1980-12-15

ROUTINE PROCEEDINGS


Mr. Donald W. Munro (Esquimalt-Saanich):: Madam Speaker, I rise under the provisions of Standing Order 43. I hope I shall receive unanimous consent for this urgent and important motion which involves the waters off our shores.
In view of the announcement by the U.S. coastguard that a test run involving a huge supertanker is to take place in the Juan de Fuca Strait next month and that the tanker involved is to have a displacement of from 150,000 to 200,000 tons, I move, seconded by the hon. member for Richmond-South Delta (Mr. Siddon):
That the Minister of Fisheries and Oceans and the Minister of the Environment withdraw any approvals they may have given for conducting this test run; and, in addition, that a protest in the strongest possible terms be sent to the U.S. authorities indicating Canada's complete opposition to any such project, experimental or otherwise, because if the experiment is successful, using a dummy cargo of seawater, it will be difficult to resist the pressure that is bound to be mounted to carry out real-life tests with the live ammunition of crude petroleum.


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.


AIR CANADA
Mr. J. R. Ellis (Prince Edward-Hastings):: Madam Speaker, with more Canadians planning to travel by air in the next three weeks than at any other time this year, the urgency of my motion is self-evident. I move, seconded by the hon. member for Richmond-South Delta (Mr. Siddon):
That the Minister of Transport is hereby directed by this House to take whatever steps are necessary to ensure that no slowdown or stoppage of air travel by Air Canada during the holiday season takes place for other than natural causes.


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.


FEDERAL BUSINESS DEVELOPMENT BANK
Mr. Nelson A. Riis (Kamloops-Shuswap):: Madam Speaker,
I rise under the terms of Standing Order 43 on a matter of urgent business. Since this government's policies have led to escalating interest rates, many small businesses across Canada have had to turn to the rather weak business development bond as their only solution. Here they find that they are forced now, in many cases, to pay severe penalties to the Federal Business Development Bank. On the left hand the government is attempting to assist small business, while on the right hand those same small businesses must pay a penalty equal to six months' interest at the prevailing rate, or thousands of dollars, which they are obviously not able to pay to the Federal Business Development Bank. I therefore move, seconded by the hon. member for Beaches (Mr. Young):
That this House request the Minister of Industry, Trade and Commerce to have the six-month penalty clause reduced to ensure that the Federal Business Development Bank assist small business rather than hinder small business.


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.


PUBLIC WORKS
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Madam Speaker, 1 rise under the provisions of Standing Order 43, and I am pleased that the Minister of Transport (Mr. Pepin) is in the chamber. On December 4 the Minister of Transport said, as reported at page 5393 of Hansard, in partial response to concerns over dredging tender policies:
I think the hon. member and some of his colleagues raised an important point tonight about the tendering methods with respect to Canadian-owned and

December 15, 1980
foreign-owned companies. The nine questions he raised will give me a chance, particularly in the context of Roberts Bank, to examine those matters properly.
In view of the shortness of time in this regard, I move, seconded by the hon. member for Central Nova (Mr. MacKay):
That this House call on the Minister of Transport to make a statement on motions setting forth the procedure government intends to follow in ensuring fair and equitable treatment for Canadian firms, which treatment they are currently denied, with foreign-owned companies competing for dredging contracts in Canada.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


EXTERNAL AFFAIRS
Mr. Stanley Hudecki (Hamilton West):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In light of the critically tense situation in Poland, with the country in severe distress due to a shortage of food and supplies and an uncertain economic future, I move, seconded by the hon. member for Dauphin (Mr. Lewycky) and supported by the hon. member for Edmon-ton-Strathcona (Mr. Kilgour):
That this House declare December 21, 1980, as a day of prayer for peace and security for the citizens of Poland.


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


Some hon. Members:: Agreed.


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


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. Dave Nickerson (Western Arctic):: Madam Speaker, under the provisions of Standing Order 43, I introduce the following motion. Whereas at the same time as external affairs officials were advising the United Nations that Canada plans to end discrimination against Indian women by amending the Indian Act next year, the Minister of Indian Affairs and
Northern Development (Mr. Munro) was telling a parliamentary committee that no such changes were contemplated, probably until 1985. I therefore move, seconded by the hon. member for Edmonton-Strathcona (Mr. Kilgour):
That the Prime Minister be required to inform this House which of his ministers was telling the truth; was it
(a)	the Secretary of State for External Affairs;
(b)	the Minister of Indian Affairs and Northern Development; or
(c)	neither of the above?


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.


FINANCE
Mr. Girve Fretz (Erie):: Madam Speaker, I rise on a matter of urgent and pressing necessity. Given the fact that the Canadian Federation of Independent Business has predicted
50,000	bankruptcies if the current policy of high interest rates is followed and, further, given that such warnings fall on deaf ears as far as the Minister of Finance (Mr. MacEachen) is concerned, I move, seconded by the hon. member for Oxford (Mr. Halliday):
That this House urge the Minister of Finance to visit during the Christmas season with children whose despairing parents are unemployed, thereby gaining an insight into what his hopeless policy means in terms of human suffering, in the hope that, once he has seen the results of high interest rates, the minister will drop his destructive and demoralizing policy.


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. In view of the fact that Inuktitut broadcasting is a crucial part of the preservation of language and culture in the north, and that the Inukshuk project is the first Inuit television broadcasting system, officially opened on December 1, 1980, I move, seconded by the hon. member for Skeena (Mr. Fulton):
That this House recognizes and supports the continuing contribution that services provided by the Inukshuk project and the northern Quebec Naalagvik 11 offer to Inuit communities.
December 15, 1980


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


Some hon. Members:: Agreed.


Madam Speaker:: Does the House adopt the said motion?


Some hon. Members:: Agreed.
Motion agreed to.



ORAL QUESTION PERIOD


Hon. Allan Lawrence (Durham-Northumberland):: Madam Speaker, in the absence of the Prime Minister, in the absence of the Minister of Finance, in the absence of the Minister of Industry, Trade and Commerce, and in the absence of most ministers today, my question is directed to the Minister of Public Works in charge of CMHC who presumably has the duty and responsibility within government of formulating housing policies and programs which affect the purchase of land and the purchase of homes.
In view of the anger that is sweeping this country today and has been sweeping the country since last Thursday regarding the act of helplessness that the Minister of Finance has been putting on in this House respecting the lack of government policy to control the high interest rates, and because high interest rates vitally affect the housing industry, which in turn has a ripple effect through the whole economy, if the government cannot do anything about high interest rates-which we on this side reject entirely-is the minister in charge of housing in this country doing anything to formulate some new policies which would at least ameliorate the high cost of interest, the high cost of building, and the high cost of mortgaging for the people of this country in respect, perhaps, of a new tax deal for those who have to pay high interest rates?


Hon. Paul J. Cosgrove (Minister of Public Works):: Madam Speaker, some of the ministers mentioned by the hon. member are attending, of course, the funeral of a former member of this House who was also a former premier of the province of Quebec. I want to make that point if it does not come immediately to the minds of hon. members opposite generally.
With regard to the response of Canada Mortgage and Housing and the housing ministry to the question of interest rates, of course, that has been a problem and was a problem for this government immediately upon taking office. Some of the actions of the government, of my ministry and the corporation in response to high interest rates are, for example, the increase of 5,000 starts in social housing, improving the eligi-
Oral Questions
bility for people seeking to stay in their homes by making rehabilitation improvements in housing, and the redirection of the portfolio. For example, on Friday of this week I announced that looking at the take-up at the year end of social housing units, 1,000 more units were designated for the city of Vancouver. These modest steps, in response to a problem that we appreciate is difficult, have been taken while we look at the impact of the rates to see whether they will come down as they did in May and June.


Allan Frederick Lawrence: Madam Speaker, in view of the fact that the Minister of Finance and the Minister of Industry, Trade and Commerce also find it necessary to attend funerals when the Prime Minister does-


Some hon. Members:: Oh, oh!


Allan Frederick Lawrence: -my supplementary to the minister in charge of housing is this. We know what the situation is and what the minister has been doing. My question was more directed to what he is going to do. With these high interest rates, is the minister going to come up with any measure at all now or in the future, and has he given any consideration to a measure, which will help relieve the high cost of interest for those people, especially young people, who desire and need to buy new housing in this country?


Paul James Cosgrove: Madam Speaker, first of all, I have taken the opportunity in the last few weeks to visit the minister for housing for the province of Ontario and discuss this problem with him, because indeed the major pressure so far as housing is concerned at this time is rather not the opportunity for people to enter the purchase market, but is in effect the tight rental situation in some of the metropolitan areas. That is our first priority.
I have had an opportunity of meeting with the minister from the province of Ontario and I have had a discussion with the minister from the province of British Columbia. These are the two provinces in which the rental situation is the most acute. I have attempted to encourage the ministers, in response to the step taken by the Minister of Finance of reintroducing the MURB provision, to consider whether the response of the provincial ministers, in their areas of responsibility for housing, could complement that initiative of the federal government so as to ensure a meaningful response by governments to those people facing tight rental situations.


Allan Frederick Lawrence: Madam Speaker, I am having a hard time getting through to the minister. Interest rates have gone up 4 per cent since the budget. CMHC is on the verge of bankruptcy, solely and simply because people are turning in their keys and walking out of their mortgaged premises. The construction industry is facing the worst time it has faced since the great depression of the 1930s, if not before, yet the minister has had but two discussions, one with a provincial minister in Ontario and one with a provincial minister in British Columbia.


Mr. Nielsen:: What is he going to do?

December 15, 1980
Oral Questions


Allan Frederick Lawrence: Madam Speaker, what is the minister doing now with respect to housing in this country? Will he come up with any new deal? If not, will he say so?


An hon. Member:: Higher interest rates.


Paul James Cosgrove: Madam Speaker, the provision in the budget dealing with the reintroduction of MURBs is a provision associated with the ministry of finance. This takes time, in fact some few months, to come on-stream. Therefore, we do not know, for example, how quickly the 10,000 to 15,000 starts expected to be generated by that provision will impact on the market. It does take some time to observe that movement in the market.


Erik Nielsen: You are monitoring the situation.


Paul James Cosgrove: I am meeting with the corporation and with major players in the industry to see whether there is any movement in the industry and whether that provision will have impact. I would think that 15,000 units in a market where total starts for the year are approximately 160,000 is a significant step by this government, and we are waiting to see what effects do take place.


Mr. Crosbie:: Resign. You have nothing to offer.


MORTGAGE INSURANCE FUND-SALE OF VACATED HOUSING UNITS
Hon. Elmer M. MacKay (Central Nova):: Madam Speaker, my question is also directed to the minister responsible for housing. If I understood him correctly, he referred to 15,000 new starts which he hopes will take place this year through the provision in the budget for MURBs. With respect, I cannot see how this can possibly generate that kind of activity; I hope it does, but can I ask the minister this question? With respect to the large amount of units of various kinds in the mortgage insurance fund portfolio which have to be sold, may I ask what progress the minister is making in this sale? Are the units being sold by open tender so that all possible purchasers, of whatever ilk, have an equal chance to buy them? Could the minister give us a brief report? I realize, as I am sure the minister does, that the mortgage insurance fund badly needs to be made more liquid so that more funds will be available for emergency housing measures.


Paul James Cosgrove: Madam Speaker, I am pleased to relate to the hon. member, who had responsibility in this portfolio several months ago, that indeed the corporation's objective of disposing of some of the numerous claims on the fund is moving ahead according to plan. That is, the corporation expected, with the assistance of the loan made by the former government to the corporation to tide it over during this period, together with its sales program, that this would result in the corporation putting the fund back into a solvent or static position, bearing in mind the run on it in the last two years. The target of having that position established by the spring of 1982 is on course. The sales program is
working. The number of units sold thus far this year is around 18,000, I believe. We expect to reach the limit of
20,000	units. It is on a restricted proposal basis, but the real estate boards of the major metropolitan areas have all been canvassed and all are participating in the sales program.


Elmer MacIntosh MacKay: I thank the minister for that information. I want to ask him about another topic in his portfolio which I know he feels is important. What progress is the minister making with respect to bringing in a shelter allowance? I hope that this scheme, which has already been costed and which, according to our calculations, was slightly in excess of $100 million for producing shelter for senior citizens over 65 years of age, will be brought in fairly soon in order to alleviate difficulties in which senior citizens are finding themselves with this kind of housing market and the rental conditions they face.


Paul James Cosgrove: Madam Speaker, the proposal for a shelter allowance, of course, was one of the recommendations of the Matthews report, a document reported to the hon. member in his responsibility for this portfolio in the last government. It is a matter which has interested me from the first day of assuming responsibility for this portfolio.
The costs vary from the amount given by the hon. member and, indeed, if the proposal is expanded to other areas, could be much higher. I have asked the officials of the corporation to prepare a report showing the costs and the possibility of introducing this proposal, bearing in mind the many claims for other types of assistance, such as non-profit co-operatives and our senior citizens program. That report has been made available to other ministry officials in the social area of the cabinet portfolio. It is my hope, with the report back from the other ministries, that these financial implications can be available for the cabinet at about the time the national housing conference is under way in Ottawa, which will be early in March.


THE ECONOMY
Mr. Ian Deans (Hamilton Mountain):: Madam Speaker, I had hoped to direct my question to the Minister of Finance; instead I will direct it to the Minister of State for Finance. I am sure the minister recognizes that both the budgetary and economic policies of this government are working a great hardship upon the majority of the people. They are destroying any chance of the auto industry recovering and creating a level of personal and business bankruptcies unheard of in Canada in the past. Prices are being driven up at every single level where consumers are involved. They are slowing the industrial expansion and replacement plans of almost every industry and commercial sector in this country.


Erik Nielsen: And you voted for all of it.


December 15, 1980


Some hon. Members:: Hear, hear!


Ian Deans: The high interest rate policy of this government is making it necessary for Canadians in almost every municipality to walk away from their homes which they had saved for and purchased. They are being faced with having to lose their entire investment. 1 want to ask the minister how long must this decay go on. At what point in the decay will this government move to create policies which will meet the obvious problems confronting by far the vast majority of people in this country today?


John Carnell Crosbie: Ask Bob Rae.


Hon. Pierre Bussieres (Minister of State, Finance):: Madam Speaker, the hon. member has elected to draw conclusions from circumstances of a single moment, from a single snapshot, as though this snapshot provided the complete picture of the Canadian economy for the forthcoming years. The hon. member knows full well that the country is still at grips with major inflationary pressures, that no one has yet come up with a short-term magic formula to solve these problems which are perturbing not only the Canadian economy but indeed the North American economy as a whole. It is through medium and long-term action as well as the concerted effort and will of all economic agents that we will overcome the inflationary threat, allow our economy some breathing space and contribute to its full recovery.


Ian Deans: Madam Speaker, the minister speaks of inflation. How does the minister propose that we solve inflation problems in the long run in this country if one of the primary industries is unable to sell its product because of high interest rates, or if the majority of the manufacturing sector is unable to undertake the retooling and development necessary to meet future demands, both here and outside the country, or if the majority of people who are earning today do not make enough money-


Madam Speaker:: Order, please. The hon. member has very long preambles to all his questions. I think I have to ask him to co-operate with the House and ask briefer questions.


Ian Deans: Let me put it quite simply, Madam Speaker.


Some hon. Members:: Hear, hear!


Mr. Rae:: The higher the interest rates, the longer the preamble!


Some hon. Members:: Oh, oh!


Ian Deans: The minister indicates that high interest rates are necessary to fight inflation. Inflation continues to rise apace with high interest rates.


Some hon. Members:: Question.
Oral Questions


Ian Deans: What does the minister propose to do to bring the interest rates down in order that people can live in Canada in the way to which they are entitled?


Pierre Bussières: Madam Speaker, I am afraid the problems with which our economy must cope are not so simple. We will know better days only if we put time on our side, as well as the concerted effort and will of all the economic agents I mentioned earlier. In his budget speech the Minister of Finance clearly indicated his intention to support fully the Bank of Canada's policy aimed at gradually reducing the money supply through tax measures which will create the fiscal framework necessary for the recovery of the Canadian economy. I am convinced that these medium and long-term measures will carry us through this critical period.


Ian Deans: How does the economy recover if people cannot afford to buy?


An hon. Member:: Good question.


NORTH ATLANTIC TREATY ORGANIZATION
Hon. Flora MacDonald (Kingston and the Islands):: Madam Speaker, my question is for the Secretary of State for External Affairs who has just returned from the NATO ministerial meetings in Brussels. All the reports from those meetings-the communiques and statements by other foreign ministers as well as the journalistic reports-have indicated that there was unanimous agreement among the NATO partners that if there was to be Soviet intervention in Poland, it would be met by tough countermeasures of a political and diplomatic nature by the members of NATO. I should like to ask the Secretary of State for External Affairs whether he gave Canada's support to the NATO response in this regard; and second, I should like to ask him if he views the NATO statement as an intervention in Poland's internal affairs?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, Canada not only fully supported but was in part responsible for the NATO consensus. We support very strongly the consensus which emerged and which was stated in the communique. I think the hon. member might have in mind other comments which have been made subsequently by other governments in interpreting the NATO communique or by the Secretary General of NATO. Those comments are not part of the foreign policy of Canada.


An hon. Member:: We were not thinking of that.


Flora Isabel MacDonald: I set forward the statement which had been made to which the minister had agreed, that there would be tough political, economic and diplomatic countermeasures

December 15, 1980
Oral Questions
taken by NATO. That was the statement made by Secretary General Luns of NATO and by other ministers, and it was to those statements to which the Prime Minister of this country took exception in his press conference last Friday when he said:
I find it useless to speculate on what we would do if there was an invasion of Poland by the U.S.S.R. I find this type of speculation completely inopportune-
I find all speculation ... very ill-advised-
Those were the statements of the Prime Minister of Canada after unanimous agreement by NATO members on the way in which they would meet Soviet intervention in Poland.


Some hon. Members:: Question.


An hon. Member:: Speech.


Flora Isabel MacDonald: I should like to ask the minister whether he was aware of the Prime Minister's view before he agreed with the NATO members as to the stand which Canada would take; and did he communicate the views of the Prime Minister to the other NATO ministers before he agreed with their stand?


Mark R. MacGuigan: Madam Speaker, the statement which was expressed in the NATO communique was not the statement which the hon. member had quoted, which was the statement made by the Secretary General of NATO and which was misreported here. The statement which was made by the allies reads as follows:
The allies would be compelled to react in the manner which the gravity of this development would require.
The other relevant statement which was made was that detente could not survive if the Soviet Union were again to violate the basic rights of any state to territorial integrity and independence.
There was a report on Friday, an entirely erroneous report, that the Secretary General of NATO had stated there would be military consequences, a military reply by NATO to any intervention in Poland. That was not what the Secretary General said, it is not part of the NATO communique, and it was not part of any explicit agreement which was arrived at by the foreign ministers.


Flora Isabel MacDonald: Madam Speaker, there seems to be a great deal of difference between the line which the Secretary of State for External Affairs is taking and that of the Prime Minister of Canada. One says yes, NATO agrees that there would be need for action in the event of Soviet intervention- and I understand the minister agrees with that-whereas the Prime Minister says it would be useless to speculate on action of any kind that NATO might take. I want to ask the minister when he will get together with the Prime Minister to find out exactly which line Canada is taking.


An hon. Member:: Who speaks for Canada?


Flora Isabel MacDonald: Are we going to be backing our NATO allies on this question, or is the government going to be siding with the Prime Minister in his criticism of NATO?


Mark R. MacGuigan: Madam Speaker, there is no problem with government policy in this respect. The government's policy is clearly one that there will be a strong and appropriate reaction to any intensification of the crisis with respect to Poland. The position which the Prime Minister has enunciated, and which 1 myself have repeatedly stated in other forums since the NATO meeting, is that speculation as to the form that those reactions might take is entirely unwarranted. It would not serve the cause of world peace if we were to speculate in that fashion, and in fact it was agreed, because of the large number of scenarios which could possibly occur, that the NATO foreign ministers would be called together immediately upon an intensification of the crisis with respect to Poland. Therefore, in fact, Canada's position is clear. It is the same as that of other NATO states, namely, that the effect on detente would be incalculable, serious and destructive if there were to be any Soviet attack on Poland and that the consequences would be strong and severe; but there is no attempt to detail what those consequences would be.


Some hon. Members:: Hear, hear!


AGRICULTURE
Mr. Jim Schroder (Guelph):: Madam Speaker, my question is directed to the Minister of Agriculture. Considering that the Canfarm co-operative program is recognized worldwide as the best specialized farm accounting software available to help commercial farmers with increasing business demands of the 1980s, considering that the federal government has already invested over $50 million in developing Canfarm and has provided direct and indirect aid to Canfarm in the amount of over $6 million, and considering that Canfarm has made substantial progress in gaining the support of farmers and accounting firms across Canada, I should like to ask the minister what steps the government is prepared to take to make sure that Canfarm, whose management technologies are in the forefront of this kind of activity, is not lost to the Canadian farmer and is not lost to Canadian agriculture in general?


Hon. E. F. Whelan (Minister of Agriculture):: Madam Speaker, there are 350,000 farmers in Canada, and between
5,000	and 6,000 belong to Canfarm. As the hon. member says, it is a very good program. We had a meeting again this morning with some of our partners in financing. We met with the Canadian Co-operative Credit Society for over an hour and discussed new ways and means of trying to keep Canfarm alive; but if those who applaud Canfarm so generously would
December 15, 1980

encourage farmers to join Canfarm, that would be the simplest solution.


NORTH ATLANTIC TREATY ORGANIZATION
Right Hon. Joe Clark (Leader of the Opposition):: Madam Speaker, my question is directed to the Secretary of State for External Affairs, and it is supplementary to that of the hon. member for Kingston and the Islands. Can the Secretary of State for External Affairs tell us whether the NATO ministerial meeting discussed in any detail potential forms of NATO reaction?


Mark R. MacGuigan: Madam Speaker, I think the most I can say on that is that there was a very general discussion of all the possibilities of action and reaction and that there was a strong consensus on the part of the ministers.


Charles Joseph Clark: Was it the position of the Government of Canada as represented by the Secretary of State for External Affairs or the Minister of National Defence at these NATO ministerial meetings, as distinct from the very general discussion the Secretary of State for External Affairs indicated ensued, that no specific discussion should be undertaken, and was that a minority position?


Mark R. MacGuigan: Madam Speaker, we did not take any minority positions; we were always in the majority. In fact, there was unanimity in all of the questions discussed. I think perhaps the best way I can answer the question of the right hon. member is to say that there was agreement that foreign ministers would be called immediately on the intensification of the crisis and that that would be the appropriate time for decision-making on what courses of action should be taken.


PENITENTIARIES
Mr. Svend J. Robinson (Burnaby):: Madam Speaker, my question is for the Solicitor General and it concerns recent very serious allegations of violence at Dorchester penitentiary. The Solicitor General has, up until now, categorically denied allegations that following the tragic hostage-taking incident on the D-4 range at Dorchester, prisoners on that tier were subjected to physical and mental torture, that they were stripped and handcuffed with their arms extended through cell bars and then maced and beaten about the hands for some five or six hours. The minister stated that he was relying upon eye witness reports of the warden and the fact, as he put it, that the RCMP were present at all material times.
Oral Questions
Will the Minister now confirm that the RCMP were not in fact present at all material times, as he has stated, and that these very serious allegations of violence have been substantiated by the confidential special inquiry report of his own inspector general; and what action does the minister intend to take as a result of this very serious confirmation?


Hon. Bob Kaplan (Solicitor General):: Madam Speaker, my understanding from the information I have is that there was an RCMP officer present at all material times. I know that there certainly was an RCMP officer there for a great deal of the time following that incident. 1 can and will check into whether an RCMP officer was there for the five hours which the hon. member suggests were material.
As to allegations respecting whether further incidents or any incidents of violence took place, I repeat what I said before. I have the report of the inspector general to which the hon. member referred, and no such incidents following the release of the hostages in that five-hour period have been substantiated.


Svend Johannes Robinson: Madam Speaker, I too have a copy of the confidential special inquiry report, and the minister has misled the House.


Some hon. Members:: Oh, oh!


Svend Johannes Robinson: The special inquiry report states, for example, and I quote:
There is little doubt that many inmates were maced because they did not react to commands immediately and that they did not do so because they could not hear properly what was being said through the gas masks.
There was rough and unprofessional behaviour. Many inmates were beaten about the hands for some five or six hours. The RCMP were not present for the critical period of time. That is what this special inquiry report states.
In view of that and in view of the fact that until now the minister has stated that these very serious allegations should be subtantiated by an independent source and that the allegations have been substantiated by his own inspector general, is the Solicitor General now prepared to appoint a fully independent judicial inquiry to get to the bottom of this serious incident and the other serious incidents which have taken place at Dorchester so far?


Robert Phillip Kaplan: Madam Speaker, I have not seen the language the hon. member read. He says he has a copy of the report. 1 thought I had a copy of the report as well. I took a quick look through it this morning. I would be very glad to see the copy of what the hon. member says is a report, to look through it and make a statement to the House about it.

December 15, 1980
Oral Questions CAPITAL PUNISHMENT


REQUEST FOR VOTE ON PRIVATE MEMBER'S BILL
Mr. Bill Domm (Peterborough):: Madam Speaker, last month in the House I asked the Solicitor General a question which dealt with allowing one of the many private members' bills on capital punishment to come to a vote rather than it being talked out by members of the government party. The minister suggested I ask the government House leader that question since it was in his jurisdiction to determine whether matters of this nature should be allowed to come to a vote.
1 will ask my question of the government House leader. Would he give serious consideration to allowing one of the many dozens of private members' bills concerning a return to capital punishment to come to a vote in this House of Commons and not be talked out by members of the government party?


Mr. Jelinek:: And if not, why not?


Hon. Yvon Pinard (President of the Privy Council):: Madam Speaker, I am advised that a similar bill was discussed not very long ago. I think it would be advisable to give a fair opportunity to all members who have sponsored private bills. We will follow the order established in the Standing Orders and in the order paper. 1 am convinced that the hon. member does not want us to violate the Standing Orders and deprive other members who have very interesting bills to discuss and are waiting their turn.


William Henry (Bill) Domm: Madam Speaker, it is not giving everyone in this House a fair opportunity if the government will not allow a bill to come to a vote.
My supplementary question is also directed to the government House leader. If he will not listen to the opposition and allow these bills to come to a vote, would he listen to the people of Canada who through three years in a row have been surveyed? Gallup polls indicate that 70 per cent to 75 per cent of the people support a return to capital punishment. If the minister will not listen to the opposition, will he listen to the people of Canada and at least allow one of these bills to come to a free vote in this House of Commons, as promised by the former Conservative government?


Yvon Pinard: Madam Speaker, 1 am advised, if I am not mistaken, that when the matter was discussed during private members' hour not long ago in this session, it was a Conservative member who indeed talked that bill out. In that case it was the hon. member for Edmonton East.


HOUSING
[Stage Direction]
ahop-assistance respecting shelter costs
Mr. John McDermid (Brampton-Georgetown):: Madam Speaker, my question is directed to the Minister of Public Works who is responsible for CMHC. My question is with respect to AHOP. Under the program 30 per cent of income is allowed for housing for people who are suffering very severely. Mortgage rates have increased from 8 per cent to 15 per cent or 16 per cent. How did the minister inform AHOP owners of this plan, and how many have taken advantage of it?


Paul James Cosgrove: Madam Speaker, 1 assume the hon. member is speaking about the program change introduced in March of this year. That change guaranteed those people in the program whose shelter costs exceeded 30 per cent that those additional costs would be underwritten by the corporation and not be part of the demand for payment either under their repayment plan or part of their loan forgiveness. My understanding is that at the end of October approximately 420 people had qualified and had taken advantage of that provision. It was administered in the various local offices of CMHC across Canada.


John Horton McDermid: Madam Speaker, I would like to ask the minister, if the program is working so well, why 50 to 75 homes per month in my area of the county of Peel alone are being returned to CMHC. What is the minister going to do about that?


Paul James Cosgrove: Madam Speaker, I am very pleased to advise the hon. member that since the program change was announced in March of last year, the rate of claims against the fund has decreased. The number of defaults against AHOP has decreased. The problem is diminishing. Although it is severe in the hon. member's riding-and I appreciate that-I would like to indicate to the hon. member that when we consider that approximately 139,000 families took advantage of the program, and when there is is a decrease in defaults we are indeed hopeful that the improvement will be to the advantage of all.
*
* *


SHIPPING
Mr. Jim Fulton (Skeena):: Madam Speaker, my question is directed to the Minister of State for Science and Technology and the Minister of the Environment. Recently he informed me that there is inadequate equipment on the coast of British Columbia to clean up an oil spill. A recently released United States coastguard report predicts that tanker traffic on the British Columbia coast will cause three major crude oil spills per year. Now the United States plans to bring a very large
December 15, 1980

crude oil carrier through the Strait of Juan de Fuca in January, contrary to the marine mammals protection act and various United States federal regulations. Will the minister tell the House whether he supports this individual project for a crude carrier to come through the Strait of Juan de Fuca and, if so, is he now supporting the Trans Mountain or the northern tier project?


Hon. John Roberts (Minister of State for Science and Technology and Minister of the Environment):: Madam Speaker, 1 have not given my support to this project which, on the basis of information given to me, I understand is one that is taking place entirely in American waters.


NAVIGATION AND EMERGENCY PROCEDURE TESTS
Miss Pauline Jewett (New Westminster-Coquitlam):: Madam Speaker, my question is directed to the Secretary of State for External Affairs. Is he aware of the navigation and emergency procedure tests which are being planned for January by this oversized supertanker? Was the minister consulted, and what is he doing to inform the United States administration of our opposition to these plans?


Mark R. MacGuigan: Madam Speaker, we have not made an objection to this specific trial run for the reason that it is not only within American waters, as my hon. colleague said, but also because on this occasion it will be carrying sea water rather than oil. So there is no possible danger on this occasion, but we have made it known frequently to the American authorities that we are very concerned about the possibility of tankers containing oil using the strait. Certainly we are not abandoning that position; we are pressing it strongly with Washington.


INQUIRY WHETHER PROTEST MADE TO UNITED STATES ADMINISTRATION
Donald W. Munro: Madam Speaker, my question is directed to the Minister of Fisheries and Oceans, the Minister of State for Science and Technology and the Minister of the Environment, or to the Secretary of State for External Affairs.
Despite the acknowledged fact that these experiments can be carried out in United States waters, there are several related facts which ought to be borne in mind. First, that the currents carry northward from where the experiments will be taking place; second, that if these experiments are conducted without protest, it virtually forecloses any possibility of preventing the real supertankers from coming in. I ask all three ministers if they will rise in unison and say that they will protest-


Flora Isabel MacDonald: They would never agree.


Donald W. Munro: They could not speak with one voice, that is true. Why has no protest been made in
Oral Questions
this instance? It is sea water being carried, but they are not refining sea water, they are refining petroleum.


Mark R. MacGuigan: Madam Speaker, we have by no means given away our position-


An hon. Member:: Oh, oh!


Mark R. MacGuigan: No, we have not.


Erik Nielsen: What position?


Mark R. MacGuigan: -with respect to the passage in these waters of oil tankers. Our position is one of great concern which we have communicated consistently and persistently to the American authorities. But we believe we should protest voyages which can cause damage. This trip is an experimental one within United States waters by a tanker carrying a cargo of sea water. I ask my hon. friend how it is possible to make a formal objection to that kind of voyage.


FISHERIES
Mr. Alexandre Cyr (Gaspe):: Madam Speaker, my question is directed to the Minister of Fisheries and Oceans. The quality of fish remains a problem in eastern Canada and several factors are involved, such as the nets that are used and the storage of catches both on boats and on shore. It seems that for several years now the fish industry has shown greater concern for quantity than quality. Does the minister intend to adopt more severe inspection standards to improve the quality of our sea products?


Hon. Romeo LeBlanc (Minister of Fisheries and Oceans):: Madam Speaker, 1 thank the hon. member for putting his question: it gives me the opportunity to answer highly erroneous articles published recently. The truth of the matter is that at times the quality of our fish production is not constant; foreign buyers not being advised of this, they do not know whether they are dealing with fish of prime or inferior quality. We intend to introduce a permit system that would set the standards to be respected in processing plants as well as on the boats that deliver fish to the plants. In that way, instead of having a problem in the future, we will, on the contrary, build up the Canadian reputation in the field of fish exports.
5744

December 15, 1980
Oral Questions


MCDONALD ROYAL COMMISSION
Mr. David Kilgour (Edmonton-Strathcona):: Madam Speaker, my question is directed to the Solicitor General. It deals with the McDonald commission and I shall put it in English.

The commission has been sitting for four years. One of its members made a $500 donation last year to the Liberal party while the commission was sitting. The chairman is the past chairman of the Alberta Liberal party. Recently it has been indicated that a complaint against his colleague, the minister of energy, was heard in secret and dismissed without hearing the minister. Does the minister not think that perhaps the point of a reasonable apprehension of pro-Liberal or pro-government bias has been met by the commission? Therefore, would he not consider turning over all the relevant evidence to the various attorneys general?


Robert Phillip Kaplan: Madam Speaker, the McDonald commission has proceeded for a very long time, and in that period of time it has certainly well demonstrated its independence from the government of the day. I am looking forward to its report and we are doing everything we can in government to co-operate with the McDonald commission so that the report will be of maximum use to Canadians when it is available. As I have indicated to the House, it will be received by the government by the end of next March. Shortly thereafter, all relevant findings and evidence will be brought to the attention of provincial attorneys general and to my colleague, the Attorney General of Canada. 1 hope that in very short order the recommendations of the McDonald commission will speak for themselves to Canadians regarding the independence of its work.


David Kilgour: Madam Speaker, the question of a stale prosecution as a term of law does not seem to be well known to the Solicitor General. My question is one of apprehension of bias. The minister will be aware that Marshall Crowe was found by the Supreme Court of Canada to create such a reasonable apprehension of bias that he was unfit to consider hearing the Mackenzie Valley pipeline inquiry before the National Energy Board. Does the minister not think that the indications of pro-government bias already demonstrated by the McDonald commission are far greater than they were in the case of Marshall Crowe?


Robert Phillip Kaplan: Madam Speaker, I am not aware of any evidence of pro-government bias by the McDonald commission. When members opposite formed the government, they had a full opportunity, if they felt that way, to do something about it. My understanding was that the government, which the hon. member supported, also supported and co-operated with the McDonald commission in the hope that its findings would be forthcoming soon and would be of maximum benefit.


INQUIRY RESPECTING CONTINGENCY PLANS TO ASSIST UNEMPLOYED OIL WELL DRILLERS
Mr. Bill Wright (Calgary North):: Madam Speaker, my question is directed to the Minister of Employment and Immigration. Last Friday in the House I quoted from the November report of the Canadian Association of Oilwell Drilling Contractors which indicated that 200 rigs were leaving Canada and that 10,800 workers would lose their jobs. On Friday morning the minister was present at a meeting in which the drilling contractors told him that the total could reach 200 rigs with 12,000 workers losing their jobs. Could the minister tell the House if he has any contingency plans to help those workers?


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, we pretty consistently monitor job registrations and vacancies in the province of Alberta. I can report to the member that as of last week the number of registrations in our offices is down from what it was last year, showing that there is less demand for job applications than almost a year ago.


John Carnell Crosbie: You have given up.


Lloyd Axworthy: The fact of the matter is, Madam Speaker, that there is such an intense demand for labour in the province of Alberta, particularly skilled labour, that where there may be a small downturn in one part of the economy, or in the industrial sector, there is a very major upturn in other parts. There will still be a very intense demand for labour in the province of Alberta without any abatement whatsoever.


Frederick William Wright: Madam Speaker, my supplementary question is addressed to the same minister. A recent financial magazine reported that there would be job losses in the following Ontario cities: Stratford, Welland, Hamilton, Sault Ste. Marie and Peterborough. Those were the only cities mentioned. I wonder if the minister could tell us if he is aware of the number of workers who will be laid off due to the downturn in the oil industry, and what are his plans to help these workers?


Lloyd Axworthy: Madam Speaker, I think I just pointed out to the hon. member that there is already a very intense demand for labour in the province of Alberta. If the hon, member would look at the proposals and initiatives put forward in the budget, he would see that the kinds of incentives which are being offered major exploration and development and in regard to conversion from oil to gas, amount to approximately $8 billion to $10 billion worth of reinvestment back into the economy, which will create a strong demand in the entire country.
December 15, 1980


MUNICIPAL AFFAIRS
Mr. Maurice Foster (Algoma):: Madam Speaker, my question is for the Minister of Public Works responsible for CMHC. In view of the concern being expressed by municipalities about the discontinuance of the community services contribution program, will the minister consider extending the program for at least one or two more years beyond the planned termination date of 1982, to allow projects which are now planned and committed to tender to be completed and so that these municipalities will be able to finish these projects?


Paul James Cosgrove: Madam Speaker, the government indicated there would be no extension in terms of the funding committed for this program. The funding is scheduled to terminate at the end of March, 1982.1 have had submissions, not only from the hon. member but from many municipalities and other hon. members, to the effect that the time committed for the use of these funds be extended. These groups have asked whether that type of proposition would be available. The corporation officials have prepared a submission to the government and to Treasury Board asking them to consider the impact of such an extension of the period of time of payment, bearing in mind we are attempting to free	up time and space for	new	program initiatives starting in March,	1982. If such	an	extension were
granted it would have to be on the understanding that the moneys paid out in 1981-1982 would be reduced accordingly if moneys are paid out in 1982-1983. I am awaiting an answer with respect to that.

[ Translation]


THE LATE JEAN LESAGE
Hon. Jean-Luc Pepin (Acting Prime Minister):: Madam
Speaker, I would	like to	pay tribute to	the	late Hon. Jean
Lesage.
It is not easy to add any original thoughts to those which have been expressed since last Friday about the former Quebec premier whose passing we all regret.
Everyone has spoken very highly about the long list of reforms effected in Quebec during his term of office. This impressive list covers all fields of public activity and includes social, cultural, legal, administrative and economic areas. 1 do not intend to repeat this list.
We should note, however, the importance given to economic affairs in these reforms: the creation of Hydro-Quebec, of the deposit fund, of the General Investment Corporation, and so on. A former parliamentary secretary to the Minister of Finance in Ottawa, Mr. Lesage respected budgets and, during
The Late Jean Lesage
his six years in office, he remained his own finance minister. He also understood that the development of Quebec should perhaps be first of all an economic development.

All the reforms he introduced were not necessarily of his own invention. He recognized that first, before others did. He was a wonderful conciliator, a good orchestra leader, and a fine practitioner of the art of the possible. The best ideas in the world, as we all know, are not worth much if not properly channelled into contemporary realities.
Mr. Lesage throughout his life and until the end of it was keen to combine his Quebecite with his Canadianism, his provincial preoccupations with his respect of the central government. Yes, he did want a modern Quebec, but he wanted it in a Canadian federation. Having two eyes, he refused to close one. Having access to two cultural heritages, he refused to ignore the second. Living under two orders of government, he recognized the importance of both. In that, as in many other aspects, he leaves an important message.

In the tribute he paid to Mr. Lesage last Friday, the Right Hon. Prime Minister of Canada (Mr. Trudeau) emphasized the importance given by Mr. Lesage to the renewal of the concept of state, the fact that, partly because of him, this concept had acquired a more positive significance in Quebec and even in the rest of Canada, and also the fact that, through Mr. Lesage, the state had become less an impersonal "it" and more a collective "we", and an instrument for action and progress.
Madam Speaker, all governments have a choice to make: laissez-faire-have it done or do it itself. Mr. Lesage, whom I do not consider a theoretician, believed that a balance could be stricken in this respect, and he gave us a good example of such a balance in harmony with his time.


Charles Joseph Clark: Madam Speaker, it was with regret that I learned last Friday of the death of the Hon. Jean Lesage. I would like today to join with the Acting Prime Minister and Minister of Transport (Mr. Pepin), and all my colleagues of the House in paying tribute to Mr. Lesage and offering our deepest sympathy to his wife and the other members of his family.
Mr. Lesage had a remarkable political career. After thirteen years on the federal scene, he chose to direct his efforts more particularly toward Quebec. He became the leader of the Quebec Liberal party and premier of his province. Under his leadership, Quebec entered an era of deep change and intensive development, and he himself earned the name of "Father of the Quiet Revolution."

Jean Lesage will be remembered particularly for the profound and important changes which he introduced, and over which his government presided in the province of Quebec. As the Acting Prime Minister (Mr. Pepin) said, Jean Lesage

December 15, 1980
Point of Order-Mr. Hawkes
always looked beyond his native province to see the country as a whole. He knew that the changes in Quebec must not simply be encouraged and allowed expression there but that they must be understood in the rest of the nation. I remember when I first had the honour to meet him, which was in my own region in western Canada, where he had come in the early days when the question was being asked as to what Quebec wanted in the hopes that he could answer, and with success he did answer that question being asked by Canadians who wanted to build the nation but wanted to understand all of its elements. He worked to bring change to his own province and to bring understanding of that change to all of the nation.

With the disappearance of Mr. Lesage, Canada has lost a distinguished citizen and Quebec a great premier.


Mr. Edward Broadbent (Oshawa):: Madam Speaker,
Quebec has lost a great politician. He had been called, and rightly so, the "Father of the Quiet Revolution". He had promised significant changes for Quebec and he kept his word. He achieved his goal. Within a few years Quebec underwent transformation under his leadership.
Mr. Jean Lesage proved that one could be at the same time a Quebec nationalist and a Canadian. He was proud of belonging to Quebec and to Canada. Under his administration, Quebec became a modern society thanks to the social and economic reforms implemented by his government. Quebeckers today benefit from his important work.
Mr. Jean Lesage will remain in the eyes of all Canadians one of the most progressive and efficient politicians Quebec has ever known. Finally, Madam Speaker, personally and on behalf of my party I extend to Madame Lesage and her family our most heartfelt condolences.


POINT OF ORDER
Madam Speaker:: I am sorry that the hon. member for Calgary West (Mr. Hawkes) has left the House at the present time, but I think that he will be happy to hear that we did check on the omissions in Hansard on December 8, 1980, which he indicated. He was right. The error to which the hon. member referred was an error in proof reading and the omissions occurred through a misunderstanding as the reporters changed over on the floor of the House. Both matters have been corrected and revised in the final version of Hansard.


HAZARDOUS PRODUCTS RECALL ACT
Madam Speaker:: Last Friday, through inadvertence, a motion standing in the name of the hon. member for Hamil-ton-Wentworth (Mr. Scott) for the introduction of Bill C-622, an act to establish the hazardous products recall, was introduced. The bill was read the first time and ordered to be printed and ordered for second reading at the next sitting of the House. All this was reflected in Votes and Proceedings of last Friday but, regreattably, while the document with respect to the motion was prepared, the bill itself had not been drafted and, therefore, was not ready for introduction.
Standing Order 69 is very clear:
No bill may be introduced either in blank or in an imperfect shape.
I now find myself required to direct that the proceedings of last Friday relating to this bill be declared null and void and that the notice in the name of the hon. member for Hamilton-Wentworth be carried on the order paper until the bill is drafted. The hon. member will then be able to proceed and to ask for leave to introduce the bill pursuant to the Standing Order.


POINTS OF ORDER
Yvon Pinard: Madam Speaker, earlier during question period I indicated in answer to a question by the hon. member for Peterborough (Mr. Domm) that the hon. member for York East (Mr. Collenette) was the last one to speak on a bill during private members' hour and prevented that bill from being put to a vote. I have checked and it seems that this was not Bill C-215 on capital punishment, but rather Bill C-216, on abortion. 1 have therefore inadvertently misled the hon. member for Peterborough. 1 apologize and I would ask that the report be corrected.


MR. OBERLE-IMPLEMENTATION OF CANADA BUSINESS CORPORATIONS ACT
Mr. F. Oberle (Prince George-Peace River):: Madam Speaker, as you know I was seeking the floor of the House during question period. On a point of order, I would like to raise a matter which is rather serious. I was checking to see whether any of the government ministers would rise today on motions to make a statement with respect to a matter involving the Canada Business Corporations Act. When it was passed in 1975, the then minister said that on December 15, 1980, the act would be fully implemented, and that any Canadian company which was not properly registered by that date could
December 15, 1980

have its assets confiscated by the government, and he outlined other serious possibilities for such companies.
It is my understanding that up to 12,000 companies have not yet registered, for a variety of reasons which are best known to the companies and which are also known to the government. Since today is December 15, what is the government doing to those federally incorporated small businesses in particular which have not registered? Will their assets be confiscated today, or is it the intention that one of the ministers will make a statement on motions, or some kind of statement, to inform these companies, which will be very anxious as to what the government's position will be with respect to this matter so that their anxieties and fears may be allayed? Is the government in a position to say something on this matter today, a very crucial date?
[ Translation]


Yvon Pinard: Madam Speaker, I shall check on the question put by the hon. member and make sure that he is given an answer as soon as possible.


MR. CLARK-STATEMENT MADE BY MR. PINARD
Charles Joseph Clark: Madam Speaker, on a very minor point of order, I believe there was an error in the apology offered by the President of the Privy Council (Mr. Pinard). He delivered an accusation against the hon. member for Edmonton East (Mr. Yurko) and directed his absolution toward the hon. member for York East (Mr. Col-lenette). I think he will agree that he meant to absolve the hon. member for Edmonton East.


Yvon Pinard: Madam Speaker, I never wanted to accuse the hon. member for Edmonton East (Mr. Yurko). If I said York East (Mr. Collenette), it was Edmonton East that I had in mind, but I never wanted to accuse him. In any case, no such accusation was implied in my answer. In reading my answer in today's Hansard, the Leader of the Opposition (Mr. Clark) will note that I said "If I am not mistaken,...". I was indeed mistaken, and I simply corrected myself. I have too much respect for the hon. member for Edmonton East, whose motion on unilateral patriation of the constitution I supported, to accuse him in that way.


PRIVILEGE
Svend Johannes Robinson: Madam Speaker, I rise on a question of privilege of which I have given notice both to
Privilege-Mr. S. J. Robinson
yourself and to the Solicitor General (Mr. Kaplan). It concerns the question which I raised during question period today and it involves certain statements that were made by the Solicitor General to the Standing Committee on Justice and Legal Affairs, on October 30, and also on a number of other occasions.
The question of privilege concerns certain allegations which had been made by a number of prisoners at the Dorchester penitentiary following the tragic death of guard Bill Morrison and alleged violence which took place at the institution, specifically following that particular incident. I visited Dorchester penitentiary shortly after the incident, and both myself, members of the official opposition and, indeed, a member of the government party raised very serious concerns about the allegations which had been made, suggesting that it was only through the vehicle of a full independent judicial inquiry that we could get to the bottom not only of these particular allegations but of a number of very serious matters which had taken place at Dorchester Penitentiary over the past several months.
These include such occurrences as three hostage-taking incidents in the past eight months, one of them resulting in a tragic death of a prison guard at the hands of the IERT, the special team, the escape of four convicted murderers, the suicide of a prisoner, the allegations of widespread destruction of personal property of prisoners, and the substantiated allegation of shooting into the penitentiary gymnasium involving some 137 rounds of ammunition. It involves allegations of violence before the hostage-taking incident in which prisoners alleged they were victims of what was called psychological and physical torture. Finally, it includes the allegations of violence, of physical and mental torture immediately following the hostage-taking incident.
With respect to those allegations the Solicitor General on October 30, 1980, replied to questions by myself on the allegations, questions that following the hostage-taking incident, prisoners were stripped, forced to lie under their beds with their hands tightly handcuffed and their arms extended outside the cell bars, and that for a period of some five hours or six hours they were gassed and their hands were beaten. These are obviously very serious allegations. There were other allegations as well with respect to very serious acts of violence against individual hostage takers. In response to these allegations, the Solicitor General stated:
-I would be interested in holding a judicial inquiry only if an element of credibility were established in relation to that allegation. Otherwise the inmates would run our institutions-
The minister suggests that there was no credibility for the allegation.
At page 8:16 in the minutes of that committee meeting of October 30, the minister stated:
Now, you have referred to a number of specific allegations. You said that the inmates were stripped; that is true. They were stripped and they were searched after the hostage-taking incident ended. They were handcuffed so that the search could take place. Tear gas had been used in the institution during the entry to try to end the incident and capture the hostage takers, but there was absolutely no torture. Now, you say the inmates were beaten and gassed.

December 15, 1980
Privilege-Mr. S. J. Robinson
We come now to the critical words, Madam Speaker:
1 categorically can deny that because independent witnesses were present during the time that took place.
This did not occur!
Now, this has satisfied me that there is no credibility to these allegations-
I should add, if any substance is added to any of the allegations of inmates by this process-
I suppose this refers to the various investigations.
-then a judicial inquiry could well be justified at some point down the road, but it is not now.
In other words, Madam Speaker, at that point in response to calls for a full, independent, judicial inquiry, not only by myself but by representatives of the official opposition, the minister said that these allegations were categorically unfounded, that there was no substance to them, but that if in the future there was some substance to them then indeed an independent judicial inquiry might very well be considered.
The Solicitor General went on and it was very clear that he was relying upon the warden of the institution, presumably, as well as other individuals four days later at the justice committee, when he said:
While the inmates allege that they were stripped, handcuffed to the bars of their cells, tear-gassed and beaten. At all material times the warden was present and members of the RCMP were present and they deny that anything like that happened, that the inmates were tortured at all, so I do not feel that that is an allegation that I should be concerned about.
One final quotation from the Solicitor General on November 4, Madam Speaker, is as follows:
But 1 feel those allegations have been sufficiently discredited in the last few days by a recent statement of the warden that he was present at material times with members of the RCMP who are, of course, outsiders as far as the correctional service is concerned and that no such gassing and beating took place.
Those statements were simply not accurate. The minister was misleading the committee and, through the committee, was misleading the Elouse. I say that because I recently obtained a copy of the confidential special inquiry report drawn up by the Solicitor General's own officials, including the Inspector General, Mr. Renshaw, another independent person from New Brunswick, and another member of the Inspector General's staff.
There is no doubt that this confidential report is couched in rather careful terminology. That is not surprising. It is an in-house report attempting to put the best possible gloss on the events that took place. Madam Speaker, no matter how one reads this document it is very clear that what the minister told the justice committee, and through it the people of Canada, and this House, was absolutely unfounded.
I should like to refer to this confidential special inquiry report which rebuts fundamentally the statements made by the Solicitor General in which he categorically said, without hesitation, that those allegations were totally unfounded. The report starts out by stating that the staff at Dorchester were interviewed, that inmates on the range were interviewed, and that the hostage takers themselves who had subsequently been
transferred, were also interviewed. There is then a chronology of events which took place at the penitentiary.
One of the critical points of the report is that immediately following the removal, the dragging of the hostage-takers out of that particular tier, for at least 20 minutes there were no independent witnesses present whatsoever. There were no RCMP officers-no independent witnesses at all, yet the Solicitor General said that at all material times independent RCMP witnesses were present. This report of his own inspector general says that just in not true, that during the critical period of time, the 20 minutes immediately following the removal of the hostage takers, there were no independent witnesses present and no RCMP officers whatsoever on D-4 range. The report goes on to say that there was absolutely no pre-planning, and I quote:
-there had been no pre-planning as to what was supposed to take place once the range had been secured.
One member of the security squad told everyone to sit on their beds and another one came along and told them to lie under their beds. They were stripped and told to lie under their beds. The report confirms that they were handcuffed very tightly with nylon handcuffs.
On the question of gassing, which the minister has denied took place, I quote:
Systematically, two IERT members-
That is the Independent Emergency Response Team.
-went from cell to cell and cuffed all inmates.
These were the inmates who were trapped on that tier. They were not involved in the hostage-taking in any way. They were innocent victims of what took place on that tier. The report states:
When an inmate did not respond immediately he was maced. An officer would grab the inmate's hands and pull on them to get them far enough out then cuff the wrists together.
For this they used flexicuffs, nylon bands approximately one quarter inch wide. The wrists were very closely bound and the cuff tightened snugly, with the hands in a prayer-like fashion.
The chronology continues. The incident started about 6.40. By 9.19 one of the hostage takers who was down in dissociation was being watched by the RCMP. He was their prisoner. The RCMP were so concerned about what was happening there that an RCMP constable told the IERT officers that he was the RCMP's prisoner and he did not want anything to happen to him. The RCMP officer did not like the way Enman was handled. Then, in an incident which even this special in-house inquiry report has referred to as degrading treatment of a prisoner, there were at least three masked IERT members who dragged one of the hostage takers, head first, across the main dome and down C-l range to the hospital in such a way that his buttocks and back would slide along the floor. The report goes on to say that the RCMP again said to the guards that the RCMP were in charge and that it was not the guards who were running the prison at that point, because things were clearly out of hand.
December 15, 1980

Some five or six hours later the inmates on that tier were removed and taken to hospital. I have the reports of the medical inquiry which indicate very clearly that many of these prisoners were bruised on their hands and that they had other injuries. The report goes on to indicate that nine of the prisoners complained of having been maced, and kicked or clubbed on the hands. One complained of having been maced only, and two of having been maced or struck with a night stick.
Then we get to the factual conclusions which are directly at variance with what the Solicitor General categorically stated to the justice committee. This special inquiry in-house report states:
It is clear that the majority of the inmates were maced before they were handcuffed. Inmate Grealey's version is typical. 'My ears were still ringing from the explosion and all that racket when along came this guy with a mask on and he said something to me. I guess he was telling me to lay down but 1 couldn't hear well through his mask so 1 said: 'What did you say' and I got maced and went down.'
The inmates were all ordered to the floor (most at gunpoint), cuffed, and told to lie still. This rule was rigidly enforced.
One inmate said-
-'every time you'd move, you'd get maced or hit with a club or kicked.'
Then the report goes on:
The board has little doubt that a few discreet shots of mace were applied unnecessarily despite the presence of RCMP officers.
Of course, RCMP officers were not even there for a period of 20 minutes. The report continues:
There is also little doubt that some inmates were kicked in the hands or had them struck by a night stick-
That was categorically denied by the Solicitor General in misleading the justice committee.
I will come to the conclusion very shortly, Madam Speaker, but there were a number of other concerns that I wanted to point out briefly arising from this report. Another quote directly from the in-house report is as follows:
There is little doubt that many inmates were maced because they did not react to commands immediately and that they did not do so because they could not hear properly what was being said through the gas masks. There is also little doubt that inmates were handled in a rough fashion.
The report goes on to deal with rough and unprofessional behaviour and to express very serious concerns about the fact that all of these IERT members were unidentified, were anonymous. Finally, the report states that one of the inmates was subjected to degrading treatment by being dragged across the prison.
My question of privilege, Madam Speaker, is that the minister, in speaking to the justice committee, and through it to the House, has categorically denied there were gassings and beatings, and has stated that independent witnesses were present at all times. Both of those alleged facts are simply not true. No independent witnesses were present for the first 20 minutes at that tier. The minister's own in-house inquiry report clearly states there were beatings and gassings, that inmates' hands were handcuffed very tightly, that they were
Privilege-Mr. S. J. Robinson
held there for five or six hours and at least one inmate was subject to degrading treatment.
In view of this, and in view of the fact the minister has misled the House, I have no doubt the situation had something to do with the warden of the institution having placed his own reputation on the line by saying he was present at all times and that none of this had occurred. Therefore, I assume the minister will take the necessary action with respect to that particular individual, because his own official has said that what that acting warden has stated is not accurate. However this arose, it is clear that the minister has a responsibility to the justice committee, to this House to which the justice commmittee reports, and through this House to the people of Canada, to state that he has misled the House and the people of Canada and that these very serious allegations indeed have substance.
Therefore, if Your Honour finds there is a prima facie case of privilege in this particular instance, I would be prepared to move seconded by the hon. member for Winnipeg North Centre (Mr. Knowles): that this matter be referred to the Standing Committee on Privileges and Elections for a full and comprehensive examination.


Robert Phillip Kaplan: Madam Speaker, 1 will be brief in my submission. However, I would like to say a few things about this report, which I confess I had not fully read by the two o'clock period today.
When 1 appeared before the justice committee and gave answers referred to in the statement made by the hon. member for Burnaby (Mr. Robinson), I was relying on the information I had received, as he noted. However, I had been told and was well aware that another investigation was under way. That second investigation is the report from which my friend has read in such a totally distorted way, with no reference to many of the other matters contained in the report which certainly temper the impression which the hon. member for Burnaby has attempted to give to them.
I was quite satisfied, and I remain quite satisfied, that the events which took place following the release of the hostage takers cannot be characterized as a kind of revenge-torture session, which is the impression my friend has attempted to create. There is nothing in this report which indicates there was a revenge-torture situation. My hon. friend has this report. I intend to quote from it, and I know that that means the report will be made public. But in fairness to those who work for the correctional service of Canada 1 think the report should be made public. 1 say that because the way in which it has been read by my hon. friend totally distorts the findings, which I will come to, and the observations which were made.
First, I want to comment on the absence of the RCMP officer. The report does indicate, and this is somewhat inconsistent with the information I had, that for a twenty-minute period following the release of the hostages the RCMP officer was not present. But 1 believe the warden was present at that

December 15, 1980
Privilege-Mr. S. J. Robinson
time. As I said in the justice committee, and as I believe to the present, although I am not certain, the warden was present. I understood he was present. I view him, having met him and interviewed him, as an honest and independent person in such a situation. I believe my friend is of the same opinion, and perhaps that is common ground between us.
I must state that 1 knew about the handcuffing, but there has been an attempt to create the impression that this is a revelation. However, I indicated to the justice committee that these people were handcuffed and that was a totally legitimate procedure in those circumstances.
I want to come now to the beatings and the macings. Doctors both inside and, I believe, outside the institution examined inmates following this incident. The board interviewed them as well. Although the statements which my friend read are accurate, and members of the House will have a chance to read them for themselves, the hon. member read only half of each paragraph, for example, when the hon. member said 12 inmates were interviewed and nine complained of having been maced, kicked or clubbed in the hands and one complained of having been maced only, and two of having been maced or struck with a night stick. I knew about those allegations, as did my hon. friend, but I indicated to the committee that 1 believed revenge-torture had not taken place. I shall now read from the same report which my hon. friend relies upon, although he left this part out. It states:
None of the fourteen inmates suffered any serious physical injuries. There were no observations made by medical staff of any injuries at all to the top of the hands, which would have been the case had the officers in fact jumped on the hands.
My friend read the first part of that paragraph but he did not read the medical evidence. He just read the allegations.
I want to read three more portions to which my friend referred in a distorted way. The first is:
-McCready complained of having been burned in the face by mace. McCready's file indicates that he is allergic to dust. As a result. Health Care Officer Gallant feels that the redness about the face was more likely caused by the allergic reaction from lying face down on the floor for a few hours.


Elmer MacIntosh MacKay: How many hours?


Robert Phillip Kaplan: I think four to five hours.
During the question period, the hon. member for Burnaby read another half paragraph which reads:
There is also little doubt that some inmates were kicked in the hands or had them struck by a night stick.
As I said, this was news to me. When I stood up to answer the question, I had not yet read that part. But the report goes on to state:
-the lack of physical injury indicates that these incidents were few and of low intensity.
On that score I feel justified in making the statements I made before the justice committee, relying on the information upon which I then relied.
Coming to the conclusions, we read:
After reviewing the foregoing facts, the Board finds that . . .
(1)	The force used to effect the arrest of the hostage-takers and their subsequent removal from D-4 Range to the dissociation areas was, having regard to all circumstances, not excessive.
(2)	There is no evidence to indicate that inmates 2579 DESROCHES and 3321 WRIGHT were subjected to excessive force or mistreatment.
(3)	Inmate 0592 ENMAN was subjected to degrading treatment while being transported from the dissociation area to the institutional hospital.
(4)	The keeping of 14 inmates secured to their cells-
This referred to the handcuffing and the lying on the floor of the inmates. It continues:
-on the D-4 Range, while police were gathering physical evidence was justified.
(5)	With the following two exceptions, all inmates on D-4 Range, including the hostage-takers, were guarded by CSC staff under the observation of RCMP officers at all times:
(i)	A period of approximately 20 minutes immediately following the removal of the hostage-takers from D-4 Range.
(ii)	Inmate ENMAN was transported from the dissociation area to the institutional hospital without police observation.
(6)	All remaining D-4 inmates underwent a medical examination upon being moved from D-4 Range. No serious injuries were recorded.
(7)	There was a lack of pre-planning for the orderly securing of all remaining D-4 inmates-
The hon. member for Burnaby referred to that.
The final recommendation is:
(8)	The total anonymity of IERT members is not advisable.
I can tell the House that we are changing that procedure. We are putting numbers on the IERT uniforms so that an inmate will know exactly who is approaching him from the IERT. This recommendation will be implemented in the next day or so.
When 1 read parts of the report and my friend reads parts of the report, it sounds like two different reports. The sentences he read are there. In many cases he has just read half sentences. When I look at the findings, I insist in substance no torture or vengeance took place following the freeing of the hostages. The information I gave to the justice committee was justified. I believe hon. members who read this report will draw their own conclusions and will come to the same conclusion. Therefore the motion by the hon. member for Burnaby is ill-founded.


Madam Speaker:: Does the hon. member for Notre-Dame-de-Grace (Mr. Allmand) want to speak on the same question of privilege?


Mr. Allmand:: Yes, Madam Speaker.


Madam Speaker:: No. I do not think I can hear him if those incidents occurred under his administration. If necessary, I could perhaps let the hon. member for Notre-Dame-de-Grace explain himself. But this is a discussion following a report of which only one person in the House has a copy. I have the feeling that the hon. member for Burnaby (Mr. Robinson) has the copy, and the minister himself, of course. At first glance, I think there is a difference in the interpretation of the facts.
December 15, 1980

Perhaps we do not have two reports, as the minister says, but if there is only one report, we have before us two interpretations of the same report which are very different. Off-hand, 1 have the impression that it is a different interpretation of the facts, but to make sure, I shall take that question as notice, because it is very important.


Robert Phillip Kaplan: Madam Speaker, since I failed to do so while I was speaking, 1 wonder if 1 might have permission now to table this document.


Some hon. Members:: Agreed.


Madam Speaker:: The minister may table the document.


Robert Phillip Kaplan: Madam Speaker, 1 am in your hands as to one matter. The document is in English only at the moment. A translation can be prepared.


Madam Speaker:: That is the minister's choice. If he wishes to table it now in one language only, he may do that. If he wishes to defer, I will accept that, too.


Some hon. Members:: Table it.


MR. ROBINSON (BURNABY)-STATEMENT MADE BY MR. KAPLAN
Svend Johannes Robinson: Madam Speaker, I recognize the ruling you have made, but there is another matter which arises from the remarks the Solicitor General (Mr. Kaplan) has just made to which I must draw attention. The minister has again misled the House in the remarks he just made.


Madam Speaker:: Order, please. If the hon. member feels he has some reason to rise again, he may do so on a new question of privilege.


Svend Johannes Robinson: That is what I am doing.


Madam Speaker:: The discussion is now closed. The hon. member has had an opportunity to present his point and the Solicitor General (Mr. Kaplan) has replied. I have to close the discussion in so far as that question of privilege is concerned.


Svend Johannes Robinson: With respect, Madam Speaker, this is a new question of privilege arising out of the minister's response. The minister once again misled the House on a very fundamental question of fact in his reply to my initial question of privilege. The minister indicated that on October 30 he stated:
Now, you say the inmates were beaten and gassed. I categorically can deny that because independent witnesses were present during the time that took place.
The minister said that at that particular time on October 30 he knew there was another independent inquiry, that a special inquiry was under way into these allegations and on that basis he was giving the response he gave on that point. That simply is not true. On October 30, 1980, this special inquiry had not even been commissioned. For the minister to suggest that he
Privilege-Mr. S. J. Robinson
knew this special inquiry report would be forthcoming very shortly and on the basis of certain information which he had, to be supplemented by the special inquiry report, he made the false and misleading statement that he did, is false and is misleading this House. I call upon the minister to admit that a decision was not made to have another special inquiry into these allegations until well after that, in the month of November.


Robert Phillip Kaplan: Madam Speaker, my friend was reading from a report of the justice committee. I do not have the report in front of me. I believe I have been before the justice committee three times. Each time I have been asked extensive questions about the incident at Dorchester.
I was under the impression the hon. member was reading from a statement I made during my most recent appearance when I was anticipating this report. At that time I was asked the same questions he had asked me the time before. The answer sounded like the one I gave when, as I say, I appeared there the last time.
Of course I did not know in October that this second report would be justified or called for. Therefore, the hon. member is quite right about that. I will retract that statement if I have his permission to do so. I knew at that time when we were talking on October 30-well, Madam Speaker, I am trying to recall now. I want to be very precise about the times. I cannot be, because on at least three separate occasions before the justice committee I have been questioned about this.
The report of the incidents that took place following the hostage-taking have been made public. You, Madam Speaker, and the public generally can draw conclusions from it.


Allan Frederick Lawrence: Madam Speaker, I would like to say a few words with respect to the question of privilege. I am not too sure which one we are on. They both amount to the same thing, namely, that the justice committee and this House have been misled by the Solicitor General (Mr. Kaplan) with regard to the contents, the interpretation and the misapprehension he has deliberately attempted to convey to the committee, the House and the public. I refer to the contents of investigative reports resulting from the great tragedy which took place in Dorchester in connection with the death of guard Bill Morrison and the results of the various investigations which have taken place with regard to that tragedy.
I do not know which one we are on. It does not matter much to me. We are on the second one? That's fine. They all fit in together in a pattern in any event. The pattern has been that the minister has intentionally attempted to leave the wrong impression in the committee and in this House as to what happened at the time and since that tragedy, and also with regard to the various investigating groups.
The tragedy in Dorchester Penitentiary took place on a Friday night. On the following Monday in this House, the minister was asked if a report would eventually be made to the House. The minister very deliberately said that within a few days the group he had set up would be reporting to him and,
5752

December 15, 1980
Privilege-Mr. S. J. Robinson
within a few days, that report would be released. That was not off the cuff, nor was it off the top of the minister's head. Exactly the same question was asked the next day, the Tuesday, in this Elouse, and essentially the same reply was given.
Later the minister backtracked and backtracked greatly, in the House, at a press conference and at the meeting of the justice committee, and this obviously affects the privileges of the members of this House. He said at that time that he would not necessarily release the contents of the report when he got it, in direct contradiction to what he had said in the House, because now another group would take a look at it, namely, there was to be a coroner's inquest.
At a subsequent meeting of the Standing Committee on Justice and Legal Affairs, the minister indicated that he had received the report and, after receiving it, realized that the report itself said the same things that had been said at the inquest and had come to the same conclusion. 1 might have missed something at the justice committee meeting, but at that time I am firmly convinced that the impression which the minister attempted to convey was that that was the end of it so far as he was concerned, that there was only the one report in his hands, and that there had only been the one group set up in his department to take a look at the whole matter.
We now find that that group was reconvened as a result of certain allegations that were made, and that the minister has only now received the second report from the same group, which is quite different from the misleading impression he had attempted to give.
This might be merely semantics, and perhaps the time of the House has been wasted by this because perhaps this is the usual conduct of the minister-I am not sure. In any event, I plead with the minister to take into account that the problem with which the House is faced at the moment, the problem which he has forced members on this side to bring to the attention of the House at this time, is solely and simply the result of attempting to hide things somewhere under the rug and keep them secret.
Quite frankly, we took the heat off the minister in the week after this tragedy because of his absolute commitment to this House that he would be releasing the initial report. The long and the short of it is simply this: he did not release that report to this day, which he should do because he gave that commitment. The only way we found out that the same group was reconvened and has now presented a second report is simply because some of the officials at Dorchester or in the department have leaked it to opposition members. This is the only way in which we can find out these things, and that is part of the continuing tragedy of Dorchester and part of the continuing tragedy of the whole correctional service organization so far as this government is concerned. I also say it is a personal tragedy so far as the minister is concerned because he does not live up to the commitments he gives to members of the House or members of the justice committee.


Madam Speaker:: The minister has had a chance to reply to the hon. member for Burnaby (Mr. Robinson), but I suppose that had he known at the time that other hon. members would want to speak on this question, he would have reserved his comments and spoken later. I believe 1 have to give the minister a chance to reply, but now I see that other members are asking for the floor. Perhaps the minister would prefer to be recognized later. 1 think that would be much better for the Chair because then I will be able to hear what reply the minister makes to the statements.
I shall recognize the hon. member for Central Nova (Mr. MacKay), followed by the hon. member for Notre-Dame-de-Grace (Mr. Allmand), who insists on being heard on the second question of privilege, and then the minister will have the floor.


Elmer MacIntosh MacKay: Madam Speaker, my intervention will be very brief. I listened with a great deal of attention to what has been said so far, and I would just like to add another dimension, or make a suggestion to my friend, the minister. I shall be very interested to hear the comments which will be made by the hon. member for Notre-Dame-de-Grace (Mr. Allmand), the former solicitor general.
I want to suggest to the present Solicitor General (Mr. Kaplan) that there is ample precedent for making him very skeptical indeed of the quality of information which he receives from the RCMP. I do not know about penitentiary officials, but there is at least one precedent where the commissioner of the RCMP misinformed the hon. member for Notre-Dame-de-Grace when he was solicitor general. It is quite clear to me that the results of that particular bit of misinformation had some very tragic effects, which still exist to this day, on a number of members of the force and former members of the force.
I hope that when the minister is replying on this very serious matter he will tell the House whether he is still taking all of the information conveyed to him by the RCMP on blind acceptance because, if he is, he is much more foolish and naive than I think he should be.


William Warren Allmand: Madam Speaker, as a member of the Standing Committee on Justice and Legal Affairs and a former solicitor general, I had received many letters from inmates of Dorchester Penitentiary alleging provocation, harassment and cruelty on the part of some of the staff against certain inmates following the tragedy which took place. I must say that I was not surprised, because things like that had happened in the past, and, when investigated, were found to be true. I want to make clear that such allegations were not made against all staff, but some staff had been found guilty of such actions in the past, so it did not surprise me that it might take place again. Consequently, when this matter was raised before the justice committee, 1 also put several questions to the Solicitor General (Mr. Kaplan) about it. He replied to me in much the same way as he replied to the hon. member for Burnaby (Mr. Robinson),
December 15, 1980

that he felt there was no evidence to substantiate the allegations.
Now it seems with this report, and I have copies as well, that there is more evidence than there appeared to be in the first place. Once again, as pointed out by the hon. member for Central Nova (Mr. MacKay), this does not surprise me, because I learned through bitter experience as Solicitor General that you just cannot rely, unfortunately, on much of the information that is given to you about some of the tragic events which take place within our criminal justice system.
I have tried to caution the minister against accepting such flat statements of non-guilt on the part of staff, and have suggested to him that perhaps there should be a more independent and more exhaustive inquiry into this matter. I pointed out that under the Liberal party and with Liberal governments over the past five years faced with similar incidents, we did have independent inquiries.
After the death of Mary Steinhauser at B.C. Penitentiary, we appointed Chief Justice Farris to investigate that matter. Following the terrible riot at Kingston penitentiary, my predecessor, Mr. Goyer, had appointed Attorney Swackhamer from Toronto to conduct an independent inquiry into that incident. During my term of office we had also appointed Judge Ducros of the Quebec Superior Court to investigate irregularities at the Laval Institution, and when there were irregularities at the Millhaven Institution we appointed a board of inquiry made up of four members of the House, the former Mr. Speaker when he was chairman of the justice committee, Mr. Jerome, the hon. member for Kingston and the Islands (Miss MacDonald), Mr. Stuart Leggatt from British Columbia, former NDP member, and one other member, to investigate Millhaven penitentiary, because the prima facie evidence, while not fully substantiated in advance, indicated that there was more serious trouble there than the staff wanted to admit.
My intention this afternoon is not to demand retribution from the minister, because I think he probably spoke in good faith in reporting to the justice committee and in reporting to the House, but I caution him not to rely entirely on what he is told, and what comes up to him through the line, with respect to certain serious incidents of this kind. I hope that he will shortly announce to this House or to the justice committee the type of action he intends to take on the findings in this report, to discipline those who perhaps have misled him. If he feels that a more complete inquiry is necessary, I repeat again that there are many precedents for complete inquiries, some of which I mentioned in the last few minutes. When he spoke before the Standing Committee on Justice and Legal Affairs, he said he would not rule out a more extensive inquiry if more evidence was brought forward to support the allegations. It seems to me that more evidence has now been brought forward, but he may wish to take definitive action instead of having another inquiry, and that would be acceptable to me as well.
Privilege-Mr. S. J. Robinson


Robert Phillip Kaplan: Madam Speaker, I appreciate the sympathy for me in my job which has been expressed by hon. members. I want to make just a few points in reply to specific comments which have been made by hon. members.
There is very good reason for not making reports of this nature public. Now that one has been made public because of what I want to assert is its misinterpretation, the House once again is given the opportunity to look at a report and contemplate the wisdom of that rule. Names of inmates in that institution have now been made public. In some cases their former offences are described. This may endanger some of them. It certainly could endanger the order of the institution. Similarly, guards may be named. The types of jobs they hold and perform in the institution are described. Certain operational procedures are commented upon. I am not certain as to whether some physical details of the institution are described in this particular report.


Mr. Speyer:: We have to rely on you.


Robert Phillip Kaplan: However, for all these reasons and because of the risks involved in those kinds of disclosures, it has always been the practice to keep reports confidential. When the first report was in the course of preparation I indicated, as my friend, the hon. member for Durham-Northumberland (Mr. Lawrence), has pointed out, that I would be prepared to make a statement later. I said I would be prepared to or, if the House wanted one, I would. I do not feel I made a definitive commitment to do so, but I used words of that sort. The reason I was saying that at this time was because wild allegations were being made which in their way are as damaging to the good order of an institution as the other disclosure to which I referred arising from the report as it was tabled.
I thought that if wild allegations were going to be made and believed by the public, it would be better to make a full statement of facts at that time. Subsequently the coroner of New Brunswick indicated that he would be holding a public inquest into the matter, and it seemed to me-and still does- that it was desirable that the facts be brought out through evidence at that hearing. That is exactly what happened. The evidence was given before the coroner. Conclusions were reached by the coroner. I could say that substantially all of the facts which were available and which are consistent with the facts in the internal report were given by witnesses who appeared before the coroner at that public hearing, and they are available.


Allan Frederick Lawrence: Why not release the report?


Robert Phillip Kaplan: Since the findings of fact were substantially the same, I did not feel at that point that there would be much to be gained, if anything, by making the report public, against the risks of the problems of disclosure to which I referred in connection with this special report.


Elmer MacIntosh MacKay: What problems?


Robert Phillip Kaplan: The last time I appeared before the Standing Committee on Justice and Legal Affairs I was aware that a

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Privilege-Mr. S. J. Robinson
second report was being prepared, and I am not certain that I said so, but I indicated, as the hon. member for Notre-Dame-de-Grace (Mr. Allmand) quoted, that more information would be coming to my attention.
In any event the hon. member for Notre-Dame-de-Grace has quoted me as saying that if more information comes out or more allegations are substantiated to my satisfaction and in a way which justifies taking further action, that action would be taken. That information has come. It has now been made public. I have had the opportunity in the last hour or so to read the details of that report. I feel that the findings of this inquiry are definitive. I would like to take another look at all of the facts. I would like to discuss this with members of the Correctional Service of Canada. In fact the only reason I did not read the report last weekend was that I knew I would be seeing, at my regular meeting, officials of the correctional service of Canada later this week, and I did not see the urgency of reading the report at the precise time it was handed to me.


Mr. Beatty:: This is a sad admission.


Robert Phillip Kaplan: I felt I would be doing my job if I devoted myself to preparing for matters which would be arising today, tomorrow and Wednesday, and doing the things necessary to prepare for Thursday afternoon somewhat later during the week. I think the hon. member who just made an observation would know, as a former minister, that that is a very sensible way to organize the use of one's time.


Mr. Collenette:: He wasn't a minister long enough.


Robert Phillip Kaplan: I would like to indicate to the hon. member for Notre-Dame-de-Grace that I do not automatically believe everything I am told by officials. I do try to establish alternative lines of communication so that when incidents occur I do not have just an official version but that I also have other versions. This was illustrated by the way I handled the Dorchester incident. I called the correctional investigator and asked him to do his own investigation. He is an official whose position was established by Parliament. He is not accountable to the correctional service of Canada. It was intended that he conduct investigations, I called upon him to undertake one, and I had two meetings with him at which we discussed what he had found when he went there and interviewed witnesses.


Allan Frederick Lawrence: But only you see the report.


Robert Phillip Kaplan: I have tried to establish a direct relationship with the inspector general, who conducts these investigations. I do not feel he should report to the commissioner and that the commissioner should report to me. I have been a member of this House for many years, and I have seen the problems which can arise in one way or another. I am well aware of them, and I take this into account and try to have alternative means of obtaining information. 1 travel to institutions and speak to people on-site. I have spoken to warden Corbett. I spoke to him following the incident on at least two occasions.
From what I can see, I think he is a good warden. I think he is a sensitive individual who is very conscious of all the human problems as well as the security problems involved with running a prison. I look forward to continuing to work with him as the warden of Dorchester.
As I understand it, this matter of privilege is before us so that whether there is validity can be determined. I stand by the substance of what I said in the Standing Committee on Justice and Legal Affairs. Nothing in this report challenges that. No revenge torture took place. It does appear that there was rough treatment following the release of the hostages but, as the report says, that rough treatment was not considered in general, except in the case of Enman's treatment, to be excessive.
At an early opportunity, perhaps in the Standing Committee on Justice and Legal Affairs, I will indicate the ways in which the recommendations made by the coroner's inquest, in this report and in the first report, are being implemented.


Madam Speaker:: That second question of privilege is obviously related to the first one. I shall also take it as notice and I shall render my decision on both of them on the same day.



ROUTINE PROCEEDINGS


Henry Perrin Beatty: Madam Speaker, I have the honour to present, in both official languages, the Sixth Report of the Standing Joint Committee on Regulations and Other Statutory Instruments. This is our report on Bill C-42, the Canada Post Crown corporation bill.
[Editor's Note: For text of above report, see today's Votes and Proceedings.]

(Questions answered orally are indicated by an asterisk.)


David Michael Collenette: Madam Speaker, the following questions will be answered today: Nos. 1,013, 1,496 and 1,695.
I ask, Madam Speaker, that the remaining questions be allowed to stand.


REGULATIONS AND OTHER STATUTORY INSTRUMENTS
[Stage Direction]
December 15, 1980
Mr. Beatty: 1.	Is the government committed to the development of the Telidon system closed captioning of programming for hearing-impaired Canadians instead of encouraging the use of the system designed by the American PBS?
2.	Is the government discouraging the use of the PBS system on programming designed for Canadians who are hearing-handicapped?
3.	What is the time-frame for having the Telidon system commercially available?
4.	What is the anticipated cost to deaf Canadians for the Telidon system and how does this figure compare to the cost of equipment compatible with the PBS system?
5.	Will the Telidon system enable Canadian viewers to decode programming employing the PBS system?
6.	What specific action is the government taking to increase the amount of programming available for the deaf?
7.	What are the government's projections of the number of hours per week of programming for the deaf available over each of the next five years over Canadian broadcasting networks?
8.	Does the government intend to make the Telidon system available for deaf Canadians through broadcasting, cable or a combination of the two and what is the timetable for making facilities available if they will not be introduced simultaneously?
9.	What discussions, if any, have been held with Canadian broadcasters on the question of captioning or interpreting programming for the deaf and what steps have been taken by the broadcasters to increase such programming?


Mr. Peter Stollery (Parliamentary Secretary to Secretary of State and Minister of Communications):: In so far as the
Department of Communications is concerned, the answer to the above question is as follows: 1. In the long term the government is committed to the development of a Telidon-based closed captioning delivery system of providing television programming for the hearing-impaired for at least four reasons:
(a)	It is felt that the potential value of Telidon to the hearing-impaired is far superior to that of the PBS system, although the latter is already operational while the former is yet to be;
(b)	A full-service Telidon system would provide the deaf with a whole range of interactive services in addition to closed captioning, without their having to purchase a separate device which would serve only to provide captioned television;
(c)	For the sake of fully exploiting a vast international market for Telidon, it would be preferable to have one system which would provide captioning "plus" rather than two separate and therefore competing ones, which would result only in unnecessary market fragmentation to both;
(d)	Telidon technology makes more efficient use than the PBS system of the electromagnetic spectrum, which is a scarce resource, thereby freeing more spectrum to be used for other, non-related purposes.
It is, however, equally important to state, and to emphasize, that the department is actively pursuing with the Canadian Co-ordinating Council on Deafness, the National Film Board,
Order Paper Questions
the CBC and others, the development of an interim Telidon-based system for captioning. Indeed, draft specifications for such a decoder now exist and were presented at the Canadian Videotex Consultative Committee (CVCC) this spring. A special subcommittee of the CVCC which was given the mandate to examine the issue of television and the deaf recommended on September 27, 1980, that the Department of Communications establish price and availability for a Telidon decoder of minimal capability with an optional capability for decoding captions from the National Captioning Institute in the U.S.A. The Department of Communications is currently going out to industry to obtain this information.
2.	No, the government is not actively discouraging the use of the PBS system. In fact, I am in agreement with the subcommittee on captioning's recommendation to the CVCC that no action be taken that may inhibit the orderly introduction and use of the system such as implementing regulatory, tariff, trade or broadcast barriers, at least until an equivalent Canadian system becomes available. However, the Telidon system is projected to be available in a similar time-frame, and the government wishes the hearing-impaired community in Canada to be fully aware of this goal to enable them to decide for themselves which device they will purchase. From recent information obtained from the manufacturer of the PBS decoder, the marketing of the decoder may be delayed because of the unavailability of "chips" from the manufacturer of the integrated circuits which has a two-year exclusive right to produce them. Also, the Canadian version of the PBS decoder requires an additional "chip" to display the French symbols. This chip has not yet been designed and, therefore, a Canadian version of the PBS decoder may be further delayed. This means that for the deaf to await the arrival of a Telidon terminal next year, should not result in any disadvantage. Moreover, captioned versions of U.S. programs are now being provided in some localities by cable companies allowing subscribers to use only a normal cable converter in the home. There is, therefore, already a low-cost alternative to the PBS decoder in these regions.
3.	A "mini" Telidon terminal (comparable to and optionally compatible with the American decoders now available in the U.S.-but not capable of providing the full range of potential Telidon services) should be available on the Canadian market by next year.
4.	It is expected that the Telidon terminal will be comparable in cost to the American devices-that is, approximately $350. Ability to decode off-air captioned programming from the U.S. would represent an additional production cost. Exact costs will be volume-sensitive, and the market demand has not been quantified at this time.
5.	Yes, but at an optional cost where direct reception over the air is involved.
6.	The government has no direct control over the programming provided by broadcasters. However, the government has long been urging and will continue to urge the broadcasters, in general, and the CBC, in particular, to provide for the needs of the hearing-impaired. Ultimately, the amount of programming

December 15, 1980
Order Paper Questions
available to the deaf is a matter of economics, as it is currently estimated (in the U.S.) to cost $2,000 to produce a single hour , of captioned television programming. The NFB, the CBC and NH&W are currently putting together a proposal for the Government's consideration to develop a Canadian caption centre from which the CBC and other broadcasters in this country may have captions added to their Canadian programs. In addition to captioned material for the deaf, specially made programs for and by the deaf are currently offered by various cable systems in the country, of which the government wholeheartedly approves and which it urges the cable industry to increase wherever possible.
7.	The CBC is proposing to make substantial amounts of French and English captioned television network programming available once a Canadian caption centre has been established, in addition to the interpretation (or "sign" language) provided on such broadcasts as the Flouse of Commons coverage. Beyond that, it is not presently possible to project over the next five years specific amounts of programming that may be offered by private broadcasters. At separate licence renewal hearings last year of both the CBC and CTV networks, before which the deaf intervened, the CRTC urged the broadcasters to provide captioning at the earliest opportunity, but the CRTC recognized the economics involved.


Mr. MacKay: 1.	Did the government contribute to the Foreign Claims Fund or its operations and, if so, in what amount and on what dates?
2.	Did any foreign governments contribute to the Foreign Claims Fund or its operations and, if so (a) which governments and what was the amount and the date of receipt of such contributions in each case (b) have funds been sought from other governments and, if so, which ones?
3.	(a) On what dates did disbursements to claimants begin in regard to the above governments and on what dates were they completed (b) what was the total disbursements to claimants, by government (c) what were the costs of administering the fund in regard to staff, accommodation, travel and the like?
4.	At the end of each fiscal year since 1975, what was the balance on hand?
5.	Are payments currently being made in respect to claims against the fund in regard to Algeria and Czechoslovakia?
6.	Are negotiations currently under way or planned, with reference to the Foreign Claims Commission, in regard to Cuba, Yugoslavia, the German Democratic Republic and the Soviet Union?


David Michael Collenette: I am informed by the Departments of External Affairs and Finance as follows: 1. The Government of Canada has made the following contributions to the Foreign Claims Fund in respect of expenses of the Foreign Claims Commission:
8.	The Telidon system will be available both off-air and via cable simultaneously. In the meantime, some cable companies, on their own initiative, have begun to provide American captioned programming which is now being delivered by three U.S. networks off-air in an "open" format (i.e., only the cable head end need be equipped with a decoder; the viewer does not require one at home) in border areas on converter channels.
9.	Many discussions at various levels have taken place involving officials of this department, the CBC, NH&W, NFB and the cable industry, as well as with organizations of/for the hearing-impaired over the last two or three years. The response to these discussions to date has been limited by three factors:
(a)	the simple fact that until only a few short months ago the technology was not in place, even in the United States, after some nine years of discussion there;
S 1,000	May 1967
30,000	January 1971
40,000	March 1972
20,000	March 1974
36,000	March 1975
31,000	March 1976
47,000	March 1977
55,000	January 1978
36,000	December 1979
39,000	March 1980
5335,000	
2.	(a) The following amounts have been received by the Foreign Claims Fund in accordance with agreements concluded between Canada and five foreign governments:
Government	Amount	Date
(b)	the high cost of producing captioned programming; and
(c)	the fact that the government has no authority to compel the broadcasters to provide such programming.
Bulgaria
Hungary
Romania
Poland
Czechoslovakia
$	40,000
1,100,000*
1.400.000
1.225.000
3.250.000
August 1966
August 1970-August 1974 July 1972-October 1974 June 1972-June 1978 November 1973-November 1979
Nevertheless, positive progress is being made, and I am expecting to receive from officials at the NFB, in the near future, a proposal which they are currently collaborating on with the Department of National Health and Welfare. A final note is that an information paper prepared within my department on "Television and the Hearing-Impaired" has been released in the last few months, and is available on request to the public. This document is intended to provide basic information on this matter to all interested parties.
* In addition amounts totalling $239,912.27 were transferred to the fund under the Treaty of Peace with Hungary in respect of Hungarian assets formerly vested in the custodian.
(b)	Funds have not been sought from other governments as voluntary contributions to the fund, however, it is expected that funds received in future from other governments as a result of agreements in respect of claims will be deposited in the fund.
December 15. 1980

3.	(a) and (b)
Payments to Claimants up to September 30, 1980
Amount
$	41,296.95
1,500,540.88 1,523,237.26 1,161,984.30 980,177.39
Country
Bulgaria
Hungary
Roumania
Poland
Czechoslovakia
First
June 1967 May 1972 January 1973 July 1973 October 1974
Last
August 1968 July 1978 October 1977 In progress In progress
Payments are complete in the case of Bulgaria but in the cases of Hungary and Roumania small amounts remain to be paid pending advice from the claimants. The interest earned by the fund made it possible to pay claimants more than the amounts received from those governments as shown in answer 2 (a).
Fiscal Transfers to Provinces
Province	1975/76	1976/77	1977/78	1978/79	1979/80British Columbia	937,909	2,434,875	1,404,857	1,282,930	1,371,181Alberta	279,192	524,204	991,497	631,253	696,627Saskatchewan	851,495	546,543	339,473	449,707	419,172Manitoba	588,223	720,365	544,053	698,616	582,951Ontario	1,121,811	938,585	1,910,630	1,504,528	1,109,320Quebec	783,238	1,124,322	732,014	2,281,500	1,289,220New Brunswick	672,889	601,759	272,144	961,400	608,150Nova Scotia	225,819	459,010	944,460	914,759	1,150,870Prince Edward Island	160,098	108,300	183,164	111,836	81,200Newfoundland	176,494	436,329	406,615	251,083	195,300


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.
(c)	Costs of adjudication and administration paid from the fund have amounted to $684,274.62 up to March 31, 1980.



GOVERNMENT ORDERS

[Stage Direction]
4.	Fiscal Year End Balances of the Fund
Date
March 31, 1975 March 31, 1976 March 31, 1977 March 31, 1978 March 31, 1979 March 31, 1980
Balance

[Stage Direction]
5.	Payments are currently being made in respect of claims against Czechoslovakia but not in respect of Algeria.
6.	Negotiations with Cuba in respect of Canadian claims have been completed and it is expected an agreement will be signed shortly. The government of Yugoslavia has agreed to investigate Canadian claims and it is expected negotiations will commence when those investigations are completed. Initial discussions have been held with the German Democratic Republic and the latter has agreed to investigate Canadian claims referred to it. There have been no negotiations held with the Soviet Union nor are any planned in the immediate future.

Mr. Herbert: For each of the past five years, by province, what amount was given by the National Museums of Canada to museums other than those in the national capital region?


Peter A. Stollery: I am informed by the National Museums of Canada that the reply to the above question is as follows:


Pierre Bussières: that Bill C-24, to amend laws relating to fiscal transfers to the provinces, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
He said: Madam Speaker, the bill whose second reading we are now broaching is designed to amend laws relating to fiscal transfers to the provinces. The bill now before the House will implement changes to the structure of fiscal agreements between the federal and provincial governments. Under those arrangements, the federal government will transfer over $12 billion to the provinces in 1980-81. That amount reaches almost $17 billion if we also take into account those payments related to the transfer of taxes under the Established Programs Financing Act. The financial effects of the changes provided under this bill are important in absolute terms and are an integral part of our efforts to limit government expenditures. However, they are of little importance compared with the total amount of transfers paid to the provinces by the federal government.
I should like to add that Bill C-24 is identical to Bill C-26 that was introduced on December 11, 1978. Moreover, the minister of finance of the previous government stated on November 6, 1979, before the Standing Committee on Finance, Trade and Economic Affairs that he intended to implement the provisions of Bill C-26. Bill C-24 therefore implements what has been federal policy for over two years.

December 15, 1980
Fiscal Transfers to Provinces
This bill is important in at least two regards. First, it proves that the federal government must adapt to evolving circumstances. Fiscal arrangements are not static and must be revised from time to time to take into account new facts of life. Second, the provisions of this bill reflect the will to reduce expenditures and the federal deficit.
We know that all administration levels share that purpose.
Bill C-24 provides amendments to two statutory programs. The first relates to the equalization payments authorized under the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, 1977. The second aspect of the bill has to do with the payments made under the Public Utilities Income Tax Transfer Act. I will deal briefly and specifically with both questions.
Flon. members recall that the equalization program is meant to authorize the transfer of sufficient revenues to the have-not provinces to enable them to provide satisfactory public services without levying higher than average taxes. I would like to point out that the equalization program ultimately rests on the capacity of the provinces to provide those services. And the program performs that role by estimating the revenues which each province would draw through the levy of average tax rates on its basis of assessment and by adjusting upward such potential revenues in the case of provinces below that average.
Thus we make sure that those provinces have sufficient financial resources to finance the main public services. Equalization is one of the most important programs of the federal government and I want to assure the House that we remain firmly committed in that respect. The very substantial payments which continue to be made under the program indicate quite well the federal commitment in that area. Indeed, the payments will be over $3.3 billion in 1980-81 even if the bill is passed by the House. Newfoundland and Prince Edward Island will each receive more than $600 per capita in 1980-81, New Brunswick and Nova Scotia over $500 per capita, Quebec and Manitoba each more than $250 per capita.
The equalization formula encompasses nearly all the revenue sources of the provinces, including those drawn by the provincial government from their oil and gas resources. These revenues from oil and gas resources have increased sharply in the past five years. In particular there has been a spectacular rise in the revenues of the provinces from the sale of exploration and oil and gas development rights. These revenues have gone from $253 million in 1976-77 to $932 million in 1977-78 yet they remain very unstable and varying.
It is obvious that the costs borne by the provinces to provide services have not risen at the same pace as the revenues drawn by the rich provinces from their natural resources. Furthermore revenues coming from the sale of rights differ from the ordinary revenues of the provinces given the fact that they come from the sale of assets. For these reasons it is considered that these revenues should not be included in the equalization formula.
The present bill provides also for the gradual suppression over a period of two years of the revenues from the turning over of Crown concessions on oil and gas fields for the purpose of equalization. Even if we take into account this change, the equalization payments to the provinces will increase by $311 million in 1979-80 and by $130 million in 1980-81. Each of the seven provinces receiving equalization payments will share in these increases. Saskatchewan's shares will go down in 1980-81 by comparison with the previous year, but this decrease will not be due to the provisions of the bill before the House, Bill C-24.
The bill also includes another change in the equalization formula. This change is based on the principle that the provinces in which per capita personal income is regularly higher than the national average should not be eligible for equalization payments. The reason for this change is that such a province can provide for its residents the services which they normally expect. Obviously, it would be inappropriate to make equalization payments to an economically strong province, such as Ontario, simply because Alberta revenues from oil and natural gas are increasing. This is what would happen under the present formula. This would seriously threaten the basic purpose of the equalization program and the capacity of the federal government to Finance it. The situation of Ontario within the equalization program will be given priority during the next renegotiation of financial arrangements for the period from 1982 to 1986.
We must also ensure that a province where the per capita income is only temporarily higher than the national average will not be excluded from the equalization formula. This provision would therefore only apply during a year where per capita personal income in the province is higher than the national average that year and the two previous years. We would therefore take into account a period of three consecutive years where the average in the province would be higher than the national average.
If I may, I would now like to speak about the Public Utilities Income Tax Transfer Act. Hon. members may recall that the government announced on September 8, 1978, in the context of the expenditure restriction program, its intention to eliminate the payments made under this act, which allowed the federal government to transfer to eight provinces and both territories 95 per cent of the federal income tax paid by public utilities of the private sector for the production and distribution of electricity and natural gas.
In determining the restrictions concerning tax transfers, the government judged that all provinces, and not only those who receive equalization payments, should play some part in the cutback of federal expenditures. The public utilities income tax transfer program met this objective since it included not only five of the seven have-not provinces, but also Alberta and
December 15, 1980

British Columbia. Originally, this program aimed at eliminating any attempt by the provinces to nationalize for taxation reasons the public utility companies of the private sector. This was the purpose of reimbursing the income tax paid by these utilities. The federal government had also expressed at the time the hope that these reimbursements would be passed on to consumers as rate reductions. In fact, while this program was being implemented, a large number of private companies were nationalized. The only provinces where there are still some private hydro companies left are Alberta, Newfoundland and Prince Edward Island. Furthermore, it is only in Alberta that federal payments were in fact passed on directly to consumers.
When the program was created in 1947, the rate of payments was set at 50 per cent. That reached 95 per cent in 1966 when the Churchill Falls project was launched. However, despite this increase in the transfer rate, which allowed Newfoundland to receive all the income that would have accrued from the federal income tax, the province eventually nationalized these facilities.
After the government announced its intention, on September 8, 1978, of eliminating completely this transfer payment, that is of decreasing it from 95 per cent to zero, representations were made by the provinces concerned as well as by certain public utilities and some consumers. The federal government therefore decided to reconsider its proposal. This bill effects a compromise by reducing transfer payments, as of taxation year 1979 for corporations, from the present rate of 95 per cent to an initial rate of 50 per cent. So instead of dropping from 95 per cent to zero, the rate will go down to 50 per cent.
Mr. Speaker, that summarizes what I wanted to say on the main provisions of this bill. Essentially, it would bring needed changes to the present equalization formula so that it is not unduly affected by the rapid increase in oil and gas prices, and it would also effect a compromise with respect to the Public Utilities Income Tax Transfer Act. Even though these changes are proposed with a view to cutting back expenses, which is an objective all members of this House support, there are no doubt some members who believe that this reduction in transfer payments to the provinces is unjustified. But considering the level and the rate of increase of these transfers, it is absolutely impossible to slow down the rate of increase in federal expenditures without decreasing slightly the rate of increase of these payments. And it is with those goals in mind that 1 ask hon. members to approve this bill on second reading.


David Kilgour: Mr. Speaker, would the minister allow me to put a question to him about his comments?


The Acting Speaker (Mr. Ethier):: Would the hon. minister accept a question?


Pierre Bussières: Yes, Mr. Speaker.
Fiscal Transfers to Provinces


The Acting Speaker (Mr. Ethier):: Very well then, the hon. member for Edmonton-Strathcona (Mr. Kilgour) has the floor.


David Kilgour: Mr. Speaker, if I may, 1 shall ask two questions. First, does the minister approve of the nationalization of electric power companies in Alberta and, second, how much, as of now, is the federal government going to pay the Ontario government?


Pierre Bussières: Mr. Speaker, about the first question, it is a matter of opinion and if I were a member of the legislature in a province where there are private electric power companies, I could say what I thought about it. However, I do not see what purpose it would serve for me to say what I think about a purely theoretical matter that does not concern the federal jurisdiction at all. As to exact amounts, I must say I did not commit them to memory, but I can assure the hon. member that in committee 1 shall give him readily and in detail the exact amounts involved. I am sorry I do not have them here now.


Mr. Don Blenkarn (Mississauga South):: Mr. Speaker, this is an omnibus bill which deals with equalization and also the Public Utilities Income Tax Transfer Act. With respect to the equalization problem, this party recognizes the government's concern. Indeed, if this bill were not passed the government's deficit would increase by at least a billion dollars, and probably by the end of 1982 by about $2 billion in total, so that equalization would be payable to the province of Ontario. In effect this bill will remove the right of equalization from the province of Ontario. The province of Ontario, for a number of reasons which I will mention later, is perhaps prepared at this time to go along with the bill.
The second part of the bill deals with the Public Utilities Income Tax Transfer Act. This bill particularly affects a part of our country in which there has been some concern about how the federal government is operating with regard to what might be called crushing individual rights of people, and that is the province of Alberta.
My party has suggested to the minister that if he will withdraw section 3 of the bill, we will make sure that the bill passes all three stages today. But if this section is to remain in the bill, we are concerned that the terms of the bill will be used by those who might advocate the break-up of our country, as another grievance. The amount of money involved is not that much. Our estimate is that at the very most we are talking about some $30 million spread over two years. That is an insignificant amount of money in terms of the government's budget.


John Horton McDermid: They can spend that in ten minutes.


Donald Alex Blenkarn: Indeed, as my friend has said, the government could spend that money in ten minutes. I am not sure

December 15, 1980
Fiscal Transfers to Provinces
that I could spend it that rapidly, but we are fast approaching that level of expenditure. If the government would indicate that it will withdraw clause 3 of this bill-and we appreciate the fiscal problems of the goverment-then we are prepared to let clause 1 and clause 2 of the bill pass. We suggest that the government, in light of the political climate of today, should not concern itself with the minor amount of money involved in clause 3 and that it immediately indicate that it will withdraw this clause from the bill.
Perhaps the government may wish to introduce that clause later, and perhaps it may be a question of discussion in dominion-provincial fiscal matters as they transpire, but it is a matter which will be used by people who are at this point- perhaps rightly, perhaps wrongly,-inflamed over the actions of this government in connection with the budget, the constitution-


John Horton McDermid: Energy.


Donald Alex Blenkarn: -and, as my friend has indicated, energy. It may be used by these people as another grievance which might well tear apart the fabric of the country. We are not asking for very much. The minister may wish to reflect on what I have said.
This party has always believed in equalization of provincial revenues. It is a fundamental precept of my party. Indeed, this party, under the hon. member for Yellowhead (Mr. Clark), when he took over the leadership of the party, convened a conference at Kingston at which all Conservative premiers of the day met and fully endorsed equalization. Included among those premiers was the premier of Alberta, who has clearly stood behind the principle of equalization. If it were not for the confrontational techniques of this government, there would not be near the problems which we face today with respect to energy taxation. There would be agreement.
The Progressive Conservative Party, both provincially and federally, is fully behind the principle of equalization. We have a number of concerns about the question of equalization, but I think the principle of equalization was well spelled out by the Hon. Mitchell Sharp in 1966, when as minister of finance he said equalization represents:
-one of the dividends of Canadian unity, designed as they are to enable all Canadians to enjoy an adequate level of provincial public services. Where circumstances-whether natural or man-made-have channelled a larger than average share of the nation's wealth into certain sections of the country, there should be a redistribution of that wealth so that all provinces are able to provide to their citizens a reasonably comparable level of basic services, without resorting to unduly burdensome levels of taxation.
There are several methods by which equalization could be obtained. Perhaps the easiest method is spelled out in the bill, that equalization should be on the basis of the gross provincial product divided by the number of people in the province. If a province has a better ratio than the average, that province should be deemed a have-province, and if the province has a worse relationship than the average, then that province would be deemed a have-not province. Equalization would be on the basis of equalizing the gross provincial domestic product available for provincial taxation.
Unfortunately our system of equalization is not the one which I have just mentioned. Our system has been described as a representative tax system in which some 29 items of provincial taxation are equalized. This group of 29 includes such diverse items as personal income tax available to the provinces, business tax revenues, tobacco taxes, gasoline taxes, revenues from the sale of beer as opposed to liquor, and so on. There are 29 separate items. Under the current system we try to equalize, for example in the case of personal income tax, by taking all the revenue of the province from personal income tax and multiplying it by the population of the province or the per cent of population.
For example, the province of Newfoundland has 2.43 per cent of the population of Canada. All provinces receive $10.7 billion in revenue. Therefore, they multiply that dollar figure by 2.43 per cent. The average revenue of the province of Newfoundland would be less than the figure arrived at, therefore there would be a claim for equalization, based on equalizing that particular source of revenue. Each province is equalized on these 29 items of revenue. A plus figure or a minus figure is arrived at and the total at the bottom of the pile is determined by adding the pluses and subtracting the minuses.
For example, with regard to personal income taxes Newfoundland would be entitled to $129,000, but since it has certain mineral revenues, water power rentals and so on, these revenues are all taken off as equalization and you add and subtract until you get $343.8 million, which was the figure for the 1979-80 fiscal year. This applies to every province. I might point out that in the case of Ontario, if that formula were used in fiscal year 1979-80, Ontario would be receiving $255 million. The effect of this bill is to prevent Ontario from receiving $255 million to which it would otherwise be entitled if the system was as it is written in the act. The effect of this bill is that it takes that money away from the province of Ontario.
The problem which has developed was set out to some extent by the minister, but I would like to set it out again for the benefit of the House. There are only three provinces in this country which have any significant oil and gas revenue at the present time, and those provinces represent a relatively small portion of the population of Canada. Indeed, the population of Alberta has only 8 per cent of the population of Canada. The problem is that when you add oil and gas revenues into the pot, you wind up with a levering effect.
I want to explain to the House what in fact has happened. Because the province of Alberta has such a relatively small population and such a relatively large revenue from oil and gas, the province of Alberta's revenue is equalized into the totality of what is to be equalized. The effect is that as you increase the revenue from oil and gas and oil, the system would remain the same. A dollar increase in revenue in oil and gas generated in western Canada increases the federal government's responsibility to equalization by 78 cents. That is the kind of relationship you get, whereas if you had an increase in revenue in another source, say, personal income tax in a
December 15, 1980

province, that increase of one dollar would only increase the obligation for equalization by seven cents. In other words, there is a levering up because of the relatively small population of the province of Alberta, and that levering up affects the whole equalization process.
The problem, of course, is that the federal government's revenue does not come, or has not come until this stage, from natural resources. The provinces' and the federal government's revenue has come from the traditional sources of personal income tax, corporate tax, customs duties, sales tax, and the like. In fact, the province of Ontario contributes 43 per cent of the tax revenue that the federal government has. That 43 per cent winds up being revenue used to equalize. As the revenue in western Canada available to provincial parties increases, the demand on the federal treasury increases and, consequently, the demands that are placed on the province of Ontario.
Indeed, sir, if you analyse the tax base you find that of federal revenues, 29 per cent comes from western Canada, that is, the four western provinces; 28 per cent of federal revenues comes from the five eastern provinces, including the province of Quebec; and 43 per cent comes from Ontario. The huge increases in provincial revenues in the west do not cost the west, in terms of equalization, anything like they have cost Ontario.
The result is that the province of Ontario, probably not being as altruistic as one would think, is saying, "Look it, don't give us equalization, because if you do-if this bill does not go through-the real burden on the people of Ontario will be even greater." And so, whereas the province of Ontario, as I said at the beginning of my remarks, might well be entitled over the total period of this bill, and to March 31, 1982, as a result of an increase in oil and gas prices, to as much as $2 billion, it is prepared to forgo that. I think that is a very important thing, that the people of Canada should know that the province of Ontario is prepared to forgo revenue that it would get in equalization. The point of the matter, of course, is that the system is wrong, as the minister says, and this is just a patch-up bill.
What we would really be happy to see is a new bill, because there is a solution. A solution would be to change what you equalize. There is absolutely no reason why we should follow the existing equalization pattern. There is no reason why we are not equalizing on the basis of gross domestic product. There is also no reason why the federal government should attempt to equalize oil and gas revenue when the federal government has no access, or up until now has no access, indeed, constitutionally, has no access, to oil and gas revenues. The federal government has no right to royalties on Crown-owned land. The federal government has no right to rents on Crown-owned land. That is constitutionally not proper. There is no reason then why the federal government should attempt to equalize that type of revenue; it should be equalized separately. It should be equalized by an agreement between the provinces setting up a separate provincial fund to equalize, in some fashion, the fact that some provinces have massive natural resources, and that they do not need to pass that
Fiscal Transfers to Provinces
equalization money through the federal government. Indeed, the federal government has no right, sir, to say, "Because we have to have equalization we have the constitutional right to seize resources, seize revenues that are really provincial, because we are going to spread some of them out to the provinces."


Some hon. Members:: Hear, hear!


Donald Alex Blenkarn: One of the reasons why people are opposed to the entrenchment of equalization in the constitution is that they view that entrenchment of equalization in the constitution as perhaps a method by which the federal government could seize what is really provincial resource assets, resource revenue, and use that seizure as an excuse for equalization, or use equalization as an excuse for seizure.
What we have to do is go along with the suggestion, without confrontation, but in a sense of compromise, to have the provinces between themselves equalized with their own revenue-the excessive revenue that accrues to some provinces by virtue of their ownership of resources-and have the federal government only equalize that which the federal government receives to equalize.
An. hon. Member: Hear, hear!


Donald Alex Blenkarn: Sir, we have a problem in the country. Our problem is that one of our provinces is almost a Kuwait. The revenues in the province of Alberta have been such as to almost knock the spots off Canada. Alberta has provincial and local government services that are among the best in Canada. It has no sales tax, no gasoline tax, no residential property tax for school purposes, and by far the lowest individual corporate income tax rates. In its 1979 budget it retired all municipal debt. It is almost a Kuwait. It still has a billion dollars of possible surplus, and its Heritage Fund is increasing, and increasing, and increasing. It is almost a Kuwait.
One of the grave dangers to our confederation is that one part of Canada may become so exceptionally wealthy that it is able to supply services to its inhabitants far in excess of what any other part of Canada can supply, is able to have tax rates far lower, or, indeed, no taxes. Indeed, there was a proposal that Alberta abolish all corporate taxes. There is no doubt about it, that with the revenues that were not diverted to the Heritage Fund, they could abolish all taxes in the province of Alberta and rely on oil revenues. The situation is a matter which must cause great concern to a government which should be trying to keep a country together.
I refer to the Economic Council of Canada report of last year entitled "Two Cheers for the Eighties". One of the great cheer problems for the 1980s is the issue of development and taxes. At page 57 of this report we find:
The issues this development raises are political rather than economic, although the way in which they are resolved will have a bearing* on the nature of economic management in the country. The federal government is in a poor position to continue to play its major role in economic management, equalization of

December 15, 1980
Fiscal Transfers to Provinces
provincial revenues, and the conduct of major national policies. In most areas of economic policy, achieving national objectives will require extensive provincial participation, or these objectives may never be met. There is an urgent need for more co-operation. In the longer run, the fiscal structure of the federation will have to be rebalanced and better institutional arrangements will have to be developed to cope with the challenge of interdependence between the federal and provincial governments.
That is what has to be done.
What do we have from this government? We have confrontation where we should have accommodation. We have a situation where we have Pierre and Peter fighting with each other. We have a situation where we do not get down to brass tacks. We do not make arrangements where provinces could do some sharing without the necessity of the federal government being involved. I point out to you, sir, and to the minister, that every Conservative premier agreed to equalization at the Kingston conference. There is no reason why that cannot be effected. There is no reason why we could not have an equalization bill and an equalization arrangement among provinces with respect to natural resources revenue which would solve the problem this bill is skirting around.
One concern expressed by the province of Ontario is the effect of the present equalization system. In fact in many cases there is overequalization. The reason for that is you wind up using this 29-tax item. Instead of using gross provincial product relationship to population, a study in the province of Ontario shows that this year the federal government will spend $628 million more in equalization payments than it should spend if it used the gross provincial product system with relation to population. 1 ask the minister why that has not been a policy of this government.
The present system is unfair. It tends to overequalize. It tends also to create a situation where natural resource revenue must be financed and equalization paid out of other revenues. That situation cannot go on. Even though we have reduced the equalization of non-renewable resources to 50 per cent, we still wind up with that continuous problem.
One thing which bothers me about this bill is that it continues to leave the province of Saskatchewan as a have-not province even though that province can afford to set up a heritage fund. It is the only have-not province with a heritage fund. The minister says it gets only $52 million. But it seems strange that when the province of Ontario, which has no oil to speak of, no heritage fund at all, and with a billion-dollar deficit, is prepared to come to the government and say, "Yes, we will forfeit our share to equalization," yet the equalization bill does not refer to the province of Saskatchewan, and allows Saskatchewan to continue to be treated as a have-not province. This is a ridiculous situation. When the minister introduced this bill, I would have thought that that particular concern would have been brought to his attention.
In the last few minutes I have before five o'clock, I would like to speak about the Public Utilities Income Tax Transfer Act. At the beginning of my remarks I said that we are very concerned about this portion of the bill. There are several problems with it. Aside from its possible use by those opposed to our confederation, the bill tends to make it more profitable
for a provincial government to set up a Crown corporation. Provincial Crown corporations under the British North America Act, as the minister knows, are not taxable.
When the British North America Act came into being in 1867, there was no intention that provinces should set up businesses as Crown corporations. The situation we have today is that what may have been a service originally has been treated almost as a business. For instance, we have Ontario Hydro selling hot water tanks, electric stoves, air conditioners, and whatever. Consumers' Gas Company, a private utility company, is affected by this act. It pays its corporate tax. The corporate tax money goes back to the province of Ontario and it is kept in general revenues. That corporation is not entirely a public utility. It is a merchant. It sells new gas furnaces, hot water tanks and whatever else it can sell. In my riding the corporation has a display room where it merchandises all kinds of products. In other provinces there are Crown corporations which are certainly intended to be in business. For example, the potash corporation in Saskatchewan is intended to be in business and intended to make a profit. It is not a utility. It could never be described as such and it pays no tax. This bill encourages a province to take gas and hydro companies and make them public corporations under the jurisdiction of the provinces, so they will pay no income tax at all.
The minister must look at whether we can continue having Crown corporations in Canada in business and paying no corporate tax, certainly no corporate tax to the federal government. If the provincial government wants to waive corporate tax for its own entities, that is one thing-and provincial governments can do that if they have the revenue to do it-but as far as the federal government is concerned, every time one of these companies is made a Crown corporation then the federal government's share of revenue becomes less and less.
Does the minister see any advantage in messing around with the Public Utilities Income Tax Transfer Act? All it will do is encourage provincial creation of Crown corporations on which no federal income tax will be paid. The minister may say-



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Ethier):: Order. 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 Ottawa-Vanier (Mr. Gauthier)-Public Service-Inquiry whether retirees will benefit from indexation; the hon. member for Athabasca (Mr. Shields)-National Energy Program-Alsands Project- Request for assurance of completion; the hon. member for
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Winnipeg-Birds Hill (Mr. Blaikie)-Atomic Energy of Canada Limited-Disposal of nuclear waste.
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
[Stage Direction]
Motions Nos. 14 and 20 allowed to stand by unanimous consent.

OO)

Bob Rae: That, in the opinion of this House, the government should consider the advisability of providing veterans' benefits to Canadian members of the Loyalist Republican forces who fought in Spain between 1936-1939.
He said: Mr. Speaker, there are few motions which have given me greater pleasure to move and have considered in this House. Basically, what we are attempting to do is have the government and people of Canada finally recognize the contribution made to and on behalf of our country, indeed on behalf of the democratic ideal, by a group of Canadians some 1,250 strong. Without any organized payment by anybody, they decided to take it upon themselves to leave this country, from British Columbia through to Newfoundland, and fight on behalf of the forces of democracy those enemies of democracy who attempted and were eventually successful in overthrowing the democratically elected government of Spain.
As pointed out by my colleague, the hon. member for Regina West (Mr. Benjamin), we are dealing with about 200 surviving veterans of the Spanish civil war whose only mistake, if it can be described as a mistake, is that they were anti-fascists before it was fashionably popular to be so. They were the idealists, from all walks of life across Canada, different backgrounds and of different ethnic groups, who recognized something that other Canadians and people throughout the western world were slow to recognize.
They saw that the forces of fascism and nazism were fighting as one. They saw that Mussolini's Italy and Hitler's Germany looked upon Spain as the first arena in which they were going to fight the cause of anti-democracy. They were going to attempt to subvert democratic and liberal democratic institutions. The vast majority of these idealists fought in the battalion now known as the Mackenzie-Papineau battalion.
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Others fought privately and joined other battalions on behalf of the Spanish republican forces.
The first thing the government did in 1936 when these people went to Spain was to declare them illegal. They were made outlaws in their own country by the passage of the Foreign Enlistment Act. In order to get to Spain, they were forced to go hither and yon. They had very little official support from any government or diplomatic agency in Britain, France, or wherever. If they were shot or wounded, they had to rely almost entirely on their own resources and the resources of a number of Canadians who were prepared to contribute to their welfare. Basically, this was a self-help operation.
These people have been described in many ways. One of the most interesting descriptions is by Hugh Garner in his novel "Cabbagetown" which, as many members know, is a description of working class life in Toronto during the depression. At the end of the novel, the hero decides to become one of these idealists who were to fight fascism before it became fashionable. He gives a very good description, a very evocative description, of who some of these people were. In describing these people, Mr. Garner wrote:
They were a ragtag of communists, socialists, trade-unionists, social-reformers, intellectual anarchists, liberals, and the just plain angry, from twenty countries, drawn together by a strange social osmosis, yet each man's reason as individual as he was himself. The Internationals had already proved themselves in the suburbs of Madrid, in University City and Casa Del Campo, these amateurs who sometimes defeated the Spanish regular army, the Moors, the Spanish Foreign Legion, the Carlists, the Falange, the Italian Blackshirt divisions, aided by the German Condor Legion of the Luftwaffe, and the Portuguese. None of them knew it then, but they were already doomed to defeat, not by Spanish fascism, or Hitler, but by the machinators in Whitehall, the Quai d'Orsay and on Washington's Capitol Hill.
The war in Spain was a great and noble cause, a democratic and social democratic cause. It was not, as has so often been described when this matter has been raised as it has in this House on a number of occasions, a private war, with soldiers of fortune going off to fight in it. As I said before, this was the central arena where the forces of fascism decided to become involved. What in fact happened in that war was that Mussolini's Italy and Hitler's Germany-the Luftwaffe, as my friend for Regina West suggests-used that war in order to test their weapons.
Throughout all this time the governments of the west, England, France, Canada and the United States, were following appeasement and the doctrine of appeasement. The notion was that all you had to do was give Hitler a little more, and that was all he would want, it would be sufficient. One had to recognize the principle of absolute neutrality, even though that principle was being breached every day by the fascist powers.
The principle involved here is very simple and basic. The principle is that if the Government and Parliament of Canada can, through the War Veterans Allowance Act and all the legislation which applies to veterans in Canada, provide for pensions and allowances not simply for Canadians, but for members of the allied forces who are now Canadian citizens who fought in World War I, World War II and the South African war, there is no reason why, retroactively, it is not possible to designate those Canadians who fought in the

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Spanish civil war on behalf of the Spanish forces as equally entitled.
I want to anticipate for a moment the response of the government and of many people. The first statement is that they were simply soldiers of fortune and we cannot go around subsidizing people who fought in any individual war anywhere in the world, that it has to be a war officially declared by the Canadian government. Let me deal with that problem very briefly.
I do not see why, retroactively, Parliament cannot admit that perhaps the Government of Canada made a mistake when it passed the Foreign Enlistment Act. 1 do not see why Parliament cannot recognize that those people, whose only mistake was to have been unfashionable, should now be granted some recognition by virtue of the fact that the war which they were fighting in Spain was exactly the same cause which so many other Canadians fought and died for only three years after the Spanish civil war began. In fact it was the continuation of precisely the same kind of battle between the same kind of forces. The fight between Vichy France and Canadian troops, the fight between fascist Germany and Canadian troops, and the fight between fascist Italy and Canadian troops was exactly the same fight as the fight between fascist Spain and those Canadians who chose to ally themselves with the Spanish republican forces in 1936.


Some hon. Members:: Hear, hear!


Bob Rae: Indeed, the Spanish government itself has now recognized this by granting pensions to all those who fought on whatever side. If the Spanish government is capable of doing that and capable of attempting to rebuild its democratic institutions, recognizing that retroactively one can attempt to rectify mistakes one has made, I see no reason why the Canadian government should be any less generous and less forthright. We are not dealing with tens of thousands of individuals, because we are not dealing with vast amounts of money, we are dealing with a principle.
Some will say, "Well, if we do it in one case, we will have to do it in every other case." All I can say is that this is a matter for the discretion of Parliament. It is for Parliament to decide that, on balance, those Canadians who were fighting in a given theatre of war were in fact fighting for principles and ideals, the same principles and ideals for which Canadians themselves were officially engaged to fight some years later. I say it is an important act of discretion for us to be able to do this.
Let me say very briefly, Mr. Speaker, that when my colleague, the hon. member for Regina West, raised this matter most recently in Committee of the Whole, as I have been raising it and as our leader raised it last year, he put a question to the minister with respect to the treatment that is being accorded to those 200 Canadians who live throughout Canada, many of them in very difficult conditions. When he raised this question, as reported at page 2731 of Hansard of July 9 of this year, he was told by the minister:
Mr. Chairman, I planned to make some reference in this regard but I see that time is moving on. The hon. member may not know but this is under consideration by the department. I have no answer for him today other than to say that it is under consideration.
I had discussions about this matter with the minister, the Hon. Daniel MacDonald, when he was alive, and he indicated to me privately that he was considering the matter and that he realized the difficult circumstances in which many of these veterans found themselves. He realized the anomalous distinction between those veterans who fought in the Spanish civil war and went on to fight for the allies and who were receiving pensions, and those veterans who were so ill after 1939 that they were unable to continue fighting, and who are receiving no pension.
I look forward to hearing the government's response because it is a matter of principle, it is a matter which involves, I think, the exercise of collective compassion on the part of this Parliament, and also a question of retrospective political judgment, to recognize that the official wisdom of the time was the wisdom of appeasement. In Canada, the official wisdom was the wisdom of not getting involved in any foreign wars.
If you read the diary of the Prime Minister of the day you will see that when he went to visit Hitler, he was very impressed. He thought that a marvellous experiment was going on in Germany and he could not understand what all the fuss was about in Spain. There were many, many Canadians, not all of whom fought in the Spanish civil war but many of whom fought in the Second World War and worked for the government in different ways, who recognized the fact that the policy of appeasement, the official wisdom of the time, the official policy of Chamberlain, the official policy of Daladier, that policy, was bound to lead, as it inevitably did, to the Second World War because, unless Hitler was resisted in Spain, unless he had been resisted years before in Germany, unless he had been resisted in the 1920s in his country, one could see the writing on the wall in terms of the intentions of the nazi idea, the notion of total domination of Europe by a totally reactionary and inhuman philosophy.
There were many people who were wrong about Hitler, many people who were wrong about Spain, many people who unofficially decided that they would take it upon themselves to do something in which they believed, which was to fight in a war which was not popular. So they were declared effectively to be outlaws by their own government. But when you read the description of the return of the Mackenzie-Papineau battalion to Toronto in 1939, you recognize the fact that this was a popular and courageous thing to do. By that time, in 1939, the public of Canada recognized the fact that indeed these people had a great deal of courage and deserved recognition.
I want to conclude my remarks now, Mr. Speaker, because there are a number of other hon. members who want an opportunity to speak and because I want to hear from the government. I think this is a matter on which it should be possible to achieve some agreement. I want to close by quoting from George Orwell's book "Homage to Catalonia". George Orwell was even more courageous, unofficially, tha others. He decided to fight his own group on the left among whom there
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was a great deal of in-fighting in terms of which side or which way one would go in the Spanish war. He was wounded and he came back to England. I think his description of England would fit very well the description of Canada by someone who came back from Spain at that time. I will read it because 1 think it is a good description of the contrast between what Orwell found in England in 1939 when he returned and what he knew was on the horizon. He wrote:
Down here it was still the England I had known in my childhood: the railway-cuttings smothered in wild flowers, the deep meadows where the great shining horses browse and meditate, the slow-moving streams bordered by willows, the green bosoms of the elms, the larkspurs in the cottage gardens; and then the huge peaceful wilderness of outer London, the barges on the miry river, the familiar streets, the posters telling of cricket matches and Royal weddings, the men in bowler hats, the pigeons in Trafalgar Square, the red buses, the blue policemen-all sleeping the deep, deep sleep of England, from which I sometimes fear that we shall never wake till we are jerked out of it by the roar of bombs.
Those words were written before the outbreak of the Second World War. They were written by someone who, having fought in the war in Spain, having seen the awfulness of the political conflict there, recognized that there was a deep complacency within his own country and his own society, a complacency in people who could not come to grips with the fact that a war was going to be fought between those people who believed in democratic institutions and those people who believed in exactly the contrary.
Canadians, perhaps, slept an even deeper sleep than those in Europe who were much closer to the conflict. Canadians who went overseas, who fought in Spain and returned to say "appeasement will not work, this is a force that has to be fought, a force that has to be fought with guns because it cannot simply be fought with words", those who lost their lives-and there were hundreds of them-and those who were wounded-and there were hundreds of them-came back to Canada as official outlaws, but as unofficial heroes to many, many people.
Many of them went on to fight in the Second World War. Many of them were unable to fight any longer because of the seriousness of their illnesses, but all of them have one thing in common, and that is that none of them, by virtue of the fact that they fought in the Spanish Civil War in the battles of Jarama, Brunete, Quinto, Belchite, Fuentes de Ebro, Teruel, The Retreats and The Ebro, will be as well known as those Canadians who "officially" died. But dare one say that their fighting for democracy in Spain was just as important, just as worthy now, finally, of our official recognition as the fighting of those Canadians who sacrificed so much for us in the First World War, in the Second World War and in Korea, and, indeed, who continue to risk their lives in the keeping of peace throughout the world?


Mr. John Campbell (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, the hon. member has made a very eloquent speech and, I must say, for a very worth-while cause. I welcome this opportunity to speak on the motion proposed by the hon. member for Broadview-Greenwood (Mr. Veterans' Benefits
Rae). He asked that the government consider the advisability of providing veterans benefits to Canadian members of the Loyalist Republican Forces who fought in Spain between 1936 and 1939. The wording of the motion demonstrates the hon. member's understanding that there are factors to be taken into consideration and that the government must weigh carefully these factors when contemplating the validity of what is proposed.
The government has given this question every consideration, as have previous administrations.


Mr. Benjamin:: Well, do something about it.


John Campbell: Before his untimely death, the late Hon. Dan MacDonald gave very serious consideration to this cause, as did the hon. member for Victoria (Mr. McKinnon) in the previous administration, and as has the present acting minister, the Minister of National Defence (Mr. Lamontagne). These three ministers have all been asked to consider this matter.
I am certain that they all gave it serious, thoughtful consideration, and yet none of them felt they could recommend that the members of the Mackenzie-Papineau brigade become entitled to the benefits available to Canadian veterans under the veterans charter.
One can certainly congratulate those men who went to Spain and waged war on the fascists. One can applaud their bravery in the face of a better manned and better equipped enemy. As soldiers they were superb, and Canadians in general regard the performance of the Mackenzie-Papineau brigade as heroic. Certainly the Spanish people appreciate the participation of the international brigade. The new administration in that country has, I believe publicly thanked all persons who joined the international brigade. However, the indisputable fact is that they were "soldiers of conscience", freelancers against fascism, and by all logic this House cannot say that they should be treated in the same manner as men and women who fought in the uniform of Canada or, in some cases, fought for countries allied with us in war.
Let us just consider the mandate of the Department of Veterans Affairs. First, it has an obligation to commemorate the memory of those who died in the service of Canada. That is why every April Canadians gather on Vimy Ridge to pay tribute to those who lost their lives in the carnage of the First World War.
On November 11 of each year Canadians stop to remember their fallen countrymen. DVA has programs in place and is developing others to ensure that Canada does not forget the sacrifices made during the conflicts in which we participated. Veterans' associations like the Royal Canadian Legion and members of the National Council of Veterans' Associations are active in supporting the cause of veterans and active in commemorating the sacrifices made by veterans.
Just over a week ago the acting Minister of Veterans Affairs led a pilgrimage to the Far East to commemorate the memory

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of those Canadians either killed in the defence of Hong Kong or the victims of years of captivity.


Leslie Gordon Benjamin: Look at the number of years it took to do something about it.


John Campbell: These were Canadian ceremonies, our way of recognizing that our present freedom and prosperity were secured through the sacrifice of those who believed this country was worth fighting for.
The department's mandate includes the objective of perpetuating recognition of wartime sacrifice and achievements and their contribution to Canada. Let us note the words "contribution to Canada". Similarly, the department provides a wide-ranging program of benefits in recognition of wartime service. The objective is, and 1 quote:
To manage special programs for veterans and other specified persons which will compensate for death or disabilities incurred in the service of Canada.
The words "service of Canada" are the key to the benefits Canadian veterans can receive. With the best will in the world 1 cannot accept that the veterans of the Mackenzie-Papineau battalion were serving Canada in the full meaning of the department's mandate.


Leslie Gordon Benjamin: Change the mandate.


John Campbell: The hon. member for Broadview-Greenwood has detailed the reasons why these men went to fight in Spain, and from the standpoint of history these reasons seem valid and noble. However, at the time these Canadians deliberately chose to ignore the laws of their own country and to join in the conflict raging in Spain. This was an individual decision for which we are now being asked to give a collective reward. Whether the Foreign Enlistment Act was worthy legislation is certainly something which can be disputed over 40 years later, but at the time it was the law of the land. Canada chose to be neutral when Spain erupted into war.


Leslie Gordon Benjamin: It is time to admit a mistake.


John Campbell: Over 1,200 Canadians chose to ignore that neutral stance and to take sides against the nationalist forces. Nobody forced them to go. Canada was not at war, but they let their conscience be their guide. Surely such an individual conviction does not entitle them to join the ranks of those Canadians who went to war because their own nation asked them to serve. The strength of the conviction which propelled these brave individuals to fight against tyranny and oppression as it existed in Spain was not shared by the Government of Canada, nor by most other nations of the world. Although we can only see the world order from an historical perspective, 1 do not believe it would be wrong to say that the Mac-Paps were very alone in their struggle. Canada did, however, offer some measure of welcome when the survivors returned in 1939, and the Department of External Affairs did assist in the return of the battalion to Canada.
As I said earlier, our government has given the requests of the veterans of the Mackenzie-Papineau brigade every consideration. Representations were first made back in 1975. Only last May 22 members of the Mac-Paps met with Dan MacDonald and received an understanding hearing when they voiced their objectives.
Dan MacDonald was aware that the survivors of the Mackenzie-Papineau battalion had seen the horror of battle and shared a common experience with our soldiers who fought Hitler and Mussolini a few years later. During the meeting they asked that the Foreign Enlistment Act be amended. This is understandable because they were still living under the threat of prosecution. While there has never been any intention in recent years of prosecuting them, this symbolic cloud was there, and the minister appreciated this concern.
As a result, the minister of justice was able to give an assurance that the government would not undertake any prosecutions of members of the Mackenzie-Papineau battalion under the Foreign Enlistment Act. A symbolic gesture it may have been, but it was the government's way of putting on record its view that these men were not criminals and should not have to live in the shadow of the act any longer. Also at this meeting the veterans of the Spanish civil war asked for recognition under the veterans' charter. This request was not shrugged aside. It was given a long, serious study. The study reaffirmed the government's conclusion that it could not, in all conscience, give these veterans the recognition they felt they deserved. This decision was not taken out of a spirit of meanness. In financial terms, the cost to Canadian taxpayers would be insignificant. The decision was taken simply of the grounds that these men did not qualify under the provisions and the spririt of the veterans' charter.
This is not to say that their cause was unworthy or that they were not brave and stubborn soldiers. They fought in the company of a man called Norman Bethune whose concern for humanity went beyond geographical boundaries. Certainly the exploits of the International Brigade will live on in literature long after all the members of that gallant group have passed away.
History has proven them right. They were among the first to take on fascism. As has been said, some of them enlisted in the Canadian forces in 1939 and continued their struggle against Hitler and all the evil he represented. Naturally these particular men are entitled to all benefits available to any Canadian veteran. With that said, the House must deny the Canadian survivors of the Spanish civil war the benefits earned by servicemen and women who fought in the uniform of Canada.
1 should like to repeat the government's reasons. These men went to Spain in defiance of the laws of Canada at that time. They fought on behalf of their own conscience, not on behalf of the people and the Government of Canada. The fact that they are now regarded as having been on the right side at the right time is not the point. If Canadians were asked whether they now agree or disagree with the action taken by the members of the Mackenzie-Papineau battalion, I am certain that few would disagree.
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But that is not the issue. We are being asked to consider treating these men in the same way as we treat those who, in two world wars and Korea, went into combat on behalf of the Canadian nation officially at war. It cannot be said that these men contributed to Canada directly. It can be argued that they attempted to contribute to the cause of world justice, and I believe it is only fitting that they are greeted as heroes in post-Franco Spain. Perhaps any requests for veterans benefits could be directed to Spain.
Other speakers on this side will detail the practical problems which would be involved in processing applications for wartime benefits for men who did not serve in the Canadian forces. Others will point out the consequences which would accompany the precedent of Canada officially recognizing freelance soldiers. Soldiers of conscience are not exclusive to the battlefields of Spain.
The government recognizes the sincerity behind the motion of the hon. member for Broadview-Greenwood. This debate gives some of us an opportunity to say to these men that many thousands of Canadians do not regard them as criminals, but as gusty and motivated individuals.
We salute their bravery but simply cannot agree that men who fought in a war not sanctioned by Canada are entitled to the benefits reserved for people who answered their own nation's call to arms.


Donald W. Munro: Mr. Speaker, I have a few comments to make at this stage, but 1 do not propose to use the full 20 minutes allotted to me. I think there is another aspect to this problem which ought to be brought to the attention of the House; it is time that it was.
I suggest that the hon. member for Broadview-Greenwood (Mr. Rae) is stretching credibility beyond the point of no return to suggest that there is an absolute parallel between what occurred in Spain and what occurred in the 1939-45 war. There were forces contending in Spain; there is no question about that. They were the forces of fascism, on one side, represented by a fascist group in Spain, supported by fascists from Italy and the nazi forces from Germany. On the other side, however, in that particular operation were the forces of communism. There is no question about that.


Bob Rae: Rubbish!


Donald W. Munro: I was of an age to attend those meetings, and I was aware of the infiltration of communist elements in the recruiting campaigns. What was going on was a contest between fascism on the one hand and communism on the other.
But 1 should like to make the following caveat right away- this is not to condemn those who out of good conscience were not able to see the particular machinations of the communist recruiters; this is not to question their good will. I am sure many of them went there idealistically believing that the forces they were fighting were the forces of fascism, and that they were supporting the democratic principles of western democracy. They were being appealed to and asked to support interna-
Veterarts' Benefits
tional communism. Some of those members of the Mackenzie-Papineau battalion who came back-and I think it was probably the idealists-went on to fight when Canada's call came in the Second World War. Those who came back and who did not put on the Canadian uniform might well have been aware that there had been an entente or deal worked out between the Soviet Union and nazi Germany in 1939 and who, therefore, would not become involved in that particular operation. At that time there was an element which was trying to prevent Canadians from joining, putting on the Canadian uniform.


Leslie Gordon Benjamin: What does this have to do with the motion?


Donald W. Munro: It has a great deal to do with the motion. I am suggesting that those who went abroad at that time were, to a considerable extent, motivated and urged to do so by communist influences and not in the interests of democracy as 1 understand it. If there is anyone who is entitled to further recognition beyond that accorded by the Canadian government, 1 would suggest-and I have suggested this to ministers of national defence for a number of years-it should be those civilians who were posted in the Vietnam conflict to one of the international joint commissions in Saigon, Hanoi, Phnom Penh or Vientiane. The civilians who served on those commissions in Vietnam, Cambodia or Laos, have never been recognized, as those who were wearing uniforms have been. A medal was struck for that service. The military were awarded medals for their duty in that service, for the dangers they underwent at that time. I speak with the thought in mind of the father of the member who introduced this motion, as one who was entitled on more than one occasion, having served on the International Joint Commission in the Far East, and should be accorded the same privileges and the same recognition as those who were wearing uniforms were accorded.
I close on that note. I feel that if there is anybody at all who deserves some recognition it is the civilians who served in that area before all others.


Leslie Gordon Benjamin: Mr. Speaker, I wish to thank the three hon. members who have spoken previously on this motion. I want to be brief, sir, and say to you, to my colleagues and especially to the hon. member for Esquimalt-Saanich (Mr. Munro), that in what he had to say about the fascists in Spain on the one hand and what he called the communist element on the other hand, he ignores what was called the loyalist cause, made up of the monarchy and the monarchists, the trade union movement, the democratic socialists, the communists and the small business community who had some belief in democracy. The loyalists were a melange of people of all political points of view, except that of fascism and fascist totalitarianism. Those who fought on the loyalist side were often tarred with a communist brush. The fact is, they were in a united fight, men and women of all political stripes from all walks of life from Spain as well as from outside Spain. I do not want to hear any more paranoia held over from the dirty

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thirties, or any other time, with respect to that particular fight, or subsequent ones.
Mr. Speaker, it took us 25 years to finally do something about special recognition, some special act of discretion by Parliament for our Elong Kong war veterans. It took 30 or more years for a special act of discretion and recognition for other veterans who were prisoners of war in Europe and places other than Hong Kong.
In my opinion, had the rest of the western democracies listened to those who went to Spain, those of all political stripes and all occupations from Canada and many other countries, we might well have stopped Hitler, Mussolini and Tojo sooner than we finally did. They were vilified in their own countries, including ours, and certainly ignored and deserted by their country and by their government.
Mr. Speaker, my colleague, the hon. member for Broad-view-Greenwood (Mr. Rae) who moved this motion has asked for an act of discretion. When members of our caucus and members of the caucuses of the other parties met with this organization earlier this year they will recall that they were not being asked for any kind of financial benefits. All they were being asked for was recognition of some historic facts and of history itself. I suppose that without them saying it, they were asking us, as a parliament, to say that in this time-frame, from 1936-1939, our country, our government and Parliament was wrong. That is all they are saying, it was wrong, at least in their case.
This is more than an act of discretion, which is a good way of phrasing it. It is also an act of recognition, of passion and compassion. I remember when I was some 17 years of age working at the shipyards, Burrard Drydock, in North Vancouver, I got to know a veteran of the Spanish Civil War. I saw scars on his body caused from having been in a fascist prisoner of war camp. He has never asked his country for anything. He volunteered, was accepted and went through another four years of the Second World War, which many others tried to do-some were told they could not because they may have had communist sympathies or influences. Some of them tried to join and were turned down. I hope the hon. member for Esquimalt-Saanich will remember that.
This will do no more than the minimum. It is not changing or attempting to change what has gone on before. The government is only being asked to consider making whatever minimal changes are necessary to provide these remaining 200 or so people with recognition and reclassifying them as veterans. I say this should be done without mentioning the Spanish Civil War or anything relating to it, just as an act of discretion by this Parliament which would entitle those who need it-or those who ask for it, if any of them do-to the same kind of benefits, as well as recognition, as are presently provided under our veterans legislation.
I plead with the House to accept this resolution. It does not require the government to do anything other than consider it, to take into consideration the opinion of the House. One can only hope that thereafter the government will make a decision in favour of these gallant and heroic men.


Mr. Marcel Dionne (Chicoutimi):: Mr. Speaker, I must regretfully decline to support this proposal. Like all other hon. members, I cannot help but admire those who fought in the Mackenzie-Papineau battalion against the nationalists during the Spanish civil war. Some in the House of Commons have properly called them the soldiers of conscience. The expression is certainly more charitable than the opinion which some hon. members expressed during the Spanish civil war: "Here, in Canada, our own country, there are volunteers who have boarded ships to enlist in the Spanish Red Army, something over which, I must confess, I do not grieve. If only they did not come back, we would be rid of these undesirables".
As I said, this fairly inhumane point of view is symptomatic of the controversy which was raging then in Canada. In his book entitled "The Mackenzie-Papineau Battalion", Mr. Victor Hoar wrote that the Communist Party of Canada had been the main driving force behind the enlistment of Canadian volunteers, and that the members of the brigade have never been recognized internationally as fighters for democratic freedom because they had been trained by Russia.
The Canadian government at the time wanted Canada to remain neutral, as did most other countries. In 1937, it enacted legislation dealing with the enlistment in foreign lands, making it a criminal offence to enlist in the armed forces of a foreign state at war with another state on friendly terms with Canada. In July, 1937, the law was applied to the enlistment on both sides in the Spanish civil war. It is estimated that over 500 Canadians were then already fighting in Spain and that some 700 more came to join them within the next 14 months, although it was then forbidden to travel to Spain. As far as I am concerned, we are not called upon to decide whether history has proven they were right to commit this offence, but whether they should be entitled to the same consideration as the veterans of the Canadian Armed Forces. Doing so, Mr. Speaker, would be grossly unfair to our own veterans.
Canada has one of the most generous programs in the world for veterans and their families, and the Canadian people should be proud of it. But were this House to grant the veterans of the Spanish civil war the privileges recognized by the veterans' charter, we might be accused of granting preferential treatment to those who did not wear the Canadian uniform. Think, for instance, of the formalities the volunteer or the Canadian recruit had to lend himself to on signing up with the forces. First, he had to submit to a complete medical check-up; his medical background was put on file and his physical condition examined. When he was sent overseas, his medical file was kept up to date. He had to undergo regular medical check-ups. If he was wounded, he was usually treated by Canadian nurses and doctors and, upon his return to the
December 15, 1980

country, a large number of services were made available to him, to help him recover.
Wounded veterans were entitled to a disability pension. The Canadian Pension Commission could study their medical background, compare their physical condition at the time of enrolment with that after being wounded in service, and determine what pension corresponded equitably to the degree of physical disability, on the basis of military and medical documents. Any veteran who felt denied his rights in that regard could appeal any decision to the Pension Review Board. Once again, his medical and military files played a determining role in their decision.
The same checks and comparisons apply in matters relating to veterans allowances. The applicant has a file on his military services. Documented proofs are easy to obtain and can be compared with the applicant's present situation. However, how could the organizations associated with the Department of Veterans Affairs deal so exhaustively with the cases of Canadians who fought in the Spanish civil war? At the time, Canadians did not undergo medical examinations before going overseas. There were no service files such as we know them today. How could the Canadian Pension Commission determine the eligibility of an applicant in such a case?
Are we going to tax further still the resources of the commission which considers each year a great many applications by veterans by changing the normal duties of some officers and asking them to analyse in great detail claims submitted by people who do not even have the required evidence? And what about veterans allowance? We have no register. No file has been established during service. All we have is somebody who says: I went to Spain to fight Franco for two years, so I am entitled to veterans allowance.
I think that many Canadian men and women who served in the armed forces and whose claims were rejected after a thorough review of their case would have reason to feel wronged if we were to grant benefits to those who did not wear the Canadian uniform, and who, besides that, were not even subjected to the reviews and conditions applicable to the granting of benefits. This would create an impossible situation, Mr. Speaker. How could an agency determine to what extent the health of someone has deteriorated because of wartime service when there is no evidence to show how healthy this person was at the beginning of the Spanish civil war? This would create a double standard, Mr. Speaker. Such an action would enable the veterans of the Spanish civil war to bypass the regulations and formalities to which every Canadian veteran must adhere to be eligible for benefits.
I believe this would be unfair and intolerable. Moreover, Mr. Speaker, we should think for a few moments about what it would mean internationally if this House recognized officially the fight of these volunteers. Whether we wanted it or not, we
Veterans' Benefits
would be approving the actions of other people who may want to interfere in the internal affairs of other countries. Canada and most democratic countries do not interfere in the internal affairs of other countries. We do not send observers or volunteers to other countries. Mr. Speaker, the government would create an extremely dangerous precedent by recognizing officially these volunteers as Canadian soldiers. Where would we stop? How could we justify not giving benefits to all Canadians who fight in other countries for what they consider to be a just cause?
Let us examine a few recent examples. There is the case of Canadians who were living in Israel at the time of the six-day war. Let us suppose that a Canadian was wounded while fighting for Israel. Would he not be entitled to assert before the Canadian government that, in his opinion, his cause was as noble as that of the Spanish civil war for the veterans of the Mackenzie-Papineau battalion? If the situation got worse and Russia invaded Poland, would we not have every reason to believe that certain Polish Canadians would consider it their duty to go back to their country and defend it against the invader? Let us suppose that some of them were wounded or killed. If we give the green light to the Mac-Pap, how could we refuse to Polish Canadians the benefits that they would claim and which are now reserved for those who have fought for Canada?
Let us take the case of Uganda. If Canadians residing in that country had joined others in their praiseworthy efforts to overthrow Idi Amin Dada, would they not be entitled to be considered soldiers for a cause? Should Parliament or the Department of Veterans Affairs be placed in a position where they would have to decide whether an Amin is worth a Franco? No, Mr. Speaker. If this House decided to grant these rights to the veterans of the Spanish civil war, we would be opening the door to the claims of other non-recognized veterans and their dependants. We must not allow such a situation to occur. For my part, Mr. Speaker, if we gave to these men the same privileges as to Canadian veterans, it would be like stating that a Canadian injured while working on an oil drilling platform belonging to a British company in the North Sea is entitled to compensation from the Workmen's Compensation Board simply because he was born in Toronto. This is simply illogical and unfair. Canada asked its young men to fight in two world wars-


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

December 15, 1980
Fiscal Transfers to Provinces AFTER RECESS
The House resumed at 8 p.m.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Bussieres that Bill C-24, to amend laws relating to fiscal transfers to the provinces be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
The Acting Speaker (Mr. Blaker):: When the debate was interrupted at five o'clock, the hon. member for Mississauga South (Mr. Blenkarn) had the floor. In his absence I will recognize the hon. member for Broadview-Greenwood (Mr. Rae).


Bob Rae: Mr. Speaker, the principle of fiscal transfers or equalization within our federal system is one which all parties agree is of vita! importance for the continuation of our country. It has been described by most observers as the very lifeblood of the principle of co-operative federalism. There should be rough and ready equality of service and the provision of services between and among the different regions and provinces of Canada.
The principle of equalization was first recognized as the result of the Rowell-Sirois commission in pre-World War II days, but took on its modern form in 1957-58. At that time, the payments were $139 million representing less than one-half of one per cent of the gross national product of the country. In 1980-81, the latest year for which figures are available, they total some $3.3 billion, well over 1.2 per cent of the gross national product.
The hon. member for Mississauga South (Mr. Blenkarn) gave the House a very accurate, lengthy and detailed description of the basis on which the equalization formula is currently calculated. It is not based on the average income in each individual province, but in terms of looking at a number of revenue categories.
In determining the equalization formula, some 29 categories are taken into account. It is important to recognize that the equalization formula is based on the principle that the federal government should be the agency of redistribution. Under our present system, the federal government is the sole agency of redistribution. This is a feature of our current equalization to which I shall return and deal with as to whether it is appropriate now, with the resource revenues, for the federal government to be the sole distributor or whether we should look at another system.
We approach this debate with a number of very real problems in mind. The first problem or challenge is that the fiscal balance within confederation and within the country has dramatically changed since the days when the principle of equalization was first worked out. In those days, there was no question about the federal government being the critical agency in the economic management of the country. The federal government was not simply the primus inter pares of governments, but indeed it was the whole of the economic management of the country.
There are a number of ways of looking at this. One can look at the share of tax revenues collected by the federal government or at the share of public expenditure by all governments which is borne by the federal government. If one looks at it in those years, it is clear that the federal government was far and away the most important and powerful government. Indeed, the provinces were tremendously dependent upon the federal government for provision of services essential to the growth of social services, public education, higher education, research and development and all of the programs now associated with our various provincial governments.
This began to change in the sixties. Perhaps it was personified by the arrival of medicare that the role of the provincial governments was going to become increasingly important and that their share of public revenues had to increase. Other tax points had to be transferred to the provincial governments to allow them to carry out their responsibilities in the fields of medicare, social services, public education, higher education and so on.
If there was a kind of revolution in the sixties in terms of the provision of public and social services by the provinces and growth of government, both at the provincial and federal levels, there has been another fiscal revolution which has deeply affected the balance within confederation. The major factors of the seventies seem to be the economy, along with federalism, the notion of federalism, and understanding of the country. It is this new situation with which we have to come to grips. I am referring to the fact that ever since the OPEC increases of 1973-74, the fiscal power, financial power and resource base of a number of provinces has become so significant as to throw the whole pattern of equalization payments up until 1973 into question.
I am not saying this to single out one province as being peculiarly wealthy or another as being peculiarly poor. Generally speaking, the over-all economic power of the federal government has declined. This has affected the ability of the federal government to redistribute wealth within the country, which is the purpose of the equalization formula. It also affects relations between and among provinces. This problem has been recognized by many people. It has been recognized by the Leader of the Opposition (Mr. Clark) who, as I have heard him say and as I have heard him quoted as saying a number of times, expressed the view that there is a fiscal imbalance in
December 15, 1980

confederation which poses a very severe problem. As quoted in The Globe and Mail of December 3, 1980, in the first week of the last election campaign, he said:
We must face the fact that the federal government is not as able as it should be to manage the national economy, to help overcome regional disparities and to conduct major national policies.
There has grown up a serious fiscal imbalance not only among the provinces, but between the federal and provincial levels of government.
That fact has also been borne out at some length by the Economic Council of Canada in its 1979 report, which is called, appropriately enough, "Two Cheers for the Eighties". The Economic Council Report for last year-it seems almost prescient in terms of what we are facing now-points out, for example, that projections of surpluses and deficits are extremely sensitive to the projected path of the economy in assumptions about government actions. It goes on to say:
But the persistence of the federal deficit and the Alberta surplus are very clear consequences of the current fiscal structure. This situation stands in marked contrast to the one that prevailed up to 1974, when the revenue-generating powers of the federal government made possible a central distribution system to finance nation-wide policies and to supplement revenues of the provinces with a relatively low revenue base, while leaving the federal government enough room for fiscal management of the economy and programs for economic development.
The issues this development raises are political rather than economic, although the way in which they are resolved will have a bearing on the nature of economic management in the country. The federal government is in a poor position to continue to play its major role in economic management, equalization of provincial revenues, and the conduct of major national policies. In most areas of economic policy, achieving national objectives will require extensive provincial participation, or these objectives may never be met. There is an urgent need for more co-operation. In the longer run, the fiscal structure of the federation will have to be rebalanced and better institutional arrangements will have to be developed to cope with the challenge of interdependence between the federal and provincial governments.
To describe as briefly as possible the problem caused by the exponential growth in resource revenue in the three resource-rich provinces of British Columbia, Alberta and Saskatchewan, and the impact these revenues have had on the principle of equalization, let me say that the principle of equalization has been that the federal government will attempt to bring up all the provinces to a common level of service and a common level of revenue, based on the 29 factors that are taken into account in calculating the revenue base of each province. The fundamental difficulty with the resource question is that the federal government has been obliged-although it is trying to get out of it-to attempt to bring up the have-not provinces to the level of the have provinces without having access to the revenues which would make such redistribution fully possible. That is precisely the nature of the fiscal imbalance in which we find ourselves. The federal government has been expected until the present time-this is the cause of the fiscal squeeze in which it finds itself-to redistribute wealth without having full access to the revenues which are the basis upon which the equalization will take place.
The system of equalization has attempted to take this problem into account in a number of ways. It is a major problem because the growth in revenue from natural gas and oil has been exponentially higher than any other form of
Fiscal Transfers to Provinces
revenue one can think of. For example, there is no comparison between the growth in revenue which has taken place from sales tax or from income tax or corporate tax at the provincial level, and the growth in resource revenue. The system has tried to accommodate this fact by, first of all, saying, "We will take out 50 per cent of the resource revenues right off the bat. The provinces can skim that right off. We will not include that in the revenue base". The other way they have done it is to say that only one-third of all equalization can be based on that resource base. There is a one-third cap on the calculation of the over-all amount allowed to be calculated when one looks at the revenue of the provinces of Alberta, Saskatchewan, and so on. In a sense, this is the first shift away from the principle of equalization. It is a very understandable shift because it appears to accommodate two things. First of all, it allows the federal government to get around the dilemma of having to spend money it does not have.


An hon. Member:: They can do that anyway.


Bob Rae: It is an attempt to do that, although it has not been quite successful, as we have seen. The second thing it does is to allow the provinces to establish heritage funds. They are not permanent-it is important to remember this because we are talking about a depleting resource, not a resource which is renewable. The three producing provinces have established heritage funds so as to create a capital base which will allow them to diversify away from a reliance on non-renewable resources and give them an assurance that, in the long run, they will be able to deal with the long-term economic needs of the citizens of their provinces. I think those two principles are very important. If there are people in the country who begrudge Alberta the concept of a heritage fund or who begrudge Saskatchewan its heritage fund, I think they are mistaken because it is terribly important that provinces be able to develop capital funds so as to move away from dependence from a resource base that is very narrow so they can diversify their economies.
The bill before us further accommodates those principles because again it takes out in an aspect of the oil and gas revenues from the base and in this way further protects the provincial heritage funds. Moreover, it further guarantees that the federal government will not be required to spend money which it says it does not have.
When these things happen, somebody always loses. So who loses? The answer is very simple. It is not the federal government, because it is not making equalization payments-we have taken that out of the revenue calculations. And it is not the producing provinces because we have said to them, "We will not put that in the calculation, so you are okay too". The people who lose as a result of this are the have-not provinces. It is not the federal government that is losing, and I can understand the position of the federal government trying to protect itself. The problems that have been caused in the last six or seven years have a great deal to do with fiscal imbalances which are structural in nature. Some of them have to do with mismanagement and incompetence as well, but others

December 15, 1980
Fiscal Transfers to Provinces
have to do with structural causes and I am prepared to accept that.
However, it is important to remember-and very important for the producing provinces to remember-that their fight with the federal government should not be confused with another principle and another problem, that is, the question as to who wins and who loses in the resource game is not simply one between the provincial governments and the federal government; it is between provincial governments which have won the game of geological roulette and the provincial governments which have not. Where do we go from here? One of the reasons I am not happy with the proposal put forward by the hon. member for Mississauga South that we remove the section on public utilities and simply get this bill through in three days is that the federal government is about to engage itself in a process of negotiation and renewal of the equalization formula with the provincial governments. This matter has not been discussed in the Standing Committee on Finance, Trade and Economic Affairs. We have not had an opportunity, as has the Senate committee on national finance, to discuss the implications which are involved in these transfers and the implications for federalism and federal-provincial relations.
Therefore it seems to me it is important that the Senate committee on finance have an opportunity to discuss more than simply PUITTA, which is particularly important to one province. I do not gainsay the importance of that province and the consumers of that province, but 1 think it is of too great a seriousness for us simply to get this thing through when this is the only opportunity we will have in the near future to participate, to ask the minister and the department questions and to obtain information from the department as to its perspective on the problems caused by the imbalances produced by the nature of our economic system and the economics of co-operative federalism.
A number of suggestions have been made for dealing with the fact that resource revenues are growing in one part of the country. That is called the recycling problem. One of them has been that the federal government should get a greater share. I think all of us in all parties agree with that principle. It was one of the principles contained, in a slightly blurred way, in the Crosbie budget of last year. It is a principle which was contained in the Liberal budget of this year. Each budget chose to take a different route in guaranteeing that the federal share would be larger, but each recognized that the federal share had to be larger whether taken in the form of taxes on resources at the refinery level or in the form of a tax on gasoline at the pump. I think there has been a general recognition that the federal share has to be larger. I think this feeling is shared by all parties. Not everyone is prepared to carry it forward as a greater principle, but I think everyone recognizes that that has to happen.
We still come back to another problem. That takes care of the federal government, but it does not take care of Nova
Scotia necessarily. It does not take care of New Brunswick, Quebec, Manitoba or those other provinces which, as I put it before, have lost the game of geological roulette and which can foresee no real possibility of being able to win it. Suggestions have been made by a number of observers as to how to deal with the problem of the equalization of resource revenues. If we were to agree that money should be taken out of the general formula for the provision of public services, that would not be a bad thing, because it is in a sense almost a separate phenomenon and is so large that it creates a tremendous imbalance in the formula itself. To include it in the formula and simply redistribute it as "gravy" across the country would be unwise and very shortsighted, but if we simply allow it to accumulate in one or two provinces-the accumulations are going to be rather large if we adopt the types of price regimes which are being suggested, even by the Minister of Finance (Mr. MacEachen)-then I should think we would have to look at something else.
A number of other proposals have been made. I do not think there is any need to be ideological about any of them. The Premier of Saskatchewan suggested the creation of a federal-provincial energy bank as one way of dealing with revenue. The government of Alberta has suggested that it simply lend money to those provinces which want it. The government of Ontario produced a paper which was, if I may put it this way, widely drawn on by the hon. member for Mississauga South when he gave his speech. The government of Ontario in its budget of 1980 produced a very thoughtful paper on equalization and fiscal disparities. It has a number of proposals to make. Professor John Halliwell of the University of British Columbia has also made a number of proposals. Professor Courchene, a former Conservative candidate in London and, if I may say so, a distinguished conservative economist, has made suggestions as to what to do about the recycling problem. Professor Scarfe of the University of Alberta has made a number of proposals. What all these proposals have in common is a concern that a proportion of this capital which is growing in the producing provinces has to be distributed in some way. It should not be distributed to the federal government, because it can take care of itself, but it should be distributed to those provinces which do not have as much. I refer to the have-not provinces.
There has been a suggestion with respect to a negative income tax. There has been a suggestion with respect to a distribution between and among provinces which would be separate from the federal government. There have been suggestions with respect to interprovincial transfers. Some of these suggestions are very exciting. They draw on the idea, for example, of capital funds for Atlantic Canada, for Quebec or for the province of Manitoba.
There is the notion that a heritage fund is not something which should be restricted simply to the producing provinces but something to which all Canadians should have access, perhaps not solely through the federal government. There may be other ways of doing it, but all these things point to new adventures in co-operative federalism and new institutions of
December 15, 1980

economic interdependence which require imagination, not the old approach by which the federal government will come down with a heavy hand and take it all. I do not think that is the necessary answer. The answer may be to acknowledge that we have an equalization formula, and rather than see it based on revenue, I would prefer to see it based on gross per capita income and transfer it that way and then deal with the separate problem of resource revenues or, indeed, any other similar revenue which is allowed to grow in some provinces or parts of the country and not shared adequately because of the legal nature of the resource ownership concept. Our present institutions do not allow for those revenues to be shared.
1 believe the primary claim on resource revenue has to be with those provinces which have the resources. If we move away from that principle, it seems to me that we move away from the very notion that people who live and work in an area have to possess a greater sense of control over their lives and a greater sense of control over their economies. We do not want governments simply imposing their will on people who live thousands of miles away. The country does not lend itself to that kind of economic system. In my view the principle must be that of socialization and sharing but not necessarily of total centralization. The two things are not necessarily the same.
If I have a concern about this bill, putting it in the broadest terms, the concern I have about the first clause is that it simply buys a little more time for the federal government to get around an immediate fiscal problem. That is to say, unless we take certain items from the revenue base, the federal government will be forced to spend more money which it does not have, although I question this, now that the federal government has increased its share of resource revenues by such a large amount. It seems a rather ironic twist that the federal government would be getting out of it on the one hand and taking money on the other.
I still see the problem, but the federal government does this in a kind of philosophical vacuum. This is why it seems to me we ought to refer this question to the committee so that we can find some way of dealing with this problem, some way of dealing with the very significant fiscal imbalances which have grown up in our economy and which have to be dealt with in a constructive way. They must be dealt with in a manner which is not confiscatory but recognizes the principle of sharing and the fact that certain provinces have simply been lucky. It is not as though Shell Oil and Imperial Oil went out and planted a bunch of oil 50 or 60 years ago and are now reaping the benefit of what they sowed. It is a question of luck and chance as to what geological formations exist in certain parts of the country whether or not certain revenues are available in certain parts of Canada.


Leslie Gordon Benjamin: God put it there for the Social Credit.


Bob Rae: I hear the hon. member for Regina West (Mr. Benjamin). It is possible, but whether or not one believes in predestination, we believe firmly that there must be some way
Fiscal Transfers to Provinces
of dealing with the problem other than the evasion which is implicit in Bill C-24.
Essentially Bill C-24 niggles away; it is a buying of time until the renegotiation in 1981-82. But I want the committee and Parliament to have something to say about that renegotiation, because we have a right to be involved in the principles contained in the various federal proposals which will be put forward.
We must be consulted, and we must know what will happen. The disturbing element with which the hon. member for Winnipeg-Birds Hill (Mr. Blaikie) will deal at greater length is that the federal government is attempting to buy economic fiscal respectability at the expense of the have-not provinces and at the expense of the level of services in provinces right across the country. That is why they brought in the fixed programs act in 1977; that is why there has been a decline in medicare services. One can document this from experience. Specialists in the city of Toronto in a variety of fields are practising outside medicare. So, it is virtually impossible to find an obstetrician, a gynaecologist or an anaesthesist in Toronto who practises under medicare or OHIP. One cannot have a baby or an operation without paying extra, which is an offence to the principles which were supposed to have been contained in medicare.


Some hon. Members:: Hear, hear!


Bob Rae: There are two other aspects of the bill with which I should like to deal in the time remaining. Again, it is an improvisation dealing in a haphazard manner with what is going on in the country, with the realities of the economic inequalities in the country.
They say that Ontario will not get equalization payments because its average income is too high. There can be no real objection to that. There is no real objection to the fact that Ontario is not getting equalization payments, but something must be said about a scheme which is inappropriate to the nature of the country at the moment. They say the legislation before us is making minor changes, that Bill C-24 is a minor bill. It is not a minor bill. On the one hand it affects the oil revenues and, on the other hand, they say that payments will not go to the largest provinces in terms of population. These are very major changes in the concept which was first introduced.
Finally, I come to the question of the Public Utilities Income Tax Transfer Act and the fact that private utilities in provinces which still have private utilities for the production of energy now pay corporate income tax to the federal government but public utilities pay no corporate income tax. Previously the federal government agreed that 95 per cent of the revenue from the corporate tax on private utilities would be redistributed to those provinces which had such utilities and that the consumers of those provinces were supposed to benefit. The federal government wanted to eliminate the payments altogether and get out of the formula in that manner. It has finally moved to 50 per cent, which is where it was between 1947 and 1966.

December 15, 1980
Fiscal Transfers to Provinces
I should like to refer to a press release distributed by the then minister of finance, the present Minister of Justice (Mr. Chretien). Does the House remember him in those days? It is dated at Ottawa on November 24, 1978. It shows how quickly we have managed to move on the principles contained in PUITTA; we are still debating this matter two years later. It was designed to discourage the nationalization of private utilities. That was the purpose of the change, and I presume that remains the purpose of the change.
In 1978, the payments were $7 million to Newfoundland; $1.5 million to Prince Edward Island; $2 million to Quebec; $15 million to Ontario; $234,000 to Manitoba; $64,000 to Saskatchewan; $235,000 to British Columbia; $41 1,000 to the Yukon; $272,000 to the Northwest Territories; $50.5 million to the province of Alberta.


An hon. Member:: Poor Alberta!


Bob Rae: It is clear that this aspect of the change affects Alberta more than any other province. Again it is a kind of improvisation. Whenever this question has been raised in the House during question period by the hon. member for Bow River (Mr. Taylor) and others, they have expressed a real concern.
I understand their concern, because unless Alberta gets equalization payments, the rates paid by consumers will not be subsidized, will not come down, and the consumers of Alberta will be paying more as a result of the change in this legislation. We in this party understand that; there is no problem with that. But I suggest there is another issue at stake, that is, whether, at a time when the oil and gas revenues of Alberta are over five billion billion dollars on an annual basis, the federal government should be paying transfer payments at this level to the province of Alberta.


Mr. Andre:: How much?


Bob Rae: That is the nature of the debate. The second problem is: why should we be discouraging provinces from taking over control of private utilities?


Some hon. Members:: Hear, hear!


Bob Rae: The province of Newfoundland-


Frederick William Wright: It will not give cheaper rates.


Bob Rae: There is no black and white in these issues; there is no easy answer to these issues. Of course the rates which consumers pay are important, but I suggest that if the Alberta government were to nationalize utilities, it would be able to get around this problem and have lower rates.


Frederick William Wright: We have the cheapest rates now.


Bob Rae: They have the cheapest rates now partly because they are receiving equalization payments from the federal government. If they were not receiving equalization payments from the federal government, the member would say that the rates would rise, but I say that the problem would be solved
partly if we got around the hard fact that, in a sense, we are subsidizing the private ownership of what I always regarded as a public utility. Even the Tories in Ontario have always regarded it as a public utility.


Mr. Malone:: Let them do it.


Bob Rae: The hon. member for Crowfoot (Mr. Malone) said, "Let them do it". I can understand that. He will say that each province should be allowed to make its own bed in its own way; if it decides to do it privately, then it is up to the province and we should not impose patterns of living, ownership and everything else on provinces from the outside. But I simply say to the hon. member who I know will make that point, it is fine if that is the way he chooses to do it, but he should not expect the federal government, which means the taxpayers of every province, in that instance to subsidize the luxury of private ownership. That seems to be a legitimate statement.


Frederick William Wright: When has public ownership been cheaper than private ownership?


Bob Rae: If the hon. member has a few hours we could go through a number of instances where it has been repeatedly shown that for the provision of those basic services it is cheaper to do it on a public ownership co-operative basis than on the basis of production for private profit.


Mr. Blaikie:: Hydro rates in Manitoba are frozen for the next five years. Tell me the name of a private company that will do that.


Bob Rae: Mr. Speaker, this is a difficult time in our country to talk about any subject which affects federal-provincial relations in a way which does not simply say: you are from Ontario, you are from Alberta or you are from Manitoba, and that is what you think. If I have not succeeded, I am prepared to learn and listen, to take as much abuse as is due to me and that which has been given to me so far. We must be imaginative. We must try and be fair. We must look at all the sources of revenue. We have to pay regard to the problems of provinces which are less able to speak for themselves. We must look to the importance of continuing to provide as high a level as possible of public service in each province. The hard fact is that the policies of the Liberal government, as enunciated by the Minister of Finance in his budget, will lead to a decline in public and social services and a decline in funding for education. I heard the Minister of National Health and Welfare (Miss Begin) quoted the other day as saying that maybe one of the problems which would have to go would be higher education because that was a kind of luxury program-


William Alexander (Bill) Blaikie: An elitist program.


Bob Rae: She said it was an elitist program. Where does she think our technologists will come from, our skilled manpower, our artists? Where does she think the people who will contribute to all walks of Canadian life will come from? Why should
December 15, 1980

the federal government not be involved in the funding of those programs? Why should the federal government not be concerned about the level of manpower training in the 1980s, the 1990s and in the year 2000? There is no reason for calling it an elitist program. The federal government should continue, and must continue, to be concerned about the level of funding for secondary education-there is nothing elitist about that. That is fundamental to the growth of a democratic society. We will have a poorer country if we take to university bashing, health care bashing or hospital and library bashing. Failure to provide for very basic and essential services, for artistic funding, and so on, will only serve to create a poorer country. We will have a country which lacks the level of services it deserves to have.
I suggest the answer, Mr. Speaker, is to go back to certain basic principles of co-operative federalism and the basic principles of the co-operative commonwealth. We must attempt to create an economy which reflects the regional reality of our country. We need an economy which reflects the need of the provinces for an assured income, a steady income. We must have programs which they can develop in their own way to reflect the needs of their communities-programs not imposed by people from the outside. But to guarantee that kind of system we will also need a federal government which has the ability to lead and the ability to co-ordinate and redistribute. There are new ways of doing this, they do not have to be the old ways. Even the Leader of the Opposition (Mr. Clark) has recognized that we must have this. The method does not simply have to be in the form of straight taxation followed by distribution. There are various ways of doing it among the provinces.
Mr. Speaker, the reason we are so concerned about getting this issue to committee is because this is precisely the kind of debate we should be having in committee. We should be looking very seriously at the challenges, not the problems. We talk too much of problems and of the insoluble difficulties which we face. We must look at the challenges which face us because we live in a country which is diverse and rich. Yet it is a country which needs to do so much more to provide for the needs, desires and the wishes of all its people.


Some hon. Members:: Elear, hear!


Harvie Andre: Mr. Speaker, before I get into the main part of my remarks I would like to comment on some of the points raised by the hon. member for Broad-view-Greenwood (Mr. Rae).
I am sure he inadvertently stated that the Public Utilities Income Tax Transfer Act was, in effect, an equalization payment from the federal government to provinces which happen to have private utilities. He cited the figures and indicated that the amount of money involved for Alberta is $50 million, for Newfoundland $7 million and for Ontario $15 million. I am sure he would not want to mislead the House with an indication that this is some sort of subsidy for the taxpayers of Canada because the Public Utilities Income Tax
Fiscal Transfers to Provinces
Transfer Act simply rebates to the provinces corporate taxes collected from private utilities. All it does is put the consumers, if you will, the provinces which have privately-owned utilities, on the same basis as those provinces which have publicly-owned utilities.
Socialists believe that socialized public ownership is somehow superior to private ownership. 1 take no offence to them believing that. Where they find the economics to support that belief is beyond me.


Mr. Evans:: Alberta owns some companies. Public ownership is not good on one side and bad on the other.


Harvie Andre: The Parliamentary Secretary to the Minister of Finance (Mr. Evans) is interrupting with some inanities which have nothing to do with the subject at hand.


John Leslie Evans: Public versus private onwership.


Harvie Andre: In Canada the bulk of our utilities, certainly electricity, are publicly owned by the provinces. For example, there is Ontario Hydro, which we in Alberta like to think of as the Ontario heritage fund. It is about equal to the value of the fund, as a matter of fact.


Bob Rae: I do not think of it that way.


Harvie Andre: Obviously not. There is also Quebec Hydro which could also be equated to a heritage fund, if you will. It is approximately of the same magnitude.
Clearly, one of the principles of taxation should be that it is fundamentally equal and fair in its application, that is, that a person of similar circumstances in one part of Canada should not be taxed more heavily than a person of the same circumstance in another part of Canada with regard to the federal government. I am sure everybody in this House accepts that fundamental principle. If you are a farmer living in southern Alberta your power is supplied to you by Calgary Power. Calgary Power is a privately-owned, widely held Canadian-owned utility. It is not foreign owned, it is Canadian. It is an efficient and well-managed company. For example, if you lived in Irricana, Alberta, your hydro bill might have been, as this typical bill I have in my hand shows, for the month of September, 1979, $81.37, less a $15.05 income tax rebate for a net cost of $66.32. This puts you on an equal basis with a farmer in Ontario and Quebec who receives power from the provincially-owned utilities. Of course, these utilities, such as Ontario Hydro and Quebec Hydro, and the other public utilities, do not pay income taxes. So all PUITTA did in 1966 was restore into our income tax system that sense of equity and fairness which everybody, socialists included, would favour.
What is so offensive about this cancellation of the Public Utilities Income Tax Transfer Act-


An hon. Member:: Not a cancellation, a reduction.


Harvie Andre: That is right, it is not a cancellation it is a reduction. The original intent was to eliminate it altogether,
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December 15, 1980
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but as a result of pressure the government said it should be made a saw-off, 50 per cent instead of a total cancellation. It is still unfair. The principle still applies. It is unfair because if you are a consumer supplied by a privately-owned utility, through your bill you will be paying income tax to the federal government. If you are a consumer supplied by a publicly-owned utility you will not be paying that federal income tax. That is unfair. I am sure the hon. member said inadvertently that PUITTA is an incentive to private ownership and that we should not offer that incentive to private ownership.
It is not an incentive to private ownership. PUITTA puts on an equal basis publicly and privately-owned companies and is a disincentive to private ownership. It puts private and public ownership on an equal basis. Therefore, it is a misrepresentation when the hon. member for Broadview-Greenwood suggests that PUITTA unamended is somehow equalization for Alberta, which is so rich that it does not need equalization. It is not equalization to Alberta at all.


Bob Rae: That is not what I said.


Harvie Andre: I am sorry, I heard the remarks.


Bob Rae: It is a difference of opinion.


Harvie Andre: We will examine the blues. The existence of PUITTA-and I believe these are the exact words of the hon. member for Broadview-Greenwood-discourages provinces from taking over private utilities, and we should not discourage provinces from doing so. It does not do any such thing.


Bob Rae: I was reading from a government press release.


Harvie Andre: The hon. member is right, he was reading the minister's remarks which were totally wrong.
This matter first arose in December, 1978. The Minister of State for Finance (Mr. Bussieres) said it was part of a restraint expenditure program which is a twisting around of words. It is not an expenditure restraint program at all. It is a new tax. The government will be able to tax private utilities which it did not tax before because it did not want to tax only private utilities and not public utilities which it was not allowed to tax because of the constitution. Now the government will be able to tax private utilities. It is not restraint. It is new revenue; it is a tax, a tax which was contemplated simply because, fortuitously, it affects primarily the people of Alberta.
When the gurus in finance look for new ways to raise money, this is where they look.


John Leslie Evans: Oh, oh!


Harvie Andre: The hon. member should examine the consequences before he shakes his head in the negative. Let him take a look at the bill. I am sure he cannot imagine this government or any government saying, "We are going to tax Ontario or
Quebec, but not the rest of the country." Not on the hon. member's life, would the government design a tax which hits hardest at Ontario and Quebec and not the rest of the country. But since this tax will hit Alberta, it is fine. Members opposite are shaking their heads.


Leslie Gordon Benjamin: You can hear them rattling over here.


Harvie Andre: Yes, I can hear them. I wonder when somebody over there will take the time to stop and look at their policies and the things which they are doing and think for a minute and say to themselves, "Gee, are all those people who are joining separatist parties and talking about alienation out west bananas? Is there something in the air out there, or do they, perhaps, have some complaints at which we might take a look?"
This bill is nothing more than fuel for the next West-Fed meeting. This national government, which represents all of Canada, has simply found another way to tax Alberta more than the rest of the country. The government is merely giving more fuel to the West-Fed movement. When does it intend to stop and smarten up and become a national government for the whole country? It is pathetic in the extreme.
I would think that the Minister of State for Finance who has fought separatism in Quebec and who must feel strongly about this country in the sense that he would like his constituents and the people of his province to feel a part of the national whole, would have some understanding of the feelings which exist now in the west when, time after time, including again today, this government in Ottawa comes forward with a proposal designed to hit Albertans a little harder than the rest of the country. It is not the money, because the amount involved is not that large. I agree with the hon. member who just spoke in that regard.
The principle embodied here should not apply. Albertans should not have to beg for fair treatment; it should come as a part of being Canadian.


Some hon. Members:: Hear, hear!


Harvie Andre: We are getting tired of begging for fair treatment, tired of trying to explain why we feel frustrated, alienated and angry. We should not have to explain. Any national government concerned about the whole country should be aware of the situation automatically, but apparently it is not. After all, it does not need votes from Alberta when it can form a national governement without the votes of that province. So, why the hell bother being fair? What the government needs is money, so it can buy more votes where it counts, here in central Canada. That is the principle behind this bill.
We from Alberta have a minister in this government, Senator Bud Olson. On June 27, 1966, when Senator Olson was a member of this House he said with regard to PUITTA, as reported in Hansard at page 6893:
I suggest that the purpose of this bill, for which 1 commend the Minister of Finance-is simply to provide a measure of justice to those citizens of Canada in areas that are served by privately-owned utility companies, because certainly the only way in which privately-owned companies can get the money with which to pay the federal corporation tax is through the rates charged to their customers.
December 15, 1980

Where was the Senator when this bill was discussed in cabinet? Where was this minister who comes from Alberta and is presumably the member of cabinet who should represent Alberta? Where was he when he let this bill get through? Where are his principles? I guess that is something one gives up when one crosses the floor in exchange for the remuneration one receives for being a minister; he must forget about all his obligations and responsibilities and the things he might have said in the past.
We in this party cannot accept the PUITTA provision. We cannot accept such discrimination. We cannot allow the government to carry on in this way. The bill itself is very short, containing only three clauses. The first two deal with the question of equalization and the ramifications of resource revenues as affected by equalization. By and large I share many of the views expressed by the hon. member for Broad-view-Greenwood with regard to the problems which exist in arriving at a more modern way to reflect the reality of Canada today considering the changes in income patterns, and revenue patterns of individuals and provinces.
Perhaps a better way of dealing with this bill would be to refer it to the finance committee. The current equalization regime runs out at the end of the next fiscal year, March 31, 1982. Certainly at the rate we work around here, it is not too early to begin talking about what might be done in the future. It is a very worthy subject for that committee to debate and discuss over a considerable length of time. I say this in the context of the bill before us because if we were to get that subject discussed in committee, the bill would not come back until next June, July or August, so extensive is the subject.
Since we are all presumably in agreement with clauses 1 and 2 of this bill, I think I can speak on behalf of my party and say we are quite prepared to let clauses 1 and 2 pass. For that matter they could be heard in the House and passed very quickly through all three stages and receive royal assent. If there is insistence on tying all three clauses together, then I am afraid we cannot give our commitment to that kind of co-operation. We would certainly support any suggestion by the hon. member for Broadview-Greenwood to have the subject matter referred to the finance committee, since it is a subject worthy of consideration. It deserves a lot of discussion by this House and I agree with the hon. member it is a subject with which this House should be seized. It is not something to be worked out exclusively by officials in the federal and provincial governments and finalized at the time of some first ministers' meeting.
I want to outline just a few things with regard to the remarks made by the spokesman for the NDP. One pertains to his comments on the question of recycling revenues from oil and gas. Listening to him, one gets a notion that somewhere in Alberta there is a huge vault full of currency called the Heritage Fund, or a huge pot of gold. That money is being recycled today by the banking system. Alberta is in the money market. The bank is buying that money daily, weekly and
Fiscal Transfers to Provinces
monthly. It is using it within Canada in the normal way by responding to the normal economic situation in the country. People borrow from the bank, the bank borrows it from the Heritage Fund and that is how the money is in the system today. Without that Heritage Fund, I think the federal government would be having a terrible time financing its deficit.


Mr. Lang:: That is the problem.


An hon. Member:: Sit there and listen.


Harvie Andre: I heard the hon. member for Kitchener (Mr. Lang) say that is the problem.


An hon. Member:: The problem is economics.


Harvie Andre: The problem resides right here in Ottawa. The deficits were not caused by provincial governments, I can assure the hon. member of that. The deficits were caused by this government.
The question of redistribution of the capital funds needs some discussion. It is illusory to claim that somehow it is not being redistributed today. Frankly, I worry about some of the suggestions being made. The banking system has the benefit of operating according to economic principles which have served this country very well. If all of that money is to be recycled by governments, you are talking about it being recycled by bureaucrats. You are talking about decisions being made- whether through an energy bank or some other development funds-by bureaucrats deciding whether such and such is a good investment or a bad investment and so on. So we are getting into the question of philosophy again. But there is precious little evidence anywhere in the world that bureaucrats make better decisions than do people in the marketplace who borrow these funds against their own assets and are, therefore, obliged to repay them. Because of that, they are guided by constraints which, in my view, make for better decision-making.
The other slogan which the hon. member used and upon which I must comment was "geological roulette." He said accurately that Shell did not put the oil there and that it was therefore a matter of geological luck. I suggest to the hon. member that he might profitably use some of his Christmas break by taking a trip to southern Saskatchewan. One of the biggest plays in the United States today is a play called Williston Basin. At Williston, North Dakota, there is a large deposit of sedimentary rock. The sediments extend into Wyoming and well up into Saskatchewan. In North Dakota, there are wells being drilled everywhere. There are wells so close to the Saskatchewan border that a roughneck on the top of a rig with a wad of chewing tobacco in his mouth could spit into Saskatchewan. There are drilling rigs on the Canadian side. I can assure hon. members that the geology does not stop smack right on the 49th parallel.


An hon. Member:: Let the NDP deny that.


Harvie Andre: What happens at the 49th parallel is you change politics and thereby political systems. You change countries; you get into Canada, and if you happen to be in Saskatchewan,

December 15, 1980
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it actually costs money to produce oil today. For every barrel of conventional oil produced in that province today, the combination of federal and provincial taxes means it costs money. One actually has to pay 75 cents to produce a barrel of oil. The hon. member for Kitchener says it is all the province's fault. But what kind of a system is that?


Peter Joseph Lang: Mr. Speaker, 1 rise on a point of order. 1 did not comment on what the hon. member was saying. I hope he will make that clarification in his speech.


Harvie Andre: Mr. Speaker, any member who wants to speak on this bill is welcome to join us.
This question of geological roulette is not quite the whole answer. It is not exclusively a question of geology. It has much to do with questions such as royalties, taxes, price and many other things.


John Leslie Evans: Royalties, taxes and price will not put oil there.


Harvie Andre: I grant you, you are not going to be able to find oil if there is no sedimentary rock underneath. But what it involves is an awful lot more than just running outside and poking a hole in the ground.


Bob Rae: I did not say that.


Harvie Andre: I am not suggesting the hon. member said that, but the term "geological roulette" implies it. His exact words were: "It had a lot to do with luck". It is not just luck. It is what was done with the opportunity which was available to those provinces.
I have one other comment on the question of revenues and the necessity of developing new equalization schemes. It concerns the question of approaching this from an honest point of view. There is no hope of us reaching an accord in this country as long as the government and members opposite keep talking about needing a more equitable share-that it is unfair for the federal government to get only 10 per cent and the provinces 45 per cent. That figure is just a blatant lie.


Some hon. Members:: Hear, hear!


Harvie Andre: The more often that statement is repeated as the truth, the deeper the resentment, the deeper the resistance, the more alienation-call it what you like-will occur. We have to approach this thing from an honest point of view. We must be honest.


Peter Joseph Lang: When are you going to start?


Harvie Andre: The member who rose on his fallacious point of order asks us when are we going to start.
1 would advise the hon. member to read the bible-the Sunday Star. By reading George Bain's column, the hon. member will note a few of the inaccuracies in "The National Energy Program". I suggest the best way to start would be for members opposite to challenge the Minister of Finance (Mr. MacEachen) and the Minister of Energy, Mines and Resources (Mr. Lalonde) in caucus by telling them that these
facts are being denied by people out west, and with some legitimacy.


An hon. Member:: Even the Ontario papers are doing that.


Harvie Andre: Hon. members should ask whether there is some basis for that. That is the way to start. As long as hon. members keep repeating in mailings, in speeches, etc., the demonstrably false information contained in "The National Energy Program" and given to hon. members by the minister and his officials, the more difficult it will be for this country to come together and resolve some very difficult problems. I say this in all sincerity. It is necessary to demand more integrity from that minister. It is a situation which is extremely important to the long-term future of this country. It cannot be understated.
Before closing, I would like to say to the minister that we are prepared to see clauses 1 and 2 of Bill C-24, dealing with equalization, receive very rapid passage. We support the view of the NDP that the subject matter of equalization is worthy of considerable discussion and a reference to that effect should be given to the finance committee. That might be a better way of doing it than using this bill exclusively as a means of addressing ourselves to those questions.
With regard to clause 3 dealing with PUITTA on the basis of equity and reasonableness, it is absolutely fundamental that the federal tax system be fair in its application to all Canadians, no matter where they live. This proposal is patently unfair and we will resist it. Therefore, we make no commitment to rapid passage of this piece of legislation.


William Alexander (Bill) Blaikie: Mr. Speaker, 1 want to take this opportunity during the discussion of Bill C-24 having to do with federal-provincial fiscal arrangements and transfer payments to make a few remarks about how this topic bears on the subject of health care, for which I am responsible in the NDP caucus.
However, one never debates in isolation, and before the hon. member for Calgary Centre (Mr. Andre) leaves the chamber, I would like to respond to part of what he said. I begin by assuring him that as a fellow western Canadian and a member of a party which stands, to put it mildly, in critical relationship with many of the ideas he espouses from time to time, we do not think that the streets of Alberta are paved with gold or that somewhere in Alberta there is a large vault which Albertans are greedily hoarding and protecting from other Canadians in an inappropriate way. We understand, as do all Canadians, that the anxiety of Albertans about a non-renewable resource is legitimate and has to be taken very seriously.
Having stated that I know the streets in Alberta are not paved with gold, the hon. member and I part company for philosophical reasons. I have talked to many Manitobans who have gone to Alberta to take part in what is perceived to be a great surfeit of riches and have come home broke, partly because the great wealth being created in Alberta is not being
December 15, 1980

properly distributed by the Alberta government among ordinary Albertans. Many have gone to Alberta and come back because of the high cost of housing and everything else. Many ordinary Canadians are not able to afford the cost of such wealth. But that is somewhat beside the point of our debate this evening.
I want to make another point in response to what the hon. member for Calgary Centre said about a remark made by the hon. member for Broadview-Greenwood (Mr. Rae) concerning geological roulette. It cannot be denied that much of the good circumstances in which certain provinces and people find themselves has only to do with the fact that they happen, through no virtue of their own, to be in places under which very valuable resources are found. When speaking about the undeserved nature of the wealth which accrues to certain people in certain places at certain times, we must realize that none of those resources belong to any of us. They belong to the whole world. Many Canadians are guilty of acting as though the only debate that is important is whether the resources belong to the provinces or to the federal government. We forget we have another responsibility.
In the final sense, none of us are owners of the resources. We are the stewards or trustees. We ought not to act as if the only game in town is the game we play with each other to determine who will get the most benefit from these resources. We must begin to act in a way which reflects the wider knowledge and larger picture. These resources may be put to better use in the future by other people in other places. We should have the wisdom to use the resources wisely so that more alternatives might be open for the future. That is what we must keep in mind during the interminable debates in this House which more often than not leave out that kind of global perspective.
This morning I attended a meeting of the Canadian Health Coalition, a national coalition of various groups which came together because of their mutual concern about the state of Canada's medicare system in 1979. It became obvious to people across this country that federal-provincial fiscal arrangements, as they pertain to health care and had been determined in 1977, were not working in a way that was beneficial to the maintenance and improvement of the kind of health care system which Canadians regard as normal and have come to expect.
In 1977, the Established Programs Financing Act came into being. This recognized that there were certain programs such as medicare, post-secondary education and hospitalization which were regarded as established. The logic behind it was that these programs were written into the social and political fabric of Canada and did not have to be worried about any more. The provinces were to be given a certain amount of money through block funding and tax point transfers, and because these programs were thought to be beyond the pale of political debate, it was believed the money would be used appropriately.
However, it should come as no surprise that programs such as medicare, considering how young they are, turned out to be
Fiscal Transfers to Provinces
not all that established. Indeed, many of the social programs which have come into being since the war have never really become established. They might be better described as "never safe programs". As soon as economic times become tough, the inherent philosophical compromises which existed at the time in which these programs came into being re-emerge.


Mr. de Jong:: That is why they should be in the constitution.


William Alexander (Bill) Blaikie: The hon. member for Regina East (Mr. de Jong) suggests that that is why they should be in the constitution. Indeed, witnesses before the constitution committee have suggested that one of the basic conceptual inadequacies of the constitutional proposal now before us is that it elaborates no such thing as social rights; it merely delineates the limitations of the state and goes no way at all toward delineating the responsibility of the state to its people for quality of life, for health care and for any other thing that we might regard as a social right.
Nevertheless, since 1977 we have had this problem with medicare. At the time when the provinces were, in fact, given a great deal of autonomy over how they spent their health care moneys, an ideological phenomenon occurred whereby at least seven out of the ten provincial governments, Conservative governments, came to see government spending as the greatest demon with which they had to deal, and they chose health care as one of the progams where they could fight the demon of public spending. So we found that coincidentally with bloc funding, we had this neo-Conservative trend, and health care was one of the first programs to suffer.
What has happened in the course of this debate about health care, the first rumbles of which began in the early part of 1979, is that the federal government got off scot-free. I think it is time for this to end, not just for the sake of accuracy but because the federal government itself in its most recent budget has indicated its real commitment, or lack thereof, when it comes to some of the social programs, health care in particular, about which it has been so virtuous in lecturing the provinces. Let us remember that the original intention of the federal government in setting up the established programs' financing was restraint of its own. It wanted to put the lid on the amount of money which it was spending in this area, and it wanted to enable the provinces to restrain themselves in this area. The federal government did not want the provinces to feel penalized every time they saved a dollar, as they did under the former program, because every time they did not spend a dollar, that was another dollar they did not get from the federal government. So, in effect, restraint was, both federally and provincially, one of the motivations for the Established Programs' Financing.
It was a situation of which the provinces took full advantage. In effect, they took too much advantage of it and they spoiled what could have been a good system, although we in our party are not convinced it could yet be a good system. We would prefer to return to some kind of cost-sharing system, so

December 15, 1980
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that the federal government would have a positive role in health care, not just a negative one where the health minister is reduced to threatening the completed withdrawal of funds. The provinces have spoiled what could have been at least a worth-while experiment, one which has proven worthwhile in some provinces, particularly in the province of Quebec where freedom was used to develop and to expand the health care system.
Now, because the provinces took advantage of the federal government in some ways through the Established Programs' Financing, either out of resentment toward the provinces or out of a further move toward restraint, the Minister of Finance, as stated in the budget, expects that significant savings will be made by the federal government in the upcoming renewal of federal-provincial fiscal arrangements in the social development area, which of course involves medicare.
We think the federal government should be tough in its negotiations with the provinces. We do not think it should just go in there and say, "Don't worry about it, boys, we will continue to put lots of money into medicare, it does not matter what you do." We are not suggesting that the federal government be a patsy for the provincial governments. We think steps should be taken in the course of renewing these arrangements to put in place structures which would prevent the provinces from acting in the way they have recently.
We do not think, however, that the federal government should go into those renewal negotiations with the intention of saving money. Its intention should be to ensure that both the provincial governments and the federal government put in as much money on a shared basis, whatever the details might be, as is needed to maintain and to improve Canada's health care system. That should be the goal of the federal government in the upcoming negotiations with regard to the renewal of federal-provincial fiscal arrangements. To go in there with only the goal of saving money is, I think, starting off on the wrong foot. What is needed is not for the federal government to compound the stinginess of the provincial governments with regard to health care by exhibiting the same quality.
It is bad enough that the provincial governments have been pulling back on health care. What are Canadians to expect as far as health care and social services are concerned when saving money becomes the primary goal of the federal government? All Canadians agree, even people who do not otherwise agree with each other such as, for instance, the Canadian Medical Association and the NDP, that one of the fundamental problems of the medicare system is that it is drastically underfunded. Now it appears that this underfunding is to be compounded by the federal government in its intention to save money in the forthcoming negotiations.
If, indeed, the problem is underfunding, there are only two options available. One is that the money which will be needed to maintain the existing level of services, the money which will be needed in the poorer provinces to bring them up to a level of health care enjoyed by some Canadians in some provinces, the money which will be needed right across the board to fulfil the original vision of Mr. Justice Hall in his royal commission
report of 1964, the money which will be needed to instal a comprehensive health care system in this country, both preventive and curative, will either have to come from public or from private sources. Of course, the argument of the Canadian Medical Association is that this money should come from private sources in the form of extra billing, deterrent fees, ward charges, premiums, and various other ways. This is really not private money but public money coming from citizens on a selective basis, coming sometimes from the sick and sometimes from people in general. For instance, with regard to premiums, that money comes on a regressive basis. There is no notion there of the kind of fairness which we expect, at least in theory, from our tax system.
The other alternative to solving this problem of underfunding is, of course, to solve it by public means through increasing the commitment of governments, both federal and provincial, to our health care system. That means finding political will. That means closing tax loopholes. That means taking seriously the other side of the restraint question, which is the revenue question. There is another approach to restraint other than cutting back services, and that is to raise the necessary money by going out and appealing to the best in Canadians, by appealing to their notion of a fair and just society in which health care, for instance, is something about which people do not have to worry and which they can expect without regard to their economic circumstances. That is the direction in which we want to see the federal government move in this whole area of concern having to do with federal-provincial fiscal arrangements. The federal government should maintain its role as redistributor of the national wealth. However, it should maintain that role for the right reasons and see itself as the guarantor of the quality of life of all Canadians.
If the federal government enters the negotiations with that spirit and if any further amendments which come before us are put before us in that spirit, we could see our way to supporting that kind of principle.


Mr. Bill McKnight (Kindersley-Lloydminster):: Mr. Speaker, I enter the debate on Bill C-24 because coming from Saskatchewan, a province which still relies on equalization from the federal government in order to obtain revenues, I feel it is important to do so. The first two clauses of this bill do not really cause me much concern, but what does concern me is the idea of equalization. In order to equalize there must be something to begin with. If there is nothing to spread about Canada in terms of dollars, equalization really does not mean much, despite all the high sounding words spoken about it.
In the brief time allowed me I would like to talk about some of the policies of the present government and what they are doing to stifle funds in Canada. I refer not just to the western part of Canada but to all of Canada. When funds are stifled there are fewer funds to equalize. There are fewer funds to give to other Canadians to provide the joys of a better life and a higher standard of living.
December 15, 1980

My constituency is basically agricultural, but in the constituency there is a considerable amount of heavy oil and sweet oil. A considerable amount of experimentation has been going on in my constituency to enable the people in the business to extract the heavy oil from the ground. 1 do not want this to sound like a maiden speech, but in my constituency there are several small rural communities of anywhere from 350 to
3.000	people. As a matter of fact, a town with a population of
3.000	is large. If I wanted to go on like the Minister of Agriculture (Mr. Whelan) I could do the "Eve been everywhere" act and refer to Kindersley, Eston, Maidstone, Nay-mont, Marsden and Lloydminster. I could go on, but I am sure not everyone is interested in the number of towns in my constituency.
I would like to talk about something which is not manufactured in my constituency, the automobile. There have been great debates in this House about the support given to the Chrysler Corporation. There have been great debates about supporting the industry in central Canada, and I agree with that. However, I will tell the House what this government's policy has done to some of the small-and I mean small- owner-managed companies in my community which employ anywhere from five to thirty employees.
Let us talk about the energy policy and what it has done. Ackerman Chev-Olds of Kindersley had plans to expand to a daily rental service. It had plans to expand its leasing division. It was going to hire three more people, and in a small community that is an asset. The company was asked to do appraisals, before the budget was brought down, by companies in the oil industry, but now those requests have been withdrawn. The company feels that in the next months it will lose vehicle sales amounting to $300,000. Those vehicles are not manufactured in Saskatchewan.
Let us talk about Tisdale Ford in Kindersley. That company will lose 20 potential sales which it had planned for over the next three months into the oil patch. The company will have lost sales of approximately $200,000. It will lose sales of $75,000 at the gas pumps because of the reduction in the number of vehicles coming in to fill up. That is how drastic the reduction in my area is.
Let us talk about Dodsland, Saskatchewan, which is a small community of 350 to 400 people. One small company lost the sales of four units, which amounts only to $40,000. But those trucks are not made in Saskatchewan. They are made in Ontario.


An hon. Member:: It all adds up!


William Hunter (Bill) McKnight: Let's carry on. Look at Cavalier Chev-Olds in Lloydminster. One company has cancelled four units. The sale of four units at $10,000 amounts to $40,000, but Cavalier Chev-Olds has had orders for four semi-tractors cancelled, and they cost about $80,000 to $100,000. And they are not made in Saskatchewan.


An hon. Member:: What about equalization payments?
Fiscal Transfers to Provinces


William Hunter (Bill) McKnight: An hon. member opposite asks about equalization payments. I am telling hon. members opposite that the problem is that they are destroying part of their Ontario industry by the energy policies they are creating. Those policies are destroying the Ontario industry they propose to support. It is not hurting the people of Saskatchewan. We do not manufacture trucks and cars, but we would like to buy them from the good people of Ontario. We would like to support our friends in Ontario by purchasing vehicles, and if we can purchase them and continue in our area of expertise, which happens to be in the oil patch, we will support the industries of central Canada.
I would like to go on to say that Cavalier Chev-Olds in Lloydminster has spent a quarter of a million dollars on expansion, and now the company is wondering if it will be able to maintain its dealership.
Regal Motors in Rosetown took a look at its projected sales after the budget and reduced them by $1.2 million. Stuart Ford-Mercury in Lloydminster has reduced its potential sales by one-third. These are sales of trucks and heavy trucks.
Let us talk about what has happened to the companies which would have bought these vehicles and which would have contributed to equalization. They would have purchased goods from central Canada, Atlantic Canada and, indeed, western Canada. Let us talk about Husky Oil. Husky has not decided to take its goods out of Canada. It has not decided to drill elsewhere, but it might cut its exploration budget by 60 per cent. It still has faith in this country. It would be its intention to offer help to this government in any area this government might wish so that it could continue to explore for oil and heavy oil in my part of Canada.
Just a few months ago United Canso, led by Canadians, took back control of United Canso from the Buckleys of New York, from Cataba, an American company. United Canso fought a very expensive battle to bring back Canadian control to this company, but let us see what is going to happen. Do hon. members know what will happen after January 1 at $16.70 a barrel?
The Saskatchewan oil well income tax of $7.47 is taken from that. Freehold and overriding royalties amount to $1.11. Petroleum and gas revenue tax is $1.07. Operating costs, direct with no overhead, amount to $3.35. Federal income tax amounts to $3.34. Provincial income tax amounts to 67 cents. The total is $17.01. They will lose 31 cents per barrel. One cannot expect a company to produce at a loss of 31 cents per barrel.


An hon. Member:: No, they will not.


William Hunter (Bill) McKnight: I hear a socialist saying that they will not. They say they should produce oil and lose 31 cents per barrel because it is a Canadian company. They say, "Please do that." I do not think it is proper, and I am sure most members of the House would agree.

December 15, 1980
Fiscal Transfers to Provinces
At least 60 per cent of this company's exploratory budget will now be moved to the United States. In other words, they have doubled exploration in the United States. These people are responsible to shareholders, and they have nothing else to do but to try to protect their shareholders. The policies of the government opposite have shut down the market. When the energy policy of the government comes into effect on January 1, it could create more equalization money; but when a valve freezes, they will not send a man out at $8 or $12 per hour. They will leave the valve frozen. Why would they go out when they lose 31 cents per barrel? Nobody would go out. But the government imports oil from Mexico at approximately $40 per barrel. One cannot understand this, unless one talks to the people who have spent a long, long time in the business.
I should like to talk about Home Oil and run over its operating costs. In Saskatchewan, from a well which pumps less than ten barrels a day, they get $15.15. Their operating costs are $4.80. Their net return is $10.35, less the royalty of $5.15, net provincial tax of 77 cents, federal tax of $2.79 and a petroleum gas revenue tax of zero. They will get $1.64. But let me deal with heavy oil and a well which produces more than ten barrels a day. After January 1 they will get $16.15. Their operating costs will be $4.80. Their net return will be $11.35. Their royalty will be $6.61; provincial tax, 87 cents; federal tax, $3.06; the petroleum gas revenue tax, 91 cents. They will lose ten cents per barrel. There is no point in producing oil at losses of ten cents per barrel. This is in Saskatchewan. If a company loses ten cents per barrel on heavy oil, why would it continue? It will only continue to do maintenance. The net result of the 8 per cent petroleum gas revenue tax is that earnings will drop by 50 per cent in 1981 and by 75 per cent in 1984.
I should like to refer to Big Hart Oil which was started by a Canadian individual who worked in the oil patch, became an expert in it and went ahead on his own. Does the House know what has happened? He stopped. He will not spend any more money in Saskatchewan because he would lose six cents on the dollar. The Saskatchewan government takes 68 cents out of $1 and the federal government takes 38 cents. If Big Hart quit today, it would end up owing $5 million to the bank five years from now. They cannot quit; they say they cannot quit. He obtained a bank loan for $15 million for 1980-81 to be paid back in September, 1985. If all his cash flow was applied to reduce the interest and loan expenses, Big Hart would still owe $5,127,000 at the end of five years. His total income for 1980-81 will be $64 million, but he would still owe $5 million if he did not spend any money. What has the government's policy done? Big Hart is forced to stay in Canada with its wells, but it has gone into the United States and has purchased
55,000	acres in Texas. It has spent $4 million, which would have been spent in Canada, in order to obtain the drilling rights on 55,000 acres. The company is gambling that the Texas production, if it is lucky, will pay off its investment in Canada. Is that not terrible-a Canadian company has to go to the United States and gamble that its oil production there will pay off its investment in our country?
Yet, hon. members opposite wonder why the people of western Canada say, "What you are doing is not fair, what you are doing is not right."


Eugene Whelan: Tell us how they share the oil in Texas.


William Hunter (Bill) McKnight: I hear the Hon. Minister of Agriculture talking about sharing. If he was not such a tired Minister of Agriculture and had more heart and spirit, he would stand up for the farmers of western Canada. He would stand up so that they are not crippled by the energy policy of the government, so that some day equalization payments would not have to be paid to the farmers of western Canada. That will happen if the energy policy of the government continues without some support for agriculture.
I should like to continue dealing with the same Canadian company which was started by an individual. In the last two years he spent $20 million. He cancelled next year's program which means that he has cancelled 15 wells. Does the House know to what it has come? The government of Saskatchewan has a better understanding of the oil industry than the Liberal government here in Ottawa. At least the government of Saskatchewan understands that producers must negotiate and receive some return on their investment. They are willing to go an extra mile. They went in 1973 and 1974, the province of Alberta went an extra mile in those years. The federal government hopes the provinces will dig it out of the hole, so that these companies will be able to continue finding oil for the people of Canada.
Let me turn to Francana which indicated that after tax it made 12 cents per barrel. With the budget and its 8 per cent revenue tax, the federal government will take $1.02 per barrel and Francana will lose 12 cents per barrel. It will lose 12 cents per barrel on producing wells. Before the budget and including reinvestment on new oil, it was netting 30 cents per barrel, assuming that it costs $5.60 per barrel to find it. But after the budget, it will lose 90 cents per barrel on new oil. There is no way to equalize payments when a company goes 90 cents per barrel in the hole.
Turning to Buttes Resources, it has ten out of 40 wells which are marginal. They will shut them down. They will have to pay an 8 per cent wellhead tax and have indicated that they might as well shut the valve. They have two service rigs under contract, but if they do not use these wells, they will let one of the service rigs go. There goes employment! Buttes is another company which has indicated that the province of Saskatchewan is talking to them, assisting them and trying to give them a deal so that they can stay in production, because the heavy hand of the federal government has removed any incentive at all.
I am just at the end of my time, but I should like to talk about heavy oil. The budget papers indicated $30 per barrel for heavy oil, but the hooker or the snag is that it must be sold in Canada. How can one sell heavy oil in Canada when there isn't a refining plant? Where is the refining plant for heavy oil in Canada? How does the government expect people to take oil
December 15, 1980

out of the ground at $30 per barrel? That is what they are being told, but there is no refining plant in Canada. If there is no plant in Canada to handle the refining, where do they sell it? Do they sell it across the line? They could sell it across the line, but there is only one plant across the line. There is one refining plant but it must have a guaranteed supply, and the government refuses a guaranteed supply, by saying that it must be sold in Canada. Equalization means that one must generate funds so that they can be equalized. Government policy in the energy field and other areas has stifled the growth of Canada, reduced the incomes of people, and reduced the outflow of cash from any part of Canada.
Therefore, if there is nothing to equalize, why do they talk about equalization?


Some hon. Members:: Hear, hear!


Mr. Knowles:: Mr. Speaker, I rise on a point of order. Could the government whip or an hon. member on that side tell us whether we will stay with this bill tomorrow or whether the government would rather switch.


Mr. Turner:: Mr. Speaker, I am advised we return to Bill C-48, the oil and gas bill, tomorrow and possibly Wednesday.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, on December 9 last 1 directed a question to the President of the Treasury Board dealing with two matters which I consider important. First, it had to do with the pension system in the public service, especially the indexing rate for 1980, and second, I tried to learn the number of public servants who were retiring this year before December 31, and perhaps after December 1, because it was implied in my question that I wanted to know whether some public servants were waiting till the end of the fiscal year to retire thus taking advantage of an indexation measure to enjoy an indexed pension immediately in the year in which they retire.
Hon. members will remember that since 1970 a public servant can retire, subject to some restrictions of course, with full benefits at 55 years of age. Over the years, the benefits have been standardized by removing any sex discrimination
Adjournment Debate
and the contribution rate of the employee has been raised from 5 to 6.5 per cent. In 1970, partial indexing of benefits was adopted and contributions of both employer and employee were increased by half a point. Finally, full indexing of benefits was recommended in 1973 and implemented by this government in 1974. A second increase of half a point was also provided for, to be collected from both employer and employee, as of January 1, 1977.
The President of the Treasury Board (Mr. Johnston) recently told me in answer to a question that he had not yet set the rate of indexing but that he would write to me; I received his letter today; I should like to read it to you. I quote:
Dear Mr. Gauthier:
Further to the question you put to me in the House of Commons Tuesday last with regard to the rate of indexing that will apply from January 1, 1981, to the benefits received by former members of the civil service, I am pleased to advise that the rate will be 9.7 per cent, as announced publicly last Friday.
I was not aware that he had announced it last Friday. I resume the quotation:
The 9.7 per cent increase will apply to the benefits paid at any time in 1980, that is, to the pensions of those persons who retired or became disabled in 1980 or earlier, and those of surviving spouses and for dependent children who were entitled to pensions in 1980 or earlier. The 9.7 per cent increase will be paid former employees of the civil service, the armed forces, the RCMP, former members of Parliament and senators, former judgesand the letter lists all those who are entitled to that increase in pension. Mr. Speaker, I believe we all agreed, some years ago, on the need for indexing pensions, to protect our pensioners against the thief that inflation is. And I am pleased to learn that the President of the Treasury Board announced today that one hundred thousand retired civil servants and dependants will be entitled this year to a catching up increase which, while not giving them an edge in terms of real income, will at least enable them to maintain their purchasing power for the coming year. I think, Mr. Speaker, that no active and industrialized society is immune from a certain level of inflation nowadays.
Inflation, as we know, is detrimental to the various types of pensioners and widens the income gap between those who work and those who are fully retired on a pension. The debate on public service pensions has been at times quite acrimonious and it has been going on for at least over ten years. I witnessed the attempts made by the government over the past eight years to set the indexation rate, to put a ceiling on it, to make it above all flexible and geared to the ability of the fund to pay the indexation of pensions. We have seen Bill C-12 being violently opposed by certain groups from the private sector, I am referring here to the Coalition for Citizens' movement which lobbied to prevent the indexation of public service pensions under the pretence that they were getting very good salaries and were collecting highly generous pensions.
While in fact, Mr. Speaker, the truth could not be further removed from what certain groups opposed to indexation
5784

December 15, 1980
Adjournment Debate
portray it to be. It has often been repeated in the course of this debate that on the average public servants get an annual pension of $7,000 or less, which is certainly not a high income. Indexation of this pension would only allow them to survive a little above the poverty line. After all, public servants cannot be blamed for all the economic ills the country is going through today and all the economic hardships we are faced with.
On a final note, Mr. Speaker, 1 would simply like to remind the President of the Treasury Board that it is imperative that we deal with some of the problems concerning indexation. At present, for example, public servants are allowed to retire at the end of the year, just before December 31, so as to benefit from indexation for the last year and again, on January 1, to be eligible for indexing for the coming year. I think the question could be solved by an amendment to the superannuation legislation, an order in council, a regulation or otherwise. I think the President of the Treasury Board is in a position to act. Three past presidents of the Treasury Board have told us: "We will look after it." I hope to see improvements in 1981 and I hope that the legislation will be amended so as to achieve some kind of equity, some kind of fairness in the area of pensions.


Mr. Roy MacLaren (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, on December 9 the President of the Treasury Board (Mr. Johnston), stated that he would soon be announcing the rate of increase applicable to public service pensions on January 1, 1981. The necessary calculations under the Supplementary Retirement Benefits Act have now been completed. The rate will be 9.7 per cent. This figure represents the average of the increases in the monthly Consumer Price Indices from October 1, 1979, to September 30, 1980. The 9.7 percentage increase will be applied to update pensions which were in pay during 1980; that is, the pensions of persons who retired or became disabled in 1980 or earlier and those of surviving spouses and children of pension plan members who died in 1980 or earlier with a pension entitlement.
The hon. member asked specifically whether those who retire before December 31 of this year will receive a full increase in their pensions on January 1, 1981. The answer is yes. The Supplementary Retirement Benefits Act provides for annual updating of pensions on January 1 for all pensions in pay in the previous year. This means that no matter how short a period of time the pensioner was drawing pension in a year- even a few days-he or she will receive a full year's cost-of-living increase on the next January 1. Until such time as legislative amendments are made to the Supplementary Retirement Benefits Act, this provision of the law must continue to be applied.
As the President of the Treasury Board advised the House, it is his intention to bring before Parliament proposed amendments to the Supplementary Retirement Benefits Act in
respect of that specific feature. In Bill C-12, the public service pension amendment bill introduced in the Thirtieth Parliament, which lapsed when that Parliament dissolved, changes were proposed which would have prorated the amount of pension indexing to which a pensioner would be entitled in respect of his or her first year of retirement.
Under the proposals contained in Bill C-12, a person who had been retired only a few days prior to January 1 of any year, would have to wait a full year until the next January before receiving any pension adjustment. These proposals seem quite reasonable and fair to public service pensioners. I believe I am correct in stating that there was no opposition to this feature of Bill C-12, either from members of Parliament or from pension plan members.


NATIONAL ENERGY PROGRAM-ALSANDS PROJECT-REQUEST FOR ASSURANCE OF COMPLETION
Mr. Jack Shields (Athabasca):: Mr. Speaker, I rise at this time as a result of a question I put to the Minister of Energy, Mines and Resources (Mr. Lalonde) on December 4. In my question I asked the minister whether any discussions had taken place to ensure the Alsands consortium-the project north of Fort McMurray-would proceed on time. If it did not, it would be a catastrophe for the nation. At a time when money is waiting from private sources to be invested in the heavy oil industry or tar sands and is sitting idle when we are at such a crucial stage in our development waiting for oil to come on-stream down the road.
The minister replied by saying:
I can tell him that if he looks at the record, particularly with regard to tar sands plants, he will find the federal government has always been very forthcoming and ready to make sure those projects will take place.
I have had a chance to look at the record. I ask hon. members, what is that record? In a press release two weeks ago Imperial Oil announced that at $38 a barrel with future increases tied to the consumer price index, the plant at Cold Lake is not economically viable. The Alsands consortium has announced that the same pricing agreement, $38 a barrel, with future increases tied to the consumer price index, does not make it viable to proceed with their plans.
I went home this weekend and I found that the Syncrude expansion is stalled. This expansion was to bring a second train on to the plant to increase production from 140,000 barrels a day to 200,000 barrels a day. The syncrude press release reads in part:
The point we're trying to get across is that it is not economically applicable under the current federal policies to go ahead with the expansion. It has reduced the attractiveness of expansion and increased the risk involved.
Of course, Syncrude was referring to this government's misguided energy policy. The spokesman for Syncrude went on to state:
Imperial's message is that the opportunity from an economic standpoint is just not there.
That is the record. I know the Minister of Energy, Mines and Resources in all honesty is not trying to mislead the
December 15, 1980

Canadian people or this House in replying to the questions which 1 put to him the other night. But the situation becomes absolutely ludicrous and it can only be explained if one examines carefully what is really happening.
Alberta conventional crude oil reserves will be reduced by half in five years. Conventional crude oil reserves will be reduced by two-thirds, 66 per cent, in ten years. While the reserves decline, we are being told that this oil will be used.
The policy of the Department of Energy, Mines and Resources now appears to be to use the energy in Alberta first while seeking to bring in production from Crown land, the high Arctic and offshore.
I reiterate my feeling that the tar sands and heavy oil plants in northeastern Alberta are absolutely crucial to the economy of this country and to our security of supply. An injection of $9 billion to $10 billion for each plant, approximately $20 billion in total, into the economy of Canada would do nothing but increase employment. The policy of the department must be reconsidered and efforts made to get those two vital plants on stream.


Roy MacLaren: Mr. Speaker, I am pleased to state the government's position relative to the concern expressed by the hon. member for Athabasca (Mr. Shields) regarding the importance of bringing the Alsands project into production as soon as possible.
When the minister responded to the hon. member's questions on December 4, he explained that the federal government is fully committed to this project, but that he alone could not give absolute assurance that satisfactory negotiations would be completed to ensure that the project would proceed, simply because he could not speak for the government of Alberta. However, he reminded the House that the record showed that the federal government has always been ready to join in making certain that oil sands and heavy oil projects will take place. In this context, hon. members will recall that the federal government took the initiative in February, 1975, to save the Syncrude project. At that time, the governments of Alberta and Ontario, and the three private participants responded, and the project went ahead on schedule.
The National Energy Program reflects the emphasis being placed on oil sands and heavy oil development through such measures as the maintenance of the depletion allowance, the provisions of special tax incentives for heavy oil upgrading plants, and the application of reference prices at or close to international prices to encourage the opening up of these resources. Indeed, under the National Energy Program, we are offering incentive prices well above the level which project sponsors could have foreseen when any of the projects now in a planning or implementation phase were initiated and we are continuing our discussions with them.
I should like to emphasize the position always taken by the federal government, that the opening up of all new potential
Adjournment Debate
energy sources is a matter of high priority. The oil sands certainly do not take second place to Arctic resources or offshore discoveries. Canada needs to have all these projects brought into production as soon as possible.
We are continuing to seek an agreement with the Alberta government on both the Alsands and Cold Lake projects either as part of a comprehensive pricing agreement or separately to establish a stable and attractive regime for high cost oil projects. The Alberta government has, however, chosen to withhold its approval of the new tar sands plants until a comprehensive petroleum agreement is reached. Canadians are relying on a fair and reasonable response on the part of the government of Alberta in support of this highly important resource development project.


ATOMIC ENERGY OF CANADA LIMITED-DISPOSAL OF NUCLEAR WASTE
William Alexander (Bill) Blaikie: Mr. Speaker, a couple of weeks ago I asked the Minister of Energy, Mines and Resources (Mr. Lalonde) a question about whether he approved of a policy of Atomic Energy of Canada which I found in an internal document of AECL written by the Director of Public Affairs for Waste Management at the Whiteshell Nuclear Establishment. With regard to the approvals process for waste disposal sites, it was written, and I quote: -initiatives have been undertaken at both provincial and federal levels to have the approvals process changed in order that research areas may be obtained without forcing local councils (perhaps miles removed from a potential research area) to express their opinion by way of resolution.
The minister did not seem to know what I was talking about, particularly when I mentioned Lac du Bonnet, which I had to tell him was in Manitoba. This is forgivable, and I expect to hear tonight-although I do not really expect it because I know the parliamentary secretary will drone on as usual reading the statement prepared for him-whether the Minister of Energy, Mines and Resources approves of this policy of AECL whereby it is trying to circumvent the democratically expressed will of communities like Lac du Bonnet which in this case is to be the site of an experimental waste disposal vault,
When the minister replied to my question, he talked about federal and provincial processes of approval. He never said anything about the approvals process as it pertained to local councils. I ask whether this recommendation had anything to do with the fact that a candidate for reeve in the rural municipality of Lac du Bonnet, who was critical of AECL in the most recent election there, beat the incumbent who was not as critical, to put it mildly, of AECL. I think it does, and I think it underlines the extent to which the public affairs aspect of AECL's program is just public manipulation and intimidation and little else. A company which really respected the public's mind and was really into public affairs as such would re-think its project or would re-think itself rather than the approval process when faced with this kind of circumstance.
I want to make myself clear. I support research into how to dispose of nuclear waste which is already a fact. If Lac du Bonnet is suitable for such simulative research, tell us about it,

December 15, 1980
Adjournment Debate
but do not sign hard-to-see contracts with provincial governments, do not only vaguely hint at more projects down the line for the same community and a demonstration vault which would actually contain nuclear waste. Do not just consult the public only as a last resort and do not patronize your opponents with the increasingly embarrassing, empty vanity of technocrats who operate under such a veil of secrecy that it is no wonder people are suspicious.
Th(f Canadian people can handle the facts, they can handle the truth. That is why I ask the minister's parliamentary secretary, when we are going to get a full-fledged public and parliamentary debate on nuclear power in this country, and if we are not going to get it, why not? If AECL is really the servant of the people and not possessed by its own internal technological imperatives, then it should welcome such a debate. The people who work for AECL and its management should welcome, as well, their retraining for the solar technology, if that is what the public chooses.
The time has come to sort out the conflict of interest whereby AECL is not only responsible for protecting the public against the risks which are inherent in nuclear technology, but is also the major proponents of that technology in this country. I think it is high time the government recognized, first, that a debate is necessary; second, that the democratic process* must be respected in every aspect of development of this technology; and third, that the time has come for some sorting out of the conflict of interest in which we continually find AECL whereby the public is put in the horrible position of having to take the word of the very people whose self-interest it is to instal the projects, the safety of which they are worried about.


Roy MacLaren: Mr. Speaker, for a moment I shall try not to bore the hon. member opposite by reading something but, rather, I will draw to his attention that perhaps he is confusing, to some degree, the procedure in the province of Ontario with that in the province of Manitoba.
Recently there were press releases in Ontario concerning some preliminary research regarding, for example, groundwater and fly-overs in the Crown lands of Ontario where there are no incorporated townships. In those areas that type of preliminary research has been carried on with the agreement of the Ontario government and with full public notice.
With regard to Manitoba, the situation is somewhat different because there, of course, the plans are to build an underground research laboratory, at the Whiteshell Research Establishment.
That laboratory will conduct research-I hope the hon. member will excuse me for reading this passage-"in geology, mining techniques, hydro-geology, heat transfer through rock at depth and pressure, performance of potential repository backfill materials and other related work."
The plans to proceed with that research work which is being developed in consultation with the Manitoba government have been extensively described to the local community, and there has been a series of consultative procedures to ensure full public knowledge and the opportunity to participate in the detail of those plans.
With reference to the hon. member's final point, the final authority for nuclear safety matters in Canada resides with the Atomic Energy Control Board and not with Atomic Energy of Canada Limited. The board's procedures, which are well known, will be fully observed by the Canadian government when it proceeds, in consultation with the Ontario government in the case of Ontario and with the Manitoba government in the case of Manitoba, with the further development of research into the safe disposal of spent nuclear fuel.


The Acting Speaker (Mr. Blaker):: Order, please. The motion to adjourn the House is now deemed to have been adopted. Accordingly, the House stands adjourned until two o'clock tomorrow afternoon.
At 10.27 p.m. the House adjourned, without question put, pursuant to Standing Order.

Tuesday, December 16, 1980