1980-12-11

ROUTINE PROCEEDINGS


Mr. Geoff Scott (Hamilton-Wentworth):: Madam Speaker, under the provisions of Standing Order 43 I rise on a matter of urgent and pressing necessity to every home owner in Canada and to anyone who would like to own a home. Since mortgage interest deductibility and property tax measures were introduced in this House one year ago, and since the Liberals defeated those proposals and have done nothing in the meantime to relieve the burdens of those carrying mortgages in the face of devastatingly high interest rates, 1 move, seconded by the hon. member for Simcoe North (Mr. Lewis):
That the government immediately offer Canadians temporary mortgage assistance until the health of the economy is restored.


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.


AUDITOR GENERAL
Mr. Bill Clarke (Vancouver Quadra):: Madam Speaker, the president of Eldorado Nuclear Limited told the Public Accounts Committee last Thursday that his corporation was going to fire the Auditor General and engage a private firm of auditors. Since this action would seriously impair the comprehensive auditing program of the Auditor General and remove the ability of the Auditor General to report directly to this House, 1 move under the provisions of Standing Order 43, seconded by the hon. member for Mississauga South (Mr. Blenkarn):
That this House urge the Minister of Energy, Mines and Resources to consult his colleague the President of the Treasury Board and the Auditor General of Canada before putting into effect order in council No. PC 1980-3127.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL REVENUE
Mr. Gordon Taylor (Bow River):: Madam Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. Whereas the Liberals promised during the last election campaign to alleviate the impact of capital gains taxes on farmers and businessmen, but after being elected, instead of keeping their promise, they have continued this iniquitous tax, thus increasing inflation, preventing the expansion of farms and businesses and ruining the retirement plans of our pioneers, I move, seconded by the hon. member for Moose Jaw (Mr. Neil):
That the government forthwith bring in legislation eliminating this tax or at least providing for a once-in-a-lifetime exemption.


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.


LIBERAL PARTY OF CANADA
Mr. Bob Rae (Broadview-Greenwood):: Madam Speaker, I rise under the provisions of Standing Order 43. This being the first anniversary of the Crosbie budget and the Liberal party now clearly having won this year's Herbert Hoover look-alike contest, I move, as I did a year ago, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House unreservedly condemns the government for its outright betrayal of its election promises to lower interest rates, to cut taxes and to stimulate the growth of the Canadian economy without a mandate from the Canadian people for such a reversal.


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

December 11, 1980


Some hon. Members:: Agreed.


Some hon. Members:: No.

[ Translation]


HEALTH CARE
Mrs. Therese Killens (Saint-Michel):: Madam Speaker, I rise under the provisions of Standing Order 43 to ask for the unanimous consent of the House to introduce a motion dealing with an important matter of pressing and urgent necessity.
Considering that the people of Montreal enjoy an excellent emergency service, Tele-Medic, which up to now has enabled us to save human lives and since that service had to suspend operations due to a lack of funds; and considering that such a service is vital for a city such as Montreal, I move, seconded by the hon. member for Chicoutimi (Mr. Dionne):
That the House exert pressure on the Quebec health minister to find an immediate solution to that problem.


Madam Speaker:: The Department of National Health and Welfare could be involved in that resolution. I will present it, but I think it deals with a provincial jurisdiction. Anyhow, presentation of such a motion under the provisions of Standing Order 43 requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


ECONOMIC COUNCIL OF CANADA
Mr. Don Bienkarn (Mississauga South):: Madam Speaker, I wish to move a motion under Standing Order 43. The Economic Council of Canada's seventeenth report is entitled "A Climate of Uncertainty." In view of the fact that the projections in the budget of October 28 differ dramatically from those of the Economic Council of Canada, an agency of this government, and the Economic Council advocates measures significantly different from those set out in the budget, I therefore move, seconded by the hon. member for Vancouver Quadra (Mr. Clarke):
That this House refer the report of the Economic Council of Canada entitled "A Climate of Uncertainty" to the Standing Committee on Finance, Trade and Economic Affairs for analysis and investigation, and that the committee be
instructed to call before it the Minister of Finance, the governor of the Bank of Canada and such other witnesses as it feels appropriate.


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.


ENERGY TAX CREDIT
Mr. F. Oberle (Prince George-Peace River):: Madam Speaker, I too rise to move a motion under Standing Order 43. Having regard to the harsh realities of the recent budget and the energy statement, and in view of the fact that one year ago today the Progressive Conservative Party brought down a budget proposing a refundable energy tax credit to assist lower and medium-income people in Canada meet rising energy costs through an income-tested tax credit amounting to $80 per adult per family and $30 per child, to be paid in full to all those having incomes of up to $21,380, a program which would have helped Canadians save $500 million in 1980 and $1 billion in 1981; and having regard to the fact that the "new democratic-liberal party" has failed to produce any alternative, I move, seconded by the hon. member for Cariboo-Chilco-tin (Mr. Greenaway):
That this House direct the government to introduce the refundable energy tax credit immediately, thereby benefiting 7.1 million Canadian families, or 7.6 per cent of the total population of Canada, with over 70 per cent of such benefits going to individuals and families with less than $20,000 of family income.


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.


COMMUNICATIONS
Mr. Mark Rose (Mission-Port Moody):: Madam Speaker, I too rise to move a motion under Standing Order 43. In view of the fact that the Department of Communications has recently threatened private owners of satellite receiver dishes with prosecutions whose penalties include fines of up to $1,000 a day, confiscation of equipment and even jail, despite an in-House DOT legal study which concluded that private dish antennae may in fact not be illegal under current legislation, I move, seconded by the hon. member for Skeena (Mr. Fulton):
That the Minister of Communications table this study for the information of this House and interested members of the public and, further, advise this House
December 11, 1980

of any impending legislation affecting foreign satellite reception and the protection of Canadian broadcasting.


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.


LABOUR CONDITIONS
Mr. Bob Corbett (Fundy-Royal):: Madam Speaker, I rise to move a motion under Standing Order 43 on a matter of urgent and pressing necessity. In view of the fact that unemployment has risen sharply in the maritime provinces, proof positive that the budget presented by the maritime minister responsible for finance and other programs, such as those under DREE, are failing miserably, I move, seconded by the hon. member for Halifax West (Mr. Crosby):
That the House instruct the government to act immediately to develop new and meaningful programs which will encourage permanent economic growth and jobs in the maritimes.


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.


INDIAN AFFAIRS
Mr. Lome Greenaway (Cariboo-Chilcotin):: Madam Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. Whereas the report of the Auditor General which will be tabled today indicates that the Indian economic development account continues to be grossly mismanaged and significant blame for a proposed write-off of $17 million in loans can be put on the Department of Indian Affairs and Northern Development, I move, seconded by the hon. member for Prince George-Peace River (Mr. Oberle):
That this House instructs the Minister of Indian Affairs and Northern Development to appoint immediately a person to be directly responsible to manage the account and be accountable for its performance.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
Oral Questions AUDITOR GENERAL


TABLING OF REPORT FOR FISCAL YEAR ENDED MARCH 31, 1980
Madam Speaker:: I have the honour to lay upon the Table the report of the Auditor General of Canada to the House of Commons for the fiscal year ended March 31, 1980. I remind hon. members that under Standing Order 65(l)(q), this report is deemed to have been permanently referred to the Standing Committee on Public Accounts.



ORAL QUESTION PERIOD


Hon. John C. Crosbie (St. John's West):: Madam Speaker, my question is directed to the Minister of Finance. The Bank of Canada rate has just gone up an astounding 1.38 points to 16.14 per cent.


Some hon. Members:: Oh!


Mr. Kaplan:: What is it in the United States?


Miss MacDonald:: Shame.


John Carnell Crosbie: I point out to the minister that the 16.14 per cent is 4.38 per cent more than it was when he brought down his budget. This means prime bank rates will be going up again very shortly afterwards. In view of the fact that these interest rates are much higher than they were last year, did the minister anticipate such a high increase in interest rates when he prepared his budget just a few short weeks ago? Secondly, will he now agree to refer this whole interest rate question to the Standing Committee on Finance, Trade and Economic Affairs, an investigation which was interrupted by the election and the minister's refusal since to look into this question? Apart altogether from that, has the minister now had a chance to make a decision on some new policies? Yesterday he said, "I have not decided to launch any new programs or change any budgetary measures." Has the minister now had a chance to rethink that in view of the alarming intelligence we have had in the last few days?


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, in reply to the first question, neither 1 nor anyone else I know who is knowledgeable in this field could predict with any accuracy last October the movement of interest rates. I doubt whether it is possible to predict that with any accuracy over the next several months, in view of the extreme volatility which exists in this field at the present time, especially in the United States.
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December 11, 1980
Oral Questions
In reply to the second question, when I appeared before the standing committee as a witness, I told them that I would like the standing committee itself to reflect whether it had the time, in view of its present workload, to take on another investigation.
In reply to the third question, not since yesterday. No, I have not decided to launch new measures or introduce new policies.


John Carnell Crosbie: Madam Speaker, I might point out to the minister that at the moment the finance committee has nothing before it; the estimates are finished and there is nothing of any priority before it. We now have the Economic Council of Canada, an independent government agency which reports to the Prime Minister-I hope it will arouse his interest for the first time-reporting that it has studied the minister's budget. I should like to quote from page 7 of its press release of yesterday:
The general impact of the federal budget appears to be one which increases the rate of unemployment.
It has looked at the minister's budget and raised its inflation forecasts in its annual report up to 11.4 per cent because of the budget. That is 1.2 per cent higher than the minister's forecast. The council has looked at the budget and has reduced its forecast for real growth next year downward from over 1 per cent to .5 per cent. All of these are the council's reflections as a result of the budget and they are the Prime Minister's forecasts; they are the forecasts of his Economic Council of Canada.
In view of the forecasts of this independent agency which reports to the Prime Minister, will the minister now rethink his position and bring in and launch new programs and new budgetary measures?


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: Madam Speaker, there is something very confusing about the interpretation which the hon. member placed upon the press release of the Economic Council of Canada, or alternatively there may be some contradiction between the actual projections presented by the Economic Council of Canada and the press release.
As hon. members know, Madam Speaker, the Economic Council did present certain projections in its annual review. That review was prepared before the budget and before the National Energy Program was prepared. The whole review was written and not changed. It was there before the budget. What was done was to up-date projections based upon the budget. As I look at the actual projections I find, since the hon. member mentioned unemployment, that for every year from 1981 to 1985 the council's projections, made after the budget, show unemployment rates lower than those projected in the budget. If the hon. member will look at those projections he will find that statement is correct.


Some hon. Members:: Hear, hear!


John Carnell Crosbie: Madam Speaker, the minister can squirm any way he wants to squirm. This is a document which is called "An Assessment of the Impact of the Federal Budget on the Canadian Economy". The Economic Council of Canada says in this document:
The general impact of the federal budget appears to be one which increases the rate of unemployment.
Their projections are worse in every respect as a result of the minister's budget.
A year ago the minister was supposed to be the crafty genius who manoeuvred another party out of office. I ask him this question; Why? Interest rates are now in excess of 2 per cent higher. The minister has brought in no new policies and no new approaches. Everything is worse. Why did he put a government out of office last year when he had nothing to offer himself? Would he tell the public that?


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: Madam Speaker, I want to assure the hon. member it was not very difficult to manoeuvre the former government out of office.


John Carnell Crosbie: It's harder to govern, is it not?


Allan Joseph MacEachen: I want to return to the comment made by the hon. member about the projections of the Economic Council of Canada. The projections which were made by the council after the budget show the unemployment rate for 1981 to be 8.2 per cent. The projection of the Department of Finance is 8.7 per cent. The figures go down for each succeeding year and the projections-


Mr. Broadbent:: What does that prove?


Allan Joseph MacEachen: The Leader of the New Democratic Party asks what it proves. First of all, it proves that the Economic Council of Canada is showing lower projections for unemployment than those which are proposed in my budget. That is the first thing it proves. The second thing it proves, Madam Speaker, is that the hon. member for St. John's West does not know what he is talking about.


Madam Speaker:: A final supplementary, the hon. member for St. John's West.


John Carnell Crosbie: Madam Speaker, I read from page seven of the release of the Economic Council of Canada:
The pre-budget base case suggests an unemployment rate of 8 per cent for 1981 -
However, their post-budget figures, based on the minister's budget, show the figures going from 8.2 per cent to 8.6 per cent, an increase of-


Madam Speaker:: Order, please. 1 allowed the hon. member the opportunity to pose an extra question. I expect him to make that question brief.


John Carnell Crosbie: How does the minister explain his misinterpretation of the facts?
December 11, 1980


Allan Joseph MacEachen: Madam Speaker, what the hon. member fails to understand is that the Economic Council of Canada is updating its own projections based upon what happened.


An hon. Member:: It is worse because of you.


Allan Joseph MacEachen: It is based upon the information contained in the budget.


Mr. Andre:: Now you have it.


Allan Joseph MacEachen: Even after the update they show unemployment rates from 1981 to 1985 which are lower than those projected in the budget. So I ask, Madam Speaker, how can the hon. member say that they have concluded that the budget itself has a greater impact on unemployment?


Harvie Andre: Because they said it.


Allan Joseph MacEachen: All they have said is that "We have had to up-date our projections, which we found were erroneous". That is all they have said.


HOUSING
Mr. Doug Lewis (Simcoe North):: Madam Speaker, my question is also for the Minister of Finance. Had the principles of the last Conservative budget been in place in 1981, the average Canadian family of four earning an income under $21,000 would have received $220 as a refundable energy tax credit and $1,125 under the mortgage interest and realty tax credit scheme. These would offset high mortgage interest rates. Would the minister tell the House what he is offering Canadian families as an alternative?


Allan Joseph MacEachen: Madam Speaker, the hon. member fails to understand that in the National Energy Program we provided energy prices which saved about $1,000 for the very family about which the hon. member is talking.


Donald Alex Blenkarn: Absolute nonsense.


Douglas Grinslade Lewis: Madam Speaker, Canadian families will understand that they are missing $1,345. With regard to tenants, there are high mortgage interest rates which make it uneconomical to build apartments. Because there is no building, the tight vacancy situation will tighten up even more, and MURBs do not affect interest rates. What is the minister's plan of action?


Allan Joseph MacEachen: Madam Speaker, I have already indicated to the hon. member for St. John's West that I have not yet decided to introduce any new measures at the present time.
Oral Questions
Naturally, the increase in interest rates as they affect not only persons who must renew mortgages but persons who wish to buy a house is a matter of very great concern to me and to all members of the government, and it will be kept under very close scrutiny. At the present time I have not yet decided to launch any new program, but I intend to keep the matter under very close scrutiny to see how the burden will be expressed on affected groups in the country.


FINANCE
Bob Rae: Madam Speaker, I would like to ask the Minister of Finance whether he agrees with the following statement:
Interest rates are costs, and costs are a part of prices. They affect everything done by Canadians and their families. The present record level of interest rates... cuts back the ability of Canadians to buy goods and services of all kinds-cars, homes, food and clothing, everything people need ... These high interest rates limit the ability of business, especially small business, simply to operate at basic non-inflationary levels.
Does the Minister of Finance agree with that statement?


Allan Joseph MacEachen: Madam Speaker, as I said yesterday to the hon. member for St. John's West, I do not intend to express an opinion on every conceivable opinion which has been expressed by any person or body that hon. members can dredge up. But let me say to the hon. member that I have no hesitation in telling him that the present high interest rates, especially the very dramatic surge in rates over the past week or so, is a matter of very deep concern and is bound to affect adversely groups in the country. My concern in examining this situation is to determine where inequities may exist and whether at a certain point it is necessary to take any action.
The hon. member does not have to convince me that in present circumstances high and rising interest rates are damaging to certain groups in the economy, if that is the point which he wanted to make.


John Carnell Crosbie: You're changing your tune.


Bob Rae: Madam Speaker, the minister may be interested to know that the person I was quoting is the Minister of Industry, Trade and Commerce when he was finance critic while the Liberal party was in opposition. I would point out that we did not dredge him up, the Prime Minister did.
In the Speech from the Throne on April 14, a time when we were undergoing a very severe spiralling of interest rates-a peak which we have almost reached once again-the government said:
In particular my government recognizes the need to protect those Canadians most affected by unacceptably high interest rates.

December 11, 1980
Oral Questions
Does the minister now consider the interest rates we are currently suffering unacceptably high? Secondly, what is the minister doing to protect those Canadians most in need?


Allan Joseph MacEachen: Madam Speaker, I remember very clearly the words which were in the Speech from the Throne because at that particular time a very exhaustive analysis was made of the impact, especially on home owners and potential home owners, as a result of the very high interest rates. We did undertake certain steps at that time which were helpful.
Fortunately in the circumstances, the level of interest rates dropped very considerably and the problem, it seems to me, would have been compounded had the government launched a new program to solve a problem which, in the course of the summer, virtually disappeared. Now we are facing the same problem for the same reason.
The problem is not one that originates in Canada. It is not caused by bad policies being followed by the Governor of the Bank of Canada.


Some hon. Members:: Oh, oh!


John Carnell Crosbie: Made in Canada interest rates.


Allan Joseph MacEachen: Regardless of the source of the problem, it still affects this country. I want to tell the hon. member that those words are very much on my mind, and I will be keeping them in mind as events develop.


Bob Rae: Madam Speaker, my final supplementary question relates directly to the minister's answer. Ele says it is not the fault of the government and it is not events in Canada that are dictating the government's interest rate policy, but that it appears to be events elsewhere. Presumably he means the United States of America, the problems that the economy of that country is undergoing and the policies they are following.
With respect to that, I should like to ask the minister to read an exchange that took place in this House on October 29 last year between the then leader of the opposition, who is now his seatmate as Prime Minister, and the member who is now the Leader of the Opposition. At that time we were looking at interest rates of 11, 12, 13 and 14 per cent and the fact that we were following the American policy. At the end of that lengthy exchange, this is what the then leader of the opposition, now the Prime Minister, said in referring to those policies:
They might have been appropriate at 7 or 8 per cent, but surely at some point one begins to look at new policies.
He also asked:
At what point will the government look at... alternatives, rather than following the American interest rate up to 13. 14 per cent and Good knows how high?
Now, not only God knows how high, Madam Speaker, but they have gone through 20 per cent in the United States. When is the minister going to start looking at some alternative policies?


Some hon. Members:: Hear, hear!


Flora Isabel MacDonald: Check with your seatmate.


Allan Joseph MacEachen: Madam Speaker, obviously the hon. member has failed to ask himself how it has been possible for Canada to maintain short-term interest rates about five points below those prevailing in the United States when the normal circumstance has been for Canadian rates to be about one point above those in the United States.


Harvie Andre: When our dollar was above the U.S. dollar too.


Allan Joseph MacEachen: Has the hon. member asked himself how that has happened? If he has, I hope he has concluded that it is because the governor of the bank and the management of monetary policy in Canada has been such that we are not moving in locked step with the United States but have maintained this disparity much to the advantage of Canada.


BANKRUPTCIES
Mr. Peter Lang (Kitchener):: Madam Speaker, my question is directed to the Minister of State for Finance. In view of the fact that some of my constituents in Kitchener and, indeed, many people in south-central Ontario, have lost their life savings because of dealings with Astra Trust, as well as the provincially chartered C & M Financial Consultants and Re-Mor Investment Management Corporation, can the minister tell the House what changes the government is considering to the trust and loan act to ensure that investors and depositors are better protected in their dealings with federally chartered trust companies, and whether any compensation is planned for those who lost funds over and above the $20,000 mark that is protected under the Canada Deposit Insurance Corporation?


Hon. Pierre Bussieres (Minister of State, Finance):: Madam Speaker, we have already replied in the House to questions concerning the situation of Astra Trust which is federally incorporated and of other provincial corporations in which Ontario residents have lost a lot of money.
Hon. members will know that, as concerns Astra Trust, the Canada Deposit Insurance Corporation covers deposits by individuals up to a maximum of $20,000. When the company's assets have been disposed of, certain sums which could make up the difference over $20,000 will be recovered.
As for the much more specific question asked by the hon. member concerning amendments that could be made to the legislation to improve the situation and prevent such situations from occurring, I do not believe that we should look for correctives through legislation, but rather by ensuring that the control and application provisions of the present federal and provincial legislation are appropriate and can prevent reoccur-
December 11, 1980

Oral Questions
rence of such situations as that concerning Astra and its Mr. MacEachen: Madam Speaker, I cannot believe that an subsidiaries, including Re-Mor.	informed commentator would make the kind of statement the
hon. member has quoted.


John Carnell Crosbie: You had better learn.


FINANCE
Mr. Stevens:: I have it here.


Sinclair McKnight Stevens: Madam Speaker, my question is also for the Minister of Finance who must have noted the economic depths his policies are creating in this country with bankruptcies in the business sector up 22 per cent and personal bankruptcies up an astounding 19 per cent over last year. Translated into human terms, this means that in Ontario, for example, 25,430 jobs were lost in the first nine months of this year as a result of plants having to close down because of the economic climate created by the minister and his government.
Would the minister indicate what plans he has to lessen the impact of the high interest rates on such companies to ensure that we will not have this continuing high level of bankruptcies? For example, has he decided to bring in a type of insurance plan which would insure business loans in the future similar to the way CMHC loans are insured?


Allan Joseph MacEachen: Madam Speaker, in light of the dire and doleful picture painted by the hon. member of the economy in general, it would be worth pointing out that in this year the Canadian economy has created in excess of 200,000 jobs, and that that employment creation record compares favourably with any country in the OECD group. I do not think there is any benefit, either to him politically or to the country, to distort and exacerbate the situation, as he has in his question. I ask him seriously to consider whether it is fair to address those doleful facts in a distorted way at the present time.
The answer to the question is no.


Sinclair McKnight Stevens: Madam Speaker, it is not whining; those are Dun & Bradstreet brutal facts of the number of corporate corpses that have been left on the battlefield in Canada as a result of this minister's high interest rate policy.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: Madam Speaker, my supplementary question to the minister as he sits dreaming in this country is, would he explain to the House, if things are going so well in Canada, why Ray Richardson, for example, of the New York state commerce department has gleefully told the The New York Times that Canadians have invested in 35 states in his country, winning in his state alone, the state of New York, 50 companies that have created 3,700 jobs, as a result of Canadians fleeing from this country because of the economic climate structured by his government?


NATIONAL ENERGY PROGRAM
Hon. Michael Wilson (Etobicoke Centre):: Madam Speaker, my question is also addressed to the Minister of Finance. The minister has blamed today and on many other occasions in this House international economic problems, OPEC oil pricing and high interest rates in the United States for all the economic problems of this country. Yesterday the Economic Council of Canada released its report. Last year its report referred to two driving forces for the Canadian economy, the first of which was the world economy, and the second our own domestic energy development. This year, because the minister has torpedoed that energy development with his budget, we are left with the world economy and he knows that it is in trouble.
This party, the Canadian Manufacturers' Association and many experts, including, for example, the former chairman of the National Energy Board, and now the Economic Council of Canada, have urged him to make changes in the National Energy Program brought in under his budget. What proposals is he proposing to put forward now to unwind the deadlock between Alberta and Ottawa in an area which is completely under his control-no excuses-in the whole area of energy development in this country?


Allan Joseph MacEachen: Madam Speaker, the hon. member in the preamble to his question has stated that I blamed this on some force outside of the country. It is not my intention to blame individuals or groups but to draw attention to the fact that Canada is part of an international trade and payment system, that Canada is part of the world economy, and it would be foolish for Canadians to look at their own problems unless they look at them within that international perspective.
That is what I have been attempting to do in explaining the very dramatic increase we have had in interest rates in this country. They do not come from policies pursued in Canada. They are the result of a dramatic impact arising from policies pursued in another country, which have the same general effects in all industrialized countries as they have in Canada. I make that comment in answer to the rather long preamble which the hon. member introduced into his question.
I agree with the hon. member it is important that we have Canada's energy house in order. In the budget and in the National Energy Program we have put out a very comprehen-

December 11, 1980
Oral Questions
sive framework which will achieve that objective. The hon. member asked what we were going to do to discuss matters with Alberta. As I understand it, and I have not been directly responsible for these discussions, they are moving as rapidly as possible and in the tenor requested by the government of the province of Alberta.


Michael Holcombe Wilson: Madam Speaker, the government, the minister and the Minister of Energy, Mines and Resources have been given a heaven-sent opportunity to get our economy rolling in an area which is completely under their control so that we do not have to listen to what is going on in other parts of the world.


Some hon. Members:: Hear, hear!


Michael Holcombe Wilson: We are losing job-creating opportunities in many major projects, for instance, Alsands, Cold Lake and now today we had the announcement that the Judy Creek project is being shelved. Conventional oil drillers are moving south. Orders are being cancelled and jobs are being lost in central Canada as well as in the west. The government has been sitting idle for six weeks listening to the advice of the experts in the field and doing nothing about it.
In view of the fact that unemployment is approaching the one million figure this year and we are having a balance of payments deficit in the manufacturing account of $17 billion, will the minister listen to the Economic Council of Canada, which is the primary economic adviser to the Prime Minister and the government, and will he take their advice as to how to unwind this deadlock between Alberta and Ottawa in energy development?


Allan Joseph MacEachen: Madam Speaker, the government is obviously prepared to study and consider all the proposals made by the Economic Council of Canada in its annual review. I have begun the process of reading and studying that report, which was written prior to the budget and the National Energy Program. I have been greatly reassured by the fact that there is very broad consistency between the budget and the comments and concerns expressed by the Economic Council of Canada. I can hardly turn a page in that review without finding support for a major element in the budget presented on October 28.


TRANSPORT
Mr. Ian Waddell (Vancouver-Kingsway):: Madam Speaker, my question is for the Minister of State for Trade. According to yesterday's Vancouver Sun, the minister indicated that any federal funding for the new proposed light rapid transit system for Vancouver had been jeopardized by the premature announcement of the British Columbia government. The minister knows that we on this side of the House have been
pushing for light rapid transit development. Would the minister assure us that the citizens of Vancouver will not end up as innocent victims of or bystanders in this federal-provincial dispute? Could the minister also tell us whether there has been approval in principle-I am not asking the minister for amounts-of Government of Canada funding for light rapid transit for the city of Vancouver?


Hon. Ed Lumley (Minister of State, Trade):: Madam Speaker, I have been given a mandate by my cabinet colleagues to enter into negotiations with the province of British Columbia and the local transit authorities to further negotiations between our two governments for federal participation in the Vancouver project. As the hon. member knows, we think this is a tremendous opportunity for Canadian industry. It gives us an opportunity to enter into a multibillion dollar industry internationally. It is a great Canadian project and we will do our very best to follow up those negotiations.
Under the chairmanship of the Minister of Employment and Immigration, who chairs the cabinet committee on western affairs, this is just one of a number of initiatives for western industrial development in Canada that are being considered.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Mr. Paproski:: What about Edmonton and Calgary?


Ian Gardiner Waddell: Madam Speaker, I thank the hon. member for his usual loquacious announcement. I remind him that we have been pushing for that for years and I am glad to know he is in favour of this scheme in principle. I want to thank him for that and for taking myself and some of my constituents to see the new project in Kingston yesterday.
Since this is a new project and has not been tried, and although it has advantages for Canadians buying Canadian technology and for east-west relations in Canada, is the minister prepared to assure the House and the city of Vancouver that federal funds will be given directly to the city and that he will not allow the provincial government to deduct from its portion of funding the amount which comes from Ottawa? In other words, that the federal money will go directly to the city of Vancouver. Is the minister prepared to consider that and give the House that commitment?


Edward C. Lumley: Madam Speaker, since we have not started any specific negotiations, it would be foolish for me to give that kind of commitment to the hon. member. This is a partnership. The federal government is trying to propose a partnership among the provinces, the local authorities, the private sector and the Government of Canada so as to fulfil its obligations.
December 11, 1980


NATIONAL REVENUE
Mr. Bruce Lonsdale (Timiskaming):: Madam Speaker, my question is for the Minister of Finance. On Tuesday evening, in response to a question from the hon. member for Algoma during the adjournment debate, the minister's parliamentary secretary indicated that legislation would be forthcoming allowing wages paid to spouses by unincorporated small businesses to be deductible for income tax purposes and that the legislation would be retroactive to January 1, 1980. Could the minister assure the House that the other measures announced and tabled on April 21, 1980, in his ways and means motion, and particularly the measure increasing the volunteer fireman's exemption from $300 to $500 per annum, will also be retroactive to January 1, 1980, and that these measures will be implemented in time to take effect for the 1980 taxation year?


John Carnell Crosbie: These are my proposals. Admit they are mine when you are on your feet.


Allan Joseph MacEachen: The answer to the question is yes, Madam Speaker. I am glad the hon. member for St. John's West likes these proposals and that when they are brought forward he will ensure speedy passage.


Some hon. Members:: Hear, hear!


NATIONAL ENERGY PROGRAM
Mr. John Bosley (Don Valley West):: Madam Speaker, my question is for the Minister of Finance. There is another fire we would like him to think about fighting, and that is the unemployment fire in this country. The Economic Council of Canada makes a couple of points which I think the minister will have to agree are not in support of his budget. They are to the effect that if we fail to miss our energy development possibilities, we stand to lose over 753,000 jobs in this country. That situation will occur if the projects which are needed, notably the heavy tar sands and the Alsands projects, are not built. The minister must now face the fact that the Economic Council's proposals for energy development are substantially different. My question, therefore, is this: Will he now agree, with the wisdom of the council to support him, that he should move off the position he has on energy pricing, support the council's position, get Canadians back to work and make Canada energy self-sufficient?


Allan Joseph MacEachen: Madam Speaker, I have noticed this is one area where the council differed from the budget presentation because it recommended increases in the wellhead price of about $6 a year. That is greater than the amount proposed in
Oral Questions
the budget. The government has made it clear for quite some time that it would bring in a pricing regime which would have the effect of ensuring Canada's energy future and investment in the energy industry. That is my belief today, even though I have read and will continue to read the review of the Economic Council of Canada.


John William Bosley: Madam Speaker, it is precisely the deadlock caused by the difference in opinion between the Economic Council and the Minister of Finance that will cause more and more Canadians to be out of work. The question I must ask is this. Can the minister now tell us why he prefers a policy which says we shall have high interest rates to keep Canadian money in Canada, but we shall have, through his Fiscal and energy policies, an energy deadlock which will drive Canadian money and jobs out of Canada? Can he resolve this conflict and will he now see it is no longer appropriate to remain pigheaded about the sharing arrangements with Alberta which the Economic Council of Canada criticizes, when what we need is to get the engine of energy driving this country ahead again?


Allan Joseph MacEachen: Madam Speaker, the hon. member's question covers a broad field, including monetary policy and energy policy. Regarding energy, the Economic Council of Canada seems to agree very strongly with the Government of Canada in our desire to have an increased share of energy revenues in the country. In fact, one of the flaws they pointed out in current arrangements was the fiscal imbalance which existed between the federal government and especially the rich western provinces. This is one of the problems we are attempting to address in this budget in order to get more of the share of revenues now going, for example, to the province of Alberta. After all, we have reduced that share by about only two points, which is a rather modest amount.


TREASURY BOARD
William Hillary (Bill) Clarke: My question is directed to the President of the Treasury Board. The Auditor General has reported again on some basic deficiencies which have continued over several years. He cites particularly the lack of attention to Treasury Board policies and inaccurate Treasury Board monitoring of compliance with its policies and lack of investigation into non-compliance. When is the Treasury Board going to display some responsible management on behalf of the Canadian taxpayer?


Hon. Donald J. Johnston (President of the Treasury Board):: Madam Speaker, 1 have not had the opportunity to study the report in detail but I have had a preliminary look at a number of the comments. I am pleased to report that the Auditor General also indicates we are taking on these problems on a broad front and have demonstrated considerable progress in a number of important areas, such as the IMPAC
Oral Questions
program and so on. I can assure the hon. member for Vancouver Quadra we are moving forward and improving management practices across the system. I am confident the Auditor General will agree that great progress has been made and we can look forward to more progress.


William Hillary (Bill) Clarke: Madam Speaker, since one of the agreed upon solutions was the appointment of a high level departmental comptroller in all departments, and since the Auditor General again found it necessary to state this was not taking place, can the minister tell the House why he is taking so long to act on this program?


Donald James Johnston: Madam Speaker, it is not a question of delaying that agreed upon program. We consider that a senior financial officer in each department and agency is essential. This is very much a part of the program which has been moving forward. It is difficult in all circumstances to find the adequate personnel to fulfil these functions but I know the office of the Comptroller General is acting rapidly and efficiently in terms of moving forward on this front as well.


ACCESS TO INFORMATION
Hon. Jake Epp (Provencher):: Madam Speaker, I direct my question to the Minister of Justice. On November 28 my colleague, the hon. member for Wellington-Dufferin-Simcoe asked the Prime Minister at that time whether he would release the three polls that particularly had polled public opinion on the government's constitutional proposals. At that time the Prime Minister said he would check whether he could release them. 1 understand the minister has made a decision. Could he now give us the decision as to when they will be released?


Hon. Jean Chretien (Minister of Justice and Minister of State for Social Development):: Madam Speaker, I intend to make public within a few days that part of the poll which covers the constitutional issue.


Arthur Jacob (Jake) Epp: Madam Speaker, I must admit I did not get the full import of the minister's answer.


An hon. Member:: There wasn't much import in it.


Arthur Jacob (Jake) Epp: If I understood him correctly, he did not give us any date. He said he would do it in terms of the committee's work. I suggest to him the committee has been working for some time.
Yesterday a Gallup poll came out clearly showing that Canadians are opposed more than two to one to the program or the plan of the Prime Minister. I should like to ask the Minister of Justice how the government can reconcile a policy
December 11, 1980
where, on the one hand, they are going to restrict the number of expert witnesses to five and they will only be allowed to appear before the committee after they have passed a litmus test as to what they might say.


An hon. Member:: Shame!


Arthur Jacob (Jake) Epp: Why is it that the policy of the government when, on the other hand, they are now planning another advertising program, or considering one, to con the Canadian people with their own money and yet will not allow experts to appear?


Joseph Jacques Jean Chrétien: Madam Speaker, the committee decided yesterday to allow five experts to appear, two to be named by the official opposition, two by the government party and one by the New Democratic Party. This is the decision of the committee and I shall respect it.
As for the advertising campaign mentioned by the hon. member, no decision has been made as yet, but I would like to remind him that the Quebec government has now spent nearly $1.5 million since September for advertising which is sometimes questionable. For example, a parish priest says the proposed constitution is not moral. As for the poll, since the hon. member did not understand my first reply, I shall repeat that I intend to make them public in a short while. And since he did not understand what I said in French concerning the polls, perhaps I could quote this sentence from Cicero: Plus apud nos vera ratio valeat quam vulgi opinio. This means, Madam Speaker, that we should be guided by reason rather than by public opinion.
We therefore intend to make these polls public, but if we are right, we plan on going on in the same way.


COST OF POLICING SERVICES IN PROVINCES
Mr. Svend J. Robinson (Burnaby):: Madam Speaker, my question is for the Solicitor General, who recently announced major increases in the shares to be paid by provincial and municipal governments for RCMP contract services- increases unanimously opposed by the eight provincial attorneys general involved-and the shifting of a $100 million tax burden from the federal government on to provincial and municipal taxpayers. I have before me a document prepared by the RCMP showing, for the first time, the actual increases proposed amounting to over 100 per cent in some cases and to an increase of over $2 million a year for the municipality of Burnaby alone.
Why is the government proposing to pass on an extra $14 million in RCMP headquarters administration costs, and how can the federal government justify this totally unwarranted


ROYAL CANADIAN MOUNTED POLICE
[Stage Direction]
December 11, 1980
[Stage Direction]
raid on provincial and municipal treasuries of western, northern and Atlantic provinces?
Robert Phillip Kaplan: Madam Speaker, let me note first of all that this has nothing to do with the federal policing program. There are over 10,000 members of the force across the country, including those in British Columbia, who are paid for and will continue to be paid for 100 per cent by the federal taxpayers of the nation.
As to the municipalities and provinces which are served by RCMP contracts, every five or ten years for the last 70 years when these contracts have expired they have been renegotiated. The objective has always been to try to derive a fair balance so that the federal taxpayers are paying for that share of provincial and municipal contracting which represents the national benefit. We have made proposals to the provinces and municipalities. We have not yet been given a hearing by them at which I could explain to them the basis on which we feel these amounts are justified. I am fully confident that we can justify them and that RCMP contracting will continue to be a bargain-even with the increases we have asked for-for those municipalities and provinces which continue to use them and which we hope will continue to use them.


Svend Johannes Robinson: Madam Speaker, perhaps this is another initiative for western Canada supported by the Minister of Employment and Immigration. Surely of all times this is a time for conciliation and not for provocation of western provinces.
The minister has promised this House many times a long overdue bill to replace the RCMP Act. Will the minister tell the House what has happened to that long overdue bill and specifically how the government will address two concerns? The first is the need for far greater accountability by the RCMP to the provinces. The second is the legitimate demand by the association of 17 divisions and many individual RCMP members for an end to the paternalistic divisional representative system and the right accorded other police forces in Canada to free, full, non-strike collective bargaining.


Robert Phillip Kaplan: Madam Speaker, 1 do not agree with the hon. member's characterization of the div-rep system, which is an excellent system under which progress is constantly being made. I think it serves very well the needs of members of the force in industrial relations with management.
As to accountability, I think there are ways in which we can make changes and give assurances to the provinces that their full constitutional responsibility can be exercised even though they continue to use the national police force. 1 am looking forward to meeting with them and discussing ways in which their constitutional integrity and responsibility can be fully assured.
With respect to the bill, it is ready and, if hon. members of all parties could indicate a willingness to deal with that bill expeditiously and refer it to the Standing Committee on Justice and Legal Affairs, it could be introduced very shortly.
Royal Assent ENERGY


FUTURE NEGOTIATIONS WITH PROVINCE OF ALBERTA-GOVERNMENT POSITION
Mr. Jim Peterson (Willowdale):: Madam Speaker, my question is directed to the Minister of Energy, Mines and Resources and relates to an article in today's Ottawa Citizen. In this article it is indicated that Alberta treasurer Lou Hyndman has said that Alberta, in effect, is not prepared to negotiate again with the federal government. He used very strong language to the effect that Alberta will not capitulate. In light of this very strong language, I would like to ask the minister what the position of the federal government has been in the past and what it will be in the future with respect to negotiations with Alberta.


Hon. Marc Lalonde (Minister of Energy, Mines and Resources):: Madam Speaker, I would like to remind the House that there has already been a meeting at the level of officials, and 1 expect that another meeting will take place before the end of the year. I want to stress that nobody-but nobody-has asked any provincial government, and particularly the government of Alberta, to capitulate. I find this type of language rather regrettable because what is required is a spirit of compromise on both sides. I would like to stress that this type of speech should indicate to all Canadians who are the ones who are throwing out ultimatums and who are the ones who are showing inflexibility in their approach to this important question.


VACANCY
Madam Speaker:: I have the honour to inform the House that I have received from the hon. member for Hillsborough (Mr. McMillan) on Wednesday, December 10, 1980, a communication notifying me that a vacancy has occurred in the representation, and pursuant to section 10 of the House of Commons Act, I have addressed my warrant to the Chief Electoral Officer to issue a new writ of election for the electoral district of Cardigan.



THE ROYAL ASSENT

['The hon. member for Oshawa (Mr. Broadbent) has given me notice of his motion under Standing Order 26, as is required under the provisions of the order. I have examined his statement and I find that the problem raised by the hon. member is obviously a very important one. It refers to a situation which undoubtedly has a certain character of urgency. At the same time, I am sure that it is a matter of continuing interest to all members of the House.\nAs everyone knows, there has been a pattern of changing interest rates in recent months, including the announcement today by the Bank of Canada that interest rates will further be increased. The inevitable conclusion is that the problem is of continuing concern. As evidence of this, the Chair need only refer to the fact that recently there have been a number of motions moved by hon. members under the provisions of Standing Order 43, as well as a number of oral questions directed to the Minister of Finance (Mr. MacEachen) and other ministers on this very matter. The fact that the House has already been dealing with the situation for some time is an indication to the Chair that we have a problem which is of a continuing nature, and in this sense I feel that it does not fall within the purview of Standing Order 26.\nFor those reasons, I regret very much that it is not possible at this time to put to the House the motion proposed by the hon. member for Oshawa.']
Madam Speaker:: I have the honour to inform the House that a communication has been received as follows:

December 11, 1980
Business of the House
Government House Ottawa
December 11, 1980
Madam,
1 have the honour to inform you that the Honourable Antonio Lamer, Puisne Judge of the Supreme Court of Canada, in his capacity as Deputy Governor General, will proceed to the Senate Chamber today, the 11th day of December, at 5.00 p.m., for the purpose of giving Royal Assent to certain bills.
I have the honour to be,
Madam,
Your obedient servant,
Esmond Butler
Secretary to the Governor General



Madam Speaker:: I have the honour to inform the House that the Clerk of the House has laid upon the Table the thirty-sixth report of the Clerk of Petitions stating that he has examined the petition presented by the hon. member for Portage-Marquette (Mr. Mayer) and finds that it meets the requirements of the Standing Orders as to form.


BUSINESS OF THE HOUSE
Mr. Baker (Nepean-Carleton):: Madam Speaker, I wonder if 1 could ask the government House leader if he could inform the House as to the business he contemplates between now and the adjournment for the Christmas recess.
Perhaps while he is on his feet he might indicate to the House when he feels that the adjournment motion might be brought and dealt with, and specifically, if it is possible and if he is in that position, the length of the adjournment contemplated by the government.


Mr. Pinard:: Madam Speaker, later on today we will start debate on second reading of Bill C-48. I understand that tomorrow we will be able to deal with the report stage and the third reading stage of Bill S-2, which has just been reported from the standing committee. I understand that we will be able to get through two stages of that bill provided there is only one speaker per party. Following that we will resume debate on Bill C-34 concerning judges.

With regard to the business of the House for next week, on Monday, we will start the debate on the bill concerning fiscal transfers to the provinces, hoping to obtain quick passage; in any event, next week we shall want to continue the debate initiated today on Bill C-48, namely the Canada Oil and Gas Act, with a view to referring it to a standing committee of the House before the Christmas break. In addition next Friday we
hope to spend the day completing whatever items I have just mentioned that might still be pending for some reason or other.
We have also agreed, with regard to a bill to be brought in as a result of three notices of ways and means motions dealing with amendments to the Customs Tariff Act, to refer it, after hearing one spokesman for each party, to a standing committee of the House rather than studying it in Committee of the Whole in view of its highly technical nature. To that end, I have here an order of the House confirming the agreement which you will kindly allow me to read, that we might know where we stand for next week, seeing that, contrary to what we discussed earlier, it will not be possible to proceed tomorrow in that regard; however, we could do so at any time next week since it can be done be very quickly.

Madam Speaker, after consultations with all parties I would like to call ways and means proceedings 6, 7 and 16. In the latter case I understand there is unanimous consent. I also understand that there is unanimous consent that the bill based thereon, the bill relating to the customs tariff, after second reading be referred not to the Committee of the Whole as is usually done in such cases but, because of the unusual complexity of the bill, be referred to the Standing Committee on Finance, Trade and Economic Affairs.

I understand, Madam Speaker, that when I have finished my remarks, you will seek the required unanimous consent. With regard to the Christmas break, since the question has been put to me, naturally if the work I have just outlined proceeds with due dispatch, we should be able to consider seriously an adjournment toward the end of next week or, at the latest, early in the following week. But I hope we can make it Friday next week. As for the date or our return, we had discussions on the matter this morning; I feel it would be important to have another meeting early next week when, depending on the progress achieved, we will have a much better idea of whether we should come back before or around January 12.


Walter David Baker: Madam Speaker, with respect to the proposed notice, my friend has indicated there is consent with respect to that to which he referred. We can certainly deal with that. That has been discussed and agreed upon.


Mr. Knowles:: Madam Speaker, there is agreement to the request for the introduction of the customs tariff bills today, and there is also agreement that the complicated one, after it has been read the second time some day next week, be sent to the Standing Committee on Finance, Trade and Economic Affairs.
December 11, 1980

On several Thursdays earlier in the session, the minister made reference to the freedom of information bill. It seems to have been forgotten. Is there any reason why it could not be dealt with and sent to committee before we break for the Christmas recess? That might be a better piece of work than the judges' bill.


Yvon Pinard: Madam Speaker, the hon. member will understand that if we are to adjourn on December 19, there will be only seven days left. I have had discussions with him this morning and with my other colleague from the Conservative party. We discussed the different pieces of legislation which I have just mentioned. It is certain that the access to information bill has our high priority, but I do not think it can be concluded that, because we are not able to deal with the bill quickly before Christmas, we are not giving the necessary priority to that bill.
I wish to state very firmly that this bill is very important to us, but some time last week or a week ago it was mentioned on the floor of the House that it would not be possible to obtain second reading of that bill in one day. That being the case, I think it would not be reasonable for us to take more than one or two days on the second reading stage of that bill, because we would then prevent other pieces of legislation from being referred to committees. That is the reason why we think that in the next seven days it will be difficult to give second reading to the bill. However, I want to confirm to the hon. member that as soon as possible following the Christmas recess we will ensure that the bill is referred to committee, and I will call for the co-operation of all parties on the other side.


Madam Speaker:: Hon. members have heard the suggestion of the President of the Privy Council concerning the ways and means proceedings Nos. 6, 7, and 16, which will be called as the first items under government orders and that the bill based thereon, after second reading, be referred to the Standing Committee on Finance, Trade and Economic Affairs. Is this motion agreed to?


Some hon. Members:: Agreed.


Madam Speaker:: It is so ordered.


MOTION TO ADJOURN UNDER S.O. 26   FINANCE EFFECT OF RISING INTEREST RATES
John Edward Broadbent: Madam Speaker, I am rising under the provisions of Standing Order 26 as a result of the deeply disturbing news which we heard today that the Bank of Canada is raising its interest rate to a record 16.14
Order Paper Questions
per cent. I ask leave, therefore, seconded by the hon. member for Broadview-Greenwood (Mr. Rae), to move the adjournment of the House under Standing Order 26 for the purpose of discussing a specific and important matter requiring urgent consideration, namely, the announcement by the Bank of Canada today with the government's approval that interest rates will be further increased to a record level threatening the economic livelihood of most sectors of the Canadian economy, the ability of Canadian families to cope with the basic necessities of life, and leading to the worst winter in terms of a combination of inflation and unemployment since World War II.


Madam Speaker:: The hon. member for Oshawa (Mr. Broadbent) has given me notice of his motion under Standing Order 26, as is required under the provisions of the order. I have examined his statement and I find that the problem raised by the hon. member is obviously a very important one. It refers to a situation which undoubtedly has a certain character of urgency. At the same time, I am sure that it is a matter of continuing interest to all members of the House.
As everyone knows, there has been a pattern of changing interest rates in recent months, including the announcement today by the Bank of Canada that interest rates will further be increased. The inevitable conclusion is that the problem is of continuing concern. As evidence of this, the Chair need only refer to the fact that recently there have been a number of motions moved by hon. members under the provisions of Standing Order 43, as well as a number of oral questions directed to the Minister of Finance (Mr. MacEachen) and other ministers on this very matter. The fact that the House has already been dealing with the situation for some time is an indication to the Chair that we have a problem which is of a continuing nature, and in this sense I feel that it does not fall within the purview of Standing Order 26.
For those reasons, I regret very much that it is not possible at this time to put to the House the motion proposed by the hon. member for Oshawa.



ROUTINE PROCEEDINGS


[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. D. M. Collenette (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 1,490, 1,629, 1,657 and 1,668.
I ask, Madam Speaker, that the remaining questions be allowed to stand.

December 11, 1980
Order Paper Questions


Mr. Cossitt: What are the names and addresses of all lawyers or legal firms in Ottawa and District who were hired by the government (a) since April 14, 1980 (b) between July 8, 1974, and May 22, 1979, and, in each case, what amount was received where the fee involved was more than $1,000?


Joseph Jacques Jean Chrétien: For the Department of Justice: The following lawyers were appointed agents of the Minister of Justice of Canada:
1. (a) G. B. Cooke
Michael J. Quibley
(b) Barnes & Cannon Batt, Robert F.
Batt & Howard Beseau, Paul D.
Boguc, John E.
Bond, James M.
Brunn, Karl Cooke, G. B.
Cote, Fran?ois Dent & Francis Dickinson. Richard H.
Dixon, N. D.
Gowling, Henderson & Co. Green, Poulin & MacKinnon Filion, Jean-Paul Kane, Paul MacDonald, T. D.
McNabb, A. A.
Nicol & O'Connor O'Donnell, Hugh J.
Ostiguy, Raymond Panet, A. De.
Quigley, Michael J.
Scott & Aylen Scott, Cuthbert A.
Scott, David W.
Smart & Biggar Willson, John E.
Willson & Willson
Renfrew	N/A
Smiths Falls	N/A
Ottawa	N/A
"	N/A
"	N/A
"	S 1,710.30
"	N/A
"	N/A
Carleton Place	N/A
Renfrew	$ 5,741.30
Ottawa	N/A
"	$ 1.822.15
Renfrew	N/A
Smiths Falls	$ 13,530.84
Ottawa	$ 19,552.50
"	$ 21,298.50
Vanier	N/A
Ottawa	N/A
"	$165,202.37
Renfrew	$ 14,534.73
Ottawa	N/A
Perth	N/A
Ottawa	N/A
"	$ 4.692.47
Smiths Falls	N/A
Ottawa	$ 1,009.20
"	$ 56,970.96
"	$ 70,750.69
"	$ 19,892.35
Perth	$ 25,906.82
"	$ 1,004.35
(a)	$900;
(b)	The speaker's kit contains basic information on the definition of a constitution, its usefulness and why it is important to change the Canadian Constitution.
2.	The Government of Canada must inform Canadians about their country, its system of government and the services offered by the national government. The objective of the document entitled "About our Constitution" is to make Canadians more aware of the importance of the unity of their country and the need for constitutional reform.
3.	The information included in the speaker's kit is factual and deals with constitutional reform, to which political leaders of all parties publicly committed themselves during the referendum campaign.


Mr. McKinnon: What has been the increase in real terms in the Department of National Defence's annual (a) total budget (b) capital budget, for the fiscal years 1970 through 1980-81?


Mrs. Ursula Appolloni (Parliamentary Secretary to Minister of National Defence):: fi 51
(a) and (b)	Total Budget * less Statutory	Capital Program	fit1970-71 Actual Expenditures	(7.43)	(18.39)	1971-72 " "	(3.26)	( 6.18)	..1972-73 " "	(6.20)	(27.04)	1973-74 " "	4.33	23.68	1974-75 " "	(4.91)	( 2.46)	1975-76 " "	4.72	19.27	1976-77 " "	2.89	17.56	1977-78 " "	3.41	5.89	1978-79 " "	2.79	8.18	1979-80 " "	(0.23)	11.39	1980-81 Main Estimates	3.50	7.91	* The "increase in real terms" for the total budget has been calculated exclusive CANADIAN UNITY INFORMATION OFFICE-FOLDER	of statutory costs.


Mr. Cossitt: 1.	Did the Canadian Unity Information Office circulate with a memorandum dated October 8, 1980, a folder entitled "About our Constitution" and subtitled "Speaker's Kit" and, if so (a) what was the entire cost to the taxpayer for the printing of all such kits (b) does the kit contain essentially, explanations of the constitutional policies of the government?
2.	Is it government policy to spend taxpayers' money to promote the policies of the Liberal party?
3.	Were the views of other political parties in Canada included and, if not, for what reason?


Joseph Jacques Jean Chrétien: For the Canadian Unity Information Office: 1. Yes


Mr. McKinnon: What was the rate of inflation, according to the Department of National Defence's "inflation model", for the fiscal years 1970-71 through 1980-81?


Ursula Appolloni: The Department of National Defence Economic Model was established in 1971-72 and therefore the actual inflation rate for 1970-71 is not available. However, it has been estimated and included as an estimate in the table below:
December 11, 1980

1970-	71
1971-	72
1972-	73
1973-	74
1974-	75
1975-	76
1976-	77
1977-	78
1978-	79
1979-	80
1980-	81
Fiscal Year (Estimate) (Actual)
(Forecast)
Defence Service Program per cent Inflation 6.5 7.09 8.68 9.88 16.45
13.4 11.6
9.7
9.4
8.8
10.4


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



GOVERNMENT ORDERS


Marc Lalonde: that a ways and means motion to amend the Customs Tariff, laid upon the Table on Monday, April 21, 1980, be concurred in.


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


[Stage Direction]
Motion agreed to.
Some hon. Members:: Agreed.


BUSINESS OF THE HOUSE
Walter David Baker: Madam Speaker, I rise on a point of order. The President of the Privy Council is not here right now but his parliamentary secretary is, so I draw his attention to my point of order. I am a little concerned about my friend's reference to an understanding, as he put it, that there would be one speaker per party speaking on Bill S-2 when the bill comes before the House. I did not quite catch in the translation, what the President of the Privy Council said, so I went out to check it and I found that indeed he had stated that there was an understanding that there would be one speaker per party on Bill S-2. I just want to make it clear, so we do not have any misunderstandings, that the understanding of the President of the Privy Council does not accord with mine, although it is my understanding that the debate on that bill will be very short. I do not believe we ever discussed it on the basis referred to by the minister. I am making this point while the parliamentary secretary is here so that we will not have any misunderstanding of our intentions on this matter.


David Michael Collenette: Yes, Madam Speaker, I concur in the sentiments expressed by the hon. member for Nepean-Carleton. In the discussions which we have had, we spoke about a very short debate on Bill S-2. I do not believe there was any specific agreement to limiting the speeches to one speaker per party, but we hope to get the bill through very quickly tomorrow.


CUSTOMS TARIFF, NO. 2
Marc Lalonde: that a ways and means motion to amend the Customs Tariff, No. 2, laid upon the Table on Monday, June 2, 1980, be concurred in.


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


[Stage Direction]
Motion agreed to.

Marc Lalonde: that a ways and means motion to amend the Customs Tariff, No. 3, laid upon the Table on Tuesday, October 28, 1980, be concurred in.


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


[Stage Direction]
Motion agreed to.

Marc Lalonde: that Bill C-50, to amend the Customs Tariff and repeal the South African Trade Agreement Act, 1932, the Irish Free State Trade Agreement Act, 1932, and the United Kingdom Trade Agreement Act, 1937, be read the first time and be printed.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
[Stage Direction]
Canada Oil and Gas Act

Marc Lalonde: that Bill C-48, to regulate gas interests in Canada lands and to amend the Oil and Gas Production and Conservation Act, be read the second time and referred to the Standing Committee on National Resources and Public Works.
He said: Madam Speaker, when we introduced the National Energy Program on October 28, the government set out aggressively to seek the energy sources and solutions which Canada will need for generations to come. We did so with a determination unmatched by any previous federal government, and we believe we have found a solid way in which to build our energy house.
Our way begins with the clear, strong, nationally-oriented principles of security, opportunity, and fairness. It constitutes a deep commitment by the government to a secure energy future for all Canadians. Also it underscores a basic confidence in this country's ability to confront the world energy situation on our own terms and in our own way.
Today I am pleased to introduce Bill C-48 for second reading. In doing so, I present a key element in the successful fulfilment of the National Energy Program. The Canada Oil and Gas Act will establish a new and modernized regime to govern resources development activity in those immense frontier regions of our country known as the Canada lands.
Two centuries ago, Edmund Burke, the eminent British statesman and political philosopher, wrote the following:
If we command our wealth, we shall be rich and free; if our wealth commands us, we are poor indeed.
The years have not dimmed the significance nor lessened the impact of those words. Canada is rich in natural resources. Our aim is to allow Canadians from coast to coast the opportunity of sharing the benefits of those riches. Bill C-48 is a significant step in that direction.
I have stated on other occasions that there are three direct action programs essential to solving Canada's energy problems. Members will recall that these include reduced consumption of oil products, rapid substitution of oil by other more plentiful energy sources, and finally, exploration, development and production of domestic oil supplies. It is to this last program dealing with domestic oil supplies that the Canada lands are of vital importance.
Our offshore regions cover an area of some 2.5 million square miles. The territories alone comprise another 1.5 million square miles. Together this is what we call the Canada lands, an area which is almost twice the size of the ten provinces combined.
The promise of this vast frontier region is as enormous as its size. It represents Canada's best prospects for large, new
reserves of conventional petroleum. It holds the key to our energy security. If it is true that the future is the most expensive luxury in the world, then there is a substantial downpayment on that luxury, and that downpayment is in Bill C-48.
The existing Canada oil and gas land regulations covering frontier oil and gas rights were promulgated two decades ago. Obviously they are not appropriate to resource development needs today. We cannot continue with a system requiring that holders of rights meet only minimum requirements, particularly minimum work requirements set out in fixed schedules, designed for very broad geographic areas. We must ensure that holders of oil and gas rights pursue vigorous and sustained exploration and development efforts, or relinquish their rights to make way for explorers who will do so.
Oil and gas rights have already been issued for 350 million acres in the Canada lands. Virtually all the area is considered promising in terms of potential reserves. Bill C-48 will convert these existing rights to the new land management regime thereby establishing it in a meaningful way. It will see that this is done within one year of the passage of Bill C-48.
1 should like to take a moment to spell out for the House the main elements of the new regime. They can be summarized in seven specific points. First, there will be stiffer work requirements through negotiated exploration agreements which include firm drilling commitments. Second, we will reserve to the Crown a 25 per cent share of oil and gas rights in the Canada lands, to be exercised through Petro-Canada or some other designated Crown corporation. Third, there will be a minimum requirement of 50 per cent Canadian ownership, through the private or public sector, of production from the Canada lands. Fourth, we will ensure optimum employment of Canadians, and use of Canadian goods and services, in oil and gas activities carried out on the Canada lands. Fifth, we will provide ministerial authority to order production to commence and be delivered to Canadian markets, in quantities and at prices specified in the order. Sixth, we will be providing a greater degree of control in the timing, direction, rate, and level of exploration, development and production by various means. These would include drilling and production orders, earlier release of proprietary information, prior approval of transfers and assignment of rights. Seventh, we will ensure that Canadians receive a fair return for their oil and gas resources through a basic royalty of 10 per cent, with an additional royalty of 40 per cent of the net profits of a field.
As I said earlier, the Canada oil and gas act will bring existing oil and gas rights into line with the new regime, but in such a way as to ensure that if these rights are not actively developed they will be relinquished to the Crown. Existing permits, leases and agreements will either be converted to new leases and agreements within a year or will be surrendered to the Crown. Under the new regime, all exploration rights will lead to one type of production rights only, namely, a production licence.
The emphasis in all leases and agreements will be on active development. Even though, as was pointed out in "The Nation-
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al Energy Program", Canada may not need its northern resources for domestic markets until the 1990s, we should press ahead with exploration so that Canadians will know that a secure source of oil and gas is available as our safety net for the future.
As in Bill C-20, which this bill replaces, there will be a basic royalty of 10 per cent, reducible where economically justified, to allow commencement or continuation of production. In addition, there will be a form of profit-sharing amounting to 40 per cent of the net profits of an oil and gas field above a 25 per cent rate of return according to the formula set out in the act. Incorporating the fiscal obligations of holders of frontier rights in the act will provide certainty for industry and make for a stable investment climate.
The thrust of the new regime is on the early assessment of the oil and gas potential of Canada's frontier regions. However, this will not be done at the expense of fisheries resources or the environment. There are provisions for a fund to cover costs of regional environmental studies related to oil and gas activities. This fund will be raised by assessing rights holders proportionally on an acreage basis to cover the costs of biological and physical research designed to ensure safety and to ensure the prevention of pollution. There is provision for catch-up assessments to be levied on parties who acquire oil and gas rights in a region where such environmental work has already been financed.
There are a number of provisions in the new Canada oil and gas act relating to the supervision and control of oil and gas activities rather than to the strict land-management regime. These operational provisions more accurately fit into the Oil and Gas Production and Conservation Act of 1970, and so they are put forth as amendments to that act. Items thus covered include:
1.	Operating licence to be prerequisite for carrying out oil and gas activities, with an individual authorization in writing necessary for each activity, as well as deposit requirements to ensure submission of data and reports, and requirements for optimum employment of Canadians and utilization of Canadian goods and services;
2.	Authority for the chief conservation officer to order the commencement, continuation and cessation of production on the basis of sound engineering principles;
3.	Provision for oil spill liability on the part of operators, in particular providing for absolute liability; and
4.	Authority to charge operators for outside consultative advice when evaluating and authorizing oil and gas production systems.
The proposed new regime will involve far-reaching administrative responsibilities for its implementation. Judgmental decisions will determine when, where, and how oil and gas rights should be made available for development. Involved in this process will be such factors as the extent of Canadian ownership, and the use of Canadian goods and services. It is
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therefore our intention that in order to ensure efficiency of administration, and consistency in application of this regime, there will be one national resource management agency. It will be responsible for implementing the Canada oil and gas act throughout the frontier regions.
The element of Bill C-48 which seems to have attracted the most attention, especially that of industry, is the 25 per cent Crown share. I would like to clear up some misunderstanding about this aspect of the bill. In brief, Bill C-48 grants to the Crown a 25 per cent share of existing oil and gas rights in areas where production has not yet begun. This share, described as a "carried interest", does not constitute a free ride for the Crown.
The Crown share can be transferred by the Minister of Energy, Mines and Resources to Petro-Canada or to some other Crown corporation. This corporation must convert the share to a working interest, not later than the time at which a production system is approved for the relevant lands. Thus, the Crown share would be in the form of a working interest some time before the expenditure of 85 per cent to 90 per cent of the total cost involved in bringing a field into production. I stress here that this 25 per cent Crown share does not apply to fields which are already in production, like Norman Wells.
This concept has variously been described as "confiscatory" and "expropriation without compensation". I would like to state emphatically that this is not so. Surely the Canadian taxpayer has the right to retain a share in the ownership of his resources.


Michael Holcombe Wilson: After the fact.


Marc Lalonde: As far as the charge of expropriation is concerned, I point out, to the friend of the multinationals on the other side, that a 25 per cent federal cash incentive grant will be made available to all explorers to offset the 25 per cent Crown share.
The Crown share replaces the Petro-Canada "back-in" provision in the current Canada oil and gas land regulations, and it reflects the substantial contribution by Canadian taxpayers to frontier exploration through such incentives as the super-depletion allowance. The new cash incentive grant recognizes the vital need to know as soon as possible what the frontier region may contribute. I would remind hon. members on the other side of the House that in the past Canadian taxpayers have contributed, in some instances, over 100 per cent of the cost of that exploration. It is only fair that today Canadian taxpayers should be entitled to a share, which we have set at 25 per cent, in the development of those resources which have been found through the contribution of the Canadian taxpayers in the past, and which will be found in the future.
I am sure members are aware of the statements made by some industry spokesmen that there will now be a decrease in oil and gas activity in the frontier regions. These spokesmen have said their plans will have to be reviewed and that investment money may have to leave Canada. 1 doubt that these people have carefully analysed the National Energy

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Program, especially the positive aspects of such elements as the cash incentive grant program. 1 can say that in discussions 1 have had with various representatives of the industry in the last couple of weeks, they have indicated very substantial interest in investing in the Canada lands under the new regime.


Some hon. Members:: Hear, hear!


Marc Lalonde: In any event, I would be hard pressed to name any area of the world today where a more favourable exploration situation could be found, both from the standpoint of geological promise and investment climate.
In the United Kingdom, for instance-and I will not talk about the recent 20 per cent tax which the U.K. government has imposed on the oil and gas industry in England-one would encounter a far more severe taxation system involving, in fact, four levels of taxation of petroleum production. In addition, there is one U.K. state enterprise empowered to purchase up to 51 per cent of all oil production, and another one with a monopoly in respect of all gas production. In Norway, there is a Norwegian state enterprise empowered since its inception in 1973 to be a 50 per cent carried-interest holder in oil and gas rights throughout the exploration stage. The percentage share can go higher on the basis of the productivity of a field with the maximum rate attained to date being 80 per cent.
In the case of producing areas such as Indonesia, where the production sharing type of contract is the general mode of doing business, the rate of return obtainable under that system is considerably less favourable than will be the case under the fiscal terms set out in the proposed Canada oil and gas act. As regards moving south to operate in the U.S.A., the limited extent of the areas that do remain available for exploration in the United States are by no means in the same category as Canada's vast frontier regions. The elements of the new oil and gas regime for Canada's frontier, together with the geological promise of these regions, constitute a situation attractive to a degree difficult to find anywhere else in the world.
For some years now industry has been concerned with the need to establish certainty regarding the tenure of oil and gas rights in the frontier regions, as well as the applicable fiscal regime. Industry reaction following the announcement of the National Energy Program has centred on the timing of the proposed new legislation and the opportunity for industry to make its views known.
I share industry's desire for a speedy resolution of these questions. I am introducing Bill C-48 for second reading today so that we can quickly move to the committee stage where interested parties will have the chance to be heard. I might add that if, after having heard witnesses, the committee feels that some appropriate adjustments are required, the government will be open to the possibility of some modifications in order to meet the justified concerns.

I should like to add a few words in my own language concerning Bill C-48, a bill to regulate oil and gas interests in Canada lands, which I have just introduced for second reading. People are not particularly aware of the wealth and resources which Canada lands mean for all Canadians. These lands include the Northwest Territories and the offshore regions where Canada has submarine mining rights. When we make the sum total of all these areas, we end up with a surface which is nearly double that of the ten provinces put together.
As a matter of fact, it is a huge area which is enormously rich in terms of oil and mineral resources generally. In fact, all geologists agree that the Canada lands are the most promising for the future in terms of oil and natural gas. Following the exploratory work which has been carried out off the cost of Newfoundland, in the Hibernia field, as well as in Beaufort Sea, there are already very encouraging indications that within the next few years Canada may count on major reserves of conventional oil similar to those which are now being tapped in the west.
Up to now, Canada had granted exploration permits for some 300 million acres of this territory which covers some four million square miles. And Bill C-48 which we are looking into today will make it possible for the Canadian government to update all its current regulations governing the exploration and development of oil resources on Canada lands.
In fact, we have several main objectives in mind with this new system. First of all, exploration agreements will contain stricter project requirements and provide for firm drilling commitments. Also, the government of Canada, on behalf of Canadian taxpayers, will keep a 25 per cent share of oil and gas rights in the Canada lands, which will be handed over to Petro-Canada or some other designated Crown corporation.
All agreements will also specify that at least 50 per cent of the interests developing those reserves will have to be Canadian, from either the public or the private sector. Fourth, through these agreements, we will ensure that the projects to develop oil and gas in the Canada lands will employ as many Canadians as possible and use the greatest number of Canadian goods and services. There will also be provisions to guarantee Canadians a fair share of the returns accruing from the resources committed on their behalf in the oil and gas industry through a basic 10 per cent royalty with an additional 40 per cent royalty on the net profits from a particular deposit.
Finally, Bill C-48 contains several other clauses enabling the minister to ensure that the rate and volume of production are adequate to satisfy the future needs of Canada. It also contains a whole series of provisions so that the government can be sure that exploration in the north and offshore is ecologically sound, and that exploration work and the actual projects are respectful of the environment which, as everyone knows, is extremely fragile in those regions.
December 11, 1980



I have said that the government wishes this bill to be considered in committee so that it may be considered in detail and so that hon. members may have an opportunity to hear witnesses. We on this side of the House will be very open to suggestions for improvements. I am confident that the members of this House share our concern that the industry should be provided with some certainty as soon as possible regarding the tenure of oil and gas rights in the frontier regions coming under the Canada lands.
1 therefore commend Bill C-48 to early consideration in committee, and I commend it to the House generally.


Michael Holcombe Wilson: Mr. Speaker, we are today debating the legislation which will set the framework for energy development in the Northwest Territories, the Arctic Islands and offshore in the north, as well as on the east coast and the west coast, for years to come. It is the framework for what will probably be the most significant area of energy development in Canadian history. Unfortunately, since this bill was tabled on Tuesday for first reading, we have only had two full days to study the bill before we are put in the position of presenting some preliminary views. It is not sufficient time to do justice to the legislation, which is very complex and very far-reaching. Therefore it is important that we have good committee hearings to understand the full complexity and full impact of the legislation.
The results of exploration to date in the Mackenzie Delta, the Beaufort Sea islands, the Arctic islands, and the east coast offshore, have been very exciting to date. There is great promise for the future. It is essential, therefore, that this legislation provide a very positive framework for future development and for increased exploration in these areas. The east coast is a very exciting area, not only because of the size of the potential of the discovery that has been made there to date, but also because of the very strategic location of these new resources in view of our over-all vulnerability to offshore sources of oil, particularly the very volatile Middle East.
Atlantic Canada and Quebec are totally dependent on offshore sources of oil at this time. By 1985 we expect that Ontario will commence using imported oil. Hibernia and other discoveries off the east coast will transform this picture. It will also transform the development of the east coast, not only in terms of the economic development but also in security of supply, and with regard to the regional balance between that part of the country and other provinces, as well as our international balance of payments. It is essential, therefore, to treat Bill C-48 with the utmost respect, to deal with it expeditiously but with great care, because of the impact it will have on our energy development.
The broad objectives of this legislation are worth while and are certainly acceptable. One might go so far as to say they are motherhood; they are intended to increase production and Canadian ownership, as well as to provide a very stable tax environment. I agree with the minister when he says that it is
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important to have this legislation. We have been waiting for it for about ten years now.
Let me trace the sorry history of the life of this bill, Mr. Speaker. It goes back many years. Until now, the regulations under which the federal government makes oil and gas rights available for development have been the Canadian oil and gas land regulations. These were promulgated under the Public Lands Grants Act and the Territorial Lands Act. In 1970 we were promised new rules under these acts, and in 1973 in the "Energy Policy for Canada, Phase I," the federal government document, it was noted:
-these land regulations are currently under review. No new federal permits have been granted since March 1972.
In May, 1976, the then ministers of energy, mines and resources and of Indian affairs and northern development announced the elements of a petroleum and natural gas bill which was to be placed before Parliament later that year. About a year later we got the Canada oil and gas act and were promised speedy action on it, but 15 months later there was an election so there is still no Canada oil and gas act. Now, almost three years later, we finally see this legislation come to light.
This delay is shocking, Mr. Speaker. It is irresponsible to expect companies to operate in an environment when they have no idea what the ground rules will be. In fact the minister has changed some of the ground rules to the significant detriment, not of the multinationals as he keeps saying in this House, but of the Canadian-owned independent companies that he is looking to, to play an important role in developing the Canadi-anization of the oil industry. That is the kind of company that is being hurt.
This delay, going back to 1970, has cost Canada valuable years in reaching oil self-sufficiency. It is important that we get on with the job now. If I may say one positive thing, I would commend the minister for finally bringing this legislation forward.
We must study this new legislation very carefully and look at its objectives. It reveals that the stated objectives have been seriously undermined by the specifics of it. Today, I will only judge the legislation on the minister's own criteria, on the over-all objectives to achieve self-sufficiency in this country and to increase Canadianization. These are two of the principal objectives of his National Energy Program. I will also comment on the retroactive nature of the 25 per cent back-in by the Crown, the whole question of offshore jurisdiction for resource ownership, the international implications, and the very important element of ministerial discretion which is rampant throughout the bill.
Let us take the objective of self sufficiency. In the National Energy Program, frontier and offshore reserves are not included in any discussion of the producibility in the industry leading up to 1990. In the program it is stated that conventional sources will produce about 713,000 barrels per day and nonconventional sources will produce about 730,000 barrels per day. These figures are suspect, first of all because of the changed economics brought in by the National Energy Pro-

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Canada Oil and Gas Act
gram which altered the degree of production on the conventional side and then because of the current deadlock between Alberta and the government. We have seen the non-conventional projects put in limbo. A third project has announced it will not go ahead today, the Judy Creek tertiary recovery program.
There is a very good reason why we have to look toward these frontier resources. There is also a good reason why they are not included in the supply figures in "The National Energy Program", because they are not assured. Their viability has not been proven. There is great promise but the technical problems of transporting the oil to places where it can be used have not been solved, and the over-all economics of development have not been proven. These are important elements in the bill we are studying today.
It is important to ask whether the provisions of Bill C-48 bring these sources closer to reality. It is important to know whether Bill C-48 encourages increased levels of exploration and development. The initial assessment we have made on this side is that the answer to that question is no. One of the public responses we have seen is by Gulf Canada which has cut its northern exploration budget from $400 million to $270 million for next year-about one-third. I find that to be a very serious decision by Gulf Canada.
We must also examine the change in the tax evironment between the prior position and that proposed under Bill C-48. The royalty position proposed under the previous bill, which was not passed, is the same as set out in this bill. As the minister pointed out, the super-depletion allowance which provided a significant amount, in some cases 100 per cent of the cost of the expensive wells up there, was to be changed and has been changed to provide for exploration grants of between 20 and 80 per cent, depending on the level of Canadian ownership.
Under the previous proposed legislation Petro-Canada was given the right to back in if it met two conditions. One was if there had been no significant discovery, and the second was if the consortium was not more than 35 per cent Canadian owned. Under this new legislation, as well as under the National Energy Program there is a 10 per cent basic royalty plus a 40 per cent participating royalty after a 25 per cent return on investment has been achieved, and 8 per cent gas and oil production tax, and an automatic 25 per cent back-in by Petro-Canada, or another state agency. That back-in is there, whether or not there is a significant discovery and whether or not there is a significant degree of Canadian ownership.
The economics have been changed significantly by the proposed legislation and by the energy program. That is a matter which must be taken into account by the government when it is considering expert testimony here in committee.
I do not quarrel that there is a 25 per cent back-in. If the government feels this is necessary, then we can support that. However, I point out there are very high front-end costs involved in exploration offshore and in the northern frontiers.
There is a very inadequate pricing regime relative to other countries in the world. This, too, must be taken into account when the over-all economics are considered, whether or not companies feel it is worth their while to spend the huge amounts of money required for frontier and offshore exploration.
The impact of frontier and offshore exploration and development highlights the inadequacy of the pricing regime of the National Energy Program. In the conventional area, the problem is primarily a dispute between the province of Alberta and the federal government. We have urged the province and the federal government to get on with negotiations to unwind this deadlock. But the problem in the frontier is that we do have expensive drilling costs. If the pricing, together with the tax and other royalty requirements, is not attractive enough, then work will not go on. On that particular aspect, I am not encouraged.
I want to point out the difference in the pricing regime. The minister has referred in a passing way to the tax regime in the United Kingdom and Norway. He has omitted any reference to the pricing regime and he also only mentioned part of the tax aspect. He omitted to mention that in England there is a 150 per cent full cost recovery before there is a royalty and taxes are levied.
The economic adviser to the department of energy has stated:
A crucial element of our policy of economic pricing is that North Sea oil should be sold at world market prices within as well as without the U.K ... it would be very shortsighted for us to become accustomed to cheap energy supplies at below world market prices-
A paper on energy policy in Norway states:
It is especially important to economize with non-renewable resources, such as oil.. . It is therefore the view of the government that, even though Norway has become an oil exporting nation, domestic prices of oil products continue to be based on world market prices.
In the case of The Netherlands we find:
Since the 1973-1974 energy price increase The Netherlands immediately tried to price their own natural gas for domestic use and export at the OPEC equivalent level.
In the 1980 Venice summit, in declaration 7 the comment
was:
There is no justifiable rationale for subsidizing energy prices domestically-
In a policy speech in Australia, the prime minister stated:
-the oil parity pricing policy is an important part of the over-all plan. We want Australia to be as energy self-sufficient as possible in future years. We do not want Australia to be a beggar for fuel on the international market.
I mention these items today. While we may have one consideration regarding the question of conventional oil as it relates to the debate between Alberta and the federal government, in the case of offshore production, where the costs are so high, it is important to look at the experience of these other countries which are ahead of Canada in offshore development. Where primary resources are offshore these countries have moved quickly to world price. In Canada, as all Canadians know, we are considering not a move to world price but to about 75 per cent or 85 per cent of world price. Today the
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Economic Council was proposing 85 per cent of world price and the premier of the province of Alberta has proposed 75 per cent of world price.
It is important to look at what is happening in other countries of the world when we decide how to proceed with very expensive offshore development in Canada. Other countries do not have to contend with icebergs and short drilling seasons. Canada has to, as we all know. The result is that Canada's objective of self-sufficiency has not been moved forward. In fact it has been set back by the provisions of Bill C-48.
There is one other element to which 1 referred in passing when I was talking about the offshore development on the east coast. This is very strategic as it relates to Canada's supply position. We are relying on the Middle East, Venezuela and Mexico primarily for imports of oil. By taking oil from those parts of the world, security of supply is uncertain. This has been particularly so in the last two or three years. My colleague, the hon. member for Kingston and the Islands (Miss MacDonald), will be discussing this point further in the debate. However, I will comment that Canada has been given a heaven-sent opportunity to free itself from offshore dependency. Other countries would move quickly and aggressively to capitalize on this opportunity. But in Bill C-48 nothing like that is proposed. My initial observation is that the greed of the federal government for revenues and control is likely to set back this very exciting development.
If we are to err, I say let us err on the side of early and full development, to protect ourselves and our future so that we can free ourselves from offshore supplies of oil and thus secure the independence which Canada so richly deserves.
I have stated that we have no problem as far as the 25 per cent back-in for the Crown is concerned. I believe that it is a positive element to have a working interest rather than a carrying interest. I support these two provisions of the bill.
However, I have a very strong disagreement with the retroactive nature of this back-in aspect as it relates to exploration and development in the way it has been done to date. In 1977 the Government of Canada, in order to encourage exploration in these unknown areas of Canada and to understand what we had in the north and in the offshore, introduced a super-depletion allowance and it introduced certain back-in rights for Petro-Canada. These back-in rights would allow Petro-Canada to take a 25 per cent interest if there were no significant discoveries and less than 35 per cent Canadian ownership.
What has been done in this legislation is unfair, confiscatory, and immoral. On reflection, what the government has done is to say the success of the Beaufort Sea and Hibernia is too much to handle. The government has said it must have a part of it, and have it without payment. What happened is that $5 billion has been spent by the various companies in exploration over the years.


Marc Lalonde: The Canadian taxpayer paid for it.
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Michael Holcombe Wilson: This amount of $5 billion has been spent, and now Petro-Canada is being given the right to take a 25 per cent share on a retroactive basis without compensation. This is equivalent to a theft of $1.25 billion from these companies which have been operating in good faith.


Marc Lalonde: Try Norway.


Michael Holcombe Wilson: The consequences 1 see are negative as far as the impact is concerned on existing companies which have been exploring in the Beaufort Sea. It is immoral and it is an embarrassment to this country. We are acting like a banana republic in our relations with people who have operated in good faith.
Let us step back and look at the long-term implications of this.


An hon. Member:: Start acting like a Canadian.


Michael Holcombe Wilson: If you are going to take things away on a retroactive basis, I ask you to consider for a moment that you have an RRSP. Think what the fellow next to you is going to do about it because it is the same consideration-there has been a tax write-off, the government feels you have received too much and is going to take some of that back after it said you could have it. That is the position these companies are in, and it is totally unfair.


An hon. Member:: Gross imagination.


Michael Holcombe Wilson: There is no gross imagination there whatsoever. It is there in black and white. It is going to affect us not just in this one area relating to oil exploration and development in the north, but also will affect international confidence in government action of any sort as it relates to foreign investment, and it is going to set back economic development in this country because of that. We have received a black eye in the eyes of the rest of the world and it is bound to affect us in the years to come.
The government has changed the rules in another portion of this bill, and has done so on a retroactive basis. Bill C-20, although it was not legislation, was regarded by the industry as the ground rules under which they would be operating. It allowed for a three-year royalty holiday on production coming from reserves which were proven prior to December, 1982. The purpose of this was to encourage production and exploration in that part of the country. The government, having encouraged that exploration, has shortened the time, making the date December, 1980-which is only three weeks after the bill was introduced. The development programs which had been planned for a period leading up to 1982 have to be cut short. These programs could have been compressed into a tighter time-frame in order to take advantage of the royalty holiday. With only three weeks left, that is impossible to achieve. It is another example of the trickiness of this government.
Let us look at the other primary objective of the National Energy Program, and that is Canadianization. We on this side

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of the House fully support that objective and will support the government in any realistic way in achieving increased Canadian ownership of this industry. It is imperative to examine the impact of Bill C-48 on that objective. Will Bill C-48 achieve that objective of increasing Canadian ownership?


An hon. Member:: Yes, it will.


Michael Holcombe Wilson: Mr. Speaker, I do not agree that it will. We want to examine the witnesses very closely when we reach the committee stage to see how it is affecting the Canadian companies we are looking to to take an increased role in this industry. The preliminary indication is that only a limited number of Canadian companies are of the size to participate in the very expensive programs which must be undertaken in the north and offshore. The new economics of the industry under Bill C-48 and under the National Energy Program will not encourage others to participate. There are very high front-end costs, there is tremendous risk and high taxes as a result of Bill C-48.
As I indicated earlier, the pricing regime the companies will have to operate under is not going to be sufficient to attract investment. We had a slowdown in activity before Bill C-48 came into effect. Now with the changes brought in under Bill C-48 and the National Energy Program, I can see a further slowdown in that activity, and signs of that have been indicated already.
My concern is that the approach to Canadianization will lead to a very heavy involvement in the industry by the Government of Canada, either through PetroCan or through some other Crown corporation. The problem is not how to gain greater participation for Petro-Canada in the Canadian offshore. The provisions of this bill provide many opportunities for Petro-Canada to have a very full involvement. The danger of Bill C-48 is that it will result in too much centralization. There will be too much control vested in one central agency. There will not be enough breadth of decision-making so that the decision to move into this or that prospective area of development will be concentrated in one spot, the Government of Canada. That is wrong. Anybody who has followed the development of the oil industry over the years will agree that is wrong, and Canadians will suffer for it.
If Petro-Canada or the Government of Canada has a dominant involvement there will be insufficient diversity of points of view. The oil business thrives on competition and it thrives on different points of view.
I should like to make two proposals which will develop Canadian participation in this industry to a greater extent than will take place under Bill C-48 as it is today. I hope this may be discussed further in committee. The first is to go back to Bill C-20 and consider the approach taken there, and make some adjustments to the approach on how Petro-Canada or the state would have back-in privileges to any developments in the north.
Canada needs all the participants it can get for northern development. 1 say that because we have to bring to bear the maximum capital involvement as well as the maximum technological involvement and the differing points of view resulting from a wide range of participants. It will strengthen the Canadian industry and will encourage non-residents to seek out Canadian partners. Under Bill C-48 there is no incentive to make a good effort at expanding Canadian participation past a minimal 25 per cent.
I suggest to the minister that rather than make it a compulsory back-in for Petro-Canada, he allow Petro-Canada to back in if there is not 50 per cent Canadian involvement. Canadian involvement would be encouraged in those projects and we would not have the mandatory imposition of the state.
The second proposal concerns an alternative form of royalty not unlike the case in Great Britain and, I believe, in Norway. It is to allow companies to recover 150 per cent of their total investment and then subject them to a higher royalty, allowing them to get their capital investment back in a faster way. This would improve their investment and allow them to reinvest that money in other development in the north sooner rather than waiting for the very long pay-outs which can take place under Bill C-48 as it stands today. This is an approach which is consistent with the high degree of risk which prevails in the north and in the offshore, as well as the very huge size of commitment. It would be much easier for the less well-capitalized Canadian companies to take a stronger and more active participatory role. The result would be a faster development of the north and certainly would result in broader and more extensive Canadian ownership of the oil industry.
Bill C-48 confirms the Government of Canada's unilateral approach in yet another area of policy, and that is in the area of offshore jurisdiction over resources. Our party believes there is a legitimate right for coastal provinces to have the same rights to their resources as those which have their resources totally underground. We have stated many times we believe this jurisdiction should be guaranteed under the constitution in the same way as the inland provinces.


Some hon. Members:: Hear, hear!


Michael Holcombe Wilson: The oceans should not be regarded as barriers to these coastal provinces but should be regarded as an extension of their livelihood. This is similar to the position of these provinces as it relates to the fisheries. It is just an extension of that same thought to relate that same principle to offshore resources.
Other colleagues will be elaborating on this fundamental principle, but let me say only that it is essential that this disagreement be settled, and settled as quickly as the disagreement we have with Alberta because, if not, the legitimate development of offshore Newfoundland and Nova Scotia resources may well be delayed for many years, until the companies involved have sufficient confidence to proceed and spend the vast amounts of money required to bring those fields into production.
Let me comment on the economic development we hope will arise out of Bill C-48. We are pleased that provision is made
December 11, 1980

for the minister to approve plans for the employment of Canadians and for the use of Canadian goods and services in projects under the jurisdiction of Bill C-48. We on this side have been pressing for this, and we look forward to the regulations or the business plan the minister or his colleague, the Minister of Industry, Trade and Commerce (Mr. Gray), will be presenting to companies, so that we can judge the merit of this approach.
We believe this is important because of the job-creating possibilities there are, the increased opportunities to develop technology within this country, and the opportunities to export that technology in future years. The impact of that on our over-all balance of payments can be very significant, and this is something we believe is very important to keep in mind in the development of those regulations. However, it is essential to provide the companies with these ground rules beforehand so that they know what they are dealing with and how to conduct themselves in the development of these offshore resources. It is essential that in the development of these ground rules we limit the amount of discretion the minister has, and give the participants as firm an understanding as possible of what constitutes good behaviour in the use of Canadian people and products in these developments.
While I am on this subject I would like to draw the attention of the minister to a matter which my colleague, the hon. member for Calgary Centre (Mr. Andre), raised in the House the other day and of which the minister disclaimed any knowledge, that is, the question of the purchase by Petro-Canada of a drilling platform which, we understand, has been ordered from Japan.
The drilling platform will cost $150 million. It is a Sedco designed platform, and Thompson Drilling Company, owned by Atco Industries, a Canadian company, has had four identical rigs built in Canada, three in Halifax and one in Vancouver. Now we see Petro-Canada, the Canadian state-owned company, going to Japan to buy this same rig. We have asked the minister to get an explanation of this from Petro-Canada, and we ask him to impress upon Petro-Canada the importance of following the basic policies he is setting forward in this bill in the conduct of its activities. 1 hope the minister will be reporting to this House in a short period of time as to the reasons which led Petro-Canada to make that decision. It runs contrary to everything the minister has said, and I am surprised that he has not been on top of it prior to this.
Let us step back for a minute and look at Bill C-48 as it affects development in this huge area. If the result of Bill C-48, as I set out in the section of my remarks with respect to self-sufficiency and how we are going to take ourselves to self-sufficiency, is truly a slowdown in activity, the north will be affected in a very serious way. We have seen indications of budget cutbacks already. Job opportunities for native peoples will decline. Manufacturers and suppliers of goods in Alberta and central Canada will see orders to which they were looking forward to receiving, vanish.
I refer again to the Economic Council report which notes that the major opportunity for Canada to get out of the
Canada Oil and Gas Act
economic doldrums it is in today is through energy development. We do not see a sufficient forward thrust in Bill C-48 to move us in the direction to which the Economic Council refers. Major opportunities for economic development will be lost, and it is very important today at a time when one million people are unemployed and when we have a $17 billion deficit on our manufacturing trade-to say nothing of what this can do for energy supplies-that we err on the side of development and not on the side of greed.
I will not cover the question of the environment. My colleague, the hon. member for Hillsborough (Mr. McMillan), will be speaking to the House later with respect to the environment, but I wish just to note that that is a very critical element of this bill because of the very fragile nature of the environment and the ecology in the parts of the country which are affected, the north as well as the east coast offshore. We will be looking very closely at the environmental impact and at the regulations to be forthcoming as a result of this bill.
One final matter I wish to discuss is that of ministerial discretion. In reading this bill it is clear that there are many elements of ministerial discretion. This is of grave concern to me and, I believe, would be of grave concern to the people in the industry who have suffered quite seriously as a result of the discretion the minister has used to date in his very heavy-handed approach regarding the 25 per cent retroactive confiscation of the work which has been done to date. Against that background, participants in the industry must query whether there will be other areas in which the minister will exercise his discretion in a negative way. I have identified 23 significant areas of ministerial discretion. I believe these must be reviewed very carefully in committee. Petro-Canada can be designated the operator, and fields can be delineated by the minister and not by the industry. The power is particularly dangerous in the hands of a minister who has the record of this one.
In summary, we are pleased to see this bill come forward. We have waited, as I said earlier, since 1970 for legislation governing development in this part of our country. The objectives of the bill are worthy ones, but the bill is singularly ill-conceived in its structure with respect to the greed of the Government of Canada and its desire for control.
The government is undermining the objectives that the bill and the National Energy Program have set out to achieve. In the two key areas of self-sufficiency and Canadianization, the objectives of the National Energy Program have been undermined. This is a common thread in Bill C-48 and also in the Petroleum Administration Act, and I believe that the committee must give very careful study to certain elements of this bill in order to ensure that these objectives are not undermined.
1 urge the Government of Canada to be flexible, as the minister has promised the House today, to be openminded, and to put the interests of the country ahead of the interests of the government in achieving what we want to achieve in the development of these resources. The Government of Canada has a grave responsibility to all Canadians with respect to economic development and security of supply. Its policies in Bill C-48 would lead toward an insecure energy future. We are

Canada OH and Gas Act
risking economic development, and I urge the minister to weigh very carefully the advice and the views of experts who appear before the committee.


Ian Gardiner Waddell: Mr. Speaker, 1 am very pleased, on behalf of the NDP, to take part in this debate on Bill C-48. Previously the Canadian oil and gas regulations were debated only in the boardrooms of government departments and of oil companies. Some of the provisions in the bill governing the industry in the north and offshore are set out in some detail. As a matter of fact they are set out in so much detail that I agree with the hon. member for Etobicoke Centre (Mr. Wilson), who spoke before me, that it is very difficult, as a result, to deal with this bill in a lot of detail this afternoon, a bill which we received only 48 hours ago.
What I want to do is to discuss major parts of the bill, and later on to deal in committee with some of the other provisions of the bill. I should say right away to the minister that we in the NDP oppose the bill, and I will give some reasons as to why we oppose it. One of the major reasons is that in the past Canadians have really been international patsies with respect to our policy which allowed companies to come in and develop our oil and gas, especially in the north where the Government of Canada, which pretends to know better and which should know better, allowed quite open development.
The hon. member for Etobicoke Centre said we were somewhat like a banana republic in the sense that we seemed to be depriving people of property and investments which they had made in good faith. I, too, am against depriving people of property and investments made in good faith, but when 1 heard the hon. member for Calgary Centre (Mr. Andre) yell about the "immorality of the situation" being staggering, to use his words, I thought of what my constituents think about the immorality of the situation of, for example, Dome Petroleum in the Beaufort Sea. The fact is that that is a company which has been subsidized almost completely by public moneys, a company with all kinds of tax write-offs, the most incredible tax write-offs, a company which has never paid and is not paying any income tax. That company has admitted it in Victoria at a symposium and a debate which 1 attended this summer with the president of the company. My constituents think it is pretty immoral on the part of the company and pretty stupid on the part of the government to allow that situation to occur.
I have said that we have had a resource give-away unparalleled in any country in modern times, and 1 would draw hon. members attention to an article written way back in 1973 by Professor Andrew Thompson entitled "Canada's Petroleum Leasing Policy-A Cornucopia For Whom?", and subsequent articles written on Canada's leasing policies in the north. It is quite clear, if you read some of the work by Dr. Thompson and others, that they talk about a free entry system and about rights that are excessive, which go on and on, that there is no end to these free rights. They talk about a system which does
not promote turnovers and does not promote government intervention.
But that is in the past, is it not, Mr. Speaker? In the past we have seen, under Liberal governments by and large, that of the 290 million acres held under permit in our frontier lands, only 110 million acres are held by Canadian-controlled companies, and of the Canadian-controlled companies, Petro-Canada holds 60 per cent. When we look at this bill, when we examine it in detail, we should remember that it is the same old gang, the same sponsor who brought in the previous regulations which I have described as a resource give-away unparalleled in any country in modern times, who is bringing in these new regulations. The question arises as to why they have changed. Is it because we have a new minister, the genial and amicable member for Outremont (Mr. Lalonde)? He is smiling, not because I said that but because he is just back from Paris.


Some hon. Members:: Oh, oh!


Ian Gardiner Waddell: Some of my colleagues say that "old ironclad" is back from Paris.


An hon. Member:: Latex man.


Ian Gardiner Waddell: In any case, Mr. Speaker, one has to ask why they have changed. If you had listened to the minister speak, as I did a few minutes ago, you would have found it to be, as Mr. Diefenbaker used to say, the greatest conversion since Saul on the road to Damascus. Suddenly the minister proposes a new program of Canadianization. Essentially this is why we oppose this bill.
I want to say something about Canadianization. I have a different word for it. It is not a new word and you can look it up in the dictionary. I call it "lalondization", or "lalonding". "Lalonding" is defined as the illusion of control by Canadians when, in fact, it is the same old control by foreign oil companies. That is what this bill is.


An hon. Member:: What dictionary are you using?


Ian Gardiner Waddell: It is a west coast dictionary. I say that because many people in the country, many well-meaning people, are really concerned-I think people are concerned in spite of what the Conservative party says-about the large oil companies and the shape of the development through these companies in the future. In spite of what the hon. member for Calgary Centre might say, many people are concerned, and they tend to want to support the government on this because they are in favour of Canadianization. Who is not? The Liberals are, we are, and the hon. member for Etobicoke Centre said a few moments ago that he was. But the problem is that many Canadian people think that Canadianization really means public control. Well, it is not public control, because if you look at the oil and energy policy you find there are no detailed provisions for public control. Which companies will Petro-Canada take over, when, how much are they going to pay, how are they going to do it? There is nothing there.
December 11, 1980

Mr. Hopper, president of Petro-Canada, when asked those questions, said that there are really no companies for sale right now. So it should be made quite clear to the Canadian people that Canadianization, or lalondization as I call it, does not include right now public takeovers and public ownership. It does not even include Canadian control. That is why I call it "lalonding", because even after this bill is passed and the provision for a 50 per cent Canadian ownership in frontier lands before production is allowed, is in effect, it will still be possible to have control from New York or from other parts of the United States where it has always been.
Let me give you two examples. The previous member for Winnipeg North Centre, before the present member who is in the front row of our party, the first leader of our party in the House, J. S. Woodsworth, used to go around the country with a blackboard, I am told, and he used to explain, through figures on his blackboard, what was really going on. I cannot bring a blackboard to the House of Commons, so I ask hon. members to bear with me when I give a few figures to illustrate my point. I will try to go slowly and make it very simple.
Let us take the case where Imperial Oil and Petro-Canada under this new scheme, if it does not change but goes through as it is, were to go into a project 50-50. Remember that 70 per cent of Imperial Oil is owned by Exxon, the largest multinational oil company in the world, and Petro-Canada, of course, is a government-owned oil company. If there were to be 100 shares in this consortium of Imperial Oil and Petro-Canada, Imperial Oil would take one-half and Petro-Canada would take the other half. I said that Imperial was approximately 70 per cent foreign-owned, which means approximately 30 per cent Canadian-owned. If the Americans laid claim to their share of the 50 shares taken by Imperial, they would get 70 per cent of 50 shares which would be 35 shares, and the remaining Canadian portion would be 15 shares. Then the 50 per cent of 50 shares of Petro-Canada, since it is 100 per cent Canadian owned, would be classified as Canadian.
In order to take advantage of this new act, the Canadian ownership rate is established in a white paper by the Petroleum Monitoring Agency. Judging by that standard, all Canadian-owned shares are classified as Canadian. If we take the 15 shares of Imperial and the 50 shares of Petro-Canada, it would give us a project with 65 per cent Canadian ownership and about 35 per cent foreign ownership. So, it would qualify. We would have 50-50, Imperial Oil and Petro-Canada, and suddenly we have a Canadian project which can produce, even though Imperial will control 50 per cent. 1 do not call that Canadianization; I call it lalondization. It is the first example of lalonding.
I should like to give a second example which will make it even worse. Let me take a case where Imperial goes in with 70 per cent. It could be Shell, Gulf, Texaco or any foreign company which the government does not propose to touch. They did not win in cabinet or whatever. The government did
Canada Oil and Gas Act
not have the courage to interfere with the foreign companies. It is still taking all the flack anyway, so it might as well have interfered with them. Returning to my example of Imperial with 70 per cent and Petro-Canada with 30 per cent, it would still qualify for a production licence.
That is strange, but let me explain how it works. We must remember that Imperial is 70 per cent owned by Exxon; 70 per cent of 70 shares would be 49 shares or 49 per cent. The Canadian content of Imperial would be 30 per cent of 70 shares, which would be 21 shares or 21 per cent. Of course Petro-Canada would be 100 per cent of 30 shares, which would be 30 shares, or 30 per cent. The result would be that this project, in which Imperial has 70 per cent of the action, under the new scheme would be 49 per cent foreign-controlled and 5i per cent Canadian controlled. Therefore, it meets the requirements. It is another example of "lalonding". It gives the illusion of Canadianization, but in reality, as was pointed out in my dictionary definition, we would have a consortium controlled by a foreign multinational.
I would ask subsequent Liberal speakers to challenge my figures. I see the parliamentary secretary indicating no. I gather my figures are unchallengeable.


Marc Lalonde: Don't go too fast.


Ian Gardiner Waddell: The minister said that his other chief gem in this bill is that the Crown would get a 25 per cent interest, the radical measure which incensed the members to my right. I ask the minister to read about a little deal which the Government of Canada entered into in 1945 between His Majesty the King and Imperial Oil Limited for the Norman Wells project in the Mackenzie Valley in the Canadian Arctic. In that project, which was a voluntary scheme, the government took 33 per cent. Now, under this radical scheme, which is not a voluntary one, it will take 25 per cent. This is another example of lalonding. It gives the illusion of doing something, it gives the illusion of a progressive policy, but really nothing is being done at all.
This bill affects the NDP concern about multinational oil companies, that they do not operate all the time on the basis of the Canadian national interest. The minister should read some of the literature written about these oil companies. For example, there is the book entitled "The Seven Sisters", which was written by Anthony Sampson. I recommend it to all my friends in the House. The evidence is clear that they do not always operate in the best interests of a national country, to put it mildly. We have seen it in Canada. The hon. member for Oshawa (Mr. Broadbent) raised it in the House when he brought forward the example where Exxon had an agreement to take Canadian technology from the tar sands and to take the technology from Imperial. There is nothing in the bill which deals with the transfer of technology. There is something in the bill which deals with a fair opportunity provision for Canadian industry, but it is not enough. When that oil runs out we want an industrial base for Canada. That must be examined in committee.

December 11, 1980
Canada Oil and Gas Act
With respect to environmental matters there is very little in the bill. The hon. member for Nunatsiaq (Mr. Ittinuar) will speak in far greater detail about that important matter. There is no mention of native claims in the bill. Perhaps I did not expect them to be included in the bill, but 1 did not hear the minister mention anything about them or that they were a priority. The drilling and the exploration will just go on as usual, forgetting the legitimate claims of the native people of the north.
We in the New Democratic Party adopt the principle that oil belongs to the state. We say that nothing will change the importance of oil in the next 20 years. So, it is crucial what we do now with that oil.
I should like to make reference, as did the minister, to what was done in Norway and Britain. 1 should like to quote from the book entitled "Arguments for Socialism" which was written by Mr. Tony Benn. He was the minister responsible in the Labour government for setting up the control over North Sea oil. Page 74 of this book reads in part as follows:
-our job was to make sure that the resources of the North Sea were exploited for the benefit of the nation as a whole and not solely for the benefit of a handful of multinationals controlled mainly from America.
Bill C-48 ensures that the Canadian north will still be part of the same old regime; it will still be controlled in the same manner.
I should like to compare the manner in which Norway handles it with what the minister is doing in Canada. Even under the new provisions of Bill C-48 we will still have lax rules and requirements. In Norway, special corporate taxes on multinational companies in the offshore mean that the companies pay 85 to 90 per cent of gross revenues in taxes. Despite this and despite what friends to my right say, Shell, Exxon, Mobil, Gulf and Phillips are still drilling in Norway; they are not pulling out. By contrast, Bill C-48, the radical measure brought in by the minister, imposes a royalty of only 10 per cent on oil and gas, compared to 35 per cent for that other radical province, Alberta. Also there is a provision for an incremental royalty of 40 per cent of net profits.
In committee we will be required to go into what "net profits" mean and the various write-offs. Any oil or gas discovered on or before December 31, 1980, is exempt from paying royalty for three years. The 40 per cent tax on net profits, after all these deductions, will be reduced considerably. Past income tax deductions reduced the nominal tax rate of 36 per cent for the petroleum industry to an effective rate of only 10 per cent from 1974 to 1979. Norway's state oil company, State Oil, inherits a 50 per cent ownership in any new oil or gas concession. The equity can rise as high as 70 per cent, and most of State Oil's share of exploration costs is picked up by the multinational oil companies. Bill C-48 provides a 25 per cent interest to be picked up by the federal government through Petro-Canada or another Crown agency. The Crown will not have to pay for previous exploration costs when it exercises this option but would pay 25 per cent of production costs.
Britain's state-owned oil company, British Petroleum, nationalized by Sir Winston Churchill, has first claim to 51 per cent of offshore oil production. The Conservative government in Britain recently levied a 20 per cent surtax on the profitable North Sea oil industry. The industry in Canada now claims that the 25 per cent government interest is a confiscation. But the Canadian taxpayer, in the past, has put up over 90 per cent of the cost of far north and offshore oil exploration.
Under the new National Energy Program the government will give grants up to 80 per cent of the cost of exploration on Canada lands for Canadian companies. I find it incredible that the hon. member for Calgary Centre and the hon. member for Etobicoke Centre complain about the 25 per cent interest when you consider how much money is being put up by the Canadian taxpayer. That is the point, Mr. Speaker-how much will be put up in the new National Energy Program? If you take what will be put up, the 80 per cent of the cost of exploration, this combined with tax breaks means that the taxpayer will put up 93 cents for every dollar spent by a Canadian company, and 72 cents of every dollar spent by a foreign company on Canada lands. Under these terms this 25 per cent interest is a give-away.
There was talk of industrial benefits and industrial spin-off. Norway has strict requirements-the source of supply for the industry must come from Norway. Norway supplies approximately 50 per cent to 60 per cent of all deliveries for offshore development. Their offshore industry now employs 36,000 people, which is 9 per cent of all industrial employment. Rig construction, petro-chemicals and refining have been developed for Norwegians, not by multinationals. Canada has the potential to develop a supply industry. It is only the Davies Shipbuilding Company in Quebec which builds semi-submersible rigs at the moment. Their major equipment components such as draw workers, pumps and large diesel engines are all imported. Our east and west coast industries could be manufacturing ships, pipe, rigs and equipment.
Strict Canadian content rules seem to be necessary and are workable, as is shown in Great Britain and Norway. I could go on and on with this comparison with Great Britain and Norway. The minister raised the subject and that is why I, too, raise it. This is another "lalonding" scheme which gives the illusion of being progressive when in fact it is not.
Mr. Speaker, I wish to say something about the sleeper provision in the bill which needs to be debated in committee. That is the section which defines Canada lands. It defines Canada lands as being lands in the Yukon Territory and the Northwest Territories and those sub-marine areas adjacent to the coasts of Canada. This raises the question of the provincial role in offshore oil and their role and control over resources. Sooner or later the government will have to face this.
It seems to us that the Atlantic provinces are facing economic hardships and difficulties. What Atlantic Canada needs-and I say this as a westerner who can see the real facts around me-is a resource base so that its people do not have to
December 11, 1980

go cap in hand to Ottawa and so that they do not have to rely on the charity of central Canada, as we in the west do not have to do that any more. I woud like to see Atlantic Canada in that position. They need a good resource base. That is why the provinces must have primary claim and ownership over their offshore resources.
Ownership is a bundle of rights. There are many things involved in ownership. For example, it does not mean that the federal government will be completely cut out. The federal government has control over shipping, fisheries, and defence, and certainly it has a strong claim to environmental control and protection in the coastal areas. Basically, the government must recognize-and it is not recognizing it by waving this red flag before the bull-that at some point it must make an agreement with respect to offshore resources. Perhaps this might be better dealt with in the constitution committee, but I raise it at this point anyway.
I wanted to say one special word on my own behalf before I go on to another matter with respect to the environment. It is very important that in this bill and in the committee we go into some detail about the northern environment. It is our last frontier, our last environment. I have been there and I have seen the incredible environment in the Beaufort Sea and the Mackenzie Delta. I do not want to see it spoiled. I think we can have oil and gas production there. I think it can be done, but it has to be done carefully.
I draw hon. member's attention to a speech given by Sam Raddi of I nuvik, Northwest Territories. 1 will not read it into the record. It is a speech he gave on January 28, 1976, to the Berger commission. What Sam Raddi said was that "for generations we have been told that as go the animals so go us. If the animals, the fish and the whales of the Beaufort Sea and the surrounding area, ever disappear, then we will disappear, the Eskimo people will disappear." That is a thing which we cannot see happening in Canada. That is why we must go very carefully in the area of environmental protection.
I want to discuss one further aspect of Canadianization. I spoke in the House on November 21, and in response to my speech I received a letter from a Mr. Conrad M. Black, who is the chairman of the executive committee for a small company in Toronto called Hollinger Argus Limited, located at 10 Toronto Street. Since Mr. Black did not agree with some of the things I said about Canadianization, and it pertains to what I am saying now, I will read the letter into the record. I do so because the minister also got a copy of the letter. It certainly is not a confidential letter. Mr. Black wanted a chance to respond to some of the statements I had made. He said:
Dear Mr. Waddell:
I have read with some astonishment your reference to me on page 4955 of Hansard, reporting your comments in the House of Commons on November 21, 1980. The statement, "We will simply replace the Rockefellers with the Conrad Blacks or the Bob Blairs", is so demonstrably untrue that I cannot allow it to pass without comment.
I believe it is well known to the government and to the official opposition that I, personally, support the announced objectives of Canadianizing the energy industry, according the federal government a greater fiscal benefit from the
Message from Senate
operations of that industry, and maintaining Canadian energy prices somewhat below the world price level.
I digress there. I know that the government has the support of the chairman, at least in respect of Argus. So much for their radical policy. I continue reading from the letter:
I part company, however, with the authors of the National Energy Program in so far as that program, if it is not amended, will increase Canada's strategic dependence upon foreign energy sources rather than reducing it and will go a long way toward strangling the domestic private sector in the energy industry, while inflicting serious unemployment and a loss of technological skills upon both eastern and western Canada in the aftermath of the departure of the megaprojects; nor do I, as a citizen, feel that the public interest is particularly well served by gratuitously antagonizing even the most patriotic and least self-serving elements of the private sector, as this budget and energy program and official reaction to criticism of it have tended to do.
He parts company and joins my friends to the right. I am used to that, Mr. Speaker.


The Acting Speaker (Mr. Blaker):: I am sorry to interrupt the hon. member but, it being five o'clock, there is now other business with which we must proceed.


Ian Gardiner Waddell: Mr. Speaker, I will finish reading the letter and give my reply to it later this evening.


MESSAGE FROM THE SENATE
The Acting Speaker (Mr. Blaker):: I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed the following bills, to which the concurrence of the House is desired:
Bill S-16, an act respecting the President of the Lethbridge Stake of the Church of Jesus Christ of Latter-day Saints;
Bill S-18, an act to amend and repeal an act to incorporate General Security Insurance Company of Canada; and
Bill S-10, an act to amend the Corporations and Labour Unions Returns Act.
Further, I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed the following Bills:
Bill C-47, an act for granting to Her Majesty certain sums of money for the Government of Canada for the financial year ending March 31, 1981; and
Bill C-49, an act for granting to Her Majesty certain sums of money for the Government of Canada for the financial year ending March 31, 1981.
80092 -63

December 11, 1980
Business of the House



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Blaker):: 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 Parkdale-High Park (Mr. Flis)-External Affairs-Closure of Polish border-Possible threat to world peace; the hon. member for Surrey-White Rock-North Delta (Mr. Friesen)-External Affairs-Poland-Inquiry regarding context of Prime Minister's note to Chairman Brezhnev; the hon. member for Portage-Marquette (Mr. Mayer)-Energy-Gasohol-Inquiry whether consideration given to removal of excise tax.
It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, private bills, notices of motions (papers), and public bills.
* *
*


BUSINESS OF THE HOUSE
David Michael Collenette: Mr. Speaker, on a point of order, there have been discussions among the parties concerning Bill S-18, which you just informed the House was passed by the Senate earlier this afternoon. There has been agreement that this bill will be dealt with later in private members' hour, following royal assent and following the conclusion of Bill S-12, and that Bill S-18 will be dealt with in all stages, including Committee of the Whole, this afternoon before six o'clock.


Walter David Baker: Mr. Speaker, that is precisely the agreement. We would also be agreeable to not seeing the clock in the event that there should be a few minutes past the normal adjournment hour required so that the matter can be completed.


Stanley Howard Knowles: Mr. Speaker, we are in agreement.


The Acting Speaker (Mr. Blaker):: The House has heard the arrangement as related by the parliamentary secretary and the House leaders of the two opposition parties. Is there agreement to proceed in that fashion?


Some hon. Members:: Agreed.


PRIVATE BILLS
Mr. Pierre Deniger (Parliamentary Secretary to Minister of State, Multiculturalism) moved: that Bill S-12, respecting the Canadian Merchant Service Guild, as reported (without amendment) from the Standing Committee on Miscellaneous Private Bills and Standing Orders, be concurred in.


[Stage Direction]
Motion agreed to.
Pierre Deniger: that Bill S-12 be read the third time and do pass.
He said: Mr. Speaker, I am really pleased this afternoon to introduce to the House and to Canadians on third reading the bill concerning the Merchant Marine of Canada, that is the new incorporation legislation. First I wish to extend my thanks to the member for Dartmouth-Halifax East (Mr. Forrestall) as well as to the member for Comox-Powell River (Mr. Skelly).
When we refer to the hon. member for Dartmouth-Halifax East, we refer to the member of Parliament who probably knows maritime circles better than anyone else. That member has dealt so much with maritime issues in his province and throughout Canada that he has now made a name for himself in maritime circles in Canada, especially in the Atlantic region. As for the member for Comox-Powell River, although he was elected at the same time as I was, I think that already on the Pacific coast his authority in maritime circles has made him a noteworthy member and colleague.
Mr. Speaker, this bill has been requested by Mr. Robert Cook and Mr. Maury Sjoquist, respectively President and Secretary-Treasurer of the Canadian Merchant Service Guild of Canada, who are obviously commissioned by the Guild to this end. The Guild was created in June, 1919, essentially to provide a fraternal union of Canadian seamen and to provide insurance for seamen and their dependants, in accordance with the provisions dealing with the benefit fraternal societies, as provided for in section 2 of the constitutive act.
Madam Speaker, the Guild is a fraternal union of seamen and for a long time its membership has been limited to licensed seamen and maritime pilots. As regards its activities as a fraternal benefit society, the Guild has not issued insurance coverage to anybody for over 50 years.
December 11, 1980



THE ROYAL ASSENT

[Stage Direction]
A message was delivered by the Gentleman Usher of the Black Rod, as follows:
Madam Speaker, the Honourable the Deputy Governor General desires the immediate attendance of this honourable House in the Chamber of the Honourable the Senate.
Accordingly, Madam Speaker with the House went up to the Senate chamber.
And being returned.
Madam Speaker informed the House that the Deputy Governor General had been pleased to give, in Her Majesty's name, royal assent to the following bills:
Bill S-13, an act to revive Montilac Ltd. and Socam Ltd.
Bill S-14, an act to revive Tremus Industries Limited.
Bill C-47, an act for granting to Her majesty certain sums of money for the Government of Canada for the financial year ending March 31, 1981-Chapter No. 41.
Bill C-49, an act for granting to Her Majesty certain sums of money for the Government of Canada for the financial ending March 31, 1981-Chapter No. 42.

[Stage Direction]
The House resumed consideration of the motion of Mr. Deniger that Bill S-12, respecting the Canadian Merchant Service Guild, be read the third time and do pass.
Pierre Deniger: Madam Speaker, I have just had the good fortune of seeing again Mr. Justice Antonio Lamer, the representative of the Governor General and a former professor of fiscal and criminal law of mine. I had not seen him in at least five or six years. And here he is the representative of the Governor General and here 1 am a member of the House of Commons. Who would have thought that possible ten years ago!
As I was saying, there are today 4,693 members of the Guild who can be found all over Canada. Classified by categories, there are 1,197 captains, 1,900 executive officers, 1,200 mechanics and 396 pilots. There are 22 permanent employees.
As of September 30, 1979, the Guild had $344,000 in assets; it had revenues amounting to $1,193,000, and expenses amounting to $1,146,456. Its structure has changed considerably and become much more complex in the process, so that it
Canadian Merchant Service Guild
no longer corresponds to its statutory description. One now has to go by national statutes.
In short, Mr. Speaker, time being of the essence as there are other bills on the order paper, today the Guild needs a new incorporating act for many reasons. It must, by law, be given powers, purposes and aims that conform to the activities it has pursued for a long time and wishes to continue to pursue. In addition, this act must ratify what it has done in the past, and do away with any ambiguity with regard to its legal existence. Finally, the act must be flexible enough to allow it to develop, to expand its field of activity so that it can fully achieve its main objective, namely, the preservation of the interests of its members. This act, as it stands here before us, seems to be most adequate under the circumstances. In closing, Mr. Speaker, I should like once again to express my appreciation for the co-operation of hon. members of the Progressive Conservative Party and hon. members of the NDP in the matter of this bill which I consider important, not only because the bill itself is important but I feel the Guild is of exceptional importance. I really appreciate that co-operation.


Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, first of all I want to say that the matter has been dealt with in an exhaustive way in the other place and I want to conform to my colleagues that several of us have looked at this bill closely. Inasmuch as the charter for the guild dates back to 1919-1920, some 60 years ago, it is not unfitting they would want to bring their charter into line with the requirements of the 1980s.
In reviewing the matter, I have one brief question which I will put at a later stage in Committee of the Whole. It has to do generally with an assurance from the sponsor-


Stanley Howard Knowles: We are on third reading.


The Acting Speaker (Mr. Blaker):: Order, please. I recognize the hon. member's difficulty because I had the same one myself. We are now in third reading. If the hon. member has a question he wants to put, or if there is some procedure he wants to follow, it might be wise to keep that in mind. When the hon. member sits down, we will finish third reading of this bill.


J. Michael Forrestall: Mr. Speaker, my apologies. I was not aware we were on third reading. I have only one observation to make. In the development of the sections of the new act I had an earlier concern that there might be a transfer of liability from the association's various chapters, from wherever they may be located in Canada, to the national body, or from the national body back to the various branches. However, I am satisfied that that is not the case. I am quite prepared now to welcome the upgrading of the Canadian Merchant Service Guild charter. I would like to note on the record what an active role the 3,000 or 4,000 members of the Canadian officers guild have played in the last 60 years in the development of this country.

December 11, 1980
General Insurance Company of Canada
They have demonstrated leadership in many areas, including safety at sea, modernization of ships, care and attention for crews, and care for the men who have served on ships. They have served actively and meaningfully not only at sea but also on shore.
We can do no better in this chamber than to accommodate the requirements of the Canadian Merchant Service Guild and give speedy passage to the bill now before us.


Stanley Howard Knowles: Mr. Speaker, as the sponsor of the bill has pointed out, my colleague, the hon. member for Comox-Powell River (Mr. Skelly), represented us on the committee which dealt with the bill. On his behalf I am happy to indicate our readiness to support it on third reading. I do so not only on his behalf, but in recognition of the fact that, although I was not here 60 years ago when the first charter was granted, I did have contacts with the Canadian Merchant Service Guild in the 1940s and 1950s. I know of the good work this organization has done, and I agree with my colleagues who have spoken that this guild deserves to have its charter updated. Mr. Speaker, we are happy to give third reading to this bill.
Motion a_greed to, bill read the third time and passed.!


The Acting Speaker (Mr. Blaker):: Earlier the House indicated its intention to consider and pass all stages of Bill S-18 this afternoon. We will proceed in that fashion.


GENERAL INSURANCE COMPANY OF CANADA
Mr. Dennis Dawson (Parliamentary Secretary to Minister of Employment and Immigration) moved: the first reading of Bill S-18, to amend and repeal an act to incorporate General Security Insurance Company of Canada.


[Stage Direction]
Motion agreed to, bill read the first and second times, considered in committee, and reported.
Dennis Dawson: the third reading of the bill.
[ Translation]
He said: Mr. Speaker, on behalf of the group comprising 1,300 caisses populaires, 11 federations and thousands of members of the caisses Desjardins, 1 wish to thank hon. members on both sides of the House for the wholehearted co-operation they have given the Desjardins group in this matter. We apologize for the urgency of the situation, and we thank them. We may be sure that the members of the caisses Desjardins will benefit considerably from their co-operation.


Hon. Roch La Salle (Joliette):: Mr. Speaker, 1 see there is excellent co-operation in the House today. In less than a few minutes, two bills have already been passed. I rejoice for my colleagues and the government members in this co-operation and in the apportunity I am given to join in, in view of the urgent need for this act, the sponsor of this bill for the greater good of all the members of the caisses Desjardins, a well-known name back home, which is synonymous with progress.


Stanley Howard Knowles: It is
because the request came from the caisses populaires that we are prepared to agree to the speedy passage of this bill. We are happy to give it third reading. We are doing pretty well today.


The Acting Speaker (Mr. Blaker):: In that case I observe there is not very far to go. Is it the pleasure of the House to adopt the motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, bill read the third time and passed.
The Acting Speaker (Mr. Blaker):: The hour provided for the consideration of private members' business having expired, I shall now leave the chair until eight o'clock this evening.
At 5.32 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of the motion of Mr. Lalonde that Bill C-48, to regulate oil and gas interests in Canada lands and to amend the Oil and Gas Production and Conservation Act, be read the second time and referred to the Standing Committee on National Resources and Public Works.
Madam Speaker:: When debate was suspended at five o'clock, the hon. member for Vancouver-Kingsway (Mr. Waddell) had the floor. The hon. member for Vancouver-Kingsway.


Ian Gardiner Waddell: Madam Speaker, I will continue to read the letter from Conrad Black to me. Starting with the first paragraph, it reads;
For your information, according to our figures, Norcin Energy Resources Limited-


Some hon. Members:: Hear, hear!


Ian Gardiner Waddell: I do not know whether my friends are applauding Norcin, Conrad Black or the Speaker.


Some hon. Members:: The Speaker.
December 11, 1980


Ian Gardiner Waddell: It goes on to read:
-the corporate connection that presumably caused you to bandy my name about in the distinguished company of the Rockefellers and Bob Blair, stands to lose in 1981 almost 60 per cent of its projected natural resource income. This represents a loss of about $1.30 per Norcin share, and at the multiples that currently obtain in stock market evaluation, this would mean that my associates and our minority shareholders and I would be called upon to endure an apparent loss on our investment of about $150 million. In exchange for this, no discernible benefit is conferred upon us, and if you can explain to me how this process leads to my own enrichment or elevation to economic parity with the Rockefellers, I will be deeply grateful.
There are now various proposals before the minister and his colleagues which, without impairing anticipated federal revenues or varying the espoused objectives of the federal energy policy, would enable the private sector to participate usefully and to the profit of all Canadians in the achievement of those objectives.
I am hopeful that in the climate of construction moderation, our company and most other companies in this industry have observed, and which has been generally reciprocated by the federal government, modifications in the broadest public interest can be achieved.
You will appreciate that utterances such as yours cited above, disparaging me personally and endeavouring to stir antagonism toward prominent industrialists who seek nothing other than the emancipation-
I repeat the word "emancipation".
-of this country from the vagaries and caprices of international oil cartels and influences, are very unhelpful.
If you would like any elaboration from me on our position on these complicated subjects, I would be happy to provide it; and, in any case, without being self-righteous about it, I would ask you, given the importance of the subject to all Canadians, to try to be a little more statesmanlike than you were in your remarks of November 21. It is not my place to rebut all of the inaccuracies in that speech, as this is the job of your parliamentary adversaries, but I feel entitled to object to demagogic and misleading reflections upon myself.
Yours sincerely,
Conrad M. Black
A carbon copy was sent to the Minister of Energy Mines and Resources (Mr. Lalonde), PC, MP.
First of all, I would say that I certainly would not make any personally disparaging remarks about Mr. Black. Obviously we do not agree politically. I might say that if he were as generous as the Rockefellers, perhaps my remarks might have been considered more accurate. I should like to give him a chance to reply. I will be writing to him. He cannot appear in the House, but perhaps he could run for my friends the Liberals or for my friends the Conservatives. In his letter he expressed support for both their positions. Alternatively, I invite him to debate with me at Hart house at Toronto University. I would be prepared to debate with him any time on these topics.
Mr. Speaker, I want to answer Mr. Black and answer my friends in the Liberal party in this way. I suppose the question could arise: would Canada be better off if her petroleum industry were owned and controlled by private Canadian companies rather than private foreign-controlled companies? In terms of preventing the transfer of wealth to foreign shareholders and having the wealth reinvested in Canada, the answer is obviously, yes, it would be better off. But in terms of developing energy resources for the public interest-and this is what my constituents are concerned about-there is little difference between the methods and objectives of the Canadian capitalist and the foreign capitalist. Each has as his objec-
Canada Oil and Gas Act
tive the maximization of profit, and to achieve this, the private oil industry pushes, first, for higher prices, second for more sales through exports, and third, for more tax concessions. In reality, the public's long-term interest of security of energy supply at reasonable prices is compromised by a "Catch-22" position of the energy industry. Higher prices and more tax incentives supposedly mean more new discoveries, which mean more exports, which mean more shortages, which mean higher prices and more tax incentives. Unfortunately, we are dealing with a non-renewable resource, and Canadian consumers and taxpayers, not Mr. Conrad Black, not my friends in the Liberal party and not my friends in the Conservative party, end up being the ones who are the losers.
I conclude by saying that this is a complicated bill which should be examined in committee. There are nine major points to it. The first is that it gives the Crown a 25 per cent interest in the production. This has not yet taken place. I have dealt with that matter and shown the weaknesses compared to Norway and to the United Kingdom. The minister himself brought this out. If they can do it rationally and logically in Norway and in the United Kingdom, countries very much like Canada, why can we not do it in Canada? That is what the public will ask. The second is the new production permits. To produce in the north and offshore, 50 per cent Canadian ownership will be required. I have shown in my speech that this is a ruse, they "lalondized" it, it is an illusion, a loophole, and you can get around it. Third, they will renegotiate agreements with existing exploration permit holders to require them to drill. That is a good idea. Fourth, there will be a new royalty system which I have explained. It is not enough, it is too little, it is even less than in Alberta. Fifth, the Crown will require Petro-Canada to be an operator at some points, and I agree with that. Sixth, the Crown can order Petro-Canada to drill after significant discoveries have been made, and that is a good idea. Seventh, payments will be required for a fund called, "The Environmental Studies Revolving Fund." This is not enough. It has to be considered in much greater detail and there must be stricter provisions. My colleague, the hon. member for Nunatsiaq (Mr. Ittinuar) will talk about that later. Eighth, there will be a 30 days' notice on transfers and the government will have the right to block transfers for leases. That is a good idea. Finally, there will be provisions to make information on exploration and what they get out of the wells available to the public. That is a great idea which is long overdue because all the information available in this country on how much supply we have is information coming from the oil industry.
I look forward to seeing this bill in committee. Before I sit down, Mr. Speaker, I want to say one final word. When I have advocated more government involvement, I did that not because I want a big government bureaucracy but because I see it as the proper way to spread the wealth, a way to bring about some justice and equity, a way which would give a break and which would require some co-operation. I see that there could be some problems with it and those problems will have to be examined, but that way wealth could be spread throughout

December 11, 1980
Canada Oil and Gas Act
society-to my constituents, for example. A decade ago the people of my generation thought of things somewhat differently than we do now. We thought of sharing and of community values; we talked a bit about those things. A representative of that generation died this week. He talked about values which were different than the private pursuit of happiness and wealth.
In closing, I should like to quote from one of his songs which reflects what I am saying. It reads:
I read the news today, Oh boy About a lucky man who made the grade And tho' the news was rather sad Well, I just had to laugh.
I saw the photograph
He blew his mind out in a car
He didn't notice that the lights had changed
A crowd of people stood and stared
They had seen his face before
But nobody was really sure if he was from the House of Lords.
It was a song which reflected a generation trying to change society into one which did not pursue money and wealth for the sake of pursuing them, but thought of sharing and a better deal for the ordinary person. That is the manner in which we will approach this bill in committee.


Mr. Raymond Savard (Parliamentary Secretary to Minister of Public Works):: Mr. Speaker, it is with great pleasure that I rise to speak on such an important topic as the energy future of our country. Bill C-48 before us will enable each and every one of us to benefit from new resources and will ensure security and especially fairness for all Canadians. I am privileged to represent here in this House the riding of Verdun. For the most part, Mr. Speaker, Verdun is a working class riding.
Most of my constituents show no concern over the daily workings of international politics and the way in which oil prices are set. They do not follow very closely the technical and complex negotiations regarding pricing, price per barrel, and so on. They are more anxious to know how much it will cost them to heat their house or apartment and how much more than the last one a fill-up will cost. This is a difficult period in which to develop an energy policy which will maintain reserves and satisfy consumer requirements. But that is precisely the challenge.
In my opinion, Mr. Speaker, the energy program we are now discussing succeeds in meeting this challenge. This program treats everyone concerned, namely the consumers, the producers or oil companies, the provinces and the federal government, equitably and fairly. Let us look at the current situation of the Canadian oil industry. We are now importing 20 per cent of our crude oil requirements and quickly eating away at our supply of less expensive western Canadian crude.
In spite of our efforts to develop our expensive domestic sources of crude oil in Newfoundland, the Beaufort Sea and the tar sands, the Canadian Petroleum Association has estimated that we shall still have to import up to one third of our domestic requirements in 1985 before our domestic production can rise to the level of self-sufficiency. As much as we try, our country will not be able to conserve or substitute enough natural gas or other energy sources to replace this oil in cases of shortages. This is why we had to develop a national energy policy which showed courage and which would create the political determination and the national will to solve these problems. First of all, we must ensure that the Canadian people realize that crude oil and natural gas are our two major natural resources. They are the foundation on which we could build a Canada whose social and economic development would be the envy of every other country of the world for decades to come. We could build a Canada which would no longer depend on uncertain oil supplies from foreign countries, a Canada which would show a surplus in international trade and whose main problem would be to fill all the jobs created in new industries from Newfoundland to British Columbia. But this result is not guaranteed, Mr. Speaker. To meet this objective, we must first of all aim for independence in the field of energy, which would make us self-sufficient and place control of our oil industry in the hands of Canadians, as it should be. This means that we must replace the perhaps insecure foreign supply sources for which we pay a price which harms our economy by secure sources of Canadian oil, which would at the same time consolidate our economy. The Canada oil and gas act administered by the National Resource Management Agency will be the main instrument for meeting these objectives.
This act is designed to promote oil and gas exploration in frontier areas to discover the substantial new reserves needed by Canada. The provisions of this legislation will give greater control to the government through its activities, which will also help promote oil and gas exploration and development. [English]
To answer my friend on the other side in the NDP, and to allay the fears of all Waddellists and environmentalists, let me make it clear that this exploration will not be carried out at the expense of the fisheries and the environment. Our bill is very clear on this point.
[ Translation]
It is a simple matter of choice, Mr. Speaker, for which the government must receive the support of the people and that means some sacrifices because of the price increases. Even if those increases are much more limited than those proposed by the Progressive Conservatives, all Canadians and not only oil companies and producing provinces would benefit from that program.
Mr. Speaker, the people in Verdun are all for a prosperous province of Alberta and believe that all producing provinces
December 11, 1980

should get what they are entitled to. But they still find it difficult to understand certain facts. They know that people in Alberta pay the lowest taxes in Canada, that their oil products cost about 25 per cent less than anywhere else in the country and that Alberta has a heritage fund of several billion dollars to ensure its economic future. The people in Verdun, Mr. Speaker, like other Canadians in eastern Canada, think that Albertans are entitled to that wealth. What we fail to understand is to what extent Mr. Lougheed has forgotten the recent history of Canada, complaining as he does of having been cheated and of not getting his fair share.

But, no, Mr. Lougheed said that Alberta has always been, and is continuing to be, shortchanged. He said Alberta is entitled to the OPEC price for its oil because it is the fair market price. He said he was trying to protect a rapidly depleting resource, and, finally, that the provinces are the sole owners of their resources and should therefore be the only level of government permitted to tax them. Let us consider his arguments one at a time.
While it is true that Alberta's conventional oil production is peaking and will decline through the 1990s, this ignores the fact that Alberta has enormous natural gas, tar sands and coal reserves. According to federal energy estimates, Alberta had the equivalent of 18.7 billion barrels of oil last year compared with 18.5 billion in 1970. This represents oil, natural gas and tar sands designated for the two functioning tar sands plants. It does not even include another 25 billion barrels from the tar sands which can be reached with existing technology. So, Alberta has enormous resources for its future.
Ottawa needs a greater share of the oil tax revenues to offset the harmful effects of rising energy prices, to diminish big differences between rich and poor provinces, and to help restructure the Canadian economy so that it becomes less dependent on scarce oil and more energy efficient.
Mr. Lougheed's demands for higher oil prices would mean more inflation. But that is only the beginning, as our energy paper points out. Because consumers would have to pay more for oil and gas they would have less money for other goods and services. This reduction in total demand in the economy would mean more lay-offs, plant shutdowns and less economic growth. The rest of the country cannot accept Mr. Lougheed's demands for higher oil and gas prices and a bigger share of those prices going into the Alberta treasury and its heritage fund. Even the new federal proposals leave enormous wealth in Alberta's hands over the 1980s of at least $100 billion, with $30 billion going to the heritage fund to earn income for future generations. Albertans will continue to have the highest incomes and the lowest taxes in Canada for many years to come. The federal energy proposals represent an effort to achieve a fair balance between the federal and Alberta positions.
Canada Oil and Gas Act

Mr. Speaker, the budget attempts to use the energy industry as a factor of growth for Alberta and the country as a whole. The action considered by Mr. Lougheed, namely, a 15 per cent decrease in oil production and the temporary freeze on a big tar sands development project, would delay this growth, which would hinder industrial development, particularly in Alberta. The people in Fort McMurray and Cold Lake, rapidly developing communities, are likely to be concerned that this legislation will slow down this growth.

Mr. Speaker, the one newspaper in this country which most closely allies itself with Mr. Lougheed's policies is probably the Edmonton Journal. Certainly it is a paper which most often stands squarely against what Ottawa does with regard to its energy policy. But listen to what it said in its editorial of November 13 regarding the tar sands project:
What does Alberta gain by delaying approval of oil sands development permits? In a word, very shaky leverage. If the premier abandons his demand for a global agreement on energy pricing, what bargaining power does Alberta have left?
The risks involved in delaying the oil sands projects are even greater. The Alsands and Cold Lake projects represent $16 billion worth of development, 280,000 barrels of oil a day, capable of replacing $4 billion a year (1980 prices) of imported oil. How long can Alberta reasonably expect Ottawa to stand by while the national goal of energy self-sufficiency by 1990 disintegrates... If Alberta shows no sign of movement at least on synthetic oil pricing, is it reasonable to expect the national government not to act in the national interest? How long should Alberta defend its position? What price should Albertans be asked to pay to support that defence? And how long is Canada prepared to wait while we decide?
.The Edmonton Journal published that not even one month ago, Mr. Speaker, and still Mr. Lougheed wants to blackmail the people of Canada by threatening to destroy our chance for energy self-sufficiency.

In an eleven-page advertising supplement published in The New York Times, it is reported that according to the Alberta government, the standard of living of Albertans is 25 per cent higher than that of any other Canadian living in the same conditions. The budget deals therefore with the question of sharing among all the regions of Canada.
In 1979, the federal government received less than 9 per cent of total oil revenues, while the Alberta government collected over 50 per cent. In Texas, for instance, the state gets only some 25 per cent of revenues. In Australia, the state get only 15 per cent of oil revenues, while the federal government receives 48 per cent. The National Energy Program's prime objective is to ensure safe supplies and allow Canada to do away with dependence on the global oil market. It also aims at keeping a competitive edge over our American neighbours. This is why the domestic price should never exceed 85 per cent of the American equivalent. Our Canadian industry will derive no benefit, however, if Alberta retains all or an excessive part of oil revenues.

December 11, 1980
Canada Oil and Gas Act
Our aim, Mr. Speaker, is to achieve 50 per cent of Canadian ownership in the Canadian oil industry by 1990, and this is an essential facet of the National Energy Program. Our goal is to ensure that Canadians receive at least half of the direct benefits generated by the growth of an industry whose cash flow will quadruple over the next ten years. Clearly, that objective meets with our economic expectation and can only have benefits for Canada. More important still, benefits should be maximized. A constant supply of "reliable" oil and gas would be ensured long term by a stronger Canadian presence in the oil industry. And this includes a stronger and larger presence of the public sector in the industry.
So this is what we are doing at the government level to improve this country's energy position. But our National Energy Program also calls upon the individual Canadian to pitch in. We are doing this through two major programs that would conserve energy and reduce the costs to home owners. The first one is the well known CE1IP program. As parliamentary secretary to the minister responsible for the administration of that program, I am proud to state that it has been one of the most popular initiatives taken by this government over these last few years.
This program is part of a federal scheme designed to check the growth of energy consumption by improving the insulation of homes. Subsidies are granted for insulation purposes to owners and tenants of homes in three-storied or smaller buildings. In April 1979, the terms of the program were amended, so that 100 per cent of the material costs up to $350 and one third of the labour costs up to $150 are now eligible. Related expenses are also eligible, such as those incurred for weatherstripping, caulking, ventilation of roof space, thermal blinds, bedded protection for lighting fixtures. The eligibility date was set at 1961 for all provinces.

That could happen to anyone; anyone can lose his breath. [Translation]
Thanks to these changes, this program is in much greater demand.

I remember the first time 1 heard an hon. member on the other side do exactly the same thing as I just did.

Mr. Speaker, up to November 1980, the federal government has paid to Canadians over $261 million in subsidies under this program. So we urge Canadians to conserve energy by converting their oil heating system to electricity or natural gas. In order to inform the people about conversion, I should like to give the following example: The owner of a building with four individual heating systems may, if he so wishes, convert those four systems into one central system and be automatically eligible to a 50 per cent grant up to $3,200, and so on for each
individual system. Of course, this federal offer is subject to the federal-provincial agreement.
In conclusion, Mr. Speaker, I sincerely believe that the energy policy put forward by our government is one of the best ever introduced in this Parliament. The people in my riding as well as all Canadians will be able to take advantage of this program. We may rest assured that the future will show that we were right even though the official opposition is critical of our proposal.


Mr. Friesen:: Would the hon. member permit a question?


Pierre Raymond Savard: No.


Mr. Tom McMillan (Hillsborough):: Mr. Speaker, I am pleased to participate in the debate on Bill C-48, "An act to regulate oil and gas interests in Canada lands and to amend the Oil and Gas Production and Conservation Act". I do so primarily as the environment critic for the official opposition. My pleasure is not because this bill is a sound one from an environmental principle point of view. The bill is, in fact, an affront to environmental principles. In a few moments I will be elaborating on that point. Other hon. members on this side will be giving learned analyses of the various shortcomings of the bill in total.
For my part I would like to concentrate on those aspects, and there are several, which relate to the environment. Generally, the bill seeks to impose new rules for oil and gas exploration and development on federal lands in the north and the offshore areas. These rules dictate the terms for the leasing of Crown lands for oil and gas exploration and development, for the participation by the federal government in such initiatives, for licences to private oil and gas companies involved in Crown lands, for royalty payments, and for the compulsory production of oil and gas under specified conditions.
Finally, there is clause 49 which concerns the environment. Basically, clause 49 establishes a revolving fund, the Environmental Studies Revolving Fund. As I see it, it is really two funds which are to be composed of mandatory contributions from companies participating in oil and gas exploration or development on Crown lands. The total amount is not to exceed $15 million. Incidentally, the draftsmanship of this particular clause-and, I think, of the bill in general-is terribly shoddy. For example, it is not clear in clause 49 whether there are two funds or one fund; whether the $15 million is for each of the funds or whether it is a total of $15 million for the two funds together. I presume, however, that what we are talking about is a double-barrelled single fund totalling $15 million.
In any event, the purpose of the fund or funds seems to be to finance studies relating to oil and gas-related enterprises on Crown lands, presumably of an impact assessment sort. If I may quote subclause (6) of clause (49), it reads:
December 11, 1980

The minister may direct payment from the relevant fund of the reasonable costs of such environmental studies of Canada lands as he determines are necessary in order to decide whether or not to authorize exploration or development under this act or any other act of Parliament.
One of the most jarring notes is that the environmental fund is to be administered, not by the Minister of the Environment (Mr. Roberts), but by the Minister of Energy, Mines and Resources (Mr. Lalonde) and by the Minister of Indian Affairs and Northern Development (Mr. Munro). Such a provision perpetuates the truly stupid or, if I may say so, even malevolent approach taken by this government as far as the environment is concerned in other areas.
Funds for environmental purposes must be allocated to those who are designated by Parliament to be responsible for environmental matters. The Department of Energy, Mines and Resources is no such agency, nor is the Department of Indian Affairs and Northern Development. Clearly, if an environmental fund is to work, it should be allocated directly to two departments. The first is the Department of the Environment. Under the Government Organization Act, 1979, section 14, Parliament directed in part that the powers of the Department of the Environment should extend to and include "the co-ordination of the policies and programs of the Government of Canada respecting the preservation and enhancement of the quality of the natural environment".
The second department which should receive funding for such environmental purposes is the Department of Fisheries and Oceans. The energy initiatives envisaged by the government's recent "energy budget", including Bill C-48, will accelerate activity in the Arctic. Based on current information, much of that activity will impact directly on marine areas. That is the area which Parliament directed the Department of Fisheries and Oceans to handle. Yet, there is no mention of funding for that department either in the budget itself or in Bill C-48.
In the event the government wishes to brush this aside too quickly, let me cite one example of the perilous situation now faced by that department which might well bring them to their collective senses. The Arctic biological station at Sainte-Anne-de-Bellevue is the only government lab doing major Arctic marine biological research. Staff at the station in the fiscal year 1979-80 was reduced by over 20 per cent from the previous fiscal year and there is a further 20 per cent reduction slated for the fiscal year 1980-82.
The initial allocation of funds to the Arctic Biological Station for 1980-81 was $270,000. Flowever, after discounting the costs for Atlantic programs, building maintenance and services, the station was able to devote a meagre $40,000, only $40,000 in total, to Arctic biological studies. This represents about 17 per cent of what was available for the same Arctic projects in the fiscal year 1977-78, the last "normal" year of funding for the Station.
Last spring, just a few months ago, after questions in the House and various front-page exposes in the press, the government did manage to make an additional amount of money available, but that was only $100,000. Arctic marine research
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in government has been eroding at an alarming rate since 1974. The Arctic research which has occurred has largely been facilitated by industrial proponents interested in oil and gas development. Such support must be commended, but it underlines federal avoidance of responsibility, both nationally and internationally, to govern development activity in the Arctic.
Channelling environmental funds to the Department of Energy, Mines and Resources and the Department of Indian Affairs and Northern Development, as contemplated by Bill C-48, would serve only to further strangle the federal agencies in the execution of their major responsibilities in these matters.
The territorial governments in the north are responsible for wildlife and that responsibility carries with it the need to maintain all wildlife resources upon which native people are so dependent. So they must also be guaranteed sufficient funds to fulfil their mandate-a mandate that will surely get lost in the energy urgencies and development mentalities of the Department of Energy, Mines and Resources and the Department of Indian Affairs and Northern Development. In my view, the role of those two departments in environmental areas needs to be greatly reduced as a matter of general principle. The fact is that whole chunks of environmental policy under federal jurisdiction are within the authority of departments other than the Department of the Environment, to the point at which that Department is a secondary player and, in some cases, not even a player at all.
In no place is that more clear than, for example, the Arctic Waters Pollution Prevention Act, passed in 1972. It was introduced in large part to assert Canada's sovereignty north of the 60th parallel, or at least to exercise Canada's extra-territorial jurisdiction there. The main legislative purpose was to control the use of technology in the north so as to maximize the benefits and prevent a disaster. The principal thrust of that particular act was to prevent the pollution of Canadian Arctic waters from shipping, from land-based installations and from commercial activities such as oil drilling carried out on the continental shelf.
I do not want to go into detail about that act; I only want to draw a parallel between the Arctic Waters Pollution Prevention Act and Bill C-48 to illustrate my general point. In essence, the act prohibits, under prescribed conditions, the deposit of waste in Arctic waters, on Arctic islands and on the mainland. It emphasizes prevention, for example by providing for the appointment of pollution prevention officials and so on. It also contemplates the possibility of pollution from accidents or unforeseen causes; it provides for civil liability for damage resulting from the deposit of waste and addresses the question of clean-up costs and damages.
Even that sketchy description shows clearly the parallel between the Arctic Waters Pollution Prevention Act and clause 49 of Bill C-48 which deals with environmental studies. Both are, first and foremost, environmental in their purpose and thrust. Yet neither acknowledges the existence of the
5688

The Canadian Arctic Resources Committee, in a first-class study by Dr. R. William Rees, published in Northern Perspectives, sums up the situation succinctly. With your indulgence, Mr. Speaker, I will quote from Dr. Rees' report. He said:
The over-all conclusion pertaining to The Environmental Assessment and Review Process is inescapable. Given the "ludicrous" time-frame, skimpy data base, and direct interference from Ottawa, the best efforts of AWAC/RODAC could not satisfy the minimal requirements of a rigorous and effective screening process.
That is damning evidence indeed. The findings of Dr. Rees, which I have just quoted, are well supported in a confidential report, which I have, of the government's own Arctic Waters Advisory Committee dated February, 1980. I do not have the time to quote this at length, but let me refer to just a few passages which tell the tale. That confidential report of the government's own advisory committee stated "in the past-


Mr. Deputy Speaker:: I regret to interrupt the hon. member, but I must advise him that his allotted time has expired. I am sorry. 1 was mistaken. I am advised by the Clerk at the table there is still some time left and I apologize to the hon. member.


Thomas Michael McMillan: I will continue with my quote, Mr. Speaker.
Government decision-making processes resulting in approvals for land-based support facilities and dredging for the approach to Tuk and inside McKinley Bay did not meet the minimum standards for adequate environmental review and assessment.
The same report continues:
It appears that senior officials in Ottawa ... decided to "avoid any time-consuming and administrative hindrances" in securing the necessary approvals for the proponent (Canmar).
Another quote from the same report reads:
Recommendations that were specific and required standards of performance from Canmar or more thorough review which might have caused delays were not implemented or significantly altered by Ottawa to make them ineffective.
Finally, we read the following:
The compromise of the environmental review processes has potentially jeopardized not only the environment but the governmental review and decisionmaking processes as well.
The AWAC report from which I have just quoted documents the assertion, on page after page, that Canmar-and I use this as but one example-is violating and is being allowed by the government to violate operating conditions set by the government itself. Those violations are outlined in great detail in the February, 1980, draft report of the government's own Arctic Waters Advisory Committee.
In my opinion, the government must be able to manage the total social and physical environment in the Arctic in the face of an influx of southern technology. That geographical area covers something like 40 per cent of the territory of our country. Although vast, it is the most environmentally vulnerable region in all of Canada. Because of the frigid climate, a major oil spill or a well-site blowout here would have disastrous consequences for the delicate ecosystems, as well as the traditional lifestyle of the native people. We cannot wait until the damage has been done in the Arctic or in any other such area because, according to experts, it may well be irreversible.
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The environmental screening procedures will have to be tied more closely to the development approach concept. There must be a streamlining of the entire process so that industry, and government both-not just industry, but government, too- know how to operate by the rules.
At present, there exist some 23 pieces of legislation to regulate activities like Canmar's. The government needs to examine a process by which a one-window approach to legislation and regulation can be achieved. Bill C-48 compounds the problem. It does not mitigate it.
I wish to draw your attention, Mr. Speaker, to subclause 11 of clause 49. That subclause says:
The governor in council may make regulations for the administration of the relevant fund.
This much we do know. The section to which I have referred is shrouded in ambiguity. We do not know what the regulations are to be. It is openended. It makes reference to regulations, but it does not define them. It just authorizes that they be made. I ask myself, and I invite the House to consider, the following: given the ambiguity and the openended nature of that subclause, what principles will guide the use of the fund? What is to ensure the maximum access to it by the public and others? Certainly there are examples of funds being established to which, in practice, access is difficult if not impossible. The Maritime Pollution Claims Fund is a case in point.
The government continuously hides behind regulations. It leaves much of the true force and thrust of its legislation-in this case as in so many others-to regulations and to federal bureaucracy. That is not acceptable, in my view. Among other things, such a situation frustrates the purpose of Parliament and the goals with respect to which Parliament is being asked to legislate. In my opinion, there must be a more specific mandate under legislation to government, whether it has to do with environmental funds or any other subject.
Clearly amendments are required; there must be direction to administrators in the public service as to how the funds are to be allocated, along with an accountability system to ensure that such funds are not being institutionally frozen or flushed through senseless programs. Above all, the legislation must recognize the role already assigned by Parliament to various government departments, the Department of the Environment and the Department of Fisheries and Oceans in particular.
More than anything else there has to be the will to honour environmental principles. There has to be some consistency in legislation. There has to be a dedication and devotion to the environment for its own sake. Environment principles should be viewed as ends in themselves, not as a subterfuge for government inaction. This government's good faith in environmental matters, as in so many other areas, is seriously in doubt in my estimation.
To use an example, in 1979 the Environmental Assessment and Review Process panel appointed by the Minister of State for Science and Technology and Minister of the Environment to assess the Alaska highway gas pipeline concluded that

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because of severe deficiencies in the information put forward by the pipeline company, "it is not possible to complete an environmental impact review at the present time". Despite that conclusion, neither Foothills nor the government's own Northern Pipeline Agency has made any progress toward meeting the deficiencies which have stalled the environmental assessment. Indeed, as if to induce environmental disaster, the government has already approved surveying and other work on the right-of-way through the Yukon, despite the fact that the EARP analysis identified major environmental reservations on that route and requested work on alternative routings. The Northern Pipeline Act passed by Parliament on April 4, 1978 required by law that the pipeline be built according to broad objectives which included "minimizing any adverse effect on the social and environmental conditions of the areas most affected by the pipeline". Clearly, the purposes of that act are not being met. Quite apart from the issue of accountability of Parliament, the situation is bound to create impasses to the eventual construction of a pipeline in the Yukon. Unless the present government has its head completely in the sand, which is quite possible, they will be aware of the mounting legal and other difficulties their actions are generating.
Even within the government, responsible officials are as perplexed as I am and as are my colleagues on this side of the House. Senior officials in Environment Canada's western and northern region have said, according to a confidential memo to which I have been made privy:
Based on our experience with the Northern Pipeline Agency, on the basis of what we have seen, we would not recommend a single agency approach because, in the case of the Northern Pipeline Agency, it is prepared to expedite construction of the pipeline, rather than to protect the environment. We feel that a more direct involvement by DOE would be better.
This kind of deliberate fiddling, and I use that word judiciously, with important environmental matters in the government's decision-making is all the more astonishing when we compare it to the recent Q & M pipeline decision. In yesterday's Globe and Mail, the National Energy Board chairman, Mr. Edge, referred to the environmental problems which led the board to reject the bid by a consortium of companies to build a gas pipeline into the maritimes. At page 11-8 of their April 1980 "Reasons for Decision" the board said and I quote:
-the board wishes to stress that Q & M has not satisfied the board that the pipeline could be constructed in an environmentally acceptable manner.
Consistency in decision-making-particularly environmental decision-making-is obviously not something of importance to the government.
I, as a maritimer, wonder sometimes why it is that when a project like the Q & M pipeline, which is so important to my region, is at stake, the federal government suddenly decides it is going to be concerned about environmental matters and to hold up the project on the basis of environmental principles, while other projects which have equal cause to be looked at from an environmental point of view are allowed to go ahead without any environmental assessment required despite the government's own regulations.
We require more than legislative consistency or the removal of conflicts of interest posed when departments engaged in
protecting the environment are the very ones involved in promoting major projects which are going to damage the environment. More fundamental than most of the themes I have talked about, there must be a will by the federal government and by the cabinet, in particular, to honour environmental principles. There must be a consistent adherence to environmental principles because they are worthy in their own right. That is what we require from this government.
The government's good faith in environmental questions is seriously in doubt. In my view this government does not care about the environment, and that fact is reflected in Bill C-48. Is it not ironic that the Minister of the Environment should have been given special responsibilities for constitutional matters? He has been asked by the Prime Minister (Mr. Trudeau) to aid in a major way in piloting through this House the resolution on the constitution. Yet the government's own charter of rights for which the Minister of the Environment has special responsibility makes no mention whatsoever of environmental rights. Is it any wonder, sir, that Bill C-48, by the same token, is such a serious affront to sound environmental principles? It is a shoddily drafted bill; it is a bad bill. Worst of all, as far as the protection of the environment is concerned, it is a dangerous bill.


Mr. Yves Demers (Duvernay):: Mr. Speaker. I am pleased to speak on this extremely important matter, Bill C-48, which spells out Canada's energy policies for years to come. Among other things the bill will enable us to reach three aims: security of supplies and subsequently self-sufficiency for Canada, access for all Canadians wherever they live in Canada to wider participation in energy industries, especially gas and oil, and finally fairness of prices and sharing of revenues among governments and industries.
The program is based on Canada's extensive energy potential. The country is already producing more energy that it can consume and it can use its surpluses of electricity, natural gas and other fuels such as solar, wind and tidal energy to make up for its oil shortage. Total demand for oil will therefore be sufficiently restrained to equal domestic supplies at the end of this decade. The prices of natural gas will increase more slowly as a result of negotiations between the federal government and the producing provinces thus remaining lower than the normal prices of heating oil. The natural gas distribution system will also be extended here and there to serve the main cities throughout Canada and the prices of natural gas in eastern Canada will be standardized to promote its use as a replacement for heating oil in residences as well as in industries. The replacement of oil by natural gas, electricity and other energy sources will be supported through federal consumer grants in order to reduce the use of oil to 10 per cent of the total energy demand in residential and commercial sectors before 1990. We propose to subsidize people who convert their heating systems

from oil to gas or electricity. We will subsidize those conversions up to a maximum of $800, thus paying 50 per cent of the costs. Still, before going ahead with this program we must negotiate its details with the various provincial governments, but the province of Quebec is being reluctant in some respects. There are no problems, they agree, with regard to conversion to gas but where conversion to electricity is concerned, that is, conversion from oil to electricity, the leaders of the Quebec government are being difficult because they know full well that if a larger number of Quebeckers convert to electricity, the province will then have less electricity to export to the United States. At the present time, the province of Quebec, through Hydro-Quebec, is selling its electricity at roughly the domestic price for other Canadian energies. In other words, in Quebec it now costs about the same, give or take a few dollars, to heat one's house with electricity, oil or gas.
In December, the cost of fuel oil may be a bit higher than that of electricity, but when the price of the latter goes up by about 12 per cent in January, it may cost slighly less to use fuel oil than electricity. Be that as it may, prices are now about the same, and thus electricity is sold in Quebec at the domestic price. But if Quebeckers consume less electricity, then Hydro-Quebec can sell it in larger quantities to the United States at world prices. 1 recently had a conversation with the Quebec minister who told me he thought that market would bring the province of Quebec about $1 billion in the next few years.
Personally, I feel that opposing the conversion of oil heating to electricity is being dishonest toward the policies of the Canadian government, as well as those of the government of Alberta, because in so doing, Quebeckers will be allowed to use Alberta oil at a cost price by about 50 per cent lower than the world price thereby enabling the province to export electricity to the United States at world prices. That is therefore extremely dishonest and jeopardizes the Canadian energy policy as a whole.
There is also another factor. If we disallowed subsidies for converting from oil to electricity, some areas in Quebec would be greatly prejudiced, areas like Abitibi, Mont-Laurier, northern Quebec, because the people in the larger urban centres like Montreal, Quebec City or Trois-Rivieres will have the option of converting to natural gas because the pipeline will be extended to serve those cities, whereas the distribution system will not reach, at least not for several years, the smaller communities. Therefore, if the government refuses to subsidize alternate conversions, the people in those small communities will be forced, if they want to convert, to pay the full price out of their own pocket.
The Canadian Constitution as it now stands gives the Government of Canada the authority to tax energy resources and to set prices. The government intends to maintain that policy in the new constitution. However, Quebec Premier Rene Levesque, who wants separation, says: no, the federal government has no right to tax and to set prices for energy because
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some day it will want to tax the electricity that Quebec sells the United States.
And yet the domestic price of oil is now $19 a barrel and the international price is $38 a barrel. In fact, because of this policy of the Canadian government, in the last five years, from 1974 to 1979, Quebeckers have had to pay $9 billion less for their oil than if they had paid international prices. Moreover, if Quebeckers now paid international prices for their oil, gasoline would cost nearly $3 and heating oil about $2.
This is what Mr. Levesque is proposing to Quebeckers. He suggests that they should pay $3 for their gasoline and $2 for their heating oil. I believe that any Quebecker who considers the interests, mostly of his province, but also of his country, will understand that the Canadian policy is very good and benefits all residents of Quebec.
We may also wonder why the provincial government would want us to pay international prices for oil. Perhaps the separatist ideology is behind this suggestion. For instance, if Quebeckers were now paying international oil prices, the arguments of those who promote separation would be much more convincing because they would be able to tell Quebeckers: If we go tomorrow morning, the price of gas will stay the same because we are now paying international prices and we shall continue to do so. However, the Liberal policy provides the opposite argument and constitutes an obstacle for Mr. Levesque and his party, and Mr. Levesque, who already sees the province as a separate state, is willing to sacrifice the $9 billion that we have already saved Quebeckers over the last five years. Moreover, before the last Parizeau budget, there was a fixed tax on gasoline per litre or gallon in Quebec.
In his last budget, Mr. Parizeau applied what I would call an indexed tax in so far as a percentage is charged, and every time the price of oil goes up, the taxes of Quebec consumers increase in proportion, as do the revenues of Quebec, of course. I therefore readily understand why Mr. Parizeau is not interested in lower prices. He indexes tax revenues to oil prices, but he is not interested in indexing personal income tax, which would benefit all Quebec taxpayers.
I sometimes try to understand the philosophy of the Parti Quebecois, and I tell myself that if Quebec separated, it would be an independent country which would not have to ask anyone for permission to do what it wants and which could pass its own laws. Moreover, there would be departmental governments or state or provincial governments because the province would be divided in regions like Abitibi, Lac-Saint-Jean, the Gaspe Peninsula, the Bois-Francs and so on, which would be called departments, as in France, or states, as in the United States, and every one of these regions would have an elected government, in addition to the central government in Quebec City. There would be a constitution recognizing the powers of the central government of Quebec and the powers of the regional governments, and if we follow the philosophy of the Parti Quebecois, every one of these regions would have the

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right to tax its own natural resources. Let us imagine that the Lac-Saint-Jean area finds huge amounts of oil; sure enough the state government or the government of the department of Lac-Saint-Jean would tax its resources and sell them to the rest of Quebec and to other countries as well. Of course they would sell to other countries at world prices, and people from Lac-Saint-Jean would be anxious as well to secure the international price, even for sales made to Quebec. And I am sure that the central government of the province of Quebec would then impose prices for domestic sales, just as we are doing now for Canada. And yet, Mr. Levesque does not understand our philosophy, when it is applied to Canada as a whole.
The members of the federal government want one energy price, they want a standard price in all regions of the country for all Canadians. It is very easy, to understand, Mr. Speaker, that if oil were sold at $3 a gallon in Quebec, in the maritimes and in Ontario and $1 in Alberta, this would result in a dramatic economic slowdown. We all appreciate, and it is easy to understand, that all new industries would prefer to go to Alberta and we would witness a massive exodus of people from the eastern provinces to Alberta. There would be tremendous unemployment in eastern Canada and a boom and galloping inflation in Alberta. This is why our basic policy has been to maintain stable and fair prices for all Canadians.
Not so many years ago, Mr. Speaker, we had the Borden line legislation. At that time certain Canadian provinces, including the major parts of Ontario, had to buy Alberta oil at a price higher than the international price to promote Albertan oil sales. Today, it is the opposite. Alberta is subsidizing other provinces that use its oil, by selling it at a cheaper price. But who knows if five years from now, with the discoveries in the Soviet Union where huge amounts of oil have been found, apparently more than anything that may exist in the Middle East, the international price may be lower than the price we would pay for instance for tar sands oil. It is my conviction that if this happened the Canadian government would then force other Canadians to pay the higher domestic price for Alberta or other Canadian oil. Therefore, Mr. Speaker, we will continue with a uniform policy for the well-being of all Canadians. I thank you for the opportunity to speak on the matter.


Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, they always save the best to the last.


Some hon. Members:: Hear, hear!


Dave Nickerson: It is rather unfortunate that there is nobody left to hear what I am going to say, at least in the galleries. I do hope that somebody is watching on television.


Geoffrey Douglas Scott: What you do mean, there is nobody here?


Dave Nickerson: I am very pleased that the Minister of Energy, Mines and Resources (Mr. Lalonde) saw fit to come back to the House. I have a few choice comments for him in the few remarks which I intend to make. I must say that I have been looking forward to the presentation of this bill for about ten years now. It was originally promised a little over ten years ago by the late hon. Sidney Green-


Mr. Blais:: You mean Joe Greene.


Dave Nickerson: We certainly have good reasons to forget.


Marc Lalonde: You forgot Sidney Green.


Dave Nickerson: Members on this side of the House have asked continuously for the last ten years when the government was going to present rules and regulations governing the disposition of oil and gas in the areas referred to in this bill. The answer that we have always received has been, soon. I remember asking the same question earlier this year of the Minister of Energy, Mines and Resources. His reply at that time was "very soon". If nothing else, we now have an interpretation of these Liberal terms. When they say soon, they mean ten years, and when they say very soon, they mean ten months.


Marc Lalonde: Four months.


Dave Nickerson: Was it worth waiting ten years? Quite frankly, I do not think so. I was looking forward to this. I was looking forward to something which would get the offshore oil and gas industry back on its feet again. But somehow I do not think we have it here. To understand this we must examine the present circumstances, the circumstances at this time when the bill is being introduced. It comes after ten years of neglect and wavering, after ten years of putting Canada's industrial and energy needs in second place to narrow, partisan consideration. The result is the situation we have today. The situation we have today is one of dependence on insecure, high-priced, foreign sources of energy. There is no denying that. That is the position into which the Liberal government has put this country. It comes at a time of serious conflict between the provinces and the federal government which is intent or imposing at all costs its concept of a centralized and socialized Canada. As we go through this bill we see two concepts throughout, the concept of strong control from Ottawa and the concept of the government ownership of Canada's oil and gas industry, something which it has been trying to promote with the concurrence and at the instigation of our friends to the left for some time.
There are two ways in which we can look at the present energy situation in Canada. First of all, there is the view from this side-my view and the view shared by my colleagues. We recognize that we have problems which have developed over many years of Liberal rule, but we look upon them as a challenge. We know that Canada has the potential resources, or the resources we need; more resources perhaps than anywhere else in the world. Certainly this country is greatly endowed with such resources as oil, gas, uranium and hydro potential. All we have to do is to implement sensible and
December 11, 1980

equitable policies and legislation. Ordinary Canadians, not governments, people in the private sector, will take the initiative as they always have in the past, and they will put us back on the road to self-sufficiency.
However, the view on the other side, a view shared by the Liberals and the New Democrats, is quite the opposite. What they are trying to do is to exploit the difficulties which they themselves have caused and for which they themselves are responsible so as to pursue their own policies for greater centralized control, as I mentioned before, at the expense of the provinces and territories, for greater governmental presence in commercial undertakings in this country, and a greater use of Crown corporations such as Petro-Canada. They want more regulations and more restrictions placed on the daily lives of Canadians, all at the expense of individual liberty. That is the way I see it. Centralization and socialization go to the very heart of the proposals before us in the Canada Oil and Gas Act.
After that introduction, I want to say a few words on the Canada lands concept which has crept into Liberal terminology in the last little while. It is a new term. We have not been accustomed to using it in the past. We should find out from where it came and what it really means. In order to find out, we must turn to page 43 of the so-called "National Energy Program" which was presented on the evening of October 28. It came in with the ill-fated budget. The two documents quite properly belong together. In my opinion they are both of the same worth and value.
Page 43 contains a map which indicates what is meant by Canada lands, this term which has crawled out of the woodwork of the inner sanctum of the Liberal cabinet. According to this map, it means a huge area of Canada's land and water mass. This afternoon we were told how many more times in area the Canada lands were than the remaining ten provinces. These so-called Canada lands comprise all the traditional offshore areas of Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and British Columbia.
The hon. member for St. John's East (Mr. McGrath) was to speak tonight. However, he is indisposed. If he were speaking on this subject, he would put what I am about to say in much stronger terms. Having failed to negotiate any reasonable agreement with the provinces concerned, provinces which have a legitimate case to present, the Liberal government is using its sledgehammer approach and its unilateral technique to impose its will, for the main part, upon those provinces which are least capable of protecting their own interests.
Also Canada lands is defined by this map as including the Yukon and the Northwest Territories. This land was previously known as territorial lands, lands which we can only think of in this manner. It is land which the federal government presently holds in trust for four provinces to be established at some point in time in Canada's north. I stress the trust concept of these lands. There is no argument that at the present time they are owned by Her Majesty in right of Canada, but in time
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to come, as provinces are developed in the north, as the Yukon becomes a province and as one or more provinces are developed in the Northwest Territories, the resources of those areas must be transferred to those new provinces. They must not be treated any differently than any existing province in Canada.
At the present time it is absolutely necessary for the territories to be given access to resource revenues. The territories are faced with onerous, very high expenditures. The territorial governments are required by law-by federal law in many instances-to provide government services on a par with those of the provinces. It is very expensive to provide educational and social services and hospitals; to maintain the roads and to develop public works.
If they do not have access to some form of revenue in order to provide these services, they will have to approach Ottawa. We must realize that there is no other tax base. The population is such that the government cannot collect the required amount of money from personal income taxes or sales taxes. If they are not able to generate public revenues, territorial governments will always be forced to come cap-in-hand to Ottawa. The rich resources of the territories, which the people there are so anxious to share with their southern counterparts, will be taken out or extracted from the area with no real return. The revenues will be piled up in Ottawa, and the people of those areas will be forced to crawl on their hands and knees in an attempt to get back a few of those sadly-needed dollars to use for the purposes I have outlined.
I refer to page 43 of "The National Energy Program" and the offer which was made by the Minister of Energy, Mines and Resources to the various provinces adjacent to offshore resources. The Government of Canada offered to provide 100 per cent of provincial-type resource revenues to the adjacent provinces, subject to arrangements whereby when the province reached an agreed level of wealth, the revenues would be shared with other Canadians.
The offer included giving to those provinces a substantial voice in matters of direct concern to them, including the need to minimize social, environmental and economic disruption in the region. This offer was apparently turned down by the provinces. At least, this is what is contained in the official publication of the minister. I do not propose to speak on behalf of those provinces. Perhaps they had very good reasons for doing so, but I would strongly recommend to the minister that the same type of offer should be extended to the Northwest Territories and to the Yukon. I am sure this formula would be completely acceptable as an interim arrangement for the north. If it were put into effect, discretionary revenue would accrue to the territories, and they would not be in the position they are now.
The north would not be stripped of its resources with no revenues coming back to it. They would not be forced to come to the Minister of Indian Affairs and Northern Development (Mr. Munro) to ask for federal government handouts. But at the same time the government would avoid the situation of people there becoming too wealthy; any excess over a certain

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amount would be shared with the people of southern Canada. That seems like an equitable solution for the time being.
I hope the minister will take note of what I am saying and try to negotiate such an arrangement with the two territories.


Geoffrey Douglas Scott: He is not listening.


Dave Nickerson: He does not appear to be particularly interested. He just does not seem to be listening. He is very expert at shutting his ears when such matters are being presented.


Mr. Simmons:: He can read it in Hansard-, there is no problem.


Geoffrey Douglas Scott: He does not listen to the provinces; he does not listen to the territories.


An hon. Member:: That is true.


Dave Nickerson: So that is what we have, Mr. Speaker, this Canada lands concept. It is an attempt by the government, which by and large represents the interests of central Canada, to hang on to its regional privilege. That is what it amounts to.
The natural development of Canada will take place anyway. You cannot hold back the dawn, it will happen one way or another. We see the economic centre of gravity of this country moving westward. Nothing is wrong with that type of thing. It does not mean to say that the people in Ontario and Quebec will really miss out. The hon. member for Etobicoke Centre (Mr. Wilson), who spoke earlier, said that the central provinces of Canada could take advantage of this shift. It could be to everyone's advantage in this country. But the Canada lands concept is designed to preserve forever the pre-eminence of the central areas. What it seeks to do is create in the offshore areas of New Brunswick, Newfoundland and the other provinces I mentioned, and in the territories, a hinterland which can then be drained of its resources so that the people in southern Ontario and Quebec do not have to face economic reality.
In saying this, Mr. Speaker, I am being a little unfair to all those good Canadians who live in Trois-Rivieres, Quebec City, Toronto, Hamilton and Burlington. 1 do not really believe that is the way those people think. It is the way the Liberal government thinks they think. That is why they are pursuing this type of inane policy.
I have dealt with clause one of the bill, the short title, and I will have to go through the remaining 85 sections of the bill a little more expeditiously.


Marc Lalonde: With more sense would be fine, but take your time.


Dave Nickerson: We intend to do that. We intend to give you a good going over in the next few minutes.
Mr. Speaker, I would like to examine the objectives which the government says it wants to achieve through this legislation. These are generally agreed objectives between the three parties represented here. First, what we want to do is attain energy self-sufficiency in Canada. In the policies pursued by this side of the House when we were in office, not that many months ago, this was quite evident. Second, we want Canadian participation in the energy industries. We want Canadians to be the investors and to receive the dividends. We want Canadians to be active in the financing of oil and gas exploration, production and marketing. We want to utilize the manufacturing industries of Ontario and Quebec so that their expertise can be brought to bear on energy questions. We want to increase and maximize Canadian ownership within the oil and gas industry. There is already significant Canadian ownership of the exploration end.
The real problems are in the refinery part of the industry. There are some differences of opinion. We on this side of the House would like to see that accomplished privately by Canadian individuals, whereas on the other side of the House they are more inclined to think in terms of public ownership. What we want to achieve by the type of legislation with which we have been presented today is to bring on stream as quickly as possible the frontier and offshore resources of Canada so that we can achieve the goal of energy self-sufficiency.
Given those objectives what type of policy would any sane person-and there are a few on this side of the House at any rate-put into effect? What type of policy would encourage Canadians and Canadian corporations to undertake the risks involved in the job which is before us? First of all, you must give investors secure tenure of their land holdings. If they receive a lease or some form of permit or title to some oil or gas lands from a government they must know that it is secure. That is the first thing they want. So we examine the oil and gas legislation to see where that security is contained therein. We see that the best deal they can get is a five-year exploration agreement. When it comes to production, the best deal they can get is a ten-year lease. And when you read through the rules and regulations you see that there is no end to the discretion which is allowed the minister. He can run them off practically any time he wants to. So they do not have security of tenure in this bill.
Second, you must give the investor a set of known rules and regulations, guidelines by which he can operate. In this way he can pick up the rules and read them in advance to see what he will have to abide by. Again, we examine this bill to see whether that concept is contained in it. We find that, to the contrary, everything is arbitrary. It is left up in the air. The government, the minister, the bureaucracy can at any point in time change the ground rules, so no one really knows what is going on. You cannot invest with confidence. When you want to get into the business you must negotiate what they call an exploration agreement. There are no fixed rules. You do not know what they will be. For each project a separate agreement will be negotiated.
As I have said before, when you examine the act there is nothing in it but ministerial discretion and bureaucratic discretion. Authority is delegated to the minister's staff. They can
December 11, 1980

practically tell you how to run your own life. They can give you an order to drill. They can tell you where to drill and, if you don't, they can throw you off the land. Or, they can say you cannot drill here and if you do drill here we will throw you off. They can tell you how to transport the petroleum product that you are likely to find. They can dictate to what market you can sell your product. They can tell you how to produce, how much to produce, how little to produce or whether to produce at all. It is all left up to the Minister of Energy, Mines and Resources or the Minister of Indian Affairs and Northern Development. You can take your pick; one is as bad as the other as far as I am concerned.
Third, if you are to encourage people to make those investments you need sensible taxation and a sensible royalty scheme. We do not have these either. The rule should be that if you are successful you can make a profit. But when you look at what is in this legislation you see a basic 10 per cent royalty, 25 per cent Petro-Canada backing, 40 per cent net profit. When the product gets to the refinery, you are stuck with another 8 per cent. Then you have corporate income taxes. There is no end to it. 1 wonder how much the industry can stand.
Mr. Speaker, in every conceivable way this bill falls short of what is needed to encourage people to explore in those areas. 1 would like to call it ten o'clock.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Jesse P. Flis (Parkdale-High Park):: Mr. Speaker, I rise to share with you, on this occasion, a matter of deep and troubling concern to all people committed to the preservation of human rights and world peace.
On Wednesday, December 3, 1980, 1 asked the hon. Secretary of State for External Affairs (Mr. MacGuigan) what steps the government planned to take to convince the Soviet Union and its satellite countries to keep their armies out of Poland and to respect the principles of the Helsinki Final Act, in view of the fact that the Soviet Union had ordered the East German-Polish border sealed off, and in view of the fact that the Deutsches Democratic Republic and the Soviet Union have moved military forces along the Polish border, thus threatening world peace and jeopardizing East-West detente.
Further, on Tuesday, December 9, 1980, I asked the Prime Minister (Mr. Trudeau) whether he is prepared to ask the
Adjournment Debate
United Nations Security Council, through proper channels, to proceed under the terms of chapter VI, article 34 of its charter, under which it may investigate any dispute or any situation which might lead to international friction or give rise to a dispute in order to determine whether the continuance of the dispute or situation is likely to endanger the maintenance of international peace and security. The Prime Minister indicated that he is in favour of this suggestion and would bring it to the attention of the Secretary of State for External Affairs. I trust that the minister, who is in Europe right now discussing this problem with other western allies, will inform this House of any developments regarding these matters when appropriate.
At this point, Mr. Speaker, on behalf of many Canadians across Canada, I thank and congratulate the Prime Minister for the sensitivity he has thus far clearly demonstrated by urging all parties to remain calm and place party politics aside. This is not a time for any to rattle their sabres. What is happening in Poland now is an internal matter, and outside interference of any form must be avoided. The people of Poland have certainly come a long way, since the last ten years when I lived there, during which a lot of bloodshed took place through the food riots of 1970. Today, on the other hand, the workers have achieved miracles in regard to independent trade unions and freedom of the press, without an ounce of blood being shed. For this the people of Poland are to be respected.
I urge us all not to raise any further exaggerated expectations or demands upon the Polish government or, by implication, its Soviet backers. Let us not forget that the Kremlin may stamp its boots on Poland's soil with a clear and sounding reply of tanks and rockets. It is obviously simple to realize that the Soviet Union is determined to limit reforms in eastern Europe and will even accept all of the economic and moral consequences of an invasion of Poland if it feels that the basics of communism are threatened.
This is why Canada must work in unison with other nations to take a unified stand against the U.S.S.R. should it move its military might across Poland's borders. Again, I congratulate the Prime Minister for comprehending the complexities of this situation and for urging the western world to act together in maintaining peace and stability. I trust the Prime Minister will also continue to communicate directly with Mr. Brezhnev of the Soviet Union, in an effort to keep the situation in Poland an internal matter.
The two most important things that Poland needs today are prayers for peace, and food. In fact, it is my understanding that people around the world, from all religious denominations and backgrounds, along with Pope John Paul II, will be dedicating Sunday, December 21, 1980, as a "prayers for peace in Poland" day.
Further, as many members of this House are probably aware, Poland's economic situation is stark and desperate. The people are facing food shortages similar to those experienced in many developing countries. The financial crisis Poland faces

December 11, 1980
Adjournment Debate
in 1981 may have more serious consequences for East-West relations than the political situation.
Poland is in desperate need of food. Perhaps one aspect that could be explored by the Minister of State for Trade (Mr. Lumley) is trade by barter. That is, since Poland is rich in coal and other natural resources and since she requires food and hard currency, perhaps a system of mutal exchange could be established, similar to some of the exchange trade systems used by the Swiss government.
All in all, Mr. Speaker, I trust that as a nation we will do our best to act together with all concerned to maintain peace and stability in Poland. Perhaps the Parliamentary Secretary to the Secretary of State for External Affairs (Mr. Duclos) could give Canadians an update of the government's plans to help solve this critical situation in Poland.
[ Translation]


Mr. Louis Duclos (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, the hon, member will be happy to learn that according to the information we have the situation has not deteriorated along the Polish border over the past few days. There is no evidence that the Deutsches Democratic Republic has mobilized its forces; on the other hand, even if the Soviet power is in full strength, we have no reason to believe that it has deployed its troops along the border or decided to invade Poland.
On the other hand, in the communique issued following their recent summit in Moscow, the member states of the Warsaw Pact have indicated their determination not to use intimidation or force in their relations with other states, but to seek negotiated settlements to conflicts. Those are key provisions of the Helsinki Final Act and Canada repeatedly emphasized that they should govern foreign relations of all signatories to the Final Act. Those provisions are particularly pertinent to present relations with Poland. Canadian representatives have made known that point at the Madrid conference and in capitals of eastern Europe and in our political dialogue with European countries, we always stand up for the respect of the non-interference principle in domestic affairs of other countries.


EXTERNAL AFFAIRS-POLAND-INQUIRY REGARDING CONTEXT OF PRIME MINISTER'S NOTE TO CHAIRMAN BREZHNEV
Benno Friesen: Mr. Speaker, someone said "He who sups with the devil needs a long spoon." Many Canadians across the country today wonder whether the Prime Minister (Mr. Trudeau) has a spoon long enough, if he is going to sup with the devil.
There is growing concern in the country about the situation in Poland, about the manoeuvres taking place on both sides of its borders, and even more concern about the silence of our government in face of that threat to world peace.
Canadians wonder why the Prime Minister is so quiet about the situation in Poland. I am reminded of the situation a year ago when he was leader of the opposition and a member of the Privy Council. At that time we were concerned about the trouble in Iran. As a Privy Councillor, he had been briefed about that situation but he taunted the prime minister of that day with questions and was on the verge of endangering the lives of those Americans who were in our embassy in Tehran.
With that background in mind we wonder what he is trying to pull off concerning Poland. Yesterday in the House I asked him whether it was because of the friendship protocol, that he, as Prime Minister, signed with the Soviet Union nine years ago, that he had finally written a secret letter to President Brezhnev. He replied that it was not because of that. I then asked him whether as a gesture of solidarity between the Canadian people and the Polish people, he would break off that protocol with the Soviet Union, and he declined.
That is not all that concerns me, Mr. Speaker. About a month ago at a news conference he said that as a result of that friendship protocol he regularly briefed the Soviet ambassador in Ottawa if he met with world leaders like President Carter, Prime Minister Thatcher or Chancellor Schmidt.
Mr. Speaker, can you imagine a member of the NATO alliance meeting with other members of the NATO alliance and, having met with them, going to a member of the Warsaw pact and briefing a member of the Warsaw pact about the discussions he had had with NATO alliance members? Can you imagine that? Can you imagine the reverse being true where Chairman Brezhnev would meet with members of the Warsaw pact about concerns they have in their alliance and, after that meeting is over saying, "Now that we, as members of the Warsaw pact, have met I had better brief a member of the NATO alliance about our discussions." That is sheer stupidity. Yet the Prime Minister frankly, openly and gratuitously gives the information at his news conference that such is his regular custom. What in the world does he think he is pulling off? 1 might add that at the time of the debate in 1971 when the friendship protocol was going on, the hon. member for Winnipeg North Centre (Mr. Knowles) said, the protocol was "like a couple of boys meeting at summer camp and agreeing to continue in close touch after they had returned to their homes". Isn't that sweet? These are like boys coming home from camp. All they do is share the secrets about the alliance.
Let me quote the actual terms of that treaty. It is taken from "Keesing's Contemporary Archives." I quote clause 2 of that protocol:
In the event of a situation arising which, in the opinion of the two governments, endangers the maintenance of peace or involves a breach of the peace, the two governments will make contact without delay in order to exchange views on what might be done to improve the situation.
There we have the terms to which the Prime Minister signed in 1971. If those are the terms then we can come to only one of two conclusions. First, that there are other secret messages which the Prime Minister has sent to Chairman Brezhnev,
December 11, 1980

which he has not told us about if he was trying to fulfil this protocol, or else he does not think this is a crisis for world peace. It is one or the other. The agreement clearly says that without delay they will exchange views if there is a threat to world peace.
I say all this against the backdrop of 1968 when the Russian tanks rolled into Czechoslovakia and our government made that strong statement about it being regrettable. The question which the Prime Minister did not answer still remains. The Canadian people are looking for a strong statement from our government. The least the Prime Minister could do, without affecting the internal affairs of Poland, without messing around with a quarrel inside Poland and without being accused of interfering with the internal affairs of Poland, would be to demonstrate our concern about what the Soviet Union is doing by breaking off that friendship protocol. After all, that is supposed to be a bilateral agreement. At the time, it was announced, it was trumpeted across Canada as an agreement dealing with technical, scientific and high Arctic exploration. Those were the concerns. Actually, what the Prime Minister does is use that protocol to continue liaison with the Soviet ambassador in Ottawa. That is what he said. That is not what I said; it is what the Prime Minister said. He admitted it freely; he was not even asked to give that information. Mr. Speaker, we have reason to be concerned that the delay in the Prime Minister's sending a communique to the Soviet Union has to be because of this friendship protocol. I believe the people of Canada want to see a clear demonstration of the solidarity of the Canadian people in opposition to what the Soviet Union seems to be planning and want to see a clear demonstration of our opposition to that. One demonstration would be, without interfering with the domestic affairs of Poland, to break off that friendship protocol.


Louis Duclos: Mr. Speaker, the Prime Minister (Mr. Trudeau) stated in the House on December 9 that the government has been seeking to establish a collective attitude within NATO vis-a-vis the events in Poland. That is why the Secretary of State for External Affairs flew to Brussels, to participate in a meeting of Atlantic alliance foreign affairs ministers, during which the Polish situation was reviewed.
I am pleased to announce that those discussions resulted in a unanimous approach concerning urgency plans, but unfortunately I cannot disclose the details of those plans. In addition to that, the ambassadors of member countries of NATO in Brussels have been instructed to follow up the situation in Poland and to review a series of political, diplomatic and economic measures which could be enforced should the situation deteriorate. In the meantime, it would not be appropriate to disclose whether the Canadian government is contemplating any measures.
Adjournment Debate
As for the suggestion that the Canadian government would abandon what has been described as the friendship protocol between Canada and the U.S.S.R., obviously, I cannot for the moment say whether such an action would be appropriate. However, to avoid any confusion, I should underline that the protocol is not in fact a friendship protocol, but rather a protocol concerning consultations during which the Canadian and Soviet governments agreed in 1971 to improve communications between their respective countries, both under normal conditions and in times of crisis. It was never designed as a means of revealing Canadian state secrets or of betraying the confidentiality of communications with allies and friendly countries. Indeed, it was never used for this purpose.
Mr. Speaker, I seriously deplore that there can be such demagogy in this House on such a serious matter as we have had on the part of the hon. member this evening. He behaved the same way when he asked this question a few days ago. Mr. Speaker, if the hon. member really believes that his protocol between the Soviet Union and Canada is not in the interest of Canada, I wonder why he did not rise to denounce it during the eight or nine months when his party was in power. He kept his mouth shut at the time, and I deplore the fact that we cannot in this country do the same as our southern neighbours when serious issues of foreign policy are raised, and act in a non-partisan manner and avoid the kind of demagogy that we have seen tonight.


ENERGY-GASOHOL-INQUIRY WHETHER CONSIDERATION GIVEN TO REMOVAL OF EXCISE TAX
Mr. Charles Mayer (Portage-Marquette):: I have a topic of major concern and it has to do with our energy supplies in Canada.
It is well known that our ability to produce liquid portable fuels in this country is declining. We are currently importing about one out of every five barrels we consume and the prospects are that in five years we will be importing roughly two barrels out of every five barrels we consume. I want to stress a question I raised in July concerning encouragement by the federal government of the production of ethyl alcohol with the idea of making this country self-sufficient or bringing it closer to that by making use of some of the renewable resources we have. Ethyl alcohol is capable of being produced by a large variety of the crops we grow. There are two or three areas I should like to cover in terms of dispersing some of the myths presently associated with the production of ethyl alcohol. One has to do with the food myth. Many people think it is immoral to take grain and produce alcohol from it.
In actual fact by producing ethyl alcohol we can add to the total food supply in this country. I think it is well known that many countries around the world are capable of producing a lot of starch and sugar, but that is not what is in short supply as far as food is concerned. What is in short supply is protein,

December 11, 1980
Adjournment Debate
and when we produce ethyl alcohol from grain, we only subtract carbohydrates, the protein remains. If refined properly and produced in sufficient quantities, protein produced in this way is capable of being sold and used for human consumption. I would like to read a quote into the record with respect to that. It is from the proceedings of the Canpac 1980 conference. It was the first Canadian national power alcohol conference, and it was held in Winnipeg back in June.
The largest current producer of fuel alcohol-
That is the United States.
-is shipping much of the protein byproducts from its alcohol plants to Holland, for human food use. This is a brand new protein source for Holland. And it can be a brand new source for other countries.
Those who are saying it is immoral to produce alcohol from grain which can be used for food are in fact missing the point. If we produce ethyl alcohol in sufficient quantities, as I said, and refine it properly, it is certainly capable of being a very good and valuable source of human food.
In addition to that there are many idle acres, particularly in western Canada, lying in summerfallow. There is much concern that with continuous summerfallowing we are losing some of those acres in terms of their capacity to produce. We could get into salinity problems. Summerfallow is not designed entirely as a means of increased production. It is a marketing tool. Because of the way our quota system is set up, people in some areas have to summerfallow as a means of increasing their marketing ability. If we can find markets for this kind of grain at home, we can decrease the amount of summerfallow thereby avoiding some of the salinity problems we are getting into in certain areas of prime land in western Canada.
Another potential problem people see with ethyl alcohol is the energy myth. Some people are saying that it takes more calories to produce a gallon of ethyl alcohol than the number which result. That is not the case either. It is a good, cleanburning fuel. It is a cool-burning fuel. Good engine life can be obtained through its use. Many Indiana racers use straight methanol, which is quite similar to ethyl alcohol. They use it alone in racing engines. It is a good fuel. Brazil is a major producer of ethyl alcohol, and I am told that most of the major farm equipment manufacturers are producing engines for sale to Brazil which burn straight ethyl alcohol. We are not talking about producing very much ethyl alcohol in this country because I do not think we have the capability to produce enough to burn alone in our engines. What we are talking about is a mixture of ethyl alcohol and gasoline, which is commonly referred to as gasohol. The mixture would be approximately 10 per cent ethyl alcohol and to be competitive in terms of price, it would have to be subsidized. I do not think this is the case any more, given the price of fuel in this country.
We are getting very close to the point where ethyl alcohol will be competitive in terms of price. Anyone who follows the energy-pricing situation knows that our prices will probably increase very drastically in the next two or three years. That will make the production of ethyl alcohol even more competitive with conventional gasoline. When we look at the subsidy
we are paying now on gasoline presently imported into the country, we find we are paying some $20 a barrel to buy imported oil. If we were to pay that kind of subsidy-and I am not advocating this-to people in our own country to produce ethyl alcohol, that subsidy would stay in the country.
There is another side to this. We pay that amount of subsidy to bring in imported oil and we make use of only some 50 per cent or 60 per cent of a barrel of oil to produce gasoline. The remainder goes into asphalt and other heavy products which we in this country are capable of producing from coal and natural gas. So, by buying a barrel of oil from offshore sources and paying a subsidy on it, we are only making use of part of that barrel of oil to produce gasoline which is in short supply in this country.
What I am saying is that if we would pay any kind of a subsidy to encourage the production of ethyl alcohol, we would get a double benefit. Not only would the money stay in this country, but we would not be subsidizing the importation of things that go to make asphalt, those heavy products which come from the remainder of a barrel of oil out of which we cannot make gasoline. We certainly are capable of producing those other products from coal and natural gas.
What I should like to say in conclusion is that Manitoba, by waiving a provincial excise tax on the production of ethyl alcohol, was able to encourage a plant to start in that province. I would like to see the federal government show some initiative in this respect and remove the 7-cent a gallon excise tax as it applies to gasohol and thereby encourage production of energy in this country from a genuinely renewable resource. It has been done not only in the United States but in Brazil and in Manitoba.


Mr. John Evans (Parliamentary Secretary to Deputy Prime Minister and Minister of Finance):: Mr. Speaker, over the years there has been increasing interest in Canada, in the United States and elsewhere, especially in Brazil, in using gasohol which, as the hon. member has pointed out, is a blend of 90 per cent gasoline and 10 per cent alcohol, and this would be used to conserve gasoline. The government has indicated its support for the development of this and other renewable energy sources in its national energy program.
In the national energy program, the government identified a number of alternatives to gasoline which warrant consideration. These include the use of propane as a clean and efficient fuel for motor vehicles and the development of compressed natural gas for fuel. The Department of Energy, Mines and Resources and the special parliamentary committee on alternative energy and oil substitution are both studying alcohol as one of these options.
Alcohol fuels present a unique opportunity for the future production of alternative liquid fuels from renewable biomass. This potential, however, requires more research and development to improve on the current economic and technical disadvantages. To this end, the Minister of Finance (Mr. Mac-
December 11, 1980

Eachen) reaffirmed in his recent budget speech his intention to introduce amendments to the Excise Act to facilitate the production of denatured alcohol for use in experimentation and development of fuels. The new provisions will include the creation of special temporary licences, a reduction in the bonding requirements, and exemption from the excise duty on alcohol to enable researchers to produce denatured alcohol for experimentation and development of fuels such as gasohol.
With existing technology, however, there are a number of drawbacks to using gasohol in place of gasoline. First, alcohol is costly to produce, compared to gasoline, even when refined from imported oil. Second, the recoverable energy content of alcohol is lower than that of gasoline. Finally, there are some technical problems still to be worked out, such as the feasibility of using gasohol in Canada's severe winters. For these reasons, elimination of the 7 cents per gallon levy from gasohol
Adjournment Debate
would appear to be an unwarranted subsidy, and, indeed, could even be counter-productive, since this fuel is primarily gasoline. I might point out that since it is 10 per cent alcohol and 90 per cent gasoline, the effective subsidy to the alcohol component would be 70 cents a gallon.
For these reasons, subsidization of gasohol by removing the excise tax would be premature. The taxation of alternative fuels for internal combustion engines can only be properly addressed when all the various alternatives have been properly assessed and a viable and efficient substitute for gasoline has been identified,


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 11 a.m.
Motion agreed to and the House adjourned at 10.29 p.m.

Friday, December 12, 1980