1980-04-25

ROUTINE PROCEEDINGS


Mrs. Celine Hervieux-Payette (Parliamentary Secretary to Solicitor General):: Madam Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House To deaTwith a matter of urgent and pressing necessity. I move, seconded by the hon. member for Welland (Mr. Parent):
That the House extend its best wishes of good health and its congratulations to the hon. Senator Thirese Casgrain on the fortieth anniversary of the achievement of the right to vote for women in Quebec, in which she played a leading part.


Madam Speaker:: Such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Madam Speaker:: It is moved by the hon. member for Mercier (Mrs. Hervieux-Payette), seconded by the hon. member for Welland (Mr. Parent):
That the House extend its best wishes of good health and congratulations to the hon. Senator Therese Casgrain on the fortieth anniversary of the achievement of the right to vote for women in Quebec, in which she played a leading part.
Is it the pleasure of the House to adopt the motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. Dan McKenzie (Winnipeg-Assiniboine):: Madam
Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. The Minister of Transport (Mr. Pepin) has informed the mayor of Winnipeg
that no funds are available for CP rail relocation in Winnipeg. The Prime Minister (Mr. Trudeau) has stated previously that CP rail relocation is a Liberal approach and that he favoured rail relocation. The hon. member for Kenora-Rainy River (Mr. Reid) rescinded construction permits for an overpass until further studies were done, delaying the project for over a year and adding an additional $2.5 million to the cost. Now the city of Winnipeg has no choice but to proceed with the overpass.
I therefore move, seconded by the hon. member for Portage-Marquette (Mr. Mayer):
That this House instruct the Prime Minister to provide immediately the $2.5 million in additional cost to the city of Winnipeg which has accrued due to federal government delays.


Madam Speaker:: Such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


PENITENTIARIES
Mr. Svend J. Robinson (Burnaby):: Madam Speaker, I rise on a matter of urgent and pressing necessity pursuant to the provisions of Standing Order 43. In view of the fact that it has been almost three years since the unanimous report of the parliamentary subcommittee on the penitentiary system in Canada was tabled stating that a crisis exists in the penitentiary system and recommending that the then solicitor general act immediately on the report, and in view of the fact that there are still many recommendations which have either been rejected or not implemented by previous solicitors general, I move, seconded by the hon. member for Saskatoon East (Mr. Ogle):
That this House call upon the present Solicitor General to move quickly to implement the recommendations of the subcommittee on penitentiaries in Canada to prevent the possibility of serious problems recurring in our prison system.


Madam Speaker:: Such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.

April 25, 1980


THE ENVIRONMENT
Mr. W. C. Scott (Victoria-Haliburton):: Madam Speaker, 1 rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. The Minister of the Environment (Mr. Roberts) met in Washington recently with his U.S. counterpart on the matter of acid rain contamination, but he has not yet reported to this House on whether he was able to obtain firm commitments from the U.S. Environmental Protection Agency on joint Canada-U.S. action to combat the causes and effects of acid rain fallout. 1 therefore move, seconded by the hon. member for Simcoe North (Mr. Lewis):
That the Canadian government express to the United States government our deep concern over the planned changeover of United States utility companies from oil and gas to coal to generate electricity, and the effect it will have on the increase of acid rain fallout in Canada, and that we should ask the U.S. government not to concur without full consultation between our two governments on the effect of acid rain on our total environment.


Madam Speaker:: Such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


FISHERIES
Hon. John C. Crosbie (St. John's West):: Madam Speaker, 1 rise under the same standing order on a matter of urgent and pressing necessity. In view of the provision made in the estimates for 1980-81, as announced in the budget speech of December 11, for $50 million to initiate new measures to stimulate employment and economic development in eastern Canada, and since $25 million was to be made available to Fisheries Canada with $40 million allocated for projects of the small craft harbours branch during 1980, I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That this House direct the government to confirm the additional $25 million to fisheries with $14 million additional to small crafts harbours branch for important wharf, dredging, slipway and other necessary construction work on facilities for the fishermen of eastern Canada, and specifically that plans already announced for dredging in Petty harbour, wharf repairs and reconstruction at Renews, Admiral's Beach, Merasheen, St. Vincent's, Bay Bulls, St. Bride's, Point Lance and St. Shott's, all important inshore fishing communities in the district of St. John's West, be commenced immediately.


Madam Speaker:: Such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN PACIFIC RAILWAY
Mr. Douglas Fisher (Mississauga North):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. I refer to the daily threat facing thousands of people resulting from the refusal by the Canadian Pacific Railway to instal simple, basic safety devices called hotbox detectors on its London to Toronto track. Every day CPR transports deadly and inflammable gases on this track. We have already experienced one massive derailment in Mississauga. These devices are not required by regulation nor are they foolproof, but if they had been in place last November, the train crew might have had a vital extra warning that a derailment was about to occur.
I therefore move, seconded by the hon. member for Belle-chasse (Mr. Garant):
That this House deplores this threat posed by CPR's lack of proper safety signalling devices; that CPR be directed to cease the transportation of deadly and inflammable gases on this route until it instals hotbox detectors, and that CPR be directed to start the installation of these hotbox detectors at once.


Madam Speaker:: Such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


AIR TRANSPORT
Mr. Cyril Keeper (Winnipeg-St. James):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Whereas there is strong and mounting public opposition to the Pacific Western Airlines application for hangar space in the south end of Winnipeg International Airport, and whereas former Liberal transport minister Otto Lang accepted the recommendations of a departmental study calling for such development to take place, only further northwest, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the Minister of Transport back the decision taken by the regional air transport administration to reject the PWA application.


Madam Speaker:: Such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.
April 25, 1980

S)



PENSIONS


Mr. F. Oberle (Prince George-Peace River):: Madam Speaker, I rise on a matter of urgent and pressing necessity regarding the serious effects on thousands of Canadians who trace their ancestry to the Federal Republic of West Germany of double taxation of pensions they may have earned in their old homeland. I move, seconded by the hon. member for Mission-Port Moody (Mr. Rose):
That this House requires the government to act with the utmost dispatch and expediency to bring into effect the terms and conditions of the 1976 bilateral agreement between Canada and the Federal Republic of West Germany as these agreements affect the double taxation of pensions.


Madam Speaker:: Such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



PRESENCE IN GALLERY OF MINISTER OF PLANNING AND CO-OPERATION OF REPUBLIC OF UPPER VOLTA

Madam Speaker:: I should like to signal the presence in our gallery today of His Excellency Georges Sanogoh, Minister of Planning and Co-operation of the Republic of Upper Volta, and President of the Liptako-Gourma Authority.



ORAL QUESTION PERIOD


Right Hon. Joe Clark (Leader of the Opposition):: Madam Speaker, in the absence of the Prime Minister, I will direct a question to the Secretary of State for External Affairs regarding the failure this morning of the United States rescue mission in Iran. I wonder if the Secretary of State for External Affairs can give the House any information on this matter that was divulged to the Prime Minister, to the Secretary of State for External Affairs or to other Canadian officials by Secretary Vance or other American officials, or information that was communicated directly to the Prime Minister by President Carter.
Oral Questions


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, the Prime Minister regrets that he is not able to be here this morning. As I believe the House knows, he released a press statement in which he referred to the valiant effort and regretted the loss of life, which we all do, as we also regret the continued holding of the hostages in Tehran. We had no advance knowledge of the operation. The knowledge we received subsequently is of a very general kind and not, I think, of the kind to which the hon. Leader of the Opposition referred.


Charles Joseph Clark: 1 wonder if the Secretary of State for External Affairs will tell the House whether the Government of Canada is considering any initiatives which Canada might take or recommend that would be helpful in securing the safety and the peaceful release of the American hostages remaining in Tehran?


Mark R. MacGuigan: Madam Speaker, obviously this is a subject which especially today is very much at the forefront of our concerns. We expect to have discussions in the near future with our allies, including the United States, on this question. We had some general discussion along those lines with Secretary Vance when he was here, but now in this new context I think it is more important than ever that we have some additional consultations in this respect.


Charles Joseph Clark: Madam Speaker, is it the position of the Government of Canada that Canadian sanctions against Iran should and shall stay in full effect?


Mark R. MacGuigan: Madam Speaker, certainly we intend to keep in effect the sanctions which we put in place. We are not unsympathetic to further sanctions in co-operation with our European allies along the lines that have been spoken about recently. We do not yet have a full economic embargo on Iran. We are considering that step, and we will more with our allies in that direction.


CANADIAN PACIFIC RAILWAY
A. Daniel McKenzie: Madam
Speaker, my question is for the Minister of Transport. I wonder if he would explain to the House the complete reversal by the government in not providing funds to the city of Winnipeg for CP rail relocation. The Prime Minister stated that he favoured rail relocation. The Minister of Employment and Immigration stated that we need rail relocation. The predecessor to the Minister of Transport, Mr. Lang, said that we must have rail relocation. The hon. member for Kenora-Rainy River gave advice to the city of Winnipeg on how to obtain funds for rail relocation. In view of these statements, can the minister explain to the House the complete reversal of policy of the Liberal government?

April 25, 1980
Oral Questions


Hon. Jean-Luc Pepin (Minister of Transport):: Madam Speaker, the Minister of Transport is in favour of relocation, and everybody and his aunt is in favour of relocation. This is the essence of it. Everybody finds it easy to agree with this relocation project.
A study has been made which illustrates or demonstrates the substantial difference between building overpasses and relocating, and the difference is between $65 million and $135 million. Three orders of government have some responsibility in this matter, and the city of Winnipeg is trying to find if it can get the necessary money for the relocation option from somewhere. The mayor and his advisers came to see us yesterday. As Minister of Transport the only instrument I have is UTAP, the urban transportation assistance program. Under that program $9 million can be assigned for that, and arrangements have been made to assign that project should the city and the province-because the province has the main responsibility to decide-accept this recommendation.
We are looking for money elsewhere and there is a possibility that the Department of Regional Economic Expansion might make a contribution.
The difficulty, of course, is the size of the gap between option one and option two, that is, the difference between $65 million and $135 million. Even if DREE wanted to be helpful, they would require quite an amount of money to do so.
May I conclude by saying that this is a responsibility of all three orders of government. We are in a bit of a vicious circle because everybody is looking to somebody else to see what they are going to do. 1 tried to say yesterday what I thought as Minister of Transport.


Some hon. Members:: Hear, hear!


A. Daniel McKenzie: Madam Speaker, the vicious circle has been created by the Prime Minister and the hon. member for Winnipeg-Fort Garry. They never said any of these things when they stopped the city of Winnipeg obtaining funds-


Madam Speaker:: Order. Will the hon. member ask his question.


A. Daniel McKenzie: My question is, as the year's delay was caused by the Liberal government, is the government now going to reimburse the city of Winnipeg for the additional $2.5 million cost for the building of the Sherbrook-McGregor overpass, and is it going to provide them with a permit for the overpass? If the minister has the DREE funds, when will he be making an announcement on those DREE funds?


Jean-Luc Pepin: I want to repeat, Madam Speaker, that the door is not closed. There is still an exercise to be done, which we hope to conclude next week. I am going to dedicate a lot of time to it because I think the city of Winnipeg should know where the two other orders of government stand. I am referring to the government of Manitoba, which has not been too keen to come out on this subject.
On the point of compensation for the delays, 1 regret to say that I do not accept the idea and for two reasons. First of all, this study, which took a bit of time to do, was necessary for the project to come under UTAP. Secondly, I think that had the study not been done, generations of Winnipegers would have asked themselves what would have been the cost of relocation and if it would have been financially possible to take that approach.


WINNIPEG-REQUEST FOR COMMITMENT ON RAIL RELOCATION
Cyril Keeper: Madam Speaker, I would direct my question to the same minister, asking whether he agrees with and recognizes the importance of rail yard relocation in Winnipeg and that the economic benefits outweigh the cost? Is he prepared to make a commitment within a week on relocation?


Jean-Luc Pepin: Madam Speaker, I cannot see what I can add to the very clear answers I have already given.


Cyril Keeper: My supplementary to the minister, Madam Speaker, is, is he willing then, if required, to bring in amendments to the Railway Relocation and Crossing Act so as to make that act more sensitive to community interests and not simply to CPR interests?


Some hon. Members:: Hear, hear!


Jean-Luc Pepin: Madam Speaker, I repeat again that the objective of relocation is one with which everybody and his aunt agree. The question is to find the money needed to do that. It is not only in Winnipeg, it is in Regina, Toronto, Montreal, everywhere.


Charles Joseph Clark: What were the limits of the Axworthy promise?


Jean-Luc Pepin: I hope that in the coming months to begin to develop a program that would replace the UTAP program which ends in the fiscal year 1982-83.


INQUIRY AS TO DELAY IN EXPLAINING BLENDED OIL PRICING
John Carnell Crosbie: Madam Speaker, my question is directed to the Minister of Energy, Mines and Resources. The Minister of Finance on Monday night made a solemn pledge that the implementation of blended oil pricing would reduce the expenditures on oil import subsidies by one third, $1 billion, out of the new estimate for this year of $3.1 billion. This year Canada will import 165 million barrels of oil at a subsidy at present of $20 a barrel. Therefore, there would have to be an increase in the price of imported oil to $6 a barrel to reach this $1 billion.
April 25, 1980

Would the minister explain to the House, in view of the importance of this pledge, why the long delay in explaining fully to Alberta, Saskatchewan and the other provinces what his new formula is in detail-not election rhetoric as he told the Leader of the Opposition yesterday, but his detailed proposal? Is it because the proposal resulted in an increase of over $4 more a barrel this year than was stipulated in the budget, or is it because the minister wishes to gull the people of Quebec beyond May 20 he gulled the people of Canada beyond February 10? What is the reason for this?


Hon. Marc Lalonde (Minister of Energy, Mines and Resources):: Madam Speaker, I wish that the hon. member would quote accurately what was said by the Minister of Finance. I suggest, when the hon. member refers to a statement made by the Minister of Finance in his absence, that he should at least quote exactly the statement from Hansard.


Some hon. Members:: Hear, hear!


Marc Lalonde: As to the hon. member's question, I would remind him that it took his government six months before it went to Alberta and really started to discuss detailed proposals with that province. I had a meeting with the minister of energy of Alberta within two weeks of my appointment to office.


Miss MacDonald:: It took you ten years.


Marc Lalonde: During the first two weeks of May, I intend to meet with my provincial colleagues, particularly those of the producing provinces, and discuss with them rather specific proposals.


Charles Joseph Clark: Again he refuses to answer.


John Carnell Crosbie: Madam Speaker, the blended price was a central proposal during the election campaign. Now the minister is admitting that he does not know what it is and that he does not have a proposal ready yet.


Flora Isabel MacDonald: That's right.


John Carnell Crosbie: With respect to the accuracy of quotations, the minister told the hon. member for Athabasca yesterday that it was not the federal government which delayed the starting of the Alsands plant, but the government of Alberta. The president of Shell Canada Limited said yesterday, as reported in this morning's Globe and Mail:
Completion of Canada's third oil sands plant will be put back a year to 1987 if Ottawa does not agree to world prices for output by the end of June-
In view of that fact, how can the minister now blame the government of Alberta, when Shell Canada is saying that completion will be put back one year if Ottawa does not agree to world oil prices for their product by June? Who is correct, the president of Shell Canada or the minister? I know who I think is correct, and it is not the minister.


Marc Lalonde: Madam Speaker, obviously I do not expect the hon. member to exercise fair judgment on this issue, nor am I surprised by his conclusion. I would remind the hon. member,
Oral Questions
that well before our decision to use the force majeure clause within the agreement with Syncrude, and to put an end to the tying of tar sands oil prices to international prices, the government of Alberta had delayed for many months the necessary approval for the Alsands proposal, while the federal government had taken all the necessary steps to make sure that this project would go ahead. The decision to delay any further approval was taken by the Premier of Alberta at least a month, if not two months, before our announcement on tar sands prices. Those are the facts, and I challenge the hon. member to prove to the contrary.


John Carnell Crosbie: Madam Speaker, in view of the urgency of settling the oil pricing question for the purposes of the budget, which the Minister of Finance is hesitating to bring down until this matter is settled, since the present agreement ends on July 1, in view of the fact that it is holding up the tar sands project, and in view of what the president of Shell Oil has said, that if we do not have that price, these projects will not be economically viable, when does the minister intend to pull his blended rabbit out of his blended hat and give it to the provinces and this House so that we can see exactly what he is aiming for and how he intends to accomplish his goals?


Marc Lalonde: Madam Speaker, this government will not be blackmailed by the threats of any president of any company.


Some hon. Members:: Hear, hear!


Marc Lalonde: We are engaged in discussions with the provinces, the producing provinces in particular, concerning a new pricing arrangement. There is agreement between the government of Alberta and ourselves that we should set our target for early July. That point is agreed between our governments. I am working on that basis, and I hope that bv that time we will have an agreement.
By the way, Madam Speaker, if that does happen, we will have achieved an agreement twice as fast as it took the previous government not to reach an agreement.


GOVERNMENT EXPENDITURES
Hon. Sinclair Stevens (York-Peel):: Madam Speaker, on the same line of questioning, perhaps I could put a question to the President of the Treasury Board. In introducing the main estimates in this House earlier this week, the President of the Treasury Board stated:
The $2.6 billion provision in the 1980-81 main estimates for oil import compensation payments is based on the previous government's domestic oil pricing strategy-
Would the President of the Treasury Board confirm to the House that that strategy anticipated a $4 per barrel increase in the price of domestic oil in this current fiscal year?
414

April 25, 1980
Oral Questions
Elon. Donald J. Johnston (President of the Treasury Board): Madam Speaker, as I recall, that was the figure that was produced in the projections of the former minister of finance in December, 1979.


INQUIRY WHETHER BLENDED PRICE FORMULA CONVEYED TO PRESIDENT OF TREASURY BOARD PRIOR TO FINALIZATION OF ESTIMATES
Sinclair McKnight Stevens: Madam Speaker, as we now have it confirmed that before this House we have estimates that anticipate a $4 per barrel increase in the price of oil, I would put my next question to the Minister of Energy, Mines and Resources. Did he at least convey the workings in detail of his blended price formula to the President of the Treasury Board prior to the estimates being finalized and put before this House, as certain oil compensation payments are reflected in these estimates, but apparently the $4 price was assumed still to be in effect?


Marc Lalonde: Madam Speaker, the government is working on various scenarios in terms of pricing-


Some hon. Members:: Oh, oh!


Mr. Hnatyshyn:: It is a great day.


Marc Lalonde: -but I can assure the hon. member that for this year the wellhead price increase that the government is working on is below $4.


CONSUMER AFFAIRS
Mr. Ian Waddell (Vancouver-Kingsway):: Madam Speaker, I am pleased to hear that this government is tough and will not be blackmailed.
I have a question for the Acting Prime Minister. In view of the fact that oil company profits for the first quarter of this year have just been released, showing that Shell's profit is up 94 per cent, Gulf 72 per cent, Texaco 94 per cent and Sunoco's profit is up an incredible 364 per cent, what action is the Government of Canada contemplating to stop this exorbitant profiteering by these oil companies?


Marc Lalonde: Madam Speaker, as far as Suncor is concerned, the hon. member knows that we have stopped tying the price of tar sands oil to international prices, and that we are going to work on the basis of a negotiated price which has no relationship necessarily to international prices.


Ramon John Hnatyshyn: What are you going to do, Marc?


INQUIRY WHETHER OIL COMPANIES ALLEGED TO HAVE FIXED PRICES WILL BE PROSECUTED
Ian Gardiner Waddell: Madam Speaker, that does not answer my question on oil company profits, but I will direct my supplementary question to the Minister of Justice, if 1 might. I know he is tough and will not be blackmailed either.
In view of the fact that the Department of Consumer and Corporate Affairs has been conducting a seven-year investigation on price fixing by large oil companies and that lawyers in the department are running over themselves with evidence from this investigation, can the minister confirm to the House that there is going to be action taken now, including prosecution of these oil companies who are making these exorbitant profits and are alleged to have fixed prices?


Hon. Jean Chretien (Minister of Justice and Minister of State for Social Development):: Madam Speaker, I will look into the matter. I have not been informed of any immediate action concerning that file. I think it is a very important subject and 1 will look into it. If we have to take action, we will take it, but I am not in a position to report to the House at this time.


Ian Gardiner Waddell: Madam Speaker, the Minister of Consumer and Corporate Affairs knows about this matter, or at least should know of it. Could he confirm to this House that officials in his department are simply furious over the inaction of the last government and over the unwillingness of this government to be tough and to take on the giant oil companies over this price fixing? Can he tell us when there is going to be some action in this area?
[ Translation]


Hon. Andre Ouellet (Minister of Consumer and Corporate Affairs and Postmaster General):: Madam Speaker, I should not forgive myself for expressing publicly the personal feelings of civil servants. I shall not continue in that vein but will merely reply to the hon. member that an investigation is now under way, as the hon. member already knows. I am confident its director will do a thorough job of it. For the time being, anything else would be mere speculation. 1 feel it would be wiser to wait for the findings of the director of inquiries. When he has handed in his report, of course the government will act without delay.


NATIONAL DEFENCE
Mr. Jean-Louis Leduc (Richelieu):: Madam Speaker, my question is directed to the Minister of National Defence. I should like to know what the intentions of the government are with regard to the future of escort ships in Canada.
April 25, 1980


Hon. J. Gilles Lamontagne (Minister of National Defence):: Madam Speaker, I am glad the hon. member brings up the matter considering the updating of our Canadian armed forces, which process is making great strides, the purchase of fighter aircraft and probably, in the near future, that of other material. With regard to the ships we must purchase for the Canadian navy, 1 think it is important to mention that the Quebec shipyards will certainly benefit the most considering that we have two shipyards which need help very badly, and like in other parts of Canada the situation can certainly be improved.


NATURAL RESOURCES
Hon. James A. McGrath (St. John's East):: Madam Speaker, I would like to direct a question to the Minister of Energy, Mines and Resources. In view of the fact that the failure of this government to recognize Newfoundland's claim to offshore oil and gas is retarding commercial development of the Hibernia well, and in view of the position taken in Newfoundland by the minister's provincial colleagues in support of Newfoundland's position, I ask the minister if the government intends to recognize Newfoundland's position, vis-a-vis offshore oil and gas, in order to enable production of this very important well to get on and, if so, is the minister prepared to tell the House what the position is?


Marc Lalonde: Madam Speaker, what is retarding any development, if there is any such delay taking place, is also the failure of the government of Newfoundland to recognize the position of the Government of Canada.


James Aloysius McGrath: Madam Speaker, I have a supplementary question for the minister. The minister's colleague, the Minister of National Revenue, said publicly that the position of the Government of Canada is getting closer to that of the government of Newfoundland. My question is: has there been any change in the very stubborn position of the Government of Canada, and does the minister intend to enter into negotiations with the government of Newfoundland in order to enable the development of that very important source of energy to proceed and hence reduce the dependence on offshore oil and gas which is so costly to this country?


Marc Lalonde: Madam Speaker, I am happy to hear that my colleague recognizes that the position of the Government of Canada might be coming closer to that of Newfoundland, and I hope this also means that the position of Newfoundland is coming closer to that of Canada.
As far as the other part of the hon. member's question is concerned, I intend to meet with my colleague, the Newfoundland minister of energy, in the near future.
Oral Questions INDUSTRY


FINANCIAL SUPPORT TO CHRYSLER OF CANADA
Hon. Michael Wilson (Etobicoke Centre):: Madam Speaker, my question is directed to the Minister of Industry, Trade and Commerce. Last Tuesday 1 asked the minister whether he was proposing to have discussion of the Chrysler Canada issue before an appropriate committee of the House. To my amazement, in light of the size of the proposed support, he has said that this will not take place. I do want to get some of the other matters on this important decision before the House prior to the decision taking place.
In view of the magnitude of the decision and its imminence, and in view of the fact that the fiscal position of the federal government is very tight right now, will the minister tell us out of what spending envelope any aid to Chrysler would come? Would it be out of the economic development envelope or would it be taken from social programs?


Hon. Herb Gray (Minister of Industry, Trade and Commerce):: First, I have not finished my consultations with the House leader regarding having the auto pact situation studied by the appropriate committee. 1 would think that when the estimates of the Department of Industry, Trade and Commerce are before the finance committee this would provide at least a partial vehicle for the kind of consideration the hon. member has in mind.
As to the precise reference in his question, he should not assume that the larger amount speculated upon in the press is the amount the government is considering with respect to Chrysler.
Finally, the exact nature of the envelope would depend on the form and extent of the aid finally decided upon.


Michael Holcombe Wilson: I was not referring to the auto pact itself. I agree with the minister that the question of the auto pact should be brought before an appropriate committee of the House, but I am directing my question to the Chrysler decision which is to be taken shortly. Can the hon. gentleman assure us today that a decision to support Chrysler would not have any adverse effect on any other economic development program? Would any assistance to Chrysler be in addition to other economic development programs, in view of the importance of economic development in our country today?


Herbert Eser (Herb) Gray: Madam Speaker, any decision we take with respect to Chrysler would have as its purpose enhancing the economic development of Canada.


Michael Holcombe Wilson: No answer.

April 25, 1980
Oral Questions


CANADIAN BROADCASTING CORPORATION
Mr. Mark Rose (Mission-Port Moody):: Madam Speaker, my question is directed to the Secretary of State in his capacity as the minister reporting to Parliament on behalf of the CBC, In view of the fact that the CBC intends to drop three public affairs shows, including "The Medicine Show", "The Watson Report" and "Newsmagazine", plus-and I emphasize this-"Ombudsman", an investigative program and an example of access television because it addresses itself to the problems of the average person stonewalled by a faceless bureaucracy, would the hon. gentleman find out if and when the CBC intends to replace "Ombudsman" with some other kind of hard-hitting investigative program which will take up the cause of the little guy?


Hon. Francis Fox (Secretary of State and Minister of Communications):: The CBC is, of course, completely responsible for the type of programming which it offers to the Canadian public. I will bring the concern the hon. member has expressed to the attention of the management of the CBC and see what reply they have to his question.


Mark Willson Rose: I am aware, of course, that the Secretary of State only reports for the CBC to the House, but I would ask him this by way of a supplementary. Will he also try to determine whether "Ombudsman" has been dropped not because it had poor ratings but because, like "This Hour Has Seven Days, over a decade ago, this program sometimes reveals high government officials in embarrassing posture, in addition to the fact that some of the top management of the corporation, perhaps even its president, never understood or liked "Ombudsman"?
[ Translation]


Francis Fox: Madam Speaker, this is the first time that representations have been made to me. 1 think the hon. member is well aware of the CBC's independence in establishing its programming. Considering the type of public affairs programs that the CBC has discussed over the years I do not think anyone in the House can say that such a decision was taken for political reasons, as the hon. member says.


AIR CANADA
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Madam Speaker, may I direct my question to the Minister of Transport? It arises out of press reports of a week or ten days ago emanating from the United Kingdom to the effect that the U.K. government was prepared to cancel the landing rights of our national carrier between western Canada and the U.K. Can the minister tell us where this matter stands, whether
negotiations are in progress at the present time, and whether or not Canada has taken a clear position and one to which it intends to adhere with respect to alternate rights being sought by the United Kingdom in this respect?


Jean-Luc Pepin: Madam Speaker, this question has to do with the entry into western Canada of foreign carriers, particularly the British. Negotiations have started on this subject and somewhat to our surprise-because we do not expect this from cool Britishers-the British negotiating team went to the press and announced that if the Canadian approach did not improve they would suspend flights of Air Canada from western Canada to Britain next year.
That is the situation. It shows how difficult these negotiations will be in the future. It shows, also, that the British, like everybody else, have a short memory and have forgotten that way back in 1966 some arrangements were reached that were advantageous to their side.


J. Michael Forrestall: Would the minister take this opportunity to tell Canadians just what the difficulty is between Canada and the United Kingdom with respect to these freedoms? In particular, I would ask him whether or not this precipitate course taken by the United Kingdom was associated in any way with the difficulty we experience in maintaining a presence at Heathrow International Airport outside London, or whether it arises out of other negotiations and, if so, what are the factors that have contributed to this precipitate step on the part of the United Kingdom?


Jean-Luc Pepin: I was told that Heathrow has not played a role in this matter. That is in the past. What is happening is simply the normal exchange between negotiating teams which have very clear interests at heart. I do not think we should be discouraged. These negotiations are very important in terms of Canadian and British interests and it is normal that the first steps should have been difficult. What is surprising is that they should have led to the British announcement.


TRANSPORT
Mr. Stan Schellenberger (Wetaskiwin):: Madam Speaker, my question, too, is addressed to the Minister of Transport. Reports across western Canada are that the government intends to partially renegue on its undertaking to buy 2,000 hopper cars to move western Canadian grain. Can the minister tell us whether this is true?


Jean-Luc Pepin: I can deny that with all the emphasis at my command. It is not true. The program is continuing. As a matter of fact, the situation is good at the present time. But a decision will have to be made before the end of the year as to the regularity with which we
April 25, 1980

are going to remain in this business of providing hopper cars to the western railways.


An hon. Member:: What does that mean?


Jean-Luc Pepin: It means simply that a good level has been reached but it might be advantageous if we could establish a level of regular purchasing in the future.


FISHERIES
Mr. Lloyd R. Crouse (South Shore):: Madam Speaker, my question is directed to the Minister of Fisheries. I may say that in response to the minister's answer yesterday I have checked my facts carefully and, for the hon. gentleman's information, six trawlers are under contract in Denmark for the Uruguayan operation to which I referred.
My question today is as follows. Would the minister outline his policy concerning the 6,000 tons of gaspereau to be landed in his native province of New Brunswick, the number of tons promised by Canada to joint trawlers of Sweden-owned by Russia, trawlers which pay no taxes in Canada-and the reason for this action since Canadian processors could have taken up to 10,000 tons of gaspereau?
[DOT] (MS0)


Hon. Romeo LeBlanc (Minister of Fisheries and Oceans):: Madam Speaker, the hon. member may have verified some facts at the beginning of his statement but he did not do so with the second question. In relation to National Sea's decision, the hon. member forgets that this is a joint venture. There are other partners. He also forgets that in his own riding National Sea has expanded its processing plant, which is now the biggest in North America. Surely that must show some confidence in the future of the fisheries in his own province and his own riding.
As for the matter of direct sales to offshore freezers, the fishermen from different parts of the maritimes, particularly in this case of the gaspereau fishermen in New Brunswick, had put a request to the department for permission to sell fish for which processors had made no firm offer at a firm price for firm quantities.
1 tried to have the processors and the fishermen work out the details of what could be an accommodation in a joint meeting. The processors did not come up with a firm offer to the fishermen at this meeting. Since the gaspereau were heading for our coast and the fishermen were waiting for an answer, I authorized the sale.


Lloyd Roseville Crouse: One brief supplementary question, Madam Speaker. Since the minister's fisheries policies are obviously not leading to the progressive development of the Canadian industry, will he give consideration to an early meeting with the provincial fisheries ministers in Atlantic Canada in the
Oral Questions
hope that a more pro-Canadian fisheries policy may be established?


Roméo LeBlanc: Madam Speaker, the hon. member seems confused. Pro-Canadian policy "pro" a number of processes which do not offer fishermen a reasonable price and a reasonable guarantee to take the fish they have to sell. But a "pro-fishermen policy" is what I have tried through the years to give the fishermen, at least an opportunity to have something to say in their own industry. I intend to continue doing that.


INCOME TAX
Mr. Jim Fulton (Skeena):: Madam Speaker, my question is directed to the Minister of National Revenue. In view of the continued uncertainty regarding income taxation of non-salary benefits for the years 1978-79 in northern Canada-such things as flights, subsidized housing, fuel, room and board etc.-will the minister clarify this situation for the House and assure members that the benefits for these years will not be taxed?
[ Translation]


Hon. Yvon Pinard (President of the Privy Council):: Madam Speaker, I will take note of the question and make sure that the hon. member gets a reply as quickly as possible.


COMPARABLE BENEFITS FOR NORTHERN NATIVE PEOPLE
James Ross Fulton: A supplementary question, Mr. Speaker. I did not notice that the minister was not in the House but I see that the Minister of Indian Affairs and Northern Development is. in light of the position of the Minister of National Revenue on a moratorium for at least the 1980 tax year, will he assure the House and northern native people that immediate consideration will be given to introducing plans that will provide them with comparable benefits?


Hon. John C. Munro (Minister of Indian Affairs and Northern Development):: Madam Speaker, I am aware of the interest of the native peoples in the final outcome, following any governmental policy after the moratorium is over.
May I advise the hon. member, as he may know, that the vast majority of the Indian chiefs across Canada are gathering in Ottawa next week. I hope to explore further just what they have in mind with respect to how they would like to see the policy formed. I will perhaps be in a position to give more elaborate details after I have had a chance to receive their input.

April 25, 1980
Ora! Questions
[ Translation]


INDUSTRY
Hon. Roch La Salle (Joliette):: Madam Speaker, my question is related to that of my colleague but 1 think the Minister of Industry, Trade and Commerce has just left. Where is he?


An hon. Member:: Maybe he resigned!


Roch La Salle: 1 will therefore put my question to the Minister of Transport. Since he must have had the opportunity, I imagine, to examine the Nordair file after this appointment, since the public expects an early decision and since he met with the people concerned, could the minister tell us where this question is now standing and whether a decision will be taken, and when he will announce the sale of Nordair?


Jean-Luc Pepin: Madam Speaker, we had not been very hard on the previous government on that question. But I understand better now why they could not decide either way following their inquiry.
We are giving a good deal of thought to the question. I am now in the process of meeting a large number of people concerned and consulting my colleagues, and 1 will make an announcement as soon as I can.


Roch La Salle: Madam Speaker, I could tell the Minister of Transport that we had seriously reviewed that issue and that we had already committed ourselves to protect the considerable interests of Quebec anyway.
Could the minister at least assure the House, whoever the buyers are, that the majority interests of Quebec will be protected in that sale? To my mind that is the important thing.


Jean-Luc Pepin: Madam Speaker, it goes without saying that this government is as much aware of the interests of Quebec as the former government was.


PUBLIC SERVICE
Hon. Walter Baker (Nepean-Carleton):: Madam Speaker, I have a question for the President of the Treasury Board. The minister is no doubt aware that the Auditor General's report with its comments on the public service has created or compounded an already difficult morale problem in the public service, since it is being interpreted as an attack on the working public service rather than the management system. Given that situation, is the minister considering tabling the methodology and the studies as well as the background documents that the Auditor General used with respect to this? Are
any studies being carried on within the minister's department or elsewhere within the government to extend and broaden the rather narrow sample that he used in order to come to the conclusions which he did, in order to test the conclusions to which he came?


Hon. Donald J. Johnston (President of the Treasury Board):: Madam Speaker, I hope to have the opportunity of meeting with the Auditor General. I would invite interested members of the opposition to join with me to determine the methodology and look at the sampling, unless it comes up before the public accounts committee in the very near future. As hon. members know, the sampling was in, 1 think, classes 1 to 4 of the clerical and regulatory group. There has been an understandable tendency, due to some of the comments, to extrapolate that across the public service which, in my judgment, is unfair and inaccurate.
As I indicated in response to a question last week, it must be placed in the context of the over-all management of human resources. In that regard, Madam Speaker, I have received a mandate to direct recommendations with respect to the Lambert commission and the D'Avignon commission acting in concert with a committee of cabinet which will be formed for that purpose and chaired by the President of the Privy Council Office.
I believe it is in that direction that we must move, Madam Speaker-to improve the management of human resources and not tend to attack the hardworking public servants who have been the subject of this particular study.


Some hon. Members:: Hear, hear!


Walter David Baker: Madam Speaker, I just want to say to the hon. gentleman that 1 agree with that general approach as a rational one. I am happy to hear him say that the D'Avignon report is going to be studied by the government as well, since a reference to it did not appear in the throne speech, which only had reference to the Lambert report.
Could the hon. minister tell the House whether he is carrying on consultations with the Public Service Staff Association and unions with respect to the D'Avignon report relative to the conclusions of the Auditor General, and what shape are those consultations likely to take? I noticed they were absent from the recitation of the list of people for whom he would be working in concert.


Donald James Johnston: Madam Speaker, there are continuing consultations, of course, 1 have met with the Public Service Commission, 1 have met with Mr. Stewart and Mr. Myers of the National Joint Council. As hon. members know, Mr. Stewart is president of the Public Service Alliance. We are
April 25, 1980

continuing a series of meetings and consultations and, of course, in all of these discussions consideration of the D'Avignon report and Lambert commission is uppermost.

[Translation)


LABOUR RELATIONS
Mr. Lome Nystrom (Yorkton-Melvllle):: Madam Speaker, in the absence of the Minister of Labour, my question is directed to the Secretary of State. There is a possibility of a Radio-Canada strike at noon considering that the recommendations of the conciliator which was appointed by the Minister of Labour were accepted by the producers' union but rejected by Radio-Canada. Therefore, does the minister intend to have discussions with the management of Radio-Canada to urge them to accept the recommendations of the conciliator of his government and of his Minister of Labour?


Francis Fox: Madam Speaker, this week I had the opportunity to meet a delegation of the union concerned which told me about their concern and their problems in the current negotiations between Radio-Canada and the union. At that time, and I think it was Wednesday afternoon, those people told me that they did not intend to strike, that instead they were withdrawing their services now and then. Of course 1 am going to discuss this with my colleague, the Minister of Labour, who appointed a conciliator in this conflict.


HOUSING
Mr. John Kushner (Calgary East):: Madam Speaker, I wish to direct my question to the Minister of Public Works, who is responsible for housing. A very critical situation has developed in the city of Calgary. Rents have gone up 30 per cent this year. There is zero rent vacancies. Families are doubling up and cannot afford to buy homes. To qualify for a modest home one must earn about $50,000, which puts it beyond the reach of the average Canadian. It strongly appears that the minister is dragging his feet in this area.


Madam Speaker:: Order, please. Will the hon. member try to make his question briefer.


John Kushner: Madam Speaker, I have concluded my preliminary remarks. Is the minister in fact going into deferred
Point of Order-Mr. W. Baker
interest rates, or exactly what is the minister doing to relieve this serious situation?


Hon. Paul J. Cosgrove (Minister of Public Works):: Madam Speaker, as the Minister of Finance indicated, I was given a mandate to meet with representatives of the industry. That includes lenders and private insurers.
I hope to have a meeting on May 9 with a good cross-section of the industry. I hope, coming together with the federal government in consultation with my provincial counterparts- and 1 am meeting with the ministers from British Columbia and Saskatchewan on Monday-that we should have an answer for this House and the public within a short period of time.


AIRPORTS
Jean-Luc Pepin: Madam Speaker, I want to answer a question raised yesterday by the hon. member for Regina West, who alluded to a rumour that firefighters are no longer responsible for the evacuation and rescue of people in an aircraft which has crashed. This rumour stems from a review which is being made now of standards for firefighters. A draft which was issued became the subject of a leak.
The truth of the matter is that the role of firefighters will remain to save lives, property being secondary to that primary objective of saving lives. However, the question being refined now is how to go about it, and the regulation is trying to determine that. It says that firefighters will provide fire free escape areas by maintaining "fuselage integrity" and very, very complex things of this kind, but should crew members be incapacitated, then firefighters will enter the aircraft and help in the evacuation.
This is, it seems to me, a very worth-while attempt to define in regulation what is the role of firefighters in terms of priorities in their responsibilities.


POINT OF ORDER
Walter David Baker: Madam Speaker, I rise on a point of order. It relates to your recognition of the Minister of Transport, with which I do not quarrel because it is your right to recognize, but I know of no part of our procedure which allows a minister to make an answer to a question asked the day before or at some previous time.


André Ouellet: Of course there is.

April 25, 1980
Privilege-Mr. Hnatyshyn


Walter David Baker: 1 just do not know of that. There may be one but, in any event, it could lead to supplementary questions. It could lead to every minister in the House standing up and answering fully questions they could not answer, for good or bad reasons, the day before. I think it is quite inappropriate to do that unless it is intended to extend the question period far beyond the hours. I think it is inappropriate for a point of order to be used for that purpose. I am quite prepared to discuss a way by which we could accomplish that, but I do not think we should revise the rules as we go.


Madam Speaker:: I note the hon. member's comments. I thought 1 had made it clear that the question period was over, and the minister was giving an explanation as to a previous question.


Walter David Baker: That is the problem.


Madam Speaker:: I think I will try to find some way of making it clear that the question period is over. I do it now by recognizing somebody else, sometimes knowing that it is on a question of privilege and sometimes knowing that it is on another point which hon. members would be allowed to raise at that time; but I will try to make it clear when the question period is over.


PRIVILEGE
Ramon John Hnatyshyn: Madam Speaker, 1 rise on a point of order with respect to a question of privilege which 1 raised, I think, a little over a week ago. Your Honour will recall that I brought to the attention of the House the fact that the proceedings of the House of Commons were not available in Saskatoon through the cable system there, Saskatoon Telecable Limited. At that time the Minister of Communications (Mr. Fox) indicated that he would put the full force of his departmental officials and his own personal attention into the investigation of the circumstances in order to see whether or not the broadcasting of these proceedings could be brought about.
1 am rising on this point of order, in view of the fact that the Minister of Communications is here, to see whether he can tell us if that investigation is proceeding and when we might expect his report, which he offered to the House and Your Honour, so that I can have an opportunity to assess what position and what actions to take next on behalf of the people of the city of Saskatoon.


Francis Fox: Madam Speaker, in reply to the hon. member's question, following the raising of the question of privilege by the hon. member last week I immediately sent a telex out to both the president of Saskatchewan Telecommunications, Mr. Forrester, and the minister responsible for communications
policy in the Saskatchewan government, the hon. Roy Roma-now. I have yet to receive a reply to the telex I sent to both those gentlemen. I drew their attention to the fact that members of the House in general are concerned about the fact that there has been an interruption in the distribution of the proceedings of the House of Commons in the Saskatoon area, and I requested that they look into the possibility of resolving the matter without prejudice to the rights of both parties involved.
As the hon. member knows, it is quite possible that this matter will lead to litigation, but my request of Mr. Romanow through the government of Saskatchewan is that they be able to come to some understanding on this problem without any prejudice to the eventual legal disposition of the matter.


Ramon John Hnatyshyn: Madam Speaker, I appreciate very much the report the minister has given us and the efforts he is taking to allow the people of Saskatoon the right and privilege of watching the proceedings of the House of Commons. I understand that steps might be taken in other cities in Saskatchewan which might fall into the same category if a dispute arises with respect to private television companies.
However, what I was going to ask with respect to the report made by the Minister of Communications is whether he would be prepared to table in this House the correspondence so that we may have the benefit of seeing precisely the nature of the representation made by the minister and his officials. 1 would very much appreciate having the documents tabled if the minister was prepared to do so.


Francis Fox: Yes, Madam Speaker, I would be willing to table the telex I sent to Mr. Forrester and Mr. Romanow. However, I request a delay so that I may advise Mr. Romanow and Mr. Forrester of my intention of doing so and also in order that I could table the documents in both official languages.


MR. STEVENS-GOVERNMENT EXPENDITURES-NOTICE OF POSSIBLE QUESTION OF PRIVILEGE TO BE RAISED
Sinclair McKnight Stevens: Madam Speaker, I would like today to give notice of a possible question of privilege I hope to raise next week after I have had an opportunity to read today's Hansard. My question of privilege will centre on the two responses I received today, one from the President of the Treasury Board (Mr. Johnston) and one from the Minister of Energy, Mines and Resources (Mr. Lalonde), which put this House in the dilemma of now being told that a premise which was used in putting the estimates before the House, namely, that there would be a $4 oil price increase in Canada, is now being challenged by the Minister of Energy, Mines and Resources.
The net effect of that challenge could be as much as $400 million. That would mean that we have before us estimates that are grossly erroneous, to the knowledge of at least one minister in the cabinet, I believe. After having read today's
April 25, 1980

Hansard, I would like to pursue this matter more fully when I see the true import with which the Minister of Energy, Mines and Resources has startled the House today.


Marc Lalonde: Madam Speaker, I should like to reply to the point raised by my colleague. I think he has completely misinterpreted and misread the answer given by the President of the Treasury Board (Mr. Johnston) as well as my answer. I hope that after he has looked at Hansard he will recognize that he has no point of privilege at all.
What the President of the Treasury Board has indicated is that the figures which have been mentioned were the estimates prepared by my colleague when he was in the Treasury Board and that the total figure there was based on the budget, the figures mentioned in the previous budget which was defeated. That does not necessarily mean that the same amount would be raised in the same way as in the previous budget. It is very simple.


Sinclair McKnight Stevens: Madam Speaker, the Minister of Energy, Mines and Resources has now greatly complicated the question because apparently he is totally unaware of the fact that the estimates which have been brought in are an increase of $1,545 million over any estimate that we proposed to put before the House. My point is that even the $1,545 million is based on the premise that there will be a $4 per barrel increase in the cost of domestic oil in Canada. The Minister of Energy, Mines and Resources is now challenging that premise, and the thrust of my question of privilege may be the fact that we have been misled so grossly.


MR. TOWERS-IMPLEMENTATION OF METRIC CONVERSION PROGRAM
Mr. Gordon Towers (Red Deer):: Madam Speaker, I rise on a question of privilege pursuant to the remarks made on April 23, 1980, as reported at pages 326, 327 and 330 of Hansard, by the Minister of State for Small Businesses (Mr. Lapointe) relating to the metric program, remarks which I believe to be misleading and not representative of the truth.
The minister would have this House believe that there was full and open debate on the implementation of the metric program and, as he said:
-there were ample opportunities for hon. members to discuss this when the legislation on metric conversion was passed in this House.
The fact is that there has not been a metric conversion bill per se debate in the House. The metric program was foisted on the Canadian people through the back door in a devious manner.
The metric program had its genesis in the white paper which was tabled in the House on January 16, 1970. As is the custom with statements on motions, our spokesman, Mr. G. W. Baldwin, had only a few minutes in which to comment on the proposal. A metric converion omnibus bill was not introduced or debated in the House. Bill S-5, the Weights and Measures Act, was introduced in the Senate in October of 1970 and was
Privilege-Mr. Towers
passed in April of 1971. The bill provided that metric units could be used in trade in Canada. It would appear then that the government established a metric commission by executive order.
The Minister of State for Small Businesses stated:
-the government has no intention of imposing the metric system-
But in fact this is what has been happening in Canada. Between June, 1971, when the metric commission was established, and November, 1976 when Bill C-23 was introduced in the House, there was no opportunity for hon. members to debate the principle. A metric program was already in place when Bill C-23 came before the House. Hon. members were presented with a fait accompli. Bill C-23 was simply a catchall bill facilitating amendments to several pieces of existing legislation, such as the Wheat Board Act, the Consumer Packaging and Labelling Act, etc.
On page 330 of Hansard the minister is reported to have referred also to progress in metrication in the United States. To the best of my knowledge, the government and business community in the United States has not taken steps to go metric. Perhaps the minister has information we do not possess and he will be kind enough to make it available to us. At the time of the tabling of the white paper, Mr. Baldwin said:
We should think particularly of our trading relations with the United States, which of course is and has been for some years examining its position with regard to adoption of metric. Whether we like it or not, what we must do to a considerable extent is to keep pace with what is being done in the United States.
I think it might well be suicidal for us to adopt the metric system without considering what is being done in the United States.
The minister has not given the House an accurate chronology of events which led up to the introduction of metrication in Canada. I believe that my rights, along with the rights of millions of Canadians who are in opposition to metric, have been infringed upon by the misrepresentation of successive Liberal ministers, including the hon. member for Charlevoix (Mr. Lapointe).
After studying the case, Madam Speaker, if you rule that my rights as a member of this House, along with those of many Canadians resident in a supposedly free country, have not been upheld by the actions of successive Liberal governments, I am prepared to move, seconded by the hon. member for Moose Jaw (Mr. Neil):
That the matter of the misrepresentation of the Minister of State for Small Businesses of the proceedings of this House on metrication be referred to the Standing Committee on Privileges and Elections.


Hon. Charles Lapointe (Minister of State, Small Businesses):: Madam Speaker, I would like to make an initial remark. I feel that my colleague would have shown the most basic courtesy if he had given me advance notice of his intention to raise a point of privilege on this. Clearly, when there is reference to facts that happened over these last ten years, nobody in this House can be expected to recall every detail of the debates that may have been held. Had 1 been given notice of the question, I would be in a position to give a much more detailed answer.
422

April 25, 1980
Privilege-Mr. Towers
But let me add a few general remarks, Madam Speaker. 1 would like to remind the hon member that when the white paper on metric conversion was tabled, in the early seventies, it was supported by the leaders of the three parties in this House. And it was recognized in that white paper that moving toward metric conversion was in the public interest.
1 listened closely to the hon. member's remarks, and 1 humbly submit he has no valid point of privilege. It is only a difference of opinion between the hon. member's views and the position I took at the beginning of this week.


Charles Joseph Clark: Madam Speaker, I should like to speak very briefly on this point. I noted that the minister indicated that it is indeed possible for a human error to be made by a minister or by others and he suggests that that was the cause of the information he gave to the House to which a complaint has been made by my colleague, the hon. member for Red Deer (Mr. Towers).
It is my very clear recollection-and 1 have not had a chance to consult Hansard on that matter-that in fact there were two questions put to the minister, that there was a separation of time, and that he had the opportunity to become briefed on the matter. Indeed, he was provided with supplementary information having to do with the authority on which metric is based. The information of which the hon. member has complained was in fact a deliberate statement in his second answer, when the minister attempted to cite a number of pieces of legislation which he claimed gave authority for the implementation of the metric system. In other words, it was not a simple error based upon misinformation; it was a deliberate statement reflecting a consultation of the laws that had been passed and of the situation at the time.
I think the minister has raised the point that were there to be a simple error, the Chair might decide one way, that the Chair might decide that it was a simple error; but if a statement had been made after the minister has had the opportunity to consider the facts and if, in the course of that statement, he cited various pieces of legislation, as it is my recollection he did, then I believe the question of the hon. member for Red Deer for a reference of this matter is much more firmly founded.
As Madam Speaker will know, of course, there is a great concern in this House and indeed in this country that we are proceeding with reckless speed with the implementation of a program which has no, or the most suspect of, legislative authority. That is a side issue, but it is an important one. It speaks to the seriousness with which the question was raised by the hon. member for Red Deer and by others on this side of the House, and to the seriousness with which the country would react to a position taken by the government, deliberately or by accident, that in fact there was legal foundation for a system which we believe is being imposed without adequate
legal foundation. The capacity to consider the answer by the minister is very germane to Your Honour's finding.


Charles Lapointe: Madam Speaker, I listened very closely to the remarks made by the right hon. Leader of the Official Opposition (Mr. Clark). In my first answer, or that given to the first question, 1 recognize I was in error, because I had not enough time to be adequately informed. I quote from page 326 of Hansard:
First I should like to remind the hon. member that there were ample opportunities for hon. member to discuss this when the legislation on metric conversion was passed in this House-
1 recognize quite humbly that there has been no legislation on metric conversion that was passed as such.
In my second answer, when I had the opportunity to check further the available information, I indicated in this House that when the Weights and Measures Act and also the Labelling and Packaging Act were discussed in 1971, reference was made to the metric system, and I did not suggest that that was an act concerning metric conversion, but that within the framework of the discussions held on these two bills, hon. members had an opportunity to address the matter of the metric system. And if the right hon. Leader of the Official Opposition will read my answer again, as reported on page 327 of Hansard, he will see that this is what I said in the House.


Madam Speaker:: Is the hon. member for Moose Jaw (Mr. Neil) seeking the floor on the same question of privilege?


Mr. Neil:: Yes, Madam Speaker.


Madam Speaker:: Then I will recognize the hon. member for Moose Jaw.


Douglas Charles Neil: Madam Speaker, at the outset I should like to say that I support what the hon. member for Red Deer (Mr. Towers) has said. I suggest that if the minister examines page 368 of Hansard dated April 24, he will see that the hon. member for Red Deer gave notice of the question of privilege which he planned on raising today.
I listened to the questions put to the minister on Wednesday which are recorded at pages 326 and 327 of Hansard. Quite frankly I was very disturbed because the response of the minister was such that it would lead people to believe that at some time or other, and perhaps on several occasions, members of the House of Commons have had the opportunity of discussing the implementation of the metric system. This is not so. He referred to the white paper which the minister said received the support of all parties.
Also I suggest that the minister should examine Hansard of January 16, 1970. There were three speakers, one from each of the parties. While there was general acceptance, there was no over-all debate and no indication at that time that the metric system would be imposed upon Canadians without a general debate.
April 25, 1980

1 feel the answers of the minister were such that he has given the impression to the public of Canada that there was a general debate on metric conversion. As 1 said, this is not so. The debates were restricted. I believe my privileges as a member have been breached, and certainly I am in support of the question of privilege of the hon. member for Red Deer. This was the reason 1 was prepared to support the motion and to act as seconder.


Some hon. Members:: Hear, hear!


Madam Speaker:: Is the hon. member for Capilano (Mr. Huntington) seeking the floor on the same question of privilege?


Mr. Huntington:: Yes.


Madam Speaker:: The hon. member for Capilano.


Arthur Ronald Huntington: Madam Speaker, 1 too should like to speak in support of the motion of the hon. member for Red Deer (Mr. Towers). What the Minister of State for Small Businesses (Mr. Lapointe) has done in his statement is perpetuate the myth that the House of Commons, since 1970 or the tabling of the white paper, has given the Government of Canada, no matter which party, a mandate to implement or impose the metric system on the people of Canada. I sympathize with him in his new position, with the duties, paper work and study he has to do. In fact they are imposing it through governor in council or through members of a commission making deals with public servants in departments which have the power to implement aspects of weights and measures legislation or health of animals legislation that were never intended to impose a change in the measurement system on Canadians.
In 1975 the then prime minister wrote to the premiers of the provinces of Canada advising them that he had a mandate from the House of Commons to ask for their assistance in imposing the metric system across the land. If Madam Speaker examines that mandate, it goes back to some legislation in the 1870s when there was an act which allowed the Government of Canada governor in council approval for certain actions pertaining to the metric system. If one takes unbiased, independent surveys on this subject matter across the land by age group, one will find that the Canadians resisting this imposition exceed 75 per cent of the population.
If the House of Commons is ever to represent the people against governor in council imposition of deals behind the scenes, using acts that were not intended for that purpose, then 1 suggest that this motion has to be heard by Madam Speaker and placed before the said committee. The issue is very serious indeed.


Some hon. Members:: Hear hear!


Arthur Ronald Huntington: Surely Madam Speaker will allow this chamber to represent the people at large when the power being used is vested strictly within the bureaucrats of the Government of Canada, with the use of the governor in council and
Privilege-Mr. Towers
acts that were never intended for this purpose. If Madam Speaker does not accept the motion, then it behooves the government to submit to the House of Commons a metric conversion act where the advantages and the reasons for it can be explored and explained to the people of Canada.
I urge the House to support this motion.


Some hon. Members:: Hear, hear!


Ramon John Hnatyshyn: Madam Speaker, I want to make a brief intervention in support of the motion and the proposal put forward by the hon. member for Red Deer (Mr. Towers) and so well articulated by my colleagues on this side of the House. I think it is important to get the whole question in context. I sympathize with the minister. The fact is that he has had only a matter of three or four months to be seized of this particular subject matter.
I think it is important for us to understand two basic principles. The minister should be fully aware of the background circumstances because it is important if we are to understand the responsibilities of members of the House of Commons. One of the basic principles is that the only reference to the House of Commons by way of debate was on a resolution brought forward by the government in which there were brief replies by representatives of each of the parties. As I say, this was only referenced by way of government initiative.
On reviewing the record, it would be interesting for the minister to observe that the spokesman on behalf of our party at that time warned the government respecting the question of the implementation and accountability of the conversion program. Mr. Baldwin pointed out with the forensic ability he has shown in his distinguished parliamentary career that the most dangerous aspect would be metric conversion taking place without ample consultation with the people involved, that is, the people of Canada.
The second point which should be brought to the attention of Madam Speaker and the minister is that one of the shortcomings of this particular conversion program has been the lack of accountability to Parliament, either directly through legislation or by reference to a committee of this Parliament. What it amounts to is this. The metric conversion commission is proceeding on the basis of a resolution of a most general nature, enacted in 1970 and passed by this House, which simply supported the concept of eventual metric conversion in line with developments around the world, which everyone understands.
We in Canada have a unique situation, as the minister well knows, with well over 70 per cent of our trade taking place with the United States. It is foolhardy for us, in terms of economics and in terms of public acceptance, to proceed at a pace that exceeds by much the conversion that is taking place in the United States.
This issue demonstrates the fact that if we in Parliament, as has been indicated by my colleague, the hon. member for Capilano (Mr. Huntington), are in fact to fulfil our respon-

April 25, 1980
Privilege-Mr. Towers
sibilities, we must have accountability in respect of government-initiated actions which have taken place under orders in council passed by the government.
I say to the hon. minister, coming as 1 do from western Canada, that the Speech from the Throne made some reference to the responsibility of members of Parliament to stand up and state clearly in this House those issues that are of some concern to western Canada. If the minister wants to deal with a western Canadian issue that does cause some concern across that part of our great country, he should pay very strict attention to this question of metric conversion. He should take the lead in terms of having the metric commission made accountable to Parliament, and he should in fact give very serious consideration to the introduction of legislation which will outline the timetable and procedure under which metric conversion takes place in our country.
I do not want to go any further at this time except to say that 1 think this is a valid subject and a valid motion for the Standing Committee on Privileges and Elections, where members of Parliament could in fact, from a parliamentary point of view, bring forward their concerns in respect of this particular initiative on the part of this government and the responsibilities of the minister in that regard.


Some hon. Members:: Hear, hear!


Charles Lapointe: Madam Speaker, I would like to set a few facts straight. It is true that notice of a question of privilege was given on April 24, as evidenced at page 368 of Hansard, but if you read what was said carefully, the content of that question of privilege is not specified.
With respect to the comments made by the hon. member for Moose Jaw (Mr. Neil), there seems to be an apparent contradiction when he says that when Parliament discussed the issue in 1970, there was, and 1 quote him in English:

"A general acceptance of the principle".
[ Translation]
So it was obvious, Madam Speaker, that the House had to vote at a certain time in its history on the principle of metric conversion. And my colleague, the hon. member for Saskatoon West (Mr. Hnatyshyn), indicated that, and I quote:

"An act was adopted in 1970 recognizing the broad principle of metrication."
[ Translation]
So 1 think my predecessor held my portfolio longer than I did and I wonder how it is that now they should think it has become a problem of national urgency that action was not taken at that time. An action taken by my predecessor was to delay the introduction of metric scales in retail stores and I intend, Madam Speaker, to make the same recommendation he made to my colleagues in cabinet.
As to the rest of the debate, Madam Speaker, we cannot rewrite history. There was a discussion on that subject in 1970. It is not your fault nor mine nor that of members of this House if none of them spoke about that and I think the whole thing is basically a matter of a difference of opinion.


Arthur Ronald Huntington: On the question of privilege, Madam Speaker; I thank you for recognizing me again. The Minister of State for Small Businesses alleges that the action 1 took on this important subject matter was limited to the postponement of the implementation of metric action as it related to weights in the retail sector for one year. That is not so, Madam Speaker. I think I have the right to point to the record.
We imposed in a very careful manner a metric overview board that worked very industriously for a matter of months on this whole matter. It made six individual reports and a final report. The report was submitted to me in the last hours of my privilege of being a minister. I understand that under the new Minister of State for Small Businesses the report is not going to be circulated and made available officially, which I think is an absolute shame because the people of Canada have paid quite a few thousands of dollars for a report which does represent a very fair analysis of the concern that exists at large in this country.
I would think that the minister's predecessor acted in a very responsible manner in not doing unnecessary damage to the work that had been put in place by the metric commission, but rather represented the people of this country and represented one of the matters that was causing extreme alienation in more than one region in Canada. 1 should like him to please understand that I think I acted in a most responsible manner in this whole matter and did not do anything negative to damage any area that had progressed beyond the point of retreat.
Thank you for allowing me to say that, Madam Speaker.


Some hon. Members:: Hear, hear!


Madam Speaker:: I think at this point I must remind the House that we are in fact going well into debate, even to the point that members are expressing opinions as to the efficacy of those who now have responsibility or held responsibility before. I do want to remind the hon. member for Red Deer (Mr. Towers), while thanking him for his remarks, that it seems to me he is essentially dissatisfied with the answer he got to a question he addressed to a minister during the question period. He knows that he cannot debate that matter under the guise of a question of privilege.
The subject is important. Everybody has recognized the importance and the seriousness of the subject and I am sure the House will at some time want to debate it. I am entirely in the hands of the House as to the time at which it would want to do so.
In support of my ruling that it is not a question of privilege I should like to refer to what Mr. Lamoureux, one of my predecessors, said in similar circumstances, circumstances that
April 25, 1980

do arise very frequently in the House. He said that a member who essentially is not satisfied with an answer that he received to a question obviously does not have a question of privilege. He went on to say:
The hon. member, with his long experience in the House-
I think that would also apply to the hon. member for Red Deer.
-knows that he cannot rise on an alleged question of privilege to make reference to an answer which has been given in the House. The hon. member may be dissatisfied with the answer that has been given and he may feel there is a contradiction. He is entitled to his opinion about such matters, but this cannot be raised by way of a question of privilege.
Therefore I must rule, having heard this discussion at length, that there is no question of privilege.


MR. FORRESTALL-SHIPYARD CONTRACTS-NOTICE OF QUESTION OF PRIVILEGE TO BE RAISED
J. Michael Forrestall: Madam Speaker, I rise to give notice that, after some review of the electronic and printed record of the proceedings in this chamber, I reserve the right to rise on a question of privilege next week, a question of privilege arising out of a question posed by the hon. member for Richelieu (Mr. Leduc) to the Minister of National Defence (Mr. Lamontagne) in respect of ship repair and shipbuilding activity in Canada.
Order Paper Questions
I would ask your indulgence, Madam Speaker, to allow me to reread the minister's response so that there is no question of misinterpretation of my words or those of the minister in response to the question put by the hon. member for Richelieu.



ROUTINE PROCEEDINGS


Madam Speaker:: I have the honour to inform the House that the Clerk Assistant of the House has laid upon the table the first report of the Clerk of Petitions stating that he has examined the petition presented by the hon. member for Vancouver East (Mrs. Mitchell) and finds that it meets the requirements of the Standing Orders as to form.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
1 regret that the Minister of National Defence is not present in the House, but so that he will have time to reconsider his reply, the area that 1 will be discussing is with regard to the implication in his reply to the hon. member for Richelieu-and 1 hope that 1 am quoting the minister correctly; 1 apologize if I am not- that Quebec shipyards would be favoured over other "Canadian yards" for contracts rising out of Department of National Defence requirements for fleet replacement programs and for ongoing government contracts, government account awards for building and repair.
The question of privilege which 1 will be pursuing is whether or not the government has the right to extend special favours in this particular area in light of the principle of tendering, and in light of the action already taken by the government with respect to the military fleet replacement program, such as the invitation of proposals to a number of interests in Canada with respect to this matter and, finally, the implication of the reply to what was very obviously a blatantly staged question, the effect of which was to buy shipyard workers in Quebec back to the No-side of the referendum.
The very important question is whether or not the government has infringed upon acceptable good business practices in suggesting to the Canadian shipbuilding industry on the west coast, the Great Lakes and the east coast that they need not waste their time, effort and money any longer to prepare tenders and estimates for shipyard work on building, repair, overhaul, maintenance and tenders of that nature.
Mr. D. M. Collenette (Parliamentary Secretary to President of Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 108 and 544.


Mr. McKenzie: Did the Liberal Party of Canada pay for the use of any government aircraft in the period August 16 to October 16, 1978, in connection with the by-elections held on October 16, 1978 and, if so, in what amount for each trip?


David Michael Collenette: See reply to question No. 331, Thirty-first Parliament, answered November 26, 1979, page 1688 of Hansard.


Mr. Orlikow: 1.	For the fiscal year 1978-79, what contracts for professional services were let for studies, surveys and analyses into (a) present or future policies, programmes or information analysis and their efficiency and effectiveness (b) the examination of the administration or internal operation of the Privy Council office?
2.	How much was committed on each contract and to whom?


David Michael Collenette: See reply to question No. 24, Thirty-first Parliament, answered November 20, 1979, page 1496 of Hansard.

April 25, 1980
Small Businesses Loans Act


David Michael Collenette: I ask that the remaining questions be allowed to stand.


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


Charles Lapointe: that Bill C-17, to amend the Small Businesses Loans Act, be now read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
He said: It is my pleasure today to present before this House for second reading Bill C-17, an act to amend the Small Businesses Loans Act. In essence, Madam Speaker, this bill will extend the Small Businesses Loans Act for two years and, by so doing, will become part of the reaffirmation of this government's commitment to support small businesses in Canada.
As you probably know, Madam Speaker, the Small Businesses Loans Act originally came into force on January 19, 1961 to make it easier for small businesses in Canada to obtain term financing. A major feature of this program is that loans are made directly between the borrower and the lender without any prior approval of the government. The government simply guarantees a loan transaction which takes place in the private sector and in this way supports and builds on the strength of the financial community. Since 1961 the act has been subject to legislative review on a regular basis and amendments have been made over this period of time to widen the scope of operations under the act.
At present, Mr. Speaker, loans may be made for (I) the purchase of fixed or movable equipment, (2) the improvement or modernization of premises, (3) the purchase or construction of new premises, and (4) the purchase of land.
These loans are granted in accordance with standard lending procedures and are fully secured. The maximum period over which they can be repaid is ten years.

Since 1961 almost 65,000 loans have been made, to a total value of over $1 billion. These totals are a clear indication that the Small Businesses Loans Act is an important source of
financing for small businesses. The program has been growing very rapidly in recent years. In 1979 alone, over $250 million in loans was guaranteed by the government, fully one quarter of the total $1 billion lent over the entire history of the program.
The program has a broad national impact and it has steadily gained acceptance by the financial community. A breakdown by province of the total value of loans made in 1978 shows that 24 per cent were made in British Columbia, 18 per cent were made in the other western provinces, 12 per cent were made in Ontario, 39 per cent were made in Quebec and 7 per cent were made in the maritime provinces.
As for lender participation, the program was originally established to operate almost exclusively through the chartered banks and to encourage the banks to do more lending to small businesses in Canada. Since the inception of the program, however, participation by lenders has expanded. At this time, participant lenders include not only the chartered banks but also trust companies, mortgage and savings companies, credit unions and the Alberta treasury branches.
The bill before us, Mr. Speaker, proposes various changes and does two things. First of all, it amends the present act which has been in force since July 1, 1977 and is due to expire on June 30, 1980, and furthermore it amends and extends the act for an additional two-year period, from July 1, 1980 to June 30, 1982.
First, the bill amends the act so that the authorized lending ceiling which was established for the period from July 1, 1977 to June 30, 1980, is increased from $600 million to $675 million.
Mr. Speaker, when this act was last before this House it was extended for a three-year period. It was thought that a lending ceiling of $600 million would be sufficient to cover the three-year period. This amount has proved to be insufficient. With the growth of the program which I have already described, lending is rapidly approaching the $600 million ceiling. Bill C-17 proposes therefore that the ceiling for the present act be increased from $600 million to $675 million so that all of the borrowing which is required by small business will be accommodated under the terms of the present act which expires on June 30, 1980.
Secondly, Mr. Speaker, Bill C-17 extends the Small Businesses Loans Act for a two-year period, from July 1, 1980, to June 30, 1982.
It has been usual in the past to extend the act for a three-year period. This year, however, the government is undertaking an intensive review of all of its financing support programs for small business. This review will be complete in the coming months at which time the government will be coming forward with comprehensive proposals for small busi-
April 25, 1980

ness financing. Therefore a more normal three-year extension seems to me inappropriate at this time, Mr. Speaker, whereas a shorter two-year extension will more closely coincide with the conclusion of the government's review of its small business financing.
That is the main reason for the two-year extension, Mr. Speaker. I will return to make mention of the review by the government of the financing and of its support programs for small business at the conclusion of my remarks.
Now, I want to spell out the main amendments which are to be made to the act.

Most importantly, the limit on the size of individual loans has been increased from $75,000 to $100,000. This increase is absolutely necessary in view of the steadily growing demand for more and larger loans and in view of inflation. While inflation has hit hard at all of us in the business community, it has hit hardest at the small businessman and businesswoman. These smaller companies, Mr. Speaker, are less able than larger companies to defend themselves and to protect the viability of their companies. In this respect one of the real benefits of this program is that smaller companies can borrow at 1 per cent over prime, a rate which is considerably better than they would be otherwise able to obtain for the purposes which are eligible under the act.
As an additional amendment, Mr. Speaker, a new lending ceiling has been proposed for the two-year period of extension. Whereas the present ceilling will be $675 million for the three-year period ending on June 30, 1980, the new ceiling will be $850 million for the extended two-year period from July 1, 1980, to June 30, 1982. The fact, Mr. Speaker, that the proposed new ceiling is considerably higher than the previous one, even though it will cover a shorter time period, is very clear evidence both of the growing requirement for small business borrowing and the government's willingness to meet this requirement.
Finally, Mr. Speaker, the act has been amended to take account of the fact that administration of the program has been transferred from the Department of Finance to the Department of Industry, Trade and Commerce. This transfer is a natural one, as it puts the Small Businesses Loans Act into a department which has a mandate to work closely with and service the needs of small business.

Now that 1 have outlined the major points of Bill C-17, Mr. Speaker, I would like to return briefly to the government's review of financing support programs for small business.
As this House is aware, the government makes available a wide array of financial support for the deserving small business community. For example, the Federal Business Development Bank has been serving the needs of small business since 1944. The bank has established offices all over Canada and at this time has approximately $2 billion in loans outstanding. The FBDB in recent years has also been supplying venture capital to small businesses. In addition to the bank, the enterprise
Small Businesses Loans Act
development program of the Department of Industry, Trade and Commerce supports a large number of loans to small business and their activity has been furthered by wide decentralization of the program. Last year the program provided approximately $140 million in loan insurance and $90 million in grants.
In addition, financial support is provided to small business through the lower corporate tax rate for smaller firms, and the Department of Regional and Economic Expansion operates financial programs which support small business.
Aside from these federal government initiatives, the provinces have established support programs for small businesses and the private sector has greatly increased its term lending efforts in support of small business, especially in recent years.
In view of all of these activities, the government has undertaken, over the coming months, to review its own programs so that they might better complement other programs, be they provincial or in the private sector.

Indeed, Mr. Speaker, it is the intention of the government during the course of the review to seek the views of the financial community, the small business community and the provincial governments. We expect that such consultation will provide the government with the kind of broadly based advice and analysis which will be necessary to establish the best possible financial support policy for small businesses in the years ahead. Mr. Speaker, this is a vital task. 1 am sure that my predecessor and members of his party as well as my colleagues in the New Democratic Party will also be most willing to advise me on the best ways and means at the disposal of the government to put in place the best programs for small businesses in Canada.
As I said, this is a vital task and it is being done in the knowledge that the health and vitality of the small business sector is of great and lasting importance to the over-all health of the Canadian economy.


Arthur Ronald Huntington: Mr. Speaker, I cannot say that it is a pleasure to follow my successor. I would dearly have loved to continue much of the work 1 had started as minister of state for industry and small business, but I am encouraged by the opening remarks of the minister to note that some of the very fundamental work and much of the very detailed discussion and intercourse that was going on between the ministry, members of Parliament on both sides, the small business secretariat and, indeed, at the various levels in the Department of Industry, Trade and Commerce, is being continued.
We on this side will have no problem supporting Bill C-17, to amend the Small Businesses Loans Act as initiated today in second reading debate by the minister. We are pleased to see that the amount has been lifted from $75,000 to $100,000, which is really nothing more than indexing to account for inflation.'Even if we examine the additional expansion therein, it is just keeping the bill in touch and within practical limits of

April 25, 1980
Small Businesses Loans Act
the diminishing use or value of the monetary system, or the money within our monetary system.
I sometimes wonder if it would not be a little simpler and a less heavy workload for the House if we acknowledged that and allowed the bill to adjust to the inflation component.
We will not be opposing this bill, Mr. Speaker, but I take this opportunity, as will some of my colleagues, to offer a few comments in the whole area of small business and government assistance available to the small and medium enterprises.
May I call it one o'clock, Mr. Speaker?


Mr. Deputy Speaker:: It being one o'clock, I do now leave the chair until two o'clock this afternoon.
At 1.01 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
The Acting Speaker (Mr. Blaker):: Order, please. When the house rose at one o'clock the motion on second reading of Bill C-19, an act to amend the Employment Tax Credit Act, was then under consideration. The hon. member for Capilano (Mr. Huntington) had the floor.
My apologies to hon. members. 1 had the wrong form in my hand and that was the reason for my hesitation. When the House rose at one o'clock, Bill C-17, an act to amend the Small Businesses Loans Act, was then under debate.


Arthur Ronald Huntington: Mr. Speaker, 1 am glad my colleagues had that straightened out because I did not have my notes here regarding Bill C-19. It would have made quite a difference.
I was interrupted at one o'clock at the beginning of my remarks concerning the bill amending the limit and the area of responsibility for the Small Businesses Loans Act. I would like to put on the record a few comments and observations about the act, and perhaps the Minister of State for Small Businesses (Mr. Lapointe) might take note of these and, in his windup, reply to a question or two.
The Small Businesses Loans Act can, I think, be said to be a very successful program of financial aid to the small business community. As the Minister of State for Small Businesses has said, since it was taken from a ceiling interest rate to a 1 per cent over prime rate, the use of it has expanded dramatically in the private sector.
It has been a very inexpensive program to operate and the losses have never been higher than 0.42 per cent of average loans outstanding. Perhaps it is not generally known to members that the formula virtually removes all risk from the large lenders of these loans in that the government guarantees 95 per cent of the first $125,000 of loans made, 50 per cent of the next $125,000, and 10 per cent of the balance of loans made. This really represents an effective 100 per cent guarantee for the larger lenders.
I am glad to see that the amendment is to bring the dollar ceiling up to something that offsets the deterioration that has taken place in the value of our dollar as a result of the inflationary pressures on our economy.
One of the disappointing things that we might make note of, which the minister might reply to, is the fact that one of the real needs as we study the financial requirements and the changing conditions of the small and medium-sized enterprise sector is working capital. Too often the pressure on working capital or the use of liquidity within the small and mediumsized enterprise units of our economy is for fixed plant or equipment, covering losses, or for unforeseen poor accounts. That is an area where there is serious pressure. I think, when the minister says that the time has come for a total review of the financial needs of the small and medium-sized enterprise sectors, that working capital requirements should be a major part of that review. Also, perhaps the Small Businesses Loans Act might be widened to include working capital in the future. At the moment, working capital is not a part of its terms of reference. We would be wise as members of Parliament representing that important community to have a good look at that as we review this whole matter of financial programs for the business community.
Once again 1 would like to put on the record the importance of the small and medium-sized enterprise sector to the economy and why the review that the Minister of State for Small Businesses mentioned and suggested is so necessary. The small businesses secretariat did a very fine piece of work extracting information from income tax data. On 1,075,000 businesses in Canada, 325,000 were incorporated businesses and 750,000 were unincorporated. Ninety-nine per cent of these businesses have annual sales of less than $2 million; 429,000 of the unincorporated businesses were self-employed professionals.
The total sales of all of the businesses in Canada were $392.2 billion in the year 1976. Of that, the incorporated sector of the business community sold $347.6 million, the unincorporated sector, $44.6 billion. It is interesting to note that 28 per cent of the total sales came from businesses with less than $2 million in annual sales; it is this area which the small business secretariat tries to study and watch over, advising members of Parliament what is needed in that area and which forces for change are coming into play. That is a very important component of our industrial community.
About 225,000 of the unincorporated businesses have sales of less than $10,000 and, believe me, that is within the category of small business. That is what the budget of the former government was trying to do in allowing spouse deductibility in the unincorporated business sector. It would have allowed very considerable relief to that sector. That was an important initiative and I should like to see it carried through.
The business contribution to the gross national product in 1976 was 42 per cent. Thirty per cent of the business compo-
April 25, 1980

nent of the gross national product originated from firms with less than $2 million in annual sales. Fifty-five per cent of the business component of the gross national product originated from firms with less than $20 million in annua! sales. That left government institutions, financial institutions, hospitals and the like, making up 58 per cent of the gross national product. I am putting this on record because it is important we get a feeling which will provide support of the Minister of State for small businesses and to the small business secretariat, and draw attention to a need which hon. members will have to regard with increasing concern.
Within the community 1 have described, total employment amounts to 6.6 million persons according to the 1976 statistics. Businesses with sales of less than $2 million employed 2.5 million people or were responsible for 42 per cent of business employment. Businesses with sales of less than $20 million, which brings us to the small and medium-sized enterprise sector, employed 4.1 million people, or were responsible for 66 per cent of business employment in 1976.
1 put this on record again to outline the impact and the importance of these matters and these instruments and of the study which the Minister of State has told us is part of an ongoing process. It is to that study and to that financial review that I should like to address some remarks. Before doing so, however, there is one other point I wish to raise and 1 would appreciate hearing the minister's remarks with regard to it.
As the small businesses loans legislation has expanded-the minister told us about this in his opening remarks-outside the basic group of chartered banks, and has gone out to include credit unions and other lending institutions, 1 should like the minister to tell us whether he is aware of any change in his liability under this act. I have in mind the nature of the loan, the credit review, the type of institution which is now embraced by the legislation and which has probably opened up a pattern of activity which has not been reflected in practices to date by the larger, more conservative institutions. I, at any rate, would appreciate knowing whether the minister is aware of any change in the minister's liability as a result of the expansion of the program.
The minister told us a financial review was taking place related to all aspects of financial programs affecting the community I have described in my remarks. There is the Small Businesses Loans Act, the act we are amending today; there is the Small Loans Act, an entirely different measure and which perhaps does not touch on the business community other than with regard to accounts receivable. There is the Federal Business Development Bank with regard to which I had the opportunity of explaining my feelings in depth during the debate on Bill C-4 in the Thirty-first Parliament.
1 am sure that the Federal Business Development Bank is sweating it out right now and in need of financial relief in light of the very high cycle of interest rates we are going through. 1 would think that the increasing rate of bankruptcies has been creating a magnitude of change in terms of their liquidity and in terms of pressure upon their accumulated surplus. We would, perhaps, like to be aware of the extent of this pressure.
Small Businesses Loans Act
If the minister could advise as to the change that the last 90 days have brought, and the pressures it has placed upon the Federal Business Development Bank, those of us who are interested would much appreciate the information.
In addition to the extensive work of the Federal Business Development Bank in this field, we have the adjustment assistance programs of the enterprise development under the Department of Industry, Trade and Commerce. One of the things I found frustrating as minister of state for industry and small businesses in the former government was the magnitude of dollars which my colleague responsible for the Department of Regional Economic Expansion had at his disposal in his dealings with his provincial counterparts, or with industrial counterparts in the provinces, in terms of programs of assistance to the business community. So we have all these different activities going on, different departments all making their play for this audience which is described in the 1976 statistics. If there is one thing which needs co-ordination so as to bring about effectiveness in the use of resources and in the use of the program, it is this area which I have described.
1 am very pleased the minister intends to continue the work in place in the department in bringing about the review of which he spoke. In my view, a basic change of structure is needed to assist the minister because, so far, we in Canada are reacting in what amounts to knee-jerk fashion to political pressures which accompany lobbying by the Canadian Federation of Independent Business and so forth.
Now that we have defined the audience and the importance of that audience in the Canadian economy, it behoves both sides of the House to move in on a structure which will serve that community more efficiently and will allow them to use the resources at the disposal of Parliament more effectively. In that review I would like to suggest and submit that perhaps the government should give consideration-or perhaps the minister of state can carry this forward to cabinet-to a standing committee of the House on industry and small business at which the constituency described and now defined could have a platform and a means of communicating with their elected representatives, and particularly with the bureaucracy responsible for the activities and subactivities within the various departments.
Having studied in some detail and debated the proper vehicle through which the industrial community could best be served-or this end of the spectrum of the industrial community-one looks at and studies in some depth the small business act of the United States which has built a massive bureaucracy, put in place programs, has got itself all caught up in definitions within each category, and has indeed become a very cumbersome situation.
If one then moves over into Europe and the European Common Market countries, one will find that the co-ordinating role of the secretariat and the advocacy of the secretariat are being enhanced, but that role in itself can be quite frustrating to the staff within the department. They really do

April 25, 1980
Small Businesses Loans Act
not have the clout that is necessary for the constituency-the statistics I put on the record-really demands and needs. I am sure my colleagues on this side of the House would assist and probably push for a vehicle such as a standing committee on industry and small business which would be able to assist that department and the outside community in co-ordinating the programs and improving the communication between ourselves as elected representatives, members of the business community and the various associations and lobby groups and the bureaucracy, because if there was one thing I found frustrating in the short period in which 1 had the privilege of serving my country as minister of state, it was the difficulty 1 had in moving between departments.
I could get an understanding and a working arrangement going within my area of responsibility, but it was extremely difficult to move that progress through the other departments within the bureaucratic structure, and I think a standing committee of the House would aid immeasurably in the efficient delivery of programs to the business community.
In addition, I am troubled about the ability of the political process, or this process, to communicate the needs and the feelings and the studies from organizations like chambers of commerce, boards of trade, and the various groups which study and gather up the inputs, feelings, wants and wishes of the community. 1 think the struggle that we, as elected representatives, are facing, is the will of the wealth-creating community outside-those people who are engaged in wealth-creating activity and in adding to the value of goods which, after all, create all the payrolls, cash flow and taxes upon which the consolidated revenue fund can finance programs- that the decision-making base be spread more widely where that community can have an incentive to direct its capital and its energies into certain directions.
To me, research and development crystalize the struggle which is going on. I believe the bureaucrats-and 1 speak respectfully when 1 use that term-within two or three departments of government naturally want to keep control unto themselves in terms of research and development, in terms of incentive programs and in terms of venture capital programs, rather than deliver tax points to the community whereby there is an incentive to make a decision to spend a particular block of money in a particular area of risk. That is the debate I would like to see enhanced, and I do not know of what forum it can be developed in other than the standing committee on industry and small business which I am proposing here as a result of the opportunity I had to spend some time studying this area of activity.
Basically the bureaucrat feels that there is more efficiency in delivering research and development incentives through programs than through tax points. I come from that industrial sector out there, and I can tell hon. members that I have not time to come through the paper work and the screening process for those programs, but if 1 had 125 per cent, 1 could have a board of directors' meeting and we could decide that the risk of doing something new that would add to the payrolls and wealth of this country was compensated in that 25 per
cent factor. Then those decisions could be made across the land by the decision makers who, after all, are gambling their own working capital and their own savings, and to me that is an issue which 1 think we have to address, and perhaps we could challenge the desire for programs which many of our friends within the bureaucracy have.
1 think what I have just mentioned is one of the causes of frustration within that industrial community, and I think again-1 am sorry to repeat myself-that such a committee could do much to diffuse that level of frustration and improve the feeling and the spirit of communication between the three forces.
One of the other things that 1 found, I suppose while in office and particularly since being in office, is the lack of awareness that the small business community and the mediumsized enterprise sector have in terms of the government programs which are available, and 1 was going to bring into the House a stack of literature, the ABCs, all of the beautiful literature of the Federal Business Development Bank and the case counselling service, and all of the programs which have to do with each aspect of accounting or procurement in the small business sector.
All of this magnificant material has been put together in very well designed presentations, and yet there is a major lack of awareness within the community. I know that the Federal Business Development Bank has small business seminars. One can see university after university and institution after institution now putting on small business seminars, but the lack of awareness of what is available is another matter I would like to see addressed, and I use the opportunity in this debate on the amendments to the Small Businesses Loans Act to make the minister aware that we should again perhaps be in a committee addressing this awareness problem and seeing what can be done to make a more efficient and effective use of the material that is available.
One of the emerging needs in the review on finance that I have seen is the need for risk capital. It is a case now of moving any liquidity over into safer instruments and investments, or giving out some kind of an incentive which protects the high after-tax dollar cost of that type of capital in areas of risk.
I have mentioned working capital, and the province of Quebec and the province of Ontario-and 1 believe B.C. and one of the other provinces; not yet, the minister says-are moving in this area of vehicles for venture capital. There is potential for some abuse there, but I think anything that can move our conservative after tax savings dollars into risk areas of business, with tax shelter protection, would be an initiative that the minister of state could take, and it would have wide and great support from the community at large in Canada.
1 have mentioned research and development policies and programs. We debated extensively through the Thirtieth Parliament, and if the minister cares to look into the files, he will find extensive studies on research and development programs and policies which really have to be delivered to that industrial community if we are going to keep the Canadian industrial
April 25, 1980

plant modern and effective and at highly optimal levels of production efficiency. Too many of the government programs I saw when in office-and which 1 am sure the minister will see-are running after industries which, because of obsolescence, old plant, or emerging technologies in other countries, really cannot compete in the global marketplace.
Tied in with this is the General Agreement on Trades and Tariffs and the phasing out of tariff protection for industries. I suggest that part of that review must be a change in attitude, a change in the use of the government resource from a protective attitude toward industries that are now obsolete in the global market place to delivering programs of front-end benefit and incentive which will allow us to put the highest technology of the world in place within Canada, within the Canadian industrial community, so that we can compete against global efficiency and labour in other parts of the world where there is a lower standard of living and perhaps not the burden of environmental protection that we demand of ourselves.
These are all areas which I do not think this community, through its elected representatives, is debating, and that is one of the reasons why I urge all members of the House to support the call for the establishment of a standing committee on industry and small business where these studies could get wider recognition and more input. Perhaps the combination of programs and tax points could reduce the frustration level which exists, and we could start delivering and creating an awareness of those industrial sectors that need assistance, because that is where the future is and where the payrolls will be tomorrow.
1 am seriously concerned at the extent of the resource that we are delivering in protecting what is obviously obsolete. A classic example, 1 think, is the auto pact crisis which we in this country face today. We knew a decade ago that there had to be product design and product change and that environmental legislation would be coming soon, that we were going to be an energy short continent and that we could not carry on wasting in the way we were. Yet we allowed ourselves to continue blindly building cars with V8 engines, the high horsepower gas burner, while the United States was quietly putting in place the energy-efficient car. Now we have reversed the flow and caused a trade inversion in this country that is of crisis proportion.
If we are going to provide aid to these industrial areas, I think we should provide aid, programs and tax points only in those areas where the product fits the need of the people and of the continent for the decade ahead, where its fits into an energy efficient demand, where we are not protecting that which deserves to be flushed out by the market system, but rather where we are delivering something that can have a market mandate in the global market at large, particularly on the North American continent.
These are some of the problems that I have seen, and now 1 would like to close with one other in the financial area of the SME sector. Much of the Canadian dollar, through our Regis-
Small Businesses Loans Act
tered Retirement Savings Plans, ends up in pension funds in RRSPs, and in the financial institutions which require a secure covenant of safety. There is a financial vehicle that we have been trying to get through three departments of the government, the Department of Industry, Trade and Commerce, the insurance branch, and the Department of Finance. There is a vehicle which would allow a covenant to be given to lending institutions which would permit money from those institutions to be fully secured to the lender and yet made available to the business community in amounts of $500,000 to $5 million, in 15 to 30-year terms at interest rates below prime.
As I close my remarks here today, 1 make a plea that the bureaucracy really hear the message because there is a source of funding for the industrial community which lies dormant in these funds and in their security, and which could be made available to the industrial community, relieving the financial pressures which exist if a co-insured first-class covenant could be given to the lending institutions.
One thing that shocks me in the hold up of that vehicle is the fact that the federal government, or its advisers, fails, in its narrow definition of qualified lenders, to take into account such funds as workmen's compensation funds in the provinces, the Alberta Heritage fund, and pension funds from Crown corporations. I think there should be an open mind with regard to them so that that financial resource can be delivered to the industrial community and so that we can get on with building a first-class industrial plant, industries that can compete on an efficient, optimal basis in the global marketplace so that we can truly be ready as a country for the era ahead that the GATT agreement is bringing on us.


Some hon. Members:: Hear, hear!


Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, 1 rise today to speak on the proposed amendments to the Small Businesses Loans Act which would raise the ceiling on the amount of money a small business may have outstanding under the act from $75,000 to $100,000, that would increase the amount that may be guaranteed under the act to $850 million, and extend the act for a two-year period until June 30, 1982.
I support this bill with reservations since the benefits accruing to small business under this act have been more than eroded '-.rough the government's monetary policy of maintaining high interest rates in Canada.
Bill C-17 is indeed an insult, not only to the Canadian small businessmen but to Canadians as a whole. It creates the impression that this government is prepared to act and do something for the small business community when, in fact, it is doing very little for Canada's small entrepreneurs. This was misused opportunity, for with this bill the government could have initiated measures which guaranteed to resurrect and build confidence throughout our business community at a time when economic expansion and entrepreneurship are at a very low level indeed. Now we have lost this opportunity to build faith and confidence in our country since the business commu-

April 25, 1980
Small Businesses Loans Act
nity is disappointed and dejected with the contents of this bill. They were expecting so much more.
This bill does nothing to assist the small businessman, and it comes at a time when serious, thoughtful, rational changes are required in our economic structure and in our economic system. In their hearts, Canadians know the present system is inadequate. Canadians know that we are an incredibly rich country with unlimited and unimaginable opportunities, coupled with a young, dynamic, creative and talented people, yet facing such serious problems and difficulties as exist in our country today.
Hon. members to my right, as well as members across the way, tell us that we live in a country committed to the principles of free enterprise and competition. I am afraid this is an illusion, this is a dream. Canadians believe that if an industry is competitive, then we can expect to get a better choice of products in the marketplace and obtain them at lower prices. There exists extensive empirical evidence to support this belief, so long as the conditions for competition do, in fact, exist. However, the reality of the Canadian economy is very different from this competitive model. The key industrial sectors of the Canadian economic system are dominated by a small number of large corporations, and if we recognize that many of these corporations are branch plants of foreign business operations, then we begin to place the structure of the Canadian economy in its appropriate international context.
1 am certain that my colleagues in the House are aware of the extent of corporate concentration in the Canadian economy. No one can look back over the holes left in the economic landscape by the wave of corporate takeovers since the royal commission tabled its report on corporate concentration and fail to realize that our economy is undergoing dramatic and far-reaching structural changes, changes that are not necessarily in the best interests of Canadians.
It is not insignificant that a very key question was left out of the terms of reference of the Royal Commission on Corporate Concentration. That key question is: how has federal government policy contributed to and accelerated the process of corporate concentration in Canada? Or, to put it another way, how has the federal government contributed to the erosion of competitive enterprise in this country and as a result placed many small businessmen in an unfair competitive position?
Is it any wonder that, for decades, big business, and often foreign business, has exercised undue influence on the formation of economic policy in Canada? The current economic crisis has brought this to the attention of all Canadians, but to none more forcefully than those employed in small business. For it is here, in the small business sector, that the conditions for competition exist and the competitive forces of the market place have their greatest impact. For decades the government has ignored this vital sector of our economy. Only last year it finally got around to publishing its First major statistical
review of small business. Using the criteria of sales less than $2 million to define small and more than $20 million to define big, the following picture of business in Canada emerged. I should like to refer to a few specific points in that review.
In 1976 there were 628,000 small businesses in Canada representing 97 per cent of all businesses. The 2,000 largest businesses in Canada represent less than one half of 1 per cent of all businesses. Small businesses account for nearly 28 per cent of total business sales. In terms of employment, small businesses account for approximately 40 per cent of the Canadian labour force.
A recent study by the Canadian Federation of Independent Business indicates that small businesses have created more than 50 per cent of new jobs outside the government sector since 1971. But small business is vital to the Canadian economy for other reasons. While 48 per cent of big business in Canada is foreign-owned, over 96 per cent of small business is Canadian-owned. I emphasize Canadian-owned and Canadian-operated. Small business in Canada is an expression of the Canadian character, and extension of Canada's energetic and imaginative people, representing their hopes, dreams, aspirations and concerns for the future.
The decision to go into business in Canada is a decision to take one's future into one's own hands. It involves risk, frustration, and great deal of hard work. When we talk of small business in Canada, certainly we are not talking about a faceless and soulless corporation, but indeed of people. Small business is a people business, and we must do everything possible to nurture, encourage and support it.
Small business has been hit especially hard in the present economic crisis. The uncertainties associated with the 1970s have contributed to a marked increase in the number of business failures. Commercial bankruptcies in the first two months of 1980 were up nearly 25 per cent over the same period last year. Bankruptcy experts estimate that at least 75 per cent of failures occur among small businesses. Just this afternoon I had the opportunity over lunch to meet with two visiting businessmen from my own riding. One businessman owned a small clothing store and the other businessman represented a small contracting firm. Both of these individuals are on the brink of bankruptcy. The high interest rates, and the monetary policy which is perpetuated and supported by the present government, have driven these entrepreneurs to the edge.
In the face of the current downturn, this bill to amend the Small Businesses Loans Act betrays a colossal failure on the part of the government. It will do virtually nothing to ease the burden on small businesses in Canada. The increase in the loan ceiling from $75,000 to $100,000 proposed in this bill, once one takes into account the inflation over the past three years, represents no increase at all in real borrowing power. In 1979 less than 3 per cent of the value of all small business loans were guaranteed under the Small Businesses Loans Act. There are a number of reasons for this which the legislation does not even begin to address.
April 25, 1980

For example, guaranteed loans can only be used for purchase or expansion of plant, equipment or land. Loans cannot be used to provide working capital which, of course, is one of the most important capital requirements of the small businessman, the small entrepreneur. The final decision to extend a loan rests by and large with Canadian chartered banks. They have been reluctant to use this act because of the limits placed on the interest that can be charged. Why charge prime plus 1 per cent if one can get prime plus 3 per cent? In fact the chartered banks have a vested interest in not supporting this program throughout the land.
Small businesses have indicated that branch managers in the chartered banks and other lending agencies are either reluctant to talk about the Small Businesses Loans Act or are not familiar with the program, or at least they say that they are not familiar with it. The one exception to this is the heavier use of the plan by the Banque Canadienne Nationale in Quebec. We hope the minister has received commitments from the chartered banks and other lending agencies that they will actively participate in the small business loans program, and if he has not received such a commitment, we hope that he actively seeks one.
Also I feel it is important to point out that less than $500 million will be available under the Small Businesses Loans Act each year. In fact this is only a small fraction of the $9 billion borrowed by small businesses in the year 1979. As one of my hon. colleagues mentioned previously, it does not address one of the serious problems facing entrepreneurs, that is, the lack of information. Some method must be found to enable potential investors or businessmen to be more aware of the existing 400 programs of interest to them.
The real failure to provide leadership, not only in the area of small business but to the Canadian economy as a whole, is the shortsighted and misguided monetary policy which has left small business and the economy in general saddled with record-high interest rates. When the prime interest rate is 16.75 per cent, the few benefits provided by the Small Businesses Loans Act cease to be meaningful.
Short-term, simplistic, cosmetic legislation such as the Small Businesses Loans Act which we are debating today would not be needed if the government had, in the past, provided responsible leadership in implementing a sound longterm industrial strategy for Canada. High interest rates, a record balance of payments deficit, and an unprecedented federal government deficit, all point to a colossal failure to fulfil the public trust.
In travelling about the country I have had the opportunity to speak with large and small groups of businessmen about the problems which they are currently facing. I hope the hon. minister and his government will be introducing legislation during this session which will address some of the serious problems mentioned previously in this discussion.
I have yet to discuss and examine the throttling impact that government red tape has on the small businessman. The paper
Small Businesses Loans Act
requirements of the federal government have placed the small businessman in a very difficult position and have resulted in undue stress and frustration, as well as placing added personnel costs on his accounts book. Also 1 should like to remind the minister that at present a corporate tax system exists which treats small businesses differently than large businesses. The present tax system actually discriminates against small business by imposing higher effective tax rates on small businesses than on larger corporations.
In closing, I feel compelled to relate to this House an incident which occurred in my riding of Kamloops-Shuswap during the last election campaign. During that campaign I emphasized the fact that, of the three federal political parties, only one consistently and actively supports the concept of fair and equitable individual enterprise and fair and free individual initiative in the marketplace. I suggest that party is the New Democratic Party.


Some hon. Members:: Hear, hear!


Nelson Andrew Riis: The hon. member for York-Peel, the former president of the treasury board, campaigning in my riding challenged this point publicly and suggested that the voters in the Kamloops-Shuswap area would ultimately decide which party supports the concept of fair enterprise and individual initiative. May I suggest that the voters of Kamloops-Shuswap did just that?


Some hon. Members:: Hear, hear!


Mr. Ralph Ferguson (Parliamentary Secretary to Minister of State, Small Businesses):: Mr. Speaker, hon. members, it is certainly my pleasure to speak to Bill C-17, an act to amend the Small Businesses Loans Act, which has been brought forward by my colleague, the Minister of State for Small Businesses (Mr. Lapointe). The minister has outlined the details of Bill C-17, and he has also briefly outlined the general purposes and the history of the Small Businesses Loans Act. In addition, he has outlined the government's intention to work with the financial community, the small business community and the provincial governments in preparing a complete review of the government's financial support programs for small businesses.
I should like to commend the hon. member for Capilano (Mr. Huntington) for his constructive remarks in relation to this review and to the amendments to the act presented here today.
I would like to refer ever so briefly to comments of the hon. member for Kamloops-Shuswap (Mr. Riis), and refer specifically to the drop in interest rates that took place for the last two consecutive weeks since the opening of this Thirty-second Parliament. 1 feel this reflects confidence in the government and it is an indicator that the proposals outlined in the Speech from the Throne are quite proper and correct.


Some hon. Members:: Hear, hear!


Ralph Ferguson: In speaking to Bill C-17 1 would like to add some comments on the coverage provided by the program. The Minister of State for Small Businesses has already referred to

April 25, 1980
Small Businesses Loans Act
the broad national impact of the program as witnessed by its regional coverage and the very wide and growing participation by a variety of financial institutions.
In addition to this coverage, a broad range of types of businesses are supported through the Small Businesses Loans Act. 1 submit at this time that this is an act that covers all of Canada, whether it be the small towns and villages in the rural sector or the small businesses in the cities across this nation. It is vital to the sustenance of the small business community from coast to coast.
Statistics for 1978 show, for example, that of the total value of loans in that year, wholesale trade accounted for 4.1 per cent, transportation accounted for 8.6 per cent, construction accounted for 9.9 per cent, manufacturing accounted for 14 per cent, retail trade accounted for 26.6 per cent, and service businesses accounted for 35.9 per cent.
It can be seen that the Small Businesses Loans Act provides broad coverage of types of businesses, many of which are traditionally in the small business category. It does not include two additional types of small businesses, farming and fisheries, but they are supported by two other special federal government programs; first of all under the Farm Improvement Loans Act, and secondly, the Fisheries Improvement Loans Act. As announced in the Speech from the Throne, both of these acts will also be brought forward for renewed consideration by the government in the very near future.
In the course of presentation of Bill C-17 I think it is important to note the philosophy which underpins not only the Small Businesses Loans Act but also all the other federal government debt-financing programs.
A basic premise behind all federal government debt-financing programs is that they should complement rather than compete with private sources of loan capital. This is more than just a philosophical stance in respect of the roles of the private and public sectors. It is based on the realization that the government can be most effective by working with the private financial institutions to make better use of the very extensive delivery systems that are already in place in the private sector. For this reason, the success of the Small Businesses Loans Act should be measured not only in terms of the volume of business undertaken, but also, and perhaps just as important, in terms of its success in stimulating private lenders to expand both the form and volume of financing to small businesses.
The Small Businesses Loans Act is in keeping with this philosophy. It is a program which has been administered effectively with as little government involvement as is possible. All of the transactions between borrowers and lenders takes place within the private sector with the government acting only as a guarantor.
We all know that this cannot always be the case, but there are good reasons behind the government which has also established direct lending and grant programs. The programs have been established to meet special circumstances which face Canada's ever-growing businesses. Even where direct lending programs are in effect, however, an attempt is made, if at all
possible, to involve private lenders as co-financiers. This is as it should be, Mr. Speaker, and I think the small businessmen and small business women of this country would agree with me. They do not want handouts from the government. They want, and only when it is necessary, a boost from the government to assist them in their own efforts to build the businesses. They want to retain their independence and to go about their business as they see fit. The Small Businesses Loans Act is a program which follows this approach.
In concluding my brief remarks on this Small Businesses Loans Act I want to re-emphasize that this program is an important source of financing for small businesses. It provides suppport to thousands of deserving men and women who run businesses which are the backbone of our Canadian economy. I take great pleasure, therefore, in having spoken to this bill.


Mr. Bill Kempling (Burlington):: Mr. Speaker, this is the first opportunity I have had to speak in the House since it reconvened and I should like to convey to you, sir, my congratulations on your appointment, and ask you to convey to your colleagues, especially Madam Speaker, my best wishes on the duties they have undertaken in this House. I know that all of you will serve the House well. You are all experienced in the operations of the House and we look forward with great pleasure to working with you.
Let me now say a few words about this bill. The small business sector, as we know it, is the largest employer in Canada of our labour force, employing some 6.6 million people. It is something that governments at all levels talk about, federal, provincial and municipal. It is the most difficult area for the federal people to really get involved with because so many of these businesses fall under provincial jurisdiction. When it comes down to it, I suppose it is really the role of the federal government to create an atmosphere in which that small business enterprise can flourish.
I am not that familiar with the new minister of small businesses, and I do not know his background or whether or not he was ever a small businessman. This bill may encourage him to become one in the near future. I feel that the former minister during our government, my colleague, the hon. member for Capilano (Mr. Huntington), was probably the first minister, at least since I have been present in this House, who knew what it was to be a small businessman because he has been one for a number of years. The hon. member for Capilano knows what it is like to go out and raise capital, employ people, and to design and devise a product which will sell and earn a profit.
If the present minister of small businesses does not have any business experience, then I hope that he is a good listener because there is much to learn from the small business community, and indeed from the members of this House. As I say, perhaps the minister will be encouraged at some future point to enter the field of business. It is a very fascinating endeavour to undertake.
April 25, 1980

As the hon. member for Capilano has just said, the problems which the small businessman must face are, to some extent, helped by this bill. One of the major problems that I found with the Small Businesses Loans Act when I have had to deal with it over the past eight years was that most people are of the false belief that the federal government lends the money. They do not understand. It would be a good idea to put out some publicity indicating that the government does not lend the money, but merely guarantees a loan through the bank. But that is an area I will cover in a moment.
Another thing which many people do not understand about the Small Businesses Loans Act is the interest rate which has had a series of strange manipulations over the years. As I recall the original act the rate of interest was 6 per cent. At that time the bank interest rate was 7.5 per cent. Obviously the banks were not interested in loaning money under this act at the lower rate. The bank rate increased to 8 per cent and 9 per cent while the small business loans rate remained at 6 per cent. Then the interest rate under the act changed. I believe that the rate was determined by the yield on a selected series of government bonds which was altered biannually in April and October.


Mr. Knowles:: Semi-annually.


William James Kempling: At any rate, it was twice a year. However, the bond market dropped, and of course the rate of return on the bonds dropped, leaving the interest rate on small business loans in the same mess that it was in before. At this time hon. members would rise in the House during question period or during speeches and ask the minister of finance, who was John Turner, I believe, why the small businessmen were not able to get a loan under the Small Businesses Loans Act and why the banks were playing games with the small businessmen. When these small businessmen would say to the banks, "I would like to borrow some money under the Small Businesses Loans Act", the bank accountant would say, "I've never heard of it". Mr. Turner would answer, "I'm having lunch tomorrow or next week with the president of the Canadian Bankers' Association. I will bring the matter up, and we will see what we can do". Of course, nothing ever happened.
This charade went on year after year, and to some extent is still going on today. In fact the banks at one time, in order to keep the Minister of Finance off their backs for not lending money under the Small Businesses Loans Act, were using the act as a form of a gift to their better accounts. The banks were not helping the small entrepreneur who had a venture capital problem and needed assistance. They were giving loans under the act to their good accounts which paid their bills regularly, kept up their deposits, and had a good record with the bank. In other words, they were using it as a plumb.
The banks would say to these good accounts who were interested in expanding their business under the Small Businesses Loans Act, "Yes, we will get the loan for you because the rate is lower than what we charge on our normal commercial accounts, which will be of some advantage to you". These banks should have been loaning money to businessmen who did
Small Businesses Loans Act
not have the necessary collateral to obtain the money in the private sector. For the most part, that charade has disappeared.
I would recommend that the minister speak to the officials of his department and, while I do not like to see more paper, recommend that a pamphlet be printed. It could be entitled, "How to get a loan under the Small Businesses Loans Act". The Minister of Finance should lean a little more on the chartered banks and insist that they display these pamphlets on the counters of the branches across the country. This would help a great deal.


Walter David Baker: Put the minister's picture on it.


William James Kempling: When this bill gets to the committee of the whole stage, standing committee, or wherever it is to go, I intend to introduce amendments which cover areas of some concern to me. I am a small businessman, so I know the problems.


Jean-Luc Pepin: Did you say small?


William James Kempling: I will get you for that!
I would like to see an amendment which will allow loans under this act to be used for working capital. I would like to see provision within the act to allow for loans to be used to complete research and development projects. Let me expand on that topic for a moment. I have been in and out of big business, small business, and I have worked for multinationals, conglomerates, and I now have my own business. I know what it is all about. The person who turns off the research and development project in a small business is not the engineer or development man but the comptroller, the guy who controls the cheque book. He or she is the one who turns off the cash flow because there are just not enough funds to complete the project.
Most innovations and most of the patents are made by people in the small business field. There should be an amendment in the act to allow for the completion of research and development projects. I would be fair and say that the applicant would have to prove that the amount of money being loaned would in fact complete the project.
The third amendment which I intend to move would allow the Small Businesses Loans Act to register patents on a product, process or device developed in the small business field. Many times a small businessman expends all his money developing a device, process or product, only to find that he needs a good deal more money to register the patent in Canada, the United States, Great Britain, or any country where he wishes to protect his product.
The Small Businesses Loans Act could be used in the acquisition of a patented process, product or device to be used by a small business. The way the market is going today and particularly considering the volatility of foreign exchange, one finds that some in the small business community are in a

April 25, 1980
Small Businesses Loans Act
position to license a product which they are presently importing. This helps their balance of payments problem and helps to develop the whole entrepreneurial level of small business.
If the minister would like to introduce these three amendments, I would be happy to convey them to him for introduction, as long as it is done. That is all 1 am interested in. Something must be done.
The Solicitor General (Mr. Kaplan), when he was chairman of the finance committee in a previous parliament, and I went through the Bank Act. I am sure that he will recall section 88 of that act which deals with accepting as collateral raw materials and work in progress. At our in camera committee meeting where we were dealing with the inspector general of banks, we agreed to amend that section of the Bank Act, especially for the small businessman. We felt they should be able to offer their inventories as collateral. I know the minister recalls this because we had a long conversation with the inspector general of banks. He and 1 finally saw eye to eye and had the act amended. That is the bill that will now come before this House and we appreciate that, because it is going to help the small businessman.
It is the small businesses that employ the bulk of the labour force in this country and contribute the largest amount of the gross national product that is the stabilizer in our economy. When you look at the labour involvement in the small business community at large, you find that they rarely lay people off. Even if the economy turns down, they keep them on because of the difficulties they have in getting and retaining people. One of the ways they retain staff is not to lay them off as some of the larger companies do, when the economy turns down. By adopting that sort of principle or philosophy or strategy-call it what you will-they impart a great deal of stability to our economy. If we can do anything to assist them, Mr. Speaker, and to expand this sector, we will help the economy to flourish and move ahead.
There has been mention of the amount of paper that small businessmen have to deal with. I recall that a previous minister in the small business portfolio of an earlier Parliament set up a committee to examine the problems of the small businessman in dealing with all this paper. I should like to tell you something of the practical difficulties that I faced when I was in business because of the amount of paper that came in. We used to separate the paper into two piles-that from Statistics Canada was piled on one side of the table and that from Revenue Canada was piled on the other side. We knew that we had to pay our taxes, so we always looked after the pile from Revenue Canada. The other pile grew higher and higher and we started getting threatening phone calls from some clerk in Statistics Canada. It became a serious matter for us. With only a small staff, we had to ask ourselves whether we were going out to do some business, to design something, fabricate something, sell something-or were we going to sit down and fill out all these forms, some of which were totally irrelevant to our operation.
I am a very practical person, Mr. Speaker, and I was determined to find a solution to the problem. One day up town I went into a rubber stamp shop and bought a large rubber stamp which said "Not Applicable." I also bought a red stamp pad. Back at the office I stamped this great pile of government forms with "Not Applicable" and sent them all back to Statistics Canada.


Some hon. Members:: Hear, hear!


William James Kempling: In return I received a computerized letter which said something to the effect that "we are in receipt of flip-flip, your communication on form so and so which we understand is flip-flip not applicable." We duly filed this in our folder and when the repeat form came in we stamped it "not applicable", made a copy of the letter from Statistics Canada and sent it back to them. Mr. Speaker, we cut our paper load by 66 per cent.
I would recommend that to anyone as a method of cutting down on the paper work that comes across his desk from government. Much of it is just so much nonsense.


Mr. Evans:: Would you change?


William James Kempling: No, I would not change.
Let me move into another area of operation for small businesses, Mr. Speaker. One of the difficulties that small businessmen in this country face is the constant change in the method by which their products are distributed throughout North America. The United States is our largest supplier and we are their largest customer, so there is a tremendous amount of trade back and forth. That applies to Europe to some extent as well.
A series of events have occurred in North America, starting with the imposition of the 10 per cent surcharge that President Nixon put on imports to the United States when that country was having a balance of payments problem. Following that, the United States established DISC, the Domestic International Sales Corporation, the purpose of which was to entice American companies operating overseas to return to the United States, produce their goods there, and then export them.
One of the provisions of the DISC program was that 50 per cent of the profit may be retained by business, tax free, at the pleasure of the president. That meant that the profit on a great deal of export dollars was retained in the business-tax free at the pleasure of the president. Mr. Speaker, I do not know that any president is going to have the courage to rescind that! The program has had a dramatic effect on the conduct of commerce in the small and medium-sized business sector of this country. It has changed the whole method of distribution. In the past a manufacturer built a product, put it in inventory and then shipped from inventory. That is not done today. Now a product comes off the production line and is shipped immediately to the downstream distribution system. This has taken the cost of carrying inventory from the manufacturer and passed it on to the wholesaler and the retailer. The difficulty
April 25, 1980

with this is that in this country our financial system has not responded, and the effect is felt by the small and medium-sized businessses.
For that reason, Mr. Speaker, I say to the minister, through you, that I want to see this Small Businesses Loans Act amended to ensure that the funds that are acquired may be used for working capital.
Earlier I mentioned section 88 of the Bank Act which will become section 177 of the new act. It will help as well, because at the present time a small retailer like the one mentioned by an hon. member opposite, a clothing retailer in the throes of bankruptcy, has to pay for his merchandise when he receives it. If he offers it to the bank as collateral, he will only get 30 per cent of its value because the bank will take it under a floating charge. The result is that he is only getting 30 per cent of the value of an asset when it is offered to the bank as collateral.
Through this change in the act we hope that we can help in such cases by having a greater proportion of the value of finished inventory accepted as collateral by the banks so that the small businessman could pay his bills and stay in business.
The record of bankruptcies between 1968 and 1979 is absolutely staggering-the number more than doubled, and 1 suppose by the end of 1980 it will have tripled. These were all little manufacturing concerns, Mr. Speaker, and the major reason for them going under was the lack of working capital. Someone goes into business, mortgages his house, his cottage, his car, his wife-everything-


An hon. Member:: His mother-in-law?


William James Kempling: His mother-in-law-anything the bank will take.


Walter David Baker: How much would he get for his mother-in-law?


William James Kempling: That depends! At any rate, he mortgages anything he can to get his business going. Once he does, he thinks it is great and that he is really going to make some money. He gets a large number of orders, but then he has no working capital. That is exactly what happens. You have people who have the initiative to start something, to design something, and to invent something. They get their business going and then run out of funds. What do these people do? They sell out, maybe to their competitor, or they tough it out and go bankrupt. A few of them that are wily enough shake the surface and manage to succeed. So we have to find a series of ways to help this small business sector. Part of this help is here before us.
I commend the minister for introducing this bill. I am not opposed to the Small Businesses Loans Act coming under the jurisdiction of the Minister of Industry, Trade and Commerce (Mr. Gray). In fact I think that is a step forward and a good thing. Considering when it came under the jurisdiction of the minister of finance, if past experience is any criterion. The
Small Businesses Loans Ari
businessman will get a better shake from the Minister of Industry, Trade and Commerce than he ever would from the Minister of Finance. At least we will not have to rely on the Minister of Finance having lunch with the chairman of the Canadian Bankers' Association and asking him, "Charlie, can't you help those little guys?". To which Charlie replies, "Well, we are up to the limit of the amount of money we can lend, Mr. Minister. We have done about everything we can", and the thing just falls apart.
One of the great things about our economy is that it is resilient. A lot of that resiliency is in the small business sector. While there is a lot of doom and gloom around, I am not at all pessimistic about the future. I have a great deal of confidence in the business community, and in the small business sector particularly. But these people do need help. They need it now, and they are going to need it for some period of time.
I can only ask the minister to take these remarks into consideration, to give whatever aid and assistance we can to these people, and even if he is not a small businessman himself, as long as he is prepared to listen and take the advice of others, I am sure he will do well in his portfolio.


Mr. David Weatherhead (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, I am pleased to have the opportunity today to say a few words in support of Bill C-17, an act to amend the Small Businesses Loans Act. I am even more pleased to say a few words on behalf of small business in general.
First, I would like to remind the House that it was our government in a previous Parliament-1 believe it was the Thirtieth Parliament-that brought in this very important ministry, the Ministry of State for Small Business.


Some hon. Members:: Hear, hear!


David Bennington Weatherhead: Frankly, I think the setting up of this ministry was long overdue at that time, but at least around 1977 the government at that time did bring in this ministry to look at the specific interests of small businesses.
1 would also like to congratulate the present Minister of State for Small Businesses (Mr. Lapointe), and to wish him well in his new portfolio.
I listened with interest to comments of members opposite and, of course, to what the parliamentary secretary had to say. I believe that there is no question the former minister, the hon. member for Capilano (Mr. Huntington), is well known for his commitment to small business in Canada. I believe his comments and suggestions will be well taken by the minister.
I thought the hon. member for Kamloops-Shuswap (Mr. Riis) perhaps ranged a bit far in some of his comments, but when he was talking about the importance of Canadian small businessmen I agreed with him wholeheartedly.
The hon. member for Burlington (Mr. Kempling) made his comments based on suggestions with respect to possible amendments-while it is not up to me to say whether the amendments might be in order on this particular fairly limited

April 25, 1980
Sinall Businesses Loans Act
type of bill that is before us as far as amending the present bill is concerned-and with regard to the need to look at some of these matters to help small business, and these are well taken and should be considered further.
There is no question that small business, as other speakers have said today, is the life-blood of the Canadian economy. These are the people who make the Canadian economy tick.
1 see by my notes that Canadian small business employs more than 2.5 million people representing 40 per cent of the work force in the private sector. However, 1 remember that the hon. member for Burlington talked in terms of over six million people. But 1 believe that if we are really talking about 2.5 million it must be because of a very narrow definition of small business, because surely Canadian small business really takes in the bulk of the work force in Canada in one way or another.
A healthy small business community in Canada is the best way that there is to ensure more employment in Canada. These are the people who can and do employ more people when times are good and things are expanding. Therefore we must do everything possible to encourage small business in every way.
in my own borough of Scarborough in eastern Toronto, small business employs most of the people in this borough which has 400,000 people. There are a few big businesses but almost all business in Scarborough is small business of various sizes. New small businesses have been encouraged in recent years in the Scarborough area, particularly by the municipal government. This has been especially so under the leadership of the present Minister of Public Works (Mr. Cosgrove) who was mayor of Scarborough during most of the 1970s. However, the financial well-being of small businesses depends very heavily on the economic and fiscal climates of Canada as a whole, as well as particular pieces of legislation that can make financial life a bit easier for Canadian small business.
Bill C-17 is an amendment of one such necessary piece of legislation that will help Canadian small businesses.
We heard from the minister earlier today that the program has been a highly successful one which has been in place since 1961, and it is now quite well accepted by the Canadian financial community.
Private financial markets are doing most of the job in lending the money to small businesses for long-term financing, with automatic federal guarantees on eligible loans. We have heard that since the program started over $1 billion in loans has been guaranteed. Last year alone some $250 million worth of loans was guaranteed.
We have heard the details of the amending bill, the fact that it extends the act for two years, and that the limit to a borrower is being raised to $100,000 and that the aggregate amount of guaranteed loans for the period ending June 30, 1980, has been increased to $675 million. The act also proposes that for the next two-year period to June 30, 1980, a maximum of $850 million be guaranteed.
The jurisdiction changes from being under the Minister of Finance to that of the Minister of Industry, Trade and Commerce as far as the main minister is concerned.
I would like to note that extensive review of the financial support programs for small business will be undertaken during the next two years. For example, the programs of the Federal Business Development Bank, the enterprise development fund, and Small Loans Act, which the minister referred to briefly this morning and outlined some of the benefits, will be reviewed. This review may require some substantial amendments at that time as conditions change and opportunities develop in this important sector of our community.
I believe that this review, which the minister undertook this morning and which has been commented on extensively, particularly by the hon. member for Capilano, is probably the most important part of the minister's comments, if I may say so. It is essential, in my view, that the programs of the Federal Business Development Bank, the enterprise development fund and the Small Loans Act be strongly and critically reviewed, and that amendments be proposed, and also that new legislation should be introduced which will make those programs more beneficial and useful for this most important part of the Canadian economy, Canadian small business.
Hon; Alvin Hamilton (Qu'Appelle-Moose Mountain): Mr. Speaker, I am no expert on the details of small business but I do have a great interest in doing everything possible to help small business in Canada carry the load it is presently bearing.
It is not a new principle that loans guaranteed by government should be advanced to private business. The best example of precedent for this type of legislation is the Farm Improvement Loans Act introduced some 30 years ago which did so much to help farmers improve the efficiency of their operations and increase their incomes as well. In the course of its application, even the banks learned something about agriculture; some bank managers become very proficient and were most helpful to their farm clients.
I am not here to speak against the principle of this legislation. What I am here to do is to suggest the rock upon which it is going to collapse. This rock has been there for many months but we, at this moment in our history as parliamentarians, should see where the danger lies and take the necessary steps to avoid it. My proposals will not require any amendment to the legislation. They will simply require the minister to take power under the regulations and, in arranging the interest rates, to do the things which are necessary to avoid the pitfalls which exist at this moment in monetary and fiscal policy in Canada.
It is obvious I am referring to the fact that we are at a mad moment of economic history in the western world. All the countries in the western world find themselves under the firm control of people advocating monetary philosophy and principles that in fact are wrong. What they learned in school 30 or 40 years ago does not apply to the type of economy we see today in the western industrial world. Without going into a
April 25, 1980

long lecture on this subject I say flatly that every person in this Parliament understands what I am talking about. Last fall we had the ridiculous spectacle in Canada of the Bank of Canada raising interest rates sharply on the grounds that the Americans were raising their interest rates. The Germans are now doing it, so are the Dutch, the Swiss and the Japanese.
We are all in a period of international monetary madness which every single person of common sense in every country knows is madness. It is not enough for us to make that generalized statement. What we have to do as parliamentarians is to use one quality we possess-a quality these brilliant theoretical people of a generation ago are ignoring. And that is common sense. Every one of us can stand up in this House and give horror story after horror story of what has happened to individuals who were called small businessmen-and that includes farmers-in their own constituencies. The rock which has smashed these promising, enterprising businesses has been these unrealistic, highly dangerous interest rates. And all because of a fallacious theory.
A number of hon. members in this chamber sat with us on the finance committee when we questioned the governor of the Bank of Canada and the minister of finance. Those who were present will recall that the governor admitted that the three reasons he had given for following the Americans were not borne out by quantitative evidence. I asked him whether he had the evidence after two years of raising interest rates following the American pattern, that his policy was working, and in each case the record shows that he said no. He was flying by the seat of his pants in heavy clouds with hard, rocky mountains in the clouds. He was trying to direct the plane of monetary policy in a very dangerous situation.
For example, one of the fears of these brilliant minds who guide our destinies in the monetary and fiscal fields in Canada, is that if the dollar drops in value by 1 per cent this will cause increased costs to those in Canada who buy imported goods. That is true. When I questioned the third-last minister of finance-they come pretty fast in this House, as you know, Mr. Speaker-he told us that for every 1 per cent by which the dollar dropped, the cost to people across Canada would probably be one-quarter of I per cent. One-quarter of 1 per cent of what? We import about $50 billion worth of goods a year. I cannot work with quarters; it is beyond my mental capacity. Take the figure of 1 per cent, four times greater than the minister of finance mentioned.
If the dollar drops I per cent on $50 billion of imported goods it costs all the people of Canada an extra $500 million every year. That is the inflationary lift, cost-push. When I asked the governor of the Bank of Canada what was the total amount of money out on fixed terms of interest in Canada he very kindly sent me a letter containing all the figures. Over $500 billion at any given moment in Canada is out at fixed terms of interest-like this loan will be at under the amendment we are considering. Add 1 per cent to that rate across that whole body of debt and you add $5 billion a year to the cost to all the people of Canada-$5 billion as opposed to half a billion, which is ten times more by trying to fight inflation by
Small Businesses Loans Act
monkeying around with the Canadian dollar than it would be by forcing interest rates up.
Every parliamentarian can take that easy figure, half a billion versus five billion, and so the enormity of what this crazy madness has done to our western countries, particularly the United States and Canada, this last two years is there for all to figure out. Interest rates have literally gone from 7 per cent and 8 per cent to way over 16 per cent and 17 per cent. When we realize what that does as we change our financial instruments-mortgages are a prime example-up to higher rates and when it spreads through the system, we have added to the cost of living and the cost of producing, many billions of dollars in a single year. I use the word "madness" because that is the mildest word I can think of to describe it.
I am not going to continue talking about the gloom and doom effect that this will cause us all. 1 simply want to find positive, simple and constructive ways of avoiding it. Let us make up our minds that it is no fault of the governor of the Bank of Canada that he is following this theory, because every economist in the whole western world is doing it. God is in his heaven, and Keynes is right there beside him.
The reality is that we are destroying the country. We are destroying the United States, Canada and the western world, not to mention the newly developing nations. Therefore, let us get down to what our job is.
1 am not going to talk about the money supply. I think the bank governor is doing a fairly satisfactory job in bringing down the snake. I am not going to talk about the lack of co-operation, co-operating that should have been there for the last thirty years between the central bank, ministers of finance and the great commercial banks. The hon. member for Burlington (Mr. Kempling) gave an example of why there has to be that co-operation. I am not going to talk about that.
What is one simple thing that we can do under this legislation, without amending it, which will get away from this danger? On the assumption that we all agree that interest rates are the most dangerous part of the inflationary package, how can we get them down and still be economic and still not subsidize? There is nothing new in this idea that 1 am going to propose. It is as old as the system of money itself. If we look at the business sections of newspapers from this last year, almost every week we see some large corporation announcing it is going to issue a tremendous amount of equity.
Massey-Ferguson talks about putting $500 million of equity on the market. Noranda used that device to fight takeovers. They use this money they get in from equity to pay off this fixed rate of return on interest charges and get down their costs. They gamble, rightly, that every individual in the country who is interested in saving money or investing, knows that a person who has invested in a bond or any type of financial instrument with the same fixed return on it has lost money in the last ten-year inflationary period. They know that he is willing to gamble on putting his money into a type of instrument, equity, which has no guaranteed return, as a rule. He

April 25, 1980
Small Businesses Loans Act
will gamble that that company can save itself, and he will get more money out of the dividends that accrue to him inlater years. Because we see big companies saving themselves this way gives us the clue of how we can do it for small business.
Small business, as a rule, is not set up at this moment in a public company form or even a private company form, for they can go out and issue equity and change the amounts from time to time. However, under this legislation there is a way of doing it, and that is to suggest that the interest rate you are going to charge is, say, 8 per cent. I pick the figure of 8 per cent out of the air. It is very close to the amount of interest that is available to the same small businessman under this development bond concept which was put forward in the Crosbie budget and was renewed by the minister the other day in the mini-budget, where you can call your loan a development bond on which you do not pay interest. You pay dividends, and you take advantage of the loophole in our tax techniques. The banks say, "If you borrow under this provision, since we do not have to pay tax on that type of income, we will give you the interest rate at about half the average interest rate". That is my layman's understanding of how the development bond concept works.
I am simply saying-that is still going to go forward, as 1 understand the mini-budget-why not make this roughly the same? If the average interest rate under the development bond concept is now 7.5 per cent or 8 per cent, let us make it 8 per cent for the small businessman in this legislation. The immediate reaction I get is that that is subsidy and that I am asking the government to go out and borrow money at 15 per cent and 16 per cent and lend it at 8 per cent. My answer is very simple. You say you are going to lend the money at 8 per cent, but you are going to have a faster pay-out with this lower interest amount, and then after the debt is paid off you want a percentage of the profit for "X" number of years.
When you put that up to the lender and you put your hypothetical cash flow chart for the next ten or 15 years in front of him and he sees that this loan of $100,000 is going to add, say, $20,000 a year to your profit picture, even though there is a negative cash flow in the early period, if he can get that debt paid off quickly at 8 per cent and get his money back to re-invest and then have this 2 per cent, 3 per cent, 4 per cent, 5 per cent-even up to 10 per cent, depending on the situation-of the new profit, he can figure it out over a 20-year period that he is going to make more money this way than the other way. The borrower is better off. He does not have a heavy front-end loading during the period of negative cash flow. The lender is going to make more money. There is no subsidy by the government. The guy feels independent. It is a straight business deal.
That type of proposal is not new. 1 have suggested in the committee that we should use it for Farm Credit Corporation loans. All the regulations are there to allow for it. I have suggested we use it for export business, which takes a longer period of time before you get a cash flow in, and the walking money period is three years, four years, and sometimes five years.
1 have suggested it should also apply to the buying of homes. There is not much use in using the word "profit" when buying a home, but let us just change the word "profit" to "capital gains". You will lend the money to a man on a home at 6 per cent. Then you say, "If you sell that home in ten years and make any capital gain, we want half of it". All of a sudden they get their pencils out and the fellow realizes he can afford to buy the home at 6 per cent. The other fellow takes his pencil out. He knows what the figures are. He knows that 80 per cent of all new homes built in Canada and the United States in the last ten or 15 years change hands in ten years. He just plays the average. He knows the capital gains. They go up and down. Whatever figure you take-make it 8 per cent for the loan for the house and a quarter of the capital gain-you can show mathematically that both people are better off.
This is not a new type of thinking. I have seen it being done in business. 1 told several of my friends last fall that I talked this way to a group of businessmen who wanted to lend money in Canada, and I suggested there was not much point in lending money at 14 per cent because you put such heavy front-end loading onto this business that they never get up and get the product these people want. They asked what I would propose. I said, "Well, make it 8 per cent." I said, "Go back and work out your cash flow charts. You know the costs. You know the value of the product because that is in the contract. You know the length of the contract. See what you propose". 1 said, "make it 8 per cent, pay off the debt faster, get a share of the profits, and you will be better off." They came back in two months, the deal was signed and was in the headlines of all the Vancouver newspapers. It amounted to $30 million at 5 per cent. This was not 20 years ago, it was last fall.
You lend money not because you worship the rate. You lend money to make money. If you make more money at 5 per cent and a share of the profit, that is where you go. There is this worship of the fixed type of finance instrument in every type of business we do that has developed in the last ten or 15 years in the western countries, and they call it leverage, etc. If interest rates are low, it is advantageous to borrow the biggest proportion of your capital and operating needs. But now that the interest rates are no longer at that level, it is certainly destructive to business. I say that at their present level it is suicidal to the great majority of big business and little business alike.
I think I have said enough to make my point clear. 1 have suggested that this can be applied to other legislation we have already on the books. 1 am certain that if we think really hard, we could find other examples where we could apply the same principle where you still have the guarantee to the bank, where you still have the concept of trying to get money into the hands of those who do not have all the types of assets that most lending institutions want. I want to suggest that credit unions and banks will be forced by competition to go into this type of practice, as well as the governments.
Every one of us, I know, has read the reports of the Economic Council of Canada. They put out last fall their major report
April 25, 1980

for 1979 and just recently, last week, another report came out. What are they telling us? Our Economic Council is set up to give to politicians advice other than the one they get from the Department of Finance. It is warning Canadians that a peculiar phenomenon is taking place in Canada. This peculiar phenomenon is that instead of doing what you are supposed to do according to the text book in this inflationary period of going out and buying everything today because it will be worth twice as much tomorrow, Canadians do not do that. From 1975 to 1979 Canadians have doubled their rate of savings.
We were the leading saving nation in the world in 1975. We were saving at the rate of around 4.5 per cent and 5 per cent of our disposable income. Now we are saving at over 10 per cent. Canadians do not fit into the text book that the economists have down at the Department of Finance. Do you realize what 10 per cent of the disposable income of this nation is in a year? Our banks, our credit unions, our mortgage companies and our trust companies are bulging with money. They are in the tightest financial squeeze in our history. The more money you borrow at these high rates that they are offering, the greater the liabilities they have to make. If they cannot get this large amount out, the little guy goes down. Already the bank statements and the mortgage statements show the downward trend of earnings. They are in a squeeze just like the government is. I am simply saying that reality will force them to follow the practice, which I hope will be taken up by this government, instead of following these silly myths.
As I said, these ideas are not new, and I can give you other precedents back in 1965, and so on. But I am trying to make the point to the House that we have before us legislation which is good amending legislation. The principle is sound, it has worked, it does not cost the government very much, and it helps the bankers get along with their boards of directors, with a government guarantee. They lose no money. It has helped farmers, it has helped small businessmen, it has helped exporters, and it has helped the housing people in CMHC. But when the facts change, let us be willing to change here in the House. Let us put the ideas before our ministers so they will stand up to the brilliant advisers on the monetary and fiscal policy and say, "This is the quantitative evidence, let us get on with it." 1 would be very surprised if they did not agree. They must be shaking from top to bottom when they look at the evidence of what they are doing to us. These are not evil men, just men drilled to stay in a pyramid and never get away from the attitude of uniformity.
I have spoken like this around here for 25 years, and the battle goes on-the battle has to go on because, as the member for Burlington said, this country is in good shape and the United States is in good shape. But let us get the government and financial institutions off our backs. They cannot object, because if they go the way I am suggesting-and I know the government wants them to go that way-they are going to make more money. They cannot stay mad at you if they are making more money. Also the government will get more taxes, and I could go on on that subject.
Small Businesses Loans Act
I think, Mr. Speaker, that I have said enough to indicate that the House is tired of these band-aids in the last ten or 15 years. Raising the amount from $75,000 to $100,000 for the individual is a pretty small band-aid for the small businessmen today. The $500,000 on the development bond is a little better. But the basic weakness is not the amount that is available; the basic weakness is that if you lead people, who have to borrow for inventory purposes or operational purposes and all other purposes, into borrowing at these high rates of 12 per cent, 14 per cent or 16 per cent. You destroy them and you destroy the country at the same time. In all seriousness I would like the minister to accept these ideas, first, as being worth while, second, as being constructive, and third as having worked before for many centuries, which I am willing to demonstrate.
If I may throw a little bit of erudition into the debate, Mr. Speaker, let me point out that this is the same debate as was carried on between Plato and his student, Aristotle. The two fellows argued for a lifetime. Things have not changed much in this world.
I am simply pointing out to you that there is an opportunity here, with good will on both sides of the House. We are not trying to gun the minister or the government down. Let the idea be considered. You cannot lose by trying it, because there is no way of losing.


Mr. Blaine A. Thacker (Lethbridge-Foothills):: Mr. Speaker, I am pleased to have the opportunity to speak today on the Small Businesses Loans Act. It is of great regret to me personally that this represents only a small step of no great significance in the history of this nation because the problems are so much more fundamental. While I have to agree with this bill, I should like to put before the minister, with all good will, some ideas for him to consider. It is amazing, given the underlying structural problems, that although this is the second bill with which we are in this Parliament, we should be giving much more time to the major aspects. It is interesting that we have just come through a $60 million election. The increase under this bill is $25,000 for small businesses. If we had not had the election, we could have given 2,400 businesses the full $25,000.
The underlying structural problem which the government must face, and which I hope this minister will face, is the reality on energy. The simple fact of the matter is that Canada is not an independent nation with respect to oil. We are a major importer of oil. Yet the federal government is carrying on as if we were independent. The structural problem is not one of price, on which the government has made its decision and which we are now spending time debating. We are into a conflict which may well tear this nation apart if the central government tries to move in on our Alberta oil at the price it has set. This could rip the nation apart; the issue is not price, it is supply. A government which is really trying to provide leadership should be more concerned that we have supply.
As one goes out and talks to any small businessman, he will say that all he wants is certainty. He is not so much concerned with what the price is, but he needs to know what it is so that he can plan and take those steps down the road. By this facade

April 25, 1980
Small Businesses Loans Act
of keeping the price in Canada allegedly below the world price, we are causing an effect which is very serious in terms of conservation.
We could be conserving. We know that a world price would result in more conservation. We know that 50 per cent of world price is blocking the production of goods. We know that 50 per cent of world price is blocking the signals which go back to the real producers in this nation, that is, our farmers and our small businessmen. Those signals are being blocked.
One might say that it is the big oil companies which control the price. That is simply incorrect. In the province of Alberta we have over 700 oil and gas companies. Other than the big five, they are small businesses which employ husbands, wives and children-60, 70, up to 100 people employed by them. They are the people who make this nation go.
The first structural problem is with respect to supply and price. The government could go a long way if it would just recognize that the people of Alberta have already forgone revenues of $17 billion. The people of Alberta have given up about $3 billion in the export tax. Never in the history of this nation has one province been called upon to make such a massive contribution to our nation. Yet I do not hear any real words of thanks, words of appreciation, or even an acknowledgement from the minister that the province which made that contribution would be appreciated. What we have is the Minister of Energy, Mines and Resources (Mr. Lalonde) going out and immediately attacking the oil industry in Alberta, attacking the 695 small businesses which really get out and do the skilled expertise of the seismic work, the geological work, the production of oil and gas, the refining of it, and then distributing it to the market. That is the key. The small businesses do that, not the big ones.
In spite of the major contribution of over $20 billion from the province of Alberta, it has managed to save $6 billion in its magical fund called the heritage trust fund. It is that fund which is so distorting the relationship in the country, because it is thought by the people in central Canada and the east that it is a massive money tree and that anyone can pluck it. We need to realize that $6 billion is nothing more than one year's budget for the entire province of Alberta. As a result of the gross mismanagement of the Canadian economy by the government of this federal nation, that $6 billion would be used up in six months. Six months of deficit financing would use the entire fund from Alberta.
Why would there be such a concern that one government in the country is building up this pool of money? What this country needs is this pool of money in order to make capital investments. That is what the province of Alberta does with its heritage trust fund. A percentage goes into Alberta industry and a percentage is allocated for Canadian industry. The types of investments required in this nation are what the Alberta heritage trust fund can undertake. Surely it is better to borrow the money from one of our own provinces which then keeps the interest circulating within our own country, rather than all of
us going off and borrowing in New York, Tokyo and Germany as we are right now.
I am moved to ask what price we as Canadians would be paying for our oil if that oil were located in the province of Quebec. I submit that the cabinet and the government would be much less aggressive in its attacking of the people of Quebec than it is the people of Alberta. I suppose the same applies to Ontario. I am moved to say that because I watched the members from Quebec make a major power move with respect to the F-18A at a time when our nation is at a critical stage vis-a-vis Quebec and the rest of the country. But there is also another dynamic, the dynamic between a central government and a provincial government like Alberta. I submit that the cabinet would have been much less aggressive in attacking Quebec members standing up and wanting that oil at 50 per cent than it has been with the people of Alberta.
The second major structural defect in our nation is simply the question of a balanced budget. I do not need to tell Mr. Speaker that the accumulated deficit is something in the order of $70 billion. The most recent budget of April 21 predicted a $14 billion deficit for one year. As well, Mr. Speaker knows that last year the United States had a deficit of $14 billion. That resulted in an immediate movement of citizens to convene a constitutional convention to block deficit financing at that level. But for the United States to be at a comparable debt level to us, it would have to have a yearly debt of $140 billion. They had a mere $14 billion and they are moving. We have $14 billion and our government seems to be proud of it.
The critical aspect of the budget deficits which affects small business is that we know as an actual fact that every nation only has a fixed amount of capital, and that different parts of that nation draw upon that capital in order to make the nation grow and prosper. Historically governments have always had a small part of that capital. That has left the rest of the capital for small business and creative people to use, to invest, to make more jobs, and to have more taxes flowing into the central government. What has happened, as a result of the Liberals taking power in 1968 and having no parliamentary responsibility for our budget, is that we have built up this massive deficit of $70 billion with a yearly deficit of $14 billion.
I wonder how many Canadian people genuinely realize that the amount of money we spend each year on interest to service the debt, without paying one cent of capital, is larger than the entire federal budget of 1968. I wonder if our friends in the NDP genuinely understand that their honest concern for the small man is frustrated by their collusion with the Liberal government in getting us into this deficit, because the people they purport to help, the small man or the person who is trying to keep the country together, is the person who is hurt the most by these massive deficits and high interest rates. As a result of the government making such a demand on our capital markets, it has had to compete. The government competes unfairly because it borrows money and it pays high interest rates with which small business cannot compete. That too is another major, underlying structural change.
April 25, 1980

We are talking about constitutional change. We hope we can keep this nation together. As members of Parliament, 1 would hope that each one of us would be pushing for a constitutional amendment which would force governments into balanced budgets, and that there would be no such thing as a deficit budget unless we were in times of a national economic crisis, war, depression or something really major, and not for the ongoing daily operations of governments.
I know the Liberal government has had quite a desire to spend but not to collect taxes. Not meaning to lecture, we all know the theory is that any group of social people have to create a government in order to make those decisions. The government, in its wisdom, comes up with programs, and it finances those programs by levying taxes on the citizens. In theory the government convinces people of the program need, and they are, therefore, willing to pay. If they are unhappy with either the programs or the amount of taxes, they vote people out.
We also know that in this nation over the last ten years the Liberal government has developed a system of being able to get money from the people, put programs in without having to tax people directly, and they do that by the mechanism of the Canada Savings Bond. They borrow money from their own citizens and pay them a return. They pay them not only the capital but they pay them interest, and the interest is borne by all of us.
I wonder how many people realize that in this last week $218 million in Canada Savings Bonds were redeemed, with $116 million redeemed the week before, as compared to a normal week when there is only $20 million being switched? The reason is simple. People are now realizing that the nation is in deep trouble and that they have to put their money in more secure sources, sources that will perhaps bring them a higher return.
Another way the government fools us is by going into the international market. When I told you a few minutes ago that we spend over $10 billion in interest alone, I neglected to say that the vast bulk of that money goes out of this country to service the debt in New York, Tokyo or Geneva.
The New Democratic Party actively colluded with the government to get us into that position, yet this is hurting the small man they purport to represent. They would have you believe, sir, that the amount of money that is leaving is really that of multinationals sending out interest and dividends to their head offices. This is sheer, unadulterated nonsense, because that is not correct. The bulk of the money leaving this country is interest the government itself is having to pay.
If instead of going into deficit financing, which is so hurting the small businessman today, the government had even increased taxes honestly, we would have been better off. If you take ten million taxpayers and they each pay $1,000, that is $10 billion of revenue per year.
In summary, while I have to say that I am fully in favour of this bill going through, I want the minister to consider honestly
Small Businesses Loans Act
the thought that it is a small stop-gap measure, that the real solution is not in amending the Small Businesses Loans Act, but instead it is in directing our efforts nationally to the question of supply of energy and directing our efforts to the size of government and the amount of money that government pulls out of our economy. If we had less government involvement in the money markets we would have more money available for small businesses which are really the backbone of this country, as the hon. member for Capilano (Mr. Huntington) pointed out so well. They are the backbone, taking a little bit of money, hiring a dozen people who are all working hard toward a common objective, this resulting in taxes for us as members of Parliament to spend.
I wish the minister well in his efforts to convince the cabinet to solve the problems associated with energy supply and to direct its efforts to the size of government and the economic market, because if he is not successful the nation clearly is in deep trouble.


Cyril Keeper: Mr. Speaker, I rise to comment on Bill C-17, the Small Businesses Loans Act amendment which we in the New Democratic Party will support with the clear understanding, however, that this is really not a full solution to the problems of small businesses.
When we speak of small business we are speaking of quite a range of economic activities, including manufacturing, the wholesale and retail trade, service businesses, construction, transportation and communications. In the case of this legislation, all of these businesses would have to be of less than $1.5 million in annual revenues.
The amendment proposes to raise the ceiling for loans under this act from $75,000 to $100,000. This is an increase of 25 per cent, yet inflation during the period from 1977 to 1980 went up by 30 per cent. Raising the ceiling under this legislation does no more than take care of the inflation rate since the ceiling was last established.
Loans are provided at the prime rate plus 1 per cent. This provision, however, is not used that widely. Many more loans are given at a higher rate because lending institutions can make a greater return outside the act. In 1979, small businesses borrowed something like $9 billion, whereas under this act the money that will be available is something like $425 million, so that we are talking about a small percentage of the loans to small business. Therefore we must do something to increase the use of this program.
I think there are a number of ways of coming to that, and one is to make small business more aware of the availability of these loans. Another way of coming to it is to encourage banks to use the act more aggressively. The Minister of State for Small Businesses (Mr. Lapointe) could pressure the superintendent of banks to encourage greater use of this act and the program.
The amendment has limitations to the extent that the impact on interest rates will be minimal. It will be something in the order of .5 per cent to 1 per cent. That is not sufficient, given the very high interest rates we have today.

April 25, 1980
Small Businesses Loans Act
In addition, the loans under this act are available only for expansion of equipment, premises and land. There is no availability of loans under this legislation for operating capital. We should, therefore, be considering expanding the scope of this Small Businesses Loans Act to include operating capital.
As well, this amendment to this legislation is no substitute for sane interest rates. We need generally low interest rates in order to ensure access to capital for small business for all purposes.
The raising of the ceiling for loans under this legislation is also no substitute for sound economic policies, and it is no substitute for a growing economy, for one of the things that small business needs most is a demand for its services and a market for its goods. Because of the limited capital on which small businesses operate, they are very vulnerable to economic downturn and recession, and that certainly is the state of our economy at this point. Raising the ceiling under this legislation also does not in any way replace the need for a general and comprehensive business policy.
The New Democratic Party has many suggestions in this area which we would encourage the government to pick up on. For example, government procurement policy should favour small business. In the United States one-third of such procurement goes to small business, and we should do the same here.
The Economic Development Corporation should be helping small business find overseas markets. Research and development grants must be available, particularly in the area of high technology. Affordable capital must be made available for small businesses, whatever the purpose. A "buy-Canada" policy should be developed which will encourage large corporations in Canada to buy from small Canadian businesses. Also, when we come to the bill dealing with amending the Bank Act, which we will be dealing with next week, we must ensure that sufficient capital is allocated for small business. A great deal could also be done in the area of freeing up small business from the very heavy paper load under which they presently labour. NDP policy also deals with misleading advertising which would protect small business against unfair competition.
The need for a small business policy is very clearly evident from the present jump in the rate of bankruptcies in Canada. In the early part of this year, bankruptcies went up by 24.8 per cent over the same period last year. Clearly this demonstrates the need to help the small business community. This increase in the rate of bankruptcies brings the whole matter much closer to home for me because the economy of Manitoba, to a large extent, is made up of small businesses, particularly the economy of Winnipeg. For example, by way of statistical illustration, over 75 per cent of the 20,000 businesses in Manitoba are small businesses. Approximately 80 per cent of the 1,300 manufacturing companies in Manitoba are small businesses. A strong and sound small business policy is very crucial to the future of Manitoba.
Small business contributes a great deal to community life because those who run these small businesses live in the
community, are committed to it, and are not likely to pick up their business and go elsewhere. These people are residents and are an asset to the community. Small business is important, not only to Manitoba, but to Canada as a whole. Businesses with assets of less than $1 million constitute 90 per cent of the firms in Canada and over 50 per cent of the labour force. In this context it is necessary to take note of present economic conditions. The recession which Canada faces today creates very high unemployment, reduces the market for the services of small business, and points once again to the need for policies that will help small business, policies which will stimulate the economy and bring about sane interest rates.
Once again, I would indicate that my party will be supporting this legislation, but, while it is a good measure, it is by no means to be mistaken for a sufficient measure.


Mr. Gordon Taylor (Bow River):: Mr. Speaker, the backbone of the Canadian economy is the family farm and small business. The number of bankruptcies in the small business community is a fair indicator of the health or sickness of our economy. For instance, in 1978 there were 392 manufacturing firms that went bankrupt. The total number of bankruptcies in Canada for that year was 5,546. Right across the nation, 5,546 owners and their families suffered bankruptcy and all that it means. This figure is far higher than the bankruptcy figure for 1977.
I suggest that the minister and his government ought to pay very careful attention to the rate of bankruptcy in Canada. In 1977, 279 manufacturing firms went bankrupt. The total number of bankruptcies for that year was 3,905, as opposed to 5,546 in 1978. Those figures do not tell the whole story. The whole story is indicated by the actual dollars lost by these companies. In 1977 loss through bankruptcy amounted to $307 million. In 1978 the figure doubled to $638 million.
It behoves every member of this House, because all of us have small business in our constituencies, and certainly it behoves the Minister of State for Small Businesses (Mr. Lapointe) to take a look at this problem in an effort to ascertain why these companies have been going bankrupt. I should think that the minister would want to pursue the matter even further and have his department carry out a study to determine the real causes of these bankruptcies. Normally, if a person is sick, the doctor diagnoses the cause so that he can make that person well. When the doctor finds the cause of the sickness he or she can then take remedial action, either by operation or otherwise. The person then gets well.
I wonder what the causes are of the bankruptcies in this country. Since small business is the backbone of our economy, the more it expands, the more new starts there are, the less is the rate of unemployment and the greater the buoyancy of the economy, which means more income for the federal and provincial governments. If the scenario goes the other way and there are more bankruptcies and higher unemployment, the economy is stagnant and there is less money for governments, whether at the municipal, provincial or federal level.
April 25, 1980

I would like to suggest to the House three items which I think have contributed to some of the bankruptcies, or which may contribute to many of the bankruptcies in 1980 if something is not done. The first item is capital gains tax. Once the farmer, or the small businessman, has paid his income tax at the end of the year, and pays all that he should properly pay, then he puts some of the profits aside. This is done year after year to build up a fund for retirement, education of the children, or for the happiness, continued happiness and maintenance of a standard of living for the family. There comes a time when the owner wishes to sell the business. At this point he or she is levied a capital gains tax.
The business was developed through the sweat of his brow, the sweat of his wife and the sweat of his children and employees. The businessman or the farmer has already paid income taxes each year, so why does the government want to take another lump out of the amount for which he is able to sell that business? Capital gains tax on the sale of businesses is highly inflationary. The businessman says that he must have "x" number of dollars to retire or to do with as he wishes. To get "x" dollars he must raise the price beyond the normal sale price of the business. Therefore it is highly inflationary.
The real danger is to the man who wishes to stay in business, but there is no initiative or motivation for him to expand his business. A small businessman in one of the small towns in my constituency recently asked me about the government's intention with regard to capital gains. I told the man that I could not answer this question because I am not the government. I then went on to say that, if I had my way, capital gains would be eliminated. At the time we were standing in front of his thriving little business, and he informed me that it was his. He had built it up by the strength of his back and the strength of his hands. He had seven employees and was prospering. The lot next to his building was his as well.
He wanted to double the size of his business and build on that lot so that he could have perhaps ten or 12 employees because he felt there was enough business to justify expansion. 1 asked him if lack of capital was stopping him but he said that was not the case and that his credit was good. He said, "If you think I am going to work for another 20 years using the sweat of my brow and the strength of my hands and my back so that some blankety-blank government can take half of my wealth through capital gains, you are mistaken." He said he was willing to give the government its proper share every year but not the big chunk that he felt was due to his family. He said he would just leave the business as it was because he was getting by.
How many other people in this country, Mr. Speaker, do not expand their business because of the capital gains tax. How many bankruptcies occur because a business was unable to expand and take advantage of a greater available market? This man claimed that he would work ten or 12 hours a day to build up a business for his wife and family but that there was a limit to what he would do for any government. Ladies and
Small Businesses Loans Act
gentlemen of the House, I think that man was expressing a viewpoint that is sensible and sound. We look after our own first-wife and family are the first responsibility; then we pay our proper share of running the country. When that proper share appears to be exorbitant then we are inclined to say, "Hold on-if that is the case I shall not extend as much as I could."
Referring to the capital gains tax again, Mr. Speaker, if it cannot be eliminated then there are some ways it could be alleviated. One man 1 know sold his business and then had to pay a huge chunk of what he made in capital gains tax. What irked him most was that he did not have to pay only on the capital gains-which he said he would have done without complaint-but he had to pay on the inflated value of the business as well. That being the case, he felt the capital gains tax was out of line. If we cannot eliminate the capital gains tax, Mr. Speaker, surely we can at least index it so that the farmer or businessman who sells out can get a reasonable return-a return that he deserves for a lifetime of work, not just one year or five years.
I spoke to a farmer in the Nanton area of my constituency who wanted to retire because of bad health. He wanted to have enough income to guarantee that he could continue a reasonable standard of living for himself, his wife and child. He claimed that because of the capital gains tax there was no one left within the family to whom he could sell his property and so he would have to sell to an outsider. Apparently there had been one or two deferrals and he was now stuck with a gigantic bill for the taxes that should have been paid previously had they not been deferred. He was faced with selling to an outsider, and this represented a terrific burden to the family.
I know of one group in the province of Alberta who had to borrow money to pay part of the capital gains tax after their property was sold. I would ask the minister to look into this problem and find out if we are gaining anything through double taxing people who are trying to build up businesses or farms.
The second point I want to raise, Mr. Speaker, is the problem of bankruptcies. I do not have any examples of actual bankruptcies but I have examples of what storekeepers have told me will happen if we continue with the metric system. A storekeeper in my riding showed me a scale he had bought just four years ago at a cost of $1,500. With just a small margin of profit on his merchandise he claimed that he would have to sell thousands of items before he could make up that $1,500-even with the deductions permitted under the Income Tax Act. Now he has to replace it with a metric scale at a cost of $3,500. He is just a small country merchant and he is afraid that he will be put out of business because of the imposition of the metric system-something that none of his customers want. They are quite happy with the imperial scale.
Another storekeeper in the Drumheller Valley, in the beautiful canyon of the Red Deer-which I hope many hon. members will visit some day to see the bones of the dinosaurs that used to roam there and see the wide-awake people there today who are trying to contribute to the wealth of this
446

April 25, 1980
Small Businesses Loans Act
country-showed me a scale which cost $150. The only thing in the store that he needed to weigh on that scale was fruit and vegetables. Now he has to convert to metric and a metric scale will cost $300. Mr. Speaker, that may not sound much to rich MPs-if there are any rich MPs-but $300 is a lot of money to someone operating a small business. When 1 was in business there were occasions when 1 was happy to have a $50 net profit at the end of some periods, although other periods were much better. To this man $300 was a tremendous amount of money, and he felt that he would just have to stop selling fruit and vegetables. His customers would then have to use gasoline to drive the four miles to Drumheller or the eight miles to East Coulee.
I suggest that the metric system is not helping the economy of this country at all, Mr. Speaker. 1 urge hon. members to slow it down. I hope it will stop, but I do think at least we should slow it down.
Recently 1 was invited to attend a meeting of businessmen and farmers which was called an "anti-metric" meeting. One farmer, who was not a wonderful speaker, said, "This metric system-1 don't understand it. 1 don't know what it is all about." He looked at me and said, "Don't make me a foreigner in my own country. I was born in this country." Incidentally, he was born in Quebec. He said, "1 have lived in western Canada most of my life. Don't make me a foreigner in my own country by bringing in a system of weights that I cannot understand."
If there is merit in metric, Mr. Speaker, let us do it properly-through the schools so that our boys and girls may become acquainted with it and not become foreigners in their own country. I am speaking now of metric from the point of view of business, Mr. Speaker, the economic aspect. 1 think it is a factor in the destruction of some of our businesses.
There is one other point I would like to mention to the minister. I know that it is not his responsibility, possibly it is that of the Postmaster General (Mr. Ouellet). It concerns the mail service. An insurance agent in the town of Turner Valley, Alberta, told me that the Post Office was ruining his business. Why? Because the agent is not a self-issuing agent. Instead she has to take the application for a policy and mail it to Calgary or Edmonton, or in one or two cases mail it to companies which have offices in Regina or Winnipeg. She told me that it was taking her three or four weeks to get a policy back. I would suggest to the minister that the government take a real look at this situation and carry out corrections in order to give us a mail service that will get the mail to the people. We do not expect it to be a press-a-button solution but we think steps can be taken to improve the situation so that businesses are not being hurt by mail that does not arrive on time.
I agree with the bill. I wish the bill would cover inventories. I wish it would go beyond the $100,000 limit because I have one or two businesses in my constituency that want to expand
beyond that point. But it does not matter what figure is used, there will always be someone who wants to go beyond it.
1 want to express to the minister that in administering this act we hope we can prevent bankruptcies and bring back the buoyancy to the economy of our country.


Mr. Scott Fennell (Ontario):: Mr. Speaker, I would like to congratulate you and your colleagues on your appointments, and I particularly want to congratulate Madam Speaker.
Yesterday in this House we had a debate on Bill C-19 which had to do with the employment tax credit. Today we are debating Bill C-17, an act to amend the Small Businesses Loans Act. All I can make of this is a whole bunch of patchwork solutions created by the administration on the other side. All this administration does is create problems for the small businessman, and for the industry of this country, without facing up to the reality of what the problem is today. We hear it stated that this is a marvellous situation, that there will be an increase of $25,000, that is, up to $100,000. What would the rate have been last week for the poor businessman borrowing that money? It was one per cent over prime which is one per cent over 17 per cent. That is 18 per cent. No businessman can stand that type of interest cost.
We are talking about small business. What is small business? It is not what we knew it was 20 and 30 years ago. We are talking about micro-business. In the United States, SBA addresses small business based on the industry and based on the number of employees in different industries. You are not looking after anything but storekeepers, which is great. But in this country we are forgetting the medium-sized industry, we are forgetting about the micro-business, the mini-business, the small business and the medium business. But I am really annoyed that we are forgetting about Canadian business and Canadian production.
Why will the government not bring in one composite package to give us a total overview of where this country is going? Instead of businessmen having to go through books and consult lawyers in order to determine what kind of grants they can get, let us get one package together so that business-not small, not mini, not micro-can exist in this country.
Returning to the subject of interest rates, which members on the other side are trying to overcome with the $500,000 bond that our government put in-


John Leslie Evans: It is Bill C-17, please.


Thomas Scott Fennell: I am talking about the interest which the small businessman has to pay, and the small business loans. 1 have said it before a man cannot pay an 18.5 per cent interest rate. The interest rate has been compounded by this government. It has been compounded because it keeps spending money. As it spends money, it costs us more to borrow money. We cannot borrow money at lower rates today. This government is now asking small business to compound the same problem. We have no control on our interest rates. We are completely dependent on American corporations and people who sponsor us going into debt.
April 25, 1980

Small business in this country needs help, but it needs more than $100,000. We should be looking at $1 million basic. We should be looking at more than that. We should be encouraging Canadian manufacturing. An example of that is the electronics industry. We are putting no funds to speak of into that industry. We are not encouraging people. We are not providing enough funds or giving them enough risk capital. Why can we not tie all of these programs together? We have one in Ontario, one in Ottawa, one in Quebec, and one in Saskatchewan. We talk about the FBDB. I had to tell a man to go to his own bank for a loan, which he got because the FBDB could not give him the money.
The whole thing is a mishmash. We have all kinds of programs here. The average man does not know where to go to get started. Suppose he has $100,000, but he does not know where to go to get the next $100,000. Now he is told he is going to get $500,000. Where does he go for that? We have to get these things into one package.
This country has been dependent on the small businessman. Some people do not really relate to the farmer, but he is one of the largest groups of small businessmen. We have forgotten about him.
In my riding I have a microcosm of Canada. It contains small businesses, it is urban, it has small towns, and it has agriculture. Most of the people are connected with small business. But the ones we are talking about here, the small manufacturers, the small processors-this $100,000 is not enough for them.
Let me make it clear that I am not opposing this bill. I am only saying that it does not go far enough, and that it is too little too late. As someone else has said, all we have done is index. We have to do more in this country for that important segment of the population, namely, the entrepreneurs.
I have no great solutions to our problems. 1 came here from the business world, and I do not only blame the federal government. 1 blame the provincial government, the municipal government, and regional government that we are blessed with here in Ontario. It is a whole composite of government. Some day we have to get it ail together. The Ontario government has the SBDC. If one could interrelate that with the $100,000 or with the $500,000, it would help. But through you, Mr. Speaker, 1 would like to ask the minister what about research and development for Canadian products ? This country is going nowhere. We are importing all our products from Japan, Taiwan, and the United States. We must get on in Canada and develop our country. It is a wonderful country. We have the resources and we have the materials, but we are doing nothing with them. We are doing patchwork fix-ups. That is all we are accomplishing.
I ask the minister to please do something in a concrete way not only for the storekeepers, the farmers, the dry cleaners, but also for the manufacturers and the processors. Please do something about these raw materials that are being exported. Do something to create secondary manufacturing. If these things are done, we will not have to worry about the unemployment tax credit nor will there be the same problems with
Small Businesses Loans Act
unemployment insurance. The problems of this country will be resolved. We must keep in mind that by 1985 a smaller number of people will be coming into our labour force. Therefore the unemployment problem will diminish. It can shrink twice as fast if something is done in a realistic way, such as a complete over-all strategy to help this country, and to make it work.
Going back to my riding again, one of the major business areas is Ajax. Ajax was created by the federal government during the war, by Dominion Industries, for the manufacture of munitions. Many small businesses started up in Ajax right after the war but since then they have all been taken over by U.S. parent firms so it is nothing more than a branch-plant economy. The situation there is largely similar to the situation in all the suburbs around Toronto.
What happened between the end of the war and 1948-49 when they had dreams of men moving out there and starting their own businesses? What happened between 1950 and today? We sold out. Admittedly the government put in FIRA to try to stop the process, but it didn't do any good. It will never do any good. As my hon. friend from Qu'Appelle-Moose Mountain pointed out, we have driven the public into putting their money into the banks. We have got to get the money out of the banks and into industry. And we must see that that industry is owned by Canadians instead of being owned by Americans. New plants are not going up. They are still using the old plants built during the war, which were supposed to expire in 1947. They are still getting along on the basis of the government's program. So I plead with members on the government side that in your term of office-and you have a relatively long period of office before you-you should begin seriously to address yourselves to this problem.
We had only six months and that was not enough time to accomplish anything. But I will say for our government that it was well on our way to introducing programs to remedy the situation. Our cabinet had many more programs to introduce. I say to the minister: we on this side will work with you and co-operate with you in an effort to make Canada a better place, and the only way you are going to make it a better place is to let people invest in their own businesses without the government putting its hand into their pockets.


The Acting Speaker (Mr. Blaker):: Order. I recognize the hon. member is expressing himself with some feeling, but if he could address his remarks to members opposite through the Chair it would be more in keeping with the rules.


Thomas Scott Fennell: 1 apologize, Mr. Speaker. This is my maiden address. I will learn.


An hon. Member:: A good speech, too.


Thomas Scott Fennell: Another thing which disturbs me is that our funds are not staying in Canada. I understand why the government has to follow the U.S. interest rates. The money was flowing out. That happens in every country throughout the

April 25, 1980
Small Businesses Loans Act
world when there is a higher interest rate across the border. How are we going to get this Canadian money from the foreign banks back to Canada and into Canadian industry? I will tell you how, Mr. Speaker. We can develop an industrial strategy for this country which will make us number one in the world.


An hon. Member:: That wasn't a Tory campaign promise.


Thomas Scott Fennell: I am sorry, it was mine. Mr. Speaker, I think I have got most of my points across. When I talked to a few people about giving this address they said; "You could never speak for 40 minutes, you can only talk for five." I have stretched my points out and I apologize to hon. members for doing so. But my final word is: please, as members of the common house, let us all work together to make this country great. Let us encourage the minister to come up with positive programs. He can do it and we want to help him. Of course, we would prefer to be over there, and 1 am certain that if we were over there we would be doing those things. But because we cannot wait any longer, I ask that something proceed and that we get this show on the road.


Some hon. Members:: Hear, hear!


Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, just a few short weeks ago when I was on the other side of the House it was always a frustrating experience to be quiet and listen to the other people waffling and carrying on at great length about matters which were not contained in the bill under discussion. 1 would have wished that the rules of relevancy would have been adhered to more strictly. It is a little different when one is on this side, but 1 still think we should try to respect the rule of relevancy. So, in the few minutes that are left 1 want to speak specifically about the various clauses of this bill, clauses which, of course, deal only with guaranteed business improvement loans.
The first provision is that the administration of the act is to be transferred from the Minister of Finance (Mr. MacEachen) to the Minister of Industry, Trade and Commerce (Mr. Gray). I am not sure why this transfer should take place. If we look at clause 5 we find that the Minister of Finance is still required to be part of the set-up necessary to study interest rates; he is still not completely divorced from the procedure. Maybe we are getting ourselves into administrative trouble by having two people involved, instead of just one. This is something we should look at in committee.
Another of the main provisions is that the maximum amount of loan which can be made to any one borrower is increased from $75,000 to $100,000. This is obviously intended to take inflation into account. It is one of the things we need to do
periodically in regard to various pieces of legislation which specify dollar amounts and I guess we shall have to continue to do this until we get inflation under control.
I have some comment to make with respect to clause 4. This is the clause which will allow the maximum aggregate number of guarantees to increase from $600 million to $675 million up to June 30, 1980. Today is April 25 so there is one month left until this date takes effect. I have a rather suspicious mind and I am wondering why this is necessary. There is no way an additional $75 million is going to be guaranteed within the next 30 days or so, and therefore I strongly suspect that this is a cover-up and that loans have already been guaranteed in excess of the $600 million allowed by law. This aspect will require careful study when the bill goes to committee to determine how this over-guaranteeing has taken place. Possibly we shall need to put in place controls to see that it does not happen in the future.
Clause 4 will extend the aggregate limit to $850 million up to June 30, 1982. There is an additional figure within that two-year time period of $175 million.
1 see that it is five o'clock. May I call it five o'clock, Mr. Speaker?


BUSINESS OF THE HOUSE
Stanley Howard Knowles: Mr. Speaker, I wonder if there is someone on the government side who can tell us what the menu is for Monday.


John Leslie Evans: Mr. Speaker, I wish to confirm arrangements that were made by the Parliamentary Secretary to the President of the Privy Council (Mr. Collenette) with the parties. The government has given the Table and the parties notice of a motion relating to supply proceedings, and it is the government's intention to call the motion for debate as the first item on Monday, if necessary.
Other business on Monday will be the resumption of the debate on Bill C-17, then Bill C-5, and then Bill C-18. Future business will be arranged by the government House leader on Monday.


Stanley Howard Knowles: What are we going to do Monday night?


Mr. Cousineau:: We will find out on Monday morning.


The Acting Speaker (Mr. Blaker):: It being five o'clock, this , House stands adjourned until Monday next at 2 p.m., pursuant to Standing Order 2(1).
At 5.01 p.m. the House adjourned, without question put, pursuant to Standing Order.

Monday, April 28, 1980