1980-11-27

GOVERNMENT ORDERS

[Stage Direction]
[English ]

[Stage Direction]
The House resumed from Wednesday, November 26, 1980, consideration of the motion of Mr. Waddell:
That the proclamation laid before the House on Wednesday, November 12, 1980, pursuant to subsection 52(3) of the Petroleum Administration Act, as proclaimed in PC 1980-2917, be revoked.
Mr. Harvie Andre (Calgary Centre):: Madam Speaker, 1 rise to participate in this debate on the invocation of the Petroleum Administration Act. I rise with a sense of deja vu or, perhaps more accurately, with the realization that I am reliving a nightmare we have already experienced once before in this country. When the Petroleum Administration Act was first introduced in April, 1974, my party and 1 were adamantly opposed to it. In our view, the passage of this act would negate realistic negotiations between Ottawa and the producing provinces since the government in Ottawa knew it would never have to negotiate with the give and take implied, because Ottawa would have the hammer. We fought this act as vigorously as we could, and we fought it alone. But the Liberal government with its majority and with the help of its NDP bedmates, of course, prevailed.


An hon. Member:: Not with the Tory separatists.


Harvie Andre: The battle was a total rout because after many weeks and months we were able to gain the inclusion of the sections which allow ten members to bring about the debate that we now have. We gained that amendment without New Democratic Party help. The New Democratic Party approved the bill but it did not want the bill to be used, which is just like saying that it is in favour of the fox guarding the hen house but it does not want the fox to eat the chickens. Is that hypocritical? 1 say it is at least hypocritical. But there was worse to come.
The New Democratic Party energy critic, the hon. member for Vancouver-Kingsway (Mr. Waddell), was bordering on McCarthyism in some of his remarks which were directed at the hon. member for Capilano (Mr. Huntington). The late U.S. Senator, Joseph McCarthy, to whom that infamous phrase is not contributed, used to destroy reputations by making the accusation, "Why do you not stand up here now
and state categorically that you are not a member of the communist party?" He knew full well that it would plant doubts in a person's mind. That is exactly what the hon. member for Vancouver-Kingsway is doing in asking the hon. member for Capilano to state that he is not a separatist. The hon. member for Capilano does not have to prove to the hon. member, or to anyone, that he is a Canadian. He fought for this country in the war. That cheap McCarthyism is below the dignity of the New Democratic Party we used to know from the past.


Mr. Kempling:: Say it outside.


Harvie Andre: Character and integrity are not words one would use to describe the current New Democratic Party caucus. Perhaps that is why they are such comfortable bedmates of the group opposite. If there is one single reason behind the current energy crisis, it has to do with the lack of integrity and honesty shown by Liberal governments over the last seven years.
It is seldom possible to point with accuracy to the genesis of a public issue, but in this case it is possible. Very specifically, we can go back to July, 1973, when the then minister of energy, the Hon. Donald Macdonald, and his deputy minister, now Senator Jack Austin, tabled phase 1 of "An Energy Policy for Canada". That was July 7, 1973. They stated on page 9: "No national energy policy can be contemplated without the fullest of intergovernmental consultation and consensus." At page 58, they said, "That there can be no effective set of national policies developed without the participation of the provincial governments is readily apparent." That was the position of the government.
About a week later they held the Western Economic Opportunities Conference. All kinds of promises were made about consultation, listening to the west and helping western industrial development. Six weeks later, because the then leader of the NDP, David Lewis, said, "Do something about inflation or I will get out of bed and no longer support you," on September 4 they imposed a price freeze on crude oil. That was six weeks after they promised there would be no such thing in their energy policy.
On September 13, 1973, the Trudeau Liberal government announced a 43-cent. export tax on each barrel of oil because American prices were going up. Therefore Premier Blakeney and Premier Lougheed reacted with some anger and concern. Both changed the royalties in their provinces.
In November Ottawa raised the export tax to $1.90. During that time, as Hansard will show, we were told not to worry, they were just collecting this to keep the price differential

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between Canada and the United States, but the money belongs to the producing provinces and the industry.
On December 13, 1973, the then federal energy minister, Donald Macdonald, said 50 per cent of the revenue from the export tax, which was then close to $2.20, would be given to the oil producing provinces and the rest would be invested by Ottawa in the petroleum industry, likely through a national petroleum company. Two weeks later, December 27, when the House was not sitting, the export tax was raised to $6.50. Macdonald said the commitment to return the tax revenue to the province would end on February 1. That was another blatant break of a promise and a commitment. Naturally there was outrage and indignation from the producing provinces of Saskatchewan and Alberta.
In January they held a national energy conference. There was agreement that the domestic price should rise from $4 to $6, and in March all parties agreed that the increase should be to $6.50 a barrel over 12 to 15 months. About a month and a half later, on March 6, then finance minister John Turner dropped the bombshell in his budget, ending the deductibility of royalties. Companies could no longer deduct such payments from taxable income. That was a blatant contradiction of everything the Prime Minister (Mr. Trudeau) had promised just two months earlier. That was a third violation of a commitment. Under the Prime Minister we now have, there were three broken promises in the fall of 1973.
Then there was an election. The NDP got their just reward. The Liberals, I suppose, got theirs. They were re-elected a majority government. They sat down and produced a new energy policy called "An Energy Strategy for Canada: Policies for Self-Reliance." In it they stated, "It is clear, therefore, that a viable national energy strategy requires consultation and constructive co-operation with and among provincial governments." For a while they lived up to that. In fact an agreement was reached. Finally, there was agreement in 1975 that we move to world prices, there would be an escalation of $ I every six months, and the federal government imposed a tencent excise tax to help finance the subsidy for imported oil.
Lougheed formally declared peace on December 30. In fact for two years everything went along reasonably well. The industry prospered. We started working toward self-sufficiency. Then the end of that Liberal government's term of office came along. On September 27, 1978, energy minister Alastair Gillespie announced unilaterally that $1 increase scheduled for July 1 would be cancelled. That was a unilateral decision in violation of what was then a written contract. It was the fourth direct violation of a promise. It was a written contract they had violated. They broke their word for the fourth time.


Mr. Lalonde:: Lougheed agreed to it.


Harvie Andre: Later, after some concessions. He did not agree to it on September 27.


Mr. Baker (Nepean-Carleton):: Marc, you listen to a good speech and stay quiet.


Marc Lalonde: Agreed.


Harvie Andre: In March, 1979, the Prime Minister called a federal election for May 22, declaring that Canadian energy needs were too vital to be left to Exxon or the Alberta government. There we are. There is the history of broken promises, the chicanery, the dishonesty, the kind of dealings one would not expect from an enemy, let alone your own national government. That is the legacy.
If anyone wants to know the root of western alienation, look at this history of broken promises. If you want to know the root of the distrust shown by the people for the federal government, look at how the federal government has behaved-broken promise after broken promise after broken promise, and violated written agreements. That was up until the election of 1979. Since their return to power, the dishonesty has become worse.
During the summer we had the charade of so-called meaningful negotiations by the minister. We had the details laid out in the Alberta legislature. We know what actually happened at those meetings where the minister said he was negotiating in good faith. There were no such negotiations in good faith.
Then there was the advertising campaign. Incredible! George Orwell's 1984 personified right here in this strategy document for this energy advertising campaign. Then we have the malicious distortion of the energy pricing agreement which had been worked out between the Clark government and the Alberta government when the minister sent out his poor embarrassed officials to make the presentation on what gas prices would be under that agreement.
We then have the utter distortion on revenue sharing. It is interesting to note when various spokesmen from the other side talk about how the revenues from oil and gas are shared, they never talk about it at the pump where the consumer pays for it. When a consumer pays $1 for gasoline at the pump, 22 cents goes to the federal treasury, 22 cents to the Ontario government, and 18 cents to the Alberta government. Those kinds of proportions are never mentioned. What they keep saying and various ministers keep repeating by rote, even though they know not what they are saying, is that the sharing formula is 45 per cent province, 45 per cent industry, and 10 per cent feds.
What price are they talking? That is the $16.75 which bears no relation to the market or the world price. They keep saying that in Texas the state government only gets something like 20 per cent, and Alberta is getting 45 per cent. The reality is that the state of Texas gets more per barrel of oil. I believe they get $6.50 where the province of Alberta gets $6.10. The state of Texas does not own the oil. It is privately owned.
What is the fair price that we should have? The minister has said many times that world prices have no relationship to reality. There are OPEC prices. Is that the real feeling? I refer hon. members to the November 22 edition of the Toronto Globe and Mail and an article by Hugh Anderson:
Pressed to the wall in an argument, and speaking "for background" only, federal energy officials will concede that keeping the domestic price of Canadian oil far below the price of imported oil makes little economic sense. There is currently a difference of about $20 a barrel.
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The policy can only be understood through the prism of national politics. As Edward Clark, an assistant deputy minister in the federal Energy Department and one of Energy Minister Marc Lalonde's most influential advisers, puts it: "If Canada were a unitary state, not a confederation, there would be no problem about going much closer to the world price."
What an admission. In essence the article is saying that this whole thing of pricing has nothing to do with pricing or saving consumer dollars, but instead it is revenue. What they are saying is that if Canada were a unitary state and if the oil belonged to the federal government, we would be paying the world price. That is what the chief adviser of the Minister of Energy, Mines and Resources, Ed Clark, said when asked by a reporter. Yet the minister stands up in the House and has the audacity to say that the price which they are talking about is fair and reasonable based on the best advice and analysis of his officials. His officials have given the minister no such advice. His officials are described by Keith Spicer as "smug little ideologues in Lalonde's department".
What is a fair price? The Clark government and the Lough-eed government agreed that eventually the price of oil and gas in Canada would reach 75 per cent of the world price. If we were at 75 per cent of the world price today-and the officials in the Department of Energy, Mines and Resources say that we should be-then the share ratio would be the following. Alberta would receive 23 per cent; the industry 23 per cent; and the federal government 53 per cent. The federal government would receive part of its share directly through taxes and the rest of it by virtue of policy which distributes the revenue to the consumers of the country. If the government is to be honest about the sharing of oil and gas revenues in this country, the formula is federal government 53 per cent, provincial government 23 per cent, and the industry 23 per cent.
If the government has any decency or integrity, it should try to be honest and stop repeating what is a blatant lie, the ratio of 45-45-10, which has no relationship to the truth. The dishonesty goes beyond that and extends into the national energy program which came down as part of the budget.
I see the minister responsible for the western development fund is present tonight. While we are on the subject of dishonesty, I would like to deal with the question of the $4 billion western development fund. I went through the budget fairly carefully, and there is only $2 billion in that fund, not $4 billion. It is a $2 billion fund spread over three years, and most of that $2 billion comes from existing programs. The minister's colleague, the Minister of Transport (Mr. Pepin), has said that he will do away with the Crow rate and make up for it through funds from the $2 billion. The Crow rate contributes about $300 million a year to western Canada, and the Minister of Transport is going to make up for that out of the $2 billion western development fund. If one considers the Prince Rupert project, this $4 billion western development fund comes out to nothing at all. At most it is in the millions, and it is certainly not $4 billion. However, that does not prevent members of the government from standing up with no apparent embarrassment and talking about the $4-billion fund.
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I see that the holier-than-thou man with the collar is nodding; he should go to confession.
The dishonesty of the government, when it talks about $4 billion in the western development fund which does not exist, and in this document, "The National Energy Program", is evident.
In this document the government says that there will be no export tax, but in the very next paragraph it says that it will tax sales to U.S. consumers at 30 cents per 1,000 cubic feet. If sales to U.S. consumers are not exports, then what are they? And if that is not a tax on exports, then what is it? On page 17 of this document Canada's policies are compared to the British policies and the government says how favourably it is treating the industry compared to the way the British government is treating the industry in the North Sea. But it does not mention that the North Sea rules were changed several months ago by Prime Minister Thatcher. Is that dishonesty? It is certainly not honesty.


Marc Lalonde: Plus a 20 per cent tax yesterday.


Harvie Andre: It is certainly not honesty if one remembers what the government has already said.
There is another statement on page 17 which describes how important it is to deal with the question of foreign control, and that over the period 1975 to 1979 approximately $3.7 billion in capital flowed out of Canada to the United States. What the government neglects to mention is that more than half of it, or $2 billion, is attributable to Petro-Canada as a result of this government, and not foreign ownership in the industry. Is that honesty? It would certainly not be described as honesty by anybody I know and respect.
On page 27 of the document the government describes the world price on oil as being arbitrary and artificial. Yet the man who undoubtedly wrote this document, though the minister put his name to it, has said in a newspaper article which I quoted earlier, that in fact if we were a unitary state prices would be near world levels. The official is saying on the one hand in the article that our price should be at world levels, and on the other hand, in the political document he is saying that world price levels are artificial. When was this official being honest-when he was talking to the reporter or when he was writing this document for the minister?
On page 38 of "The National Energy Program," the government refers to the 8 per cent net revenue tax which is in fact a royalty because it is levied right at the wellhead. The government does not want to talk about royalties because it knows it will be challenged in the courts and that it would probably lose in court. The document goes on to say:
This tax . . . will produce a high marginal tax rate for firms that reinvest little of their cash flow.
It seems to imply that one would only pay that tax if one does not reinvest. As an official admitted to me in committee, one pays that tax whether or not one reinvests. It is a blatant distortion of the truth. Moreover, this tax is not 8 per cent. It is between 12 per cent and 24 per cent depending on the type

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of material one is producing, whether it be new oil, old oil, gas or what have you, and depending on the province in which it is produced. What is more interesting about that 8 per cent tax is that it is non-deductible for income tax purposes except, of course, if the company is a foreign multinational. A foreign multinational company can deduct that 8 per cent from the income of the parent company in the United States.
It is interesting that this great document which talks about Canadianization states that Canadian companies will not be able to deduct the 8 per cent royalty for income tax purposes, but that foreign companies may make the deduction. What genius dreamed that one up? It is absolutely absurd. It must have been the same genius who wrote this line, which is a dandy:
While the Government of Canada is determined to increase Canadian ownership and control, it does not wish the result to be increased concentration of power in the hands of a few large . .. companies. Competition is the lifeblood of the industry, and the consumer's best protection.... Therefore, the government will be vigilant about ownership trends in the industry.
The government will ensure competition in the public sector by creating perhaps two or three additional companies. Here is the sentence:
To ensure competition in the public sector, the government may establish one or more new Crown corporations to hold the assets acquired, rather than adding them all to Petro-Canada.
Is that not a dandy definition of competition? Instead of having just one Crown corporation at the minister's beck and call, he is going to have two or three and thereby have competition. There will be competition by having three toys to play with rather than one. If this were not so serious, it would be laughable.
On page 51 it says:
Judging from the results achieved to date by Petro-Canada, it is also an effective way of encouraging the rapid energy development necessary to meet our security needs.
Petro-Canada has not found a drop of oil or a cubic foot of gas yet. How can we judge its tremendous success? Success in the gas and oil industry is judged by the gas and oil the industry finds. Petro-Canada has not found any. Petro-Canada does not have it yet, but it has negotiated with a German-owned and Liechtenstein-headquartered company to build a high rise office building in Calgary. Mind you, this is all in the interest of Canadian ownership. I suppose Petro-Canada got this contract from the Bermuda company which designed its new logo.
This Canadian ownership is really a great thing when exercised by this government. The litany goes on and on throughout this document. There is misinformation, blatant distortions and dishonest analyses of facts. I am not talking about prejudice or some interpretation. I am talking about blatant distortions which are totally contrary to what the officials who wrote this would say in another format.
The reality is that we are in a crisis. This country is in an energy crisis. We are not going to have enough oil to satisfy our needs within a few years. It is absolutely imperative that
we resolve the disputes between the federal and provincial governments, reach an accord, and get on with making this country self-sufficient. That is absolutely imperative to this country. That means that there must be negotiations. The feds think they have the big club and that they can beat the provinces into submission. If that is their true feeling, they are making a very grievous and serious mistake because they will not succeed. They will do enormous damage to the country. They will do more damage than they have already done by taking that path, but they will not succeed in beating the provinces into submission.
The feds must sit down and negotiate. They must negotiate pricing, revenue sharing, and a strategy for future development of supplies for Canada. Canadians are basically a fair-minded people. I am talking about westerners and easterners. Easterners cannot help but think that westerners are greedy and selfish when the only information they get is the blatant lies put out by this minister and his colleagues who believe the things he is telling them. They cannot help but believe that westerners are greedy when they accept the figures of 45-4510 as the revenue-sharing formula. How do they know any better? That is a distortion. It is a lie. They cannot help but think that Alberta is being very difficult and unwilling to negotiate if they are not aware of all the broken promises and lies of this government in the past.
By the same token, westerners cannot help being overly protective of their resources, given the history of those broken promises. They have waited 113 years for transportation policies which would look after their interests. They have been frustrated about the national policy of high tariffs. They now finally have a resource which is providing some income, and they will not sit idly by and allow this federal government, which has lied to them so often in the past, to seize that resource based on some promise that the federal government has their interests at heart.
If the federal government really wants westerners to believe it, it should stop lying about $4 billion development funds which are not $4 billion development funds. The government should stop lying about the 45-45-10 revenue-sharing formula, which is not true. It should stop trying to portray westerners as greedy and selfish and somehow less than real Canadians because they want to be able to protect their own futures. What Canadian does not want to protect his own future? What group of Canadians anywhere does not want to be able to prosper and grow with this country?
Western Canadians feel, with cause, that they do not have a federal government which can be trusted. I say with cause, because there is that record of broken promises. And how can that be changed? It can be changed by coming clean and by being honest. Perhaps that is too much to ask. I do not know. If it is too much to ask, I am afraid we are in for some very tumultuous months and years ahead. I hope it is not too big a change or too much to ask that the Government of Canada, which is a majority and which would like to be a national government, be honest, stop distorting the truth, stop putting out blatant pieces of propaganda, cancel public advertising
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strategies and their Orwellian concept and expose Canadians to the truth about energy prices, about revenue-sharing, and about regional distortions.
Western Canadians are quite ready to share with their fellow Canadians. Their commitment to this country is every bit as strong as that of anyone else, but they are not prepared to be lied to and stolen from. As long as the approach of the federal government continues to be lies and theft, I am afraid we will see a continuing growth of that very ugly mood which exists in the west today. It will be a cancerous type of growth which may eventually destroy its host.
I plead with hon. members opposite who have consciences to think about that for a while. I do not have access to their caucus, but I ask them for goodness sake not to tolerate being abused and misused. They should not tolerate receiving false information. They should demand honesty and integrity from their government, and perhaps the country will survive.


Mr. Waddell:: Mr. Speaker, I rise on a question of privilege. I wish to give the Chair and the hon. member for Calgary Centre (Mr. Andre) notice that I wish to reserve my right to raise a question of privilege in this House after I have read in Hansard the reference in the hon. member's speech to McCarthy and other remarks with reference to me. I just want to put that on the record.


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Mr. Speaker, earlier today I had to make a very difficult decision not to provide a permit to the Stratford Board of Governors to allow an artistic director to come into Canada on the ground that I felt the board should engage in a more extensive search for a Canadian who could provide the kind of dramatic qualities of leadership required by that institution. After listening to and watching the previous speaker and taking into account the theatrics and histrionics we have observed, I feel that 1 have found a very likely candidate for that position.


Harvie Andre: Did that take you half an hour.


Lloyd Axworthy: The only problem is that if the hon. member were hired as the artistic director, the entire season would be full of farce and comedy, and we would not have any other types of presentations. I would be more than happy to recommend the hon. member for an alternative occupation and employment. I know that he is busily doing that for his leader. I do not want too many Tories unemployed come February, so we will simply leave the hon. member in his present occupation, which he very honourably and nobly espouses, as the evangelist for the oil industry. Perhaps we could call him the parson for the petroleum companies, or the minister for the multinationals.
The hon. member opposite has obviously wound himself into a religious fervor, and unfortunately he exhibits the worst signs of people who get themselves involved in that kind of obsession. They become narrow-minded and unable to see the truth and where it really lies.
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There is a play called "The Rainmaker". It is a story about an evangelical preacher down in the United States. It is said of him that he is so busy being right that he forgets what is good. I suggest to you, Mr. Speaker, that if there is any comment on or description of the debate we have heard from hon. members opposite in the Conservative party, we can certainly say that they are so busy being righteous that they forget what is good for Canada; they are so busy taking a stand on these kinds of rigid, narrow-minded arguments that they forget what we should be doing to try to plan for the future of this country in the decade ahead.
If you distil the arguments, if you clear away all the insults, character assassination, bombast and rhetoric, you come down to two simple propositions put forward by the hon. member for Calgary Centre (Mr. Andre), which is simply that the consumer should pay much higher prices and that the revenue should go to the provinces.


Walter David Baker: That is not what he said at all, Lloyd. You were asleep again.


Lloyd Axworthy: He simply said that the beneficiaries of an energy policy should be the provincial governments and their treasuries, and that the people who should pay those prices are the consumers. Basically, that is what the Tory energy policy is all about.
As the hon. member went through his litany of historical events he reminded me of the same person who wrote that new history book that the province of Alberta has just produced, which somehow avoids mention of our Prime Minister (Mr. Trudeau) as being the Prime Minister of this country. Somehow they find a selective filter through which they pass their ideology.
The hon. member forgets some facts of history, such as the OPEC countries which have been raising prices at astronomical, exponential rates since 1973. That did not come out in his account of history, Mr. Speaker. We did not hear about increases going from 10 per cent to 100 per cent, to 1,000 per cent, and to 2,000 per cent over the past five or six years. It seems that somehow all the energy problems were caused by the Liberal party and we were the authors of these horrible crises in the energy field. Somehow he forgot there is a world out there and that people were raising prices according to what their own position in the monopoly market would allow them to do. Well, he has lots of guts, that boy. He can really stand up to the heat. That really shows exactly why the Conservative party is over there and why we are here.
The fact of the matter is that Canadians do want a consistent energy policy which balances the interests of all Canadians, not just those who are in the oil patch in Calgary, but those who sit in the board rooms of Bay Street. They want an energy policy that is fair and equitable and that serves all individuals according to need and according to a fair proportion.

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When the hon. member talks about the west he is talking about a very small minority of westerners. He is talking about the friends whom he sees at the Petroleum Club and the people who read the journals which talk about the great exodus out of Canada, the loss of jobs. He is not talking about the farmer in Alberta who, if members opposite had their way in the budget, would be paying $2,400 more a year by 1984 under the previous Tory plan than under our plan. If you talk to farmers in Alberta, Saskatchewan or Manitoba, who are also westerners, and ask them if they want to pay inflated oil prices, if they want to charge higher prices for their commodities and goods so that the consumer ends up paying more, they will tell you that they are not so sure about that.
You can talk to the consumer in western Canada who lives in Edmonton, Calgary, Winnipeg or Regina, who would be paying $500 more to put gas in his car or an extra $500 or $600 to heat his home. Those are westerners as well. They are not the kinds of westerners the hon. member was talking about, because he does not associate with them very much.
That is the kind of concern we had to bring to bear in establishing an energy policy. We had to take into account the fact that there were a lot of people in this country, whether they lived in the east or in the west, who could not afford the kinds of policies and programs which had been put forward in the previous budget.
We admit that it is not easy to get an agreement with the provinces. We are not saying there is a magic wand or an instant solution which will provide the great agreement which hon. members opposite want. I am sorry, Mr. Speaker, there is an easy way. We could surrender, we could appease, we could give in. But if we were to defend the interests of the entire country and of all those who live in it, then there would not be an easy way to do it.
1 was a little surprised at the history lesson we received from the hon. member for Calgary Centre. He made it sound as if this were the great Armageddon of federalism, as if somehow what has been transacting in this country over the past few months is a one and only event. He made it appear as if the great, glorious provincial leaders were standing up to the federal government which, as he says, has been dealing in deceit and dishonesty. He is not a very good student of history, because the history of this country is one of constant conflict, tension, certainly a whole series of disputes between federal and provincial governments, disputes from one region of Canada to the next.
I was reading some debates on the unemployment insurance bill back in about 1939 or 1940, and I came across some comments from a provincial premier who said:
It is clear to me that with the western provinces hopelessly bankrupt, any national scheme of unemployment insurance will have to be borne by the two central provinces and if unemployment insurance is necessary it would probably be best to run our own show.
He went on to say that he was opposed to the federal government providing any assistance to the western provinces which were totally bankrupt at that time. That was Mitch Hepburn, the Premier of Ontario. This sounds very familiar
when we compare it to some of the statements we hear from some premiers today. Different regions, different provinces- same philosophy. They say, "We have ours, we will keep it, we will not share it". But fortunately, in 1939 and 1940 the federal government had the courage to bring in an insurance scheme to cover unemployment right across Canada, to make sure that there was fair sharing of benefits and to make sure that people in the central provinces paid more than they gained to make sure that the regions in the maritimes and in the west would get economic security.
I would suggest to hon. members opposite that they go back and read those debates on the Unemployment Insurance Act of 1940. What is interesting is that the very same party which is now claiming this great history of dishonesty by the federal government was saying the same things then. The arguments have not changed 40 years later. The same thing is true now, "Let us defend the provinces, let us not have the federal government impose its will, let us not share the wealth, let us not provide benefits". You would think that after 40 years they could update their act. The point is that this party throughout history has always recognized the fundamental fact of confederation, that there must be a sharing of benefits.


Mr. McKinnon:: It was King who said "Let's not give them a nickel."


Lloyd Axworthy: Do you know what we should do? We should take a look at the figures as they now appear. There has been a certain kind of mythology around that this new energy policy will bankrupt Alberta, that somehow the people of Alberta, who have worked hard and are good citizens, will be impoverished by this national energy policy. Yet when I look at the numbers and figure them out by the same calculations that hon. members opposite have used, I find that the per capita revenue by 1984 will be $4,000 per person in the province of Alberta on resources alone. Compare that with my own province of Manitoba which will get $22 per person from resource revenues. It seems to me that when you look at both the $4,000 and the $22, you have to conclude that there is a certain economic disparity at work. So there has to be some mechanism of sharing and evening out that disparity, some way of providing a balance between the two so that one province does not have to raise its income, corporate or sales taxes to extraordinary levels simply to try to achieve a level of services equal to that in a province which has all the wealth.
All we are trying to do is to say that the responsibility of the federal government in this day and age is to provide for some balancing, some sharing, so there are not those hills and valleys of economic wealth and economic disparity.


Some hon. Members:: Hear, hear!


Lloyd Axworthy: Also it is true to say that the other responsibility of a federal government is to ensure some degree of balance between public and private activity in the country. My party is committed to private enterprise. We support and give incentives to small and large businessmen to produce and
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create jobs, but we are also committed to a basic fundamental principle that there must be some degree of ownership, control, and management within our own country.


Walter David Baker: Do you have criteria?


Lloyd Axworthy: Yes, I do, that 90 per cent of the oil industry should not be owned by foreigners. That is the criteria I start with. I do not believe that with a valuable, essential resource like energy we can afford to have decisions made by people outside the country.


Walter David Baker: No one is arguing with that. Tell us about your criteria.


Lloyd Axworthy: 1 believe the government must be able to establish certain rules and to have a certain degree of accountability to its citizens, whether corporate or private. But we have no reach to Pittsburgh, Dallas or Houston. We are simply vulnerable to those decisions. We are trying to establish some rules which will give some certainty to private industry, at the same time providing some incentive for Canadian owners and managers to create wealth in the country and to be accountable to their own elected representatives.
The hon. member for Calgary Centre spent a great deal of time, to the amusement of his colleagues, scorning the activities of PetroCan. Yet he ignored one very fundamental consequence of the development of PetroCan in Calgary itself. Because of PetroCan, and the legislation brought in by Mr. Macdonald, Mr. Turner and Mr. Gillespie, we gave an enormous incentive boost to private Canadian operators to become active in the oil industry. It was Petro-Canada that took a bunch of small oil companies, and by allowing them to become a consortium and to get access to Crown land, they for the first time were able to get into the exploration and development field, a field which had been dominated by multinationals up to that point in time.


Walter David Baker: Will the hon. minister accept a question?


Lloyd Axworthy: Certainly.


Walter David Baker: The minister indicated that he was concerned about 90 per cent foreign ownership in the oil industry. That concern is shared by all Canadians. Would the hon. gentleman tell us how that occurred over the last 13 years? Who was in government when that occurred? Why was it allowed to occur? Has the government explored other ways, in addition to the ways the minister described, in which that may be alleviated?


Lloyd Axworthy: Mr. Speaker, I would be very happy to try to provide an alternative history lesson to the one the member received from his honourable colleague. We are talking about a major change in the nature and composition of the oil industry beginning with the OPEC prices of 1973. At that point in time we met a turning point in our history and in the
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history of the world. All of a sudden we were creating vast windfall revenues and enormous economic grants that had no relationship to cost of production or development, but were simply created artificially by the decision of a group of governments which had the ability to command and control the world market. Once that began to take place, enormous power was given to those who were acquiring the wealth.


Walter David Baker: Did you see that coming over 13 years?


Lloyd Axworthy: No one saw it coming. I mean, I would like to think we were all born in possession of crystal balls. I do not make any claim to prescience and foresight. We simply said that we had to react to events, like the Japanese, the Germans and the Americans did. I do not want to be unkind, but I suppose I could say to the hon. member opposite that if his crystal ball was so good, he might have avoided December 13 more effectively than he did.


Some hon. Members:: Hear, hear!


Walter David Baker: Will the hon. minister permit another question?


Some hon. Members:: Oh, oh!


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


Lloyd Axworthy: 1 have tried to answer the member's first question. I would like to be allowed to continue. If there is time left, certainly I would be prepared to consider it.


Walter David Baker: 1 thought you had forgotten what the question was.


Lloyd Axworthy: The fact of the matter is that we have gone through a major change, and it was this government which brought in Petro-Canada as an alternative based upon its energy policy of 1974 and 1975. We are simply saying now, as the industry grows and expands, that we want to ensure a balance between the public and private sectors.
One important result of the establishment of Petro-Canada was the incentive it gave to the private, small, independent Canadian oil and gas industry in Alberta. That is a part of history which is conveniently forgotten by members opposite, by Mr. Lougheed and by members of the oil industry. They were given incentives, they were given assistance to develop and expand their operations, but now the time has come where we must take another look at changing conditions. Perhaps that is one of the things which makes us different from members opposite.
We are prepared to change policies and programs as conditions change. We do not etch them in stone and keep them there for 40 years simply because it is the Conservative way of doing things. We are prepared to respond if something happens. Also we are prepared to admit mistakes and to say that as the world around us changes, and as our own country changes, we must have the flexibility to respond.

November 27, 1980
Petroleum Administration Act Mr. Baker (Nepean-Carleton): You have a lot of mistakes to admit.


Lloyd Axworthy: With the Petroleum Administration Act we are simply trying to say that the conditions have changed, and we need to provide for a different regime of government to set prices and to provide a different order of incentives. If they do not work effectively, we are prepared to react, respond, consult, and make changes again if necessary. There is nothing frozen, static or reactionary about this side. I believe that is why we have been here so long and hon. members opposite have been there for so long. Canadian people want a government which is responsive and flexible, not one which is reactionary and rigid.


Some hon. Members:: Hear, hear!


Walter David Baker: You will never be leader, Lloyd.


Lloyd Axworthy: Let me deal with another mythology which has grown up in the House, that somehow the changes under the national energy program will have enormous economic "drags" upon the economy of Alberta. The hon. member for Calgary West (Mr. Hawkes), the hon. member with the Ph.D., and the hon. member for Calgary South (Mr. Thomson) rise in the House and say that the companies are leaving in droves.


An hon. Member:: They are.


Lloyd Axworthy: I looked at a report in The Globe and Mail which indicated that there was a cutback in oil drilling, but I should like to point out that the article appeared three days before the budget. It was based far more on the fact that now there is a surplus of natural gas, and it had nothing to do with the national energy program. If hon. members opposite accuse us of being somewhat loose with the truth, they should read that Globe and Mail article which appeared before our budget. It simply pointed out that, because of the surplus, oil rigs had to look for alternative markets.
In the national energy program we are responding to that very problem by setting up a natural gas bank, so that we can buy surplus gas and therefore provide more incentive for the continuation of exploration and development in the market. I have not heard members opposite talk about that good measure. It is an incentive to Canadian companies, it is an incentive to keep them working. I have not heard them talk about that, yet it is part of the national energy program. Nor have I heard them talk about the major incentives given to consumers to convert from oil to natural gas, which is an energy supply that we have in large surplus, in order to ease the burden upon our oil. One of the fallacies of the hon. member for Calgary South is that he assumes that our only energy source is oil. We are saying that we are energy rich as a country. We have oil, gas, coal, biomass, solar, propane, methane and all other kinds of energy sources. Surely the trick to having a proper energy policy is to ensure that we utilize all kinds and forms of energy, particularly those in which we have a major advantage.
So, an underlying and important thrust of our program and policy was to provide for conversion to natural gas. In fact, we can follow the linkage backwards. It would give private companies engaged in the exploration and development of oil and gas a further incentive to go forward and find new sources. So, Mr. Speaker, I must disagree when we are charged with ignoring the interests of the private sector. In fact, we are providing a wide range of incentives in those areas. We do not apologize for the fact that we are giving more incentives to Canadian companies than to the multinationals. We believe in equity and we do believe in balance.
I would like to deal with another topic which has caused me some concern over the last two or three weeks. It is the argument being made that the mistrust of western Canada is all due to the federal government. There is a deliberate, and I would say malicious, attempt to build the case that there would not be grievances or calls for separatism in the west if we did not have the Liberals around. The argument is that the Conservatives would solve all these problems. I take issue with people who say that having a Conservative government on this side would immediately result in an energy agreement with the western provinces. I can recall the former minister of finance, the minister for flabbergab, walking into this House and putting a budget on the table without having an energy agreement with the province of Alberta. He did not have an agreement right up to the end when they were in Edmonton trying to get a bargain out of Mr. Lougheed. What happened at that time was this: Mr. Lougheed kept upping the ante as each hour went by. He was putting more chips on the table. There was no agreement.
Furthermore, I suggest it is wrong to start setting region against region, to deliberately set one group of people against their national government. That is a trick the leader of that party must be very careful about. I know what his occupation is. I know what his obsession is. It has nothing to do with an energy policy. It has nothing to do with the constitution. What it does concern is keeping himself in that front seat. He is a politician and, as such, I will grant him the right to do that. But I suggest at times he steps over the margin. There are times when he stretches the point, when he begins to create the self-fulfilling prophecy of "don't believe in Ottawa, your national government, because they are not working in your interests." We are trying to work in the interests of western Canada. Not all western Canadians would agree with that, and maybe not the kind of industrial group the member from Calgary represents. They do not agree with that. There are a great many people in western Canada who are prepared to give us a chance, to see what we are prepared to offer. Members opposite have made light of the western development fund. We are not talking about a fund, Mr. Speaker. We are talking about an economic and industrial strategy for western Canada, taking into account major changes now occurring in the west. There is no doubt that western Canada is setting a political, social and economic agenda for the rest of Canada right now. They are the dynamo driving the economy. It is an area of
November 27, 1980

primary importance, both nationally and internationally. It is a region for which the time has come in terms of its economic significance. We are trying to put in place a policy for our government which will respond to those changes, one which will respond to the new economic significance of the west. The western development fund is only one part of that, simply to make revenues available to provide for additional initiatives and projects. We believe that reorienting the outlook of the entire federal structure, is necessary. Similarly the outlook of the provincial governments and the outlook of the private sector must be reoriented. How do we ensure the tremendous potential which is looming in western Canada in the areas of employment, new investment and new resources? We are thinking of means by which they can be properly capitalized and used for the benefit not only of westerners but of all Canadians. It is our objective to say, in the light of this new resource boom that this is the time and here is the chance to do what westerners have always wanted to do, which is to diversify and mature their economy, not to have it based solely upon resources but to bring industry and technology into the west. Our thought is to provide for a whole new industrial base which will not work solely for the interests of the west, though that will certainly be of prime importance, but will be of benefit to the entire country, multiplying its benefits from one end of Canada to the other. That is what we are after.
Mr. Speaker, I think this should be the objective shared by all members of this House. Rather than taking cheap shots and making premature judgments, trying to stomp something into the ground, they should be trying to help us. They should be making recommendations and proposals we could use. We are a government. We have to make decisions. In doing so we are also prepared to listen to members of the opposition who come forward with constructive and positive proposals of how we can take advantage of a new resource boom in western Canada and use it to develop a richer, broader, more varied economy in that region. It does mean investing in new transportation facilities. It does mean putting new rail lines in to carry potash, coal and grain to markets. It does mean investing in new industrial locations. It means ensuring that the productivity of the soil is maintained and enhanced. There are a number of options and opportunities open to us in the west. All we are saying, as the federal government, is that we would like to use some of the revenues which come out of our resources to recycle something back into that economic plan for the benefit of western Canadians. I find it hard to accept that such a plan should be the subject of the kind of criticism which journalists, editorialists, provincial premiers or members like the one from Calgary South express, which is so negative, blind and narrow that they would not give us a chance to put that kind of a program in place. We think a national government should have some role in that economic plan of development, not just a provincial premier or one provincial government. That is the difference between us. We feel that by putting that kind of economic plan into operation we can share the benefits among all.
The debate we are engaged in today is a good one and it is useful but I think it is time we gathered away from the wailing
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wall, stopped the gnashing of teeth and the tearing of hair, stopped the negativism we see here and started looking at what a national energy policy can do for western Canada. We should be looking at what western Canada can do for the rest of the country. If we can bring ourselves to that kind of action, then I think we will have a much more positive debate.


Some hon. Members:: Hear, hear!


Mr. Lome McCuish (Prince George-Bulkley Valley):: Mr. Speaker, before I address myself to the motion before the House I would like to say most sincerely that it is, indeed, an honour for me to rise and contribute to this debate. It is fair to say that I am somewhat at a disadvantage here, Mr. Speaker, because you are so calm and relaxed and I am so much afraid, one emotion which I do have stronger than the fear I demonstrate is that of pride. I take pride in the fact that I am here, that I am a backbencher. In that one way, as a backbencher, there is only one way for me to go-down. I take pride in the fact that I am a Progressive Conservative and that I can call these men my colleagues-seven at last count. More important, I take pride in the fact that I have been chosen by the people of Prince George-Bulkley Valley to represent them in this, the House of Commons, and to speak on their behalf.
Although I take pleasure in contributing to this debate, I feel somewhat saddened by the fact that there is the need for it. I am saddened because we are in the midst of a debate on an issue which allows the federal government, under the Petroleum Administration Act, to unilaterally set the price of oil and natural gas.
Due to the federal government's inability to secure a lasting agreement with Alberta on a pricing scheme, they now propose to act alone without regard to, or respect for, their partners in confederation-the provinces. They have acted on clauses 36 and 52 of the act. This, to me, is tantamount to the other guillotine measures they have adopted during this brief session of the Thirty-second Parliament. A feeling of despair increases because the federal government is once again, demonstrating its disregard for western Canada, that part of our confederation which undoubtedly holds the key for future economic stability and security through its natural resources.
Now we find ourselves debating a section which allows the Government of Canada the right to overrule the provinces. This is a debate which should never have taken place.
I should like to emphasis the point made by the hon. member for Etobicoke Centre (Mr. Wilson). He stated that in December, 1979, our government was able to reach an agreement with the government of Alberta after tough, protracted and difficult negotiations. But we were able to reach an agreement. Our agreement was but a signature away from being final. Therefore, I find it hard to believe the present government would fail to come to an agreement with the government of Alberta, particularly as the Liberal government had promised the Canadian people a made-in-Canada energy package.


November 27, 1980
Petroleum Administration Act
We, in British Columbia, want to negotiate a fair price for energy, one that will be fair to all Canadians. The provisions of the Petroleum Administration Act, the two sections which are under debate, should only be used when all else fails.
On this side of the House we do not dispute the need to implement that provision if-and let me emphasize the word "if'-there have been sufficient negotiations between the two levels of government. The Alberta energy minister has invited the Minister of Energy, Mines and Resources (Mr. Lalonde) to return to the negotiation table with the hope of securing agreement. Ignoring this invitation, the minister has arbitrarily opted to reject the invitation and to invoke sections 36 and 52 of this act. In my opinion, this is not the Canadian way of doing things and that is what I abhor about this whole ghastly mess.
The impact of the energy program put forth by the minister will not only affect the west, but it will have a grave and dangerous impact on the whole of the country. The Canadian consumer is being asked to contribute more money to the federal coffers than it was under the Crosbie budget of 1979. Within the next four years, Canadians will be paying over $1 a gallon more for gas. By the end of 1983 the cost of energy will be between $300 and $600 a year more than it would have been under the Crosbie budget.
When one looks at the record of the present government, we see a government living in a dream world, over which it maintains complete supremacy. This government has refused to negotiate with the producing provinces for an oil agreement. Instead it is acting unilaterally. The same government also refused to debate the constitution, the most fundamental law of this land. It proposes to act unilaterally through its resolution. Since this government took office, it has totally ignored the people and the views of the people who put them there. Why do we have a government which does not listen to the people it governs?
I would like to take a few moments to reflect upon some of the expressed concerns of western Canadians. I feel it is important to this debate, especially when we are considering legislation which will have a major effect on all Canadians. today, and for generations to come.
The constituents of Prince George-Bulkley Valley have sent me to Ottawa for a very clear reason. As I said earlier, I am here as their representative and as their spokesman in Parliament. Therefore, I intend to express their concerns with regard to this debate. The issue relates directly to my constituents. It also relates to the continuing feeling of alienation and frustration in western Canada. Reports in the press, items on television and political leaders from all levels of government have all stated that the west is not understood. We hear that central Canada does not understand western Canada. Why do we hear about this alienation? My constituents in Prince George-Bulkley Valley want me to express the reasons. I intend to do so in this House, in this, the greatest institution known to Canadians.
Western Canadians are tired of subsidizing the price of fuel for industry in Quebec and Ontario. They are tired because
they already pay top dollars for central Canada's products. They are tired of living with the fact that the Government of Canada has set measures to protect the textile industry. The government makes it difficult for westerners to buy the less expensive goods from Pacific rim nations. Westerners are tired of the fact that the federal government has shown little presence in western Canada. The government has paid lip service to the needs of western Canadians with no solid effort to create continuity and fairness for the western economy. Westerners are tired of paying 1.6 times the western world price for consumer goods because of the barriers put up to protect industries established in Ontario and Quebec.
Western Canadians are not fooled by the federal government's propaganda of Canadianizing the oil industry. They know that the government will turn the notion of Canadianiza-tion into nationalization. Is the term "nationalization" not directly related to socialism? Of course, it is. The frustration of the west has led the government to encourage ministerial visits to western Canada by ministers of the Crown. They say they sense a concern that all is not well. Let me assure this House that all is not well.
The result of the last election proves that western Canada does not agree with Liberal philosophies. An editorial by the Vancouver Board of Trade states:
If the west is to be treated as something more than an obstinate child and if we are to be taken seriously as a mature member of this nation, we must speak up and state our case. Murmurings of western separation, conceived in resentment and nurtured by alienation, must not be allowed to grow.
To give this message, Mr. Speaker, is why the people of Prince George-Bulkley Valley have sent me here. Is it any wonder that western Canadians feel a sense of continued frustration when the federal government reaches into their pockets by forcing a massive federal tax grab on the industry that assures them of their future? The government has not only stifled our input into the constitution but has forbidden us the right to sit down and negotiate with our partners in confederation, namely, the provinces.
We want input into the future of our nation, and when we seek it, the Prime Minister (Mr. Trudeau) calls us hysterical. To give this message is why I have been sent here.
Western Canadians do not and will not accept the government's unilateral attempts to control our lives. I am at a loss to understand why the federal government has put Canada on a path toward a unitary state. It may not be the government's immediate intention, but its actions during this Thirty-second Parliament certainly lead me to believe that it does not hold the view that the provinces' rights should be upheld or that the provinces are, in fact, its equal partners in confederation.
We must ask ourselves the question: Are there other areas in which the government intends to act unilaterally? Its arbitrary decision to change unilaterally the most important law in the land without consultation with interest groups, notably native groups, women's groups, organized labour and even elected representatives of the people, leaves me with a sense of despair and frustration. Because the government intends to act unilaterally to attempt a take-over of one of the most important
November 27, 1980

industries in Canada I am left with a greater sense of despair and frustration. The government has most clearly implied the belief that nationalization or, if you will, socialism, is better for us than a system based on free enterprise. What will happen next? On what industry will the government of Canada next implement its so-called Canadianization scheme? Will it take over British Columbia's forest industry, the single most important industry to my province and, indeed, to all of Canada? Following the route upon which they have now embarked, I see very clear signs of something of that nature in store for British Columbians, other western Canadians and all of Canada.
I stand here to make an appeal on behalf of my constituents and all British Columbians who wish to see an end to frustration. I hope the government will recognize the serious implications of the measure for which they seek approval. The policy adopted by the federal government states that there is a desire to secure supply and ensure energy stability in an unstable energy world. Is energy security increased by the cancellation of the Cold Lake project or the cutback in exploration by Canadian independents? Is it secure when today in a small community, Grande Prairie, Alberta, of four Canadian petroleum companies, one reports a 40 per cent lay-off, the second a 95 per cent lay-off, the third a 75 per cent lay-off and the fourth a 100 per cent lay-off?
Exploration budgets are being cut. This is reported daily. Drill rigs are moving to the United States, and history tells us they will not come back. The government is prepared to allocate money to Saudi Arabia, but not to its own partners in confederation. This confuses me. I wonder what is happening on the government side when such terrible situations face the Canadian public.
Canadian independent oil companies have been hit extremely hard by the recent budget, particularly through the 8 per cent de facto royalty. The Minister of Finance (Mr. Mac-Eachen), with his energy package, has made it possible for Canadian companies to make more money in the United States than in Canada. Canadians are being asked to pay huge increases in prices for over-all energy use. The government will reap the benefits of this, not the people of Canada.
The Minister of Energy, Mines and Resources in his opening statement on the national energy program said:
We must not let our energy strength become a source of internal weakness. Most Canadians are aware of the strains created within the federation by domestic energy pricing and revenue-sharing issues.
If he is aware of this situation, I would ask the minister why his leader is prepared to put Canadian dollars in foreign economies. Why will the government not invest its oil dollars in Canadian oil? If he does not want our energy strength to become a source of internal weakness, why is the federal government not prepared to negotiate a fair pricing system with the producing provinces to see that our energy strength does not cause further internal weakness?
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This minister has also stated that the outlook for the next decade is not encouraging. Well, I must agree with him on that point because, with his attitude, and the attitude of the government of which he is a part, our future is not encouraging. Our energy richness should strengthen our nation, but the government has weakened our nation with its unilateral and autocratic actions.
We are an energy-rich nation, with new technological techniques being introduced daily. Canada can become a world leader in oil production and refining. Look at a cross-section of the whole Canadian scene. We have capacity and the capability to produce enough oil and natural gas to supply all of the western world, if there were co-operation between all levels of government. We have an agricultural industry second to none, an industry that can feed the nations of the world. We have a forest industry which, with proper control, will serve Canadians for generations to come. Canada has the potential to be one of the strongest economic forces in the modern world. With so much potential, why are we wallowing in the morass of this debate? If the past Liberal governments had effectively planned an energy strategy, we would not be in this position today.
This brings me to a point the Minister of Employment and Immigration (Mr. Axworthy) was making earlier when giving this House a history lesson. He was expounding on the wonderful programs the Liberal party had introduced and carried out with regard to unemployment insurance. I wonder if he recalls Mr. Diefenbaker's roads to resources program and the fact that a Liberal Government decided against continuing it? Will he admit, as he indeed should, that if the Government of Canada had continued with that program, our northern area would now be open and perhaps we would not need his precious unemployment insurance programs.


Some hon. Members:: Hear, hear!


Robert Lorne McCuish: The Clark government was committed to an energy policy that would bring Canada to a position of energy self-sufficiency by 1990. Our policy was right, and I truly believe that many members opposite have realized as much by proceeding with a number of our measures.
I have spoken about internal problems within the government's energy proposals and their inability to come to grips with the real solutions that lie before it. Colin Beale stated in a newsletter he published in Vancouver:
If Prime Minister Trudeau goes ahead with his plan to nationalize one or more of the U.S. oil companies now operating in Canada-
Some New York analysts call it confiscation.
-how do you think Reagan would react? He might just retaliate with some sort of bite out of our lumber market hide . . . And what would it mean for our industry if Reagan opens up some of the U.S. national forests to the domestic lumber industry?
Every time I see measures such as this imposed by the government, I wonder what they will take their next run at and where it will all end. Frankly it scares me.
The reaction from Canadian industry itself proves that the government has proceeded on a misguided course of destruc-

November 27, 1980
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tion. The president of Paramount Resources Ltd., a Canadian oil company, states in a letter:
On October 28, 1980, the Government of Canada saw fit to confiscate 25 per cent of the interest we have earned, and paid for at great expense, with no restitution or compensation whatever ... If Paramount was a foreign corporation, we might be enraged. As a Canadian company, I can find no words to describe the rape and plunder the Canadian government has perpetrated on our company. The government has effectively deprived Paramount of all possible profit in the future.
1 quote from another letter to the Prime Minister, this time from a resident of Alberta:
I am still in a state of shock and disbelief that a Canadian government can propose such complete control over a given industry, amounting to de facto nationalization, as our current federal government has done with its national energy program and related budget proposals.
When opposition from such a great multitude arises to any initiative, then no matter which government has conceived it, a second look should be taken to determine whether the measure proposed is really good for the country. First we saw the official opposition oppose the government's energy policies- and we still oppose them. Then we saw the western producing provinces, represented by all parties, oppose the government's energy proposals. And now we see industry and private citizens from all parts of the nation opposing them. Should this not tell the government something?
It frightens me to think of the future directions this government might take. To further state my case, 1 quote from yet another letter written by a western Canadian to Liberal MPs. This person expresses his deep regret regarding the government's energy proposals, and he states:
I am mad and saddened by what you have done and are doing to Canada. First, I do not think that you have properly assessed the rage of western Canadians regarding, inter alia, the budget, your energy policy and the constitution. Secondly, the discriminatory manner in which you have attacked the west and the oil industry assures me that Canada cannot become self-sufficient in oil in the foreseeable future.
1 believe opposition to the government's energy policy is widespread and completely clear and that everybody in Canada recognizes this fact except the Liberal government. When I look at the direction the government is taking, I find myself past the feeling of frustration-I am sick and I am saddened because the federal government's actions will be sorely felt by every Canadian.
There is a famous saying which quite appropriately suits the Government of Canada at this time, and it is, "Forgive them Lord, for they know not what they do". Yet, I firmly believe that the government does know what it is doing. 1 believe it knows, as I do, that it is destroying this institution through its motion of closure and is destroying any sense of national unity by ignoring western Canada. It is attempting to destroy free enterprise in this country by taking over the oil industry. Most important, it is refusing to listen to the views of the people it is supposed to represent as a national government. I am truly saddened.
The Liberals can still turn things around if they wish. The government can still move away from the dangerous path it is
on if it realizes that for us to continue as a strong, independent nation, the foreground must be the people with the government in the background. Big government and the massive tax dollar will not make a country work.


Mr. Roy MacLaren (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, a number of previous participants in this debate have referred to the fact that Canada holds a special position in this energy-sensitive world. Our resources in oil, natural gas, coal, and uranium are envied throughout the world. Unlike most of our industrial partners and competitors, we remain a net exporter of energy.
Just as Canada holds a special position in the world, the petroleum industry holds a special position in the Canadian economy. It produces a commodity of unrivalled and pervasive importance. No industry has undergone or is undergoing more rapid growth. The energy industry underpins and dominates our economic strategy. However, despite Canada's position of strength there is, however, reason for some concern. While Canada is energy self-sufficient, it is not oil self-sufficient. Oil currently provides about 40 per cent of our energy needs. But for every four barrels of oil that we consume in Canada, one must be imported from a foreign country.
The supply of oil from foreign sources cannot be relied upon. The outlook in the Middle East is unpromising. The lranian-Iraqi war has affected the supply of oil to many countries. Some have warned that supplies may be insufficient to meet future demand. After the confused and contradictory policies of the previous Conservative government, which greatly offended a number of our friends in the Middle East, the Prime Minister's recent tour has done much to retrieve our reputation there. However, to establish a truly independent Canadian foreign policy, we must have an independent Canadian energy policy. After all, foreign oil is expensive oil, and unless we act now we will have to buy more of it. The world price will continue to be unsteady, erratic and unpredictable.
For that reason, among others, the government has proclaimed a goal of oil independence for Canada. In this we have asked for the support of all Canadians. We expect to become self-sufficient in oil within ten years. And in reaching this goal we believe that Canadian consumers would prefer to pay Canadian prices, not prices set by cartels elsewhere. We believe that Canadians will accept the need to support both at the gas pumps and as taxpayers, Canadian production-not foreign development.
How do we eliminate the foreign barrel of oil? The national energy program provides the answer. First, by encouraging more exploration and development in Canada, we can replace foreign oil with Canadian oil. We have set aside over $300 million so that we may use our oil more efficiently. A second approach is to substitute other more plentiful energy found in Canada for foreign oil. We have allocated $1.6 billion for our off-oil program. Our third approach is to restrain the total demand for oil through a major effort at conservation, for which we have provided over $1 billion in federal funding. Finally, to provide for our more secure energy future, there is
November 27, 1980

$75 million for the promotion of renewable energies and almost $300 million for energy research and development.
Both opposition parties are aware of the dangers of relying on foreign oil, but the previous government seemed to remain unaware of the dangers of relying on foreign-controlled oil companies. While many other nations moved to form state oil companies, the Conservative government tried to strip Petro-Canada of its assets or to abolish its leading role in our energy future. Public outcry, fortunately, forced them to reconsider their position. After all, without Petro-Canada all of the top ten oil and gas companies in Canada would be still foreign controlled today. Petro-Canada is the one exception.
Not only were the Conservatives moving in opposition to the practice of other countries, they were also incapable of learning from the provinces themselves. Several provinces, including Alberta, Ontario, Quebec and Saskatchewan-two of which have Conservative governments-have themselves established state corporations with a mandate in oil and gas to complement the developments of a yet more dynamic private sector. These governments are committed to using these provincially-owned corporations to shape their regional economic development.
The government is pursuing the same policy and applying it for the benefit of all Canadians. Until now Petro-Canada has been the major agent of Canadianization. Yet Petro-Canada earns only about 5 per cent of the total revenue from the production of petroleum in Canada. Even if this were to double or triple in time, it would still represent only a small share of the total Canadian petroleum market.
Accordingly, the national energy program provides special encouragement to private Canadian oil and gas companies. They are big enough to do the job. Canadian entrepreneurs are at least as bold as foreign managers. Canadian investors are as sophisticated as foreign investors. The public sector will in no way overwhelm the private sector. There will be no government monopoly. The old system of tax incentives, which will be phased out-a policy to which the previous government was also committed in the case of super-depletion-tended to favour big oil companies which are foreign controlled. The profits of Canadian companies have typically been smaller. Since the incentives of the past were in the form of write-offs against profits, the Canadian companies received less support and encouragement from their government than foreign companies.
As a consequence, Canadian companies have frequently been outbid in certain essential aspects of the industry, such as land auctions, farm-ins, and takeovers. As the 1979 petroleum monitoring survey indicated, the petroleum industry in Canada spent still more of its dollars on activities and acquisitions outside the energy sector. This applies particularly to the big integrated companies which spent about 7 per cent of their capital investment on sectors unrelated to energy. This use of revenue contributes nothing to the development of Canada's
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energy potential. We are not responsible for providing foreign-controlled firms with the capital to acquire Canadian firms.
To what other purposes have foreign-controlled companies put Canadian tax dollars and the dollars of Canadian consumers? In the last four years alone, capital exports in the form of dividend and interest payments and the return of capital exceeded imports by $3.7 billion. It simply does not make sense for Canadians to accelerate the development of their own petroleum resources and at the same time see the bulk of the profits and many of the jobs and industrial benefits go to other countries.
That is why Canadianization of the petroleum industry is a fundamental part of our new energy program, a program not designed to drive out foreign investors but simply to make sure that Canadians control at least half of their own industry. We shall not be a resource colony for the United States, Europe, Japan or anybody else.


Some hon. Members:: Hear, hear!


Roy MacLaren: The new system of incentives and allowances outlined in the program will stimulate the petroleum industry to ensure that our target of energy independence by 1990 is fully met. These incentives are available to the industry, with special benefits for Canadian-owned and controlled companies. If foreign companies wish to increase opportunities for Canadians to participate in their particular activities, our government will certainly reward such efforts.
Both Canadian and foreign-controlled companies in the northern territories and offshore-on the so-called "Canada lands"-are eligible to receive depletion allowances at a rate of one-third of exploration expenses. This same rate also applies to all companies for non-conventional and tertiary oil projects and to crude oil upgraders. In addition to such measures, Canadian-controlled companies with at least half Canadian ownership will be eligible for grants which will cover 15 per cent of exploration costs on provincial lands and one-half on Canada lands. Companies with Canadian control and more than three-quarters Canadian ownership will be eligible for grants of 35 per cent on provincial lands and 80 per cent on Canada lands. For development costs, grants of 10 per cent and 20 per cent respectively will apply to Canadian companies for expenditures in non-conventional, tertiary and upgrading projects.
Let me pause for a moment to illustrate these incentives with an example. For one dollar spent, the net cost of exploration on provincial lands by Canadian-controlled companies with more than 75 per cent Canadian ownership would be only 31 cents-that is after tax and after incentive costs and assuming a 47 per cent tax rate. For an individual Canadian investor in the 40 per cent tax bracket, the cost would be 39 cents. The comparable figures for Canada lands would be only seven cents for a Canadian company and 12 cents for the individual.
The petroleum monitoring agency is about to release a paper defining Canadian ownership and control for discussion with

November 27, 1980
Petroleum Administration Act
the private sector, which will elucidate more details in this area.
The oil industry in Canada and, indeed, elsewhere is fiercely independent, and taxes are never popular, but to provide the national government with necessary revenue there will be increases in the taxation of the petroleum industry. Our government believes that the companies which benefit directly, the companies whose profits rose 54 per cent, to $4.7 billion, last year alone can be asked to contribute to this national interest.
The opposition has attacked our Canadianization initiatives. Hon. members opposite have cried, "nationalization, confiscation, expropriation". Their wailing is pure desperation. They cannot attack our energy program, so they attack another supposed program which simply does not exist. Certainly we intend to purchase a major foreign-controlled oil company, but we will pay fair market value for it. Despite such acquisitions, Petro-Canada will not have more than a limited share in the total Canadian market. Within ten years, the cash flow of the private sector in the Canadian petroleum industry is estimated to increase four times.
Canadian-controlled petroleum companies will form an even more prosperous industry than today. Among the small Canadian firms there are many potential candidates to lead the industry into the 1990s, buoyed by our incentives. Canadians will be major shareholders in many more firms. That is not nationalization; that is Canadianization.


Some hon. Members:: Hear, hear!


Marc Lalonde: Tories don't know the difference.


Roy MacLaren: On Canada lands, the lands in the north and offshore, lands which the federal government holds in trust for the people of Canada, the federal government will pay one-quarter of exploration costs. This will offset the 25 per cent Crown interest. Depending upon the level of Canadian ownership of the companies, companies will be eligible to receive the additional benefits which I have already noted. How can the government expropriate lands which it already holds?
As others have noted, we have not moved as far as Britain, where the Crown had first claim of a 51 per cent share of North Sea production. Having obtained the benefits of that particular policy, the British government has now replaced it with a higher taxation level in order to obtain a greater proportion of petroleum revenue.
We have not moved as far as Norway, where its state oil company takes up to 50 per cent in every field and has an option to increase its interest to 70 per cent. We have not moved as far as Australia, where foreign oil companies must have one-quarter of their equity owned by Australians-and they must pledge to increase this to more than one half, and a majority of their directors must be Australian. No, in Canada we have moved cautiously, we have moved with moderation but we are moving with determination.
Let us look at our policy as it will be reviewed in 1990. With our dual program of conservation and additional supply we shall not need foreign oil in 1990. Canada will have achieved energy independence in the full sense of the word. More than 90 per cent of secondary industry demand, excluding transportation, will be satisfied by energy sources other than oil. Oil will decline from its present 43 per cent share to about 27 per cent of our total energy needs. The use of natural gas and electricity will increase dramatically as a result of our program. The contribution of renewable energy will more than double.
To achieve energy independence our energy equation must balance. This means that while domestic supply will have to increase, demand will have to be restrained.
I shall not take the time of the House to cite examples of the many initiatives outlined in the energy program which will ensure that both in the domestic and in the industrial area Canadians will be encouraged to shift from the scarce resource of oil to the more plentiful sources of energy which we enjoy.
Elsewhere in Canada we shall develop new sources of energy, renewable sources, thanks in part to the creation of a new Crown corporation, Enertech, which will take a lead in assisting the private sector in renewable energy and conservation technologies.
There is much more that could be said about the demand side of the equation, but in our discussions in this House the tendency, unfortunately, has been to concentrate almost entirely on the supply side. I assume that since the opposition has said little about the demand side of the equation, they find little in our policy with which to disagree. Let us turn for a moment to the supply side.
Contrary to a common myth, Alberta's remaining established oil and gas revenues are larger now than they were ten years ago. While their reserves of conventional oil have declined, their potential in natural gas and non-conventional oil has increased dramatically. Our program will promote investment and exploration activity where it is needed most: in tertiary and non-conventional projects in Alberta, and in frontier and offshore areas such as the Beaufort Sea and Hibernia where the bulk of future oil supplies will be found.
For natural gas, the only problem our producers have is in finding the markets. So we approved the southern portion of the Alaska gas pipeline, despite the opposition of the NDP, and we shall extend the natural gas pipeline eastward, now to Quebec and soon to the maritime provinces, giving producers a much larger domestic market and consumers a less costly energy alternative. We shall drop the price of natural gas in relation to oil from its present 85 per cent to 67 per cent by 1983, providing a strong incentive for Canadians to convert from oil to gas. If producers still cannot sell enough gas, we shall buy it and we shall bank it. We have set aside $400 million in our program for a natural gas bank. For oil produced by enhanced recovery methods, a supplement will be paid to producers, a supplement which will be additional to the
November 27, 1980

conventional oil wellhead price. This supplement will initially be about $14 a barrel, or sufficient to raise the total wellhead price to approximately $30 a barrel. This price will also be adjusted annually in a manner similar to the method of changing the oil sands price to which I shall refer in a moment. Implementation of that incentive will depend upon the cooperation of the producing provinces. The government has indicated that it is anxious to conclude agreements with each of the producing provinces on this important aspect of our energy supply.
As to the oil sands where our reserves are increasing, we are doing everything in our power to encourage their more rapid development. The federal government has always supported oil sands development. In the past, we provided the international price to Syncrude and to Suncor. We provided 12 per cent of the total investment in Syncrude. We allowed the deductibility of Syncrude royalties against federal income tax. We provided a tax system of rapid writeoffs and earned depletion which reduced the costs of investors by at least $2 billion.
Under the new energy program, we shall go even further. For new oil sands development, we have offered a price of $38 a barrel, roughly the international oil price today, and we shall increase it with inflation. We offered Imperial Oil a loan of $20 million to keep its Cold Lake oil sands project alive. The Alberta government refuses to put up its share, so we shall assume that burden as well. Unfortunately, the Alberta government has refused to proceed with these projects unless we accept their demands on petroleum pricing. If persisted in, the Alberta premier's decision will hurt all Canadians, but none more than those Canadians living in Alberta. Let me quote a recent Edmonton Journal editorial:
Alberta has every right to drive a hard energy bargain ... But driving a hard bargain differs markedly from holding fast to the adamant precondition of a "global" agreement on both conventional and synthetic oil pricing. Surely, if clear heads are to prevail, it must be seen that it would be a sign of statesmanship, not weakness, to divorce conventional and synthetic oil price negotiations.
Thus spoke the Edmonton Journal. We hope the Alberta premier will reconsider his attitude. We regret his decision to withhold 15 per cent of Alberta's oil production from other Canadians. Surely $100 billion over the next decade is sufficient income for any province, including Alberta. The Alberta government should surely be satisfied with 43 per cent of the total revenues from oil and gas. We, the national government, are willing to accept less than one-quarter. Compare us with other federations, such as the United States and Australia, and you will be struck by the lower level of revenue available to the national government of Canada.
I noted that last Friday the hon. member for Etobicoke Centre (Mr. Wilson) claimed that the federal share of petroleum revenue under our plan would be much more than 24 per cent, something like 45 per cent to 50 per cent-he was not quite sure. Let me set the record straight. The issue here is the sharing of net operating income from oil or natural gas. This is the traditional way of determining shares and I believe it remains appropriate. The hon. member noted that not all sources of federal revenue are counted, but he conveniently neglected to mention that not all sources of provincial income
Petroleum Administration Act
are counted, such as revenues from downstream profits and taxes on petroleum profits.
The hon. member opposite went on to contend that the new energy policy is causing some drilling rigs to move south. We have heard a lot about those drill rigs recently but, as the Minister of Employment and Immigration (Mr. Axworthy) noted a few minutes ago, some oil rigs did indeed move south but it was well prior to the announcement of the new energy program. The movement of rigs was the result of oversupply prompted by the record petroleum activity in Canada in recent years. How could a member claim that the movement of a few rigs was an effect of a cause that had not yet happened? We are proud of the rapid growth in Canada's drilling rig industry. In 1975, there were only 272 rigs in Canada; now we have about 570. Although a temporary slowdown is expected because of the decline in natural gas sales-a decline which the energy program will do much to reverse-the Canadian Association of Oilwell Drilling Operators has said that the long-term outlook for the industry is optimistic and the demand for services will continue to grow.
Our current debate is predicated on the proclamation of certain sections of the Petroleum Administration Act. We have taken this step reluctantly but, as hon. members know, the previous agreement had expired. Some pricing schedule had to prevail. This does not restrict the right of the provinces to set the price of oil and gas within their own borders. In fact, the British Columbia government sets the price of natural gas at below cost, and the Alberta government has unilaterally proclaimed an act to set natural gas prices within that province. We have repeatedly pledged that our proclamation, now made, can be revoked immediately as soon as a satisfactory agreement is reached with the producing provinces. We cannot, however, ignore our national responsibilities. During our discussions in the past months, Alberta demanded the same net benefits as offered by the previous government. Alberta would not consider a natural gas export tax. Alberta would not consider a wellhead tax. Alberta would not discuss equalization. Alberta would not separate consideration of the oil sands from conventional oil sources. Alberta took the position that we as the national government had no claim to a greater portion of revenue which they claim was tantamount to federal expropriation. This left us with the possibility of deriving these revenues from the oil industry, including Alberta's oil industry, and Canadian consumers including Albertans. We made proposals on March 13-


Mr. Deputy Speaker:: Order, please.
5136

November 27, 1980
Adjournment Debate



PROCEEDINGS ON ADJOURNMENT MOTION

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

Hon. Elmer M. MacKay (Central Nova):: Mr. Speaker, last June the Minister of Transport (Mr. Pepin) refused to indicate his support for the retention of the Oxford subdivision of the Canadian National Railways in Nova Scotia. This 55 miles of track known as the "short line" is very important to Nova Scotia. Also at that time the minister declined to investigate the condition of the railway, the deplorable condition of the track itself. As I understood his reply, he indicated that the CTC, as far as he was concerned, was the end-all and be-all. He would not do anything until they made a decision on an application to abandon this part of the system.
In the meantime, almost six months have come and gone. Conditions on the short line, as far as I know, have not changed, and its future has been left under a cloud.
The disgust that members of Parliament of all parties currently feel toward CN policy transcends partisan politics. Jeff Matthews of the Halifax Chronicle-Herald noted the following in a recent story:
If the Commons had been voting Monday on a least popular corporate citizen, the CN just might have run away with the prize.
The story which triggered this particular feeling was, of course, the CN's current policy in closing many of its express terminal services.
As you know, Mr. Speaker, yesterday the hon. member for Hillsborough (Mr. McMillan) took the unusual but appropriate step of moving the adjournment of the House to discuss this particular move of CN which will cause over 250 CN employees to lose their jobs and inflict substantial hardship within the region. The minister is aware that CN has been systematically divesting itself of appendages which detract from its profit picture. However, he must surely agree that while profitability is commendable in a Crown corporation, a national railway system has a service to perform as well.
It is always timely to remind the House and the country that since its formation the CNR has been relieved of its debt and interest costs four times. The total relief provided from 1922 to 1978 has been in excess of S6.7 billion. At times CN management has been rather erratic, to say the least. For example, after the recapitalization that took place in 1952 which gave CN a debt-equity ratio almost identical to that of CP, CN proceeded to convert its power fleet from steam locomotives to diesel, and completed this conversion in less than half the time it took the CPR. Of course, if one was not taking depreciation into account and just had $700 million worth of debt written off, one could go out and borrow any amount to buy new diesel engines, which is exactly what they did. CN expected that
investment to make them so efficient that they would be able to beat CP into the ground. But, it has not quite worked out that way, and their trucking ventures did not work out that way either. They paid two or three times what any sane trucker would pay for an acquisition, and of course they could never generate an adequate return for the capital outlay. The tower in Toronto is another example of CN policy. It cost them 2.5 times as much to build it as they thought it would, and the number of paying customers is much less than they had anticipated. So the tower is not earning an adequate return either, and thus it goes on. Nor can they adequately maintain a very important part of the Nova Scotia railway system.
A major portion of the short line railway runs through the county of Pictou, connecting it with the rest of the province and the nation. Without it, the town and the port of Pictou would be cut off from our national rail system. According to the national statistical agency, the town produced nearly $8 million in shipments of manufactured goods in 1977. Of course these statistics do not take into account the massive Michelin Tire complex at Granton. Instead of the dismantling and dismemberment of our railway system in Atlantic Canada- and I am speaking specifically now of Nova Scotia-what is needed is a detailed study of how it can be improved, such as those undertaken in western Canada. Such evaluations, whether by Mr. Justice Emmett Hall or others, have called for a reasoned approach. Neither DREE, the federal Department of Transport, nor the Nova Scotia department of transport has yet shown initiatives in regard to the Nova Scotia rail system. The maritimes are perhaps the only region in Canada where the railways are allowed to implement piecemeal abandonments without reference to the region's total rail transport needs. Piecemeal moves to dismantle sections of our rail system run a high risk of producing a truncated rail transport system.
No further abandonments in relation to the maritime rail transport system should be considered until an adequate evaluation has been undertaken in regard to the region's present and future needs. Since constitutional matters are dominating the attention of Parliament, it is timely to remind the government that the federal government is under a constitutional obligation to maintain Nova Scotia's rail link with New Brunswick and Canada.
As a sidelight, it is interesting to denote careful reading to the debates in the House of Commons which reveal the air of constitutional obligation under which the Canadian Government Railways were authorized in 1886 and 1887 to complete the then Oxford Junction and New Glasgow branch of the Intercolonial Railway, which is the branch about which 1 speak tonight. I quote from Hansard of 1887 the words of the Liberal member of Parliament from Nova Scotia who represented Guysborough. His name was John A. Kirk. This is what he pointed out:
Then, the local legislature, during the session of 1886, passed a resolution asking the people of Nova Scotia to decide at the polls whether they wished to continue
November 27, 1980

in the union or not. Under those circumstances, on the 15th of June, 1886, the people declared by an overwhelming majority that they wished to withdraw from the union. Well, sir, I think that had something to do with the action of this government in afterwards passing those minutes of council in reference to railroads.
That quote was from Hansard of May 6, 1887, at page 311. The "short line" provides for the national government an additional capability to maintain the rail link with New Brunswick as required by the constitution.
If a derailment or other mishap should interrupt rail movements on the main line between Oxford and Truro, Nova Scotia's rail link with New Brunswick and the rest of Canada would be broken. The "short line" presently provides the opportunity for the maintenance of the rail link.
Mr. Speaker, I see my time is up. May I simply say in closing that we would like to hear less double-talking, or perhaps it was double-crossing, of the west, and more action to keep the existing rail system in operation in Nova Scotia.


Mr. Robert Bockstael (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, I have very little to add in answer to the hon. member's question beyond what the minister has already stated to him in the House and in correspondence.
An application for abandonment of this particular line was first made in 1963 and resubmitted in April of this year. In the interim the railway has continued to operate the line and will continue to do so until it is authorized to abandon it. 1 think it is generally known that the Canadian Transport Commission must decide whether to allow the abandonment or not. If it does not, the CTC may compensate the railway for its losses. In any case, public hearings are required and 30 days' notice must be given to interested parties. To my knowledge the CTC has not yet indicated when it will hold hearings. I suppose one could be tempted to accuse the regulatory agency of being rather slow in this case, but I doubt if that is the hon. member's intention.
Pending a hearing and decision by the CTC it would not seem proper for the minister to indicate a preference on the future of the line. As recorded in Hansard on June 11, the minister pointed out there are certainly avenues of appeal once the decision is made. In the meantime, however, it is the minister's intention to let the matter run its proper course.


CANADIAN FILM DEVELOPMENT CORPORATION-RESIGNATION OF MICHAEL McCABE-AMOUNT OF SEVERANCE PAY
Mr. Benno Friesen (Surrey-White Rock-North Delta):: Mr. Speaker, on May 21 I rose in the House to ask the Secretary of State (Mr. Fox) the circumstances under which Mr. Michael McCabe had left the employ of the CFDC. Specifically, my question had to do with the report that Mr. McCabe had, in fact, resigned as the executive director of the CFDC. The word among the industry people was that having resigned he was granted one year's salary. In answer to an order paper question several weeks ago, I believe, the salary pegged for the executive director was in the range of $50,000 to $60,000 per year.
Adjournment Debate
That is not bad severance pay. In the annual report of the Canadian Film Development Corporation, dated June 1, 1980, under the heading "Management" we find the following:
On June 1, 1980, Mr. Michael McCabe resigned as the corporation's executive director.
According to the records he did, in fact, resign. I asked the minister whether it was not rather strange behaviour and a little generous to someone who had resigned to give him an extra year's salary. Did Mr. McCabe resign? Was he squeezed out, or was he fired?
Other questions followed: What did Mr. McCabe do after his so-called resignation? Is it true he is involved in another business? The minister said, as reported at page 1260 of Hansard:
He indicated in his letter of resignation that he felt he had made his contribution to the corporation, that he wished to return to the private sector, and he thought this was the best time to leave the corporation so that he could pursue his own private interests in the future.
What were Mr. McCabe's own private interests in the future? If the conflict of interest guidelines of the Prime Minister have any relationship to what senior executives of Crown corporations do, I wonder what Mr. McCabe is doing now. The word is he is now working with a firm called Film Accord of Montreal, even though he is apparently living in Toronto. My question is this: how much business is that company, Film Accord, doing with CFDC? Could it be that Mr. McCabe has spent several years working with the Canadian Film Development Corporation in order to cultivate connections with the film industry, to form his own consulting firm and thereby reap the benefits of the lines of communication he established with the government while he was a member of the Canadian Film Development Corporation? I wonder whether the Prime Minister's guidelines should apply to Mr. McCabe.
Is it true that he is receiving $50,000 or so in salary even though he is no longer connected with the corporation? Is Mr. McCabe in a conflict of interest situation vis-a-vis the Prime Minister's guidelines? I understand he spent a lot of time at the film festival in Cannes where the CFDC together with the NFB spent thousands of dollars pushing Canadian films which did not get anywhere. A yacht was rented as part of the promotion for those films. I understand also that Mr. McCabe spent considerable time in California apparently pushing Canadian films. How successful was Mr. McCabe in peddling Canadian films in California? Did the board of directors ever demand an accounting of the time spent by him in California? How was he spending his time? Was he successful? How much in the way of sales did he achieve for the CFDC or for those films which CFDC helped to finance?
Finally, I understand that Mr. McCabe went as part of a production company to help film the movie "Bethune" in mainland China. In the annual report of the CFDC there is a list of all the films which the CFDC helped produce in 1979. Nowhere in that list of films which they helped to finance is a film called "Bethune". If my memory serves me correctly, that

November 27, 1980
Adjournment Debate
film was not produced by the CFDC, but by the CBC. Is it true that Mr. McCabe was part of the production crew which went to the Republic of China? Was he granted a leave of absence? Was he on full salary while he was in China? For all of Mr. McCabe's frenetic activity it seems to me that he was handsomely paid, both by way of salary and by way of the fringe benefits he seemed to accumulate while he was executive director of that corporation. The minister seems to say in his answer that he does not know anything about the terms of separation between Mr. McCabe and the corporation. If the minister is going to discharge his responsibility totally, he ought to know what those terms were. The taxpayers of Canada, who have invested millions of dollars in the CFDC, have a right to know how that board of directors is managing the affairs of that corporation.
If they are going to discharge their stewardship properly, they owe an accounting to the Canadian people as to how their executive director discharged his duties. How much did it cost the taxpayers in addition to the very generous salary they were paying him? Does the Secretary of State (Mr. Fox) hold the board of directors accountable for the way they managed the affairs of that corporation? Can the parliamentary secretary stand in his place tonight and tell us whether Mr. McCabe was paid a year's severance pay, whether the board of directors asked for an accounting of Mr. McCabe's time in California and whether he went to the Republic of China to help film that movie, even though it was not part of the CFDC production schedule? If the taxpayers are to be given an account of the stewardship of that corporation, the parliamentary secretary should speak on behalf of the Secretary of State tonight.


Mr. Peter Stollery (Parliamentary Secretary to Secretary of State and Minister of Communications):: Mr. Speaker, I intend to stick to the question the hon. member asked May 21 last and not involve myself in the rather extravagant elaboration of the question to which he has treated us.
Fast May 21 the hon. member specifically asked that the Canadian Film Development Corporation disclose what is essentially confidential information concerning aspects of the corporation's internal administration as well as its relationship with its clients. The member opposite has consistently chosen to ignore one very crucial fact concerning this issue. It is that the Minister of Communications (Mr. Fox), who is responsible for the CFDC, operates at a traditional arm's length relationship with what is a Crown corporation and does not attempt in any way to interfere with its day to day internal operations. I am sure the hon. member would be the first to protest if he did.
In response to the questions raised by the hon. member, the minister has acted in a responsible manner by requesting a full report from the CFDC. This report has not, as yet, been forwarded to the minister for his full appraisal of all the facts surrounding the resignation of Mr. Michael McCabe as executive director of the corporation.
The minister will be asking again, this week, for presentation of the CFDC report at the earliest possible date. Once the minister has had an opportunity to study its contents thoroughly, he will be in a better position to respond to the questions raised by the hon. member, namely, the resignation of Mr. Michael McCabe.


CANADA MORTGAGE AND HOUSING CORPORATION-RENT INCREASES FOR APARTMENTS IN TORONTO
Mr. Neil Young (Beaches):: Mr. Speaker, I want to thank the Minister of Public Works (Mr. Cosgrove) for being here this evening. I rise in connection with a question directed to him on May 23 of this year with respect to the Toronto Main Square apartment buildings. Those buildings are held by the Canada Mortgage and Housing Corporation for which the minister is responsible. The purpose of my question was to determine why the tenants in those buildings were being notified that rents would be increased by 12 per cent on lease renewal, and that the First and last month's rent would also have to be paid at that time.
Since then I have written a number of letters to the minister on this matter. At no time has the minister given a satisfactory response to the fact that the tenants in those apartments are being asked to pay an increase in rents that is double the increase permitted by most landlords under Ontario laws. The minister made a further response on May 26, 1980, and told the House that CMHC had introduced a rent-geared-to-income program at Main Square. Six months later, I am advised that even though a number of tenants have applied for this relief, not one has received it. The tenants in those apartments want to know just who is giving the correct answer to this question.
Whatever the real answer is, the effect of this rental increase is, and will be, very real for Main Square tenants. At the time Main Square was constructed in 1971 it was reported that 65 per cent of the apartment units would be subsidized and that those who qualified for reduced rents would be senior citizens, handicapped persons, single parent families, students and low-income families.
The executive of the Main Square Tenants Association have repeatedly requested that they be supplied with information on the current population of those buildings, and to date have not been successful in receiving that information. However, in a letter dated July 23, 1980, to Toronto City Council the minister said that as of March, 1980, there were 22 handicapped and 252 senior citizens in Main Square.
In another letter dated September 10, 1980, to the Deader of the Ontario New Democratic Party the minister said:
Initially, there were 50 units available for such tenants, but only 22 units are currently occupied by handicapped or disabled persons. The reason for this was that CMHC was not able to rent them to handicapped people at the time the units became available and they were therefore rented to other tenants.
However, I can assure you, as these units become available, every effort is made to lease them to handicapped or disabled tenants.
November 27, 1980

I recently received a letter from a Main Square tenant which I am sure other members of the House will want to hear and I am equally sure the letter will have the same effect on them as it had on me and it speaks for itself. It reads as follows:
Dear Mr. Young
I am writing to you out of sheer desperation with a total feeling of indignity. I am a woman who is totally handicapped. I have lived in Main Square since the complex first opened under the Communicept program which allowed handicapped people to live here totally independent.
1 am completely dependent on a fixed government income which does not keep pace with inflation.
I was notified by Property Management that as of December 1, 1980 my rent would be increased by 12 per cent. When I subtract the $30.00 subsidy from the new rental increase the actual cost to me is 15 per cent.
I submitted a notarized, questionable, "means test" to management at their request, which fully documents my total income and points out quite clearly the hardship that is placed on me by the 15 per cent increase in rent. To date there has been no response from management regarding special consideration and it makes me wonder why 1 must be humiliated into filling out a "means test" and notarizing it and not having it acknowledged.
I am afraid this additional hardship will give them the excuse to institutionalize me, taking away my freedom and dignity.
Since I am unable to stand up for my rights would you please make this stand for me?
Even though the minister has advised me and the tenants association and everyone else that CMHC has introduced a 25 per cent formula gearing rent-to-income to Main Square, the fact is, such a formula is not in operation in Main Square.
In examining the records kept by the tenants association it is also obvious to me-and it would be to the minister or to anyone else who cared to look at those records-that the company which CMHC contracted to manage Main Square has been more interested in making a profit than it has in properly managing the buildings.
It is a disgrace that only nine years after this apartment building was constructed a number of its structures, such as the underground garage, are in a state of disrepair. Cars parked in this garage are continually broken into and vandalized. At least one car had all of its four tires slashed in the last few months. Access to the garage by unauthorized persons is so easy that abandoned cars are an every-day item.
The lack of over-all security and protection not only in the garage but also in the buildings themselves has resulted in two reported rapes, two reported attempted rapes, several reported indecent assaults and at least one reported case of indecent exposure. All those incidents have the tenants in Main Square wondering just what kind of landlord CMHC is.
The tenants and their association have persistently made representations to the managers of Main Square to have normal and proper maintenance and security procedures implemented, and in nearly every instance have had those approaches rebuffed by both CMHC officials and the managers of this property.
Adjournment Debate
I could go on at great length about the conditions in those buildings, but I see that my time has nearly run out. I will conclude by inviting the Minister of Public Works (Mr. Cosgrove) to meet the tenants of Main Square face to face and to hear about those problems at first hand from the people who are living with them on a daily basis.


Hon. Paul J. Cosgrove (Minister of Public Works):: Mr. Speaker, before responding to the specifics of some of the points raised by the hon. member opposite I would like to confirm as a matter of record that I received only short notice of the question raised this evening. However, in light of the substantial and serious issues raised by the hon. member, I agreed to attempt to respond to the question this evening.
At the outset, with respect to the question whether the 25 per cent rent geared-to-income formula is in place, I can confirm this evening that the formula is indeed in place. If there is any confusion about that, it will be set aside. In addition, because it was announced on May 26 by me in this House, the formula will be made retroactive to the beginning of June. Mind you, it will be available to those people who would otherwise have qualified under the rules which are normally understood. Of course, it would be under a situation in which individual tenants would apply, and they would have to satisfy corporation officials that they did meet those particular requirements.
With respect to the unfortunate incidents raised by the hon. member I would like to indicate my acceptance of his invitation to meet with the tenants of Main Square. I would like to confirm this evening that it is my intention within the next few weeks, because my constituency is close by, to look for an opportunity to do that with the hon. member. Because my constituency is in metropolitan Toronto and because of my experience in metropolitan Toronto, I know that security in multiple buildings over the last few years in metropolitan Toronto has created considerable difficulty not only for this project but for many other projects in the metropolitan area. The police have found it very difficult to cope with this situation. I think the response is one which could well involve not only CMHC but also a review by police of security generally in the area. In addition, it could involve the co-operation of the tenants association and that of the city through its various programs. It could also involve metropolitan Toronto officials.
I thank the hon. member for his question and, as I have indicated, the undertakings which I have given this evening will, I hope, go some way toward satisfying the hon. member and the people he represents.


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 11 a.m.
At 10.30 p.m. the House adjourned, without question put, pursuant to Standing Order.

Friday, November 28, 1980