1981-01-21

ROUTINE PROCEEDINGS


Mr. Walter McLean (Waterloo):: Madam Speaker, I rise under the provisions of Standing Order 43. In the light of the resignation yesterday of Doris Anderson, President of the Canadian Advisory Council on the Status of Women, protesting gross manipulation of the council by the minister responsible for the status of women who feared the council's February 12 and February 13 conference on the constitution would prove embarrassing to the government, and in the light of the council's original concept to be an advisory council reporting directly to Parliament as an independent body, not a political tool to any minister, 1 move, seconded by the hon. member for Kingston and the Islands (Miss MacDonald):
That this House demands the minister responsible for the status of women be immediately relieved of his duties in order to restore the independence of the advisory council.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL ENERGY PROGRAM
Mr. Gordon Taylor (Bow River):: Madam Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. Whereas the Liberal government's energy policy in threatening nationalization of large and small successful oil companies and imposing increased federal taxes on provincial resources is crippling the oil industry, and whereas these policies are driving businesses and skilled labour and capital out of Canada which will set back oil sufficiency in this
country at least ten years, 1 move, seconded by the hon. member for Peace River (Mr. Cooper):
That the liberal backbenchers open their eyes to the facts and demand that the Prime Minister change these disastrous policies.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AIR CANADA
Mr. Jack Murta (Lisgar):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Air Canada has announced the establishment of a new connoisseur service effective February 1, 1981, for passengers paying the regular economy fare with special service to avoid line-ups at airports, more spacious seating, complimentary bar and wine service, a first choice of meals, a first choice of magazines and newspapers and priority in boarding and deplaning. Unfortunately, this service will not be available to Saskatchewan, Manitoba and Atlantic Canada where full-fare economy passengers will pay more for less. Therefore, 1 move, seconded by the hon. member for Win-nipeg-Assiniboine (Mr. McKenzie):
That this House direct Air Canada to renounce second-class treatment for the people of Saskatchewan, Manitoba and Atlantic Canada and initiate its new connoisseur service on all domestic flights effective February 1, 1981.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


REGIONAL ECONOMIC EXPANSION
Mr. Remi Bujold (Bonaventure-Iles-de-la-Madeleine):: Madam Speaker, I rise on an urgent matter under the provisions of Standing Order 43.

January 21, 1981
In view of the fact that, for the last two years, the people of the Matapedia Valley have been wondering about the possibility of establishing a paper plant in the area; that the solidarity expressed last Monday at a demonstration held at Amqui proved the extent of the frustration of the people of the valley; that the economic situation in that area is characterized by an extremely high rate of unemployment, I move, seconded by the hon. member for Rimouski (Mrs. Cote):
That the Minister responsible for Regional Economic Expansion reach a decision as soon as possible on the matter, so that the people of the valley will know where they stand with regard to the setting up of a pulp and paper mill in that area.


Madam Speaker:: That motion cannot be put without the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


GARRISON DIVERSION
Mr. Dan McKenzie (Winnipeg-Assiniboine):: Madam
Speaker, I rise under the provisions of Standing Order 43. In view of the comments made recently by North Dakota governor Olson calling for the completion on schedule of the Garrison diversion project and his statement that there have been no official statements from Canada that the project would be harmful to Manitoba waters, I move, seconded by the hon. member for Brandon-Souris (Mr. Dinsdale):
That Canada's objection to the Garrison diversion project be put on the agenda at the first meeting between President Reagan and the Prime Minister and that a copy of the IJC report which officially explains the harmful effects of the project on Manitoba waters be presented to the governor immediately.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


GOVERNMENT ADVERTISING
Mr. Nelson A. Riis (Kamloops-Shuswap):: Madam Speaker, I rise under the provisions of Standing Order 43 and would ask all members of the House to give this motion at least fair consideration. Considering that the federal government is the nation's largest advertiser, spending more than $60 million last year, and recognizing that Canada's small independent newspapers are undergoing pressure from the large newspaper chains, I move, seconded by the hon. member for Beaches (Mr. Young):
That the members of this House recognize and support our local independent newspapers and request the Minister of Supply and Services to ensure that our small community newspapers receive their fair share of federal government advertising expenditures.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


HAZARDOUS SUBSTANCES
Mr. F. Oberle (Prince George-Peace River):: Madam Speaker, I rise under the provisions of Standing Order 43 with regard to a matter which is becoming increasingly urgent and pressing, namely, the handling, storage and more specifically the permanent disposal of harmful and dangerous substances such as PCBs, which are still widely used by industry throughout the country and will be used for some time, even though replacement materials have been developed, for the reason that there are no facilities available either to safely store or, more ideally, to dispose permanently of substances such as PCBs, which have been proven exceedingly harmful to the environment and dangerous to human health. I move, seconded by the hon. member for Cariboo-Chilcotin (Mr. Greenaway):
That the government through its appropriate agencies and jurisdictions, and in co-ordination with similar agencies in the provinces, begin immediately to identify and prepare suitable sites in strategic locations throughout the country to serve as repositories for dangerous and harmful substances, and having established such repositories, to put in place regulations under which the use of such substances, particularly in the industrial workplace, can be eliminated.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


EXTERNAL AID
Mr. Bob Ogle (Saskatoon East):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the Canadian International Development Agency's extreme tardiness in living up to the promises made by the Secretary of State for External Affairs (Mr. MacGuigan) for a program of substantial assistance to Zimbabwe following Canada's prompt recognition of
January 21, 1981

the new government, I move, seconded by the hon. member for New Westminster-Coquitlam (Miss Jewett):
That this House urge the government to follow through with concrete actions, not just words, on the Prime Minister's spoken concern to increase aid levels when he was in Africa, specifically by directing Cl DA to deliver on the promises for financial and technical assistance which were made to the government of Zimbabwe.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE MONARCHY
Mr. Bill Yurko (Edmonton East):: Madam Speaker, I rise under the provisions of Standing Order 43 on an important matter. I am certain that every member of this House recognizes the unique and important role that the monarchy plays in Canada's parliamentary system of government and, indeed, in the very fabric of Canadian society. I therefore move, seconded by the hon. member for Simcoe South (Mr. Stewart):
That this House undertake, through appropriate protocol, to invite Her Majesty Queen Elizabeth and the Royal Family to schedule an official visit to Canada during 1981, to celebrate with all Canadians the adoption of the official Canadian national anthem.


Mr. Trudeau:: And the new constitution.


Mr. Hnatyshyn:: Make that 1982 or 1983.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD

[Stage Direction]
[ English |

Hon. Flora MacDonald (Kingston and the Islands):: Madam Speaker, my question is for the Prime Minister. It concerns the resignation of Doris Anderson as a result of the direct interference by the minister responsible for the status of women into the plans of the advisory council. The Prime Minister may be aware that that interference is documented in the transcript of the proceedings of the executive committee on January 9,
Oral Questions
which states that the minister strongly suggested that the conference on women in the constitution be cancelled because (a) the timing was bad since the conference was being held at the same time that the charter of rights would be tabled in the House, and (b) it would be an embarrassment to the government.
My question, Madam Speaker, is this. In light of this blatant interference by the minister responsible for the status of women in what is supposed to be an independent council, will the Prime Minister immediately demand that the minister resign from this particular responsibility? He is not responsible in this matter, he is totally irresponsible.


Pierre Elliott Trudeau: Madam Speaker, I regret the resignation of Mrs. Doris Anderson. 1 think she has done a good job and I am sorry to see that she took it upon herself to resign because I would have hoped personally that she would have continued. I understand there was a vote of the members of the council, and the result of that vote, democratically taken by members of that council, was to postpone the conference. Since that was contrary to Mrs. Anderson's opinion, she saw fit to resign which, of course, is her right. I think the hon. lady opposite, in suggesting that the minister was interfering in the process, is really suggesting that that democratic vote was made by irresponsible members of the council, which I would not accept, Madam Speaker.


Flora Isabel MacDonald: What we are talking about here is the resignation of the minister responsible for the status of women, and that is what is important to this House. What is at stake, and the Prime Minister must recognize this, is surely the integrity and credibility of the Advisory Council on the Status of Women as an independent body. It has not been allowed to be independent; it has been interfered with. Doris Anderson respected that principle, and she had no difficulty getting along with two previous administrations, both Liberal and Conservative. It is only with this minister that the difficulty has arisen. I ask the Prime Minister, therefore, whether he will immediately demand the minister's resignation from this responsibility or, better still, will he change the mandate of the council so it reports directly to Parliament and is not liable to be the political tool of any minister?


Pierre Elliott Trudeau: Madam Speaker, the answer to the question is certainly not, I would not ask for the minister's resignation. His accomplishments as minister responsible for the status of women since his appointment are very great indeed.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: He has introduced measures to ensure affirmative action in the public service, affirmative action clauses in all job-creation programs; he has ensured that a 75 per cent wage subsidy be paid to women in non-traditional occupations; he has ensured that priority be given to job creation which assists women, for instance in day care; he has reduced the

January 21, 1981
Oral Questions
minimum insurable hours for unemployment insurance from 20 to 15 hours per week-


Some hon. Members:: Order, order.


Pierre Elliott Trudeau: The hon. lady opposite knows that 75 per cent of part-time workers are women. He has sponsored a $1 million national ad campaign on women's employment; and he started a review of the unemployment insurance to, among other things, remove discrimination-


Some hon. Members:: Order, order.


Pierre Elliott Trudeau: He started a review of immigration to help-


Madam Speaker:: Order, order. I do want to remind hon. members that when a question is exceptionally long there is no reason why the answer should not be just as long if it is needed.


Mr. Clark:: So much for an impartial Chair.


Some hon. Members:: Oh, oh!


Madam Speaker:: Order. This incident is really of no consequence. Let us resume the Oral Question Period. The hon. member for Kingston and the Islands has the floor.
[English |


ALLEGED MANIPULATION OF COUNCIL MEMBERS BY MINISTER
Flora Isabel MacDonald: Madam Speaker, my final question is directed to the minister responsible for the status of women, who could take a look at the example set by Doris Anderson with respect to adherence to principle. The minister stated flatly the other day-it is recorded in Hansard-that "at no time was pressure applied". In a documented chronology of events leading up to this fiasco the minister's assistant, Nancy Connolly, reported to Doris Anderson and to the executive committee on January 7 that the minister was determined that the conference must be changed and regional conferences scheduled instead.
In light of that documentation and in light of that evidence-and there is much more-I would like to ask the minister if he is still trying to weasel out of the charge that pressure has been brought to bear and that members of the council were manipulated by his office and therefore whether this whole matter should require his resignation from that particular responsibility.


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, it may be of some interest to the hon. member to know that in reference to that particular document the members of the executive committee who were at that meeting have signed a legal affidavit stating that the document is full of misrepresentations. That affidavit has been deposited with a lawyer. I do not know what the document says. I have not seen it. Obviously, the hon. member was privy
to a confidential document to which no one else is, but I do know that an affidavit was deposited with a lawyer saying that the document was ill prepared.
I simply repeat to hon. members of this House that political pressure was not applied. The meeting referred to was requested by the members of that executive committee. They asked for an opinion; I gave them an opinion. I told them the decision was theirs to make and that we would live with the decision either way. That decision has been made by the executive committee and ratified by the entire council. That is a democratic process, and those who argue for the independence of the council should be reminded that the best way to preserve that would be to respect the decision made by a council of people who are very dedicated to the cause of women in this country.


SUGGESTED RESTRUCTURING OF COUNCIL
Walter Franklin McLean: Madam Speaker, in the light of the controversy over what has or has not been said in terms of decisions being imposed from above upon the Advisory Council on the Status of Women, and in the light of the public reaction personified by Lynn MacDonald, the president of the National Action Committee on the Status of Women, which represents 150 women's groups across the country, when she said that her group will have to rethink its position regarding a government-appointed advisory council, would the Prime Minister give serious consideration to restructuring the advisory council and widening its representation so that women's groups across the country can rely on the council to be impartial in the opinions it gives?


Lloyd Axworthy: Madam Speaker, I would like to answer the hon. member by saying that we would certainly be prepared to examine any improvements to the council which could be made, but I want to suggest that the council has already proved its real value through the work it has done in making major recommendations with respect to the constitution. Those representations were accepted by the government as part of our amendments to the charter. In fact, hon. members on this side of the House are the only ones who have strongly endorsed that particular plank and included it in our charter of rights, with which the opposition is in total disagreement. If anyone defends women's right, it is certainly this party, but we are prepared to meet with members of the council and discuss how their operations and procedures could be improved.


RECOMMENDATION THAT COUNCIL REPORT TO PARLIAMENT
Walter Franklin McLean: Madam Speaker, what the minister is saying is that the council will continue as a political tool. My supplementary question is addressed to the Prime Minister, and it is on a matter of policy in relation to the council and to this House. A 1970 recommendation of the Royal Commission on the Status of Women was that the
January 21, 1981

council should report not to a minister but through a minister, as does the Human Rights Commission and as does the Auditor General, Women represent 52 per cent of our nation, and they ought to be heard. While there are many able women here, women are still underrepresented. Will the Prime Minister act upon that recommendation and see that this House receives reports of the actions of the advisory council?


Pierre Elliott Trudeau: I will gladly look into that suggestion and ensure that a report on it is made to me. I just want to emphasize, in reply to what was said by the minister responsible, that at least we on this side have introduced a constitutional charter, binding on all Canadians, which would prevent discrimination against people on the basis of sex. 1 noticed last night that the hon. gentleman's party has copped out on that. They suggested they are prepared to defend rights when everybody in every province in Canada agrees, but, of course, we know from what happened in September that several provinces are against the infringement of rights, with the result that obviously the hon. gentleman's party has copped out on this again.


Some hon. Members:: Hear, hear!


WIDER REPRESENTATION OF WOMEN ON COUNCIL
Miss Pauline Jewett (New Westminster-Coquitlam):: Madam Speaker, I should like to direct my question to the Prime Minister, who knows that we in this party urge very strongly-indeed I made a speech in the House-that the wholly inadequate section 15 be amended, and indeed it was a few weeks ago. The person behind that thrust was, of course, Doris Anderson; I think the right hon. gentleman knows that. The minister responsible for the status of women-and perhaps the Prime Minister does not know this-made three different speeches in this country, in Newfoundland, Montreal and Saskatchewan, in which he said that the proposals of the council under Doris Anderson were not good, that they had had bad legal advice.
I should like to ask the Prime Minister, in view of the fact that people in the whole of this country, and particularly of course the women, 51 per cent of the population, have written letters and telegrams of support to Mrs. Anderson for her position of protecting the integrity and independence of the council, and in view of the fact that one reason we are all so concerned is that there are patronage appointed people on the council and they do not have credibility in the eyes of the public-


Some hon. Members:: Oh, oh!


Pauline Jewett: Doris Anderson was the one person-


Madam Speaker:: Order, please.


Pauline Jewett: I would like to ask the Prime Minister-


Madam Speaker:: Order, please. The hon. member was just about to ask her question. I would encourage her to do that.
Oral Questions


Pauline Jewett: I will. Madam Speaker. I should like to ask the Prime Minister if he would seriously consider having the council made up of people who are genuinely representative of all the women of Canada, ensuring they represent the immigrant women, the native women, the trade union women, the working women, and so on, in much the same way as other councils are made up. Would he consider that?


Pierre Elliott Trudeau: Madam Speaker, as regards the preamble which the hon. lady put to her question, I agree, and that is why in my first answer this afternoon I said I regretted the resignation of Doris Anderson.
1 think she has done some good work. 1 would point out that in bringing in our amendment on the equality provisions in the constitutional charter we were happy to do so on the advice of the council and of many people in the country.
I want to remind the House and the hon. member that the first draft of the charter was based on the desire to get as many provinces as possible supporting us. The hon. lady knows, because 1 know she is in contact with the government of at least one province, that the provinces generally are against this non-discrimination provision, and that is why we have waited for the pressure to mount on the provincial governments as well as on us to strengthen the provisions of the charter.
In so far as her suggestion for appointing members to the council is concerned, I will look into it, as I said to the previous questioner. It was my impression that members of the council were indeed representative of women in all walks of life. The fact that they are appointed by the government, it seems to me, does not mean that they are captive citizens, nor does the fact that ten voted against the proposition to hold the conference in May rather than in February and 17 voted in favour. What is the hon. lady saying, that the 17 should be smeared as irresponsible but that the ten, because they agreed with her, should be treated as responsible? Should we replace only the 17 and keep the ten? 1 think the hon. lady is on a bad course of logic in suggesting somehow the members of the council acted undemocratically and as tools of the government when they voted in this democratic fashion.


Some hon. Members:: Hear, hear!


Pauline Jewett: Madam Speaker, the fact that some of the members on the council who voted to keep the conference in February were Conservative-because of course the hon. gentleman knows the Conservatives also made appointments-does not remedy the problem. Therefore 1 repeat my question to the Prime Minister. Would he not think it advisable, now that the credibility of the council is destroyed-


Some hon. Members:: Oh, oh!


Pauline Jewett: -to have a new council, comparable to, say, the Economic Council of Canada, whose members would represent, for example, labour, native peoples, native women and other immigrant women? Would it not be better that they be

January 21, 1981
Oral Questions
on the council, not because they are Liberals, Conservatives or whatever, not because their first loyalty is to the government-


Madam Speaker:: Order, order.


Pierre Elliott Trudeau: Madam Speaker, in all her questions the hon. lady suggested that somehow the politics of the members of the council influence their decisions. First, 1 do not know how she establishes the politics of those who voted on one side or the other. She said that the ten are presumably Conservatives. I do not have the names, does she? Does she know the politics of the members? It seems to me that if she does-and the hon. lady said she does-she is precisely contributing, as the other questions today, to destroying the credibility of this council by suggesting they acted politically. We do not believe it. but if hon. members continue to say it, of course its credibility will be destroyed.
1 do not think anyone will find a way to name members of the council who have no politics at all. What will we do then? Should we ask their politics before accepting their appointment or count their politics every time they vote? It seems to me the parties opposite, in the name of protecting women, are in the process of destroying democracy.


Some hon. Members:: Hear, hear!


Pauline Jewett: Madam Speaker, since most of the women of Canada in fact question the credibility of the council-


Pierre Elliott Trudeau: How do you know that?


Some hon. Members:: Oh, oh!


Pauline Jewett: 1 wonder because-


Some hon. Members:: Oh, oh!


Pauline Jewett: Since the majority do-


Madam Speaker:: Order, please. I wish the hon. member would ask questions and not make so many statements. I have allowed a few but my patience is coming to an end. Questions, please.


Pauline Jewett: Madam Speaker, I have one final question for the Prime Minister. Would he, as he has already been requested, seriously consider finding among his ranks someone who is genuinely concerned about women and the independence of the advisory council to be the minister responsible for the status of women?


Mr. Nielsen:: A hopeless task.


Pierre Elliott Trudeau: Madam Speaker, I had begun to answer that question earlier when the opposition howled with anguish.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: I will continue the list of achievements of the minister since the month of April, 1980.


Some hon. Members:: Order, order.


Pierre Elliott Trudeau: Apart from all these things, we established a task force to look at the situation of foreign domestics. We have put forward-


Some hon. Members:: Oh, oh!


Mr. Baker (Nepean-Carleton):: A point of order. Madam Speaker.


Madam Speaker:: Order, please.


Mr. Munro (Hamilton East):: He is entitled to answer.


Madam Speaker:: Could I ask the Right Hon. Prime Minister to answer his questions briefly?


Pierre Elliott Trudeau: Yes, Madam Speaker. The answer is no.


THE BUDGET
Hon. Michael Wilson (Etobicoke Centre):: Madam Speaker, my question is directed to the Deputy Prime Minister and Minister of Finance; it concerns the thrust of the tax policy in his recent budget. The Minister of Energy, Mines and Resources on many occasions said that self-sufficiency is the number one objective of the government in energy policy. If that is the case, surely the policy should be to encourage production and discourage consumption.
In view of the fact that the policy set out in the budget of the Minister of Finance is clearly to discourage production through the 8 per cent tax and the excise tax on natural gas, and that clearly consumers are not sensing any comparable strong action to promote conservation, how does the minister explain this inconsistency in his policy with the objectives of the program?


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, 1 do not accept the premise of the hon. member's question.


Michael Holcombe Wilson: Madam Speaker, it is clearly there. If the power of logic on the part of the Minister of Finance is not any better than that, I hesitate to guess what the next budget will indicate.
Canadianization is another one of the key objectives of the government in the national energy policy. Surely the tax policy should try to impact less upon Canadian-owned companies in the industry. Because Canadian-owned companies are primarily in the production area, the impact upon them is much greater than it is upon multinationals engaged not only in production but refining, petro-chemicals and marketing. Would the minister explain again the inconsistency in his tax policy with the objectives of the National Energy Program?


Allan Joseph MacEachen: Madam Speaker, the hon. member says again that there are inconsistencies. He makes his own
January 21, 1981

assumptions and attributes them to the budget and the National Energy Program. We do not accept this total disagreement shown by the hon. member with the objectives of the National Energy Program and with the methods taken to implement them, which in my opinion are widely supported by the people of Canada, if not by his party.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


GARRISON DIVERSION
A. Daniel McKenzie: Madam
Speaker, my question is directed to the Prime Minister; it concerns the Garrison diversion project. As the Reagan administration is now in place, would the Prime Minister assure the House that the diversion project will be on the agenda for discussion in his first meeting with President Reagan and once again express our concerns over the diversion, especially if the entire project is completed?


Pierre Elliott Trudeau: Madam Speaker, I have raised this matter in previous meetings with the then president of the United States, as I am sure the Right Hon. Leader of the Opposition did in his meetings. 1 will continue to do so.


REPORTED STATEMENT OF GOVERNOR OF NORTH DAKOTA
A. Daniel McKenzie: Madam
Speaker, my supplementary question is directed to the Secretary of State for External Affairs. The governor of North Dakota has made some very startling statements. He is reported as saying: "What we've heard from Canada has been unofficial." Also he said that no evidence has been presented that there will be any harmful effects to Manitoban waters. Will the minister assure us that he will contact the governor of North Dakota and at least give him a copy of the 1JC report? Perhaps the minister could telephone the governor to explain these facts of life, because he is calling for the completion of the entire project.


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, certainly 1 will see to it that the governor of North Dakota receives a copy of the 1JC report. I suspect he is already very familiar with it and chooses to interpret it in his own way, but 1 know he and others in that region are very concerned because the government of the United States has been co-operating with us in not using funds Congress voted in any way which would imperil our waters. So we have been receiving the co-operation of the United States administration. It is that very fact which is distressing some of the local politicians in that area of the United States.
Oral Questions DISARMAMENT


PROLIFERATION OF NUCLEAR WEAPONS-SAUDI ARABIAN GRANT TO PAKISTAN
Mr. Terry Sargeant (Selkirk-lnterlake):: Madam Speaker, my question is directed to the Right Hon. Prime Minister. On Monday it was reported that the government of Saudi Arabia would give $800 million to the government of Pakistan to finance that government's development of a nuclear weapon. All Canadians view with alarm the growing proliferation of such weapons throughout the Third World. 1 would like to ask the Prime Minister if, during the course of his visit to Saudi Arabia in November, he tried to impress upon the Saudi government the danger to world peace of such proliferation. Further, would he now promise to use all the diplomatic powers of the Canadian government to persuade the Saudis of the inadvisability of this particular grant to Pakistan?


Pierre Elliott Trudeau: Madam Speaker, the hon. member refers to a news report of yesterday.
1 do not know if it is accurate, but if it was made yesterday, it certainly could not have been brought to my attention before going to Saudi Arabia. I undertake, to keep the hon. gentleman's representations in mind when I return to Saudi Arabia.


Terence James (Terry) Sargeant: Madam Speaker, 1 realize the report just came out, but I anticipated that it might have been a matter of discussion since there had been previous talk about an Islamic bomb.
In the Speech from the Throne last April the government promised to "continue its strategy to suffocate the deadly growth in the nuclear arsenals of the world." Since April there has been very little noticeable suffocation, aside from the appointment of the ambassador for disarmament. I would like to ask the Prime Minister if he can tell us whether or not his government has a real battle plan to bring about this suffocation. If so, will he bring it before this House as soon as possible so we can debate it?


Pierre Elliott Trudeau: Madam Speaker, apart from appointing an ambassador for disarmament, who has been working along the lines which were suggested by me in the speech on disarmament to the United Nations, we have also appointed exAmbassador Ford as a member of the Palme commission on disarmament.
As for the hon. gentleman's suggestion that we debate these questions, our party would be happy to do so. I think hon. members of this House know that between now and, perhaps, the next six weeks, we have a very busy agenda doing precisely the things which the hon. Leader of the New Democratic Party has suggested we do; that is to say, to pay more attention to the economy at home. When we have passed the measures of the Minister of Finance and have begun to deal with the constitution, then we on this side of the House would be happy to find a day to debate international affairs, particularly disarmament. Of course, if between now and then the opposition find it to be one of their priorities and wish to

January 21, 1981
Oral Questions
devote one of their days to international affairs, we might accept that suggestion and begin a debate earlier.


EXTERNAL AFFAIRS
Mr. Maurice A. Dionne (Northumberland-Miramichi):: Madam Speaker, my question is for the Secretary of State for External Affairs. In today's Globe and Mail the minister is quoted as saying that the hostage-taking in Iran was abominable and a gross affront to all decent, civilized people. He is also quoted as saying that our embassy in Iran will be reopened within weeks. In view of these statements, would the minister explain the haste in re-establishing ties with Iran? Would he assure the House that no Canadians will be posted to Iran against their will so that they will have to serve with these indecent, uncivilized, international bandits?


Some hon. Members:: Hear, hear!


Mark R. MacGuigan: Madam Speaker, the hon. member has correctly quoted me on one part of my statement and incorrectly on the other. I certainly did strongly condemn the actions of the Iranians during the period of captivity for the American hostages. I said that we would likely re-establish diplomatic relations on a full scale, not within weeks but within months, some time in 1981. It is certainly not something which we will be rushing into. However, we will be removing the sanctions within weeks, since they were imposed for the specific period the hostages were held captive, just like other countries.
1 assume the hon. member knows, as this House knows, that-every Department of External Affairs officer is always prepared to go voluntarily to wherever in the world he is needed.


ADVISORY COUNCIL ON THE STATUS OF WOMEN
Ramon John Hnatyshyn: Madam Speaker, I would like to direct my question to the Minister of Employment and Immigration, who is responsible for the Advisory Council on the Status of Women. It is obvious from responses of the Prime Minister that he does not consider the minister to be worthy to axe.
I would like to ask the minister about a matter which has been bothering me and a great many Canadians. Why did the minister consider that the conference, which was to be sponsored by the advisory council, would be an embarrassment to this government?


Lloyd Axworthy: Madam Speaker, as I have explained to this House
several times-perhaps the hon. member was not in his chair during those times-when my opinion was solicited as to why I thought the conference might be better held at another time we simply said there were a number of reasons. The most important reason was the fact that the recommendations had already been put forward to the cabinet by the advisory council. They had been accepted by the cabinet and recommended to the constitutional committee. Therefore, there was an opportunity for us to start looking at a second round of issues, particularly those dealing with family law, federal-provincial relations, childcare services and others. After my talks with a number of women's groups across this country, I felt they required more information and discussion so that they could bring those recommendations and ideas before the first ministers' conference, which will be held after the constitution is returned to Canada. That was the primary reason. When the question was posed to me it may be that I said, as part of the conversation, that it was certainly not my primary concern, that it was really to make sure that there would be a proper opportunity for a broad-scale discussion to take place across this country.
I repeat, Madam Speaker, that was an opinion which I offered. It was not in any way an attempt to impose an opinion; it was simply advice that I was giving. I understand the reason for the skepticism of members opposite since they are skeptical about everything, but those happen to be the facts, Madam Speaker.


Ramon John Hnatyshyn: Madam Speaker, the reason I may not have been in my chair is that the answers given by the minister usually cause me to lurch from the chamber to the washroom. On the basis of the minister's statement and the timetable imposed by the Prime Minister, theoretically the constitution is to be passed by the British parliament by the time all this preliminary work has taken place.
In effect, Doris Anderson, the president of the advisory council, has called the minister a liar. Since the minister's integrity has been attacked, I want to ask him whether under these circumstances he will not do the right thing, as he did with the O'Leary matter and with respect to the question of the Royal Albert Arms, and move a motion to have this whole matter referred to the Standing Committee on Privileges and Elections, where witnesses can be heard under oath?


Some hon. Members:: Order!


Ramon John Hnatyshyn: This would give the minister a chance to clear himself with respect to this scandalous interference with the advisory council.


Some hon. Members:: Hear, hear!


Lloyd Axworthy: Madam Speaker, I am not responsible for the condition of the hon. member's kidneys or any other part of his anatomy. I suggest to him that in this case the facts have been put forward. Those who had to make the decision were members of the executive committee and the council. It would be very worth while if members of the opposition
January 21, 1981

would provide that council of independent people, who have been committed to women's rights, with the recognition that they made that decision, without bringing it into question.


STATUS ACCORDED COUNCIL
Charles Joseph Clark: My
question has to do with the question of respect for the Advisory Council on the Status of Women. 1 wonder if the Prime Minister will tell the Elouse if there is a policy reason as to why that council should not report to Parliament in the same way the Auditor General, the Economic Council of Canada and the Commissioner of Official Languages reports to Parliament. Is there a policy reason why the Government of Canada gives the council second-class status, reporting to a minister and not to Parliament?


Pierre Elliott Trudeau: Madam Speaker, the right hon. gentleman has been prime minister. He will recall that there are two kinds of advisory councils, two kinds of originators of advice to the government. There are many different councils which advise the minister directly, such as advisory councils in trade, health and welfare, immigration and sports. They advise the minister so he can keep their advice in mind when introducing legislation. I do not think these are second-class councils, or second-class people, to use the expression of the hon. gentleman opposite. If they were, why did he not make a change when he was prime minister? Why did he not make them all first class?


Charles Joseph Clark: Madam Speaker, the Prime Minister will know that we had legislation under preparation which would-


Some hon. Members:: Oh!


Charles Joseph Clark: -change the status of that council. The policy decision was taken by the government 1 had the honour to lead to put the Advisory Council on the Status of Women on an equal footing with the Commissioner of Official Languages, the Economic Council of Canada, the Auditor General and other bodies of that kind.
I repeat my question to the Prime Minister with respect to policy. Why will he not follow the example we set? Why will he not accord to the Advisory Council on the Status of Women that first-class priority, that right to be free of manipulation and that right to report directly to Parliament?


Pierre Elliott Trudeau: Madam Speaker, since the question is repeated, I repeat my answer. I do not suggest that all members of advisory councils who report to ministers are manipulated. If the hon. gentleman thinks that, he should have changed them all. There are advisory councils to the Minister of Industry, Trade and Commerce composed of respectable businessmen and union leaders. Does he suggest that they are being manipulated because they do not report directly to Parliament? I hardly think so.
Oral Questions
In so far as following the right hon. gentleman's "example", he suggested that legislation was in preparation. Well, he knows this; this seems to be the kind of statement ex post facto like the one when he said there was an agreement on energy with Alberta.


Some hon. Members:: Hear, hear!


Ramon John Hnatyshyn: There was.


Pierre Elliott Trudeau: If there was, why does he not produce it?


Charles Joseph Clark: Madam Speaker, the Prime Minister can play what games he wishes. The public is catching up with him.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


An hon. Member:: It caught up with you, Joe!


Madam Speaker:: Order. The Right Hon. Leader of the Opposition has the floor.


Charles Joseph Clark: May I ask the Prime Minister a simple question, Madam Speaker. As a matter of policy, is it the intention of the Government of Canada to preserve the status of the Advisory Council on the Status of Women as one which reports to a minister-a minister who on the record has manipulated that council, or will he, as a matter of policy, change that status and give the women of Canada the right and confidence of knowing that their council will not have to report through a filter that manipulates but will report directly to this House of Commons?


Pierre Elliott Trudeau: Madam Speaker, the hon. gentleman continues his accusation of manipulating which I suggest is not only offensive to the minister but to the so-called manipulees. I wish the Leader of the Opposition would give me a list of the people who have been manipulated on this council. We would undertake to remove them.
I would also ask, if he wants to change the nature qf that council, how many other councils there are, the nature of which should be changed, according to the hon. gentleman?


Mr. Andre:: One for now.


Pierre Elliott Trudeau: They are suggesting one for now, but what about tomorrow and the next day?


Harvie Andre: What difference dbes it make?


Pierre Elliott Trudeau: What difference? I think if the hon. gentleman is asking for a policy statement, he should have a policy.


Charles Joseph Clark: We do.


Walter David Baker: What is yours?


Pierre Elliott Trudeau: All he is able to give us are the "might have beens" of his government-had they remained in office they
6416

January 21, 1981
Oral Questions
had legislation in preparation. We know about this kind of "might have been". That is what the Leader of the Opposition is-a great might have been.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


An hon. Member:: "Might have been Joe".


Charles Joseph Clark: Better than a fraud.


ENVIRONMENTAL AFFAIRS
Mr. Bud Bradley (Haldimand-Norfolk):: Madam Speaker, my question is for the Minister of the Environment. The minister will recall that on December 9 last I raised a question pertaining to the announced intention of the province of Ontario to transport all their industrial toxic waste through the populated heartland of southern Ontario and dispose of it on agricultural land in the Niagara Peninsula lying between Lake Erie and the Grand River. The minister informed me at that time that his department would look into the matter and inform me at a later date. I would ask the minister now if this matter has been looked into and, if so, what decision has been arrived at by his department.


Hon. John Roberts (Minister of State for Science and Technology and Minister of the Environment):: Madam Speaker, it is true that my department is aware of the proposals and has looked into them. In some ways I am naturally tempted to respond to the hon. member that he himself should get in touch with the government of Ontario directly, which is, of course, a government formed by members of his party. That government has the basic responsibility for the determination of disposal sites within the province.
I could say to him, however, since he has asked for a comment from me, that it is my view that it would probably be preferable if the government of Ontario were to establish a general policy on the criteria and conditions which should be applied to the location of those sites before determining the individual sites which are to be found, rather than to proceed in an ad hoc way looking at one site and another. I am reluctant, Madam Speaker, and you will understand why, to be overly critical of the activities of the government of Ontario in this regard. In a general way we recognize that there is a need to find sites for the safe disposal of hazardous waste, and also in a general way, through the meetings of the Council of Resource and Environment Ministers, we have promised to co-operate as much as we possibly can with that process.


T.A. Bud Bradley: Madam Speaker, 1 have been in contact with the provincial government of Ontario, as have many other concerned people in the province. My supplementary question is also for the Minister of the Environment. There is a sense of urgency about the matter. In spite of the fact that 46 communities have supported the town of Dunnville and the region of Haldimand-Norfolk in their resolution requesting an adequate environmental assessment and hearing into this matter, the province has ignored their pleas and has announced the initiation of expropriation procedures. The concern felt in the Lake Erie area now, Madam Speaker, is not about acid rain but the possibility of acid drain.
I would ask the minister of the government supports proper environmental assessment and hearings on issues as important nationally as toxic waste disposal. If so, will it take whatever steps are available to it to ensure that the people of southern Ontario, and all people in the lower Great Lakes area, are properly protected against the potential of Love Canals in Canada through proper environmental assessment and hearings?


John (Moody) Roberts: Madam Speaker, clearly I am sympathetic to the concerns that the hon. member has expressed, but I am sure he would be one of the first in the House to protest if I were to take actions which were to pre-empt the legitimate responsibilities of the provinces. We are concerned in this area to proceed in conjunction with, and with the co-operation of, provincial governments. It seems to me that up to this point that has shown itself to be the most effective way in which we can proceed. On several occasions I have talked with or written to or been in communication with the provincial governments to draw to their attention our concerns about the necessity of detecting or finding possible locations of past dump sites which presently constitute a hazard to ecology or to human health. The response from some governments, and 1 would have to say the response from the government of Ontario, has been very supportive and forthcoming; it is less so, perhaps, on the part of some other provinces. As a result, I have indicated that I intend to raise this matter at the next meeting of the Canadian Council of Resource and Environment Ministers.


COMMUNICATIONS
Mr. Mark Rose (Mission-Port Moody):: Madam Speaker, I am sorry that the Minister of Communications is not with us this afternoon; 1 intended to raise a series of questions with him on this particular matter. Perhaps they could be taken as notice or I would welcome a reply from any minister who responds for him.
The minister's department commissioned what was known as the Babe-Slayton report concerning licence renewals and transfers. One of the things that the report did was to lambaste private TV broadcasters for failing to comply with the aims of the Broadcasting Act. It further called for competitive licensing procedures in transfer situations or in renewal situations as one means of making stations live up to their promises regarding Canadian programming.
January 21, 1981

Why has the minister shelved this report? Why have we heard so little about it? If he has not shelved it, when is he going to provide the CRTC with the policy guidelines it has strongly requested so that it no longer has to operate in a policy vacuum on this very important matter?


John (Moody) Roberts: Madam Speaker, the Minister of Communications is away from the House today on important government business regarding the National Film Board's affairs. I note that the hon. member indicated he had a series of questions to ask. In view of the fact that we are near the end of the question period, perhaps the best thing would be for me to take notice of those questions and ensure that the Minister of Communications is aware of the hon. member's concerns in order that he can respond fully when next in the House.


Mark Willson Rose: Madam Speaker, the absence of a policy of competitive licensing recently allowed a Toronto-based cable conglomerate, a monster, to gobble up a Victoria cable company, despite the fact that as far back as 1977 Capital Cable Co-op had been promised that the department would deal "fully and fairly with the matter". I ask that the minister be informed of my question. Why did he not set aside the CRTC decision to allow Canadian cable systems to proceed in that application, especially when, at the time he refused to set it aside, he had the Babe-Slayton report in his hands recommending quite the opposite procedures?


John (Moody) Roberts: Madam Speaker, as I have already told the hon. member, 1 will draw these questions to the attention of the Minister of Communications who, I am sure, will want to reply to them very fully as soon as possible.


RAILWAYS
Mr. Bill Mcknight (Kindersley-Lloydminster):: Madam Speaker, my question is for the Minister of Transport. Since the minister has accepted the policy of his predecessor, the hon. member for Vegreville, to transfer the rail rights-of-way abandoned in western Canada to the provinces and interested individuals, could he update the House on the standing of that process and whether the order in how many other is about to be signed making this possible?


Hon. Jean-Luc Pepin (Minister of Transport):: Madam Speaker, the discussion about these matters is going on with the provinces. However, we are discussing now only those rights-of-way which have been the subject of an agreement between the department and the railways. As far as 1 can recall though, the discussion is still being pursued. Some provinces would like more than what the government is in a position to offer but the impression 1 have from recent conver-
Privilege-Mr. Gamble
sations with officials on that matter is that we are getting close to a resolution of it.


William Hunter (Bill) McKnight: Madam Speaker, could the Minister of Transport inform the House about the problems in these negotiations? He mentioned, as I recall, that some provinces wanted more transfers. Could the minister explain which provinces are giving his department difficulty and for what reason?


Jean-Luc Pepin: Madam Speaker, I cannot detail the position of each one of the provinces on this matter, but I will do so in a conversation with my hon. friend.
V *	*


POINT OF ORDER
Hon. Jake Epp (Provencher):: Madam Speaker, I rise on a point of order which arose this afternoon out of an exchange with the Minister of Employment and Immigration (Mr. Axworthy) during question period.
I think it is important to the House that the record be clear. The minister can play fast and loose with what are details on the public record, but 1 want to tell him, and you, Madam Speaker, very clearly, that while he might disagree with components of any propositions made by anyone in this House, or for that matter any components of the charter, this party has endorsed the charter. That has been done quite clearly, in public and on the record. I would ask the minister to keep that in mind and 1 ask that he not use something which is obviously not in keeping with the facts. If he has regained his ability to read facts, I will send him a copy of the proposal.


Madam Speaker:: The hon. member has made his point, and I will allow that.


PRIVILEGE
[Stage Direction]
MR. GAMBLE-DELAY BY MR. MacGUIGAN IN ANSWERING QUESTION
Mr. John Gamble (York North):: Madam Speaker, my question of privilege arises out of a question which I asked in this House on January 16. It was directed to the Deputy Prime Minister (Mr. MacEachen) but responded to by the President of the Privy Council (Mr. Pinard). As reported in Hansard at page 6271, the question reads:
Madam Speaker, my question should be directed to the Secretary of State for External Affairs, but in his absence I will direct it to the Deputy Prime Minister, who will know that last week Canadians, including a renowned Canadian author and columnist, Barbara Amiel, were incarcerated in the Mashava prison in Mozambique during which time Miss Amiel almost expired as a consequence of contracting tropical diseases. Having regard to the fact that both Canadians were incarcerated without just cause by the government of that country, has the Government of Canada sent a stern note of protest to the government of

Privilege-Mr. Gamble
Mozambique for the harsh and uncivilized treatment accorded Canadian citizens?
The issue which gave rise to that question was important not only to the House but to all Canadians, Madam Speaker. It involved the entry into Mozambique by two Canadians, one of whom was referred to in the question, and an American companion. These people were denied the right to leave that communist-controlled country. When they endeavoured to do so in the usual course of their travels, they were detained by the immigration authorities of Mozambique. They were ultimately imprisoned, having been arrested by the secret police of Mozambique. Both Canadians carried Canadian passports and requested the right and opportunity to consult with and seek the protection of Canadian consular officials. The facts are that while Canada has an ambassador to Mozambique, he resides, as the Secretary of State for External Affairs will know, in Zambia.
Fortunately, between the time of the original detention by the immigration authorities and the time of the arrest by the secret police, one of the three people was able to place a telephone call to the United States consulate in Mozambique. After being imprisoned from December 31 to January 8 in the Mashava prison, a place where one in Canada would not countenance the housing of animals, they were released as a consequence of the activities of both the U.S. consular officials and the consular officials of Great Britain.
Immediately after release they were questioned by Canadian consular staff in Johannesburg. According to the Canadian ambassador to Mozambique he has filed a complete report and an analysis of the occurrences.
I submit this issue concerned the duty and obligation of the government of this country to protect its citizens when travelling abroad, and to see they are granted access to Canadian consular staff abroad. Nations, such as Mozambique, which have denied Canadian citizens travelling to their country the right of that access, should be subject to the stiffest of diplomatic notes of protest which this government can issue. In my submission, instead of that, the government has acted as a spineless coward in failing to respond to this customary need which Canadian citizens travelling outside of Canada should expect from their national government.
The President of the Privy Council responded to my question, found at page 6271 of Hansard, as follows:
Madam Speaker, seeing the Secretary of State for External Affairs is absent, I shall take notice of the question of the hon. member and convey his views and suggestions to the Secretary. I shall make sure that the hon. member gets a reply as soon as possible.
I have not as yet received a reply from either the President of the Privy Council, the Secretary of State for External Affairs, or anyone acting for or on their behalf. Imagine my surprise when I read an article in yesterday's Toronto Star by Ellie Tesher, who gave an account of having communicated with the Department of External Affairs and of having been advised by the department that no note of protest had in fact been dispatched by the Government of Canada to the government of Mozambique.
Miss Testier made reference to having spoken to someone in the Department of External Affairs. Of course, not preferring to rely on an article which appeared in a newspaper, I spoke to Miss Tesher. She confirmed the accuracy of the account which appeared in the paper and gave me the name of the official at the Department of External Affairs, whom I contacted. The person in question did not deny the accuracy of the article which I mentioned to her, having first examined and read it in the newspaper.
This question of privilege is not based upon my complaint that the minister of the Crown or any minister of the Crown has not answered a question in the House. I clearly recognize that if that were the substance of my objection and my question of privilege, it would be without foundation. However, it is based upon the failure of a minister of the Crown to honour an undertaking which he gave to me as a member of the House of Commons.
Let me say in fairness that the minister might allege that the time limitation included within the phrase "as soon as possible" has not yet expired. If that is the case, why is it that a newspaper reporter can, by the simple expedient of picking up a telephone, contact the Department of External Affairs and obtain all of the information which is not available to a member of the House of Commons?
The proceedings in this House become a laughing matter if question period gives rise to the simple deferral of issues which are important not to individual members but to the whole conduct of the affairs of this House. I am not alleging that there is a deliquency in failing to respond to a question, but that there is a refusal to commit the completion of an undertaking which has been given by a minister of the Crown to this House and to one of the members thereof.
The House is not well served by a failure of the kind I have described. I submit it is incumbent upon ministers of the Crown to discharge their obligations given in this House, without which the House cannot properly function. I therefore move:
That this matter be referred to the Standing Committee on Privileges and Elections for attention.


Mark R. MacGuigan: Madam Speaker, the rather turgid presentation of the hon. member for York North (Mr. Gamble) has certainly not contributed to an understanding of this problem. The reason why he has not got an answer, and the reporter whom he quotes did get an answer, is simply that they were asking different questions. The reporter was asking whether a note of protest has yet been sent. The answer to that is clearly no. The hon. member asked whether such a note will be sent. On that question of whether a note will be sent, we have not yet reached a final decision.
I wish to tell the hon. member and the House that, on the basis of the facts as we possess them at the present time, there is no foundation for any note of protest. The facts are as follows: Miss Amiel and two companions, one of whom is a

January 21, 1981
travel agent, would have been presumed to know that when entering Mozambique a visa is needed. They entered Mozambique from a country which does not have close relations with Mozambique, South Africa, and which in itself is probably a suspicious factor for the Mozambique authorities.
They entered without a visa as required by Mozambique law. On attempting to leave Mozambique, they therefore had no valid visa on entry and no stamp on their passport. They were apparently detained because of the illegal entry. Within the bounds of Mozambique law, as far as we can ascertain, that seems to be a valid offence.
They were held rather long because of the holidays. We do not have a resident mission in Mozambique. I might say we are very grateful to the British and the American officials, especially the British ambassador, who assisted us in getting these people released from that country. 1 might add that our High Commission in Lusaka dispatched notes of thanks to those who rendered us this service.
While the circumstances of the tensions were undoubtedly very bad, there is no evidence that they were any worse than those to which citizens of Mozambique are normally exposed and to which others charged with the same offence would be subjected. In other words, there is no evidence of unusual treatment at all. On the basis of those facts as we now have them, there would be no grounds for a letter of protest.
The reason we have not yet answered the hon. member is precisely that we are awaiting a full report from our High Commissioner in Lusaka as to whether there are any other facts or aspects of the problem of which we are not aware. When we have received that final report and make a final decision on whether to send a letter of protest, at that point we will be in touch with the hon. member and give him the answer to which, I agree, he is entitled. However, at the present time there is no foundation to the question he has raised.


Madam Speaker:: I am prepared to rule on the question. It is obviously not a question of privilege. The hon. member went to some length to say he was not complaining because he was not satisfied with the answer, but he was not satisfied with the way in which the minister dealt with the commitment he seems to have made to him, inside or outside the House. That, too, is a complaint. The hon. member might be highly dissatisfied with the sense of urgency of the minister and he can complain about it, but that in itself does not constitute a question of privilege.


POINTS OF ORDER
[Stage Direction]
MacGUIGAN
Mr. Donald W. Munro (Esquimalt-Saanich):: Madam Speaker, 1 rise on a point of order. I am sure the Secretary of State for External Affairs (Mr. MacGuigan) would not want to mislead the House, but had he checked Hansard for January 16, 1981, page 6271, column two, the question asked by
Order Paper Questions
the hon. member for York North (Mr. Gamble) was "has the Government of Canada sent a stern note of protest to the government of Mozambique". To convert that into ' will the government be sending" was, I am sure, inadvertently misleading.


Mark R. MacGuigan: Madam Speaker, as the hon. member has raised a separate point of order, let me say that I was giving the sense of the undertaking. If all the hon. member wants to know is whether a note has been sent, obviously a note has not been sent. Surely what he wants to know is whether we will protest. He can ask the same question every day. I interpret the question to mean that when we have made a decision as to whether we are going to send a note or not, will we let the hon. member know, and, Madam Speaker, we will do that.


Madam Speaker:: I am not sure whether that is a point of order. However, that exchange was probably conducive to bringing out more information. We will leave it at that.


MR HNATYSHYN-NOTICE OF POSSIBLE QUESTION OF PRIVILEGE
Ramon John Hnatyshyn: Madam Speaker, I rise on a point of order in light of an exchange that took place between members of our party and the Minister of Employment and Immigration (Mr. Axworthy). During the course of his response, as I recall it, the minister said he was in the process of obtaining affidavits by members of the Advisory Council on the Status of Women, ostensibly to proceed to undermine the chairman, Miss Anderson.
I rise on this point of order to reserve the right, after having had an opportunity of reviewing the transcript of the official Hansard, to see what the minister in fact stated, with a view to determining whether a question of privilege should be raised tomorrow. 1 do that as well because of the absence of the minister at this time. I think it would be appropriate for me to look at the situation to determine whether he is making reference to a collection of these affidavits, and, if that is the case, to request that these affidavits be made public and tabled in the House of Commons. I simply bring that point of order to Your Honour's attention.



ROUTINE PROCEEDINGS


[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. D. M. Collenette (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following

January 21, 1981
Order Paper Questions
questions will be answered today: Nos. 1,000, 1,334, 1,609, 1,767, 1,853 and 1,859.
I ask, Madam Speaker, that the remaining questions be allowed to stand.


Mr. Cossitt: 1.	Did RCMP Commissioner Robert Simmonds receive a communication, message, etc. from certain representatives of the RCMP alleging that (a) RCMP senior officers were failing to provide full support for members of the force appearing before public inquiries (b) members of the force were not being protected from unwarranted interference of "their human rights" (c) inquiries into RCMP activities have "unsavoury effects ... on the membership at large"?
2.	What action, if any, has Commissioner Simmonds taken in the above regard?


Hon. Bob Kaplan (Solicitor General):: In so far as it concerns the Royal Canadian Mounted Police: 1. Yes.
2. Every possible assistance, in the form of the appointment of legal counsel, has been provided to RCMP members who have been required to appear before commissions of inquiry. The commissioner acknowledges the adverse affect these inquiries have had upon the morale of members, their families and friends. This can only be expected to improve when the commissions of inquiry are concluded. The commissioner and other senior managers are most sensitive to members' concerns and have done everything within the legal bounds of their responsibilities to ensure that members' human rights are protected. From the outset, Commissioner Simmonds has encouraged the complete co-operation of all RCMP members appearing before commissions of inquiry. He has undertaken to provide unreserved co-operation with the McDonald Commission of Inquiry and this co-operation continues to this day. However, the fact that the RCMP has been the subject of ongoing, highly publicized examination during the past three years before five different commissions of inquiry has definitely had an adverse effect upon the morale of many of its members but, in spite of this, their dedication to the duties of the force remains high.


Mr. Cossitt: 1.	With reference to the answer to question No. 100 stating that the Commission of Inquiry on the RCMP reviewed the Featherbed File in 1978 (a) was this done in camera (b) what are the names of all those present at the lime the file was reviewed (c) at what location was the file reviewed (d) what judicial steps were taken to obtain access to the file (e) what RCMP officers were present at the time?
2.	Is the review of the Featherbed File mentioned in the first report of the security and information of the McDonald Commission and (a) if so, on what page (b) if not, to the knowledge of the government what are all the reasons it has been kept secret?


David Michael Collenette: 1. (a) The Featherbed File was examined in private at RCMP headquarters on two occasions in 1978;
initially by Mr. J. F. Howard, Q.C., chief of counsel to the commission of inquiry and later by the chairman, Mr. Justice McDonald.
(b)	On both occasions, the file was reviewed in the presence of RCMP officers. It is not in the national security interest to reveal the names of those officers who were present.
(c)	See 1(a).
(d)	None.
(e)	See 1(b).
2. No.
(a)	Not applicable.
(b)	The disclosure of the contents of the file would be injurious to the security of Canada and the privacy of individuals referred to therein.


Mr. Cossitt: 1.	Did the government issue contract numbered DA E0231-0-0799 to Burns International Limited to supply security protection for Place du Portage in Hull and, if so, what are all the details of the contract?
2.	(a) Is the government aware that Burns International Limited is a subsidiary of a foreign company (b) is it government policy in the field of security to award contracts to firms connected with foreign interests whether or not the countries involved are considered friendly?
3.	Does government policy differentiate between awarding contracts to foreign subsidiaries on matters not involving security and the awarding of contracts to foreign subsidiaries that do involve security and, if not, is it considering doing
so?


Hon.   J.-J. Blais@Minister of Supply and Services: 1. Yes. Proposals were invited from 11 licensed Quebec security guard agencies with offices in the Ottawa-Hull area considered to be in a position to provide Public Works Canada with security, emergency and information services at Place du Portage, Phase I and II, Hull, Quebec, during the period November 1, 1980, to October 31, 1981. Six agencies submitted quotations, all of which were considered responsive, and the contract was awarded to Les Services de Protection Burns International Limitee, who submitted the lowest proposal. The total contract value was $419,623. A total of 33 personnel are required every day from Monday to Friday, with reduced numbers being required on weekends. The estimated total utilization for the contract period is 88,572 person-hours.
2. (a) Yes.
(b) It is the policy of the Department of Supply and Services when arranging for the provision of security guard services to contract for these requirements with the Canadian Corps of Commissionaires. In the instances where the corps is unable to provide the services, bids are invited from all qualified private commercial guard companies meeting the sourcing requirements and registered with the department. It is our general policy to contract for goods and services, including security guard services, from all qualified companies located
January 21, 1981

in Canada. In this regard, both Canadian and foreign-owned firms are given the opportunity to bid on all government requirements. In the case of guard services, the companies involved and their employees must possess a provincial government licence, issued by the authorities in the province in which the services are to be provided. The present policy has been and continues to be subject to periodic review to respond to changing environments in the security field.
3. No, see 2(b) above.


Mr. Stevens: For the current fiscal year, what are the estimated expenditures of the Cape Breton Development Corporation for (a) advertising (b) free or subsidized publications (c) other information conveyed to the public?


Hon. Pierre De Bane (Minister of Regional Economic Expansion):: I am informed by the Cape Breton Development Corporation as follows: (a) $100,000, (b) $40,000, (c) $40,000.


Mr. Stevens: For the current fiscal year, what are the estimated expenditures of the Crown Assets Disposal Corporation for (a) advertising (b) free or subsidized publications (c) other information conveyed to the public?


Hon.   J.-J. Blais@Minister of Supply and Services: (a)	Advertising and publications charged
directly to major sales programs.	$ 164,000.
Advertising for retail stores, image of the Corporation, recruitment and annual report. $	89,000.
(b)	None;
(c)	None.


Mr. Cossitt: Does the Department of Supply and Services include in application forms for certain contracts, a request for a statement of assets of all those tendering and, if so (a) for what reason (b) will the government consider as a policy, asking for credit references in regard to potential clients rather than requesting disclosure of assets and stock values?


Hon.   J.-J. Blais@Minister of Supply and Services: The
Department of Supply and Services requires all potential suppliers to complete a questionnaire in order to secure information on their legal, financial, technical and managerial capabilities for source listing purposes. The basic questionnaire includes a requirement for the supplier to provide a statement of its assets and inventory stocks.
(a) The purpose of the request for assets and inventory stocks is to inform the department as to the relative capability of the firm to supply the requirements of the federal government.
Order Paper Questions
(b) The Department of Supply and Services continues to subscribe to the Dun & Bradstreet service which provides current ratings for many of the suppliers that do business with the government. However the Dun and Bradstreet ratings are only used on an exception basis as the normal means of protecting the government against loss in payments only upon delivery and acceptance of the goods. Thus the questionnaire is an essential part of the procurement process as it provides the basic sourcing information which the department uses to assess a supplier's legal, financial, technical and managerial capabilities.


Mr. Herbert: 1.	During each of the past three years and in the current fiscal year to date, what was the total number and amount of fraudulent government cheques cashed?
2.	What was the total amount of cheques cashed with chartered banks that the government did not proceed to collect through the courts?


Hon.   J.-J. Blais@Minister of Supply and Services: 1. See
list below. 2. None.
Cheques Issued	Fraudulent Activity	Per cent1977	113,015,409	8,023	.00711978	117,617,029	6,622	.00561979	126,045,607	8,087	.00641980 (to Oct 1)	92,627,747	4,025	.0043$ Amounts	$ Value Issued	Forged Amount	Per cent1977	$67,042,536,343.09	$1,249,116.00	.00191978	$74,033,794,049.40	$1,117,118.00	.00151979	$86,789,642,963.92	$1,517,331.00	.00171980 (to Oct 1)	$69,693,094,720.54	$ 806,639.09	.0011
[ Translation]


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


Some hon. Members:: Agreed.


Mr. MacKay:: Madam Speaker, may I just bring to the attention of the parliamentary secretary, following his answers to questions on the Order Paper, or lack of them, that on May 14 I put some questions with respect to the McDonald commission of inquiry, and I am sure he would agree with me that since May 14 there has been ample time to supply me with some of the information. I would request that he look into this matter as soon as he can.


David Michael Collenette: Madam Speaker, I will undertake to do that.

January 21, 1981
Income Tax Act MOTIONS FOR PAPERS


Madam Speaker:: Notices of motions for the production of papers.


David Michael Collenette: I would ask, Madam Speaker, that they all stand.


Madam Speaker:: Is it agreed that they stand?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, January 20, consideration of the motion of Mr. MacEachen that Bill C-54, to amend the statute law relating to income tax, be read the second time and referred to Committee of the Whole.
Hon. Charles Lapointe (Minister of State (Small Businesses)):: Madam Speaker, I should like to address those aspects of Bill C-54 which would significantly benefit Canada's small businesses. Without doubt this bill of over 200 pages is a highly technical one-


An hon. Member:: That won't take long.


Charles Lapointe: The hon. member says it will not be a long speech. I hope he will have the patience and interest to stay in his seat for the 40 minutes I intend to use.
Without doubt this bill of over 200 pages is a highly technical one. It is indicative of the complexity of our tax structure, a complexity that is necessary in order for our Income Tax Act to be effective, but at the same time a burden in terms of understanding its implications and putting them into effect. Very often it leads to a degree of unawareness of forgetfulness with regard to the benefits small businesses already receive under our tax structure. These benefits are among the most favourable of western nations.
I cite particularly the small business tax deduction which reduces the tax rate for small firms by some 21 percentage points. In terms of tax expenditures, the cost of this one measure alone is approaching some $1 billion annually.

On the other hand, Mr. Speaker, various tax measures have been introduced in the last four years that apply specifically to small businesses. Among those measures, there are tax concessions to promote research and development, a sales tax exemption for all manufacturers whose annual sales do not exceed $50,000, the tax exempt sale of a small business to the children
or grandchildren of the owner, and provisions for the deduction of capital losses. Those measures, in fact, represent almost $1 billion in tax concessions. Small businesses also benefit from a number of tax measures that apply to businesses generally. I am thinking here of the provisions on accelerated capital cost allowances and inventory credit allowances.
That, however, Mr. Speaker, does not in any way mean that this is it where tax measures on small business are concerned. Bill C-54 is an example of what we can do, even now, to improve the conditions under which that sector of our economy operates and to open the door to further action at a later date. [English]
This bill includes a number of provisions which, although not specifically intended for only small businesses, will nevertheless benefit this segment of our business community. I refer particularly to those provisions which allow Canadian firms to compete more effectively abroad by introducing a special tax treatment for their employees stationed outside Canada on longer-term projects. Small enterprises offer a significant potential for increased export activities, and many small Canadian enterprises are currently involved in turnkey projects abroad.
There are also provisions in this bill which could allow employees to deduct depreciation and interest expenses relating to automobiles required for use in their employment. Many of these employees work for small firms.
This bill also includes provisions aiming at increased participation in the energy industry by Canadian firms. Although this sector is dominated by large enterprises, it has also seen the start-up of many new small businesses.

In addition, of course, there is the 50 per cent investment tax credit on new plants and equipment for manufacturing or processing of products already granted under the Regional Development Incentives Act. This provision should prove quite valuable to small businesses thus allowing them to reduce their tax load. In view of the fact that in specially designated areas where this 50 per cent investment tax credit applies, small businesses truly are the spearhead and the backbone of all new economic development. I should like to add that by reintroducing the tax relief on MURBs we hope to stimulate the building industry which makes for an important part of the small business sector. This program makes it possible to use capital cost allowance on eligible rental buildings as a tax haven for revenues from others sources.
Furthermore, Mr. Speaker, under Bill C-54 small businesses will benefit from another excellent provision which is the extension of the tax relief for retailers converting their scales to metric. This tax relief has been extended from June, 1981, to the end of December, 1983. It represents a considerable saving for retailers who have not yet converted to metric. We can also mention the taxable grants offered to assist home owners to move off oil and convert their heating system to
January 21, 1981

some other fuel. These grants will create opportunities for small Canadian businesses involved in that kind of conversion or some other related area. As you well know, Mr. Speaker, the implementation of the Canadian Home Insulation Program introduced in the House by the former Liberal government generated thousands of small insulation businesses all across Canada. It is, therefore, quite possible that this new grant program to promote the conversion of oil heating systems to some other form of energy will indeed generate thousands of new small businesses.
Also, I think we should note the importance for the Canadian economy in general and for small business in particular of the industrial restructuring program promised in the budget introduced by the hon. Minister of Finance (Mr. MacEachen) and announced by my colleagues the Minister of Industry, Trade and Commerce (Mr. Gray), the Minister of Labour (Mr. Regan), and the Minister of Employment and Immigration (Mr. Axworthy). I think that this $350 million which will be spent to promote industrial restructuring and manpower retraining will greatly help small businesses in areas of particular need to get set up, and to maintain and improve their operations.
In addition, Mr. Speaker, it is patently clear that the budget features two other highly significant tax measures more specifically related to small businesses. The first one will enable the owners of unincorporated businesses to deduct from their taxable income the salary paid to a spouse. This proposal will affect 600,000-odd businesses, most of which can be described as being small. Thanks to this new measure, any employee who is paid by his or her spouse will enjoy every fiscal advantage normally granted to regular workers. Farmers and fishermen will benefit as well from this measure, as indicated so eloquently last evening by my parliamentary secretary, the hon. member for Lambton-Middlesex (Mr. Ferguson). Finally, Mr. Speaker, this bill will put an end to the various controversies created by the implementation of the Small Business Development Bond program, under which banks and other lending institutions are allowed, for tax purposes, to report as dividends any income from interest payments. As we know, tax regulations governing dividends are less stringent, and that enables banks and other institutions to offer prime lending rates.
Under this measure small Canadian-controlled private corporations can obtain low-interest rate loans of up to $500,000. These loans can be used to acquire fixed assets and finance research and development activities.
Small Business Development Bonds can also be used to refinance assets acquired after December 11, 1979, and to finance or refinance the obligations of small firms facing financial difficulties.
Income Tax Act
Although there have been some delays with regard to the introduction of this measure, the concept has been well received by the private sector. To date over $200 million of financing has been provided to small businesses under this measure.
This tax incentive has now been extended from its December 31, 1980, expiry date to March 31, 1981. What that means is that with its retroactivity to December, 1979, this measure will have been in place for over one year to permit as many small businesses as possible to profit from it during the period of its existence.

If we consider every measure 1 have just mentioned, Mr. Speaker, we realize that so far the federal government has loaned $3 billion to small businesses, either directly through the Federal Business Development Bank, or through loans guaranteed by the government under the Small Businesses Loans Act, or again under such programs as the business development program. Besides those $3 billion in outstanding loans to small businesses, it is well known that roughly $100 million is paid to small Canadian businesses through grants from the Department of Regional Economic Expansion, or the National Research Council of Canada, or the Department of Industry, Trade and Commerce, or any other department of this government involved in economic development.
In addition, Mr. Speaker, as I said at the outset of my remarks, several tax measures such as preferred rates for small businesses, deductions for inventory financing, deductibility of the spouse's salary in a business and all those tax measures amount to about $2 billion annually in tax rebates. In other words, Mr. Speaker, and I think hon. members will agree with me, that represents for the federal government a very sizeable investment in the small business sector.
Naturally, rather than making a thorough study of the substance of Bill C-54, our colleagues from the New Democratic Party and from the Progressive Conservative Party saw fit to rehash their political philosophy and preferred to tell Canadians that there is nothing for them in Bill C-54, whereas they could have informed our fellow Canadians about the tax measures and proposals from which they stand to benefit. I suggest they are openly displaying their lack of responsibility but, coming from them, Mr. Speaker, there is nothing surprising in that.

Today I read the remarks made by the hon. member for Kamloops-Shuswap (Mr. Riis), who painted a bleak and inaccurate picture of the small business sector of this country which surprised me. 1 would like to tell him and this House that, despite an increasing failure rate, less than 1 per cent of businesses in Canada fail in any year. In addition, there are now more start-ups in the small business sector than ever before. While some 6,500 firms went bankrupt in Canada in 1980- and I think everyone regrets that-on the positive side of the
6424

January 21, 1981
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picture we must be aware that approximately 50,000 started in 1980.
[ Translation]
After having listed those programs as well as statistics and figures that are often quite high, Mr. Speaker, since I have been in charge of the Department of State for Small Businesses I have wondered whether our investments are always as effective as they should be. In other words, do we have the right formula? In a short book I was reading recently entitled "Murphy's Law", Arthur Black gives businessmen a rule to deal with bureaucrats. He says, and I quote:
When government solutions fail to answer your problem, alter the problem because you will never be able to change the solutions.
Mr. Speaker, I think that Mr. Black is mistaken, and I may add that I firmly intend to do my utmost to find suitable answers to the problems of small businesses in Canada. This is why, following my colleague, the former minister of state for small businesses, I have instructed my department to conduct a thorough study on every aspect of small business financing. At present, that study is divided in four main parts. The first part consists of a thorough study of the role and activities of the Federal Business Development Bank. Considering the importance of that institution, the results of that study will greatly contribute to a comprehensive visualization of the problem. The second part deals with the performance and the role of chartered banks with regard to small business financing. In the course of that review, loan applications received by banks will be studied; applicants, that is potential clients, will be interviewed, to determine whether or not banks have discriminated against small businesses. The third part deals with the role of financial institutions other than chartered banks. That sector is becoming increasingly important and seems mostly interested in assisting small and mediumsized businesses. It will therefore be necessary to determine in what financing sectors such good will may be turned to greater advantage, and we want to consider more particularly, in co-operation with financial but non-banking institutions, what answers they have given over the past two years to applications for financing, as far as risk capital and more especially rolling capital are concerned.
Finally, the fourth part of this review is a study conducted by the Economic Council of Canada. The Council set out to analyse a total of 24 items ranging from a critical review of all existing government programs to the financing methods used by businesses according to their size, and so on. This fourth part will be particularly useful when we analyse the results of the comprehensive study I mentioned earlier.
Of course, Mr. Speaker, we are concerned about the increase in interest rates and the negative impact that these rates can have on the financing of small businesses and the restraints that they can bring to bear on the working capital
and inventory financing. However, I believe that we would be acting irresponsibly, at a time when this major review which deals specifically with these problems has not yet been completed, if we were to take temporary measures which had not been well thought out. The hon. member for Kamloops-Shus-wap suggested yesterday evening-and I think that this is a very valid suggestion-that one of the things we could do would be to develop, as in the case of the registered retirement savings plans or the registered housing savings plans, a program to allow individuals to deposit every year up to $10,000, which would be taxed at a lower rate then other incomes and could be invested after five years, along with the savings of other individuals, in new small businesses. As I say, this is a very positive suggestion which deserves consideration.
In all the meetings that I have had throughout Canada with various groups of small businessmen through boards of trade or other associations, I was made clearly to understand that there is no need to develop new programs. They say, "There are already a great many programs available to us, and very often"-this is what small businessmen and businesswomen believe-"we cannot manage to study all the forms you send us and to sift through all the programs which might help us." What these people were telling me was not to develop any new programs but to keep the government out of their pockets if we want them to be happy.
Mr. Speaker, I believe that this is a very reasonable request. Of course, the Minister of Finance and myself want to consider the most appropriate methods to assist small businesses in addition to all the many and very generous incentives already in place in the tax system. We are quite willing and ready to consider further means of creating an even more favourable tax structure and climate for small businesses. One of the most popular and most highly rated incentives among businessmen is certainly the preferential rate that we apply to small businesses. As I said earlier, this rate is 23 per cent lower than for large businesses. We might be justified in time in considering a gradual taxation schedule for small businesses such as we have for personal income tax. We should perhaps review some time in the future the $750,000 limit now applicable to small businesses. All this is now under consideration, Mr. Speaker, but we are aware that we must still operate within the financial restraints of the national budget. Moreover, I believe that Bill C-54 introduced by the Minister of Finance is one of the most responsible bills ever brought before the House.
Indeed, we are not Utopians like the New Democrats who say that a larger national deficit does not matter, nor do we advocate the neo-conservatism of the Progressive Conservative Party which says the deficit should be drastically reduced. In his wisdom, the Minister of Finance has chosen rather to avoid both extremes so as to promote harmonious economic growth
January 21, 1981

while trying to reduce the deficit gradually so as not to create major restraints for Canadian citizens and businesses.

Mr. Speaker, as I mentioned earlier, small businesses in Canada already benefit significantly under the current tax structure. But 1 am quite ready to admit that there will always be room for improvement. Passage of Bill C-54 will add to these benefits and will be part of these improvements. It will contribute to the growth and development of a sector of our economy which I consider to be our vital majority.


Hon. Don Mazankowski (Vegreville):: Mr. Speaker, on rising to participate in the debate on this important piece of legislation, I think I would be remiss if 1 did not respond to a couple of points made by the minister. He indicated in his remarks that the bill with which we are presently dealing is very technical and complex. I suggest to him that he pay heed to the suggestion, which was advanced by my colleague, the hon. member for Moose Jaw (Mr. Neil), in his contribution to this debate in the House yesterday, that perhaps the time has come for a new income tax act to be drafted in language more suitable and more accommodating to the taxpayers of Canada rather than to computers.
When the minister, in a sort of global attack on the opposition, suggested we were not dealing with the major thrust of the bill, perhaps he would do well to read, or to have some of his officials read, some of the speeches which were made here, because 1 think he would find some very important points and some very important recommendations were made which could be put into effect.
The minister also suggested that we should be noting the positive elements of the legislation. Let me tell him that it would not take very long to go over the list of positive elements in this legislation, so there would not be much of a debate. Second, the House should be reminded that a year ago, when we were dealing with a similar piece of legislation, a budgetary measure, the minister and his party seemed to put their political welfare ahead of the welfare of Canadians. To put it bluntly, when the shoe was on the other foot, when they happened to occupy opposition benches, we certainly did not see them going out looking for any positive elements in the legislative proposals which we put forth. So I suppose that what is sauce for the goose is sauce for the gander in this case.


An hon. Member:: It is you who have suffered.


Donald Frank Mazankowski: It is the Canadian people who have suffered in the process. That brings me to the fact that it is quite difficult to participate in this debate without reflecting upon the activities of a year ago. I think it is fair to recall that a year ago this nation was embroiled in a mid-winter election campaign which was brought about by the combined forces of the Liberal-NDP alliance, on the premise that Canada can-continue on the road to economic disaster and can continue pursuing a policy of cheap energy. At that time we believed that as a government we had to embark upon a new course in
Income Tax Act
establishing a realistic energy policy and a realistic economic policy.
Throughout the course of the election campaign the stage was set for a rather bitter debate in the country, and a great deal of confrontation between the east and the west which is still with us today. What is most disturbing to people in western Canada is the fact that we have a government which is now occupying the Treasury benches and which got there on a platform and policies of deceit, deception, and cynicism. There is no question about that. Liberals were aided and abetted in every shape and form by the NDP. It was rather interesting to see them huffing and puffing for an election a year ago because they were toe to toe with the Liberal opposition, both in body and in spirit. The Liberals proposed instant solutions which were politically enticing and attractively packaged, and of course the NDP thought they might very well gain some support so that they could form the balance of power.


An hon. Member:: Don't be so bitter.


Donald Frank Mazankowski: Today some of the more enlightened members of that party are trying to extricate themselves from that union. It was a convenient bond then, but now they are finding it rather uncomfortable because they are feeling the pressure from western Canada to the effect that they are ignoring their constituencies and the people who are supporting them, and they are not standing up for the genuine interest of the people who sent them here to represent them. The NDP-Liberal alliance is under attack.
Last night the hon. member for Kamloops-Shuswap (Mr. Riis) went into quite a tirade in which he tried to divorce himself from the policies of the Liberal government. I should remind hon. members of the statement which was made in June by the financial critic of that party when he was speaking on the Borrowing Authority Act and said the following as reported at page 2063 of Hansard of June 12: .
There is a total contradiction between the kinds of statements and the kinds of things that were being said about deficits, about spending, about the nature of stopping deficits, the nature of taxation, the nature of the recession and what the Liberal party would do when it was elected, and what its record has been since it was elected.
There has been a total contradiction in the statements that were made by the financial spokesmen for the Liberal party prior to the election and what the government has been saying since the election. There is a complete contradiction, and that contradiction has to be brought home again, again and again to the Canadian people. But above all else, this party opposite is a party without a shred of principle, without a shred of conviction and without a shred of belief in anything, either political or economic.
Today the story is somewhat different. They conveniently join with the government on issues such as the Constitution. We are not sure where they stand on the energy situation but, needless to say, they are going off in all directions. The Premier of Saskatchewan is saying one thing, the hon. member for Regina West (Mr. Benjamin) is saying another, the hon. member for Yorkton-Melville (Mr. Nystrom) is saying something else, their leader is saying something different, and the

January 21, 1981
Income Tax Act
hon. member for Winnipeg North Centre (Mr. Knowles) is talking about pensions. They are really running for cover.
If any member has credibility in terms of pursuing pensions for veterans, senior citizens and railway workers, I am sure no one else in the House has established a finer and better reputation than the hon. member for Winnipeg North Centre; at least he has some principles.


Some hon. Members:: Hear, hear!


Donald Frank Mazankowski: What were some of the issues in the last election? What issues are immersed in this piece of legislation with which we are attempting to deal? During the election campaign the Liberals promised cheaper gasoline and petroleum products. As a matter of fact, on February 8, 1980, the Prime Minister (Mr. Trudeau), in a speech in Toronto, said that their price increase would be less than 14 cents a gallon, that there would be no new taxes, that there would be no increase in the excise tax, that there would be a made-in-Canada blended price, and that there would be a negotiated agreement with the provinces within a year. What else did they promise? They promised economic revitalization, cheaper interest rates, and a made-in-Canada interest rate policy. We all know what the Minister of Industry, Trade and Commerce (Mr. Gray) promised when he was finance critic. He said that if interest rates go up he would resign. Well, he is still here; perhaps that is why they call him "amazing Gray".
Also they promised an increase in the guaranteed income supplement, on which they delivered. They promised double tracking; they would link all the sidings along the CN mainline between Winnipeg and Vancouver so that the number of trains could be increased from 25 to 50 because of the parallel line. We now know that it has been discounted as an impractical solution. As a matter of fact, it is the most lunatic proposal I have ever seen. They promised to revitalize agriculture with a 12-point program. They promised help for small business. They promised changes in capital gains. They promised a four-point automotive program. The Prime Minister made a personal promise; he said that if he was elected he would resign within four years. I am sure that is one promise many Canadians are hoping will be fulfilled very quickly.
Let me review the record. What about the automobile industry? It has never been in more dire straits in the history of this country than it is today. In spite of the fact that the government is attempting to bail out Chrysler and to put the industry on a sound footing, there are still some very serious problems.
What about changes in capital gains? The hon. member for Moose Jaw very effectively dealt with that matter yesterday, but I think it should be repeated. The Liberal government promised a change in valuation day from December 31, 1971, to December 31, 1974.
There was a suggestion that some inflationary clauses would be enacted to take into account the impact of inflation. Something must be done to lessen the impact upon capital gains. The impact upon capital gains destroys initiative, discourages ownership, and stifles productivity. As the hon.
member for Moose Jaw pointed out yesterday, many people who own enterprises, particularly in the small business and farming sectors, take very, very low wages and do not institute pension or retirement programs. When they sell their enterprises, the moneys realized serve as their retirement funds, yet ministers seem to be following a course of a more regressive capital gains tax rather than a progressive one. I think the future of ownership and private initiative is under attack as a result of the philosophy of the government which is shared by the NDP that ownership is bad, that people should be taxed from the cradle to the grave, and that any selling off of one's resources acquired over the years should be subject to a very punitive tax. I do not agree with this. Our economic program dealt very effectively with these matters.
Let me turn to agriculture. A 12-point program was to be instituted, but all we have seen is an increase in the farm loan act, which is a help. What is happening in grain movement? We are barely keeping pace with the shipments of last year, even with the advent of more hopper cars and improvements in the capacity of terminals and the entire operation. The government failed to establish a target for grain movement for this year. My party established a target of increasing exports by 20 per cent in the last crop year over the previous one, and we achieved it. There should have been at least a 10 per cent increase in anticipated grain movements in the export position of this year over the last crop year. As a matter of fact in terms of quotas a number of points in western Canada are still on a three-bushel quota while others have a nine-bushel quota. There is inequity in the opportunity for delivery, which creates many problems.
What about prices? The initial price of $4.25 f.o.b. Thunder Bay established by our administration is still in effect, while wheat sales are in the $7.50 to $8 range. Why does the government allow the Canadian Wheat Board to keep farmers' money? There should be an immediate adjustment in the initial price. Farmers are paying 20 per cent interest, and the minister in charge of the Wheat Board will not give farmers their own money.
Furthermore, the minister in the other place suggested that the farmers should not get their money at Christmas because they would spend it on Christmas cheer and presents, or they might have income tax problems. It is nonsense. Certainly they have problems, problems meeting their commitments and being forced to pay high interest rates. These problems are not helped by the government's approach to small business and the small farm.
I take exception to the fact that the minister in charge of the Canadian Wheat Board is unduly politicizing that board. There is no reason in the world why he should be announcing the grain sales of the Canadian Wheat Board. They are the selling agency; he is not. He should not announce the final payments or the adjustments in the payments. The Canadian Wheat Board, acting on behalf and in the best interests of farmers, is doing the job. He should not attempt to enhance his political position and the political position of the government by associating himself and meddling with the glorious little
January 21, 1981

announcements which are strictly the property of the Canadian Wheat Board. I take very grave exception to that.
The minister who spoke today did so at length about some of the proposals for small business. I agree that the Small Business Development Bond was a very good mechanism. But because of the uncertainty, the lack of knowledge as to what the long term would be, it had a very negative effect upon many enterprises which wanted to utilize the mechanism of the Small Business Development Bond. This government, if it really intended to provide some stability and some help to small business, should have announced its intention to carry on with the program for a year when it assumed office. But it went until the end of the year and then, of course, the people who had to plan their building programs were faced with that uncertainty as to whether it would continue. As a result, full advantage was not taken of that very good program.
As 1 said, this bill basically incorporates some of the major economic thrusts and philosophies of the government, but it is mostly fine tuning; there is nothing distinctive or unique about it. The other day when the minister was introducing this bill he said that there had been a lot of encouraging developments since he had brought in his budget. 1 am not sure where those encouraging developments are. There are certainly none in the oil industry. The headline in Alberta Business of January 16, 1981, reads "Industry Follows Rigs South". There certainly haven't been any encouraging developments in the automobile industry. There have been no encouraging signs in the agricultural industry, or in the housing and construction industry. The whole mess we are in is a result of the lack of leadership and the lack of the enunciation of a clear economic policy.
Let us deal with the double tracking. I have said it was a lunatic proposal. It was then, and it is now. What is happening, Mr. Speaker, is that we now have a situation where the railways are threatening to ration the availability of boxcars and hopper cars for the movement of grain. We have the Minister of Transport (Mr. Pepin) peddling the same garbage. My goodness, if we are to continue to develop and improve our reputation as a reliable supplier of grain to our customers abroad, we will certainly not be able to do it that way. The minister should denounce that statement. He should not associate himself with it at all. If he does, I am sure our customers in Japan and China will not look to Canada as a No. 1 potential supplier of product. They will say, "Well, they have got strikes, they have snow, and they have a bad transportation system. And now they are going to ration the availability of boxcars and hopper cars. Well, we cannot go there, unless we do so as a last resort." I suggest that will have a tremendously negative impact upon our future in developing markets and maintaining our markets abroad. I hope that matter will be dealt with.
1 hope the minister will change his approach and tell the railroads, "I know the problem is with the matter of the statutory freight rates. Let's get on with the job." There is a consensus developing. There is much work which has to be
Income Tax Act
done, but we must maintain the momentum. If we are to call upon our farmers to produce the amount of grain that we want to market abroad, then it certainly does not provide much confidence for them if we are not able to move the product. They are sick and tired of building granaries and storage facilities.
We have a transportation system which I know will work. It requires co-operation and leadership, but it will work. There are some things which will always be a problem. But someone has to take charge. I call upon the Minister of Transport to take charge. 1 know that other fellow from the other place has really no interest. I must say this about the Minister of Transport, though, at least he is prepared to sit down, listen and talk to the people of western Canada. He knows he does not have all the answers. This other fellow from the other place thinks he has all the answers. As a result, he is going nowhere. I suggest to you, Mr. Speaker, and to my good friends who sit across the way who have some knowledge about western Canada, since we were on a transportation excursion both to the east and the west, that they know westerners talk straight from the hip. They will certainly sit down and talk to the Minister of Transport. I am not too sure whether sending that other yoyo out there to do the job does the party opposite and our country any good at all.
We talked about economic revitalization. Interest rates are the highest in history and yet the Minister of Industry, Trade and Commerce is still here. Our dollar is the lowest it has been in 47 years. Inflation is projected at 11.7 per cent by the C. D. Howe Institute. That is the highest in 33 years. Employment prospects are bleak. Prospects for growth are at 1 per cent. Here again that is not my assessment. That is an assessment made by experts. We will have an accumulated budgetary deficit between the years 1980 and 1984 of some $52 billion. So, you know, economic revitalization has not come to pass.
With respect to energy, the promise was that gasoline prices would increase by less than 14 cents-that was from the mouth of the Prime Minister. I do not know about areas in other parts of the country, but I can tell you that in my area the retail price of gasoline has increased by 32 cents to 34 cents a gallon since the defeat of our government. It has seen seven different increases. Diesel fuel was 61 cents at the time our government was defeated; it is now 91 cents a gallon. That is a 30-cent increase-50 per cent.
There are four new tax increases proposed under the National Energy Program. There is the petroleum gas revenue tax of 8 per cent, the natural gas excise tax of 30 cents per mcf which will increase to 75 cents. There is the petroleum compensation charge which will reach $10.05 by 1983. Then we have a Canadian ownership charge so we can start a whole series of mini PetroCans and big PetroCans. We will have more national oil companies in this country than small businesses. That charge could be a potential $4 per barrel. If you add all these figures together they amount to some $37 billion worth of revenues flowing from the provinces into the federal treasury. Western Canada does not look at this as simply an encroachment. It looks upon it as a wholesale raid.

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What has happened to the consumers? Well, there is no relief. Heating oils have gone up. The prices of natural gas in our particular area have increased anywhere from 60 per cent to 70 per cent. There has been no relief for the home owners, no relief for the aged, the pensioners, or low-income Canadians. There is no relief for farmers and fishermen. When we talk about the excise tax, there was relief for farmers and fishermen under our proposal.
So we have a situation here where there is very grave uncertainty, political and economic. There is deep division, which is the most disturbing element in our country today. There is discord, and bitterness which has developed. I say that is impairing, and will continue to impair, our nation if it is not corrected. To say the least, the state of our country today and the injury which has been inflicted on it, will be a long time healing, because we have a government today which is perceived as governing one half of the country and attacking the other.
And there is no trust. Anyone who travels to western Canada will find that out very quickly. Unless there is trust it will be very difficult to assure co-operation. The situation we are in now is caused by the infliction of unilateral action by the government. It is a process which violates the true spirit of co-operation, the true spirit of federalism, and the true spirit of a partnership. It is caused by the unilateral action with respect to the resource field. I suggest that the actions of the government on both counts is most un-Canadian.
I want to say in all sincerity that unless these policies are modified or changed, this country may not survive. While every political party and every government makes some mistakes-and perhaps some parties have made mistakes that cost them the right to govern-this government is making mistakes that could cost us the country.
I do not want to go into detail on the constitutional issues, and I may deviate somewhat from the text of the bill, but when we speak of the Income Tax Act and Canadians' ability to pay, I want to try to outline some of the difficulties which impair the ability of Canadians to pay. We are preoccupied by the constitutional issue and the energy issue. In terms of the constitution, I think the most important thing in western Canada at the moment is the perception of political inequality. It really is not just a perception, because a real political inequality exists between western Canada and the rest of the country. That should be the No. 1 issue, and it must be resolved. Our present political structure literally shuts off one half of the country from the political process. We should attempt to resolve this issue so that all regions of Canada may participate effectively in the decision-making process. That is one of the things that I believe is a grave error in terms of the constitutional package with which we are dealing.
The constitutional package does not clarify the resource issue, Mr. Speaker, and the amending formula is not acceptable. There are questions about the charter of rights that are so serious it is being challenged in the courts by six provinces.
Those are the things that irritate Canadians and the regions of the country. As a result, we are not delivering because the country is preoccupied with these issues, the economy is suffering, and individual Canadians are suffering.
The National Energy Program is bad for the west and it is bad for Canada; there is no question about that. If the economy is to be turned around, energy has to be the key. It is the key to economic recovery, to economic opportunity, and to allowing the west to take its rightful place in confederation.
The objectives of the National Energy Program are fairness, security, and opportunity. It fails on all fronts, Mr. Speaker. It is unfair to the producing provinces. It constitutes a wholesale and massive intrusion into the area of potential resources in which the average westerner sees the reconfirmation of the pre-colonial status, particularly as it concerns Saskatchewan and Alberta. It unilaterally sets the price at a level that does not match inflation. That is the first time this has been done, Mr. Speaker. It singles out the energy resources of the west., No mention is made of hydroelectricity or uranium. Yet in many respects the purpose of the National Energy Program is to garner funds for the federal treasury. If it is necessary to tax energy, Mr. Speaker, why single out the energy resources of western Canada? I am sure that no government could do that without being charged with lack of fairness, to some degree.
The National Energy Program is unfair to the industry because the federal government can arbitrarily confiscate 25 per cent of producing properties in frontier areas. It is unfair to companies like Suncor which pioneered and developed the oil sands process and was nearly bankrupted doing it. It was subsidized for many years before it showed a dismal profit. It is unfair to Canadian companies, in the words of Robert Blair, president of Nova corporation, who has pointed out that small firms suffer. A report in the Edmonton Journal of December 19, 1980, of an interview with Mr. Blair, reads in part as follows:
. .. serious damage is being done to the small, largely Canadian-owned segment of the industry.
One of the sad things "is the real and psychological damage being done to the smaller, Canadian-owned firms," he said in a Thursday interview.
It is unfair to Canadian companies. It is unfair to the heavy oil industry on which we placed so much of our hopes to achieve self-sufficiency.
Let me speak now about security, Mr. Speaker, in the context of heavy oil. A headline in a newspaper in Swift Current carried the headline "Oil Tax Increase Imperils 400 Jobs Sask. Mayor says". Today we are trying to preserve industry in central Canada, we are crying to bail out Chrysler, we are spending $350 million on a special Industry and Labour Adjustment program, and at the same time are deliberately driving Canadian industry out of the country. How foolish that is, Mr. Speaker.
Each of the little oil rigs that the Minister of Energy, Mines and Resources (Mr. Lalonde) says is really nothing, is worth $6 million and employs between 40 and 50 people. Every time one of those rigs leaves western Canada a factory is lost
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because, in effect, they are small factories. We have lost over 60 of these rigs already.
Any hope of achieving self-security under this program has been scuttled; there is no question about that. 1 do not think anyone on the government side of the House appreciates the fact that our conventional oil reserves are running out. Something like 1.2 billion barrels are being produced today; the projection is that by 1985 that figure will be reduced to 680 million barrels, and by 1990 to 377 million.
The megaprojects are in a state of limbo. Cash flows are being reduced by 30 to 40 per cent. Exploration budgets of companies going out to look for oil have been cut by 30 to 40 per cent. I have mentioned already that at least 60 rigs have left the country. Over 170 are idle, according to my colleague, the hon. member for Wetaskiwin (Mr. Schellenberger). Some 2,600 people have been laid off already, by March 40,000 will be laid off, and there will be many more by springtime. In the province of Alberta last year some 9,000 holes were dug when looking for oil, but this year less than 5,500 will be dug.
It has been suggested that because of the National Energy Program there will be a dependence on imported oil of almost 600,000 barrels per day by 1985. The cost could rise from $6 billion per year to $14 billion per year. Over a five-year period the total drain of funds would be approximately $55 billion. That is a lot of money, Mr. Speaker.
Now let us consider the opportunities that have been lost and the jobs that have been lost. I can sympathize with members from Ontario and Quebec when they are faced with the prospect of jobs being lost in their constituencies, because I am experiencing the same thing. They might not appreciate it, but the effects of the oil industry are spread over the whole of western Canada and beyond. It provides jobs for westerners and for Canadians from central and eastern Canada who have gone there. Young people in my hometown are losing jobs every day. Many who went home for the Christmas break have not been called back to work because of the impact of the National Energy Program. It is having an effect on the opportunities for young Canadians and on their spirit, Mr. Speaker. It should be borne in mind that this industry is 90 per cent Canadian owned. The drilling industry is owned and developed in our own land.
Mr. Blair from Alberta Gas Trunk Line, now known as Nova, says that 600 of the 1,800 wells which Husky Oil has in Lloydminster may have to be shut in. This impacts on the whole economy of western Canada, but it impacts more on the total economy of Canada. This program discriminates against the individual Canadian who wants to continue to invest in the industry. Of course, as my hon. colleague indicated, the program is not a program to Canadianize, it is a program to nationalize. There is nothing in this budgetary package to encourage more Canadians to invest in the resource industry. That is something which I am sure individual Canadians from coast to coast would want to do, that is, to invest in the future of their country by investing in Canada's energy resources.
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When we look at what has happened, western Canadians can only conclude that the government is pursuing a course of economic, social and political disaster. They do not believe the Minister of Energy, Mines and Resources understands the totality of what he is doing. He comes across as being very arrogant and condescending and is suggesting to western Canadians that he knows what is best for them.
A reporter for The Globe and Mail called the minister, his cohorts and colleagues a bunch of arrogant amateurs. I have to agree with that statement. The minister must start showing some flexibility and some genuine concern for what his National Energy Program is doing, otherwise this division, discord and bitterness will continue to develop.
Western Canadians are worried because they see the massive takeover which has occurred in the oil industry. They are concerned this could happen in the food production industry. Energy and food will be two of the most important commodities as we enter the year 2000. There is a major concern within the forest industry that the government may engage in a wholesale raid on that very important industry as well. In other words, we are engaged in an exercise which is having a most profound effect upon the political, economic and social future of a very important part of our country.
As I said earlier, we live in a period of very serious and political uncertainty, with serious concerns respecting our economic future. Many Canadians cannot understand why, in this land of plenty, we should be involved in this stalemate over such a basic and fundamental issue, namely, the issue of provision of energy to propel the machines of industry and the wheels of transportation. We live in a fortunate country. We are one of the very few industrialized nations of the world which has the potential of being self-sufficient and having a secure supply of energy.
I suggest that this government and this minister get back to the drawing boards and back to the negotiating table with their provincial counterparts, and do so quickly. First, they have to establish some agreement respecting figures. The federal government says that the province of Alberta is going to extract some 43 per cent of the revenue. Alberta says that it will extract only 28 per cent-


The Acting Speaker (Mr. Ethier):: Order, please. I regret to interrupt the hon. member but I must advise him that his allotted time has expired. He may, however, continue with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Donald Frank Mazankowski: Mr. Speaker, I want to thank all hon. members of this House for allowing me to continue. I will not abuse the privilege, I can assure you, Mr. Speaker.
I want to place before the House some recommendations which I think must be followed. First, the province and the federal government have to get back to the bargaining table. There has to be some agreement on a common set of figures. There is too much discrepancy about what is the provincial take. As I have said, the province indicates that its take is only

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28 per cent while the federal government suggests that its take is 43 per cent.
There are differences of opinion with respect to supply projections. Under the National Energy Program, Alberta says that net imports will be 525,000 barrels a day by 1985, and 734,000 barrels a day by 1990. This will cost something in the order of $20 billion to $30 billion a year. Ottawa claims the reliance on imports will be 260,000 barrels a day by 1985 but by 1990, no imports will be required. Obviously, there is a major discrepancy and that is the first thing to be overcome.
The federal government has to recognize that because it moved unilaterally in placing before this House the kind of National Energy Program and pricing regime that it did, and because this is not going to be bought by the provinces, it will have to make the next move to get back to the bargaining table. There can be no question about that. There must be a demonstration of some flexibility, reason, and concern. It is universal now that the National Energy Program is very detrimental in many aspects. Unless the federal government takes a position of flexibility I can say to you, Mr. Speaker, that there will be no harmony and there will be continued discord and chaos in the country.
We have to work toward an agreement which is fair, fair to all regions and fair to all Canadians. Until such time as we approach it in that fashion, the division and animosity in the country will continue.
I say in conclusion that this is perhaps one of the most important periods in the history of Canada. It could very well be the turning point between failure and success, and I mean that in the broadest sense. We have the opportunity to transform this country into one of the great industrialized giants of the world. Canada has the potential, the strength, manpower resources and natural resources. We have it all. It is unfortunate that the difficulties we have are not those caused by nature. They are difficulties caused by governments and people. The time has come for us to get the show on the road. We must ensure that this very important issue is resolved quickly, not only for the west but for all of Canada.
It was said once, "What is good for General Motors is good for Canada." We should now say, "What is good for the west is good for all of Canada." Strong regions mean a strong country. The provinces of Ontario, Quebec and eastern Canada will all reap the benefits of a satisfactorily concluded agreement. Therefore, I urge the members of this House to prevail upon the cabinet to get back to the negotiating table, and to do it quickly.


Some hon. Members:: Hear, hear!


Mr. Russell MacLellan (Parliamentary Secretary to Minister of Regional Economic Expansion):: Mr. Speaker, it is a great pleasure for me to rise today to speak on Bill C-54, an act to amend the Income Tax Act.
The Income Tax Act is a piece of legislation which touches all Canadians. I am sure many of us in the House today wish
that it did not touch most of us as directly as it does. However, we all know that the legislation is essential to the financing of government programs and services. The Income Tax Act does far more than simply provide the wherewithal for us to run the nation's business, it also contains many different measures aimed at stimulating the economy of the country.
Today I would like to speak briefly on one of the measures contained in Bill C-54, the special investment tax credit, which was described by the Minister of Finance (Mr. MacEachen) on budget night as a bold and experimental new program to help deal with regional inequalities in the country. As Parliamentary Secretary to the Minister of Regional Economic Expansion and as the member for Cape Breton-The Sydneys, I know a considerable amount about regional disparities and inequalities. That is why I heartily support this measure, for I know that the special investment tax credit program will go a long way toward reducing regional inequalities in this country.
By providing this 50 per cent tax credit, the federal government, through the Department of Regional Economic Expansion, will be able to help generate much needed industrial development in some of the most seriously affected parts of Canada. These areas, which are marked by both high family unemployment and low per capita income, can be found in every province and territory. And while these areas contain only some five per cent of the Canadian population, it is important to remember that this is the five per cent most in need of this kind of assistance.
As you might expect, since the program was announced on October 28 there have been many requests for it to be broadened, to include a larger portion of the country. While I agree that there certainly are localities outside the designated areas which could well benefit from the program, economic realities necessitate the focusing of available funds on those parts of Canada where this program can be most effective.
Let me say a few words, about this innovative program. Simply put, it is a tax credit. That means that a company, or individual, making an eligible investment in a designated area is entitled to deduct 50 per cent of the cost of that investment from the federal income tax payable. For example, if a business person invests $100,000 in a new manufacturing facility, he or she will be able to deduct $50,000 from any federal tax which is payable. If there is no federal tax payable in that year, or very little, the business person may defer the unused credit to a future year.
There are, of course, some restrictions on how and when you can use some of these credits. For example, an entrepreneur must reduce any capital cost allowances available to him or her by the amount of the tax credit in order to avoid duplication of benefits. Also, the credit must be used within five years of the year in which the investment was made.
However, these restrictions aside, it should be noted that the administration of this program is very simple. No prior
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approval of projects is required. All industries which are defined as manufacturing or processing operations under the Regional Development Incentives Act are eligible. Furthermore, the fiscal advantages are automatic from the moment an entrepreneur makes an eligible manufacturing investment. All that is required is to claim the credit as part of an income tax return. If Revenue Canada requires any clarification on the eligibility of the industry or the area in which the project is located, it will obtain this from DREE.
Let me return now to the eligible areas in which the program will apply. As I said earlier, the program is aimed at those parts of Canada which lag behind others, economically speaking.
For a variety of reasons, people living in those areas do not have the opportunities available elsewhere. Perhaps they are geographically isolated, too far away from the centres of economic activity to benefit from that activity. Perhaps employment opportunities do not exist simply because it is not financially attractive for an entrepreneur to locate or expand in such an area. There is a host of reasons why these people are in need. But, whatever the reason, action is required no matter where these people are located.
Just where are they located? With the help of Statistics Canada, DREE has been able to identify those census divisions, containing approximately 5 per cent of the Canadian population, where the family unemployment rate is greatest in relation to the national average and where the per capita income is lowest relative to the national average.
But statistics alone do not tell the whole story. In order for the special investment tax credit program to be effective, it was necessary to use these statistics as a basis for decisions requiring human judgment. I am sure that claims could justifiably be made that the criteria I have just described would warrant the designation of additional census divisions in the Atlantic region in particular. However, it must be remembered that the special investment tax credit is intended to be an incentive to stimulate industrial investment in areas of greatest need.
If the whole of a province were designated for eligibility purposes, for example, there would be no financial incentive for a firm to locate in the area of greatest economic need. That is why the Minister of Regional Economic Expansion (Mr. De Bane) placed the constraint on the program that, generally speaking, not more than 40 per cent of the population of any one province would be eligible for the special tax credit. However, I should point out that there was an exception to this 40 per cent rule in Newfoundland, where the designation of all the region of Labrador raised the provincial percentage above this level.
Similarly, the statistics did not take into account the fact that in some census divisions, while the average family unemployment rate may not be the highest and the per capita income may not be the lowest, there are, nevertheless, many people living in rural or isolated areas who are much more disadvantaged than their fellow residents who live in the more urbanized parts of the country. It was with a view to helping
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these people that the minister decided to include some census divisions in the northern parts of the country, especially in Ontario and western Canada.
I would like to take a few minutes to describe briefly the areas that are covered by the Special Investment Tax Credit program. In British Columbia the northeastern part of the province covered by the Peace River-Liard census division 55 has been designated. This includes Dawson Creek, Fort St. John, Fort Nelson and Liard River.
In Alberta the northwestern part of the province covered by census division 15 has been designated, with the exception of the urban area of Grande Prairie. Located here are places such as High Prairie, Peace River, High Level and Fort Vermilion.
In Saskatchewan the northern part of the province has been designated. This area, covered by census division 18, includes La Ronge, Buffalo Narrows, La Loche and Uranium City.
In Manitoba the northern part of the province, with the exception of the urban area of Thompson, has been designated. Here, in census divisions 19, 21, 22 and 23, we find communities such as The Pas, Flin Flon, Norway House and Churchill.
In Ontario we have designated that part of the province north of the 50th parallel of latitude. Included here are communities such as Sioux Lookout, Red Lake, Sandy Lake and Moose Factory.
In Quebec the part of the province north of the 50th parallel of latitude, with the exception of the urban area of Sept-Iles, has been designated. This includes Fort George, Gagnon, Natashquan and Fort Chimo.
The Gaspe region, covered by census divisions 02, 03, 04, 05, 06, 07, 08 and 09, has been designated, with the exception of the urban area of Rimouski. Included here are such centre as Riviere du Loup, Matane, Gaspe and New Carlisle.
The Magdalen Islands which is census division 0! have also been designated under the program.
In New Brunswick the northern and eastern parts of the province have been designated. These areas are located in the following census divisions: Kent 08, Northumberland 09, Madawaska 13, Restigouche 14 and Gloucester 15. Here can be found communities such as Edmundston, Campbellton, Bathurst, Chatham and Richibucto.
In Prince Edward Island, the area covered by the Kings census division 01 has been designated. This includes centres such as: Montague, Cardigan, Souris and Murray River.
In Nova Scotia, Cape Breton Island, which is covered by the counties of Inverness 15, Richmond 16, Cape Breton 17 and Victoria 18 census divisions, has been designated, as has the nearby part of the Eastern Shore covered by Guysborough 13 census division. Included are communities such as Port Hawkesbury, Ingonish, Sydney, Glace Bay, St. Peters and Canso.
In Newfoundland, Labrador, census division 10, and the coastal regions of the Island of Newfoundland, with the excep-

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tion of the Corner Brook area and the Avalon Peninsula, are designated. These areas are covered by census divisions 02, 03, 04, 07, 08, 09 and 10. This includes communities such as Happy Valley-Goose Bay, Port aux Basques, Trout River, Bona Vista and Marystown.
In the Yukon and the Northwest Territories, the government has designated all of these territories as specially designated areas under the program. This, of course, includes communities from Whitehorse and Old Crow to Frobisher Bay and Pangnirtung.
You will note that in this list of eligible areas the cities of Grande Prairie, Thompson, Sept-Iles and Rimouski are excluded. Understandably, residents of these areas would like the program to apply to them. But it must be remembered that the program is limited in its application to some five per cent of the Canadian population. Also, the areas designated are those most in need of assistance.
Urban centres generally offer greater economic opportunities than do rural or isolated areas. This is the case with the cities in question which do have more employment opportunities and other economic advantages than in their surrounding areas.
There are two other points I would like to address before leaving the matter of statistics and eligible areas. The Minister of Regional Economic Expansion has been asked why Statistics Canada data have been used and whether changes will be made to the designated areas. If I may respond on behalf of the minister, I would point out, as far as the first matter is concerned, that Statistics Canada provides authoritative, national data on population and other factors which have been used as the bases for things such as this program for many years. In addition, DREE wants to evaluate the achievements of the program over time, and census information provides the best means for doing this.
As to changes to the eligible areas, I would mention that the minister has indicated that he will be closely monitoring the program and that he will not hesitate to make improvements if, and when, these become necessary or appropriate. However, the minister has also stated that before any changes can be made the program must be subjected to an evaluation. Therefore, given the need for time over which to make this evaluation, the minister cannot foresee my changes to the eligible areas in the near future.
Speaking of evaluation, what are the benefits expected from the Special Investment Tax Credit program and against what will this evaluation be made? As envisaged, the benefits will be both economic and social in nature. By this bold initiative in regional development, the federal government is demonstrating, in a significant way, its interest in people living in economically disadvantaged areas of Canada. It is offering new hope to these people and it is challenging the private sectors to take advantage of this very generous offer and to make industrial investments which will be of benefit to themselves and to the people of the areas in which projects are located.
The economic benefits which will accrue from these investments are manifold. Employment opportunities will be generated in areas where such opportunities are now extremely limited. The investments themselves will have spillover effects, as well. Because the investment must be of a manufacturing or processing nature, jobs will be created in the primary and tertiary sectors of the economy. That is to say, jobs will be generated, for example, in the harvesting of resources to be used in the manufacturing process. They will also be generated in the service sector in responding to the need, for example, to supply or repair equipment in the manufacturing operation, or to provide personal services to employees.
The measure of success of the program will be, in part, the extent to which the program lowers unemployment rates and increases per capita incomes in the census divisions where it applies.
These benefits will, of course, be measured against their cost. At this point we can only estimate what the cost will be since we do not know how many firms will take advantage of the program, nor do we know what the size of the projects will be. The government is hoping that both the number and the size of projects will be large because the benefits to the areas of need will, of course, reflect this scale.
However, when I state that the costs can only be estimated at this time, I should hasten to add that the program must be developed with cost considerations in mind. For example, I referred earlier to the fact that there would be no duplication of benefits, in the sense that a firm cannot claim both capital cost allowances and the 50 per cent tax credit. Similarly, the Department of Regional Economic Expansion, as well as other federal government departments, will take this new program into account when a firm applies for a benefit from other discretionary programs. That is to say, in deciding whether a grant, repayable incentive or loan guarantee should be offered under DREE's Regional Development Incentives Program, the minister and his officials will decide whether such an inducement is needed in addition to the 50 per cent tax credit in order to get the firm to establish, expand or modernize a facility in an eligible area.
I think it is important to point out, as well, that the program is aimed primarily at profitable enterprises-firms that have demonstrated their ability to succeed in the marketplace. Therefore it can be expected that the projects generated by these firms will be viable ones. Therefore the government can expect to receive increased corporation taxes, as well as personal income taxes that will become payable from residents of the area-some of whom may have had to rely on government assistance up until the present time.
The Minister of Regional Economic Expansion will be assessing the costs and the benefits of this program over time, and will provide information both to the House and to the public in the light of this experience.
I have not dwelt on the technical aspects of the Special Investment Tax Credit program, but perhaps I should make a few remarks in this regard. The program became operational on October 29, 1980, in the sense that the capital costs of
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assets acquired on or after that date will be eligible for the 50 per cent credit. Assets must be acquired by December 31, 1985, and the credit must be claimed within five years of the date of acquisition.
As I said earlier, DREE is responsible for the direction of the program. Industry eligibility is determined with reference to the definition of a manufacturing or processing operation under the Regional Development Incentives Act. The definition of eligible capital property and other similar terms will be determined with reference to the Income Tax Act. Similarly, the calculation of the tax credit, the use of capital cost allowances and so on will be the responsibility of Revenue Canada.
The administration of the program has been kept as simple as possible. There are no prior approvals involved. There are no restrictions in terms of minimum or maximum size of project. The tax credit is simply claimed as part of a normal income tax return.
This last point leads me to my final comment. Recognition of the need for differentiated taxes between regions, and in particular for the higher investment tax credit rates for DREE designated regions, was given originally in 1975 and expanded in 1978.
In the Atlantic provinces and the Gaspe, the tax credit today is 20 per cent, and in other regions designated under the Regional Development Incentives Act 10 per cent, unless the special investment tax credit applies. So those regions which do not qualify under the Special Investment Tax Credit program will continue to benefit from these existing inducements for regional industrial development.
I believe that the Special Investment Tax Credit program offers an exceptional opportunity for the industrialization of certain regions of Canada and that it will provide significant benefits to the 5 per cent of the Canadian population that is in the greatest need of this kind of development.


Hon. J. Robert Howie (York-Sunbury):: Mr. Speaker, Canadians find themselves in severe economic straits, and the government finds itself extremely limited in the options open to it because of the hodge-podge of economic theories which have been the government's trademark over the past two decades.
The government's theory of exercising restraint is hard to rationalize. For example, it lays off employees, and closes its eyes to the acquisition of goods, services, materials and facilities. The government thinks nothing of adorning federal buildings across Canada with exotic plants and interior landscaping, of which the huge hothouse created by the Bank of Canada on Sparks Street here in Ottawa is a classic example. It would be preferable, in my view, to erect a picture of a woman in New Brunswick picking potatoes for a living, or a lumberjack in snow up to his chest earning a living cutting trees. Perhaps with a constant reminder of how hard Canadians work to supply tax revenues we might move ahead with parliamentary
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reforms to enable members of Parliament to play a meaningful role in eliminating waste and extravagance and in developing a more efficient government administration.
For years the government decided that it would be unpopular to have a modest increase in taxes or a cutback in spending, so it took the long way home and simply expanded the money supply, thus feeding the fires of inflation. And now it deals with inflation in the traditional and classical way by employing monetary policies which, in effect, feed the fires of unemployment.
It is always the little fellow who pays, and when the government is forced to increase taxation it is done in a merciless way. The energy taxes proposed by the government do not exempt low-income Canadians-they are not sheltered with energy tax credits such as those the Conservative government proposed-and they pay at the same rate as the wealthiest people in the land. That is exactly what I mean by a tax with a vengeance and without mercy. Again, it is the little people of this country who pay.
When the government's anti-inflation policies close manufacturing plants or cause lay-offs of employees, production drops, and we have the classical situation where the drop in supply is more dramatic than the drop in demand. With too many buyers chasing too few goods, prices go up, again feeding the fires of inflation. The government's policies for dealing with inflation are counterproductive. Short-term solutions have become long-term tragedies.
It is a preferable answer to abandon the spectre of nineteenth century solutions to twentieth century problems and deal with and address the reality of today. Our aging production facilities need to be rejuvenated, and the key to that rejuvenation surely is research and development.
The winds of change are blowing in advanced industrial states, and the signs of change are apparent in Canada too. The leading performers in our Canadian economy are firms that produce high technology products and systems. These firms provide good jobs for their employees and require support services that directly or indirectly involve almost every trade.
A government somehow has to learn the lesson that one of the elements in combating inflation is to increase the supply of goods, both domestically and in our export markets, so that prices go down and more Canadians are employed and become taxpayers sharing the burden of government, so that taxes can go down and the demand for social services can be reduced. It is my view that the government is doing right now exactly the opposite of what it should be doing to create jobs and fight inflation.
The tax system that supports the National Energy Program tabled on October 28 will indeed impinge on almost every sphere of Canadian activity for years to come.
The government has correctly excluded the Bay of Fundy, which is located between the provinces of New Brunswick and Nova Scotia, from Canada lands. This area is essentially

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untested for energy resources, and it would appear to be in the classification of high-cost exploration risk.
The tax table accompanying the National Energy Program indicates that the after-tax, after-incentive cost for a Canadian company conducting an exploration program would be seven cents per dollar spent on Canada lands against 34 cents in the Bay of Fundy. For a foreign company it would be 28 cents versus 53 cents. The province of New Brunswick is in no financial position to offset this differential if it is to see its offshore resource potential property evaluated. There has been one hole drilled in the Bay of Fundy, but a number of promising structures remain to be tested.
A ship-borne seismic survey by Chevron-lrving this past summer indicates a renewed interest in looking at this important area. 1 am concerned about the financial incentive to pursue exploration in the Bay of Fundy as a result of the tax program being proposed by the government. I am also concerned about the policy statement of the government that the Foreign Investment Review Agency will vigorously enforce its investment criteria in the energy sector.
Again, the government policy whereby it does not want to see the oil companies use their cash flow to expand into the non-energy part of the economy impacts adversely on the province of New Brunswick.
Over the past decade New Brunswick has received as much as one quarter of its non-hydrocarbon and uranium exploration expenditures from oil companies or their mineral exploration subsidiaries, most of which are foreign controlled. These firms have sufficiently large exploration budget allocations to justify spending a small portion in relatively high-risk areas or to test new exploration concepts in the areas of unproven potential. Following the decline in the role of junior mining companies in the late 1960s they became leaders in mineral exploration activities.
I suggest that oil companies which have established a level of mineral exploration expenditures over the years should not have their continuing participation frustrated and, indeed, if their participation is to be discouraged by the federal government, it should first see in place a comparable alternative financial source to carry on this development in New Brunswick and other areas that suffer from regional disparity.
The federal government's program does not adequately recognize the potential for New Brunswick oil shales to play a major role in the development of alternate energy forms. New Brunswick's capability to finance research and development in oil shale is limited. The extent and potential of New Brunswick's oil shale are attractive. It has not been defined, nor is it generally recognized, but the evidence collected in the only area recently tested in any detail indicates considerable potential. The one square mile drilled by Canadian Occidental Petroleum over the past number of years comprises about .1 per cent of the area known to be underlain by oil-bearing shales. The Occidental work has shown that the principal zone in the one square mile area contains 8 per cent to 10 per cent hydrocarbon, or several hundred million barrels of petroleum.
It is not unreasonable to assume that at least 5 per cent of the oil shales are of comparable or better quality. If this is so, the potential is for 15 billion barrels or more. Surely, a potential of this nature requires exploration, research and development, and this in turn requires that tax incentives be provided by this government. Instead, the government appears to be moving in the opposite direction and discourages exploration in New Brunswick.
Canada has offered Saskatchewan a five-year, S50 million heavy oil research and development program. It allocates nothing to New Brunswick in terms of development of our oil shales. The role allocated to development of the oil shales in the national energy inventory is disappointing because an active exploration program, coupled with the necessary research and development, has great potential in helping to solve our national energy problems and in providing badly needed jobs in New Brunswick and Nova Scotia.
My search for the base data used to arrive at the areas designated for the special 50 per cent tax credit provision mentioned in the bill before us was greatly assisted by the member for Madawaska-Victoria (Mr. Corbin), for whom I have a high regard, when he asked the Minister of Regional Economic Expansion (Mr. De Bane), as reported at page 5288 of Hansard of December 3, 1980, if the minister was prepared to publish the base data used in the establishment of the program, and when he further asked him to confirm that the program is being put forward as a pilot endeavour for the next year.
The minister said, in reply, that he would have never dared to make those designations, either on gut feeling or as an arbitrary decision. The minister said he took the 5 per cent of Canadians who are in most need, and in no province could he designate more than 40 per cent. He further stated that all the statistics have been made public.
If the designation of the census divisions eligible for the program was not arbitrary, why were they limited to 40 per cent of the population of Canada? Are not these in themselves arbitrary criteria?
Is the program only, in the words of the member for Madawaska-Victoria, a pilot endeavour for the next year and, if so, will this not make potential investors reluctant to participate in what may be a start-stop program?
Later, in response to a point of order I raised, the minister said he made a commitment to the parliamentary committee on regional development that during the year he would try to refine the designation to try to correct it as such. He said that there were three criteria: the highest family unemployment rate in Canada, the lowest per capita income, and an isolation factor.
Why did the minister not mention the isolation factor in his earlier reply to the member for Madawaska-Victoria, and why is it not mentioned in the information release on the program which says simply, "The program is aimed at the 5 per cent of the Canadian population suffering the most from high family
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unemployment and low per capita income?" Are isolated areas included regardless of unemployment and income levels? Also, "isolated" and "northern" appear to be synonymous as all northern areas are included, except for northwestern British Columbia and northeastern Alberta. Why were those areas omitted? The information release notes that each province and territory has at least one census division in the program. Was this a requirement; that is, was one area from each province and territory included, regardless of relative levels of family unemployment and per capita income?
The information sheet also notes that "the eligible areas generally account for less than 40 per cent of the population of any one province," but the minister's statement to the member for Madawaska-Victoria says that "in no province could 1 designate more than 40 per cent." However, in his reply to my point of order, he moves back to a more conditional phrasing when he says:
In no province should the regions designated cover more than roughly 40 per cent of the population of the province, otherwise there would be no incentive.
Is the 40 per cent criterion a requirement of the program or only a general target, and in either case why, if more than 40 per cent of a province qualifies under the other program criteria, should regions be excluded from the program? Why would there be "no incentive" if such regions were included? Will there be the opportunity to refine the areas designated and the criteria for designation before the program goes into effect this year and, if not, what value is that pledge of the minister if, in the words of the member from Madawaska-Victoria, "The program is a one year pilot project only?"
In the testimony blithe MimsTer of Eihance (Mr. Mac-Eachen) to the Senate finance committee, he said that the upper limit of revenue loss set for the program was $15 million. He added that it was not a requirement of the program that at least one census division be eligible in each province and territory, and he said that it would be possible for a company to get a combination of the tax credit and a regional development incentives grant which would be more than the company could get in a regional development incentives grant. I would like to hear the minister confirm that the upper limit of revenue loss under this program is $15 million, an amount the Liberal senator from Northumberland, Mr. Theriault, described as "minuscule".
I would like to hear the minister confirm that it is not a requirement of the program that at least one census division in each province and territory be included in the program.
If the Minister of Finance was correct in stating that it would be possible for a company to qualify both for the tax credit and a regional development incentives grant, which, in combination would constitute a larger incentive than the regional development incentives grant for which it would otherwise be eligible, why does the information release say that "stacking of the 50 per cent tax credit with other incentives is not generally permitted" and that "the tax credit will be taken into account in determining the need for an amount of incentives under the Regional Development Incentives Act"?
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Will any companies qualify for the tax credit which could not qualify for grants under the Regional Development Incentives Act? If not, is it not merely a substitute for the Regional Development Incentives program in the designated areas?
I have to confess that I find it very confusing to attempt to rationalize the minister's program which bisects parts of provinces within a region in determining where the new 50 per cent tax incentive program will apply. The stated objective is to promote industrial development in those parts of Canada most adversely affected by economic disparities. I find it very difficult to rationalize this approach with the application of the program spread over every province and territory in Canada instead of concentrating on regions which suffer from disparity.
The mystery deepens when we refer to the areas that are identified and those that are not. Take the province of Quebec, for example. The areas identified take in the eastern Gaspe and northern Quebec, excluding the urban regions of Sept-Iles and Rimouski. Yet the maps supplied to me by the minister indicate that, according to the program criteria, the counties of Labelle and L'lslet should be included. Yet they are not. In Ontario everything north of the 50th parallel is included, yet the county of Haliburton, the only county in Ontario to meet the program criteria, is not.
In New Brunswick the county of Queens is the worst off in the province in terms of income and meets the other program criteria, yet it is not included. In Nova Scotia the counties of Cumberland, Digby and Yarmouth meet all the program criteria, yet are not included.__________
All these counties could have been included in the program, even with the arbitrary 40 per cent rule, yet they are not there. Moreover, because of that rule the entire Avalon peninsula in Newfoundland and census division 05 in the western part of that province which meet the unemployment and income criteria are not included.
Meanwhile, a number of census divisions are included in the program, it seems purely on the grounds of isolation or a rule that one census division in each province must be included.
It is little wonder then, why I have asked and am asking to have the date base, the maps I have been given, and any related information which was used in arriving at these designated areas, tabled in the House.
When I look at these discrepancies and note the fact that every area in the Atlantic provinces which is included-with one small exception, that of 4,700 people in part of Guysbor-ough county in Nova Scotia-is represented by a member of the government caucus, questions arise in my mind, and there are questions put to me by other people which I simply cannot answer. I would, therefore, like to have the statistical information upon which this program is based.
I finally received more information from the minister in which he confirmed that census divisions were chosen as a geographic basis for the program. The main reason for this selection was that statistics are available on that basis which will permit, in the future, an evaluation of the program's

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impact on the areas now designated. He mentioned as well that Ontario and Quebec are minor exceptions and that partial census divisions were designated in the north in order to preserve the criterion of isolation to which he referred.
The minister confirmed that the three designation criteria applied to the different census divisions were: highest family unemployment rate, lowest per capita income, and isolation. In addition two other constraints were applied. One was to have the program applied to only those areas where approximately 5 per cent of the neediest people of Canada reside. The other constraint was to limit the designation to a maximum of about 40 per cent of the population in any one province in order to induce industry to locate in the most needy areas in the province.
The precise criteria applied with respect to the family unemployment rate and the per capita income are as follows: the family unemployment rate had to exceed the national average by at least 30 per cent, and the per capita income had to be less than 89 per cent of the national average. The minister felt the combination of these criteria resulted in a very stringent and severe approach to designation. It appears the figures of 30 per cent and 89 per cent were not based on any objective criterion of what constitutes hardship but on the colour coding system used to define different levels of unemployment and income on the maps. This is arbitrary in the extreme.
Moreover, the department utilized an isolation factor to add a few more census divisions to those otherwise designated. For example, they added northern census divisions or partial ones in Quebec, Ontario, and some of the western provinces. In the west, in particular, the department felt this criterion of isolation would also serve to include many native people who are not accounted for in the unemployment and per capita income data provided. Yet northeastern Alberta and northwestern British Columbia, excluded from the program, have larger native populations than the census divisions included from these provinces. Again I must ask why?
I have yet to receive the economic indicators on which the minister based his selection of the different census divisions to which the new special investment tax credit program will apply. But the maps he supplied show that the information base was the 1976 census for unemployment and the 1976 Revenue Canada figures for income. Since income data are available for census divisions for 1978, the use of such out-ofdate data disturbs me. But leaving that aside, on the basis of the information which he has given me it seems serious discrepancies exist which he should want to remedy.
It is difficult to offer constructive criticism of a program with a view to its improvement when the data base which accompanied most other government programs, particularly those winter works programs promoted by the Department of Employment and Immigration, such as Young Canada Works and programs of that nature, have always had the data information released and made public so that the designations and
allocations of funds made out of those programs could be verified. This program appears to be an exception.
In closing, I think the principle of this program is an excellent one. I should like to see its implementation perfected, and that is the reason why I offered the constructive criticism the minister invited.


Some hon. Members:: Hear, hear!


Mr. Claude Tessier (Parliamentary Secretary to Minister of National Revenue):: Mr. Speaker, the purpose of my speech today is to inform and reassure the people with regard to the Canadian tax policy, to stress the responsiveness of our Deputy Prime Minister and Minister of Finance (Mr. MacEachen) and finally to expound, with a great deal of pride, on the typically Liberal decisions contained in the last budget.
Indeed, Mr. Speaker, although political observers had predicted a tough budget with increased taxes for everyone, Canadians were pleasantly surprised to find a budget where the government had sought on the one hand to recover all that was humanly possible for the administration of government programs and on the other hand to plan an even fairer distribution of the economic load, and finally, to be more constructive, positive and dynamic, to prove that the Liberal government wanted to involve every sector of our economy in the solution of our current economic problems on a short, medium and long-term basis.
However I do not claim to be a tax expert and it is as Parliamentary Secretary to the Minister of National Revenue (Mr. Rompkey) that I want to comment on a bill which has been consistently described as very technical and yet which meets in a positive way the needs of the people. Therefore, I do want to assure all Canadians, Mr. Speaker, that one of my concerns is the equitable distribution of the tax load, the other being our desire to help the most vulnerable and have-not members of our society overcome present economic hardships.
Mr. Speaker, I would like to discuss in the House today one of the most equitable tax systems in the world, applied in a country where the quality of life continues to be one of the best in the world. The Canadian tax system was inaugurated, out of necessity, in 1917 to allow the country to collect the funds needed to administer the country. It has greatly expanded since that time with the implementation of various social programs aimed at promoting the well-being of all Canadians, as for instance old age pensions, family allowances, the Canada Pension Plan and unemployment insurance. The tax reform helped this system make Canada one of the best places in the world to live. It is a good idea to mention this in the House and to convince ourselves of it, and the opposition in particular should know that its masochism is very costly for Canada and all Canadians, and today more than ever before. All governments are faced with serious economic problems at this time, we all know this, and ours is no exception.
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An investigation carried by the Organization for Economic Co-operation and Development confirmed it.
In 1978, tax revenues in Canada made up 32.3 per cent of the gross national product, thus our country ranked fifteenth, far behind Sweden with 53.1 per cent. This same investigation in a comparative study of tax revenues collected by the three levels of government indicated that Canadian provinces and municipalities receive a larger portion of tax revenues than their counterparts in other countries. According to some comments on the results of the OECD investigation, such comparisons do not reflect the distribution of the tax burden among the taxpayers nor does it permit comparing personal taxes with corporate taxes. To answer such comments, Mr. Speaker, we would have to explain the entire social philosophy underlying the Canadian tax system but as I do not intend to use all my time to deal at length with the nature of the Canadian tax system and its effectiveness in promoting social justice and economic welfare. I will merely state that such are our aims and that the proof of the pudding is in the eating. I would rather dwell upon the value of the system.
First I should like to say that according to a study in which were compared the levels of personal and corporate income tax in Canada and the United States, personal income tax in Canada is lower by 1 to 1.5 percentage points than what it is in the United States. The same is to be said with respect to our respective corporate income tax levels, but this is not necessarily true, however, for all industries.
Let us now have a look at the income tax actually paid by individuals in various income brackets. Again, these data may be found in the Statistics Review for 1978 which reports on the income tax returns submitted by Canadians for that year, the most recent one for which such data are available. In 1978, Canadians with between $1,000 and $5,000 in taxable income paid an average of $3 in income tax; in 1977, the preceding year, they had paid an average of $9. Those whose taxable income was between $15,000 and $20,000 paid $2,396, while those with a taxable income between $30,000 and $35,000 paid an average of $6,134. Those in the $50,000-$ 100,000 income bracket paid an average of $15,564, and so on. Those earning $200,000 and over paid an average of $107,495 in income tax. These figures clearly demonstrate how our progressive income tax system based on income levels does operate. Moreover, these figures show how this system can adjust the taxation rates to protect the incomes of individuals against the throes of inflation. For instance, the $3 average tax paid in 1978 was a reduction from the $9 paid in 1977; the $2,396 average income tax paid by taxpayers in the $15,000-$20,000 income bracket showed a reduction from the $2,564 paid in 1977, and so on and so forth. I do not intend to talk about indexation today, for it has already been dealt with at length.
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However 1 should like to point out, Mr. Speaker, that indexation is one element of the tax structure that can benefit the individual taxpayer but not the corporations. 1 should also like to point out that since indexation has been implemented way back in 1973, the federal government has lost $7.5 billion of its share of revenue whereas the loss for the provinces has amounted to $2.3 billion. Indexation is applied not only to the tax rate but also to a large number of exemptions and credits to which each and every Canadian taxpayer is entitled, and low-income Canadians benefit more from those credits.
Let us consider, for example, the child tax credit. In 1978 a single parent with three children and an average income of less than $18,000 was getting on the average a tax credit of $711. Married people in an identical situation received an average credit of $600. With respect to those who were entitled to the child tax credit in 1978, a total of 1,698,270 people with an income of less than $18,000 obtained an average credit of $393, while 770,106 families with an income over $18,000 received an average credit of $268.
This type of taxation structure takes the financial situation of every Canadian into consideration. It allows the individual to show on his tax return the annual deductions and credits to which he is entitled. It should also be noted that the tax returns are simple enough since two thirds of all Canadians complete their annual returns themselves and that most of those who call on professional tax services are either independent workers or small businessmen whose taxation situation is more involved.
As I said earlier, a great many people believe that high income earners have great wealth which should be distributed equally. However, if every fraction of income over $30,000 were to be collected as tax and redistributed, every Canadian would receive only $150 and this would not help to develop our country in the long run. This brings me to the second aspect of our tax system, that is, the incentives available to private businesses.
As everyone knows, our tax system provides many deductions and exemptions for individual taxpayers. In the case of businesses, these deductions take the form of fiscal incentives aimed at developing the business sector during periods of economic recession or at creating employment during periods of high unemployment. These incentives are offered for the benefit of all Canadians and not only to help businesses increase their profits. Indeed, they encourage companies to take risks when an unfavourable economic climate would require them to be more cautious. Without these incentives, many businesses would decide to abandon their investment projects, which would be to the long-term disadvantage of our economy. Fiscal policies are often an important factor in these decisions. For instance, fiscal incentives have the advantage over subsidies that they can reach a vast population much more quickly. Businesses may easily determine whether they are eligible for an incentive and they can quickly take advan-

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tage of it. However, because these incentives are well known, they are bound to be criticized by the public who, too often, fail to understand their objectives. Once established, the incentives are rigorously controlled to ensure that they are used legitimately. Whenever there is abuse, the Minister of National Revenue requires that the proper legislative amendments be made. Such a regulating or tuning mechanism, if you will, may be applied over the years, and minor changes made until the desired results are achieved.
The deduction granted small businesses has, among other things, been adjusted that way. The reduced rate applies to the income of actively operated businesses, and is intended to encourage their development and the updating of their technology through the tax savings achieved. That reduction was granted because small businesses at times find it difficult to borrow in the money market and obtain the funds they need to expand. However, there have been cases where it applied to individuals not operating businesses actively.
The department also takes steps to ensure that the tax system is applied fairly. For instance, it is easy for them to check the salaries of employees, for instance, through salary deductions and information supplied by employers.
To ensure that independent workers, small businesses and corporations pay their fair share of taxes, the department carries out tax audits. For that purpose, computers print out a list of taxpayers who draw income from a source other than salaries or wages and break them down into two categories: first, corporations, namely, wholesalers and manufacturers; second, private individuals, namely, professionals, business owners and farmers.
The lists are used to select files for audit purposes, a process which may involve industry as a whole or a given group of taxpayers. Such audits have already been carried out in the scrap iron industry, the clothing industry, the tourist industry and the pharmaceutical products industry. Indeed, this last project has yet to be completed. As a result of audits in the scrap iron industry, 94 court proceedings were launched and $17 million in taxes were recouped.
Obviously the tax system has different objectives when it comes to collecting from individuals and businesses.
In the case of individuals its main purpose is to ensure social justice for all, whereas the objective is much wider for businesses since it is to strive for greater economic security for all Canadians. That is why a comparison of the tax load shouldered by individuals and companies must go beyond what is reflected by the figures. I have the figures here but they apply only to taxable income. In 1978 corporations paid $6.5 billion in taxes on a taxable income of $19.6 billion, an average tax rate of 33.4 per cent. Small business owners paid $616 million in taxes on $3 billion in income, that is a rate of 20.3 per cent, and the employees paid $16 billion in taxes on taxable incomes of $79.7 billion, a rate of 21.2 per cent. Still we should not forget that many other factors must be taken into account in
this comparison, among others the number of taxpayers in each category, which is quite significant: there are about 9,568,000 employees, close to 600,000 business owners and professionals, and 441,000 corporations. The legislative measures contained in Bill C-54 were the object of a close examination which took into account the main objective of our tax system. That is the best protection possible for the rights of all Canadians.
These measures are designed to create a balance between the rights of the individuals and the business incentives which are sometimes necessary. Earlier in the year the Liberal government released the draft of many of the amendments contained in this bill in order to gather the opinions of the taxpayers before introducing the actual legislation. Bill C-54 takes these suggestions into account, some of which had even been introduced by the previous government in December 1979. They were among other things, measures allowing people running unincorporated businesses to deduct wages paid to their spouses, and interim provisions with regard to the Small Business Development Bonds enabling them to obtain financial aid at lower interest rates in order to compensate for revenue losses incurred because of these measures and to help finance the increases anticipated in other areas. A 5 per cent surtax on top of the federal tax payable by corporations has been introduced for a two-year period. Furthermore, the bill contains tax relief provisions for volunteer firemen and for employees working on temporary assignments abroad, as well as for other cases where there is income tax related to family law provisions.
This bill also contains measures proposed in the October 28 budget for individuals and businesses, including provisions aimed at improving regional incentives in areas of high unemployment and low incomes. It also contains a great many technical changes which take into account constructive comments made by businessmen and tax experts as well as various readjustments regarding the implementation process which I discussed earlier. So Bill C-54 has been devised as a way to help Canadians of all walks of life through our taxation system. We are therefore presenting this bill for second reading hoping that after having heard the various speeches and thought things over, hon. members will give it the approval it deserves.


Mr. G. M. Gurbin (Bruce-Grey):: Mr. Speaker, I welcome the opportunity to join in the debate on Bill C-54, an act to amend the statute law relating to income tax. On January 16 the Minister of Finance (Mr. MacEachen) issued a press release relating to this act. There were several things in that release that I should like to refer to briefly.
The first is that the minister, when speaking about Canada's economy, said that we are in a period when we, like other national economies, are facing a very difficult situation. If the
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minister wants to compare Canada with other economies, Mr. Speaker, I think he should do it in an open and honest fashion. He should examine the strongest economies in the world today and compare Canada with them. 1 refer especially to the economies of Japan, Germany, the United States, and Switzerland, which are the four strongest in the world today. Those economies were not built, like Canada, on natural resources, and the abundance of fossil fuels that we are able to take advantage of. In spite of that, however, those economies have been developed to a point where they are now placing this country in serious economic difficulty. This is not being done on the basis of cheap labour, although that is a misconception held by many people in Canada.
I should like to point out to the minisUr that although we are in a difficult economic situation it is not for the same reasons that other countries, with which we compare ourselves, have had to face. They have surmounted their problems and in many cases are now in a better position than Canada, in spite of the resources that we have. This has come about because of the way they have managed their economies, by increased efficiency of production, by entering world markets with car production and other things, and by the way they have adopted science and technology as a basis upon which to build an industrial economy.
The minister referred to his budget speech and to an earlier budget. In April, 1980, he mentioned in a ways and means motion many measures that were included in the former budget. I question how much credit he should take for that however, and whether he has given proper credit to the people who instituted those measures. I see an hon. member shaking his head. When I read that I found it difficult to understand whether the minister referred to something he had put forward or something that had been put forward by the former minister of finance, the hon. member for St. John's West (Mr. Crosbie).
On page 4 of the press release the minister referred to industrial development and the grand total of $12 billion to be allocated over the next three years to essential productivity and supply initiatives. He said that this should help reduce inflationary pressures by increasing supply.
I have heard mention in this House, as have my colleagues, of the possibility of a government industrial strategy being introduced. We have yet to see any specific policy that would bring this about although we are all waiting expectantly for it. A program for the expenditure of $350 million has been established to promote industrial restructuring and manpower retraining in areas of particular need. I am not sure where the areas of particular need will be, nor exactly what kind of retraining will be involved, and I question whether that is the direction that an industrial strategy should take. Perhaps we should proceed in the same fashion that other nations have, by providing a true industrial strategy and investment for the future.
The third point I should like to make concerns the minister's comment that he would like to reiterate the support given in the budget for the monetary policy pursued by the Bank of
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Canada. I have several comments about that, Mr. Speaker. The first is that by allowing the Bank of Canada to have a floating rate, the minister has taken himself away from the responsibility of setting interest rates in our country. That in itself was politically expedient and I give the minister credit for doing that. It took a lot of pressure away from him. It also takes the government away from the responsibility of looking at what the Bank of Canada is doing with the bonds it is bringing forward. Putting extra bonds on the market really forces interest rates up and by doing that it has control over interest rates. This point has been brought out by other members on this side of the House and is something which impacts particularly on industry and on the farm community, both of which are important to the economic health of the country.
My understanding is that the Bank of Canada is selling more bonds than it needs to, and these treasury bonds are one of the reasons why the interest rate in Canada is staying as high as it is. The Bank of Canada may believe that by keeping interest rates high and restricting money for lending it will help fight inflation. That may be so, but it is at the expense of the economy, small businessmen, farmers and others who are needed to generate activity in the country. If the minister is supporting the policies of the Bank of Canada, I suggest that he needs to do it in a very honest way by saying he is abdicating the responsibility, if he chooses to take it, for the monetary policy of the country.
I would like to touch on some specific issues. There is one major issue on which I questioned the minister a few days ago. It concerns the Small Business Development Bond. Like a good many other economic measures, people are starting to question what the priorities of the government are, and whether or not the government is putting effort into the areas that need it, in order to look after the affairs of the nation. We all agree the constitution is important, and all the things concerning energy are important. But the economic basis and the structuring of institutions which lend money for businesses are matters in which we are all interested. The Small Business Development Bond is a specific instance which comes to mind. This bond was brought forward at least 13 months ago. It was given support about nine months ago, I believe on April 21, by the government in a ways and means motion. Since that time and up until now it has still not been put in place nor has it been defined in such a fashion that the business community understands what it is all about.
The minister said his department spoke to banks and that he understood they knew what it was all about. However, 1 must question that. I suggest that if the minister or his parliamentary secretary looked into it he would find by going beyond the big cities and into banks in some smaller rural areas that the bank branches do not understand what that bond is about, and there is limited access to funds. The larger branches have kept the money or have given directions to their smaller branches in such a way that people have not had access to that funding opportunity. That is a very important point, because here we

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are 13 months later at a time when that bonding will be stopped as of March 31, as I understand things stand now. Many people still do not know that that advantage is available to them.
I will cite an example of an incorporated farm. There are many of those. Owners of these farms might want to build a new barn. First, banks not knowing it would be law were reluctant or not giving proper direction, because they did not understand what the opportunities were. Accountants were in the same position of not fully understanding all of the ramifications. But now people are finding out that these things are possible and we are in the middle of winter. In my area about eight feet of snow is on the ground and people are finding out that they can get a bond to build a barn. But let me point out that on March 31 a person can only take funding for that portion of the barn that is actually erected. Money cannot be obtained for the materials bought, only for whatever portion is actually standing.
I do not know whether the parliamentary secretary or the minister understand that point, but I ask them to look into that. Perhaps they could find some way to extend the March 31 deadline. Even if they do not wish to extend it beyond the time period, perhaps they could look at it in such a way that people who are applying for these bonds, who are reasonable and honest about what they want to do but cannot do it because of time and weather, are given an opportunity to take full advantage of this interest rate level which is important if people are to expand their business or continue to survive in what is otherwise a hostile economic environment. 1 ask the minister, through the parliamentary secretary, to look into the point I have just raised. I also ask if he could look into extending the date beyond March 31.
I understand from the Department of Finance that this is anticipated to cost the government, in lost revenues, $50 million per month for each month it is functioning. It is my understanding also that it was between $200 million and $400 million which they feel has already been lost in lost revenue. I seriously question where a figure like that could come from, and I wonder how you estimate what is lost in revenue as compared to what is generated in additional revenue because people are doing things and business activity is created. I do not understand how someone could calculate that. I ask the minister whether there is an explanation. If there is, I will be happy to try to understand it.
There is a brief being prepared on behalf of the Canadian Cattlemen's Association. Mr. Charles Gracey has been instrumental in helping to draw up this brief. A motion has been drawn up supported by my local Bruce County Cattlemen's Association on behalf of the farm community across Canada, concerning this bond. The Canadian farm community has asked if this measure could be extended to unincorporated farms. This is particularly important for cattlemen. It is a subtle point, but it is confusing to a lot of people. I understand they are not able to claim interest charged against their income tax if they take advantage of this bonding. That is another area which will have to be balanced. The Cattlemen's
Association request will have to be considered in the light of that as well. Will the minister look at that and consider that request?
In many cases there is no difference between an unincorporated and an incorporated farm. On the same concession road in any part of Canada we could find a farmer who has 200 acres and has incorporated for a variety of reasons, while across the road there is a farmer with 400 acres, who may be much more productive, which has nothing at all to do with being incorporated, but he cannot take advantage of this opportunity. That is a discrepancy and an inequity.
My second point concerns volunteer firemen. This concerns firemen in my area. Some time in the past we had ongoing discussions with a parliamentary secretary who is not now in the House of Commons. Those discussions were to help develop this increase which has occurred in their tax deduction. I think it is clear that the government has continued to support the measure, and it means that it understands the essence of volunteer firemen and that these people make a contribution, often at their own expense, which is valuable to smaller communities in Canada. I believe there are 20,000 firemen who are making a contribution on a volunteer basis. They do deserve the kind of respect suggested here.
I also make the point that this has not been duplicated in other areas of volunteer work. I suggest there is a difference. I suggest also that the historical fact is that they did have a deduction. A concession was made at one time. It was quite reasonably made on the basis of the contribution these people were making to their local communities. It was a very worthwhile effort. I support the government's measure there. I suggest it continue to look at whether there is a proper level of funding for that.
I would like to spend a little time on the energy conversion grants. This is another example. I do not know whether more information has come out in the last week or two concerning this program. The idea of the grant is good, and I support it. It helps to get away from oil, something worth while. It frees up fuel oil which can then be upgraded to gasoline, or whatever. In that sense it is a worth-while measure and should be encouraged. The fact that it is taxable is another matter. This is a serious consideration. It means we are reducing the net amount of the grant by 15 to 50 per cent because it is taxable. If we had the tax credits we were talking about in addition to this, there would not be much argument. However, the fact is we do not. I wonder whether the taxable nature of this will stop the program from having the full impact it might have otherwise had. We very much want to encourage the program and the subsidies it will provide.
The fact that this program allows us to make a gradual conversion is good. The fact we can take 50 per cent of it this year and 50 per cent next year, if we want, is good. The fact that it can be related to solar energy at a lesser percentage is also good.
January 21, 1981

There are a number of inequities in the program which are confusing and make it difficult. These are probably the reasons why the program is not yet functionable. I stand to be corrected, but my information, from having tried to find out over the last several months since this was announced, is that we do not have the agreement of all the provinces. I know the discussions are ongoing.
The difficulties arise when we talk about the opportunities available in the different provinces. An example is somebody who is already off oil. A person may have converted from oil to natural gas, a very rich form of energy, a fossil fuel, and now wishes to put in a wood stove to complement that. It makes a lot of sense, using a renewable energy instead of one that is non-renewable.
There are many such inequities which make it difficult to rationalize across the country. The Northwest Territories, Prince Edward Island and Newfoundland have an opportunity to use this grant in a very special way for retrofitting and allowing increased insulation, and this does not have to be applied just to take them away from oil. That is a good point.
The government should seriously consider extending that program so that it can happen right across the country. That would make more sense and would be a lot easier to administer. I am sure there would be general support for it across the country, and I encourage that to happen.
With regard to that grant, another inequity is the fact that those who rent their homes do not get any net benefit from it. These are often low-income people and those who live in apartment buildings. Some must pay their own energy costs. Their landlord has no real need to get off oil, so they continue to sit there, paying their own energy costs. There is no direct relationship to trying to conserve or get off oil, as they do not get any advantage from it. That is not true in every case, but in some cases. It is another area that should be examined.
Another point is the spouse's deduction. Some of the additional problems are related to how far this deduction or deductibility goes. I am having trouble obtaining specific information. We seemed to get a little more information along the way. The fact seems to be that spouses can pay into the Canada Pension Plan and be eligible for benefits at some point in time. I understand they cannot get unemployment insurance benefits, but I am not sure on that. This is an example of where we have a program that has apparently been in place since last April, possibly before, for people to take advantage of, but no one is clear on what it means or what the opportunities or options are.
We have a situation now, three quarters of the way through the month of January, past the normal year end for many people. They now wonder whether they should have paid their wives for the labour they provided to the business or farm. The question is whether it is possible to make this retroactive. Can they write a cheque for the work that was done last year? If it is not possible because of a certain deadline or time lapse and is no longer legal, why was there not a good educational program? There should have been an explanation to the public and the members of this House.
Income Tax Act
I have seen no specific information, directives or guidelines which would allow us, as members of Parliament, to get this information to our constituents. If that was an honest effort to bring out a program to help people, why did we not get the information which would have made it work? If there is that kind of information, will the government now be lenient and give people the opportunity to take full advantage of that? I ask the government to look into it.
Significant in what were not mentioned in this bill are measures to help small businesses and farmers, capital gains tax measures in particular. With the increased economic pressures on the farm today, as farmers retire they have to look at the investment they have had, and the capital gains they have accrued in their lives.
I understand the government promised to increase capital gains tax exemptions for farmers during the last election. If ministers did not do that, I stand to be corrected, but my understanding is they promised to do that. According to the information that has come out so far, the white paper on capital gains tax, it really does not address the situation for the agricultural community. It does not improve the status of farmers vis-a-vis the capital gains tax. I wonder why that was not included.
I mentioned briefly the energy tax credit. When looking at energy prices this is something that has to be seriously considered. I know that some of the work being done on energy by a special committee of which I am a member is with regard to the tax credit system on energy. We are looking at this in several special ways. The question is how to address the problems which will result from increasing energy prices.
Since the last election the government has permitted the price of gasoline to rise by 30 cents a gallon, or thereabouts. That is approximately what would have happened had the Conservative government remained in power. What measures are being taken to compensate for the difficulties of people on low and fixed incomes? What is being done to alleviate some of the burden, some of the real social consequences which have resulted from those increases?
I am not arguing against an increase in energy prices in order to allow us to maintain both security and self-sufficiency. However, I wonder whether it is responsible to allow that to happen with the broad, over-all effect of making no differentiation between the different strata of our society, those who need assistance and those who are able and will continue to be able to afford it.
I understand the government made some effort to give them some deductions. Ministers suggested prices would be lower. That was one of the bases of their whole approach during the last election campaign. If it has not happened, and I know there could be a number of reasons for that and I will not try to address them, then, I wonder why they would not look at that particular segment of the population and try to address that specifically as a welfare and social measure which is responsible and necessary at this time.

January 21, 1981
Income Tax Act


Mr. Knowles:: Six o'clock.


Gary Michael Gurbin: May I call it six o'clock?


The Acting Speaker (Mr. Blaker):: Order, please. Pursuant to Standing Order 2(1), it being six o'clock 1 do now leave the chair until two o'clock tomorrow afternoon.
At six o'clock the House adjourned, without question put, pursuant to Standing Order.

Thursday, January 22, 1981