1981-05-21

ROUTINE PROCEEDINGS


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 Prime Minister of Canada (Mr. Trudeau) is travelling around the globe on the pretext of uniting the world and feeding the hungry while, in the meantime, Canada has hundreds of girls and boys and aged hungry and ill-clad, a million unemployed, interest rates that are the highest in the history of the country, an energy policy which is driving capital and jobs out of the dominion, and farmers who have been waiting for weeks for a decision from cabinet on embargo payments, etc., etc., therefore I move, seconded by the hon. member for Okanagan North (Mr. Dantzer):
That this House demands that the Prime Minister give Canada and Canadians first priority and start doing the job for which he is being paid and for which he was re-elected. "Charity begins at home".


Madam Speaker:: Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


FITNESS AND AMATEUR SPORT
Mr. Chris Speyer (Cambridge):: Madam Speaker, I rise on a matter of urgent and pressing necessity pursuant to the provisions of Standing Order 43. The concept of having a Terry Fox Marathon of Hope Day, as announced by the minister responsible for fitness and amateur sport, to commemorate Terry's achievement, is an excellent one and deserving of support by all Canadians. However, in view of the fact that for more than 30 years the month of September has been known as Arthritis Month, and a month dedicated to the raising of funds for the fight against arthritic diseases which affect more than two and a half million Canadians, and in view of the need for major
charitable organizations and, in this instance, the federal government, to co-operate with each other in order to maximize the raising of the needed funds to carry out their charitable works, I move, seconded by the hon. member for Parry Sound-Muskoka (Mr. Darling):
That the minister of fitness and amateur sport give earnest consideration to designating a suitable date in April, a month traditionally known as Cancer Month, to pay tribute to Terry Fox and to include the Marathon of Hope.


Madam Speaker:: Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


ENVIRONMENTAL AFFAIRS
Mr. Derek Blackburn (Brant):: Madam Speaker, I rise on a matter of urgent and pressing necessity which I feel deserves the unanimous support of the House. Whereas the special subcommittee on acid rain has successfully completed its inquiries, public hearings, and on-site inspections in Canada, the United States and Europe; whereas it is presently completing its report; and whereas it is imperative that this committee remain as a committee in order to monitor closely all preliminary discussions and deliberations leading up to the signing of the treaty between Canada and the United States on the limitation and elimination of long-range trans-boundary air pollutants, I move, seconded by the hon. member for Hillsborough (Mr. McMillan):
That the special subcommittee on acid rain remain a special subcommittee until the said treaty is signed and put into effect.


Madam Speaker:: Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.

May 21, 1981
5.0.	43


PUBLIC SERVICE
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5.0.	43
Hon. Flora MacDonald (Kingston and the Islands):: Madam Speaker, I rise under the provisions of Standing Order 43. In view of the fact that the government has finally acknowledged the equality of women by awarding back payments to 341 women technicians in the public service who were suffering pay discrimination because they were not receiving equal pay for work of equal value, and in view of the historic fact that for the first time the government did this "without being ordered to" by the Canadian Human Rights Commission, I move, seconded by the hon. member for Cambridge (Mr. Speyer):
That this House welcomes this belated and long overdue recognition of women's rights by the government, but reminds the government that 341 is far short of 3,000, the number of outstanding demands for equal pay for work of equal value still lodged against the Government of Canada by women employees in the public service who are being discriminated against.


Madam Speaker:: Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


FISHERIES
Mr. Donald W. Munro (Esquimalt-Saanich):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the disaster hanging over the fishing industry on the west coast and the bankruptcy facing fishermen, causing them to blockade Vancouver and Victoria harbours today, to make their point with the minister, and I should add that the ferry from the state of Washington was denied entry to Victoria harbour within the last hour, I move, seconded by the hon. member for Surrey-White Rock-North Delta (Mr. Friesen):
That this House calls on the minister to suspend the regulations imposed on trollermen and to resume negotiations with them in order to resolve the differences in a fashion which will preserve both the salmon stock and the livelihood of the fishermen.


Madam Speaker:: Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


TRANSPORT
Mr. Doug Neil (Moose Jaw):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the disparity that exists between freight rates on canola seed, and oil and meal products from that seed; and in view of the fact that this disparity restrains secondary value added processing within particular regions of Canada, with the resulting loss of potential jobs and investment as well as the loss to the gross national product and Canada's foreign exchange earnings; I move, seconded by the hon. member for Medicine Hat (Mr. Hargrave):
That this House adopts the principle that freight rate parity between canola seed and products is fundamental to any resolution of the statutory freight rate issue.


Madam Speaker:: Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADA LABOUR CODE
Mr. Lyle S. Kristiansen (Kootenay West):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Workers in the air and marine transport industry are now excluded from part IV of the Canada Labour Code and therefore have no effective protection with respect to occupational health and safety. The Minister of Labour (Mr. Axworthy) was quoted as saying that he was approached by union and company officials in the shipping industry not to be included under part IV of the code which is currently undergoing revision, a statement at complete variance with information supplied by the Seamen's International Union, certainly one of the major unions in the industry concerned. Therefore I move, seconded by the hon. member for Kootenay East-Revelstoke (Mr. Parker):
That the Minister of Labour immediately table in this House a list of those union and company officials who he alleges do not want their industries to be brought under part IV of the Canada Labour Code; and further that the minister specifically inform this House whether his parliamentary secretary, the former president and general manager of Canada Steamship Lines, is one of those officials by whom he was approached.


Madam Speaker:: Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.
May 21, 1981


INCOME TAX
Mr. Scott Fennell (Ontario):: Madam Speaker, I rise under the provisions of Standing Order 43. In view of the callous neglect shown by the Toronto district tax appeal board toward a hard-working citizen who has had the courage and the will to forgo a wheelchair for a leg brace, and in view of the fact that the tax appeal board, in a precedent setting case last week, will only permit tax deductions for disability expenses incurred through wheelchairs, and not leg braces, and because this is the International Year of the Disabled, I move, seconded by the hon. member for Brandon-Souris (Mr. Dinsdale):
That the government, through the Minister of National Revenue, direct the Toronto district tax appeal board to show less revenue-hungry zeal and more compassion toward the disabled of this country.


Madam Speaker:: Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


AIR SAFETY
Mr. J. R. Ellis (Prince Edward-Hastings):: Madam Speaker, my motion deals with the Joint-Enroute Terminal System. It is increasingly obvious that significant errors were made by Transport Canada in the determination of operational requirement for radar data remoting, processing and display capability at the time JETS was installed. I therefore move, seconded by the hon. member for Winnipeg-Assiniboine (Mr. McKenzie):
That the Minister of Transport cease installation of further JETS in Canadian airports until the deficiencies have either been corrected or a decision made to return to standard forms of equipment.


Madam Speaker:: Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


EMPLOYMENT
Mr. Rod Murphy (Churchill):: Madam Speaker, in view of the fact that the Minister of Employment and Immigration, in responding to my charge that he has used the Student Youth Employment Program for political pork-barrelling, told the media that I was a chronic complainer, which I consider a
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compliment considering the source, I move, seconded by the hon. member for Mission-Port Moody (Mr. Rose):
That the minister who could be described, if one were to use alliteration in name calling, as an incessant interferer, as the Doris Dumper, as a happy hotelier or as the pork-barrel bungler, in future confine his words and actions to dealing with the unemployment problem among Canadians, especially among women, the young, and native unemployed.


Madam Speaker:: Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


HAZARDOUS SUBSTANCES
Mr. Tom McMillan (Hillsborough):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. On March 31 this year, the head of the Health Protection Branch of the federal Department of Health and Welfare wrote an urgent, secret, intragovernmental memo urging that the fungicide captan be banned or at least severely restricted. It is widely suspected that the Minister of Agriculture (Mr. Whelan) caused that memo to be suppressed and ignored by the government for narrow economic reasons.
To protect the public against a potentially lethal substance now commonly sprayed on fruits and vegetables, I move, seconded by the hon. member for Kingston and the Islands (Miss MacDonald):
That the House call upon the federal government to release immediately to the public its findings concerning the impact of captan on the environment and human health; to restrict the use of captan until it is clearly demonstrated to be safe, and to subject this potent fungicide to thorough scientific testing to determine, in fact, whether it is a hazardous product and therefore should be permanently banned.


Madam Speaker:: Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Mr. Doug Lewis (Simcoe North):: Madam Speaker, I wish to address my questions to the Prime Minister. He knows that

May 21, 1981
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this House has examined the question of high interest rates and high inflation in the abstract for some time. Therefore, I shall deal with a concrete example, if I may.
A wage earner faced with the higher costs of food, clothing and shelter, the basics of life, is driven to asking his employer for an increase in wages. The employer, who has those same increases at home, plus the increase in the cost of business and high bank interest rates, has to come up with an answer. The only thing he can do is to raise the price of his goods and services rendered. Does the Prime Minister not feel that this fuels the inflationary spiral?


Right Hon. P. E. Trudeau (Prime Minister):: Madam Speaker, that is always how the economic system works. If one is a worker, one tends to keep equal at least with the increase in the cost of living plus participate in the success of the enterprise. If one is the employer, one charges higher prices if one's costs increase. This is the way the system has always worked.


GOVERNMENT ACTION
Douglas Grinslade Lewis: Madam Speaker, if the government acknowledges that it knows how the system works, and if the government acknowledges it has high interest rates and high inflation, what is the government doing to break this cycle? When can we get Canada off this merry-go-around of higher inflation and higher bank interest rates?


Flora Isabel MacDonald: The rate is over 19 per cent.


Pierre Elliott Trudeau: Madam Speaker, what tends to happen in times of increasing inflation is that people's expectations sometimes tend to anticipate even higher inflation. Rather than asking for normal and fair compensation either for their costs or for their efforts, they tend to anticipate and increase the prices of their goods more than is justified by normal profits, or they increase the price of their services by more than is justified by a normal increase. That is the explanation of the psychological drive behind inflationary expectations. But the hon. member knows, as well as I do, that is the way the system works. What we must do is to prevent the anticipation of inflationary expectations and to try to keep both prices and services at normal increase levels rather than anticipating high inflation.


EXTENSION SOUGHT OF SMALL BUSINESS DEVELOPMENT BOND CONCEPT
Douglas Grinslade Lewis: Madam Speaker, it seems to me and to the House that all we are doing is fuelling the spiral and not coming up with anything to break it.
In view of the fact that the bank rate today burst through the 19 per cent ceiling, I ask the Prime Minister whether his government will consider taking the mechanism of the small business development bond one step further-which is in place and is there-to businesses which have traditionally used bank credit, and have bank loans in place but cannot do anything
about it. Would he investigate extending it to all bank credit presently in existence?


Pierre Elliott Trudeau: Madam Speaker, that is not possible for the reason indicated many times by the finance minister.


An hon. Member:: Where is he?


Flora Isabel MacDonald: Who is he?


Pierre Elliott Trudeau: The small bond arrangement is one for a particular sector of the community. It is an expensive one. If the hon. member wants it to be extended to all people using credit, he will be going against the guidelines proposed by his own party and by the spokesmen in his party on economic matters, that is, to keep expenditures down. I do not believe the hon. member would advocate that.


Mr. Clark:: What about Petrofina?


Mr. Hnatyshyn:: They do it in Gabon.


CANADA MORTGAGE AND HOUSING CORPORATION
Mr. Bill Clarke (Vancouver Quadra):: Madam Speaker, I would like to direct a question to the Minister of Public Works in his capacity of being responsible for Canada Mortgage and Housing. In the meeting earlier this week with members of Parliament from British Columbia and officials of the Canada Mortgage and Housing Corporation the minister referred to more social housing by the government which might overcome the problems created by his government's fiscal and monetary policies, which include today's new record high Bank of Canada rate of 19.06 per cent.
Government housing, before all of the disastrous subsidies which are offered are taken into account, actually costs Canadians more than that provided by industry. The minister must realize that, and also that the real shortage is of money in the hands of those needing shelter. What will his government do or offer to those in need of housing assistance to replace the Clark government proposals, such as mortgage interest deductibility, which his government defeated in 1979, aided and abetted by the New Democratic Party?


Hon. Paul J. Cosgrove (Minister of Public Works):: Madam Speaker, speaking of the Clark administration and Clark proposal during its nine-month government period, on previous occasions I have, of course, made reference to the report on privatization ordered by the previous government. The one thing that we have done, as a government, is to reject the privatization of CMHC, and reject the advice offered to the previous government which was almost a complete withdrawal and complete abdication of any role for CMHC in the area of social housing. On the contrary, what we have done is to use
May 21, 1981

the programs which were in place last year, such as under Section 56(1) of the act, which is the social policy housing program. We, for example, increased the number of starts in that social area-


Flora Isabel MacDonald: Tell that to people who have lost their houses.


Paul James Cosgrove: -which provides a subsidy to housing, bringing down the interest rate from the current levels to 2 per cent, thereby aiding and assisting-


Mr. Baker (Nepean-Carleton):: Tell that to your mortgagees.


Paul James Cosgrove: -people such as senior citizens, the handicapped, and those in the special needs area. I am happy to say that those additional 5,000 units released last year have been constructed and are now coming on the market. I submit that they are coming at a time when it is more difficult, I admit, for people in those income levels and those special categories to access housing.


An hon. Member:: That's enough!


Paul James Cosgrove: I think that move of the government was well timed and is serving those people in need.


Some hon. Members:: Hear, hear!


HOUSING
William Hillary (Bill) Clarke: Madam Speaker, obviously the question period would not be long enough for the minister to try to explain all of the mish-mash of government's proposals which amount to intervention in housing. I want to ask the minister this supplementary question: can the minister assure Canadians that his government will stop interfering in the housing industry so that all of the Canadian expertise, which is investing billions of dollars in the United States to provide housing for Americans, can come back to Canada and start working for Canadians in Canada?


Some hon. Members:: Hear, hear!


Paul James Cosgrove: From the question I would take it that the intervention referred to by the hon. member possibly addresses the question of supply. I talked about the question of affordability, and I have no apology whatsoever for the response of this government to people in need. If that is intervention in the economy, then I support it, and this government supports it.


Some hon. Members:: Hear, hear!


Paul James Cosgrove: Referring to the supply, of course the hon. member knows that the government responded in the budget, I
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suppose by intervention, and by reintroducing capital cost allowance to increase the supply side modestly. Again, I have no apology for that. I have received submissions from many people, and many of the hon. members opposite, asking for that very thing.


REQUEST FOR ACTION TO REDUCE RESIDENTIAL MORTGAGE RATES
Mr. Edward Broadbent (Oshawa):: Madam Speaker, I have a question for the Prime Minister. The minister responsible for housing is taking great pride in an obviously disastrous situation for the typical Canadian. Today, even before the interest rate jumped to a record level of 19 per cent-


Mr. Nielsen:: 19.06.


John Edward Broadbent: -a Canadian family would require an average income of $47,000 to buy a typical home in Canada. This means, for the first time since the great depression, that 90 per cent of Canadian families are excluded from the normal Canadian expectation of being able to buy their own homes.
My direct question to the Prime Minister is: why does the government not take direct action to bring mortgages down so that the average family could, in fact, buy a home?


Pierre Elliott Trudeau: Madam Speaker, the Minister of Finance has dealt with these suggestions many times. I dealt with them last week when the hon. member suggested direct action to bring mortgage rates down. He knows direct action would mean immense subsidies to everybody concerned, and that would mean increased expenditures, and increased expenditures means increased deficits, and increased deficits means fuelling inflation. Or the alternative, Madam Speaker, is to go into exchange controls, and I have not heard even the NDP in its wildest moments advocate those.


SUGGESTION GOVERNMENT FORCE BANKS TO LOWER MORTGAGE RATES
John Edward Broadbent: Madam Speaker, the Prime Minister listed two alternatives, and I will deal with those points later in today's proceedings. But there is a third option the Prime Minister did not comment on, and I refer to the banks and bank legislation. Considering that bank profits in the first quarter of this year were up 60 per cent over the record level of last year, and considering that the banks represent one institution which is gaining like no other institution from high interest rates, why does the Prime Minister's government not take direct action to force the banks to put out mortgages at lower levels and, therefore, yes, reduce their profits somewhat to achieve a social purpose?


Pierre Elliott Trudeau: Madam Speaker, the New Democratic Party leader may be dealing with this matter later in the day and we will be interested in

May 21, 1981
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his views, but he should take into account what the Minister of Finance said in answer to that exact same question two weeks ago when he indicated that, indeed, bank profits had increased very considerably over the last two quarters, but that had not been true in the period before that, but that he was-


An hon. Member:: That is not true.


Pierre Elliott Trudeau: Well, the hon. member behind the Leader of the New Democratic Party is trying to get in, Madam Speaker, but I will ask him to be patient and perhaps he will have a moment to speak later in the day. I am giving the answer of the Minister of Finance. It was to that effect that the minister was monitoring these profits and, if necessary, he would consider appropriate action.


AID FOR HOME OWNERS
John Edward Broadbent: The Prime Minister took a long time not to answer the question directly.


Pierre Elliott Trudeau: That is because of your howling benchmates.


John Edward Broadbent: We are not talking about instances of a special excess profits tax which could be considered; we are talking about forcing the banks to distinguish loans in the mortgage sector from other sectors. The government recognized that distinction and should act on it.
The Prime Minister has indicated he is not willing to help those who do not already own homes. There is another group of Canadians who are being forced to sell their homes which has now reached a monthly rate of 1,000. They have to abandon them because they cannot keep up the mortgage payments. In fact this is alluded to in the Economic Review published by the Department of Finance just yesterday. My question to the Prime Minister in this regard is, will he at least take immediate steps to provide assistance to those Canadians who already own their own homes so that the number who are forced to abandon them will not increase to 1,100 or 1,200 monthly, and in order that we can at least maintain families in homes who already have them?


Pierre Elliott Trudeau: Madam Speaker, I realize that the Leader of the New Democratic Party is probably short of questions because he is always asking the same ones and he is getting the same answers.


Some hon. Members:: Oh, oh!


An hon. Member:: You are short on answers.


Mr. Hees:: And you used to be such friends.


Pierre Elliott Trudeau: Exactly, George. I realize that the New Democratic Party does not agree with the budgetary position taken by this government. Its members said so at some great length during the budget debate.


An hon. Member:: That is not the only thing they do not agree with you on.


Pierre Elliott Trudeau: They certainly did not agree with your policy either. They even pretend that they had invented Petro-Canada and the hon. member was anxious to get rid of it for that reason. I recognize the difference in economic policies put forward by our different parties, but we stand by the budgetary policies put forward by the government and we believe in gradualism in attacking these problems.


RAILWAYS
Mr. Dan McKenzie (Winnipeg-Assiniboine):: Madam Speaker, my question is directed to the Minister of Labour. Rail pensioners are amongst the lowest compensated pensioners in Canada. Some former employees are receiving such measly increases as $4 a year. Some receive pensions of only $115 a month. What is the minister going to do to correct this disgraceful condition? The Minister of Transport has made his position perfectly clear; he will do absolutely nothing to assist them in their time of need and claims it is up to the Minister of Labour.


Hon. Gerald Regan (Minister of Labour):: Madam Speaker, I am not aware of the Minister of Transport's taking any such position. I am sure he shares with me and other Canadians concern about all of those people who are living on pensions based on salaries which were at a lower level and at a time before inflation changed the value of work to the extent that it has.
The hon. member will be aware of the fact that Dr. Noel Hall carried out a very substantial investigation into the subject of railway pensions and that in the conclusion to his report he stated that pensions for railway workers are something which should be bargained between the parties.


A. Daniel McKenzie: Madam Speaker, it was just over a year ago that the minister wrote to one of the unions. I wish the minister would pay attention, please. It was just over a year ago that the minister wrote to one of the unions saying that he would be taking some action, so I suggest he review his correspondence of last May to the unions.


REPORTED PURCHASE OF GULF OIL STOCK BY CANADIAN NATIONAL RAILWAYS PENSION FUND
A. Daniel McKenzie: Madam
Speaker, my supplementary question is directed to the same minister. There are strong rumours that the CNR will use its pension fund to purchase Gulf Oil. Gulf is one of the most active stocks on the Toronto Stock Exchange. Over 500,000 shares have been traded in the last two days, which indicates another possible Petrofina fiasco.
Will the minister confirm or deny the possible purchase, will he indicate whether rail pensioners will receive any improved
May 21, 1981

benefits, such as proper indexing, as a result of the deal or will it just be the tipped off new stock purchasers who will benefit?


Gerald Augustine Regan: Madam Speaker, I find the question very strange, and the lack of background knowledge on the part of the questioner even stranger. I am sure the hon. member is fully aware that I am not the minister to whom Canadian National reports and I am in no position to know what are the plans of Canadian National. I think the hon. member is merely rumour-mongering, and he should realize that by posing a question to a minister on a matter for which that minister is not responsible, and on which the hon. member is not well informed, he is spreading the rumour further.


SUPPLY AND SERVICES
Mr. David Kilgour (Edmonton-Strathcona):: Madam Speaker, my question is directed to the Minister of Supply and Services. I believe he is fully aware of the details concerning the disgusting case of the Walter Truck Canada Company. Can the minister tell the House why he has awarded a $6 million fire trucks contract to that company, which would seem to have been reincorporated for that occasion and which is a technical branch of a bankrupt American company, strictly on the basis of plans? In addition, could he explain why, after several months of procrastination, he turned down the lowest bidder who would have guaranteed the experience, the skills and the 70 per cent plus Canadian content of the well known Thibault fire trucks?


Hon.   J.-J. Blais@Minister of Supply and Services: Madam Speaker, we did wait several months because the bids filed were very thoroughly examined. We received a request from the Department of National Defence concerning certain technical requirements. The Walter Truck Company which was chosen did best meet those technical requirements and therefore it was awarded the contract.


David Kilgour: Madam Speaker, that is one more example of the just society of the Liberals who, in my opinion, lead the most corrupt government in our history. How can anyone award such a big contract to a company whose headquarters and sole small shop are located in the riding of the Minister of National Health and Welfare? Are contracts always awarded with consideration for the political stripe of the bidders, keeping in mind that the owners, Messrs. Marcoux and Laporte, are very well known Liberals?


Mr. Blais:: Madam Speaker, first I might point out to the hon. member that he is questioning not only the integrity of
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the officials of my department but also that of the officials of the Department of National Defence. If he wants to make those kinds of accusations I hope he has supporting evidence to back them up. Madam Speaker, I do not believe that the officials who discharge their duties day in and day out ought to be subjected to such meaningless charges. I can tell the hon. member that he is raising issues about which he does not know anything at all, that the contract was awarded to the Walter Truck Canada Company because it did guarantee more Canadian content than the lowest bid which was rejected. Everything was done in an orderly manner. I made sure of that. If the hon. member wants to make an accusation let him do so seriously and let him stop making unfounded charges.


PUBLIC SERVICE
Mr. Ray Skelly (Comox-Powell River):: Madam Speaker, my question today is for the Prime Minister. Over the last two days there have been many statements surrounding the termination of the services of Monsieur Robert Bertrand, director of investigation and research. Because they are coming from government officials I think it is extremely important that this be clarified. Health reasons are being given, as well as the suggestion of a promotion to the Anti-dumping Tribunal. Senior officials are saying he was fired. In one case he was falsely accused of leaking information. Since it is the cabinet which is responsible for his appointment, I urge the Prime Minister to make a statement to this House to clarify the reasons why the services of Monsieur Bertrand were terminated.


Pierre Elliott Trudeau: Madam Speaker, I would gladly say a few words about this because I believe many of the adverse rumours we have heard in the past few days have been unjustified and, in some cases, malicious.
I have known Mr. Bertrand for some 20 years. I have a very high regard for his human and professional qualities. He is the best man to state on his behalf whether he was fired or whether he is going to another job which is of his choosing. I expect him in the next day or so to make a statement to that effect. Indeed, I encourage him to do so.


REASONS FOR CHANGE IN POSITIONS
Raymond John Skelly: Madam Speaker, I have just a brief supplementary question. The timing of this termination could not be more unfortunate, and I ask the Prime Minister to confirm that there was a great policy difference between the incumbent director of investigation and research and the cabinet minister involved, that Mr. Bertrand's services were terminated, that the cabinet was asked to approve that, that it refused to do so and that Mr. Bertrand,
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May 21, 1981
Oral Questions
rather than being terminated, was appointed to another position? Anyone here certainly knows that no one is appointed, as a promotion, to the Anti-dumping Tribunal from another position.


Pierre Elliott Trudeau: Madam Speaker, from the point of view of those who want to seize on anything to imagine some evil hiding in the recesses of government, and of those who believe in the diabolical theory of politics, any timing is wrong.
Mr. Bertrand had been in his job for some seven years. It is a very trying job. A couple of years ago he underwent a very serious operation, and there was the question of his taking on a less heavy load at that point. It was agreed that because there were several very important investigations under way, notably the one on newspapers, the other one on the oil industry-


Mr. Stevens:: What about the uranium cartel?


Pierre Elliott Trudeau: -and the uranium inquiry, he would stay on until these tasks were terminated. They are now terminated; a new phase is beginning.
The man has been there for seven years, and it is a very difficult position. He has indeed been given a promotion, one that he chose among others offered to him, and he has gone from an SX3 position to a DM1. Naturally nobody will believe this if they want to invent stories, Madam Speaker, and that is why I say to hon. members opposite, if you do not want to take our word for it, or the word of his friends, why not ask him yourself?


QUERY RESPECTING POSSIBLE POLICY DISAGREEMENT
Charles Joseph Clark: Madam Speaker, since this involves a quasi-judicial position that Mr. Bertrand occupied and is a matter in which the House is unusually interested, I wonder if the Prime Minister could tell us whether there was a significant policy disagreement between the minister and Mr. Bertrand prior to his change of position.


Pierre Elliott Trudeau: Madam Speaker, I fail to understand the preface to the question. Mr. Bertrand is now going to a semi judicial post in which he will have much higher authority than previously where he was-


An hon. Member:: Oh, get off it.


Pierre Elliott Trudeau: Well, I see some guys having bellyaches over there, Madam Speaker. I cannot deal with this kind of-


An hon. Member:: Honourable guys.


Pierre Elliott Trudeau: The hon. member from the New Democratic Party who used some very excessive words yesterday-I wish he would catch up on himself and try and be a little more
rational when he debates this kind of question. I repeat: you can ask Mr. Bertrand the question yourself.


Charles Joseph Clark: Madam Speaker, the House of Commons is the place in which members of Parliament put questions to the government about matters of government policy and conduct. I put to the Prime Minister a simple question which he did not answer as to whether or not there had been a policy difference of significance between the minister and Mr. Bertrand prior to Mr. Bertrand's change of position, and I would like an answer to that.
I would also like the Prime Minister to indicate to the House that in situations of this kind where there is a change surrounded by controversy in the position of someone carrying out a quasi-judicial function-


An hon. Member:: It is not quasi-judicial.


Charles Joseph Clark: -whether he would institute a practice whereby the minister who occasions that kind of change, in this case the Minister of Consumer and Corporate Affairs, would make a full statement to the House of Commons outlining all of the details in the case, or would be prepared to go before a constituted committee of this House to answer detailed questions from interested members about all of the circumstances leading to a change in the activities of a senior public official carrying out a highly delicate and important quasi-judicial function?


Pierre Elliott Trudeau: Madam Speaker, the Leader of the Opposition says that the House of Commons is the place where members put questions to the government. We believe that, and we have been answering questions for the past several days. What we cannot answer are malicious and inventive rumours that we have been hearing from the opposite side for the last few days. They either take our word for it or they ask the man himself, and I suggest the latter.


An hon. Member:: What is malicious about that question?


Pierre Elliott Trudeau: As to the question of setting up some kind of inquiry every time the government-


An hon. Member:: What is the policy difference?


Pierre Elliott Trudeau: On the question about policy differences, Madam Speaker, I can say that I know of none, and I hear the Minister of Consumer and Corporate Affairs say that he knows of none either. Therefore this is another invention of the opposition.


Some hon. Members:: Hear, hear!
May 21, 1981


COMMUNICATIONS
[Stage Direction]
POSSIBLE IMPACT OF AT & T STATEMENT ON SALES OF TELIDON SYSTEM IN UNITED STATES
Mr. David Smith (Don Valley East):: Madam Speaker, I have a question for the Minister of Communications. Will the minister advise the House of the significance to Canada of yesterday's announcement by AT & T and its impact on jobs in Canada?


Hon. Francis Fox (Secretary of State and Minister of Communications):: Madam Speaker, this announcement by AT & T is indeed a major step forward for Canada.


Some hon. Members:: Hear, hear!


Francis Fox: Hon. members have undoubtedly read in the press the announcement to the effect that AT & T is adopting standards which are fully compatible with the Telidon system. This arose as a result of many hours and many days of intense consultation between Department of Communications experts and AT & T.
The second part of the announcement yesterday, which does not seem to have been noticed by the media, is that CBS-


An hon. Member:: That is why you planted the question.


Francis Fox: -and I am sure it will be of great interest to members of this House who are interested in the development of Canadian high technology and its sale to the United States-is that CBS has adopted standards for transmission which are fully compatible with the Telidon system. This means, Madam Speaker, that the American market will be open to Canadian manufacturers of high technology who, because of the development of Telidon within the Department of Communications, have a leading edge in competing with other manufacturers on the North American market.


HUMAN RIGHTS
Hon. Perrin Beatty (Wellington-Dufferin-Simcoe):: Madam Speaker, I have a question for the Minister of Justice who will be aware of the fact that 15 Canadian law schools require candidates for admission to take the American law school admission test. May I ask the minister whether he feels it is appropriate that Canada's future lawyers should have to be thumbprinted in the process of taking this test and to be asked for their social insurance numbers, their family's financial status and their racial background, and that this information should be stored along with the test results in the United States? And if the minister does not feel it is appropriate, is he prepared to take action to block this from taking place in the future?
Oral Questions


Hon. Jean Chretien (Minister of Justice and Minister of State for Social Development):: Madam Speaker, I am not aware of this problem but I will certainly look into the matter and report to the House as soon as I have an answer.


Henry Perrin Beatty: I am amazed that the minister would not be aware of these facts. May I ask him, in view of the fact that these LSAT tests are American and the questions have a distinct American cultural bias and are therefore inappropriate for Canadian students, is he prepared to contact Canada's law schools to offer his assistance in the preparation of a standardized Canadian law school admission test?


Joseph Jacques Jean Chrétien: I have nothing else to add, Madam Speaker.


INCOME TAX
Thomas Scott Fennell: Madam Speaker, my question is directed to the Minister of National Revenue and arises from the plight of a polio victim in my riding who spent 36 sleepless hours in a sit-in to draw attention to an unfair tax law. As this is the International Year of the Disabled, and in view of recommendation 46 contained in the report of the Special Committee on the Disabled and the Handicapped, which recommends that a disability deduction replace the current flat rate deduction to allow an individual to deduct the full cost of goods and services directly attributable to a disability, would the minister please review the decision made by the Tax Appeal Board on May 14 with respect to a recent test case in which my constituent made an unsuccessful attempt to deduct expenses for the cost of a leg brace, shoes, and other expenses related to his disability?


Hon. William Rompkey (Minister of National Revenue):: Madam Speaker, I have a great deal of sympathy, and indeed admiration for the gentleman in question, as I am sure we all do, and I am aware of the very excellent recommendations of that task force. This, however, is the judgment of an independent body, the Tax Review Board, and I am not at liberty to change that judgment any more than I am at liberty to change the law. The law appears to be quite specific. Even though I have sympathy for the gentleman, only Parliament can change the law in this regard.


REQUEST FOR AMENDMENT OF ACT
Thomas Scott Fennell: Madam Speaker, in view of that answer I will address my supplementary to the Minister of State for Finance in the absence of the Minister of Finance.
In light of the committee's recommendation, would the minister amend the Income Tax Act so that those people who are not confined to a bed or a wheelchair, but who are disabled, would be permitted to deduct expenses for those

May 21, 1981
Oral Questions
goods and services which are attributable to a prolonged disability?


Hon. Pierre Bussieres (Minister of State (Finance)):: Madam Speaker, the special House committee which has looked into the many problems the handicapped are facing has prepared an extremely important report which proposes certain amendments to the Income Tax Act. As the hon. member is certainly well aware, changes to the tax structure are made at the time a budget is presented. The Minister of Finance has already indicated that he would present a new budget next Fall. The hon. member can be assured that the committee's report and recommendations concerning the handicapped will be given special consideration by the Minister of Finance when the time comes for him to prepare his budget.


DROP IN SOYBEAN AND RAPESEED PRICES-GOVERNMENT POSITION ON COMPENSATION
Mr. Stan Hovdebo (Prince Albert):: Madam Speaker, my question is for the Minister of Agriculture. It concerns the grain embargo-just in case he thinks we have forgotten all about it. Soybean and rapeseed prices dropped considerably immediately after the embargo on shipments to Russia was put in place. The price of soybeans dropped about $25 a ton. Most of this crop is grown in the constituency from which the minister comes. I have been distressed of late to hear that these two crops are not being considered for compensation. Would the minister indicate whether or not these two crops are being considered for compensation?


Hon. E. F. Whelan (Minister of Agriculture):: Madam Speaker, these two crops are not being considered for compensation.


Stanley J. Hovdebo: Madam Speaker, that was a record answer from the minister.


Some hon. Members:: Oh, oh!


Stanley J. Hovdebo: I am sure the farmers in Essex County will be as distressed as I am to hear his answer.
Although the minister told us last November that the government was ready to pay compensation, it still has not done so. The minister has avoided tabling any kind of white paper or giving hon. members any indication of how he will calculate the compensation to be paid. Would he explain to the House, and the farmers, why there has been this long delay in making payment of compensation?


Eugene Whelan: Madam Speaker, in the first part of the hon. member's question he acknowledged that part of the delay was
due to the fact that some of the requests for compensation, such as the request by the soybean growers in my area, which he mentioned, were made only a few weeks ago. That caused a delay.
At the time of the finalization of this program all the facts with respect to how it came about will be made public.


AGRICULTURE
Mr. Marcel Dionne (Chicoutimi):: Madam Speaker, my question is directed to the Minister of Agriculture.
For the past several months, the Canadian Federation of Hog Producers have been seeking a hog price stabilization plan from the Minister of Agriculture. Hon. members are aware that the prices on the world market had slumped so much that producers were selling their hogs below their production costs. Could the Minister of Agriculture advise us whether there will be a hog price stabilization plan, when producers will be paid, and how much the hog price stabilization plan for Canadian hog producers will amount to?


Eugene Whelan: Madam Speaker, there will be a hog stabilization plan which will amount to $8.96 per finished hog. This sum will be paid as soon as possible. As a result of the experience of last year we have all the names of producers in a computer, so it should not take very long to finalize the payment to them.


Some hon. Members:: Hear, hear!


FUTURE OF COLD LAKE, ALTA. PROJECT
Mr. Jack Shields (Athabasca):: Madam Speaker, my question is for the Minister of Energy, Mines and Resources. As the minister is aware, the June 1 deadline for the Cold Lake project, to which the government loaned $40 million, is fast approaching. The minister is also aware that Imperial Oil has indicated that unless there are clear indications that an energy agreement is imminent it will shelve the project. Will the minister be giving a clear indication that there will be an energy agreement so that this project vital to Canada will not be shelved? If not, will the minister be preparing another loan to Imperial Oil to keep its design and engineering team together?


Hon. Marc Lalonde (Minister of Energy, Mines and Resources):: Madam Speaker, the answer to the first part of
May 21, 1981

the question is that the deadline is not June 1. The answer to the last part of the question is no.


Jack Wendele Shields: Madam Speaker, that is one of the clearest answers that the minister has given. I would much rather have a straightforward answer such as he gave this time than all the running around which he has been doing.
The minister talks about a spirit of willingness and a spirit of compromise which he is seeking from Alberta. Can the hon. gentleman indicate to the House what this spirit of willingness is, what are the areas of compromise he has indicated to Alberta that he requires in order that an energy agreement can be reached?


Marc Lalonde: Yes, Madam Speaker.


NUCLEAR ENERGY
Mr. G. M. Gurbin (Bruce-Grey):: Madam Speaker, my question is for the Minister of Energy, Mines and Resources. It deals with the recently released Secor report which is a fairly comprehensive report on the Canadian nuclear Candu system. Has the minister had a chance to review this report? In the report there is a comment that the Canadian nuclear industry hovers on the brink of a crisis which threatens to bring it to its knees. This is really a comment on the many years of Liberal government activity in terms of its efforts to commercialize a Canadian energy system in the international market. We know that the Liberal party has an internal mini-review of the nuclear industry. I wonder if this review had been completed and if the minister took into account the Secor Report.


Marc Lalonde: Yes, Madam Speaker. I would like to add that the hon. member seems to have forgotten the nine months when the Conservatives held office, when the antics of their secretary of state for external affairs created very serious difficulties with regard to our sales to some other countries.


Charles Joseph Clark: That's not true, and you know it.


Gary Michael Gurbin: Madam Speaker, the minister knows that I think he is a nice guy, but I am sure he would not want to hide 16 years of Liberal incompetence in the areas of energy and finance behind nine months of the only freshness this country has had in the last 16 years.


Some hon. Members:: Hear, hear!


Gary Michael Gurbin: The Secor report suggests that we should have a 20 per cent share of the global market for Candu or any nuclear reactors. The essence of the report is that the Liberal government, along with AECL-
Oral Questions


Madam Speaker:: Order, please. The answers have been remarkably short. I would urge hon. members to put equally remarkably short questions.


Gary Michael Gurbin: I was antagonized, Madam Speaker.


Some hon. Members:: Oh, oh!


Gary Michael Gurbin: My very short supplementary question, Madam Speaker, is for the same minister. Does the minister understand that the essence of the Secor report is that what we need is a major Canadian manufacturing vendor to make the system work? Is he prepared to act quickly to see that occurs so that we can have a Canadian system which can effectively compete on world markets, in order that our whole Canadian nuclear industry, our research and development programs, in fact our contribution to global energy needs, will not wither away while we sit idly by?


Marc Lalonde: Madam Speaker, we are reviewing this matter. I can say that steps have already been taken to integrate our efforts abroad on a better basis than ever before. In particular AECL, Ontario Hydro and the Association of Canadian Nuclear Industries are now working very closely together. They are making representations abroad on a joint basis. These efforts have been quite effective in the few seminars and events which have been organized by these groups in various countries which are interested in Candu. We are monitoring the situation very closely. We are examining the advisability of developing further structures. We are working very closely with the industry at the present time.


LABOUR RELATIONS
Mr. Les Benjamin (Regina West):: Madam Speaker, my question is for the Minister of Labour, notice of which I gave to his office. In view of the fact that Nordair flight attendants have been without a contract for six months and have been on strike for something over a week, and in view of the fact that Nordair is owned by Air Canada and that these attendants want something equivalent to parity with Air Canada employees, can the minister tell us whether it is true that he authorized or approved Nordair clerks and ticket agents taking three-day crash courses as flight attendants in order to keep Nordair flights in operation during this labour dispute?


Gerald Augustine Regan: Madam Speaker, it is true that a work stoppage has been under way at Nordair for a period of time. The Montreal office has been in touch with the parties and they are aware that mediation-


Erik Nielsen: You are doing very well, Gerry. You read very well.

May 21, 1981
Business of the House


Gerald Augustine Regan: -assistance is available, if they wish to resume negotiations. Our people are standing by to be of any assistance they can in helping to bring an end to this dispute.
However, I am not aware of the other subject that the hon. member mentions. I certainly have not given authorization for any course of action, nor would I have occasion to do so. It is not a matter which would fall under my jurisdiction in any manner, shape or form. Our job in labour, and I think a job that our people in the Department of Labour carry out very well, is to provide expert mediation services to help avoid and bring to an end disputes of this type. The question of the services which are being maintained is a matter which would fall under another department.


Erik Nielsen: It certainly wouldn't be a crash course, anyway!


SAFETY OF OPERATIONAL PRACTICES
Leslie Gordon Benjamin: Madam Speaker, may I ask the Minister of Labour, if he has not given approval to this crash course for ticket clerks and other clerks to be flight attendants, would he advise the House whether he would investigate the matter and see to it that untrained personnel are not acting as flight attendants on Nordair flights? Would the minister also see to it that this effort of blatant strikebreaking by Nordair will cease immediately?


Gerald Augustine Regan: The hon. member will be aware, in relation to the safety of the operational practices, that that is a matter which presently falls under the responsibility of another department and another minister. The hon. member's urgings in that regard could be directed to the Minister of Transport, who says he will look into the matter for the hon. member.


BUSINESS OF THE HOUSE
Walter David Baker: Madam Speaker, I wonder if I could ask the government House leader the intentions of the government with respect to business next week. Perhaps while he is on his feet he might designate, as far as he could, allotted days.
[ Translation)


Mr. Pinard:: Madam Speaker, next week we will have two opposition days, Monday and Wednesday. Tuesday and Thursday we will continue consideration of Bill C-57 to amend the Excise Tax Act and the Excise Act, with the report stage of the bill beginning on Tuesday.


Walter David Baker: Is the government House leader now in a position to indicate what we will be doing on Friday of next week?
While I am on my feet, I might mention that last week I made an inquiry with respect to the extension of the small business development bond concept to operating capital and inventory and with respect to unincorporated small businesses, which would include farms and, perhaps, fishermen. I asked him if he would consult with the Minister of Finance because of the difficult situation in which people in those occupations find themselves. Has he made that inquiry, and if he has can he inform the House of the results of that inquiry, given the understanding that I tried to direct to him, that we would be prepared to talk about it in terms of a restricted debate?


Yvon Pinard: In answer to the hon. member's first question, I would say that next Friday we will be considering bills yet to be decided at the next meeting of House leaders, which is usually held on Wednesday or Thursday. That is why I did not announce the business of the House for next Friday, being well aware that we could be more specific next week depending upon the progress made at the report stage of Bill C-57.
As for his second question, I did discuss the matter with the Minister of State for Finance (Mr. Bussieres), and I am sure that after he has done the necessary checking he will only be too glad to answer himself any question from the opposition.


Mr. Knowles:: Madam Speaker, I have a couple of questions for the government House leader with respect to House business. I wonder if he could tell me whether my practice of being persistent but polite is going to pay off in terms of getting the legislation respecting veterans, especially with respect to those who were not covered in last summer's Bill C-40, or whether I am going to have to find some other tactic. In other words, what is the reason for such a long delay, since so often I have been told that the matter is going to cabinet in a day or two?
My other question relates to another group of widows. As the minister probably knows, when the present Minister of Justice was president of the treasury board, the government came awfully close to granting legislation which would end the denial of pensions to widows of public servants, RCMP and national defence retirees where the marriage had taken place after retirement. In view of the fact that there are now so many of these later marriages which last for many years and that many widows suffer because of this unfair limitation, will the minister discuss this with the appropriate ministers to see if the proposals of a few years ago can be reactivated?
[ Translation]


Yvon Pinard: Madam Speaker, in reply to the hon. member's first question, I will say that being polite always pays off, and that is the approach I would recommend he take. If he prefers to try "some other tactic", to use his expression, I must warn him that that could delay the introduction of the legislation he so desperately wants to have passed. If he wants to chance it, I strongly urge him to use manners, because sooner or later that pays off. As for his representations on behalf of the widows of
May 21, 1981

public servants, I want to assure him that they are taken into consideration and that I will convey his message to the minister responsible.


THE CONSTITUTION
Madam Speaker:: I have the honour to inform the House that the Clerk of the House had laid on the Table the fifth report of the Clerk of Petitions stating that he has examined the petition presented by the hon. member for Laval (Mr. Roy) and finds that it meets the requirements of the Standing Orders as to form.


PRIVILEGE
Mr. Pat Nowlan (Annapolis Valley-Hants):: Madam Speaker, I have a question of privilege. Ordinarily, I would have written a letter to try to have something clarified; but in view of the totality of what happened this morning, which is the first time something like this has happened in the years that I have been in the House of Commons, I think that for the benefit of all hon. members it should be clarified post haste because the same thing almost happened again at noon.
I am very sorry that the Prime Minister (Mr. Trudeau) is not here, and it is unfortunate; however, I am sure he will hear about this. Quite frankly, I am not imputing this to the Prime Minister, but I am suggesting that perhaps there is an element of pomp, circumstance or presidential, or whether there is bona fide security involved-and that is what I want to know. We all know there has to be increased security in this day of the looney when unfortunate things happen.
However, very briefly, my point of privilege is that I understood that the door to the west was known as the members' door, and that members habitually, traditionally and historically have been driven up to it. Ministers who are members get out and come in, in the same manner as a member. I have noticed, in the last week or so, that at certain times there seem to be six or eight plainclothes people and uniformed commissioners and RCMP waving off cars at the members' door. Then when one looks behind in the rear view mirror, one sees the prime ministerial entourage coming. So I can understand that to a point.
This morning I drove up and, unfortunately, I was a little late; it was about five after nine, but quite often I happen to come in either just before or after the Prime Minister's entourage. I came up, saw six or eight individuals waving off the area where the bus parks. I said to my wife, "Well, I think the Prime Minister must be around." I looked in the rear view
Privilege-Mr. Nowlan
mirror and the prime ministerial cars were down by the East Block; but I did not go into the area which is restricted to buses and/or where cabinet members and others are sometimes let off. I stopped by the sidewalk and the light post where the little lady used to stand with the lonely little flag. I then got out of the car, at which time the prime ministerial entourage was approximately by the Senate door. It took about five seconds. I walked in without any problem.
Ten minutes later I received a very even-voiced call from my wife who, after she discharged me, had continued on her way. In front of the National Cenotaph, after a blinking light from an RCMP car had followed her off the grounds, she was apprehended, pulled over to stop, and was asked why she stopped in front of a restricted area. She did say that the constable who stopped her was most polite. My wife answered, "I have let my husband off to go to work." He asked: "What does he do?" She said, "He is a Member of Parliament." So the constable said, "Oh, would you please have him get off at the sidewalk when the prime ministerial entourage is arriving?"
As I say, I am not imputing this to the Prime Minister but I am very irritated. This is a members' door, not a prime ministerial door. I have made inquiries and quite frankly, Madam Speaker, I have found that there has been no new directive for security inside the House or outside the House. Perhaps your inquiries will prove me wrong but that is what I understood.
I understand the need for security, and in view of the coming summit conference perhaps there will have to be more security. If it is security, Madam Speaker, we cannot have it both ways and have the public lined up at the sidewalk, quite properly to see our Prime Minister from time to time, and not have members of Parliament drive up and be let off at the members' door. There is the back door where the Prime Minister or members may come in, or there is the side door which is now open and which is a lot more secure, perhaps, than the public door.
I should like your Honour to take this matter under advisement to find out if it was just an overzealous act of an officer or if there has been a change of direction and instruction and, if so, who has given the instruction. Then perhaps the embarrassment that took place this morning and was almost repeated this afternoon at five minutes before two o'clock will not occur again.


Madam Speaker:: The hon. member has raised this question and I will want to inquire into what took place. I am sorry that the hon. member's wife was embarrassed. I will want to know whether new instructions have been issued-I am not aware of any at the present time-and exactly what they are. Even if it is found necessary to increase security around the House of Commons, I would certainly not want hon. members to be impeded in their function as MPs. They should be properly delivered to any door that they choose to come in through. I

May 21, 1981
Privilege-Mr. S. J. Robinson
will look into the matter and I thank the hon. member for raising it.


Donald W. Munro: Madam Speaker, on the same point, to indicate that it is not an isolated instance-


Madam Speaker:: Order, please. If the hon. member has another point, he can give me notice.


Donald W. Munro: It is the same point.


Madam Speaker:: I am sure the hon. member was not in the same car. If he has another incident he can give me notice of it and I will deal with it in due course.


MR. ROBINSON (BURNABY)-REPORTED LEAKING OF REPORT TO NEW DEMOCRATIC PARTY
Mr. Svend J. Robinson (Burnaby):: Madam Speaker, my question of privilege is not quite as serious a matter of state as that of the hon. member who spoke previously. I should say that I would gladly lend him my bike if he would like to borrow it in order to avoid the complexities he encountered.


Ramon John Hnatyshyn: Keep your pomposities.


John Patrick (Pat) Nowlan: I have a bike.


Svend Johannes Robinson: My question of privilege arises from certain remarks made by the hon. member for Durham-Northumberland (Mr. Lawrence) in connection with the recent termination of Mr. Bertrand, a matter which has been raised in this House. Unfortunately, certain allegations were made with respect to Mr. Bertrand having-and I quote from a report in this morning's Globe and Mail'.
-leaked a report to the New Democratic Party after taking umbrage at the way former Conservative Justice Minister Jacques Flynn dealt with his recommendations on a matter.
As the hon. member well knows, Mr. Bertrand is not in a position to defend himself from this kind of accusation.
As the member who originally raised the suggestion of collusion on the part of a number of Conservative cabinet ministers, I should like to say that this is a total fabrication. In no way did Mr. Bertrand, either directly or indirectly, leak any kind of report relating to the very serious allegations of wrongdoing on the part of the government of the day.
I call upon the former minister to withdraw any suggestion of impropriety on the part of Mr. Bertrand at that particular time. As the former minister well knows, Mr. Bertrand is not in a position to answer for himself.


Madam Speaker:: This is obviously not a question of privilege involving the hon. member. He wanted to make a point about what was said in the House. The point is well taken but it is not a question of privilege.


Mr. Lawrence:: May I speak? I shall be very brief.


Madam Speaker:: I am sorry, I have now ruled that it was not a question of privilege. If I had seen the hon. member rise
before, I would gladly have heard him. As he knows, I am under an obligation not to hear any comments after I have ruled, and therefore I am afraid I cannot hear him.


Allan Frederick Lawrence: Madam Speaker, I certainly realize and recognize that it was not a question of privilege, as you did too. Not only was it not a question of privilege but it was a frivolous waste of the time of the House. The hon. member already knows that the quotations ascribed to me were absolutely incorrect.


Madam Speaker:: The point is well made.


PARLIAMENT BUILDINGS
Jack Wendele Shields: Madam Speaker, I should like to bring to your attention that yesterday I attempted to go down one of the staircases after I had escorted some people to the gallery. As I attempted to go down the stairs, it was obvious that the Prime Minister (Mr. Trudeau) was entering the building because one of the plain clothes security people put his arm out in front of me to stop me from going down the stairs. I had to push his hand down. I was not stopped but the attempt was made to stop me from using the same staircase as the Prime Minister at the same time. I should like to add this incident to the question of privilege raised by my hon. friend.


Madam Speaker:: The point is well taken.



ROUTINE PROCEEDINGS


[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. John Evans (Parliamentary Secretary to Deputy Prime Minister and Minister of Finance):: Madam Speaker, the following questions will be answered today: Nos. 1,343, 1,356, 1,357, 1,358, 1,359, 1,362, 1,366, 1,369 and 2,391.


Mr. Robinson (Burnaby): 1.	Did the Minister of Transport head a fund-raising drive in the Public Service on behalf of the University of Ottawa?
2.	Were public servants from various departments asked to take part in such a drive and, if so (a) which (i) departments (ii) employees were involved (b) were they given time-off from their regular duties and, if so (i) how many employees were involved (ii) what was the total amount of time that they contributed to the project (iii) what was the total cost to the taxpayer of the time contributed?
May 21, 1981

3.	Was there pressure placed on public servants to participate even if they did not do so voluntarily?
4.	Is the government willing to set up such fund-raising drives with Public Service participation for other universities and, if so, which universities?


John Leslie Evans: I am informed by the Departments of Justice, Transport and Treasury Board as follows: 1. No. The Hon. Jean-Luc Pepin, Minister of Transport, with Mr. Charles M. (Skip) Armstrong, president, Canadian operations, Metropolitan Life Insurance Company, is serving as co-chairman for the University of Ottawa Achievement Fund campaign.
2.	Yes. See reply to question No. 1,356 answered this day.
3.	No.
4.	See reply to question No. 1,356, part 1, answered this day.


Mr. Cossitt: 1.	Does chapter 328 of the Treasury Board Regulations on charitable campaigns state in part that: "Other forms of government assistance such as use of cheque-stuffer services are hereby restricted to the United Way campaign . ..."?
2.	Were cheque-stuffers included with the June pay cheques of a large number of Public Service employees and, if so (a) what is the name and job designation of the most senior person in government authorizing such action (b) was the President of the Treasury Board aware of such action and, if so, on what date did he become aware and did he or any one acting on his behalf give permission for such action?
3.	Was the President of the Treasury Board at any time contacted, directly or indirectly by, or on behalf of, the Minister of Transport on the subject of cheque-stuffers or any other aspects of the University of Ottawa's fund campaign and, if so, what are all the details and the dates involved?


Hon. Donald J. Johnston (President of the Treasury Board):: 1. Yes; however, Treasury Board can grant exemptions or extensions to the policy. Circular No. 1980-54 clarifies this flexibility by stating that additional assistance to organizations not associated with the United Way will be considered on a case-by-case basis, limited to the following alternatives:
(a)	approval to distribute one campaign notice to public servants via the payroll distribution system; or
(b)	similar to (a), but extended to identify public servants who are willing to work strictly as volunteers, who could answer inquiries and receive completed pledge cards or donations.
Over the past two decades, such assistance has been extended to the following institutions: University of Alberta, University of Calgary, University of Carleton, University of Guelph, University of Lethbridge, University of Ottawa, University of Windsor, the Children's Hospital of Eastern Ontario, The Ottawa Civic Hospital, CARE of Canada, The Canadian Cancer Society, The Canadian National Institute for the Blind.
2. Yes.
(a) The President of the Treasury Board authorized the policy extension to cheque-stuffers for the University of Ottawa campaign.
Order Paper Questions
(b)	Approval to distribute cheque-stuffers was given by the President of the Treasury Board in his letter of April 3, 1980, to the Hon. Jean-Luc Pepin, Minister of Transport, in his capacity as co-chairman of the University of Ottawa Achievement Fund campaign.
3.	Mr. Pepin wrote to the President of the Treasury Board on March 7, 1980, advising of the campaign and seeking authority of the Treasury Board to bring the public service portion of the campaign to the attention of the public servants in the National Capital Area.


Mr. Cossitt: 1.	Was Anne Haynes hired by the Department of Industry, Trade and Commerce from an Ottawa private employment agency and, if so (a) on what date did she commence work and for how long a period of time was she hired (b) was she engaged in the soliciting of funds for the University of Ottawa from members of the department and, if so, what is the name and job designation of the highest official authorizing such action?
2.	Has Mr. Pierre Bourgault performed the same function in the Department of Energy, Mines and Resources?
3.	Did Mrs. Chaulk of the Department of Finance play any part in this matter and, if so (a) what are all the details (b) did she in any way act as a co-ordinator in charge of those soliciting in various departments?
4.	Is it government policy to permit breaches of Treasury Board regulations in regard to charitable donations?
5.	Was chapter 328 of the Treasury Board Regulations headed "charitable campaigns" dated December, 1979, changed and (a) if so, on what date (b) if not, have they been contravened and, if so, for what reason?


John Leslie Evans: I am informed by the Departments of Energy, Mines and Resources, Finance, Industry, Trade and Commerce and Treasury Board as follows: 1. Yes.
(a)	June 9 to June 27, 1980.
(b)	She was engaged as a clerk with legal services and approximately 2 per cent of her time was spent to solicit funds for the University of Ottawa. The director of legal services, Industry, Trade and Commerce authorized such action.
2.	Dr. Pierre Bourgault, assistant deputy minister, planning and evaluation, is co-ordinating the University of Ottawa Achievement Fund campaign within the Department of Energy, Mines and Resources.
3.	There is no employee by the name of Mrs. Chaulk working in the Department of Finance.
4.	No.
5.	Chapter 328 of the administrative policy manual "Charitable Campaigns", December, 1979, has not been revised or contravened. See also reply to question No. 1,356, part 1, answered this day.


Mr. Cossitt: 1.	Did Mr. D. R. D'Avignon, deputy minister of supply, circulate a letter dated May 21, 1980, to all departmental employees urging them to donate to the University of Ottawa fund raising campaign and, if so (a) was it printed on government stationery (b) did the government pay for the cost of such printing

May 21, 1981
Order Paper Questions
and circulation (c) what is the name of the highest authority authorizing the letter?
2.	Was the Minister of Supply and Services aware of, or did he give his permission in advance to the letter and, if so, on what date was it first brought to his attention?
3.	Was Mr. D'Avignon aware of the contents of chapter 328 of the Treasury Board Regulations in regard to charitable campaigns and specifically, was he aware whether or not such regulations prohibit "canvassing, solicitation or collection of funds in government offices on behalf of charitable campaigns" and, if so, what are all the reasons that the regulation was not adhered to?


Hon.   J.-J. Blais@Minister of Supply and Services: In so
far as the Supply Administration is concerned: 1. Mr. G. R. D'Avignon, deputy minister of supply, issued a circular to supply administration employees within the National Capital Region informing them of the forthcoming campaign and encouraging them to support the campaign.
(a)	Yes.
(b)	Yes.
(c)	Mr. G. R. D'Avignon, deputy minister of supply.
2.	The minister's permission was not sought for this matter, since the decision to issue a letter to the employees providing details on the campaign, does not contravene the general intent of the exception to the policy approved by the Treasury Board. However, the Minister of Supply and Services was made aware of the letter by the deputy minister of supply.
3.	See reply to question No. 1,356, part 1, answered this day.


Mr. Cossitt: 1.	Were circulars sent as cheque-stuffers and/or otherwise distributed, to public servants requesting funds on behalf of the University of Ottawa and offering eligibility to participate in a draw for gifts and, if so, is it government policy to give charitable receipts for contributions under such circumstances?
2.	What is the name and job designation of the highest official authorizing distribution of the pamphlets in such a manner and (a) what part did the President of the Treasury Board play (b) did the Minister of National Revenue or anyone in the Department authorize charitable receipts under such circumstances and, if so (i) on what dates (ii) what are all the details (iii) what are the names and job designations of all those involved?


John Leslie Evans: I am informed by the Department of National Revenue and Treasury Board as follows: 1. Yes. The cheque-stuffers distributed to public servants advising of the University of Ottawa compaign contained information of a draw, which was subsequently withdrawn. A registered charity may not issue official receipts for income tax purposes in such circumstances.
2. (a) See reply to question No. 1,356, part 2 answered this day.
(b) See part 1, above.


Mr. Cossitt: 1. Was a newsletter "Contact" dated June 3, 1980, published by the Department of National Revenue and signed by Deputy Minister J.P. Connell and, if so (a) was it addressed to all employees (b) was the entire content devoted in both official languages to urging employees to donate funds to the University of Ottawa and, if so, does this contravene Treasury Board Regulations in regard to charitable campaigns and what is the government's intention concerning this situation (c) what is the name and job designation of the highest ranking official authorizing the newsletter?
2. Was the newsletter published at the taxpayer expense and, if so (a) how many copies were printed (b) by whom and at what cost?


Bill Rompkey: 1.
Yes.
(a)	Only to Customs and Excise employees located in the Ottawa area.
(b)	See reply to question No. 1,356 answered this day.
(c)	Mr. J. P. Connell, deputy minister, Customs and Excise.
2. Yes.
(a)	1800 copies.
(b)	The newsletter was printed by the personnel branch at the request of the public relations branch. The cost: $37.


Mr. Cossitt: 1.	Was a letter dated June 19, 1980, issued to all employees of the Department of Energy, Mines and Resources and signed by Deputy Minister M.A. Cohen and, if so (a) was the entire content devoted in both official languages to urging employees to donate funds to the University of Ottawa and, if so, does this contravene Treasury Board Regulations in regard to charitable campaigns and what is the government's intention concerning this situation (b) what is the name and job designation of the highest ranking official authorizing the letter?
2.	Was the letter published at the taxpayer expense and, if so (a) how many copies were printed (b) by whom and at what cost?


John Leslie Evans: I am informed by the Departments of Energy, Mines and Resources and Treasury Board as follows: 1. Yes.
(a)	See reply to question No. 1,356, part 1, answered this day.
(b)	Mr. M. A. Cohen, deputy minister of Energy, Mines and Resources.
2. Yes.
(a)	4,000 copies printed on recycled map paper.
(b)	Canadian government printing office, $331.95.


Mr. Cossitt: 1.	Was a letter dated May 30, 1980, issued to all personnel of the Public Service Commission and signed by chairman Edgar Gallant and, if so (a) was the entire content devoted in both official languages to urging personnel to donate funds to the University of Ottawa and, if so, does this contravene Treasury Board Regulations in regard to charitable campaigns and what is the government's intention concerning this situation (b) what is the name and job designation of the highest ranking official authorizing the letter?
2.	Was the letter published at the taxpayer expense and, if so (a) how many copies were printed (b) by whom and at what cost?


Mr. Peter Stollery (Parliamentary Secretary to Secretary of State and Minister of Communications):: I am informed by the Public Service Commission as follows: 1. Yes.
(a)	See reply to question No. 1,356, part 1, answered this day.
(b)	See part 1 above.
May 21, 1981

2. Yes. The cost was charged to the information directorate, corporate systems and services, Public Service Commission.
(a)	2,275 copies distributed to the employees of the National Capital Region.
(b)	Canadian government printing office, $34.94.


Mr. Wilson: 1.	Were arrangements made to provide for landing rights for the Concorde aircraft at airports in Canada?
2.	Were discussions held with British Airways, Air France or Japan Air Lines regarding Concorde flights to airports in Canada?


Mr. Robert Bockstael (Parliamentary Secretary to Minister of Transport):: 1. No.
2. No discussions were held with British Airways, Air France or Japan Air Lines regarding Concorde flights to Canadian airports.


John Leslie Evans: Madam Speaker, would you be good enough to call the starred question?


Mr. Knowles: 1.	Did the transport of dangerous goods branch of the Department of Transport receive 13 emergency calls between July 3, 1979, and November 30, 1980, and, if not, what was the number?
2.	What were the emergencies and into which categories did they fall?
3.	How many of the emergencies occurred in urban centres?
4.	In each case, what substance was involved and which railway company was involved?
5.	In the case of any of the emergencies that occurred in Manitoba, was the government of Manitoba notified and was the Emergency Measures Organization advised?
6.	Was the Canadian Transport Commission asked to investigate any of the emergencies other than the MacGregor spill and the methanol spill of April 6, 1980 in CP Rail's Winnipeg yard and, if so, did the commission make any recommendations and what were they?


Robert Theodore Bockstael: 1. Yes; 13 calls were received from Manitoba from July 13, 1979, to November 30, 1980. Five were transport emergencies, six non-transport emergencies and the other two calls were from Manitoba agencies simulating an emergency for training purposes.
2. The 11 actual emergencies were; a leaking tank car of flammable liquid, Class (3); a leaking tank truck of flammable gas, Class (2); a tank car fire of flammable liquid, Class (3); a box of radioactive material found on the highway, Class (7); a
Order Paper Questions
leaking container of the poison in a truck, Class (6); a burst bottle of chlorine, a poison gas, Class (2); a grain elevator Fire involving herbicides, Class (6); a leaking storage tank of poison gas, Class (2); a grain elevator fire involving fertilizer, Class (5); a forest fire being reported; and a request for information on handling a poisonous product, Class (6).
3.	Eight.
4.	The products involved were methanol, liquid nitrogen, hexene, radioactive material, cresol, chlorine, herbicides, anhydrous ammonia, fertilizer. The CPR was involved in two of these incidents; the other incidents did not involve a railway company.
5.	Two were reported to the environment agency in Manitoba, Five to the provincial EMO and four were not reported to any provincial agency.
6.	The Canadian Transport Commission was not asked to investigate any emergencies other than the MacGregor spill and the spill of methanol on April 6, 1980.


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


John Leslie Evans: Madam Speaker, I ask that the remaining questions be allowed to stand.


Madam Speaker:: Shall the remaining questions stand?


Some hon. Members:: Agreed.


Henry Perrin Beatty: Madam Speaker, I apologize to you and the House for rising again with regard to question No. 1,852 which I put on the Order Paper on December 9. As you will be aware, prior to the Easter recess, on April 23, I brought this question to the attention of the parliamentary secretary who responded as follows:
Madam Speaker, following my conversation with the hon. member this morning, I am checking on the matter. I fail to understand why an answer had not been transmitted through the Privy Council office to be presented in the House. I will do my best to have it as soon as we return from the recess.
That was on April 23. It is now May 21. A month has gone by and we still do not have an answer to that question.
On Thursday of last week, I again rose on a point of order bringing this matter to the attention of the government House leader, who gave this undertaking, as reported on page 9586 of Hansard:
Madam Speaker, I shall take notice of the recommendation made by the hon. member concerning his question. I shall consult the parliamentary secretary and ensure that he can provide the hon. member with an answer as soon as possible. There are undoubtedly very valid reasons to justify this delay, and we shall try to give them to him as soon as I have talked with the parliamentary secretary.
I placed this question on the Order Paper on December 9. It deals with the government's conflict of interest regulations,

May 21, 1981
Interest Rate Policy
those requirements dealing with conflict of interest as they relate to the chairman of the Canadian Film Development Corporation. The chairman of that corporation indicated publicly over a month ago that he transmitted the information to the government many, many weeks before that. Yet, Madam Speaker, we have still not received an answer.
Since that time one of the appointees to the Canadian Film Development Board, who was appointed earlier this year by the Minister of Communications (Mr. Fox), has resigned because of a conflict of interest not noted at the time of his appointment. Second, the chairman of the Canadian Film Development Corporation has himself indicated that clients of his law firm in the film business come before the CFDC to request financial assistance and he benefits financially because they are clients of his firm.
This is a question of considerable importance, particularly in view of the fact that, if the government delays any further, the chairman of the CFDC will have resigned-his term runs out at the end of this month-before I get an answer to my question.
In view of the assurances given in the House on numerous occasions that an answer would be given to my question, can the parliamentary secretary tell me what the answer to the question is?


John Leslie Evans: Madam Speaker, I was not in the House when the hon. member inquired of the President of the Privy Council about this matter last week. This matter was checked. We know the answer is being prepared in the department but we have not received it yet. I expect the hon. member will receive his answer in very short order.



GOVERNMENT ORDERS


John Edward Broadbent: That this House condemn the government for following a made-in-Washing-ton interest rate policy and for breaking its promise to the Canadian people in the Speech from the Throne that "it recognizes the need to protect those Canadians most affected by unacceptably high interest rates".
He said: Madam Speaker, during the past hour two significant statements have been made. One revealed to Canadians that we now have an interest rate which has jumped beyond 19 per cent, the highest interest rate in the history of Canada. The second statement came some time earlier from the Prime Minister (Mr. Trudeau) in response to my question concerning precisely the same interest rate problem. The Prime Minister said that he was finding questions on interest rates raised by the New Democratic Party to be repetitious. I want to say through you, Madam Speaker, to the Prime Minister that the
questions on interest rates coming from the New Democratic Party are repetitious because the problems are still there. They are not going away. The people of Canada keep asking us questions and we intend to keep asking the Government of Canada questions about interest rates until the government changes its high interest rate policy.
The Liberals made-in-Washington high interest rate policy is a high interest policy which reveals low interest in the needs and concerns of working Canadian men and women. It is a policy of little interest indeed to the concerns of home owners and families who want to buy their first home. It is a policy showing no interest in small business, those men and women who want to expand and rely on the banking system to provide reasonable costs for such expansion. It is a policy which lacks any interest at all in the farmers of Canada. It is a policy that is indifferent to the needs of fishermen and others who rely on reasonable credit costs. In short, the high interest policy of the Liberal Party of Canada totally ignores the interests of the vast majority of Canadians.
Let's face it, the Liberals have an interest policy with only two interests behind it. The first is a policy which is determined to go on giving what can only be described as immorally high profits to the banks and the other lending institutions of Canada. Second, I would stress it is a policy that clings blindly to the misguided economic notion that our high interest rate policy must be made in Washington, not in Ottawa. I will come back to that in a moment.
Consider first the banks. The average increase in first quarter profits in 1981 of our seven chartered banks over the same period last year was 58.3 per cent. But with every new interest rate increase like the one we have experienced today, and the added hardship it provides to Canadians, shouts of joy can be heard in the banks' head offices from one end of the corridors to the other. Nonetheless, the Liberals remain with what can only be described as a doctrine attitude on monetary policy. And while they let Washington lead them around in circles, it is the working men and women of Canada who find themselves dizzy from this unstable economy the Liberals have created.
Despite overwhelming evidence, whether from the United States, the United Kingdom, or previous Conservative governments, the Liberals still retain a policy which cannot be justified by any rational consideration of the facts. Even former finance minister Walter Gordon is telling the present Minister of Finance (Mr. MacEachen), a former Liberal colleague, that the MacEachen monetary madness has gone far enough. And Mr. Gordon, surely, is right.
Consider Mr. Gordon's points. He demands that the government take action "sooner rather than later so more people won't lose their home and most small businesses don't go bankrupt". He adds that the current high interest rate policy is fuelling rather than fighting inflation. He says the banks' present course is damaging to people and rather than providing a solution it is exacerbating the problem. I say, and I am sure that I speak not only for New Democrats in this House but for Canadians all across the land, that Mr. Gordon is surely right.
May 21, 1981

I say the government's failure to force the banks to reduce their interest rates is the major cause of Canada's current economic difficulty. That policy must be changed and it must be changed now.
Let us look at some aspects of ordinary existence by ordinary people in this country as they find themselves living in the midst of this monetary madness. First, let me deal with home owners. Two years ago a mortgage could be obtained in Canada for 11 per cent. The increase to the current level of 18.5 per cent-and it will go up again after today's announcement-means an increase in carrying costs in terms of monthly payments of 65 per cent. That means a mortgage of $70,000 will now cost $1,052 per month to carry compared with a former cost of $673 per month.
Home ownership is now out of reach of everyone but those earning beyond $50,000 a year. Put differently, for the first time in my life as an adult and for the first time since the great depression, 90 per cent of Canadians cannot afford to buy their own homes. That is surely the most glaring statistic of all in terms of the government's high interest rate policy. The government says it is pleased with the statistics which show that housing starts have increased recently, but what good is a housing policy that produces houses which only 10 per cent of Canadians can afford?
What about the farmers in Canada? During the past year farm bankruptcies were up 78 per cent over the year before; that is, 1980 over 1979. In the first three months of 1981, farm bankruptcies have continued to climb and this time they are up 70 per cent over the same period last year. Farm bankruptcies are only the tip of the iceberg. Not included in these figures are foreclosures and sell-outs that have been forced upon the farmers of Canada.
What about our small business people? The federal government's failure to understand the interests of small businessmen is profound in its implications, not simply for the people directly involved as owners of small businesses, but for the majority of Canadians because the majority of men and women who work in Canada work for small businesses, not large corporations. When a small businessman goes belly up, the ordinary men and women of Canada also go belly up in terms of losing their occupation. Whether we are talking about farmers, small businessmen, home owners or fishermen, the problem of inflation directly relates to the high interest rate policy and its effect on the majority of Canadians.
Having listed in a very brief way the problems faced by Canadians in these particular occupations, I want now to deal with the government's response to this profoundly serious situation. What has been the government's response when confronted with the evidence? There certainly have been pious expressions of concern. Beyond that, they have said two things. First, they said that high interest rates are needed to bring down the level of inflation. The second argument, whether in the words of the Minister of Finance or the Prime Minister, has been that opposition suggestions, all nicely lumped to-
Interest Rate Policy
gether, would exacerbate the inflation problem rather than reduce it.
Last week in a debate on a similar topic, I noted that it was once the practice of the Liberals to refer to the Conservative party when they were in government as a non-government. At that time I said that the Liberals, given their present attitude on interest rates, were providing Canadians with what could only be described as a "con" government. I want to say precisely what I mean by that in terms of the two arguments I just said they make, first that the high interest rate policy is needed to bring down the level of inflation, and second, that opposition suggestions would be counterproductive when it comes to inflation. It is exactly the reverse of the truth.
A con government, like a con artist, likes precisely to do that. He likes to take black and pretend it is white or take white and pretend it is black. The minister dismisses a good argument if it is from the opposition and maintains a bad argument simply because it has come from the government.
Let me deal with the first argument, the interest rate policy being good for inflation. The record is clear. The record of Margaret Thatcher's government in England is clear. The record of Carter's performance, followed by his successor in the White House in the United States, is also clear. The record of the Conservative party when they were in power, followed by the Liberals when they came back into office, is clear. Every time you have had an interest rate increase, rather than leading to a reduction in the rate of inflation it has led to an increase in inflation. Surely that message will get through to the Government of Canada. They should stop paying attention to an ossified, rigid theory which emanated some time ago from Milton Friedman of the University of Chicago and has been accepted holus-bolus by too many governments in the western world, start looking at the evidence, ignore abstract theory and begin paying attention to the real problems in Canada.
The second point concerns their suggestion that the NDP proposals in themselves would contribute to the problem of inflation. I want to take that on particularly this afternoon in this important debate. Our central suggestion when it comes to the interest rate policy has been to force the banks, through direct action by the Minister of Finance and the Bank of Canada, to bring down interest rates in Canada step by step to the level of inflation.
It has been suggested that the results of this would be entirely negative, would inevitably lead to an outflow of capital and exacerbate the problem. I suggest that reducing the interest rate would have early tangible, positive effects. It would enable Canadians to own and maintain their home. It would enable farmers, instead of having to sell, to maintain their farms. It would enable all those I talked about earlier to cope with their economic situation and in some cases, such as small businesses, to more than cope and be able to expand. Those would be some of the positive, tangible effects on the economy and on people of a change in interest rate policy.
Let me consider the one negative possibility which the government has raised time after time on this issue, the

May 21, 1981
Interest Rate Policy
possibility of an outflow of capital. We in this party have considered that question, just as governments in western Europe have considered it in the past and as two different governments of the United States not only considered it but dealt with it in recent history. If necessary, and I underline those words, if there is to be an outflow of capital which causes problems, we can learn for once from some of the positive actions taken in the United States.
We should look at the experience of President Kennedy in the early sixties and his successor, Richard Nixon, in the seventies. Both presidents were confronted with the problem of an outflow of capital. What did they do? Did they bring in some extreme, radical, totally unheard of idea? Not at all. In both cases the then American president put on, on a temporary basis, a negative taxation to discourage the outflow of capital from the United States. I stress that it was temporary, to deal with a particular problem. I stress that under present circumstances, given the ravages that high interest rates are having on the Canadian economy, it is time we considered such a measure in Canada in order to bring down interest rates. I hope the government will have the intellectual integrity to reply that instead of ignoring it.
I now want to go to another specific aspect of the interest rate policy that we think could be effective and which was not dealt with by the Prime Minister today in response to questions on housing. We did not raise today, although it is appropriate in a different context, the question of an excessive profits tax on banks. We did not consider a second alternative to which the Prime Minister alluded today. We did not mention, and I repeat here with emphasis, the necessity to force the banks of Canada to not simply live up to profit maximization. They are private sector institutions and, of course, they have to make profits. We in this party believe that the banking system has social obligations as well as the right to make profits, and it is up to the Bank of Canada to make sure the banks live up to those social obligations.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Therefore, we say that when we have a situation in which Canadians are selling their homes off at the rate of 1,000 a month because they cannot renew their mortgages, and in view of the current prices of houses vis-a-vis incomes, leaving 90 per cent of Canadians-not simply the poor, though that is bad enough-for the first time in my lifetime as an adult beyond the pale when it comes to being able to purchase a house, then something ought to be done with the banking system, especially when the profits of the banks are at the kind of levels I have already indicated.
What do we say-and I want the government to reply to this? We say that, in addition to forcing through the Bank of Canada a reduction in the general level of the interest rate, categories for lending money ought to be imposed directly on the banking system, and one category should be that of home ownership. We say it may be fine for the banks to reap substantial profits on genuine luxury goods, but we also say in
this party that a home is not a luxury good but a necessity, and the banks are not entitled to reap fantastic profits off the backs of home owners in Canada.


Some hon. Members:: Hear, hear!


John Edward Broadbent: In this context we say very directly that the Bank Act should be changed. The banks should be forced to have a special lower interest rate for mortgages, because mortgages are simply a form of interest. That rate should be adjusted to enable the average family to obtain a mortgage to buy a house in Canada. Let the profits be made in other sectors, and let the banks use some of their excess profits made in 1977, 1978, 1979, 1980 and 1981 to enable more Canadians to buy their own homes.
I want to conclude by raising and then answering this question. In our judgment, something can and ought to be done about shifting the monetary policy of the government. I have indicated what that should be in terms of a general lowering of the interest rate. Something can and ought to be done about a specific act we have talked about today, and my colleagues will talk about other items.
I want to ask through you, Mr. Speaker, why the government is not doing this? I want to suggest that the reason it is not acting is that the banks are in fact the government's friends. The banks represent, as no other institution in Canadian society, the traditional Liberal view of profit maximization, and it is only with the most extreme reluctance that the government will ever move against such a powerful vested interest. It would almost take a depression before it would move.
We in the social democratic movement do not take that approach at all. We do not wait for disaster to inflict itself upon the people of Canada. We do not regard the banks or any other institution as sancrosanct. We believe the common good to be sancrosanct. Therefore, I say that the Government of Canada is not taking the action it ought to take on interest rates, because that would impinge upon the profits of the banks, and because changing the Bank Act would impinge upon the power of the banks to make their own decisions.
This really is a matter of social philosophy. We in this party believe the Government of Canada should be acting in the interests of the people of Canada, not in the interests of the banks of Canada. We in this party are going to continue day after day to pressure the Prime Minister and the government on the other side of the House finally to live up to the commitment made in the throne speech last year to act for those who are negatively affected by the high interest rate policy of the Government of Canada. We are going to continue to put pressure on the government until it finally abolishes the high interest rate policy which is doing untold damage to the people of this country, wherever they live.


Some hon. Members:: Hear, hear!


Mr. Harvie Andre (Calgary Centre):: Mr. Speaker, we in this party certainly join with the NDP, to use the words of
May 21, 1981

their motion, in condemning the government "for following a made-in-Washington interest rate policy and for breaking its promise". We join them in condemning, disparaging, deploring and criticizing, indeed, even weeping over, this Liberal government's interest rate policy, and in particular over its record of broken promises.
The motion deals just with the promise made in last year's throne speech but in fact the record of broken promises by the Liberal party extends much beyond last year's throne speech. This is the same party headed by the same Prime Minister (Mr. Trudeau) which in virtually every throne speech and every budget speech over the last decade and longer promised to increase growth, reduce unemployment, reduce inflation and keep interest rates low.
Remember the famous commitment that the Prime Minister was going to wrestle inflation to the ground. Remember the promise not to impose wage and price controls and then the flip-flop to do exactly that. Remember the promise that after controls were phased out inflation would decline to about 3 per cent or 4 per cent by 1981. Remember the first ministers' meeting in the summer of 1978 when the Prime Minister declared confidently that, as a result of Liberal party economic policies, by 1981 inflation would be at 3.5 per cent. As we know, inflation in 1981 is at 12.7 per cent, higher than at any time since 1948 when the war-imposed wage and price controls came off. Remember the promises and commitments of the Minister of Justice (Mr. Chretien), when he was Minister of Finance, in his budget of 1978. He predicted quite confidently that that budget would reduce inflation to 6 per cent.
Let us consider what the Liberals had to say when they were in opposition and during the election campaign. Remember The Minister of Industry, Trade and Commerce (Mr. Gray), when he was finance critic for the Liberal party, saying in the Commons finance committee on October 25:
We of the official opposition, while recognizing concern about inflation, are also very concerned about the impact of these increases in interest rates to record levels on the economy as a whole, and particularly on small business, farmers and consumers.
I wonder what the Minister of Industry, Trade and Commerce is saying now as he sits around the cabinet table?
What did the Prime Minister have to say on February 10, 1980? He said:
I would want to manage the economy in such a way that interest rates would in fact come down ... because the economy would be administered in a sounder
way.
It was just pointed out to me that this subject so interests the Liberal party that, while the Minister of Finance (Mr. MacEachen) is in Gabon, we have two members present in the House of their caucus of 145.


An hon. Member:: That's how much they care.


Harvie Andre: I wonder if the House remembers the statement reported in The Toronto Sun on February 4 by the Minister of Industry, Trade and Commerce, then the finance spokesman for the Liberal party, who said:
Interest Rate Policy
It is my belief we can manage the economy in a way that would allow us to have lower interest rates than we have now and I think we can have greater independence in interest rate policy.
I don't think that allowing the dollar to have some downward adjustment would do as much harm to our economy as our present high level of interest rates.
Then he said the same thing on "The Watson Report" on October 15, 1979; he said the same thing in the Standing Committee on Finance, Trade and Economic Affairs on October 30, 1979; and so forth.
Those were the promises and commitments of the Liberal party with regard to interest rates. There have been more broken promises than just those in the throne speech which were made and broken, which we condemn along with the New Democratic Party. There is a long trail of broken promises. In fact, based on what the Liberals have promised and what they have delivered, only a fool would believe anything a Liberal says, and only a party of fools would so quickly and unashamedly jump in and out of bed with them.
The reality of the Liberal government is that promises, commitments and goals are political instruments to be used to manipulate public opinion, and they have little or no relationship to performance or to the programs which are devised and implemented in virtually complete isolation.
For example, let us look at the last so-called budget, or budget-cum-energy statement. The intent of the programs and policies contained therein are very clear. The intent is to increase federal control over the oil and gas industry, to give the federal government access to more revenue, to increase state ownership and to sacrifice, if necessary, the conventional oil and gas industry in order to promote offshore and high Arctic exploration, which is under federal jurisdiction. Those are not particularly politically palatable, so while that is the reality of the program, the stated goals and promises are to attain self-sufficiency by 1990, to Canadianize the industry to 50 per cent Canadian ownership by 1990 and to have a fair revenue share. The goals have no relationship to the program. I concede that part of the program has been operated with some success, but the fact is that the promises, the commitments, the goals and the objectives are PR fluff. They are put out by Mr. McLaren and Dr. Goebbels' department through his advertising campaign, but they have nothing to do with the reality of the program.
At least I will say that the government has an energy program, wrong-headed, dumb, disastrous and damaging as it is. In the Department of Finance there is not even a program. There is no program at all. The subject seems to interest neither the Prime Minister nor the Minister of Finance. After being re-elected last February on a platform which had to do with energy, inflation and interest rates, the Prime Minister then devoted virtually the entire next year to a personal crusade to impose on this country his own version of what our Constitution should be, in spite of the damage this might do to the country. Now that he apparently has done as much damage as he can do in that regard, he is traipsing around the

May 21, 1981
Interest Rate Policy
world trying to impress people with his knowledge of global problems and with his perception of what needs to be done to cure those world problems. Having wrecked Canada, he has now set his sights on the rest of the world.
When the Minister of Finance stops in Ottawa in between Hawaii and Gabon, where he apparently is now, he produces about as much substance as a fog machine. In spite of being in his portfolio for over a year, he has failed so far to produce anything resembling an economic policy. Even that fine Liberal institution, the Toronto Star, was forced to conclude about the Minister of Finance and the general state of the economy in its May 2 editorial that, and I quote:
The state of our economy is, in a word, miserable.
Our economic growth is stagnant.
Throughout all this, the Minister of Finance-the man with fundamental responsibility for steering the nation's economy-has been acting like a passive and barely interested bystander.
Then at the end of the editorial the Toronto Star said:
The time has come for MacEachen to either begin meeting those responsibilities much more convincingly than he has done so far, or to step aside. At this crucial and difficult point in our economic development, the finance portfolio cannot be merely a place to hide until something more interesting comes along.
With respect to that editorial, at least, I agree wholeheartedly with the Toronto Star. I wonder about a Minister of Finance who so glibly and unashamedly refuses to accept his responsibilities, and I wonder about a Prime Minister who seems to care not at all about the economic state of the nation and who occupies his mind on much loftier concerns than the mere jobs of Canadians, the mere payment of mortgages by young people trying to buy homes and mere attempts to maintain small businesses when small businessmen are looking at interest rates of 20 per cent plus. I wonder about the morality of that kind of government. The reality is that this government has no policy. The Minister of Finance really has no policy.
The motion of the New Democratic Party today accuses the government of following a made-in-Washington interest rate policy. To some extent that is true. In fact, based on the performance of the Bank of Canada in the last little while with respect to interest rates in Canada, I think we could disband the bank and replace it with a clerk. We could instruct him once every week to telephone Washington to find out what the interest rates are and then declare that those are the appropriate interest rates for Canada.
But in fact we are not following Washington strictly. We are leading Washington. According to the latest data, Canada now has the highest interest rates of any western industrialized nation. The central bank discount rate in the United States as of May 5 was 14 per cent. As of March 18 in Japan it was 614 per cent. As of May 2 in Germany it was 714 per cent. The latest figure for France is 9'/2 per cent. That terrible pariah, Mrs. Thatcher of the United Kingdom, has managed to maintain a central bank discount rate of 12 per cent. In Italy the figure is 19 per cent. In Canada today, as we know, it is 19.06 per cent. We have the dubious distinction of not following the United States or any other country but of leading them all. We
have the highest interest rates of any country in the western world.
With the exception of Canada every one of those countries pays the world price for crude oil, so the statement that the Minister of Finance continually makes in this House that we have high interest because of high inflation and high inflation because energy prices have gone up is absolute nonsense. Every one of these countries pays the world price. Japan imports 100 per cent of its oil and gas and has a 614 per cent interest rate. It is simply an unacceptable and intellectually dishonest argument for the government to make to say that we have to endure high interest rates because of high inflation which in turn is attributable to high energy prices. The fact of the matter is that every other country in the western world has been able to deal with world energy prices in such a way as to maintain interest rates within those countries at lower levels than in Canada. The only country which comes close to being as bad as Canada in this regard is Italy.


John Leslie Evans: And the United States.


Harvie Andre: The Parliamentary Secretary to the Minister of Finance (Mr. Evans) says the United States, yet as of May 5 the central bank discount rate in the United States was 14 per cent.


John Leslie Evans: That is irrelevant and you know it. What is the prime rate?


Harvie Andre: The prime rate is 18 per cent, as opposed to 19.06 per cent in Canada. That is as of May 5. The latest figures are published in the May issue of World Financial Markets, which is a publication of Morgan Guaranty. Those are the figures I am using. I suppose the Parliamentary Secretary to the Minister of Finance must be living in the same kind of airy-fairy world as his mentor, the Minister of Finance, and must not really be aware of the true situation.
It is tragic in the extreme, Mr. Speaker, that for over a year the Minister of Finance has been in his portfolio and has yet to come up with anything vaguely resembling an economic policy. In fact, the only policy he has now is to let the Bank of Canada pursue its tight money policy. The Bank of Canada has for several years been operating on the theory that if you control the money supply, keep it within certain limits, this will eventually bring down the rate of inflation to that level. Well, that policy has been in place for several years now and during that time inflation rates have in fact climbed, and we now have enough experience to make the empirical judgment that that is a bad policy.
However, Mr. Speaker, one does not need just to make that empirical observation; in fact, examining the policy for what it is raises all kinds of questions about its validity. For example, there is the mere question of the kind of money, if you will, that the Bank of Canada is controlling. Their policy is to control the so called Ml, which is currency and demand deposits, within a limit of 5 to 9 per cent and they have now
May 21, 1981

dropped that down to 4 to 8 per cent. In fact, Mr. Speaker, there was a raging argument several years ago, and it continues in this country, the United States and Europe, as to whether Ml represents an adequate definition of money, and many suggest that M3 should be used, which is currency and all chequable notices and term deposits plus foreign currencies. If we look at M3 over the last few years, we see it has been growing at a rate more closely analogous to the inflation rate. It has been growing at 12, 14, 16 per cent, while Ml has been growing at between 5 and 9 per cent. So perhaps those who argue that the Bank of Canada is controlling the wrong type of money have a pretty valid argument based on the performance that we have observed so far.
Moreover, Ml merely represents transactional money. The theory is that if you control and limit that, you limit the transactional ability of the economy to progress by limiting the ability of people to spend and invest, thereby taking some of the steam out of the economy and producing a lower inflation rate. Well, one of the experts in regard to interest rates, I suppose on a global basis but certainly in the United States, is Henry Kaufman, chief economist with Salomon Brothers, a very well known and highly reputed Wall Street firm. He has consistently and very accurately predicted high interest rates over the last decade and dismissed the impact of money supply on interest rates. He points out in an article in Fortune magazine of May, 1981:
"One of the great wonders of the world", he says, "is the American credit market." In his view, bankers over the last two decades have been dismayingly creative in attracting new types of deposits and finetuning "spreads" between their cost of money and their selling price, so that they can turn a profit no matter how much they pay for deposits.
The net result is that there is no discount rate that the Central Bank imposes which will affect the profits of banks. In fact, as the leader of the New Democratic Party (Mr. Broad-bent) points out, profits tend to go up under those circumstances. He then goes on to say that what really matters in terms of money and inflation in the economy is the credit involved; not the currency or the transactional money, but use of credit. He gives examples of the kind of creativity shown by modern bankers and financial officers with corporations. I quote:
"The financial markets are very innovative, and we're going to find some more substitutes for money," says Kaufman. "We can drive that credit mechanism very hard." Thus he forsees an increase in the velocity of money far beyond past experience.
The net effect of that, as he says here, is that not only have high interest rates not dampened the creation of credit and therefore the flow of money, but it has merely added to the cost.
Now, Mr. Speaker, I see you are trying to get to your feet, but before I step down I wish to put on the record an amendment to the motion. In view of the fact that the government has no policies, I think it behooves them to look at ways in which perhaps some of the damage can be ameliorated at no great cost to the treasury. Therefore, I move;
That the motion standing in the name of Mr. Broadbent be amended by deleting the final period and adding thereafter:
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"and calls on the government to introduce measures to make property taxes and mortgage interest tax deductible and to extend the provisions of the small business development bond to cover farms and non-incorporated businesses for working capital as well as fixed capital financing."
In conclusion, Mr. Speaker-


Mr. Deputy Speaker:: Order, please. I regret to interrupt the hon. member but he has exceeded his time.


Pierre Bussières: Mr. Speaker, I am happy that the leader of the New Democratic Party (Mr. Broadbent) has given the members of this House the opportunity to discuss an extremely important and topical subject that concerns most Canadians. However, I would like to tell him that I am disappointed that he has imputed the economic problems facing not only the Canadian society but the whole western world to one type only of financial institutions, namely the banks. He will probably accuse me in return of simplifying the tone and substance of his speech. However, that is how I perceived his comments, and I cannot believe that the leader of the New Democratic Party would allow himself to make such a simplification. I shall blame partisanship for his having ascribed the economic problems of our country to the activities or operations of only one type of financial institutions, namely the chartered banks.
I would also like to remind the leader of the New Democratic Party that when he speaks of the profitability or the profitability rate of our chartered banks, he should be aware of the data he uses for comparison purposes. For instance, he has compared the first quarter of 1981 to the first quarter of 1980. Yet, we know that, because of certain economic conditions, there was a high profitability rate during the first quarter of 1981, while because of other economic conditions, the rate for the first quarter of 1980 was lower than usual compared with the quarterly rate of previous years for the same period. I believe therefore these two figures alone do not allow us to draw firm conclusions since the economic conditions during the periods involved were exactly the opposite. Any conclusion must therefore suffer from this distortion, and a much longer period should be considered to determine real profitability rates. On the other hand, I would like to point out to him that the Minister of Finance (Mr. MacEachen) has undertaken that his department will look fully into this sector and monitor profitability rates, and that the minister would take appropriate action if there were excessive profits.
I also noted in the comments of the hon. member for Calgary Centre (Mr. Andre) that he was making a comparison between the bank rates from country to country. This is not in every case an indication of consumer interest rates. In certain countries, the bank rate directly reflects consumer interest rates, while there might be a significant difference in others. For instance, in the United States, the bank rate of the central

Furthermore, to compensate for Alberta crude oil cutbacks, the federal government has imposed a levy in order to avoid increasing subsidies for imported oil. In April, the CPI was
12.6	per cent higher than for the previous year. Price increases in the last few months are due in large part to energy costs. These increases are necessary and during the adjustment period we can expect the general rate of inflation to be relatively high. What is cause for even greater concern in the long run is the increase in non-energy and non-food components of the consumer price index. We must also be mindful of the rate of salary increases.
Recent increases, Mr. Speaker, show that inflationary expectations are entrenched in the minds of employees, workers, as well as employers. Increased housing starts in many areas of the country, for example, despite record level mortgage rates, also show that this inflationary psychology is firmly entrenched in our views and in our outlook on the economic future of our country. The vigour of our economic activities and the strength of these inflationary expectations could by themselves explain the upward pressures on interest rates. But we must also consider that for the last few weeks another factor has been influencing this trend. Indeed, the increase in interest rates in the U.S. which exerts pressure on the rate of exchange also greatly affects the interest rate situation in Canada.
High interest rates do not seem to have greatly slowed down credit buying in this country. Save for a few weeks in March, the rapid increase in bank loans, which started in the last quarter of last year, continued. According to recent data published by the Bank of Canada, general loans by chartered banks now amount to more than $100 billion, which means an increase of $14 billion over the last seven months. Alternatives to bank credit have also increased. All this points to the fact that the demand for credit in Canada is under terrific pressure.
Considering the context which I have just described, we concur in the interest rate policy advocated by the Bank of Canada to support the Canadian dollar. One can hardly argue that a depreciation of the dollar is required to maintain the competitive advantage of Canadian products on world markets as it has been suggested. On the other hand, this very same depreciation could add to the direct inflationary pressures such as those resulting from the increased price of imported products. This same depreciation could also play upon the indirect inflationary pressures which result from the increased capacity of Canadian firms to grant inflationary salary increases.
Mr. Speaker, I would like to turn briefly from the monetary policy aspect to the financial standing of the government. The statement of financial operations for March as published yesterday gives a first indication of the financial requirements for the fiscal year 1980-81. The initial estimate was set at $10.3 billion, that is almost $2 billion less than provided for in the budget. This figure would be moderately altered. The
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preliminary figures on the components of the financial standing for 1980-81 will not be available before July. However, we can now estimate that the budgetary deficit will be about $ 1.5 billion lower than expected in the budget.
Mr. Speaker, present monetary and fiscal policies are aimed at checking inflationary pressures. They will not cause instant changes, but they can be expected to slow down the growth of expenditures and thus create an atmosphere in which inflation can be reduced further. It is absolutely illusory to believe, Mr. Speaker, as the hon. leader of the New Democratic Party does, that higher interest rates will have an immediate or concurrent influence on inflation rates.
The impact of a monetary policy compounded with an interest rate policy that conforms to inflationary pressures is a medium and long-term process. Any attempt at finding a wonder solution that would bring down interest rates overnight to something like 7 per cent while dispelling inflationary pressures, would be altogether illusory. On the contrary, such a policy would only add oil to the flames of inflation. By and large monetary and fiscal policies that do not contribute to inflation are recognized as absolutely necessary if sustained progress is to be made in wrestling down inflation. A marked decline in the inflation rate is known to be a prerequisite to relatively low interest rates.
However, Mr. Speaker, it is also generally agreed that the speed and ease with which those policies will reduce demand, and consequently decrease inflationary pressures, are subject to many factors which are in turn extremely variable. As a rule, if all decision-makers in the field of economics were immediately and totally convinced of the need to pursue the policies I have just described, the path to a lower inflation rate and lower interest rates would be short and relatively smooth. But actually we will probably have to take a much rougher road. The strength of the demand for expenditures and credit may initially push interest rates still higher, especially if inflationary expectations persist, and all the more so if they are compelling. It is very important to stress, Mr. Speaker, that the fight against inflation cannot be waged by the government alone; to win the fight against inflation the efforts of each and every economic agent must be co-ordinated.
The government has an important part to play in directing the fiscal and monetary policies in order to draw up a consistent strategy to fight inflation. However, economic agents from the unions to the employers, the corporations and even the individuals must also be convinced of the need to fight inflation, and also, as economic agents, to take the necessary steps to ease inflationary pressures. Yet, the co-operation of all these agents of the economy is of vital importance and should complement, as I said, the efforts made by the government to contain rising production costs and inflation.
The Conservative spokesman has moved an amendment to the motion of the leader of the New Democratic Party. The purpose of his motion is to call on the government to introduce

May 21, 1981
Interest Rate Policy
measures designed to ease the burden of high interest rates on various sectors of our society, more specifically on farm producers, manufacturers, small businessmen and home owners, by subsidizing interest rates in some way. Mr. Speaker, I have just stated that these high interest rates were due to the over-all economic situation in Canada and in particular to the strong inflationary pressures that are presently at work. If, through government intervention we tried to cushion the negative effects of these interest rates, we would totally cancel the expected results, namely to reduce inflationary pressures and expectations. This would be tantamount to cancelling the desirable effects that are hoped for. I think, as I said earlier, that there is a price to pay and that all economic agents and all citizens must band together if we really want to improve the situation in the long run; that is, to actually reduce the inflation rate, inflationary pressures and, hence, interest rates. It is such an effort of co-ordination and commitment on the part of economic agents and all citizens that the Minister of Finance has asked us to make in his last budget when he created the conditions designed to reach this objective.
Mr. Speaker, in this difficult economic context, the government has tried, in keeping with its basic philosophy, to protect those who are hardest hit by these economic hardships and rising interest rates. It is a fact that the Progressive Conservative opposition made a big issue of the idea of retaining the indexing of exemptions in our tax structure before the October budget was brought down. It stressed the importance of going on indexing the personal income tax in the trying times we were going through. Well, the Minister of Finance acknowledged that it was appropriate to retain indexation with regard to personal income tax in order to alleviate the burden of low-income groups in a period of economic hardships, high interest rates and high inflation. The retention of income tax indexation meant that an additional $1.6 billion was left in the pockets of taxpayers. Furthermore, Mr. Speaker, large families are aware, for instance, that the indexing of family allowances has enabled them to be compensated in some measure for the hardships they experience as a result of these inflationary pressures and high interest rates.
There are other groups which are also seriously affected, namely, elderly people. The basic allowances paid to elderly people are also indexed. It is also well known that the government increased the guaranteed income supplement as soon as it returned to power, precisely because the economic situation was difficult and because it knew that those people were the most affected. Those guaranteed income supplements are also indexed.
Mr. Speaker, if we want lower interest rates, we must fight inflationary pressures together and reduce our inflationary expectations. Then the population may be sure that the government is determined to carry on the fight and to protect the most sorely tried in our society.


Mr. Bill Kempling (Burlington):: Mr. Speaker, I want to add something to this debate about the effects of high rates of interest, particularly on small businesses. I particularly choose that aspect because I have a personal connection with small business and know how it is affected.
Reviewing how the rates have jumped around in the last few months, I see a great danger that if this problem is not resolved, thousands of small businesses will not survive. When I speak of small businesses I include farmers and fishermen. We face the danger of their not surviving the high interest rates that are before us today.
A 19.06 per cent central bank rate is shocking, Mr. Speaker. It means that most small businessmen will probably be paying in the 25 per cent bracket for funds from chartered banks. In this situation most small businessmen find that they are bracketed as far as gross profit is concerned. They sell something and make a gross profit, but the price at which they sell is pretty well set by the marketplace. They are not in the position where they have an exclusive product with no competition so that they can set the price at will and make an unusual gain. That is not the situation. Their gross profit is bracketed.
In the meantime costs go up. Costs that they cannot control, such as Bell Canada, municipal taxes, provincial taxes, federal taxes, workmen's compensation, are increasing and gross profit gets slimmer and slimmer, until the profit available at the bottom line is equal to the rate of interest paid to the bank for the use of money. That is the position they are in today.
Some measures must be adopted to ease the pressure on the small business sector. A mechanism must be developed to follow venture and operating capital into small business. It should not be a single instrument such as the small business development bond, which is welcome relief but is too limited in application.
Who is the largest employer in Canada, Mr. Speaker? It is the small business sector. Who is the most stable employer in Canada? It is the small business operator. Who keeps his employees on when the market turns down? It is the small businessman. Why does he do this? Perhaps because he is a little more human and is closer to his workers. Another reason may be that he has to compete with the large employer and one of the levers he has is to keep his employees on when the market turns down. His employees know they have a steady job so that is one of his levers. He imparts a tremendous stability to the economy which is not imparted by any other entity. We must never forget those basic principles, Mr. Speaker.
The concept of the small business development bond is good, but the repayment terms should be extended to ten years. There should be a series of variations to the small business development bond to allow it to be used for refinancing small business.
May 21, 1981

Aside from that, we also require a venture capital instrument which will offer, say, a non-taxable return or an exemption from capital gains tax, or perhaps an instrument which can be completely written off against income tax by the lender when issued, with the tax payable on earnings from the repayment or when anything is received. There are a hundred variations to this; I have outlined only a few. Something like that, however, must be put in place. Regardless of the method chosen, a venture capital instrument must be found. Small business must be refinanced. Small business must be recapitalized and the problem must be attacked on an urgent basis.
The reality of running a small business is that you must deal with the frustration of research and development and the financing thereof. Good ideas are not restricted to large companies which have researchers, engineering department and R and D facilities funded by the corporate treasury and by public funds. There is a great deal of inventiveness and innovation in the small business community.
The tragedy small business faces is that when an R and D project is closed down, the guy who usually has to close it down is the comptroller. It is not for lack of ideas, lack of innovation, lack of market sense, product design or anything of that nature; it is lack of cash which causes a close down. That is a reality which must be brought home to the government opposite. I can hear these people who have the job of closing down R and D projects saying the prime rate has just gone through the 19 per cent level and the bank is now charging 25 per cent, so we cannot afford to keep the R and D venture going. I have been there and I know all about it.
R and D projects have to be closed down because there are the payrolls to meet or accounts payable have to be paid or whatever happens to take precedence over R and D. Those are the situations we face now that R and D projects will be closed down all across the country. Even in my own business these projects have been closed down. I ordered that done today as soon as I heard what the rate was. Small businessmen just cannot afford to keep projects going with rates this high. As a result, all of those good ideas are gone from the system while the situation continues the way it is.
I know that it is very easy to criticize in these debates. We are told by members opposite that all we do is criticize, that we never come up with any solutions. However, I have some solutions to suggest. I have already suggested that the small business development bond be extended, that it be allowed to be used for recapitalizing a small business, which I think is a good thing. I do not see that it will cost all that much. I have also suggested that repayment terms be extended to ten years.
However, with respect to research and development, I propose that we put in place a registered research and development fund for small business. Small business should be allowed to contribute a portion of their tax payable to this fund, somewhat similar to the way an RRSP works and so on. In other words, out of the tax payable a businessman could take a sum of money, put it on one side into a research and development fund, and when that fund was at its optimum he could
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begin his research and development project by having enough money to complete it.
It think that is a good idea, it is workable and it is simple. It is not something that will call for a government subsidy, such as programs worth $250 million or $300 million. It would only affect those who would want to get into this sort of venture. This is a program which would allow many small companies to get on with their research projects and so help us down the road with future employment.
By a simple amendment to the Small Business Loans Act we could allow money to be used to complete a research and development project, because none of these things is complete in itself. A business might get going on something and suddenly find that another $25,000, $30,000 or $100,000 is needed to complete it. An amendment such as that would certainly be of benefit to small business.
The same act could be amended to allow for the registering and purchasing of a patent, a trademark, a registered design or even for the purchase of existing technology. I know it is popular today in business to use the buzz words "high technology", "innovative designs", and all that sort of thing, but most people employed in Canada today and who will be employed in the foreseeable future will be using reasonably common technology. There will be things such as the Telidon deal, announced either last night or today, which by 1985 or 1986 will create 10,000 new jobs. That is fine, but I say 200,000 jobs could be created in the small business sector by allowing some mechanism to get research and development projects going. As I said, if we could amend the Small Business Loans Act to allow people to purchase a patent, register a patent, a trademark, a registered design or existing technology, tools, jigs, fixtures, methods and so on, that would be of tremendous help. I am talking about low and common technology which is used every day. This may hurt some of the upwardly mobile people who like to bounce from one high technology cloud to another, but the reality is that the jobs are in small business at the present time. Much imported machinery comes into Canada that could be made in Canada. But what it comes down to is that old devil money and the high interest rates we have to pay if we are going to get on with projects like that.
Each time we talk about something the government should do involving money, each time members talk about high inflation or high interest rates and how these things are hurting small business or the consumer, there is a cry from the government side that we are asking for subsidies that will only add to the deficit, fuel inflation further and make things worse than they are. I have put forward three valid workable solutions that will help set straight some of the problems faced by small business. I challenge the government to take up those ideas and put them in the next budget. The government should put them into operation. They could be modified. The important thing is the thought. In the long run these proposals will pay dividends for business, the labour force and finally for the government.

May 21, 1981
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I shall stop here because I know there are other hon. members who want to speak. I like to be constructive in this type of debate. I know we are going through a very difficult time and that we have to find solutions. If we do not, we will have an awful mess in Canada. Our employment rate will zoom to double what it is if we do not solve these problems.
I put these ideas forward in the hope that the government will take them seriously and consider them. I will be pleased to sit down with government members to expand on these ideas and give any other help I can in this regard to assist in putting these things in place, because I know they will pay dividends down the road.


John Leslie Evans: Mr. Speaker, at the outset I want to commend the chief opposition whip for the very constructive ideas he put forward, especially with regard to research and development. They are ideas he and I have discussed before. I want to assure him that I am certainly looking very carefully at what he has suggested. Hopefully, something can be done to respond to the concerns he so rightfully raised, especially in the area of research and development. We are all aware of the problem. He has some very interesting proposals that deserve serious consideration.
With regard to the motion before the House dealing with the interest rate situation facing this country, in the last week we have had at least two opportunities to discuss this question and the causes of the difficulties we now face. We heard a great deal of opposition comment with regard to policies the government should adopt in trying to respond to the situation we face.
My opportunity to discuss the subject today will be used to indicate why those alternatives that have been put forward thus far in this debate and on the previous two opposition days are simply not workable and why the current government policy is the appropriate policy. It is the only policy that holds any hope of eliminating the problem we face and not exacerbating the problem. It does very little good to discuss the concept of interest rates or basic economic concepts using the tool of rhetoric as opposed to the tool of logic and understanding and the basic economic forces that face this country today, trying to respond to those basic economic forces with policies that deal with the problem and not just the symptoms.
As hon. members know, we are facing a very difficult situation. As the Minister of Finance (Mr. MacEachen) indicated in his May 6 speech, if you analyse the last five to six months, inflation is running somewhere in the range to 13Vi to 14 per cent. That is an unacceptably high rate of inflation. That factor alone is the prime driving force behind high interest rates.
There are two other factors that I will mention that are exacerbating the problem and creating additional upward pressures on interest rates. The main driving force behind high interest rates is the high rate of inflation and the expectation that the inflation rate will either continue at these high levels
or in fact get worse. It is those expectations we have to deal with in addition to the fundamental causes that are driving up that rate of inflation.
If we look at the most recent month, as the Minister of Finance indicated the other day in the House during question period, there was a reduction in the rate of increase in inflation. In the first quarter of this year, we had monthly inflation factors of 1.3 per cent, 1 per cent and 1.3 per cent. In the month of April we saw a decline to .7 per cent which, if you annualize it, will be in the range of 8.7 per cent. That could be a temporary anomaly. We certainly hope not. We hope it is a sign that finally inflationary pressures are being brought under control. If that is the case, we will see lower inflation and lower interest rates. It is too early to say whether that is the establishment of a long-term trend. We certainly know it is a hopeful light.
In addition to the inflation factor that is so very important in establishing the level of today's interest rates, there are two other factors. The first is the fact that the federal government and Bank of Canada are into a policy that, in my opinion, is the only policy that promises any hope of success in dealing with inflation. It is the only policy that I am convinced will work, and that is to bring the growth rate in purchasing power more into line with the growth rate in real output in the economy.
The Bank of Canada recently reduced its target for the growth rate of the money supply, defined, as the hon. member for Calgary Centre (Mr. Andre) indicated, as Ml, into the 4 to 8 per cent range. In fact, the bank is holding the money supply growth in that range. In so doing, the bank is reducing the relative growth rate in money below the level of inflation. As a result, the relative effect is to create a reduction in the supply of purchasing power in the system below that which is demanded, even at the current inflation rate, and even at stable demand levels.
On the other hand, we have a fire of expectations in the system, as I indicated last week and as the minister also indicated, which has led to an increase in the demand for credit to buy now before prices go higher later, up some 20 per cent in April. Therefore, we have two forces operating here, the constraint on the supply of credit by the central bank, the government, at the same time as a major increase in the demand for credit. These two forces are going to cause an escalation in the real rate of interest above inflation. It is going to cause that gap between inflation and interest rates to widen.
The final factor we are faced with, one that is also very important, is the level of interest rates in the United States. The hon. member for Oshawa (Mr. Broadbent) stated that the federal government has, first, a high interest rate policy and, second, that it is a made-in-Washington interest rate policy. Neither statement is true. The policy of the government is not to have high interest rates. The policy is to deal with the fundamental factors that are causing inflation, to bring down the rate of inflation, and part of the transition we are going through is temporarily higher interest rates than would normally be the case.
May 21, 1981

One of the factors, not a major factor, involved in those high interest rates is the fact that interest rates are very high in the United States. All of the dynamics involved in flows between Canada and the United States, requiring that our rates be in very close relation to their rates, means that when rates go up in the United States there is additional upward pressure on our rates to stay in line. Therefore, there are three major factors or forces driving up interest rates in this country today, and I have just outlined them.
If you are going to deal with the problem of high interest rates, there is no alternative but to deal with the factors that are causing them. To say that the federal government should reduce interest rates is to say nothing. Neither the federal government nor any other government can step forward and with a wave of a magic wand say that interest rates tomorrow will be 5 percentage points lower than they are today.


John Edward Broadbent: That is precisely what the Bank of Canada does.


John Leslie Evans: It cannot be done, and it is not what the Bank of Canada does or is doing. If the hon. member for Oshawa believes that, then he is more misguided than I thought.
With regard to the U.S.-Canada rate situation, the hon. member for Oshawa in his opening comments correctly noted that if we let our interest rates fall appreciably below those in the United States there will be an outflow of capital from Canada which will put downward pressure on the exchange rate. If we do not allow the exchange rate to go down it will put upward pressure on interest rates. So that flow of capital is a factor with which we have to deal.
The hon. member for Oshawa indicates what we could do, and that is put on exchange controls. There are some definite problems associated with exchange controls and I will deal with those in a minute.
Let me ask this question. If we were to have a drop in the dollar and we were to say that interest rates are not going to be related to U.S. rates, and if they go up we will allow the outflows to take place and allow the dollar to drop, what would be the effect of that? Immediately we would have a major inflationary surge caused by the drop in the value of our currency, and the effect of that drop on prices of all the goods we import, food, and at the moment energy and a number of fundamental commodities, would be that they would go up automatically.
People say yes, but that would mean foreign goods would be less competitive and as a result our manufacturers would be able to move in and produce those things. The fact is that in the short term-and by "short term" 1 mean five years-we are not going to be in a position to replace in any major sense imported oil, and we are not ever going to be in a position to replace fresh fruits and vegetables imported during the winter. These things cannot be replaced in the short term, and in the short term we are not going to replace the importation of machinery or equipment that we bring in which is necessary
Interest Rate Policy
for the development of the tar sands and other natural resources in Canada. Those things cannot be replaced in the short term. Over the longer term perhaps that could be done.
My contention here is that if you are talking about a major investment expenditure the exchange rate is not going to be the determining factor that causes a businessman to decide to go into a line of business, because in a flexible exchange rate world exchange rates change. If the only reason you are investing in Canada to produce machinery and equipment is because the exchange rate in Canada happens to be 20 cents below the equivalent in the United States, then you are basing your profitability on a factor that is totally unpredictable and one which could be wiped out tomorrow. So that is not a major factor in investment decision-making; there are many other factors.
We are not going to get the kind of import replacement some members believe would occur. The question is, would you get a major stimulus in demand for domestic products and would the prices for those domestic products produced here in Canada be unaffected by the increase in the competitive position and the decrease in the value of the dollar? The answer to that is that if those products are exportable then we are going to have upward pressure on the prices of those commodities, just the same as you have upward pressure on the prices of imports. Because a manufacturer who can sell those goods outside the country at much higher prices will raise the price in Canada as well. You get upward pressure on prices of both imported products and products that are exportable but are made here in Canada. You must have some means of offsetting that effect.
The hon. member for Oshawa has put forward the possibility of exchange controls. It is rather interesting to note that others have suggested this. There was a commentary in a recent editorial in the Regina Leader-Post. It is not an eastern paper, not a Liberal paper. It is the Regina Leader-Post and it talks about this particular issue.


John Edward Broadbent: It is not an NDP paper.


An hon. Member:: It sure isn't a Conservative paper.


John Leslie Evans: In any case, it clearly indicates that the impact of this particular policy-


John Edward Broadbent: We just had a vote, John, and it is a Liberal paper.


John Leslie Evans: The hon. member for Oshawa says it is a Liberal paper. If it is, thank you very much.


An hon. Member:: It is the last Liberal on the prairies.


John Leslie Evans: It states:
Among the possible cures for the high interest rate dilemma is exchange controls, intended to insulate Canada's rates from those abroad.
Then it goes on to say in relation to the possibility of controlling the outflow of oil, for example, which was just

May 21, 1981
Interest Rate Policy
recommended by Premier Blakeney who suggested you could regulate the outflows of oil:
But controlling the flow of oil through a finite number of cross-border pipelines is surely a lot easier than stemming an almost infinite number of currency channels, whether they involve stashing money in suitcases or funnelling it via sophisticated corporate bookkeeping manoeuvres.
In a country as large and heavily dependent upon foreign trade as Canada, it is hard to see exchange controls accomplishing much more than creating a burgeoning bureaucracy, black markets and other assorted economic distortions.
That is perhaps the best, most concise statement of the major problems this country would face with a policy of exchange controls as any statement I have heard so far to date.
We could go on with this. The policies of the government have been recently disputed by Mr. Walter Gordon, the exfinance minister, for whom I have a great deal of personal respect but with whom I disagree rather strongly on his economic philosophy.
I think we can deal with the particular set of arguments put forward by the Canadian Institute for Economic Policy rather quickly. Its commentary starts off on the basis of a totally erroneous set of hypotheses about the Canadian economy. If you read from the institute's own document you will note it is said that we have interest rates at record high levels, which is true. It then goes on to say that we have a slow rate of growth in the economy. In the last quarter of 1980 the economy grew at an annualized rate of 8 per cent. In the first quarter of 1981 it grew at an annualized rate of 4 per cent to 6 per cent. That is not slow growth by any standards.
The institute goes on to say we are currently running at very high levels of unemployment. We now have the lowest level of unemployment since 1976, just 7 per cent. We would like to see the unemployment rate go even lower, but we are talking about the lowest level it has been at in the last five years. The Canadian Institute for Economic Policy says we have to change the policy because the government's economic policy that is in place is causing stagnation of growth, which is not true, and excessively high levels of unemployment, which is not true. Based upon false premises such as this what good can come from considering much further the analysis by the Canadian Institute for Economic Policy? It has been known to be wrong often in the past and I am afraid its trend has not changed.
We have heard much from the hon. member for Oshawa with regard to the question of bankruptcies as well. None of us in this House wants to see any firm face bankruptcy, but I think the hon. member distorted some of the figures he quoted. He said that bankruptcies were up 70 per cent in the farming community. We had a meeting the other morning with the Ontario Federation of Agriculture, and at that meeting the Ontario Federation of Agriculture gave us a series of documents. One of the documents dealt with farm bankruptcies in Ontario during the first quarter of 1981. I agree that the figure I will quote does represent an increase of 70 per cent over last year, but there are 75,000 farms in Ontario. There were 46 bankruptcies in Ontario in the first quarter of this
year compared with 26 last year. That does not sound to me like rampant bankruptcies. There are 75,000 farms, as I say.
In closing, I would like to refer to bankruptcies in the business community. In April bankruptcies were 3.9 per cent higher than they were a year ago in April. That does not sound to me like rampant increases in bankruptcies.
The point is that if we are going to deal with economic issues, I think we have to deal with the fundamentals of the problems we are faced with, and we have to deal with the issues based upon facts. It does no good to distort the facts and to provide this House with rhetoric, because that does nothing to help the government find the solutions all Canadians want to see.


Mrs. Margaret Mitchell (Vancouver East):: Mr. Speaker, I am pleased to join my colleagues in the House in speaking about this very important issue today, particularly as it affects the most critical social and economic problem in Canada, the problem of Canada's housing crisis, which affects people of all income groups and in every province.
For years the Liberals have treated housing not as a basic need, which we believe it is, but as a tool to pump up or slow down the economy. We hear the minister talking constantly about market needs coming before the needs of the Canadian people. As a result, more than ever before home owners and tenants are the victims of a lack of positive housing policy. And, of course, the problems have become much greater because of the high interest rate policy of the government.
Today it is almost impossible to believe that we can still be shocked by changes in interest rates, but today interest rates are up to over 18.5 per cent, which must surely shock most Canadians very severely. As my leader said earlier, according to our calculations this means that only those earning over $47,000 a year will be able to purchase new homes. Can hon. members believe it?
Ninety per cent of Canadian families will be unable to purchase homes, if they are not the lucky ones who have homes already. Who earns over $47,000 a year? Certainly not very many members of Parliament, probably a few highly paid professionals, some corporate bosses, a few movie stars if we happen to have them in Canada, and perhaps one or two football players.


Mr. Mayer:: Hockey players.


John Edward Broadbent: And the presidents of banks.


Margaret Anne Mitchell: And the presidents of banks. These are the only people who can afford new houses today.


William James Kempling: Union leaders.


Margaret Anne Mitchell: Not union people. I can give some facts on that.


William James Kempling: How much does Dennis McDermott make?
May 21, 1981


Margaret Anne Mitchell: The economic policy of the government is supposedly one of restraint to cool down inflation. As we know, that has resulted in a continuous spiral of interest rates, and there is no restraint at all in view. The latest mortgage interest rates mean that instead of forcing down the price of housing there will certainly be an escalation of costs for both tenants and home owners. We know that most families who have homes and have to renew their mortgages face a crisis simply because they cannot find another $400 up to $700, depending on their mortgage arrangements, per month. The cost of food is increasing every month. There are increases in the cost of fuel and transportation, not to mention increased taxes. How can people possibly find these amounts of money on family budgets? Their only choice will be to sell their homes or face foreclosure. This is exactly what has happened. As we have said before in the House, foreclosures are at an all-time high and have been for the past year. As my leader stated the other day, approximately 1,000 home owners a month are being forced to abandon their homes. This is according to the economic review of the Department of Finance to which my leader referred today. We face a very desperate situation and have for the past year.
However, if we think we have had a bad time this year, just wait until next year. Next year is the year when there will be a record number of short-term mortgages coming due. A lot of five-year mortgages were taken out five years ago in the hope that mortgage interest rates would come down. Many three-year mortgages were taken out three years ago. Very shortsighted but desperate people took out one-year mortgages last year hoping against hope that they would be able to beat the system this year. All these mortgages will be coming due next year. If ever there was a time for government planning, this is the time, but we know that the minister responsible for CMHC has said that we will stand pat, we will not do anything new and we will not do anything to protect the people of Canada who are losing their homes. The Minister of Finance (Mr. MacEachen), supported by the Prime Minister (Mr. Trudeau), has promised that there will be no changes in economic policy, so we can expect that mortgage interest rates will go even higher.
Whenever we speak about mortgage interest rates, we tend to focus on home owners and the effects they face whenever interest rates go up. I would like to stress, however, that tenants in most cities are in a much greater plight than most home owners. Those of us who own homes or have some equity in homes at least have some security for the future. We have something to show for the money we have to pay. Tenants in most cities spend all of their incomes on the high cost of living. They are unable to save for homes. Many of them, at least in my city of Vancouver-thousands of them, as a matter of fact-are paying over 60 per cent of their incomes on rent, yet our minister suggests removing rent control.
Young people-and I am sure we all know many of them- are simply putting off indefinitely or forever having families. How can they have families when they cannot get out of one-bedroom suites and cannot really afford the cost of those?
Interest Rate Policy
Those who have been saving for houses will be disappointed again unless they have incomes, as I said, of well over $47,000. Who has those incomes? The only ones who have any hope at all-and these are the smart ones, in my opinion-are the people who have had the foresight to try to get their names on co-op housing waiting lists. Let us hope there will be some increases in funding for co-op housing, since that is about the only affordable housing for young people or, for that matter, for anyone today.
As a direct result of the economic policy of this government, and particularly as it affects home owners and tenants, I maintain that we have a two-class society, and the disparities are becoming greater every time interest rates go up. Those who are lucky enough to own their homes, even though they may be modest homes costing a few thousand dollars 20 years ago, are the comfortable elite compared with young people today. This critical situation has come about directly as a result of federal economic policy-and within an astonishingly short period of time, if we look back over the last five years.
High interest rates have not cooled down inflation. The price of housing has not cooled, it is at boiling point, and so are Canadians. It is certainly no wonder at all that Canadians are demanding higher wages just to keep food on the table. Excessively high interest rates have depressed housing starts across Canada as well, discouraged the construction particularly of rental housing despite that famous MURB program. In B.C. it so happens housing starts are up and we do not have unemployment in the construction field, but I can say most of our trades people are moving to Alberta because they cannot afford to own a house in Vancouver. Potentiel home buyers are being kept out of the housing market and those facing renewal are in an impossible situation.
I would mention briefly that housing starts are down in most provinces. Perhaps hon. members would be interested in a comparison of house prices across Canada. Here again we see a direct relationship to high interest rates. Vancouver is in a crisis situation and the disease is spreading to Ontario, so let us hope we are now going to get some action.
If we compare prices in Toronto, Montreal and Vancouver over the last quarter we see that in Toronto house prices for an average family home have gone up from $76,000 to $79,000, an increase of 4.2 per cent. In Montreal, prices have increased from $51,000 to just over $52,000; and I am told that the fastest increases are coming in Montreal and that over the past year increases have been much greater than that. In Vancouver the average price has increased from $133,000 to $ 156,521, an increase of 17.6 per cent. So we can see that the average increase in housing prices across Canada is over 12.3 per cent in the last three months, and this jump and the cutback in housing construction are directly related to these completely irrational economic policies.
I would like to mention one bright light on the horizon, and let us hope that the federal government is going to take notice and expand this program. Nova Scotia announced yesterday a

May 21, 1981
Interest Rate Policy
long-term mortgage loan assistance program. We know that in four or five other provinces similiar programs are starting up, but this is a federal responsibility, Mr. Speaker. Provinces, particularly one of our poorer provinces such as Nova Scotia, should not have to be forced to do this on their own.
Housing starts, as I say, are down across Canada, and in Manitoba they are the lowest they have been in 14 years. There have been only 35,000 new housing starts in Quebec, down 6,000 from last year. We know that St. John's, Newfoundland is another crisis area second only to Vancouver. Vacancy rates there dropped from 20 per cent in 1970 to minus 1 per cent in 1980. And we know that with the influx of people related to the oil exploration industry there is a very serious problem coming. St. John's has experienced a 22 per cent increase in housing prices.
I want to mention the situation in British Columbia again as a warning to other provinces. This week we had a briefing from CMHC officials from that area. One third of our households are tenants and to purchase a home one must have an income well over $60,000 a year. Children have to stay with their parents and work to help pay for a house, and only those who have parents or fairy godfathers have a chance of getting a house. Tenants in new housing units are paying well over $650 a month rent. Families are doubled up and there is desperate overcrowding as far as young people and students are concerned. As I said before, over 33,000 tenants pay more than 50 per cent of their income on shelter, and these are mainly senior citizens, the single parent families and handicapped persons who are living in dumps because they cannot afford anything else even if it were available.
Part of the problem is the influx of 56,000 persons into B.C. last year, 17,000 of whom were immigrants. There is an increase in demand for an estimated 25,000 more housing units, yet the government is doing nothing to help the situation. Their high interest rate policies are creating an impasse in the rental housing field and I would think also from the point of view of social housing, although we appreciate very much the non-profit mortgage write-down policy of the federal government. This is one of the best policies going but it is not enough. The cost to the government of those high interest rates for that program is another problem we must face.
We do not want to shut the doors to beautiful B.C.; we want and have a right to expect government help to increase the stock of affordable housing, as does everyone in Canada. So what are we going to do about this, Mr. Speaker? We have mentioned repeatedly a number of very positive programs that the government, if it had the will and it cared about people rather than the market, could institute tomorrow. My leader mentioned several of them earlier today. We must have a made in Canada mortgage rate as well as a general interest rate policy, even if it means that the dollar goes down or exchange controls are needed. We must have a sensible and practical mortgage assistance program through the banks, which make several millions of dollars in profits every time the interest rate goes up one point, and also through the government, particularly for family starter homes. Nova Scotia is an
example we have been advocating for some time, with low interest mortgages, preferably over a 25-year period, for families earning under $30,000. This should bring down the cost of shelter to at least 28 per cent of income. This is a federal responsibility and we have the money there to do it; we have the money that the banks have, we have the Bank Act and we should get going.
We also want, Mr. Speaker, CMHC to return to a leadership role in the field of housing. It is time they went back to direct lending for long-term mortgages.


Some hon. Members:: Hear, hear!


Margaret Anne Mitchell: We want CMHC and the federal government, in co-operation with other levels of government, to get back into land banking, assist municipalities in bringing down the cost of land and protect public land for the use of ordinary people for affordable housing. This is most urgent. We want an increase in the stock of affordable housing and the only way to do that in today's circumstances is by government write down of mortgages for non-profit and co-operative housing and for sensible family-oriented, small units of public housing.
We also need to have increased government programs to rehabilitate older homes. This is the only kind of accommodation most people can afford and it improves our cities and makes use of available resources. We should certainly have more innovative housing programs.
Let us look at what the Atlantic provinces did, but which they cannot do now because of mortgage interest rates, in regard to self-help programs in building co-operatives, shell housing, putting one's own labour into one's home, building a few rooms and adding more later when the kids come along. This government is discouraging that kind of thing.
My hon. colleague, the hon. member for Winnipeg North Centre (Mr. Knowles) tells me that I still have two minutes left-a most unusual situation.
I would like to elaborate and give some examples of some of the things people can do themselves if they have some sort of government assistance, particularly the non-profit sector getting into affordable housing. In my riding of Vancouver East groups in the Chinese community have been organized for over ten years which have not only rehabilitated the older homes in the community but which have used 25-foot inner city lots on which to construct two or three housing units. This is innovative and attractive housing which people can afford. In some cases the land is leased and in others it is strata title housing which people can own. There are other groups which are building co-op and other forms of rental housing. We need more housing which is accessible to the handicapped, and there is no better year in which to construct that type of housing than in the Year of the Handicapped.
I will conclude at this point, Mr. Speaker. I repeat, I support the motion which my party has put forward. We must have a made-in-Canada interest rate policy. We need it for the
May 21, 1981

number one economic and social problem in Canada- housing.


Some hon. Members:: Hear, hear!


Mr. Pierre  Gimai@: Mr. Speaker, once again and for the second week in a row, we are having a debate in this House on the economic effects of high interest rates in North America, and 1 should even say the entire world. 1 agree with my hon. colleagues opposite that the present interest rate is far from ideal and obviously affects people throughout our country. I have to agree that, as far as economic growth and people's ability to pay are concerned, the interest rate has a negative impact on the wealth and purchasing power of individuals. However, we must recognize, Mr. Speaker, that economic conditions in the western world have changed enormously since 1973. One major reason was the increase in energy and oil prices which on two occasions caused mini economic crises in these countries and required extraordinary imagination on the part of the government to save individual consumers undue hardship because the situation or price increases were hard to justify as they were based simply on the oil supplying countries' desire to acquire more wealth.
Of course, the opposition parties now rise to blame the government for breaking its promise to protect Canadians who must bear the brunt of high interest rates. It is easy for the opposition parties to make such an accusation now, especially as they conveniently forget several things when they talk about the situation. First, they claim the government did not make good its commitment to protect those people who suffer the most from those high interest rates. This is completely false. I can very easily prove it by mentioning some policies which specifically aim at protecting those in the lower income brackets. Of course, interest rates are one of the factors which can cause poverty, but it is not the only one. Is it not a fact that Canadians who are now paying higher interest rates are also paying only $1.80 or so for a gallon of oil compared with about $5 in every other industrialized country? I heard a member of the opposition say earlier that co-operatives could no longer build in Canada. I find this extremely surprising because the Canada Housing and Mortgage Corporation now lends money to co-operatives at an interest rate of 2 per cent for housing projects. I find it extremely difficult to explain why they cannot build when the interest rate is 2 per cent; if they cannot do it now they never will.
As far as I can see, the proposal made by the opposition party is just about the same song we heard from the official opposition last week. Members opposite would rather have lower interest rates in Canada. I would too, of course. But in what context? If it is in a context where the world interest rate hovers around 10 per cent, then the Canadian interest rate should also be 10 per cent for the well-being of all of us, but if conditions are such that the U.S. prime rate nudges 20 per
Interest Rate Policy
cent, what is the meaning of the position taken today by the opposition parties? It is very easy to define. It means that the dollar is weakening. It means that the value of our Canadian dollar is going down, so what does that imply? It implies that the price of all imported goods is going up. The price of oranges is going up, the price of coffee is going up, the price of sugar is going up, the price of energy is going up, the price of oil is going up, the price of cars is going up, the price of car parts is going up, the price of each and every consumer goods will go up tomorrow morning.
So who is undergoing the effects of all that? Mr. Speaker, I agree that it is important to stand up in this House and speak for those who can borrow because, thanks to everything that has been done in our country over the past 20 years, Canada ranks first in terms of single-family dwellings per capita. Canada is where residents own the largest number of goods, Canada is where people can borrow more than anywhere else, because no other country offers better borrowing opportunities than Canada does.
Of course, any member who rises in this House and attempts to defend those who can borrow is making friends with a great many people. But one thing that should not be forgotten is that there are people in Canada who cannot borrow even when the interest rate is 5 per cent. I am referring to Canadians who draw unemployment insurance benefits, people who depend on social welfare to survive, the elderly in many cases and widows in many others who are facing problems. There is one very simple aspect which we ought to keep in mind, namely that in any money-lending system, be it Canadian, Russian or American, no person can borrow unless he or she already has money or property. If a person does not have anything there is no way he or she can borrow even when the interest rate stands at 5 per cent.
When I hear our so-called socialist party lecture this House on the need to bring down interest rates, which would necessarily lead to a weaker dollar and force those people who have barely enough money or an income hardly decent enough to safeguard their pride, to pay more for the bare necessities of life, for sugar, salt and coffee, as we often say, then I really wonder what kind of socialism they profess. I have great difficulty in-


Mr. Nystrom:: Mitterrand!


Mr. Pierre  Gimai@: -Mitterrand, indeed! That party seems to think that we would be better off with Russian style policies, even though Russia has trouble feeding its 300 million people spread out over a huge landmass. That is the kind of socialism you are advocating. No, Mr. Speaker, the New Democratic Party in this motion of theirs is simply asking us to help multinationals and big corporations borrow still more money.
As a government we are naturally much concerned with the fact that the medium and small businessman, the farmers, the home owners have to pay more to borrow money. But was it

May 21, 1981
Interest Rate Policy
not a member of this government who announced today that pork producers would receive substantial amounts of money to help them meet their costs? This government has taken all sorts of measures to offset these high interest rates and thus to aid those who need help the most and not the multinationals whose case the hon. member for Oshawa (Mr. Broadbent) is now arguing.
I remember that last year I called that party a non-development party and I still hold that to be so. I think that the reason why the leader of the New Democratic Party is paying so much attention to underdeveloped countries is that he is realizing that the policies he wants to apply here are already being applied over there. Maybe that is his basic problem. Because above all, this so-called socialist party has overlooked a very important segment of our population which belongs to the future of this country, and I am referring to our young people who do not own homes, or cars, who often do not have any money in the bank, who cannot borrow, who have to face serious difficulties. These socialists have forgotten that these young people need to have sugar, bread, milk, and butter. They need imported oranges, imported salt and many imported goods for the daily necessities of life. If the Canadian dollar loses value, who will bear the brunt? Young people, the handicapped and people on welfare. If this is what members of the New Democratic Party want, let them say so. Let them say publicly to all Canadians: "We want to help the multinationals, the borrowers, we don't want to help those people who cannot afford to borrow. We don't care if interest rates are higher, in other words, if the Canadian dollar is weaker and prices higher. Such is not our concern.
Well, I for one, say as a member of a party that for years has been defining itself as the party of economic liberalism, as the party of individual liberties and defence of the individual, I say that the individual who cannot afford to borrow deserves more help than the one that can. That is essential to the future of our country because if our young people who are now confronted with unemployment-related problems cannot afford or have to pay too high a price for essentials, we are going to experience major problems in this country such as some other countries are presently going through.
In the same line of thought, I think that those who would like to make Canadians believe this government and preceding Liberal governments have not tried to help Canadian workers improve their lot, are simply distorting the facts and misleading the Canadian people. What is the result of all the work that has been accomplished? As I was saying, in this country people own more goods than anywhere else in the world. Some Canadians now reap the benefits of our forefathers' toil. We the young people, we who are 30 years old and over, 30 to 55 or even 60 years old can enjoy many luxuries. We own houses, cars, summer cottages, TV sets. Many of us take trips, own expensive fur coats and jewelry. Not all countries in the world
have been able to provide so much for their people. Granted, today we have to make sacrifices.
I heard the hon. member for Calgary Centre (Mr. Andre) suggest a miracle solution, an amendment. I worked it out quickly, Mr. Speaker, and came to the conclusion that the amendment of the hon. member would cost $3 billion to the Canadian taxpayers who would be affected. Considering the fact that this extraordinary suggestion comes from the party that has been condemning the government for a whole year now for spending too much, for wanting to spend too much, that has been asking the government to cut down expenditures, I feel that this is asking for more inflation; this amendment would dig into everyone's pocket directly, because even the person who receives unemployment insurance benefits pays income tax. In other words, everyone is affected.
Mr. Speaker, personally, I do not believe in miracle solutions. However, there are solutions and this government applies them. Is it not in Canada that people pay less for energy? Yes, indeed, it is. Is it not in Canada that people have access to more goods? Yes, indeed. Are not Canadians the ones who travel the most around the world? Yes, again. In that context, how can anyone accuse the government of not doing its job? Is it not in Canada that the gross national product has increased by 8 per cent over the last three months, and that on a yearly basis? Yes, we are talking again of Canada. Tell me of another country which does as much, even a socialist country such as Yugoslavia, the U.S.S.R. or any other, whose broad general policies may be based on state control. There is not one. Is it not Canada with a population of 26 million which feeds hundred millions of people throughout the world? Yes, it is Canada. Is it not a fact that the wheat produced by western farmers who seem now to have difficulty borrowing money is sold five years in advance? Is it not true? Yes it is. Those are the parties, Mr. Speaker, which come up with miracle answers. Where would those miracle answers take us? Nowhere. Another $3 billion in loans or a dollar dropping to 70 or 75 cents, this is left to one's imagination. And who will foot the bill? The small wage-earner who is earning nothing or next to nothing. The government in power has assumed its responsibilities. It has reduced unemployment by 0.7 per cent and increased the gross national product from 4 to 6 per cent over last year. What more can we ask? I think that the government is doing its duty and those who are blaming it are doing so because they lack the necessary imagination to bring positive input into this debate to help Canadians.
In conclusion, Mr. Speaker, there is one fact that I should like to emphasize: the miracle workers in this country have never built anything, contrary to the patient men who have taken advantage of economic circumstances to liberate our people and help those who needed help. In this context, the government of Canada is indeed assuming its responsibilities when it asks Canadians who can afford to borrow to pay a little more for a year or two perhaps while protecting those in
May 21, 1981

our society who need protection. You must protect your children and your parents who supported you for a great many years, because they will be facing difficult times for awhile, by paying interest rates which are a little higher, but do not let our dollar deteriorate completely; do not ask us to lower the interest rates you pay because our dollar would collapse and all those essential goods we are importing would cost more.
In that context, Mr. Speaker, this is what I say to my fellow Canadians and especially to those in my riding of Lac-Saint-Jean: Make an effort for a year, maybe a little less, maybe a little more, and pay high interest rates. Make this effort because the President of the United States, who was received with very loud applause by the official opposition for over two hours when he visited us some time ago-such loud applause in fact that we, on the government side, were wondering why-has decided to raise interest rates in the United States to 20 per cent. This is a direct attack against the Canadian dollar. We are going to support the Canadian dollar and I ask my fellow Canadians to do likewise: help the young, work for the future of our country, and everything will be back to normal within the next few months, the unemployment rate will come down and inflation which is so hard on the low wage earners will not hurt quite as much. Thank you, Mr. Speaker; I hope opposition members will see the light and understand that beyond home owners, lands, houses and corporations, there are in Canada people who have just the bare essentials to live on.
[DOT]	(1740)


Charles James Mayer: Mr. Speaker, I listened with interest to my colleague, the hon. member for Lac-Saint-Jean (Mr. Gimai'el), and I had to agree with him when he started his speech. I want to congratulate him, as well, on at least having the decency to admit that the 20 per cent interest rates in this country are causing problems and that it is not a!! milk and honey. However, as he progressed in his speech, I think he got lost in some of his rhetoric. At the end he said that we are going to help our young people. I do not see how we are going to help our young people by having interest rates at such prohibitive levels. First of all, it will drive them out of business. We all know that the people who are hurt the most are those who are the most vulnerable in business and, by and large, those are new and young Canadians trying to get started in business and those who have recently gone into business and borrowed money at lower rates. So when he talks about helping young people and at the same time defends 20 per cent interest rates, he is contradicting himself somewhat.
[DOT]	(1750)
I agree with the hon. member for Vancouver East (Mrs. Mitchell) who said that we have only seen the tip of the iceberg. If these interest rates continue, a lot of people who have to renew mortgages in the coming year at prohibitively
Interest Rate Policy
high interest rates, will lose their equity in their home and will be out on the street.
If the hon. member opposite intends to support the young people in his constituency as well as those in the rest of the country, he should prevail upon the government of which he is a member to pursue policies to bring down interest rates. The young people he is concerned about would then have the chance to participate in the development of this country which has so many opportunities to offer.
In the last month all of us had an opportunity to spend time in our constituencies. One of the reasons for having this time is to find out from our constituents what their concerns and problems are. Those of us who have been in our constituencies know that interest rates are the greatest problem facing Canadians today. They realize that there are no easy solutions to the problem. Most members on this side have presented some short-term and long-term solutions to the government and have suggested methods to alleviate the problem, but none of these have been acted upon.
Our constituents are justifiably concerned about high interest rates. While most people realize that there are no easy solutions, they do not see any benefit coming from the situation. It is one thing to go through a trying time in a business, to cut back on expectations and the standard of living and still face the possibility of going out of business if there is the prospect of better days ahead, but that is not the situation today. The government does not offer any long-range policies or solutions.
I should like to list four or five things that the government could do that would bring about lower interest rates and a more productive economy within two or three years. These have been stated many times before but I think they need to be stated again.
First of all, there should be a genuine willingness on the part of the government to negotiate with the provinces which produce oil and gas so that an agreement can be reached that will make Canada self-sufficient. This would create jobs and generate economic activity in the country. It would also stop the massive hemorrhage of Canadian money going out of the country to establish trust funds in places like Saudi Arabia, Venezuela, and Mexico. People become excited about the heritage fund in Alberta, but I would much sooner see a fund established within the borders of Canada than one outside the country. This is something that the government cannot seem to get through its thick skull, that we are much better off to keep that massive amount of money-something like $4 billion this year, which is-approximately equal to the total budget of Manitoba and Saskatchewan together-and at least have a chance to recirculate it and generate jobs and economic activity in this country. Instead, the government chooses to subsidize the price of oil and pay foreign producers more than Canadian producers.
In addition to sending the money outside the country, there is another unfortunate effect. That money has to be recirculated and it comes back in the form of foreign investment in this country. Provincial governments are engaged in the legislative

May 21, 1981
Interest Rate Policy
process of trying to prevent foreigners from buying Canadian farmland. This seems to me to be silly considering that we are sending money out of the country because we cannot reach an agreement on oil prices in our own country. Our countrymen are not asking for world price but for a percentage of it. At the same time as this is refused we are, in effect, paying foreigners to buy our farmland with Canadian dollars used to buy foreign oil.
For a long time those of us who come from western Canada have been concerned about transportation. I would argue that it is part of our heritage and should have special attention. If there were some leadership forthcoming from the federal government, we would not face the prospect within two or three years of insufficient transportation facilities to move our raw products. If we could ensure transportation, it would help our foreign exchange problem, our balance of payments deficit, interest rates and the value of the dollar. We see no leadership in this area whatsoever.
I am puzzled why the government would give top priority at this time to buying Petrofina which will add nothing to our production capacity. It simply buys out a bunch of gas stations, a refinery, some real estate and some reserves already in the ground. The $1.5 billion will be taxed away in the form of a 3.5 cents per gallon increase in the cost of gas at the pumps and in the form of an increase in taxes on natural gas.
I have in front of me a letter from Union Gas which points out that a further $18 per year increase will come into effect on July 1, in addition to the $18 per year increase to the consumer which came into effect on May 1. That means that the average consumer of natural gas in Ontario will pay an additional $36 per year-not to make Canada more selfsufficient or to increase the supply of natural gas or tar sands oil or any kind of synthetic oil in this country, but to let the government buy Petrofina.
It seems to me that if the government were genuinely interested in making the economy more productive and thereby keeping down the rate of inflation instead of adding to it and to the burden on consumers, this money would be spent on increasing production in Canada.
My constituents do not understand why the government persists in trying to attack inflation only from the demand side. That is precisely what the government permits the Bank of Canada to do when it allows the governor and the board of directors of the bank to pursue the fight against inflation through monetarism. The Minister of State for Finance (Mr. Bussieres) said something that I took down as best as I could, so it is close to a quote. He said: "High interest rates have not had a major impact on slowing down growth and credit". I am pleased to see the minister is in the House. He quoted statistics to back up his statement. If that is the case, can the minister not see that the monetarism which he supports adds to inflation? This is certainly a possibility. I see the minister shaking his head.
I should like to give the minister an example, Mr. Speaker, one which affects all small businessmen and farmers in this country. Many small businessmen are not in a position to carry
inventory at interest rates of 25 per cent. We now have a prime rate very close to 20 per cent in this country, that is compounded monthly. On an annual basis, that approaches 22 per cent or 23 per cent. Small businessmen cannot afford to carry inventory at those rates, so when a customer comes to buy something, it has to be ordered from the factory. That accounts for two or three months of supplies that the business would normally carry and in turn, this puts people out of jobs. It does nothing to fight inflation; it hurts on the supply side. This would apply to a furniture dealer, a clothing dealer, a lumber yard or any business that has to carry much inventory. There is a limit to how much interest a businessman can pay. He has to pay interest costs out of profit, and if he does not have enough profit to carry inventory, he simply cuts back.
This is the planting season in Canada, but many farmers will not be able to obtain a line of credit, and so they will not plant or buy feeder cattle to put on pasture. They are not going to plan on planting the kinds of crops which will have to be marketed through livestock. The results will show up in the food the consumer buys next fall because there will be less food around and that hurts on the supply side. That is exactly what the government is doing deliberately by simply supporting straight monetarism and not doing anything to take account of the very serious effects which these ridiculously high interest rates have on the supply side.
I see that you are on the edge of your chair, Mr. Speaker. I do not think it is because of my speech; I suspect it is because it is getting close to six o'clock.
May I call it six o'clock?


The Acting Speaker (Mr. Blaker):: Agreed.
It being six o'clock I do now leave the chair until eight o'clock this evening, at which time the Chair will recognize the hon. member for Portage-Marquette (Mr. Mayer) if he is present in the chamber.
At 6.01 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
The Acting Speaker (Mr. Blaker):: When the House rose at six o'clock, the hon. member for Portage-Marquette had the floor.


Charles James Mayer: Mr. Speaker, as I was attempting to point out to the Minister of State for Small Businesses and Tourism (Mr. Lapointe)-and I repeat we all appreciate his presence in the House-the Canadian economy is in a very serious situation. I contend, and 1 am sure many others do as well, that interest rates above a certain level, certainly over 20 per cent, on an annual basis add to inflation more than they help to prevent it. 1 was using the examples of farmers and small businessmen.
May 21, 1981

I wish to go back and relate some of the concerns I have with regard to small businessmen. Small business in this country is responsible for the creation of more permanent jobs than any other sector of the economy. It is not only small business, but farmers and new businesses who are particularly hurt by high interest rates.
Not only can small business not afford to carry the inventory which would have created jobs in order to produce it, it is also losing sales. When a potential customer is not able to make a purchase, not only is the sale lost and, therefore, revenue, but the high interest rates are draining that small business of any profit it may be making.
In the case of the farming community, as the hon. member for Medicine Hat (Mr. Hargrave) pointed out, this is an added cost in terms of farm machinery and whatever else is required in order to be productive. When there is a breakdown of machinery, more time is required to get replacement parts and eventually the whole system is affected, and this hurts the economy.
I urge the minister to take these matters into consideration. Rather than support strictly a monetary approach, which is the demand side of our inflationary concern, he should take into consideration current interest rates as they affect production. Many small business people know that the present interest rates add to inflation rather than prevent it. In his speech this afternoon, the minister, to paraphrase him, said he did not want us to cancel out what we were doing with the right hand by doing something else to counteract it with the left hand. That is exactly what the national energy policy is doing. The figures I have in front of me indicate that by mid-1981, that would be in August, approximately 20,000 jobs will be lost to the oil industry and the service industry connected to that industry. These figures also show that about 139 oil rigs will have left the country, and this represents approximately $1 billion in capital cost. As a result of the government raising interest rates to attract capital, our dollar is helped and inflation is kept in check, particularly if we keep our dollar from falling any further. On the other hand, the National Energy Program is actually driving capital out of the country. I would argue very strongly that if the minister looked at some of the statements he made, he would see that the policies his own government is pursuing are cancelling out what the government is doing.
Again I would urge the government to proceed as quickly as possible, with as much good will as possible, and with a genuine attempt at negotiation to reach an energy agreement with the producing provinces.
When we pursue a monetary policy, as we are doing in this country, strictly by trying to slow down the rate of expansion in the money supply by simply using interest rates, we are not fully realizing what has happened to money as a commodity. Money is no longer simply a medium of exchange as it was 300 or 400 years ago. I forget my history in respect of the development of the medium of exchange, but money, it seems
Interest Rate Policy
to me, has now become a commodity. It is needed in terms of production in the same way that farmers need fuel, seed and fertilizer, and in the same way a small businessman needs an office or a premises in which to do business. If we think of money in these kinds of terms, I think it would be easier for us to realize, when we raise the cost of that commodity dramatically, what this does to the productive process in this country.
This country was originally settled so people could come here, have some economic freedom and make the country productive. Yet, when we see interest rates at what I would call an "A1 Capone" level, it is obvious that is what prevents us from being productive. I am sure if interest rates were at 20 per cent or 25 per cent as recently as three years ago, they would have been referred to as "A1 Capone" interest rates. In spite of this, we see speakers from the government side standing up to defend what I would call those "A1 Capone" or exorbitant interest rates.
I would like to touch upon the amendment moved by my colleague, the hon. member for Calgary Centre (Mr. Andre) in the time left to me. It sets out that our party supports the extension of the small business development bond, and I heartily endorse that suggestion. I see the Minister of State for Small Businesses and Tourism has joined us in the House this evening. This is something to which he should pay close attention because it is an interesting concept in the sense that the small business development bond allows the incorporated small business person in this country to borrow at half of prime plus 1 per cent or two per cent. At today's rates, that would mean the incorporated small businessman could borrow at something like 12 per cent.
The reason banks are able to make these loans is that they can treat this income as dividend interest rather than straight interest and they are taxed on it at a lower rate. On the other side of this very interesting concept is the fact that the small business which borrows this money cannot claim it as an expense.
It seems to me this is precisely the kind of program that is needed. Most small businessmen are not now really concerned about making a lot of profit. They are not concerned about deductions when they file income tax returns. They are simply concerned about staying alive from one year to the next. The people who would make the most use of this are those people who are not taxable. That is a very interesting idea and a very useful concept. I would urge both ministers whom I see in the House to consider extending the small business development bond, making it available to unincorporated businesses and for things other than straight capital items, for instance, making it available to small businesses for financing the purchase of inventory and the expansion of premises. It could also be made available to farmers for the purchase of livestock and for lines of credit during a planting and growing season. If that could be done, it would certainly go a long way toward alleviating the interest problems of small businesses. Small businesses are more responsible for the creation of jobs in this country than any other sector of the economy.

May 21, 1981
Interest Rate Policy
The other part of the amendment moved by my colleague has to do with the concept of mortgage interest and property tax credit. This is an interesting concept with which I would agree. It really relates to a principle which I think is valid. It simply means that once a tax is paid, it should not be paid again. If we are in fact paying a tax, that tax should be allowed as a deduction on a person's income tax return. That is something that would be very useful to people who are renewing their mortgages and will meet all kinds of problems, as pointed out by the NDP hon. member for Vancouver East.
I would urge the government to consider the suggestions made by the three speakers from my party in order that we can do something about the very serious situation of our economy as a result of extremely high interest rates. Thank you very much.


Mr. Roy MacLaren (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, I am pleased to participate in the discussion this evening of the specific question of inflation and broader economic problems. Today we have heard the government attacked because inflation has recurred as a persistent and pernicious problem. Clearly the prime cause of inflation in Canada, as in all industrialized nations, has been the two major oil price increases triggered by the OPEC petroleum cartel.
During the 1973 oil price hike, for example, the average rate of inflation in industrialized nations jumped by six percentage points. The effect of the 1979 oil price increase, the second of the major OPEC increases, was to add a further five percentage points to the average rate of inflation in industrialized countries.
Today we have been hearing from one faction of the Conservative Party which favours a lower rate of inflation. Yet there is another faction of the Conservative Party which presses for a rapid escalation of oil prices in Canada. There is obviously a contradiction in those two positions.
For example, the hon. member for St. John's West (Mr. Crosbie) somehow manages to be a member of both those factions. He advised the Alberta government not long ago to hang tough in its negotiations with the federal government and to press for higher and higher oil prices. Yet last week in this House he piously expressed concern for Canadian consumers who must cope with oil-fuelled inflation. I do not see how he can have it both ways.
If this government were to follow in Canada the Conservative policy of a "made-in-Saudi Arabia" oil price, who would win and who would lose? Where would the impact of inflation fall? The winners would obviously be the large foreign-con-trolled petroleum companies, petroleum companies which reported a profit of almost $30 billion in 1979. Our Conservative friends evidently think that they need more. Who loses if we permit OPEC to set oil prices in Canada, or if we tie Canadian oil prices to those set by an international cartel? Certainly rapid increases would cause yet more inflation in Canada. Rapid increases would have an especially severe effect upon those in our society who live in rural or isolated
areas and those who depend upon petroleum for travelling long distances, and certainly consumers in the poorer regions of Canada would suffer more. Certainly the poor people in our country would become poorer because energy costs play such a large role in the household budgets of the poorer segments of our society. An important American study, for example, recently concluded that for families with incomes in the lowest 10 per cent bracket, energy took fully one third of their expenditures. For families, however, in the top 10 per cent bracket, energy took only one twentieth of their total expenditures. The Economic Council of Canada has estimated that for every one dollar increase in the price of a barrel of oil in Canada, the consumer price index-in other words, inflation-will jump by 0.5 per cent.
For that and for many other reasons we do not have in Canada an OPEC-made oil price policy. We have a made-in-Canada oil price policy, but that is not to say an unrealistically cheap oil price policy. Certainly prices will rise. They will rise gradually, but substantially, over this decade, and they will rise in a manner which is controlled, predictable and known to consumers and producers alike. We are actively working toward an agreement with the principal producing province on that basis.
We recognize that oil prices in Canada must increase. However, unlike the previous government, we have moved to ensure that the beneficiaries of those increases are not the "seven sisters" of the international petroleum industry but, rather, Canadians. In terms of revenues received, foreign-owned petroleum companies in Canada in 1979 still represented 72 per cent of the total industry. Moreover, the involvement of foreign corporations is greatest among the integrated companies-the large, foreign-controlled companies-and lowest amongst our junior producers which are, typically, Canadian-controlled.
In those terms it was evident to all of us on this side of the House that we had to allow Canadian oil and gas prices to rise, but we also had to continue a program of attractive incentives for exploration and development of new supplies from within our own borders. However, if we had done just that, we would inevitably have increased the revenues and the assets of largely foreign-controlled firms, thereby making it yet more expensive for Canadians to purchase a greater share of the ownership of our own petroleum industry. We would also have seen the largely foreign-controlled industry reap substantial windfall gains. In addition, higher prices would have meant either increased dividends to the foreign parents or greater foreign ownership through the reinvestment of profits in the petroleum industry and diversification into other sectors of our economy.
We have been concerned in this discussion and, indeed, earlier in this session of Parliament about capital outflows from the petroleum industry. Let me underline that since
May 21, 1981

1974, the Canadian petroleum industry has supported net capital outflows of $2.1 billion. If dividend and interest payments are added, the net outflow over the 1975-79 period was about $3.7 billion, contributing to inflation in Canada and contributing to the lack of control of this most dynamic sector of our economy.
Our preference in those circumstances has been a policy to accelerate the process of Canadianization with three specific goals. We aim to achieve a 50 per cent Canadian ownership of petroleum production within ten years. Second, we want Canadian control of a significant number of larger petroleum firms. Third, we look for an early increase in the share of the gas and oil sector owned by Canadians.
The achievement of those three goals will go a long way toward retaining the benefits of greatly increased oil and gas revenues in Canada. It will reduce our vulnerability to the fiscal and monetary policies of our powerful neighbour to the south. Greater Canadianization will stimulate more activity by Canadian-owned firms, with resultant energy and employment benefits. Greater Canadianization will also mean that more and more of the highly technical research work will be carried out here so that both the quality and the quantity of jobs for Canadians will improve.
The renewed role for Petro-Canada will mean that the benefits of Canadianization in terms of equity ownership and control will accrue not only to larger Canadian firms and wealthy individuals but also to every Canadian taxpayer.
I was pleased to note recently that the Right Hon. Leader of the Opposition (Mr. Clark) has reversed his position on the privatization of Petro-Canada, but in that policy, as in so many other cases, there seem to be several factions within the official opposition. Another part of that same party seems to be led by the hon. member for Calgary Centre (Mr. Andre), from whom we heard earlier. According to The Calgary Herald, the hon. member for Calgary Centre stated recently that "Petro-Canada is here for the moment, but we will see what the situation is if we are back in power". Despite what his leader has said, he added, "There are already more than 400 Crown corporations, and that is just far too many. Petro-Canada would be one place to start cutting that number".
If there is confusion among the factions within the official opposition, the situation does not seem to be much different in the New Democratic Party, where we see some of the same lack of consistency respecting energy policy in Canada. One of the factions in that party calls for greater federal spending to aid Canadian consumers, but another faction demands that the provinces have all resource revenues from east coast development and that we slow or cease exploration and development in northern Canada.
One faction demands greater revenues from the petroleum industry, yet another faction in the same party rejects the 8 per cent petroleum gas revenue tax. The New Democratic Party certainly seems to have a surplus of suggestions on these matters, but on oil pricing its members are strangely silent.
Interest Rate Policy
Since inflation is basically a structural phenomenon, it can best be abated by structural remedies. Much has been made during the course of the debate today and earlier about what is seen as the economic interdependence of Canada and the United States. The long-term solution of the New Democratic Party to our problems is to declare our economic independence, but what do members of the New Democratic Party advocate with such a vague phrase? Surely they favour our very successful efforts to export goods and services. The United States accounts for two thirds of our exports. In 1980, for example, our total receipts from trade with the United States alone amounted to more than $55 billion.
Now in this sense Canada cannot and will not withdraw from the international marketplace in search of some ephemeral economic independence. We are a trading nation. We are a winner in international trade. In terms of merchandise trade alone, the 1980 balance was in our favour by some $8 billion. However, in terms of our service account, Canada suffers a large and growing deficit which last year was more than $10 billion and which more than eliminated our merchandise surplus.
I believe the implication is clear, Mr. Speaker. Canada must continue its vigorous trade efforts to sell abroad while allowing our competitors fair and equal access to our domestic market. At the same time we must strive to reduce our dependence on foreign investment which contributes substantially to our current account deficit. However, if the NDP means economic independence in terms of controlling foreign investment and providing incentives for Canadians to invest in and own the dominant Canadian industries, then indeed they are supporting many recent government initiatives, of which the NEP is an outstanding example. The government, Mr. Speaker, has moved recently to patriate the Constitution. We are gradually moving to patriate significant sectors of our economy.
Let me allude for a moment to other structural causes of inflation, having touched on the major impact of world oil prices and our immensely important connection with the international trading community. In part, high inflation is a symp-ton of economic inefficiency which reduces Canada's competitiveness and productivity. One such inefficiency is the lack of a strong indigenous research capability and specialized technology. Canada has a secure resource base, a fairly strong secondary manufacturing sector, but we add little value to the resources nature has so generously bestowed on us. Borrowing someone else's technology or even just copying the products of other countries and producing them on a world scale was enough perhaps at one stage. However, the day that someone else's technology will give a country a major lead in international trade is fast passing. Major technological events are the reordering force behind changes in market competition.
The industrial strategy of Japan and several European countries has been forged through government leadership and co-operation with industry. Public policy has become a major factor in the traditional concept of competitive economic
9796

May 21, 1981
Interest Rate Policy
advantage. Public policy can serve either to support the development of a viable long-term position or, at worst, add to the costs of an industry. Although we have been slow to encourage research and development in Canada, and despite the fact that a good deal of innovation is controlled by foreign corporations, we can build on our limited domestic base. Our investment in technology must relate in large part to the specific market opportunities in the future which should be undertaken with a sense of urgency and an expectation of significant achievement. The success of Telidon is an outstanding example.
I have spoken of one or two of the factors in our economy making for inefficiency and hence, by extension, contributing to inflation. In conclusion I want for a moment to touch upon the fact that here in Canada provincial governments have erected economic barriers which frustrate the realization of the full benefits of the Canadian common market. We must be economically integrated. We must not be the victims of balkanization if we are to prosper in a highly competitive world. Most Canadians, for example, would assume they have the right to travel, live and work anywhere in our country, but because of actions that provincial governments have mistakenly taken in the past, we have had to guarantee that right in the constitutional proposals before this House.
There have been other examples of obstacles to the free flow of capital, goods and services. These obstacles to production must be reduced and eliminated if we are to compete in a difficult world and ensure that our industry is as efficient as it can be and, as a result, we shall reduce and eventually eliminate inflation.
To conclude, Mr. Speaker, I have touched on one or two of the longer term possibilities for combating inflation. 1 have alluded to some of the major components of this government's industrial strategy and touched on the benefits for all Canadians in the National Energy Program. I have also drawn attention to several significant contradictions in the opposition arguments which I believe indicate once more that they have been unable to convince the Canadian people that they have any constructive alternatives to offer.


Mr. Fred McCain (Carleton-Charlotte):: Mr. Speaker, it is indeed time that this House devoted itself to a debate on the economic affairs of this nation. Under the guidance of this government we are moving into a state of economic feudalism. It was in the middle ages that feudalism bloomed and prospered in a different way than today. It was a matter of armed force under the lords or ladies of that day that controlled society in every way. It was then that we had restricted ownership, share croppers, tenants and peasants. Over the years we grew out of that structure only to find that under the leadership of this government, in an economy which may be approaching a state of uncontrollability, a different type of feudalism is emerging.
We have small storekeepers being bought out by larger ones and the owner may be installed as manager. We have small plants being bought out by large plants and the former owner
installed as manager. We have people who are going to leave their farms by virtue of bankruptcy and they may or may not be employed by the next owner as manager. The feudal system of our economy is frightening, fearful, devastating and unacceptable.


Some hon. Members:: Hear, hear!


Fred Alward McCain: Small business cannot survive in this environment. It is our largest employer and covers a wide area of our economy, and it is the patient who suffers most in the economic malaise in which we find ourselves. Fishermen, farmers, storekeepers and home owners cannot stand the punishment government is dealing out by virtue of its fiscal and monetary policies. They do not have the power in the marketplace that big business, the feudal barons of today's economy, have. They do not have the market power, the buying power or influence with government. They do not have the power, period. They are therefore caught in the trap of the economy which has been generated by this government. They do not have the pleasure or the luxury of the protection which should be afforded them by law, and which at one time was afforded to them.
Today, for instance, if one has the good fortune to have $100,000 in loose change one can place it with a financial institution on a 30-day basis at 18.1 per cent. This was one quote I received. I do not have that kind of money, but I wanted to find out what an investment of that sort would be worth. On the other hand, let us take a look at what would happen to the guy who renewed his $40,000 mortgage today- and this did happen. He was advised by the man who advanced the money that his monthly payment would go up $240. Let us assume that this guy who arranged his mortgage pays 18.1 per cent interest to the mortgagor. He will pay $7,200 a year- $600 a month in interest alone, with no capital improvement in his position. What has happened to this guy is that he is now of little use to the economy of Canada, except as he serves himself to pay his interest to stay under his own roof. He has nothing left over to take to the marketplace to make a demand, which in turn creates employment. This is what is happening to the economy. What else can he buy? What contribution can he make?
What about the farmer who must borrow to put in a crop? If he is compelled, as many are, to borrow all his working capital for planting, a combination of inflationary history of the last ten years, plus the increased rate of interest he must pay, this will cause-and this is what I want to draw to the attention of the last speaker-a ten to fifteenfold increase in interest costs for an acre of crop. That is he must pay ten to 15 times more in interest in 1981 than he would have paid in 1970-1971. That is a real inflationary pressure.
Let us take a look at what it might cost a potato farmer to get into business this year. The following are a few remarks made by Joe Drozdowski of the New Brunswick Potato
May 21, 1981

Agency on farm debt problems for New Brunswick potato producers:
In 1980 total cost of production per acre amounted to $1,063, of which interest charges were $70. Higher interest rates should force that figure higher this year.
I submit to you, Mr. Speaker, that 1 would like to show you the position of the seed producer who will finance and plant a crop in late April or early May and who will, in turn, put that crop on the market in March or April. His costs on the basis of cost-per-acre will be in excess of $200. This is what is happening to the price of food. To get crops in the ground, producers will have to borrow $80,000 to $100,000 for a moderate-sized potato crop. They will have to pay 20 to 22 per cent interest. If a young man wants to buy a farm of 150 acres, for example, he faces an initial capital cost of $300,000. At that price, and at this interest rate, he cannot enter the agriculture business and the potato industry of this land anywhere and hope to survive. Joe Drozdowski also says that interest rates are keeping total acreage at a low level. Farm machinery dealers and fertilizer companies will not offer credit beyond 30 days, so the farmer is forced to go to a lending institution for all his operating costs. Mr. Speaker, these are pretty dire consequences.
Recently the Canadian Federation of Agriculture put a very special plea to the Minister of Agriculture (Mr. Whelan). The Federation sent an urgent bulletin to all members of Parliament requesting immediate emergency relief for farmers facing bankruptcy or foreclosure due to exorbitant interest rates. The CFA called for extra funds under the auspices of the Farm Credit Corporation, which has the staff and administrative capability to provide loans at deferred rates. Those most in need, said the CFA, were hog and beef producers, as well as cash crop producers, and that includes potato producers. The Federation also noted that it is high interest rates and not poor management, as had been implied by the members of cabinet to your right, Mr. Speaker, which has driven farmers into this unfortunate position.
As well, the CFA pointed out that these loans would not be a government expenditure but might well prove to be an investment in Canada's future from which the government would reap good dividends. It was also pointed out that in the first quarter of 1980, there were 44 bankruptcies and that in 1981 there were 75.
It was pointed out that in 1979 there were 125 farm bankruptcies in Ontario and in 1980 there were 224. Farm bankruptcies were up 80 per cent over the 1979 level. In the first quarter of 1981, it was pointed out that farm bankruptcies are up nearly 70 per cent from the first quarter of 1979. If present trends continue, farm bankruptcies could reach 400 by the end of this year. These are serious trends which involve small businessmen who are being brought to heel under the economic feudalism generated by inflation, extravagance and debt brought on this country by this government.
Mr. Whelan stated that it was really only beef and pork producers who were facing bankruptcy. Perhaps pointing out the plight of the potato industry is good.
Interest Rate Policy
The Minister of Agriculture also said in the House yesterday that only a small percentage of farmers faced bankruptcy-


Jean-Jacques Blais: Order!


Walter David Baker: The hon. member is quoting from a document.


John Leslie Evans: What is unparliamentary is unparliamentary.


Fred Alward McCain: It is obviously a sore spot for hon. members opposite. Even an economist would have to realize that there is an element of logic and argument against this government. The more you wail and complain over there, the more you emphasize how short you are on tender feelings, as you sit in the city and abuse the farmer about whom you know nothing. And you still want to interject. Mr. Speaker, I might add that that demonstrates the intelligence of the government as a whole.
The minister also tried to lay blame at the foot of the provincial budgets, Ontario in particular, stating that it only spent $200 million on agriculture in Tuesday's budget. Let me tell you, Mr. Speaker, and those tender-nerved individuals to your right, that the federal government in a single year, in ordinary administrative and research expenditures since 1980, has not made a real increase in the moneys allocated from its treasury to agriculture for the services which this government should perform. There has been an element of change in some departments and some additional emphasis placed on research in the last year, which shows previous neglect of this government. That is not-all, Mr. Speaker. The government has tried to transmit to the provinces and the provincial taxpayers historic responsibilities that the Government of Canada has carried since Confederation, since this minister was willing to accept less from the government.
I have heard members of this House complain about the cost of food without saying anything about production costs. What about the Fisherman whose fishing gear has risen in price five, six and sevenfold? The cost of boats has more than tripled. The fisherman, too, is paying ten to 15 times as much in interest as he was paying over the last ten years as a result of inflation. Interest alone may have reached as much as 15 per cent of the total cost of food-that is inflationary and cannot be interpreted otherwise.
There is no relief. Even the historic crutches which have been extended to agriculture by the government of this nation have been withdrawn. They have said: "Let us get the provinces to do it." Yes, food is costing more. Farmers and fishermen have had bad years, as they live in a cyclical situation of return in price; but rather than reaping exorbitant profits, they have actually subsidized the food consumer of this nation for years. The cattle feeder, for instance, is losing $150 per head in spite of the high price of meat. Just think of the subsidy he has extended to the food consumer of this nation. The hog producer is facing bankruptcy and, in spite of the price stabilization payment being paid by this government,

May 21, 1981
Interest Rate Policy
which comes late but nevertheless is welcomed, he still finds himself subsidizing the consumer of Canada.
What does one want from the farmers and the fishermen? They have given their blood in 400 bankruptcies; and we are going to complain about the price of food in this nation? If anyone wants to complain about it, let him examine the distribution system and examine the mark-ups, and if there are troubles there, fine. However, agriculture is far from prospering in this nation today. The government wants the provinces to look after these bankruptcies and the hon. Minister of Agriculture, to the satisfaction of hon. members over there-I cannot read it any other way-is willing to abide by all these things which have been passed out by this government. Yes, there are predictions of 400 bankruptcies in agriculture in Ontario this year.
Let us take another instance. A dairyman has advised hon. members of this House that he has an investment which has been a family heritage, and he has an estimate of its value. At no time in the last three years has he been able to realize five per cent on his investment. Why does that farmer not sell that farm and deposit it with one of the borrowing or lending institutions of this nation and get 18 per cent? He is farming for less than nothing, and we are going to complain about the price of food? Yes, it is high, I acknowledge that. However, it is no higher, relatively speaking, than are automobiles, dishwashers, clothes driers or any other requirement of a consumer.
Let us examine the situation of the fishermen in a little more detail. 1 think it is rather interesting to note that the United Maritime Fishermens Co-op showed a surplus in sales of over $100,000 in 1978. In 1979 they had a deficit of $500,000. In 1980, their sales deficit rose to over $3.5 million. Although sales rose quantitatively, the price per pound stayed low due to poor domestic and foreign markets. In spite of the rising costs due to interest rates and cost of equipment, fishermen could not get a better price. Prices were kept low by the fact that the consumer demand dropped off both here and abroad, as stated in The Globe and MaiI of March 19.
I have to stand up for the food producer in this nation because he is having a rough time under the structure that this government has established. The government, at this time, should not be opening new offices. It should not be taxing the people of Canada to support them or to employ more people. It should, instead, be looking for ways and means to use the people which it presently has in such a way as to reduce the tax burden and deficit. This is essential. Business and labour cannot be expected to exercise savings in view of the example set by this government. They cannot improve productivity and effect savings. They cannot be penny pinchers in the face of excessive taxation, excessive borrowing, and ridiculously heavy spending. When I read that executive salaries sometimes exceed $500,000, 1 must say that I find that to be a little high. I must acknowledge that that salary will have to be paid by the consumer of the goods that that company produces. I would
say to you that social responsibility in such an instance and in such difficult financial times as these has evidently gone out of the window.
I want to give one example of this. Let us take as an example the village of McAdam in the province of New Brunswick, in my constituency. It was established by the CPR as the railroad was built. It became a booming town in which that company employed some 500 or 600 people at its peak. Now this corporate giant has decided to remove virtually all employment from that community. If left to its own resources, it will become a ghost town. After creating it, it abandoned the village, in the certain knowledge that it will become a ghost town. By not restoring employment historically extended by this company to the residents of that village, I submit that it has not demonstrated a sense of social responsibility. It worries not about the hardship that has been imposed upon these people, nor about the social expense-and this is what concerns me-which will be foisted on the taxpayers of the province of New Brunswick and the Government of Canada as a result of the abandonment of that community.
It is difficult, indeed, to be a free enterpriser under these circumstances, and to exercise a reasonable degree of responsibility when excesses such as this exist. I have to say, though, that the free enterprise system has, in the main, served this country extremely well. There are just a few examples in this structure which, I must say, deserve severe criticism.
The fiscal and monetary problems of this country today may appear to be similar to those which we read about in history. They appear to be simple, as to make us think that there is too much money after too few goods. Even when too much money chased too few goods, policies, now practised by this government, of heavy borrowing, heavy spending and heavy taxation, were self-defeating as happened in Germany after World War 1. That kind of inflation could not be controlled that way. Even worse, this is not an historic inflationary period. The shelves are burdened with goods, but people cannot buy them in quantities which will encourage production or employment because the costs are too high. Yet this government is operating at high interest rates, with exorbitant spending and massive deficits, as if these were the cure. There is no immediate panacea.
The economic world today has three virtually equal parts in strength. They are government, management and labour. Until such time as each, with all its power, is prepared to sit down with the other to discuss the problem and evolve a solution, there is no hope for this nation. This government has shown that it lacks both the courage and the leadership capability to supply leadership and face the realities. It is high time that leadership and perhaps some unpopular political moves were applied. A co-operative triumvirate could triumph, but a stubborn government will not create the triumvirate or provide the leadership which could save this country with moves which might not be politically apparent. Let us go after it!


Some hon. Members:: Hear, hear!
May 21, 1981


Paul James Cosgrove: Mr. Speaker, I would like to begin my remarks this evening by saying how impressed I was with the hon. member for Calgary Centre (Mr. Andre) who, this afternoon, rose from a sea of empty Conservative seats behind him to propose that this government should ignore the needs of about 70 per cent of Canadians, those who rent and those people, chiefly the elderly, who have little or no mortgage debt. That would be the effect of the amendment proposed by the hon. member which calls for the introduction of mortgage interest and property tax deduction.
In its April 14 Speech from the Throne, this government stated that Canadians would accept economic sacrifice to meet economic challenges, provided it was done on an equitable basis. I would like to know where the equity is in the proposition which would be so targeted, as in the amendment proposed by the Conservatives. In contrast to the previous administration, which, in opposition still sticks to a program to help a minority of Canadians, this government said the following in the throne speech: "We will help first those who need help most." The speech also stated that the government "recognizes the need to protect those Canadians most affected by an acceptably high interest rate". It goes on: "The government will act to assist those ordinary Canadians unable to bear the burden of renegotiating their home mortgages in the present abnormal situation so that the spectre of foreclosure will be avoided . .. without the government embarking upon a major subsidy program."
To this end we have taken positive action on two fronts. First, we have met with lenders to determine the methods they would use to ease the impact of mortgage renegotiation. We have seen that those discussions have been successful in facilitating renegotiation. The practical result of this approach by the lenders has been a steadily declining rate of mortgage arrears in Canada.
In January, 1980, for example, there were 0.78 per cent of accounts under administration. This spring the number has dropped to 0.6 per cent, despite the number of roll-overs which occured in that period.
Second, some Canadians previously received aid for home purchases through various subsidy programs. They face a particularly sharp difference between the old and the new mortgage rates. They were often people of modest incomes; their incomes were of modest growth. We provided particular help on an equitable basis.
Let me report to this House exactly how much aid we have had to provide under the special arrangements 1 have referred to. Of the Assisted Home Ownership accounts reviewed so far, only 5.9 per cent, just 52 accounts to the end of last month, required the special help offered by this government. Very few complaints have been received to date from those served under the program who received only loans as opposed to subsidy aid; in fact just 11. The government has increased social housing by 5,000 units. These are the non-profit and co-operative
Interest Rate Policy
dwellings serving people of modest income who receive from the Government of Canada interest write-downs to 2 per cent under Section 56.1 of the National Housing Act. This is in addition to the 25,000 units committed annually by the federal government under its social programs. In British Columbia, for example, one in ten homes is assisted by the federal government. This is important assistance to many people in this country.
The Speech from the Throne states that "Canadians want more effective government, not necessarily less government." In line with this promise, I am pleased to say that cabinet approval has now been given for CMHC mortgage insurance operations to be made more streamlined, more efficient and more competitive. This entails realistic inspection fees for a look at applicants, and somewhat higher premiums. We will have an improved Crown corporation operating on a fully commercial, cost recovery basis for its mortgage insurance, but clearly committed to serving the social needs of the country. Much of this depends on legislative amendments for which I hope to receive the support of the House.
Mr. Speaker, the message I have attempted to impart with these remarks is that this government has kept its promises, it is keeping its promises, and it will keep its promises.
Switching now to other matters in the housing market today, a study has recently been completed for CMHC by Vischer Skaburskis, planners on speculative activity in the most active housing market, namely Vancouver. It reports these interesting findings: out of 17,960 residential transactions studied, it was revealed that approximately 14 per cent appeared to be purely speculative in nature-so about 86 per cent are not. That applies to residents of the province. Another study brought to my attention by the CMHC general manager for the British Columbia region, shows that only about 1.2 per cent of properties bought by individuals in British Columbia, were bought by foreign investors. I know that people have been concerned about this. We will continue to watch closely in conjunction with other concerned agencies, the various trends which have the potential to pose significant problems.
We are monitoring the situation in the housing market very closely. In contrast to the position outlined earlier by the hon. member for Oshawa (Mr. Broadbent) of large numbers of foreclosures, I have indicated that claims have been dropping steadily, Mr. Speaker. In January of 1980, 711 were received, both rental and ownership. By December of last year, despite the rise in interest rates and with the large turnover, this had dropped to 557 claims. By April, again, despite the higher interest rates, the trend continued-441 NHA claims on 808 units.
The fact is that Canadian housing production is growing. Indeed, housing starts have turned around remarkably. The rate in the first quarter of this year was the highest since the fourth quarter of 1979. The seasonably adjusted annual rate for April was 242,500 new homes to meet the needs of Canadian families, compared to 158,000 in 1980, a record rate for the last five years.

May 21, 1981
Interest Rate Policy
Some may ask, Mr. Speaker, why this could be the case if people cannot afford to buy, as the hon. member for Oshawa has suggested. It is simply not true as he has alleged, that 90 per cent of Canadians cannot afford to buy a house. He should consider who is buying homes at record rates.
There are undoubtedly problems for those young first-time buyers entering the market with a small down payment and trying to buy a home with no existing mortgage on it. The facts are that the majority of Canadian homebuyers in today's market are buying with substantial equity from the home they currently occupy. We know that this equity has increased remarkably in the last few months. Many purchasers of houses are able to assume existing mortgages with interest rates stuck since the time when they were lower. Many others, by shopping around, are able to secure builder "buy down" mortgages. Some, and this is not new, will need to save longer or secure equity from relatives or employers. It would be interesting to know how many members of this House were assisted in their first home purchase and were able, on their own, to manage the down payment. We know that in many cases home purchase has been a family or company affair.
If interest rates were lower than they are, there is no guarantee at all that the faith of the leader of the NDP that increased access would result, would be realized. Interest rates are one of the few factors restraining a heated market. We do not know what would happen if interest rates were lower than they are. I would agree with the hon. member for Vancouver East (Mrs. Mitchell) that the brunt of the housing situation in the critical market area is undoubtedly being borne by renters. Statistics show that 34 per cent of British Columbia tenants are spending more than 30 per cent of their income on shelter. The situation is difficult. Since the easing of rent controls, rental increases have been running at about 20 per cent, outpacing the growth in real incomes.
I am pleased to say that British Columbia is expected to have 45,000 housing starts this year, 8,000 over the previous record year. Over 2,500 private rental housing units will be of great help to the easing of the rental market situation there when they come on stream. These units are part of the government's initiative under the MURB program and part of the corporation's activities in B.C. in realigning its underwriting provision to encourage rental housing starts in that very difficult market.
We are doing a great deal to help Canada's rental households. We provided last year alone, for example, subsidies totalling $297 million for about 400,000 homes directed toward lower and modest income Canadians, natives and people living in non-profit homes and co-operatives. That is a continuing and significant contribution by this government toward the shelter needs of Canadians.
I would add that far from being inactive, I intend to meet early next month with my provincial counterparts for what I am sure will be a very productive session on the issues that we face inherent in the motion before us this evening. The first
priority concern I take with me to that meeting-and I might add that I am quite surprised that I have not heard mention of it in the debate today-is to bring attention to those Canadians who are the worst housed. I am speaking about the Indian, the native and the rural population of Canada.
During the year that I have held this portfolio, the corporation, in conjunction with organized people from these groups, has reviewed the policy and presented recommendations to the ministers involved, and we in turn have presented, and are in the process of presenting, those changes to our cabinet. I hope that with the co-operation and input of provincial ministers at the conference I have mentioned we can address that concern which should be a concern, not only to people in this House, but to all Canadians who, even though they are faced with problems in their daily lives, should share the concern for the neediest in our communities.
I am sure we will have co-operation and I look forward to meeting my counterparts in the provinces and from the territories as we address, not only the needs of the worst housed people in our communities, but the short-term as well as the long-term challenges that we have in housing today. We do have to plan and address the longer term problems in order to take advantage of what we have learned over the past decade. Housing is always a challenge, not only to the federal government but also to provincial and municipal governments.
In comparison, the previous government did little in the housing field. It authorized a study under the aegis of CMHC. The recommendations of that study were in effect to cancel and to withdraw from areas under the CMHC social program. In just a year we have taken action to get the housing market moving again. We have brought back the rental stimulus under the MURB program which was left to die by the previous government. We have provided additional social housing in addition to the 25,000 annually committed by this government over the years. That is opposite to the claim that this government is doing nothing in the area of social commitment to housing-


Mr. Deans:: What you are doing is harmful.


Paul James Cosgrove: -and nothing for those people who need the assistance of this government for affordable housing. We have fostered a free housing market. That market is at last beginning to see a little bit of light in contrast to the darkness that it experienced under the previous administration.


Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, I have enjoyed listening to those members opposite who have spoken this afternoon and this evening. As a result, a number of things have become very clear to me. While we in the New Democratic Party were preparing for this opposition day, I am proud to say that our caucus was unanimous that the high interest rates in the seemingly mindless policy of the Liberal government needed to be criticized and brought to the attention not only of government members but to the people of Canada. We were unanimous about the seriousness of the high interest rate situation. We were serious about the devastating
May 21, 1981

nature of the increasing cost of living. Yet the Prime Minister (Mr. Trudeau) told us the other day that home owners have never had it so good.
I listened to the Parliamentary Secretary to the Minister of Energy, Mines and Resources (Mr. MacLaren) speak. Implicit in his comments was that everything was quite fine, that the government was handling the problems of the day very well and things were going along quite nicely. Then, somewhat appalled, I listened to the minister responsible for housing suggest again that in the housing industry across Canada accessibility to decent housing is not the serious problem Canadians think it is.
I wonder why this dichotomy of viewpoint exists. Why do people on one side of this House have a certain feeling about the state of affairs while those opposite feel something quite different.


Raymond John Skelly: That is politics.


Nelson Andrew Riis: It became clear to me that while we talk of tax credits, fiscal policy, monetarism, the Ml, deferred taxes, bankruptcies, 21 percentile ranges, prime rates and the Bank of Canada, we are not talking about human beings.
We have a very interesting jargon we use to attempt to understand what is happening in our economy. We do not mention people. We do not mention that people are out there struggling just to keep alive, that they are struggling to keep running shoes on their children's feet. Instead of saving for a holiday this summer, they are struggling to keep their small business going and their farm productive. Human beings are out there being severely devastated by the policies of this government.
I do not want to dwell on the human side to this question, but it does seem to me that it has been absent from our discussions today. Within the last two weeks I had the opportunity to visit a small farmer in my constituency who had gone bankrupt. Here was an individual, a young man in his early forties, married with five children. He had purchased a farm a little over five years ago and had worked literally around the clock for 12 months of the year to attempt to get that farm on track. I had to witness a family packing up all of their worldly belongings in two vehicules and having to drive away. They will likely now find themselves on government dole as they join the ranks of the more than one million unemployed in Canada. That is the story of just one small farmer in central British Columbia.
I also had the opportunity of visiting a shop where the people had just closed the door and put plywood over the windows. This was a small welding shop in central British Columbia. Here again it was a family effort to develop a small welding and manufacturing industry to service the mining sector of central British Columbia. For the last three years the husband, wife and children worked 16 to 18 hours a day. They had to walk away from that dream.
Interest Rate Policy


An hon. Member:: The Liberal dream.


Nelson Andrew Riis: The Liberal dream resulted in an absolute nightmare for many farmers and small businessmen.
I want to talk about the home owners. I suppose there is a grain of truth in what the minister of housing suggests. I would not for a moment say that he was intending to mislead the House. In some way or another, most Canadians today are trying to make do. How are they attempting to make do and what is the human cost? I am sure all of us know of many examples of households where, in an effort to make the mortgage payments, which are getting worse every week, the spouse has to work outside the home. The mother who wants to stay home, raise a family, be with her children after school or take care of preschool children, no longer has that opportunity. That individual is now forced into the marketplace as two incomes are required to meet the mortgage payment.
How often is the other spouse in the situation where after finishing work at the end of the day, he must go out that evening and do a little moonlighting on the side in order to meet the interest payments on their exorbitant mortgage? One could go on and on and talking about the real side of high interest rates and the damage it is doing to the fabric of Canadian society.
Today one sees more and more a situation of hopelessness. If one did a survey asking parents whether they had the same optimism for their children that they had when they were that age, and will their children's lives be the same as theirs at their age, in terms of what they can hope and dream for, I suspect that 100 per cent of the parents would say no, the Canada of the future under present conditions is bound to be worse. Who do we thank for that? Our friends sitting opposite, the Liberal government of Canada which is taking us so quickly to the brink of economic and financial disaster.
The governor of the Bank of Canada, Mr. Bouey, and the Minister of Finance (Mr. MacEachen), whom our spokesperson called Allan in Wonderland for obvious reasons, told Canadian farmers, fishermen, home owners, business people and consumers that high interest rates, which are obviously made in the United States of America, are necessary for Canadians in order to bring inflation under control. Canadians are not dimwitted persons. They know there is more to it than that.
For the year ending November, 1980, the rate of inflation was 11.2 per cent and the prime rate fluctuated between 12.25 per cent and 13.75 per cent. Since then the rate of inflation has moved up to 12.6 per cent, but the prime rate has skyrocketed into the 20 per cent range, and indications suggest that next Thursday it will be 22 per cent, eventually moving on to 25 per cent plus.


An hon. Member:: Then Herb Gray will resign.


Nelson Andrew Riis: All of us in this House recall the words of the Minister of Industry, Trade and Commerce (Mr. Gray) when

May 21, 1981
Interest Rate Policy
he was playing a role in opposition. He promised that if he was in government and interest rates were as high as those under the Tories, he would resign. They are much higher today. We hope the minister will live up to his promise. We will have to wait and see.
The government's efforts to fight inflation with ever higher interest rates have not, to use the words of the governor of the Bank of Canada, been of limited success. It has been an utter disaster. In fact, the short-term objectives have not really centred on inflation at all but rather on supporting the value of the Canadian dollar relative to that of the United States.
This objective has more or less been achieved. The exchange rate has moved within a fairly narrow range, from 82.5 cents U.S. to 86 cents since the beginning of 1979, but the price of exchange rate stability has been very high.
No country has experienced a continuous and unstable deterioration in the value of its currency and yet has been considered to be well run or well managed. However, the true value of a nation's currency depends on the health and vitality of its economy. It depends on the productivity of its citizens and a nation's ability to develop a sound and efficient manufacturing base to enable it to pay its way in the world economy.
Countries that have strong currencies have strong economies. The national productivity and world trade performance of West Germany, Switzerland and Japan are unexcelled and certainly must be considered exemplary in today's society. The Canadian economy, on the other hand, under this government and previous Liberal and Tory governments has been mismanaged on a plane unparalleled among western industrialized nations, with the possible exception of Great Britain over the last two or three years.
No country in the world has allowed the vital sectors of its economy to become so dominated by foreign economic interests. The National Energy Program bears testimony to this in our key energy sector right from the beginning, and the trend continues today. First it was the fur trade, followed by the squared timber trade, and now in the automotive and food industries we are still hewers of wood and drawers of water. No western industrialized nation has allowed its research and development effort to fall to the level tolerated in our country.
We hold up our head with a great deal of pride and say we have the same level of research and development as Greece and Portugal. With no reflection on Greece and Portugal, they are not considered to have the potential of the dynamic country that Canada ought to be and would be if it were not for the retarded policies of this country.
No other advanced industrialized nation with any sense at all has pursued the kind of bankrupt, short-term, get-rich-quick policies that have left Canada with a fundamentally unsound structure to its balance of international payments. Contrary to what the Parliamentary Secretary to the Minister of Energy, Mines and Resources indicated about Canada's trade balance being fine, we are looking at a chronic current account deficit in the amount of $5 billion. We have a chronic
service account deficit of over $9 billion resulting from the outflow of profits, dividends, interest and other payments to the foreign owners of the Canadian economy. We have a staggering deficit of over $16 billion in our trade on fully manufactured goods.
These are the real underlying sources of weakness in the Canadian dollar. Under the mismanagement of the present Prime Minister and his Minister of Finance over the past 13 years, the value of the Canadian dollar has fallen by over 20 per cent with respect to the United States dollar and by more than 40 per cent in relation to the stronger currencies of western industrialized nations. If I can paraphrase a familiar quote from Pogo, indeed "we have found the problem and they is" the Liberal government.
Our dollar would be much lower if it was not for the massive interventions in the foreign exchange markets since 1977 by the Bank of Canada to support the Canadian dollar and, of course, the bank's policy of maintaining high and rising interest rates, but exchange rate stability has been achieved over the last few years at a very high price.
There is the myth that our Canadian dollar is floating. We then must ask why we have to regularly support its value artificially in the 80-cent U.S. range.


Ian Deans: It's not floating, it's sinking.


Nelson Andrew Riis: It is not a floating dollar but a sinking dollar and going down fast. Interest rate instability resulting from the Bank of Canada's monetary policies has made our financial institutions reluctant to extend fixed rate loans. This in turn has compounded business's task of planning ahead and financing long-term investment projects. When one cannot tell what the interest rate is going to be from one week to another, one is obviously reluctant to plan for six months in the future, let alone six years or 30 years down the road. In fact, a recent survey of over 10,000 small and medium-sized businesses disclosed that high interest rates were the most important factor in the decision for them to curtail planned expansion.
High interest rates contribute to a decline in our national productivity by forcing planners to discount projects in which they have invested heavily and which may result in broad based economic benefits, but over a long period of time. Thus a greater part of our economic activity is focused on rearranging industrial assets rather than increasing their size; that is, investing in new productivity, new capital creating new jobs and new opportunities for our communities.
One of the best illustrations of this type of distortion created by both high inflation and high interest rates is the growing wave of corporate takeovers resulting in increased business concentration in our economy. This is surely not at all in the best interest of Canadians.
Interest paid by one corporation on funds borrowed to finance a takeover is tax-deductible in our system. This lowers dramatically the after-tax cost of a merger, and in the present
May 21, 1981

environment of high interest rates and inflation many corporations are more interested in buying other businesses than they are in producing and selling products to customers. We are not seeing, then, our economy expanding, developing and growing. We are simply seeing mergers and monopolies evolving.
In fact, the value of mergers in both Canada and the United States rose from $12 billion in 1975 to $22 billion in 1977, and from $34 billion in 1978 to $40 billion in 1979. In fact, Canadian companies last year spent more on acquisitions than they did on research and development.
These are only a few of the consequences of this government's misguided monetary policy. The death knell is being sounded for Canadian business, especially small Canadian business. The death rate is certainly greater than the birth rate for Canadian small businesses, which obviously means that the end is very close.
Inventory growth has a powerful influence on how the economy performs. In 1980, cutbacks in inventories made the difference between a positive economic performance and a negative one. Our present high interest rates have dramatically increased the cost of carrying inventories for all businesses, but this burden falls especially hard on small businesses. As a result, they must cut back on their type of investment which reduces their ability to carry adequate inventories. It reduces their ability to compete effectively with larger corporations, with the national chains and with the multinationals, again causing difficulties for the small business.
Small businesses, by their very nature, must be flexible and responsive to changes in market conditions if they are to survive and prosper. Uncertainty and instability undermine the effectiveness of business, especially small business, to make sound investment decisions, create new jobs for Canadians and contribute to our future prosperity.
A prime responsibility of government, then, is the establishment of policies that contribute to a stable, well managed economic environment, and encourage confidence in the future. Unfortunately the legacy of policies adopted in the 1970s, and now in the 1980s, under this government, is a climate of uncertainty and an economy in decline.


Jack Wendele Shields: Mr. Speaker, I treasure this last ten minutes in the evening for the opportunity it gives me to outline just a few thoughts. I have listened with a great deal of interest to the debate that has gone on today, particularly those speeches from the government benches and from my socialist friends to the left.
We heard the socialists say they blame inflation on high interest rates, on multinationals, the money-grubbing, profit-hungry banks, big business and the greedy speculator. Then we heard from the government side that everything is going well, we are all living well in this country, and the government cannot do anything about interest rates because our economy is so closely tied to that of the United States.
Time after time we hear stories about small business firms going under. We hear about farms and others going bankrupt. We hear about people losing their homes. All this is denied, of
Interest Rate Policy
course, by members on the government benches. The fact is that all these things are happening.
The Liberals in their speeches about high interest rates and inflation say it is a result of that little bit of greedy push by Alberta which wants oil prices and commodity values to go up to something comparable to what is being paid elsewhere in the world.
All this distresses me because it becomes very obvious that this government is not only bankrupt financially, and obviously has nowhere to file its bankruptcy, it is bankrupt of ideas and solutions. It is very clear that if a business or a wage earner goes into debt by overspending and then begins to borrow funds to pay that debt, the business or the individual will go bankrupt. This government has declared personal bankruptcy but it has no place to file. This shows up in the strength of the Canadian dollar.
To make a case to the world that we are doing all right here in Canada and that Canada is endowed from coast to coast with riches galore, while countries like Japan and Germany are doing without, we prop up the Canadian dollar which is not worth the 83 cents indicated on the foreign market. This is the direct result of the system we are operating.
There is one cause, and one cause only, for inflation, and that is government spending and waste. The more government gets involved in the day to day operations of people's lives, the more it is going to spend and the more inflation will increase. The government does not have the income, and it is is not getting it in taxes. What is the government after? It is after more money to run the system. The government does not say it has to get its spending in line. If the government would say it was going to cut back on expenditures this year and next year and balance the budget, then I would humbly submit that the investment community around the world would look at Canada and begin to see immediately that Canada is the place to invest. The Canadian dollar would then strengthen and interest rates would go down because we would have something attractive for the investor. They would have confidence in the Canadian economy.
What are they saying about us in other countries? We become very incensed when we look at things around what we call Parliament Hill. We read editorials about our own words day after day and we begin to think that maybe this is the centre of the world. What are some of the others saying about us? Let me just tell you. The California business research firm, Environmental Risk Limited, has ranked Canada 29th on a list of 45 nations as a place to invest. We are preceded by places such as Singapore, Switzerland, Taiwan and South Korea. That feeling is being expressed not only in the United States but also in other countries. Why? Look at the idiotic and absolutely asinine national energy policy introduced last October. What did it do? This government moved in on the one industry which is healthy and strong and creating jobs and activity right across Canada and, with its national energy policy, killed the goose which was laying the golden egg and keeping the economy humming. Now the government is beginning to sweat because it sees that the national energy policy

May 21, 1981
Interest Rate Policy
will defeat everything the government wanted to do. The government wanted to bring about energy self-sufficiency by 1990. Let us be honest about it; there is no way that will happen. Hon. members opposite know as well as I do that there is no way we will have oil self-sufficiency by 1990 because of the delay caused by their national energy policy.
There is pressure at the present time in the manufacturing sectors in Quebec and Ontario. Why? Because there is a downturn. The golden goose has nearly been killed because this Liberal government took its arrow, shot it and said, "We want more; we are going to take it over". Hon. members opposite killed the golden goose, and where did it go? It took off.


Some hon. Members:: Agreed.


Some hon. Members:: No.


The Acting Speaker (Mr. Parent):: All those in favour of the amendment will please say yea.


Some hon. Members:: Yea.


The Acting Speaker (Mr. Parent):: All those opposed will please say nay.


Some hon. Members:: Nay.


The Acting Speaker (Mr. Parent):: In my opinion the nays have it.
And more than five members having risen:


Mr. Kelly:: How can it take off if we killed it?


Mr. Gray:: We know what you Conservatives did to the "Arrow".


Jack Wendele Shields: Hon. members opposite know exactly what I am saying, although I may not be able to express it as well or as glibly as some others.
There are small businessmen who are prepared to invest in this Canadian community of ours. Companies are ready to invest in Canada. Literally $20 billion are waiting to be invested in two major tar sands plants, one at Fort McMurray and one in the Cold Lake area. That would create in the neighbourhood of 60,000 jobs across the country and greater activity in the manufacturing sector in central Canada, thereby creating more jobs. When there are jobs, wage earners can pay taxes. When there are no jobs, they cannot pay taxes, and federal government revenues begin to decrease substantially.
I ask members of the government to consider very carefully the bankrupt policy they are following, and have been following for the past 12 years, with the complete support, through marriage, of the New Democratic Party, whose members now have a holier-than-thou attitude. They are the ones who have kept this government in power for the past 12 years.
The first realistic budget presented to the people of Canada was defeated by members of the Liberal party through their very convenient marriage to the absolutely immoral socialist New Democratic Party.


The Acting Speaker (Mr. Parent):: Is the House ready for the question?


Some hon. Members:: Question.

It being 9.45 p.m., it is my duty, pursuant to Section 9 of Standing Order 58, to interrupt the proceedings and put forthwith every question necessary to dispose of the business of supply.

The question is on the amendment. Is it the pleasure of the House to adopt the amendment?


The Acting Speaker (Mr. Parent):: Call in the members.


Madam Speaker:: I declare the amendment lost.
Amendment (Mr. Andre) negatived.
The question is therefore on the motion of the hon. member for Oshawa (Mr. Broadbent). Is it the pleasure of the House to adopt the motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Madam Speaker:: All those in favour of the motion will please say yea.


Some hon. Members:: Yea.


Madam Speaker:: All those opposed will please say nay.


Some hon. Members:: Nay.


Madam Speaker:: In my opinion the nays have it.
And more than five members having risen:


Madam Speaker:: Shall we dispense with the ringing of the bells?


Some hon. Members:: Agreed.


Madam Speaker:: I declare the motion lost.

It being ten o'clock, the House stands adjourned until tomorrow at 11 a.m.
At 10.22 p.m. the House adjourned, without question put, pursuant to Standing Order.
MacLellan	Reid
Maltais	(Kenora-Ra
Manly	Riis
Masse	Robinson
Masters	(Burnaby)
McCauley	Rompkey
McRae	Rose
Murphy	Rossi
Nystrom	Savard
Ogle	Schroder
Olivier	Simmons
Ostiguy	Skelly
Ouellet	Smith
Parent	Stollery
Parker	Tardif
Pelletier	Tessier
Penner	Tousignant
Pepin	Trudeau
Peterson	Turner
Pinard	Veillette
Portelance	Waddell
Prud'homme	Watson
Regan	Young-123.

Friday, May 22, 1981