1981-11-13

ROUTINE PROCEEDINGS


Mr. Geoff Scott (Hamilton-Wentworth):: Madam Speaker, since this Friday the thirteenth has brought Canadians yet another increase in the cost of living to 12.7 per cent, amounting to one of the longest spurts of double-digit inflation in Canada's history, and since the Minister of Finance (Mr. MacEachen) only last night forecast in his budget more double-digit inflation, and says that interest rates cannot come down as long as the cost of living is up, I move, seconded by the hon. member for Saskatoon West (Mr. Hnatyshyn):
That the Minister of Finance make an honest statement at the earliest opportunity on how this government will take the lead in fighting inflation instead of punishing Canadians.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE BUDGET
Mr. Vince Dantzer (Okanagan North):: Madam Speaker, whereas the Minister of Finance (Mr. MacEachen) has presented a budget which calls for an increase of 22 per cent in government expenditures, and whereas this budgetary document provides for tax relief for the rich, those persons earning over $100,000, and provides increased expenditure on defence and other things, and whereas this fraudulent document the minister has the audacity to call a budget does absolutely nothing for the poor, the pensioners and those unfortunate retired people, mostly women, who are currently living below the poverty line, and all this in spite of the fact that the cost of living increases month by month, I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That this House condemn the Minister of Finance and censure the Minister of National Health and Welfare for failing to provide adequate or, indeed, any assistance for our elderly, our poor or for our retired citizens.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS EFFECT OF BUDGET PROVISIONS ON ATLANTIC PROVINCES- MOTION UNDER S.O. 43
Mr. Tom McMillan (Hillsborough):: Madam Speaker, under the new fiscal arrangements provided for in last night's budget, the four Atlantic provinces will receive $22 million less next year alone than they would have done under previous arrangements. By 1986 they will receive $86 million less.


An hon. Member:: That is not true.


Thomas Michael McMillan: Hardest hit will be P.E.I. and New Brunswick. I therefore move, seconded by the hon. member for St. John's East (Mr. McGrath):
That this House condemn the Minister of Finance for completely undermining the economies of the have-not provinces of Canada with his budget at a time when they are already suffering severe hardship because of the federal government's mismanagement of the economy.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE CONSTITUTION
Mr. Jim Manly (Cowichan-Malahat-The Islands):: Madam Speaker, in view of the fact that all parties gave unanimous support last January for the inclusion of a clause in the Canadian Constitution recognizing and affirming the aboriginal and treaty rights of Canada's aboriginal peoples, and in view of the fact that this clause was dropped at the first ministers' conference with no public discussion and with no consultation with the aboriginal people themselves, 1 move,

November 13, 1981
seconded by the hon. member for Winnipeg-Birds Hill (Mr. Blaikie):
That all members of this House join the Leader of the New Democratic Party in urging all of the provincial premiers and the Prime Minister to declare their support for section 34 guaranteeing aboriginal and treaty rights, and further, that all members of this House join me in signing a petition to that effect.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE BUDGET
Mr. Ray Chenier (Timmins-Chapleau):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Last night's budget, so ably presented by the Minister of Finance (Mr. MacEachen), included a measure to assist a large segment of Canada's population, and this measure has gone largely unnoticed. The minister announced last night measures to provide duty free entry into Canada of products designed for disabled persons.
I move, seconded by the hon. member for Abitibi (Mr. Gingras):
That this House applaud the progressive-
I do not mean it in the way of the other side, but in the true Liberal manner.
-foresight of the minister in helping to make the lives of disabled Canadians somewhat less costly.


Some hon. Members:: Hear, hear!


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AGRICULTURE
Mr. Charles Mayer (Portage-Marquette):: Madam Speaker, in last night's budget the Farm Credit Corporation was allocated $50 million, or $160 per farm, to cope with the disastrous financial situation the farming community finds itself in. Today, interest rates amount on the average to $7,000, and in many cases interest rates are the largest single farming expense exceeding fertilizer and fuel costs. I move, seconded by the hon. member for Assiniboia (Mr. Gustafson):
That this House condemns the Minister of Finance for his callous disregard of this essential part of the Canadian economy.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


HOUSING
Mr. Joe Reid (St. Catharines):: Madam Speaker, a total of 12,500 home owners, out of a total of one million home owners faced with mortgage renewal within the budget time period as indicated last evening, will qualify for a once-only grant in the government's home owners assistance program. For the city of St. Catharines that means 15 families in a population of
125,000.	I therefore move, seconded by the hon. member for St. John's East (Mr. McGrath):
[DOT] (U10)
That this House condemns the minister responsible for housing for holding out false hopes and expectations to the people of this country as they waited for the budget just presented, and that because of the little impact he has had on the formulation of the budget he do now resign.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


VIA RAIL
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Madam Speaker, pursuant to Standing Order 43 I rise on a matter that is genuinely urgent and pressing. Perhaps it is fitting that Friday the thirteenth appears to be the last sitting day of the House of Commons before the date of the unparliamentary mischief planned by the Minister of Transport (Mr. Pepin) against passenger rail service in Canada, although I hope my motion will have more success than Friday the thirteenth might suggest.
On Monday not only will Canadians lose the Super Continental and the Atlantic Limited, two of the most popular trains in Canada, but coach passengers on the remaining transcontinental trains will also lose hot meal service and, of course, more railroaders will lose their jobs. Since it is now obvious that the minister's train plans, offering slower schedules, broken connections and cold sandwiches, are designed to discourage Canadians from using the remaining services so that more trains will be abandoned, I move, second-
November 13, 1981

ed by the hon. member for Cowichan-Malahat-The Islands (Mr. Manly):
That this House invites the minister to taste VIA's brown bag cold meal service, a sample of which is being laid on his desk-


Madam Speaker:: Order, please. The hon. member is not allowed to exhibit any objects in the House of Commons. I would ask him, please, to get rid of that.


William Alexander (Bill) Blaikie: I will continue my motion, Madam Speaker.
-and, further, that this House urges the minister to rescind the order in council abandoning train services and, if he is too arrogant and stupid to do that, that at the very least he instruct the CNR not to go ahead with the planned scrapping of passenger equipment so that when his mistake becomes obvious, even to him, there will be coaches enough to run the trains again.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE BUDGET
Mr. Don Blenkarn (Mississauga South):: Madam Speaker, last evening the Minister of Finance (Mr. MacEachen) delivered the most deceptive and deceitful speech this House has heard for a long time. He gutted the Small Business Development Bond program. He provided nothing but welfare to small business in trouble with high interest rates, if lenders will bail them out. Rather than help home owners he made sure that the big Financial institutions will not bleed if they capitalize unpaid mortgage payments. I therefore move, seconded by the hon. member for Portage-Marquette (Mr. Mayer):
That this House unanimously condemns the minister for his deception and deceit and directs the Prime Minister to demand his resignation.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


WESTERN ECONOMIC DEVELOPMENT FUND
Mr. Jack Murta (Lisgar):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of great concern to all western Canadians. In view of the fact that, under the provisions of last night's budget, financial commitments to the western economic development fund over the next three years were decimated and that the fund, which was intended to support development projects across western Canada, has, for
all intents and purposes, disappeared, I move, seconded by the hon. member for Crowfoot (Mr. Malone):
That this House condemns the government for its obvious lack of understanding of western Canada and its total sell-out of its promises respecting western economic development as announced in the October 1980 budget.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


RESEARCH AND DEVELOPMENT
Mr. Lome Greenaway (Cariboo-Chilcotin):: Madam Speaker, once again the federal Department of Finance and the minister have overlooked the long-term benefits that accrue from government support of research and development. Therefore I move, seconded by the hon. member for Rosedale (Mr. Crombie):
That the government be soundly condemned for not providing tax incentives which would clearly promote research and development and would have provided job security, new employment opportunities and subsequent economic recovery for Canada.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE BUDGET
Mr. Jim Peterson (Willowdale):: Madam Speaker, I rise under the provisions of Standing Order 43. This morning's lead editorial in The Globe and Mail indicated grudging support for the budget introduced last night in this House by the Minister of Finance (Mr. MacEachen). Obviously this support comes as a shock to many hon. members on this side of the House but, in spite of the fact that this support has come from The Globe and Mail, I move:
That we welcome it and approve the budget.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

November 13, 1981
Oral Questions



ORAL QUESTION PERIOD


Hon. Michael Wilson (Etobicoke Centre):: Madam Speaker, my question is directed to the Minister of Finance. Last night's budget leaves Canadians with a sense of helplessness and frustration in their fight against inflation, high interest rates, and the recession that we are clearly in today. There is nothing in that budget to give Canadians any hope or sense of direction toward a solution of these problems. How does the minister justify a 22 per cent increase in government spending while calling on Canadians, as a principal theme in the budget, to reduce their spending, because this deceit destroys all confidence that Canadians might have had in the budget?


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, I am surprised that the hon. member would use the words "helplessness and frustration" because they seem to describe more accurately his performance last night than the budget. The hon. member asked me to justify an increase of outlays of 22 per cent. I do not need to, because no such increase is taking place. If the hon. member did not rig an interpretation of statistics, he would not be using that fraudulent percentage increase.


JUSTIFICATION FOR INCREASE
Michael Holcombe Wilson: Madam Speaker, I would like to quote from page 73 of "The Budget in More Detail," the paper tabled by the minister last night. Expenditures are shown at the level of $62,711 million in 1980-81 and up almost $14 billion to a 1981-82 figure of $76,565 million. I could send a calculator over to the other side of the House, but that is 22.1 per cent. I did not give an accurate figure, I rounded it down to 22 per cent. I again ask the minister, how he can justify a 22 per cent increase in spending when he is calling on Canadians across this country to restrain themselves, Canadians who are being forced to restrain themselves because of the high interest rates, the 50 per cent increase in energy prices brought in by this government, and a level of unemployment which is forcing people out of work?


Allan Joseph MacEachen: Madam Speaker, the hon. member's question shows very clearly his confusion about economic policy. All in the same breath he is complaining about an increase in the rate of growth of public expenditures when the moisture on his lips had not dried from calling for expanded expenditures last night, just half a billion dollars in one shot, in the interest of restraint. I wonder when he is going to put his two conflicting personalities under control. Is he for restraint or for greater spending?
I want to tell him that the figure of 22 per cent is not correct. He is using the National Accounts, which do not net the petroleum compensation charge and the unemployment insurance contributions. Once that is netted out, the rate of expenditure is reduced to 16.3 per cent. If he will analyse that further, he will find that, apart from public debt charges, the total dollar amount that will be spent in the year to which he refers is less than the dollar amount forecast in the budget. If he looks at his statistics even further, he will find that the rate of growth excluding public debt charges is just about on target with the budget of last October. I invite him, if he intends to participate in this debate, to stay with an honest figure and not a fraudulent 22 per cent National Accounts rigged rate of growth.


Some hon. Members:: Hear, hear!


REASONS FOR PROVISIONS IN BUDGET
Michael Holcombe Wilson: Madam Speaker, I am amazed that the Minister of Finance would use the word "honest" after his display last night.


Some hon. Members:: Hear, hear!


Michael Holcombe Wilson: I do not know how this minister can talk about ignoring interest charges-let us look at our expenditures while ignoring interest charges. Every other Canadian in this country has to pay interest and has to pay interest which has gone up to 25 per cent because of the policies that have been followed by this government.


Some hon. Members:: Hear, hear!


Michael Holcombe Wilson: This budget has perpetrated a fraud on many Canadians, whether they are home owners, renters, small businessmen, farmers, pensioners, people suffering from the problem of urea formaldehyde, all of whom were led to believe that the budget would provide some response to these problems in return for the average federal energy tax of $1,400 per family per year over the next five years. Why has the minister designed a budget which is restrictive, which increases taxes, and which will force Canada more deeply into recession and more than one million Canadians out of work this winter?


Allan Joseph MacEachen: Madam Speaker, the hon. member again has put together a grab bag of items so that it is rather impossible to deal with them in any organized way. He asks how I can justify the budget. Let me deal with one aspect to which he has referred, namely, the assistance that we have provided to home owners.


An hon. Member:: What assistance?


Allan Joseph MacEachen: I thought that he would support that, because in a recent speech in New York the leader of his party called for assistance to home owners and he laid down several criteria. He said, "The assistance must be selective, it must be
November 13, 1981

temporary, and it must be directed solely to those in genuine need."
I believe I have gone even a bit further than the Leader of the Opposition by providing, not for the 12,000 mythical number of home owners that the hon. member talked about, but for every home owner in the country facing renewal problems who, on his own account, cannot handle the problems. That home owner will be helped by the program of the government which consists of a guarantee of interest deferral where that is appropriate, and consists, in other more difficult cases, of a subsidy of $250 a month, amounting to $3,000 a year, in the case of individual home owners.


An hon. Member:: Right on.


Allan Joseph MacEachen: That program, Madam Speaker, will discharge fully the commitment made by this government that no home owner will be put out of his home because of abnormal interest rates.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


HOUSING
Hon. James A. McGrath (St. John's East):: Madam Speaker, my supplementary question is directed to the minister responsible for housing. However, I should like to say to the Minister of Finance, as demonstrated by his budget last night and by his answers today, that he does not understand or appreciate what real need is all about.


Some hon. Members:: Hear, hear!


James Aloysius McGrath: That is our problem, Madam Speaker. I should like to ask the minister responsible for housing-and I should say the minister irresponsible for housing-


Some hon. Members:: Oh, oh!


James Aloysius McGrath: -given the fact the seasonally adjusted housing starts are currently running at 135,000, can the minister tell the house how this so-called mortgage interest deferral scheme, which is nothing but the graduated mortgage interest program now put in effect by the banks-it is not a new program-all he has done is dress it up with a new name, in a shameful attempt to deceive the Canadian people-


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


James Aloysius McGrath: That is what he has done. I should like to ask the minister how that can possibly help harassed home owners, because in actual fact people who will qualify for benefits
Oral Questions
under this so-called scheme will be worse off five years down the road?


Some hon. Members:: Hear, hear!


Hon. Paul J. Cosgrove (Minister of Public Works):: Madam Speaker, I would admit that the $350 million that is set aside to fund this program, which the hon. member says is not a new program and offers no benefits-that money is slated to assist those people who need help the most. That program, indeed, is a real benefit to the many hundreds of people who have written me in the last few weeks who definitely and directly will be assisted by that program. I would say to the hon. member with respect to his earlier analysis of starts, the seasonally-adjusted rates, I think he had better go back to his researchers.


Some hon. Members:: Hear, hear!


EXTENT OF GOVERNMENT'S PLANS TO MEET NEEDS
James Aloysius McGrath: Madam Speaker, I would suggest that the minister would serve the country well if he went back to being mayor of Scarborough, or wherever it was.


Some hon. Members:: Hear, hear!


James Aloysius McGrath: He is applying a band-aid to an industry which is bleeding to death. With respect to their so-called solution to the rental crisis in the country, they will subsidize 15,000 units. At the same time they are wiping away MURBs and they are reducing social and co-op housing by 5,000 units. CMHC estimates that we will need 100,000 extra units next year to meet the crisis in Canada. The 15,000 will not even address the problem in metropolitan Vancouver alone.
Is this their final answer to the crisis in the country which is causing people to suffer financially, which is causing people to have no hope with regard to shelter, which is causing a labour-intensive industry not to be operating in a year when unemployment is over 8 per cent? Is this the minister's final answer? If it is, I suggest that the minister should follow the example of the Hon. Paul Hellyer when the government failed to respond to him ten years ago, and resign from government.


Some hon. Members:: Resign! Resign!


Mr. Epp:: Goodbye, Paul.


Paul James Cosgrove: Madam Speaker, I realize the hon. member is having difficulties when he stands to criticize the government for attempting to direct assistance to those communities across the country which need it most, for example, to direct assistance to those communities with low vacancy rates. Our objective in the new program announced last evening, the front-end support for rental construction, was to bring those new starts to communities which need them. Many members on the other side, sitting around

November 13, 1981
Oral Questions
the hon. member and in his own party, have on occasion, and repeatedly, said to the government that MURBs do not direct assistance to where it is needed. Hon. members of the New Democratic Party as well have said that MURBs are not effective to direct assistance to where it is required. I am afraid the hon. member will have to get together with his hon. colleagues on that side to decide what they really want us to do.


Mr. Nielsen:: Scarborough needs you.


ATTEMPTS BY MINISTER TO ASSIST HOME OWNERS
Mr. Edward Broadbent (Oshawa):: Madam Speaker, my question is directed to the minister responsible for housing. The good people of Scarborough have it hard enough; the last thing they want is him back as mayor.


Some hon. Members:: Right on!


John Edward Broadbent: About two weeks ago, in a document signed by the minister, he pointed out that next year thousands of home owners will be faced with an extremely difficult situation. As for renters, if anything, with rent increases rising by as much as 100 per cent, the situation would be worse. Will the minister confirm that, as a result of last night's budget, with mortgage payments rising from $200 to $400, with the majority of those people who have to pay the increases being excluded from any benefit, and with his decision to increase the supply of rental units by only a pittance of 15,000 units over the next couple of years, the government's approach is totally inadequate? In short, will he now admit to the House that what he promised would be coming in the budget was not there when we saw it last night, and that he has failed as the minister responsible for housing?


Paul James Cosgrove: Madam Speaker, I indicated to members of the House earlier this week that, in response to petitions brought to this House by members on all sides on behalf of people affected, I had answered each of those people who sought help. That involved thousands, as a matter of fact over 10,000 responses. I have a copy of that response with me today and I will make it available to the hon. member.
In that letter I indicated that the government's approach to the people who were experiencing genuine difficulty would be to respond to them first. That is what we have done in the program announced last evening to assist people who need help the most. It is an effective program.
I admit it is not the $1.5 billion program that the NDP asked that we should put into the economy; it is a $350 million program. That is a major introduction, a major commitment of this government to the industry, and I predict it will result in a higher number of starts next year in this country than there were this year.


MORTGAGE FUNDS MADE AVAILABLE BY BANKS
John Edward Broadbent: Madam Speaker, in terms of dealing with the housing crisis as related to mortgages, we have not said that the taxpaper should bear that burden. We have said that the banks and financial institutions ought to bear their share of the burden.
Given that bank profits were up almost 50 per cent in the first nine months of this year for a total of $1.4 billion, could the minister explain to the House why the government did not restore to the Bank Act what used to be there and was taken out by the Liberals, that is to say, the principle that mortgages have to be made available by the banks at levels an ordinary family could afford? Why did the government not put that back in the Bank Act? Why in God's name did it not have the decency to bring in an excess profit tax for banks in the budget and at least use that money for assistance to home owners?


Paul James Cosgrove: Madam Speaker, I will defer and refer that question to the minister responsible for finance. I should like to indicate that the financial institutions had already taken steps to assist Canadians. We have asked for their co-operation. We have asked, for example, at a meeting with them on Monday morning, that they co-operate with the government in expanding the steps they have taken to assist individual home owners faced with difficult times on mortgage renewals.


REQUEST THAT MINISTER RESIGN
John Edward Broadbent: Madam Speaker, I urge the minister to read the budget address given by the Minister of Finance. What that address does is ensure that the Government of Canada is going to provide a guaranteed profit program for banks. That is what it does. The banks are not taking any risks at all, and the minister should know that.
In the last paragraph of this infamous document, the Minister of Finance said that as a result of the housing crisis-and that has not been changed at all by last night's budget-it is difficult to quantify the social implications arising from the stress and apprehension affecting home owners and renters. Those are the minister's words. It is clear from the puny and insignificant measures brought forward last night that the situation, far from improving, is going to get worse.
The minister has now seen what the Minister of Finance brought forward. Will he, in good conscience, now admit that what he was promising was not produced, and will he therefore submit his resignation to the government?


Some hon. Members:: Hear, hear!


Paul James Cosgrove: Madam Speaker, I must admit that I do not share the confidence of the Leader of the New Democratic Party in describing a $350 million program to assist housing as a puny response. I think that is a significant response. More important, I can assure the hon. member, and members on all sides of the House who have written me asking for assistance with genuine hardship cases-
November 13, 1981

and there are approximately 200 that hon. members thought would fall in that category-that those cases will be addressed by the mortgage renewal program introduced last evening. Further, hundreds and thousands of other-we calculate a range of somewhere in the category of 50,000 households- will benefit under that program.


LABOUR CONDITIONS
Hon. David Crombie (Rosedale):: Madam Speaker, last week 1 asked the Minister of Industry, Trade and Commerce what the government was going to do to help the thousands of people who have been thrown out of work as a consequence of lay-offs and plant closings across the country. The minister said at that time, and I quote:
I think that my hon. friends should respond with a very positive note to the budget of the Minister of Finance, which is only a few days away.
We now have the government's budget, and we now know there is absolutely nothing in it of practical value for these people. More and more Canadians are being forced by the government's policies to look to a future without a job. I want to ask the minister once again what the government intends to do to get these people back to work.


Hon. Herb Gray (Minister of Industry, Trade and Commerce):: Madam Speaker, I think we should reject completely the unsustainable and inaccurate premise of my hon. friend's question. The truth of what I am saying is demonstrated with just three points.
First of all, the budget has a number of important measures aimed at helping small and medium-sized business, which is a major source of job creation and economic growth in this country.
Second, the change in the basis for the imposition of the federal sales tax from the manufacturing to the wholesale level removes the serious bias against Canadian-made goods in favour of imported ones. This in itself will have a major positive effect on job creation over a period of time in this country.
Third, the economic and industrial development strategy tabled yesterday produces a framework for federal government leadership and activism.


Mr. Nowlan:: A farce.


Herbert Eser (Herb) Gray: It supports innovative and productive activity by the private sector in every region of Canada with tremendous opportunities for jobs and activity in the industrial and economic field for all Canadians, now and for many years to come.
Oral Questions


IMPACT OF UNEMPLOYMENT ON FAMILIES
David Edward Crombie: Madam Speaker, as I am sure the minister knows, the facts of the matter are that 88,000 jobs were lost in September and October alone. We now have 989,000 Canadians walking the streets looking for work. In Brantford, Ontario, hundreds of people were laid off at Massey-Ferguson and White Farm Machinery, and this week hundreds more have been laid off from Pullman and from Koehring of Canada. The impact on these people, their families and their communities, is staggering. I want to know, and they want to know, why that is acceptable to this government?


Herbert Eser (Herb) Gray: Madam Speaker, we are very concerned about unemployment.


David Edward Crombie: Show it.


Herbert Eser (Herb) Gray: We take our responsibilities very seriously. If we had not taken them seriously, there would be no Massey-Fer-guson operating at all in Brantford today. If we were not taking those responsibilities seriously there would be no White Farm Machinery operating in Canada today. There are people working there now who would have no jobs if it were not for our initiatives. We provided the basis for a strengthening and restructuring of these companies so that these workers will have jobs to come back to as the economy strengthens.
My hon. friend has not only missed this reality but it is typical of the way his party has missed the need for helping the economy, something which was recognized by the public in the last election.


Mr. Kempling:: Run another one.


THE BUDGET
Hon. Flora MacDonald (Kingston and the Islands):: Madam Speaker, my question is for the Minister of Finance. The reality of the situation is that there are one million Canadians unemployed as of the middle of October, and there are many more unemployed today. Before this winter is through there will probably be 1.5 million Canadians out of work. The budget totally ignores the plight of the jobless.
When the minister was drawing up his budget did he consider the social burdens that would be imposed by this unemployment crisis, for instance, the increase in marriage breakdown, the increase in crime and violence, the increase in alcoholism and suicide? Did he consider these things, or did he, in fact, totally disregard them in the way that he totally disregarded the unemployment crisis in Canada today?

November 13, 1981
Oral Questions
[DOT] (U40)


Allan Joseph MacEachen: Yes, Madam Speaker, I certainly did consider the question of unemployment and the impact it has on the most affected, and on the economy as a whole. That is why I laid out a strategy in my budget which offers the only possible basis upon which we can resume growth and increase jobs. The main obstacles to development, job creation and investment in this country are high interest rates and inflation. That is why the first theme of the budget is restraint, in order to get interest rates down and to get inflation down.
Let me tell the hon. member through Your Honour that there is no hope-


Some hon. Members:: No hope!


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: There is absolutely no hope-


Mr. Baker (Nepean-Carleton):: It is a no-hope budget!


Allan Joseph MacEachen: -there is no hope to get jobs and decrease unemployment in this country if we cannot get interest rates and inflation down. That is the purpose of the budget. 1 hoped it would sink into hon. members of the opposition that there is a link between inflation and unemployment. One day they raise hell about inflation, and the next day they raise hell about unemployment, and they do not yet understand the connection between the two.


Some hon. Members:: Hear, hear!


QUERY RESPECTING JOB-CREATION PROGRAMS
Flora Isabel MacDonald: Madam Speaker, there is no hope for over one million Canadians who are out of work today because of the action or the lack of action of this government. The Prime Minister smiles through it all because he really does not care.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Flora Isabel MacDonald: The minister says he is out to fight inflation; but even today the cost of living has gone up to 12.7 per cent. It has gone up, and that means that people who, for instance, are unemployed or are on fixed incomes will have to pay 40 per cent more this winter for their home heating fuel. That amounts to $300 more for the average family, and $200 of that is in federal taxes. The minister, who used to care about these things once upon a time, is now personally out to victimize the jobless. That is what he is doing.
Is the minister satisfied that he has now condemned over one million Canadians to a winter of hopelessness because he has failed to address job creation in his budget?


Allan Joseph MacEachen: Madam Speaker, I know that the hon. member is reading from the prepared script. She has made absolutely no connection between the answer which I gave to her and the subsequent question.


Flora Isabel MacDonald: Because you didn't have an answer.


Allan Joseph MacEachen: If she had contested my assertion that the only way to ensure job creation in this country-


Flora Isabel MacDonald: Your inflation rate has gone up today.


Allan Joseph MacEachen: -is to get inflation down, then I would be able to deal with her in a reasonable way. However, she has repeated her question in a separate way.
As the hon. member well knows, we have in place a number of job-creation programs which will be in effect this winter. The rate of unemployment projected this winter will be less than that projected last winter, for which we provided through very substantial-


Flora Isabel MacDonald: A million and a half Canadians unemployed.


Allan Joseph MacEachen: -funding, through the community employment program and through the industrial labour and adjustment program. As I recollect, this winter almost $500 million will be available in these two programs in the field of job creation, which I regard as absolutely indispensable in assisting, particularly in the areas of high unemployment. However, the hon. member knows that that is not the permanent solution. The permanent solution-


Flora Isabel MacDonald: Is job creation.


Allan Joseph MacEachen: -to our economic situation is to clear away the obstacles of inflation and high interest rates so that we can benefit from the undoubted capacity in the economy to grow and to develop jobs.
I draw the hon. member's attention to the document-


Flora Isabel MacDonald: Your figures are out right now.


Allan Joseph MacEachen: -on economic development which shows that projects in the amount of $440 billion are ready to be put in place before the end of the decade in this country, Canada. That is the growth dynamic.


Flora Isabel MacDonald: What about this winter?


Allan Joseph MacEachen: That is what will create jobs in Canada. The only way we can realize that opportunity is to be firm and get inflation down and get interest rates down, and that is what I am trying to do.


Some hon. Members:: Hear, hear!


Flora Isabel MacDonald: Tell that to the unemployed.

November 13, 1981


TAXATION OF MIDDLE-INCOME GROUPS
Mr. Bob Rae (Broadview-Greenwood):: Madam Speaker, my question is also for the Sheriff of Nottingham this morning. The budget speech contains a bald falsehood on page three. I would like to read it to the minister. It states:
Tax rates will be reducced for all taxable incomes over $ 11,120.
However, if we turn to page 32 of the document which is called "The Budget in More Detail", it shows that tax rates for those Canadians earning between $15,000 and $25,000 will remain exactly the same and have not been reduced at all. I would like to ask the minister why he presented the budget speech and a budget statement to this House which contained a falsehood of fact.


Erik Nielsen: That's right, Allan.


Allan Joseph MacEachen: Madam Speaker, the hon. member is talking about falsehoods in the budget speech, and I hope that he will reflect and withdraw that comment. In the budget documents, without any effort to conceal, the progressive effect on the taxpayers of Canada is clearly established, first of all of the very major removal of tax benefits in the budget. I am very surprised that in all the questions, neither the Tory party nor the NDP party, the representatives of which formed a tag team on Canada AM, mentioned that this was a very forward step. However, that is all covered in the diagrams. Then we go on to show the impact of the tax rate reductions, and then we go on to show the impact of the continuation of indexation.
When one looks at all of these tables together, one will clearly see that the statement which I made in the budget speech is correct. If it is not correct, I will be very glad to withdraw it after I examine the figures.


TAX RATES APPLICABLE TO FAMILIES
Bob Rae: Madam Speaker, I have no intention of withdrawing the remark, because I think it is correct. I think the minister has misled the House, and I hope he will take the trouble to consider the matter. The statement says "tax rates". It does not refer to diagrams, and it does not refer to all the other foofaraw contained in the budget. It refers specifically to marginal tax rates. If the minister looks at it, he will see that the statement he made in the budget is not, in fact, true.
I would like to turn to another point, and my supplementary question concerns page four of the budget statement. The third paragraph states:
As a result of indexing and the measures I have announced, a typical family of four will be able to earn about $15,000 in 1982 without paying any federal tax.
I would like to ask the minister whether he regards a typical family of four as being a family where one of the spouses is not working. Does he not really think it is time that the budget reflected the reality of the twentieth century, that is, that men and women both have an equal right to work?
Oral Questions


Allan Joseph MacEachen: Yes, I think that we all recognize that reality. It does not require a budget to implant that in my mind. It may require a budget to get it into the hon. member's head.


Flora Isabel MacDonald: Except for the Prime Minister.


SCIENCE AND TECHNOLOGY
Mr. Stanley Hudecki (Hamilton West):: Madam Speaker, I would like to direct my question to the Minister of State for Science and Technology. This day marks an historic milestone in the continued co-operation of the United States and Canada in pooling their skills and technology in exploration of space. Today the remote manipulator system is being deployed on the United States space shuttle Columbia.
Could the minister tell us to what extent Canada's involvement in the design and construction of the remote manipulator system with the United States shuttle promotes Canadian space industry and Canada's economy?


Some hon. Members:: Oh, oh!


Hon. John Roberts (Minister of the Environment and Minister of State for Science and Technology):: Madam Speaker, I do not know why this question should cause some dismay opposite. I would have thought that all hon. members of the House would want to salute what has been an extraordianry day for Canada.


Some hon. Members:: Hear, hear!


Mr. Hnatyshyn:: Okay, salute. Sit down; we salute.


John (Moody) Roberts: The latest information we have is that the Canada Arm has been deployed and is operating entirely successfully-


Erik Nielsen: Send MacEaehen up with it.


John (Moody) Roberts: -meeting all of the hopes that we had for it. We are very pleased, of course, with this development, not only because it marks the very significant co-operation between the United States and Canada in space, and we believe that that kind of international co-operation is a proper way of approaching space, but because of the tremendous economic advantages and technological spin-offs which will accrue to us as a result of the successful development of this arm, not only in the future sale-


Madam Speaker:: Order.

November 13, 1981
Oral Questions



THE BUDGET


Hon. Roch La Salle (Joliette):: Madam Speaker, my question is directed to the minister responsible for housing, who said this morning he was very happy with the measures announced by the Minister of Finance yesterday. The minister has raised the hopes of many home owners and renters. This morning, however, some economists and a home builders' association pointed out that not more than 10 per cent of home owners faced with mortgage problems would be able to benefit from the measures announced. In the circumstances, is the minister prepared to remain committed to honesty, an approach which he has tried to put into practice in the past few weeks, and tell us whether an additional program will be submitted to help the 90 per cent who will not benefit from these measures? Could he also tell us what measures can assist renters faced with rent increases of at least 50 per cent in the coming year? I think that thousands of Canadians need to know this morning what the minister intends to do in addition to the totally inadequate measures presented yesterday evening.


Paul James Cosgrove: Madam Speaker, the budget documents tabled by the Minister of Finance last evening will indicate, number one, a new stimulus program, front-end assistance to spur 15,000 units of rental accommodation. That is in addition to the commitment of the government to continue with its Section 56(1) support of non-profit and co-operative housing projects which will be continued. The total of those used across the country in areas where there is an identified need of people who need that type of assistance will go a long way to satisfy the request we have annually fed into Canada Mortgage offices across the country and which we have responded to in those very difficult markets.
I assure the hon. member that when I meet with the minister for housing for the province of Quebec I will have the opportunity of learning from him where we can be most effective in targeting the assistance to which I have referred. This is an ongoing commitment of the Government of Canada toward assisting those people who first need help in what we appreciate is a downturn in the housing industry at this time.


Roch La Salle: I wish to ask a supplementary question, Madam Speaker. It is clear that the minister already realizes the inadequacy of this measure. In any case, I wish to direct my supplementary question to the Minister of Industry, Trade and Commerce, who is aware that large numbers of factories have had to shut down, and he is also aware of the need to revive housing construction. I wish to ask him whether he could tell the House today if the measures presented yesterday are likely to benefit the housing industry which employs 33 per cent of the work force, considering the fact that the minister is aware of factory shutdowns in his province as well as mine. The situation is becoming increasingly urgent. I trust he will not merely repeat the argument put forward by the Minister of Finance to the effect that we must fight inflation and rising interest rates before we can make valid proposals, because for the past two years the government has been telling us that it has failed in both respects. So today-


Madam Speaker:: Order!


Herbert Eser (Herb) Gray: Madam Speaker, yesterday in his budget speech the Minister of Finance announced a special program that is to create 15,000 low-rental units. The purpose of this program is to support the construction industry and, also, through our programs, to stimulate industrial and economic development projects such as the KHD project in Montreal, which my colleague, the Minister of Regional Economic Expansion, and myself announced a few weeks ago, a project that will create 1,300 jobs in the Montreal area. It will also create jobs for the construction industry which will be building the factories required. Here are two examples of concrete programs to help the construction industry which were created by this government.




Hon. John C. Crosbie (St. John's West):: Madam Speaker, my question is for the Minister of Finance, the minister of no hope. The minister in his budget last night, and I refer to page 6, made another deceitful statement when he said this: "federal contributions to the financing of provincial medical care, hospital care and post-secondary education programs" would not be affected. When we look at the detailed budget papers we discover that in 1982-83, next year, federal contributions go down $500 million, and the year after $915 million, by
November 13, 1981

eliminating the revenue guarantee and changing the EPF rules.
My question to the finance minister is this. Why has he attempted to deceive this House and the people of Canada by pretending that the contributions to those programs are not going down, when they are going down $1.5 billion over the next two years? Why is he doing that? Why is the minister cutting back spending on the sick, on the hospitalized, those in the dispossessed areas of Canada, and the students of Canada? Why is he doing that and then attempting to deceive the people of Canada by pretending he is not doing it?


Allan Joseph MacEachen: Madam Speaker, I am glad the hon. member has raised the question because it gives me a further opportunity to state quite clearly that there is no intention in the budget to cut payments to hospital insurance, medicare or post-secondary education. The revenue guarantee is quite apart from that.
I can show the hon. member statements made by provincial ministers which show quite clearly that they have never regarded the revenue guarantee as part of the payments for these programs. Indeed, when the premiers met some time ago they released a statement showing their share and the federal share of these programs, and the revenue guarantee was not included.
The hon. member has an uphill battle if he is attempting to show that the elimination of the revenue guarantee affects these programs. I draw to his attention, for example, a table that appeared in the report of the task force of this Parliament which shows, and displays very clearly, the portion of federal contributions to the operating costs of universities, ex-revenue guarantee. They show the amount going to the provinces each year from the federal government without the revenue guarantee. That shows that, on the average, 60 per cent, and sometimes more, of the operating costs going to universities comes from the federal government. That is a pretty clear demonstration that the hon. member is off the mark.



QUERY RESPECTING FUTURE CONTRIBUTIONS

John Carnell Crosbie: Madam Speaker, my supplementary is to the minister who is a deceiver, and not a very gay one. Look at page 49 of this document which shows a $915 million reduction for post-secondary education, medicare and EPF programs in the second year from now, and $500 million next year.
Money is money, and if you reduce your contributions to the shared-cost programs by $1.5 billion, no matter how you do it they lose $1.5 billion, and the poorer provinces cannot make it up, the students cannot get it, the sick cannot get it, and the hospitalized cannot get it. The minister has gutted the mortgage holders of Canada, he has gutted Mr. Gray, he has gutted the unemployed, he has gutted the housing industry, he has abandoned the sick, he has abandoned the dispossessed, and he has abandoned those who want an education.
Petitions


Madam Speaker:: Order, please.


John Carnell Crosbie: Is he going to bring in another budget next week to try to-


Madam Speaker:: Order, please.


John Carnell Crosbie: When will he tell the people the truth?


Madam Speaker:: Order, order.


Allan Joseph MacEachen: Madam Speaker, the hon. member does not seem to be able to deal with the facts. He deals with rhetoric. Maybe if he had learned earlier to deal with facts he might not be where he is today.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: The plain fact-


John Carnell Crosbie: You lie and deceive them. That is why you are there.


Some hon. Members:: Order.


Allan Joseph MacEachen: Madam Speaker, the hon. member, when confronted with reality, has to lapse into brutal rhetoric and personal inferences, which is not becoming to this House of Commons, and I want to tell him that if he expects his questions to be taken seriously in the House of Commons he had better learn to stop larding them up with unacceptable personal references, and not attempt to conceal his lack of analysis by a plethora of unjustified rhetoric.


Some hon. Members:: Hear, hear!



PETITIONS


Madam Speaker:: I have the honour to inform the House that the Clerk of the House has laid upon the table reports of the Clerk of Petitions stating that he has examined the petitions presented by hon. members on Tuesday, November 10, 1981, and finds that they meet the requirements of the Standing Orders as to form.

November 13, 1981
Point of Order-Mr. W. Baker



ROUTINE PROCEEDINGS


[Stage Direction]
Ninth report of Standing Joint Committee on Regulations and other Statutory Instruments-Mr. Robinson (Burnaby).
[Editor's Note: For text of above report, see today's Votes and Proceedings.]

Hon. Andre Ouellet (Minister of Consumer and Corporate Affairs):: Madam Speaker, in accordance with Standing Order 41(2), I wish to table, in both official languages, the report of the Committee on Indemnification of Employees in Matters of Bankruptcy and Insolvency.
The committee was chaired by Dean Raymond Landry and also included Messrs. Ronald Lang, George Hitchman and Raymond Dufour. In tabling this report, I also wish to thank them for their excellent work.


FEDERAL BUILDINGS
Walter David Baker: Madam Speaker, I rise on a point of order. I am asking for the attention of the Minister of Public Works (Mr. Cosgrove) with respect to my point of order.
There were some reports in the press that there is now available a report on the condition of the ventilation of Les Terrasses de la Chaudiere which was to be available to the public, a full report not only with the conclusions but with respect to the findings of the people who made that report. I wonder if that is available. This is a report which has been referred to publicly and I wonder whether or not the minister is prepared to table that report in the House of Commons, if not today then perhaps at the beginning of next week.


Paul James Cosgrove: Madam Speaker, I am sure that is not a point of order. However, I will take note of the representations of the hon. member and I will speak to him later this afternoon.


PETITIONS
Mr. Bill Domm (Peterborough):: Madam Speaker, I am tabling in this House today a petition by 43 home owners, which was collected by the Peterborough local of the United Electrical Workers, who ask that the minister responsible for CMHC intercede to save their homes.
People cannot afford to face interest charges, having them deferred and compounded over a five-year period along with second mortgages and AHOP loans. They will eventually find themselves faced with first, second and third mortgages and owing more principal on their homes than they did when they bought them.
With respect, I table this petition and ask that you take it under advisement and respond. I am also providing a copy of this petition to the minister responsible for housing so he can immediately proceed to look into these 43 cases supplied by the United Electrical Workers Union on behalf of those people who are in danger of losing their homes.


Mr. Ron Stewart (Simcoe South):: Madam Speaker, I have the duty to present a petition on behalf of my constituents of Simcoe South. The purpose of this petition, which was signed by 1,201 citizens of the Tottenham area, is to indicate to the government that mortgage interest rates are forcing them out of their homes and leaving them in dire straits.
The intent of this petition is to demand that the government lower its interest rates and develop a plan of action which will enable families to retain their homes. These petitioners hope Your Honour will find their petition in order and sense the urgency and desperation of their plea, and that you might use the discretionary powers of your office to allow discussion and referral to committee at the earliest possible moment.


Hon. John M. Reid (Kenora-Rainy River):: Madam Speaker, I have the honour to present a petition signed by approximately 200 residents of the Sioux Lookout district and surrounding area protesting the cutback by the federal government of the subsidies to VIA Rail.


Some hon. Members:: Hear, hear!


Mr. Dave Nickerson (Western Arctic):: Madam Speaker, on October 19 I had the pleasure of filing a petition signed by over 1,000 people from my constituency which objected to the passage of Bill C-48 on the grounds that it would prejudice the settlement of land claims, block the evolution of responsible government and disable northerners in the development of their own economy.
November 13, 1981

Subsequently, an additional 109 people have signed that petition. They are from remote areas and their names were not available on October 19. Therefore, I would like to file with this House an addendum to that petition.



THE CONSTITUTION


Hon. Yvon Pinard (President of the Privy Council):: Madam Speaker, after several consultations and especially after discussions with the representatives of the two opposition parties, it would seem that considering the agreement reached last week at the constitutional level, there is unanimous consent in the House for authorizing the Minister of Justice (Mr. Chretien) to simply withdraw Motion No. 36 appearing under Government Orders, concerning the debate on the Constitution and on the Address to Her Majesty regarding the Constitution of Canada. Would you therefore please ask the House whether there is indeed unanimous consent for simple withdrawal of the motion?


Erik Nielsen: Madam Speaker, such discussions have occurred and the official opposition, in a spirit of co-operation, gives that unanimous consent which has been requested.


Mr. Ian Deans (Hamilton Mountain):: Madam Speaker, I can also verify that discussions have taken place and that we give unanimous consent.


Madam Speaker:: Does the House give unanimous consent to the withdrawal of this motion?


Some hon. Members:: Agreed.
Order discharged and motion withdrawn.


BUSINESS OF THE HOUSE
Yvon Pinard: In the circumstances, since the resolution has been withdrawn and is no longer on the Order Paper, I should like to determine the business for the next few days which might be of some help to my colleagues on the opposite side. We shall have four consecutive days of debate on the budget, that is, today, Monday, Tuesday and Wednesday, so that if there are subamendments and amendments, votes will be held Monday night and Wednesday night. Furthermore, by the beginning of next week, I shall be able to determine the
Order Paper Questions
business for next Thursday and Friday. Finally, the government intends to give notice very shortly of a new resolution on the Constitution, in view of the agreement concluded last week.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. David Smith (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 1,500, 3,045, 3,176, 3,177, 3,178 and 3,179.


Mr. MacKay: 1.	With reference to the government's restraint program for the fiscal year 1978-79 and 1979-80, by province and/or region and for Canada, what was the total reduction in expenditures for (a) terminations or deferrals of capital projects (i) Lethbridge Laboratory (Agriculture) (ii) Newfoundland Environmental Centre and Maritime Forest Research Centre (Environment) (iii) Vessel Capital Reduction (Fisheries) (iv) Defence Capital Projects (Defence) (v) Marine Program (Transport) (vi) Public Works Capital Projects (vii) Capital Projects (RCMP) (viii) Capital Projects (Penitentiary Services) (ix) Reduction in Capital Projects (National Harbour Board) (x) La Prade Mothballing (EMR) (xi) Salmonid Enhancement (Fisheries) (b) reductions in non-statutory contributions (i) Outreach (CEIC) (ii) Training Allowances (CEIC) (iii) Small Craft Harbours, reduction in assistance to recreational boating projects (Fisheries) (iv) New Horizons (National Health and Welfare) (v) Termination of Agricultural and Rural Development Act (DREE) (vi) Bilingualism Development (Secretary of State) (vii) Reduction in Financial Assistance to Local Airports (Transport) (viii) Canada Works-Economic Growth Component (Treasury Board Secretariat) (ix) Oil Import Compensation, Adjustment of Computation Method for Atlantic Tariff (EMR) (x) Reduction in Compensation for Waterfowl Damage (Agriculture) (xi) Contribution Toward Construction at Veterinary Universities Deferral (Agriculture) (xii) Grants to Universities for Water Resources Research, Termination (Environment) (xiii) Local Employment Assistance Program, Reduction (xiv) Young Canada Works (xv) Summer Job Corps (xvi) Industrial Training (xvii) Prairie Highway Upgrading (Transport) (xviii) Northern Highway Program in British Columbia and Alberta, Termination (DREE) (xix) Termination of Support for Land Registration and Information Services, Council of Maritime Provinces (DREE) (xx) Prairie Rail Branch Line Rehabilitation (xxi) Health Resources Fund-Deferment (xxii) Professional Training Program (c) reduction in levels of service (i) Management of the Radio Frequency Spectrum (Communication) (ii) Federal-Provincial Water Management Program (Environment) (iii) Regina Weather Office (Environment) (iv) Federal Facilities Clean-up Fund (Environment) (v) Forestry Research Station (Environment) (vi) Northern Road Construction-Reductions (Indian and Northern Affairs) (vii) Temporary Assistance Program (Fisheries) (viii) Offshore Surveillance (Fisheries) (ix) Ocean Aquatic Services (Fisheries) (x) Statistics Canada Survey (xi) Cape Breton Development Corporation (xii) Canadian Broadcasting Corporation (xiii) Urban Transport Assistance Program (Transport) (xiv) Canadian Transport Commission, Railroad Grade Crossing Fund (Transport) (xv) Space Lab-systems and Components, Reduction in Level of Activity (Communication) (xvi) National Museums, Reduction in Level of Funding (xvii) Canadian Film Development Board, Reduction in Level of Funding (xviii) National Film Board, Reduction in Level of Funding (xix) Hospital Transfers to Provinces (Veterans Affairs) (xx) Federal Loans to Provinces-Public Housing Loans (Urban Affairs) (xxi) Federal/Provincial Land Assembly Programs (xxii) Training Improvement Contributions (CEIC) (xxiii) Manpower Training Purchase Courses (xxiv) CHOICES (CEIC)?

November 13, 1981
Order Paper Questions
2.	For the same years, by province and/or region, what (a) was the per capita reduction (b) were the reductions as a proportion of the national total?
3.	For the same years, did the Atlantic provinces bear a disproportionate share of these reductions stemming from program changes and cuts?


David P. Smith: Records are not maintained in such a manner as to provide an accurate answer to this question. The cost in manpower and time to undertake the very large amount of work which would be required to gather such detailed data as is obtainable for the period covered by the question, would be prohibitive.


Mr. McKinnon: Is the Department of National Defence purchasing taffeta nylon cloth from Consoltex Inc. for $467,536 and, if so, for what purpose?


Hon.   J.-J. Blais@Minister of Supply and Services: The Department of Supply and Services, on behalf of the Department of National Defence awarded three contracts for a total value of $467,536 to Consoltex Inc. for taffeta nylon cloth. The fabric is utilized during the manufacture of DND operational garments.


Mr. Cossitt: Was the Minister of Employment and Immigration appointed to serve as a member of the security committee of the cabinet and, if so, what are all of his qualifications?


Yvon Pinard: See
House of Commons Debates, appendix A, October 14, 1981. The qualifications required for membership in a committee are membership in the cabinet and designation by the Prime Minister.


Mr. Cossitt: Was the Minister of Energy, Mines and Resources appointed to serve on the security committee of the cabinet and, if so, what are all of his qualifications?


Yvon Pinard: See
answer to question No. 3,176 answered this day.


Mr. Cossitt: Is the President of the Privy Council chairman of the labour relations committee of the cabinet and, if so (a) did he replace the former minister of labour, the hon. member for Halifax (b) for what reason was the new Minister of Labour only appointed a member of the committee rather than appointed chairman?


Yvon Pinard: See
answer to question No. 3,176 answered this day. The chairmanship of a cabinet committee is not usually determined by a specific portfolio since the subjects considered by cabinet committees go well beyond the responsibilities of any single department. Exceptions to this general policy are the Treasury Board, whose president is provided for by statute, and the cabinet committees on economic development and social development, which under the policy and expenditure management system are chaired by the respective ministers of state.


Mr. Cossitt: What are the names of all committees and sub-committees of the cabinet and, in each case, which cabinet ministers sit as members and who is the chairman?


Yvon Pinard: See
House of Commons Debates, appendix A, October 14, 1981.


David P. Smith: I ask that the remaining questions be allowed to stand, Madam Speaker.


Madam Speaker:: The questions enumerated by the Honourable Parliamentary Secretary have been answered. Shall the remaining questions be allowed to stand?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Thursday, November 12, consideration of the motion of Mr. MacEachen that this House approves in general the budgetary policy of the government.
Michael Holcombe Wilson: Madam Speaker, today is Friday the thirteenth, and there are very few Canadians who are feeling lucky. Many Canadians were looking for relief in the budget last night. They were looking for relief from inflation, high interest rates, the high cost of rolling over their mortgages into 19 per cent, 20 per cent and 21 per cent mortgages, the high cost of energy, as well as relief from the economic stagnation of the recession and the high unemployment we are facing today. It did not come. The average Canadian must continue to face the fierce attack by this government and its policies on his standard of living and on his personal budget. Every Canadian must continue to feel the emotional strain that is caused by the present great disruption.
Let us cut through the chaff and the double talk of last night's budget. What has happened to the average Canadian since this time last year? Interest rates have risen from about 13 per cent to highs this past summer in excess of 20 per cent. Those who have faced mortgage renewals have found it necessary to find $200, $300 or $400 to meet higher monthly payments, and this has caused sharp disruptions in their personal budgets. Energy prices are up 40 per cent to 50 per cent, and much of this is to provide additional federal taxes amounting to about $1,400 per family per year over the next five years. The total revenue this government is receiving from
November 13, 1981

Canadian individuals and businesses is now at its highest level as a percentage of the over-all economy since the Second World War.
This morning we were reminded again of the problems the country is facing with the announcement that we have an inflation rate of 12.7 per cent. In the budget Canadians were looking for some relief from inflation and high taxes, particularly the energy taxes which affect all Canadians, regardless of their income brackets. However, there was no relief whatsoever.
The government asks for restraint. Canadians are being forced to exercise restraint when the money is just not there in their personal pay cheques. The government is receiving new energy taxes as well as other revenues, but what is it doing with them? The government has increased its spending by 22.5 per cent this year and has raised taxes a further $1.4 billion.
Let me put that into some perspective because when we see such figures we sometimes lose track of what is happening. In the two fiscal years from 1980-81 to 1982-83, the government will increase its tax revenues by 43 per cent. That is the largest revenue increase in history. The government has said it would like restraint from Canadians. I ask Liberal members opposite, who in this country can get a 22 per cent raise? Who will be able to increase their spending by 22 per cent? What if the postal workers came to the President of the Treasury Board (Mr. Johnston) and asked for 22 per cent more income this year? Think of the reaction that would cause in the country today. Yet the government increases its spending by 22 per cent. The government has no regard for the impact of this on the rest of the country and no regard for how this affects other people's personal budgets.
What has the government given back to Canadians in the budget? We heard the minister responsible for housing bleating today about $350 million, but hold on; only $150 million of that $350 million has been committed. It has been committed over the period September 1 of this year to March 1983, about a year and a half, and $112 million of that will be going to 15,000 rental units when we need to increase rental housing by at least 100,000 units. The balance will be going to those who are hurt the most. It will provide for about 12,000 families, when the minister's own document says 30,000 to 40,000 families will be put into such a position that they will be paying 30 per cent of their incomes on mortgage payments.
Part of the program helps these people get further and further into debt by giving the banks the authority to increase these people's debts so that they can pay the banks the interest payments. That is a totally wrong way of facing this problem because it pushes Canadians who are hurt badly by high interest rates further and further into debt. That is why it is a wrong program.
The other aspect of the program is that it only affects home owners. There is a large number of Canadians today who are spending too much of their incomes on rental housing. That is because of the problems which have been created by a continually declining level of housing starts. That level has declined for five years in a row and has resulted in a zero vacancy rate,
The Budget-Mr. Wilson
pushing rents up and putting Canadians into such a position that they are putting far too much of their money into rent as a percentage of their incomes. That problem was not addressed in the budget of last night.
We have heard much from the minister responsible for housing over the past two months. We have heard all about the great things done by the MURB program and how important it was that the government extend that program. Now the minister quietly drops it. What hypocrisy!
Canadian home owners and renters must feel very let down by this budget because for three months now the minister reponsible for housing has been saying that there would be help in the budget. But this budget has been a major disappointment. As my colleague, the hon. member for St. John's East (Mr. McGrath), and as the Leader of the New Democratic Party (Mr. Broadbent) have said, for that false promise the minister responsible for housing should resign. He should go back to Scarborough, but not as the mayor; I disagree with my colleague in that respect. I do not wish that on the people of Scarborough. I think the minister should go back and bury himself in Scarborough.
I would like to address some remarks to the members of the New Democratic Party because they have called for lower mortgage rates through a subsidization of mortgage rates by people who provide mortgage money. We cannot get away from the fact that the mortgage rate for one lender will be the same for all lenders, and much of the mortgage money in Canada today comes from pension funds, from credit unions and from insurance companies. Do members of the New Democratic Party want these people to subsidize mortgage rates which are high today because of ineffective government policy? Do they want pensioners to take cuts in their pensions because of bad government policy? Do they want widows who are benefiting from insurance proceeds to subsidize these interest rates?
What about members of credit unions who today are suffering from real financial difficulties, again because of the high interest rate policy of this government? Do members of the New Democratic Party want those credit union members to subsidize interest rates? There is only one answer to that question. The New Democratic Party is holding out a gimmick. It is playing with the emotions of Canadians who are very troubled and upset at the results of the interest rate policy of this government. They know it will not work. That policy is a fraud and it is dishonest.
The problem of high interest rates can only be dealt with by a real anti-inflation program that attacks the fundamental problems of inflation. That is what the broad majority of Canadians were looking for in the budget last night. Most Canadians knew there would not be something in the budget for them, such as people who have problems with high mortgage rollovers. However, they had hoped to see some help and direction leading them out of the problems they are in today. Unfortunately, that hope has been shattered.

The Budget-Mr. Wilson


Mr. Evans:: Nonsense.


Michael Holcombe Wilson: 1 ask the minister's parliamentary secretary, what is in the budget that will lead to lower inflation? For the past three years the financial requirements of the government have been between $10 billion and $11 billion. They have been reduced somewhat; they are just marginally below $10 billion this year.
The minister holds out some possibility that in subsequent years they will decline further. However, it has been the same year in and year out: "Wait until next year. We are going to do it next year. We are going to reduce our requirements next year." They are sounding more and more like the Toronto Argonauts- "Wait until next year". Next year just never comes.
Let us look at what I mean by that statement. In 1968 the then minister of finance, Mr. Benson, said:
We should not delude ourselves into thinking the choice is between policies of fiscal ease to counter unemployment or policies of fiscal restraint to Fight inflation-
That was when the price index was at 4 per cent. A year later he said:
I think the message of this budget should come through loud and clear... It is intended to show that we mean business in the fight against inflation.
Inflation then had increased to 4.6 per cent. In 1972 John Turner, the then minister of finance, said:
I have had to resist a good many well-intentioned temptations lest I run the risk of firing inflation.
Inflation then was up to 4.8 per cent. A year later he said:
This budget is aimed at reducing inflationary pressures in Canada and at offsetting the effects of past inflation.
Inflation that year was 7.5 per cent. A year later:
Two digit inflation ... is simply not acceptable to this government.
Inflation that year was 10.9 per cent. Just to draw my point out directly, that was the year John Turner said he was going to make a direct attack on government spending, and government spending went up that year 28 per cent, even higher than the 22 per cent it will go up this year. That was the year of the real attack on inflation in this country.


Mr. Malone:: Wrestle inflation to the ground.


Michael Holcombe Wilson: As my colleague has reminded me, that is the year when the Prime Minister (Mr. Trudeau), I believe in my riding, said; "We will wrestle inflation to the ground." Another former minister said that "the effort to bring the rate of inflation down will go on unceasingly". That was said by Donald Macdonald in 1976. It did come down; it was then at 7.5 per cent. He went on to say the next year:
Our first objective must be to maintain the underlying trend to lower inflation.
It was back up to 8 per cent.
We are being held back by serious unemployment and inflation and we must do all we can to deal with them.
That was said by the Minister of Justice (Mr. Chretien) in 1978. It was then up to 9 per cent. Last year at this time:
The budget is designed to ensure a steady reduction in the rate of inflation.
At that time the rate of inflation was 10 per cent. As we all know from this morning's figures, it is up to 12.7 per cent. That is what I mean when I say we need to have a commitment to deal with the problem of inflation in a fundamental way, not deal with it in gimmicks that tend to buy votes in certain parts of the country so that people will not yell about it as much as they have. That is what we have to do. That is what is sadly missing in this budget.
To add insult to injury, in the face of the $55 billion increase in energy taxes in this country, we have seen the government increase taxes further in this budget by $1.4 billion. That is totally unacceptable, totally unnecessary and totally out of keeping with the times.
Since reading the budget, I have said that I believe it was written in September before we saw the impact of the high interest rate policies on the economy of this country, before we saw inflation bring in the highest level of unemployment we have seen for a number of years, a level of unemployment which will probably go higher, and an economy that is weak from coast to coast, from industry to industry. To bring in an increase in taxes faced with that reality means that the Minister of Finance (Mr. MacEachen) is totally out of touch with what is going on in this country.
More Canadians' earnings will, as a result of these vast tax increases, be spent by the government, not on job-producing expenditures like automobiles, clothes and household goods which we as individuals could make much more effectively, but on less productive items that will not create more jobs. The current recession, although it has already been severely hurtful as a result of high interest rates to date, will be prolonged, causing more job loss and human suffering.
It is incredible that this budget has ignored the economic weakness in the country today. There has been no attention paid to the plight of unemployed Canadians. There are no measures to turn the economy around. We have a restrictive budget when the reverse was called for. We have no vision for the future. There is no hope for Canadians facing the loss of a job. We have high interest rates, high energy prices and widespread weakness across this country.
The budget does have some minor programs for those already in real difficulty, but Canadians do not want handouts. They want opportunities. The greatest social security program of all is a job and peace of mind that inflation will not eat away at people's savings. This budget is lacking opportunity and hope for the future.
Two or three weeks ago the Prime Minister made an incredible two-faced speech to a group of Liberal supporters in Toronto. It was truly a disgusting attempt to deceive the Canadian people in the best Liberal tradition. Let us look at it.
The Prime Minister trotted out a series of statistics which showed that Canada placed fourth in a range of measures between 1973 and 1980. He drew the conclusion that that was
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a good performance. Well, it was a lousy performancce. We ranked fourth during that period when all of our competitors adjusted to not just one, but two price shocks. It was a period during which two finance ministers, John Turner and Donald Macdonald, poured money into the economy to undo some of the problems they themselves had created. That in itself ran away from those problems and created the groundwork for the high levels of inflation we are facing today. If that is performance, the Prime Minister should go in for a major overhaul. The Prime Minister either does not understand, as he is too old, too tired to learn and should quit, or he does understand and should be sacked for the odious deception he is perpetrating on the Canadian people. Canada should have been far and away number one in that study. We ran away from our problems and tried to shield ourselves from reality.
The statistics that Canadians are interested in are today's statistics. There are between 900,000 and one million people unemployed. Interest rates have ranged as high as 25 per cent this summer. It is the highest interest rate of any of the industrialized countries in the world. Canadian interest rates are currently two to three percentage points above those in the U.S. Canadian inflation rates are three to four percentage points above those in the U.S. Canada is the largest single borrower in the world, looking for handouts around the world, save one, the United States, which is ten times bigger than Canada. Our standard of living has dropped during the period 1968 to 1980 from number three to number thirteen. These are the statistics which mean something to Canadians.
The Prime Minister should get his head out of the sand and into the real world and should not mislead Canadians by using these other statistics. The Prime Minister noted three times in his speech that the government deficit caused inflation.
Let me remind the House of what the Minister of Finance and other ministers said in 1979. They criticized us because we were too preoccupied with the level of the government deficit.
The Minister of Industry, Trade and Commerce (Mr. Gray), the then finance critic, talked about our doctrinaire Conservative fixation with the government's deficit. What a tragedy that this Minister of Finance did not have that same fixation, that same preoccupation with the deficit, when he came into office. If the minister had, we would not be dealing with the same high interest rates that we are facing today. Conservative members and editorial writers have been repeatedly stressing the dangers of increasing and persistent government deficits.
The Prime Minister said in his speech that the Cassandras, presumably the Conservative Party and the editorial writers, were wrong. He was right: we were wrong. We thought that interest rates might go as high as 12 to 15 per cent, not the 20 to 25 per cent range they have reached.
The Liberals have been playing with the money of Canadians as if it were monopoly money. The Prime Minister talks about the Liberal policies of compassion and caring. What double-talk! What is compassionate about policies that lead to
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interest rates of 20 to 25 per cent and 900,000 and possibly one million people unemployed?
The mortgage rollovers have resulted in a shock to people's personal budgets of $200, $300, $400 per month, and the minister increases taxes when they should be decreased because of the economy. The Prime Minister should listen to the Cassandras, the Conservatives and others, who warned them of these disasters. The Prime Minister should remember that Cassandra, although no one liked her, was always right.
The Liberals are learning after the fact what their policies have done. They have now been forced into illogical decisions. That is economic mismanagement. There is no other word for it. The policies of the 1970s and the inappropriate response of 1981 are leading Canada into a serious recession.
The Prime Minister ends his speech by saying that this Liberal government is true to the tradition of seeking the greatest good for the greatest number. This Liberal government has made an absolute mockery of the tradition of Edward Blake, Edmund Burke, John Stuart Mill and even Sir Wilfrid Laurier. The record of the past 15 years of Liberal government must make true Liberals sick. In fact, these governments have practised time-honoured but totally discredited traditions of socialism. Most thinking Liberals are now voting Tory.


Some hon. Members:: Hear, hear!


An hon. Member:: When will you speak to the budget?


Michael Holcombe Wilson: This did not all happen overnight. I am coming to the budget, Mr. Speaker. The truth hurts.
It is not just the policies of the Prime Minister and the Minister of Finance, but the policies of the previous ministers of finance, the Minister of Justice and Attorney General, when he was the minister of finance, John Turner and Donald Macdonald. It is a policy of a party which has gone rotten to the core, a party which has been buffeted from lamp post to lamp post like a drunk in a hurricane of economic disaster trying to steady himself, when the government does not have any economic base from which to start.
The lasting answer to inflation and recession is a commitment to productive economics, to establish once and for all the government's determination to devote sufficient resources to placing the Canadian economy on a firm, competitive and forward-looking footing.
There is a document in the budget called "Economic Development for Canada in the 1980s." It sounds good, but let us relate that to the real world. What has economic development done in this budget? The economic development envelope in the 1980 budget for the period from 1980 to 1984 would amount to $30,023 billion. In the 1981 budget this has been reduced to $28 billion, a drop of $2 billion or 6.3 per cent. So much for the commitment to economic development.
The western development fund has been axed. Farmers will receive some benefit through the broadening of the Small Business Development Bond for which unincorporated busi-

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nesses will be eligible, but only in a very cautious way, and only for those farmers who are in financial difficulty. There is $50 million to help the Farm Credit Corporation reduce the interest rate, again only for those farmers who are in financial distress. That $50 million is a small pittance when it is spread among all the farmers in this country.
The small business bond has been extended for a year, but it is not the same small business bond that we have known in this House. It is to be used only for those small businesses that are in financial difficulty. The small business community has lost on the trade. The small business community will also receive the benefit of an increase in the ceiling for the low tax rate for small businesses. But what the minister gives with one hand, he takes away with the other hand because he reduces the effectiveness of that increased ceiling. Again, I believe that the small business community is behind on that trade.
Another element that will hit the small business community hard is the change in the rules for the investment tax credit where only 50 per cent of the investment tax credit will be available to businesses in the year of the investment.


An hon. Member:: Capital cost allowance.


Michael Holcombe Wilson: Capital cost allowance; thank you very much. I will tell the hon. member what I am talking about. It is incredible to me that, during a period when businesses are suffering as much as they are from reductions in cash flow because many businesses cannot get credit and must put cash up front, the Minister of Finance this year chooses to introduce a change in the tax laws that will reduce the cash flow of the small business community and other businesses. It just does not make sense.
We looked for a change in the approach that the governe-ment has taken with respect to research and development. We were looking for some fleshing out of the commitment that the government has made to increase the level of research and development spending in this country to 1.5 per cent of the national income. But there is nothing in the budget illustrating any increase in the commitment that has been sadly lacking in the actual measures that will allow the country to achieve that objective. We all know that research and industrial strategy are essential to an economic and employment policy, yet the budget has no provision for investment incentives to increase research and development. The government is only paying lip service to research, as it has done in the entire area of industrial and employment growth.
The incentives for small business companies to participate more effectively in research and development just are not there. If we are to fight the problem of long-term inflation, we must see more incentive and a more meaningful approach by the government to encourage companies to build new products and to lower their costs through developing and building the products themselves rather than buying them from companies outside Canada. This is one key to reduce the level of inflation in Canada. Instead, the environment in Canada discourages
investment in the country. It increases borrowing outside the country and the level of costs faced by the industrial community.
Next I should like to deal with the established programs funding which ties in directly with research and development. The budget pointed out that the funding of the established programs fund will decrease by about $2 billion over the next five years. It is only partly offset by tax increases to the provinces. It will lead to a decline in the quality of postsecondary education and an increase in bitterness and confrontation between the federal government and provincial governments. We do not need a decline in post-secondary education. We need an increase in the quality of post-secondary education which will lead to an improvement in our capacity to meet the research and development objectives and to meet the challenge of the high technology industry which is growing so quickly.
Another element which bothers me is that the government appears to be proposing to replace the EPF funding with grants on a per capita basis. This will lead to arbitrary decisionmaking on the part of the federal government on the basis of what it calls our national economic needs. It is a nice way of saying that father knows best-we will tell you how to run your university; we will tell you how many graduates you should have in engineering and computer science; we will tell you what courses to teach; we do not want to listen to what you understand you should have at the grass roots level to respond to the industry people in your region who are telling you what their requirements will be. The universities in the country have a better understanding of what is going on than the people in the federal government. The federal government does not have the same grasp as the universities at the grass roots to respond to pressures from people with whom they are dealing on a day to day basis.
Let us look further at the economic development strategy set out in the budget papers. For some time now the Progressive Conservative Party has been pressing to take advantage of the vast opportunities which are available in the country in major projects. We have a huge potential. I think it was in my first speech after the 1980 election that I referred to this vast potential. I asked the question whether it was opportunity or burden. If we manage the opportunity correctly, the benefits to the country will be immense. If we do not, the burden will also be immense.
In the document the minister tabled last night there is a very rosy picture of the economic development potential of the country. I should like to contrast that with the reality of the Cold Lake and the Alsands projects, projects which are on the back burner today. There is no commitment by the federal government to moving those projects ahead. There was no reference in the minister's speech to the importance of getting these projects under way. In addition, there have been two energy proposals by the federal government that are pushing 40 per cent of the drilling rigs out of the country, rigs which will be needed to meet some of the available major project potential.

I also contrast the schizophrenia of the government toward the Foreign Investment Review Agency, toward the role the National Energy Program should play, as well as toward the fight with the United States over our approach to American companies in Canada. These policies are turning off foreign investment at the same time as the program is indicating that we need large amounts of foreign investment if we are to achieve our potential. The loss of confidence has forced equipment, capital and talented people to leave the country at a time when the minister is tabling a document which indicates that there are $440 billion worth of possible major projects between now and the year 2000. I do not know how we will handle these projects with men, equipment and capital leaving the country. It just does not make sense.
There is another element which points to the schizophrenia in the government. Recently the Minister of Industry, Trade and Commerce referred to world product mandate; he has finally caught on. I believe I made ten speeches on this subject when we were in government. World product mandate is the ability of a Canadian company, a subsidiary of a United States company or of another foreign company, to have the total responsibility for a product line. There is one problem in Canadian companies achieving world product mandate. If the top management of the parent company, which, after all, makes the decision as to whether or not to give the mandate to the Canadian company, sees a government which appears to be opposed to the interests of foreign companies, sees a country with inflation running at 3 to 4 percentage points higher than its own country, and sees a continuation of the policies which have led to those problems, why would it give the Canadian company a world product mandate? This is a problem in achieving the economic development which we know is available to us.
Let me also contrast the document the minister tabled last night to the need for skilled people. The Minister of Energy, Mines and Resources (Mr. Lalonde) has shown no concern for the technical oil and gas people who are leaving the country, the enormous brain drain of people leaving the country to contribute to the Canadianization of Texas, of the Williston Basin and of Australia. Those are the concerns we have today, based on the reality of today which is not reflected in the government policies. They are different from the objectives and the goals which are set out in those economic development documents.
In this area of economic development strategy, let me caution the government to steer away from too great an involvement in the decision-making process on these major projects. Because of their size, each of them is a quasi-public enterprise and in many cases needs a government decision to permit it to go ahead. The size of the projects can lead to crowding out in the sense of pulling scarce capital away from other elements in the country. It can also lead to centralizing decisions to too great an extent so that the response to normal market forces is ignored by the decision made between management and senior government officials.
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Let me also point out to the minister the potential imbalance that can come about in favour of these major projects, an imbalance that can lead to inflation. Because of the power of these major projects, this inflation will have an adverse effect on other industries in the country but will not have the same effect on the project itself because of its size and the particular deal that government might be prepared to enter into. We must be very careful about the inflation rate induced by these major projects. I think we have seen the best possible example of this in the last two or three years in Alberta, where inflation rates are running ahead of the rest of the country and make things very difficult for other industries trying to compete in the same marketplace.
I come to my last point on the crowding out possibility of major projects. I am not making these comments in a critical way but in a positive way to try to draw out some of the problems we may face. The capital flows that will be attracted by these major projects may tend to push up the value of the Canadian dollar. This happened in the late 1950s and for other reasons in the middle 1970s. What happens is that the value of the Canadian dollar is held up, and this forces a deterioration in the competitive position of other manufacturing companies in a different set of circumstances. That is what I mean when I say that these major projects can represent an opportunity or a burden. If we manage them properly and if we are responsive to market conditions and do not deal with the major projects in isolation from the rest of the economy, the potential of this country is tremendous.
We must take advantage of these major projects because since the last war they have been a major force in the economic development of the country. We must take advantage of them because they can lead to great technological advancement. What that means is that potentially we are exporters of this technology. One of the best examples of this is the oil sands projects. We are ahead of many other countries in what we know about oil sands technology. The government does not seem to understand that we can lose that advantage. Countries like Venezuela are anxious to import our technology, but if we start to slip and these projects do not go ahead- and one is completely stalled right now-we will lose that tremendous advantage.
We can increase our capacity and expertise in project management and this can help us throughout the world. We can upgrade the skills of Canadians in this country to meet the opportunities of the future. We can improve our balance of payments. Today we have a real problem with our balance of payments, and I want to come back to that in a minute.
Finally, Mr. Speaker, we can do great things for equalizing regional development in this country because many of these projects are located in the less advantaged areas of the country.
What we have to do when we compare the real world of today to that nice-sounding potential of the future is to question the competence of the government to implement and take advantage of the policies that will be necessary if we are

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The Budget-Mr. Wilson
to move ahead on economic development in the major project areas.
I made reference to the balance of payments deficit. This year the minister's papers show that the balance of payments deficit will be $9.1 billion. A year ago the current account balance of payments was about $1.6 billion. In the two or three years prior to that it had been running at a level of about $4 billion. That is a major problem the country is facing.
I should like to draw the attention of hon. members opposite to a statement made by the Minister of Industry, Trade and Commerce when he was opposition finance critic. This is what he said:
In his budget the minister mentioned only in passing a deficit which deserves as much and, in fact, more attention than the government's budgetary deficit, and that is the deficit in the balance of payments of our current account of international trade.
Apart from a reference in a table of figures, there is no mention that I could find in the vast number of papers set before us last night about the importance of this problem of a $9.1 billion balance of payments deficit. I should like to ask the Minister why that is so. I think I know why he has not proposed any action to face up to this problem. It is because the balance of payments is an enormous embarrassment to him.
In a question I put in the House I made reference to the huge outflow of private capital caused by the policies of this government, capital amounting to $8.4 billion, or five times the level of the average outflow during the 1970s. When you combine the capital outflow with the current account outflow, the figure reaches $17.5 billion, or nearly $1,000 for every man, woman and child in the country. That is a major problem for Canada and a problem for all of us, Mr. Speaker. It leads to an outflow of money from the country. The Bank of Canada has told us that if money flows out of the country the bank will either keep interest rates up in order to prevent that, or arrange to attract other money into the country.
We are all suffering from this problem because of the government's policy of maintaining high interest rates. That is why we should take this more seriously. That is why we have to be so concerned about the competitive position of this country which has deteriorated severely in the past year and a half.
Let me move to other proposals in this budget which I feel should have been there in order to encourage the productive capacity of this country, but before doing so, may I call it one o'clock, Mr. Speaker?


The Acting Speaker (Mr. Blaker):: It being one o'clock, pursuant to Standing Order 2(1) I do now leave the chair until two o'clock this afternoon.
At one o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
Michael Holcombe Wilson: Mr. Speaker, when I completed my comments before lunch, I was discussing those things which I felt were necessary to lead this country to a reduction in the rate of inflation that we have today, and also to generate increased economic activity. What I want to come to next is the importance of savings and investment in this whole process.
I think that all of us feel that savings are the means by which we prepare ourselves for certain expenditures down the road, whether savings for making major expenditures while we are working, or savings which will prepare us for retirement, allowing us to retire in dignity and free from concerns about where we will be getting the money to look after our requirements. However, savings are a very important element in the economic development of our country because they do provide the money for investment and also for increasing the degree of Canadian ownership in our country.
In looking at this budget, I was concerned that there are no new incentives for Canadians to save and to invest in this country. There is no increase, as an example, in the amount of money individuals can put into a retirement savings plan or a pension fund. These were last increased in 1976. Since that time, we have had some 60 per cent to 65 per cent inflation in this country. Therefore, it is not only discouraging, not allowing individuals to set funds aside for their retirement, but it is also robbing us of the savings we will need in the country to produce the plants and equipment which will create the jobs to get us out of the economic malaise that we have today.
In his remarks the minister made some slight recognition of the importance of incentive through the lowering of the marginal personal tax rates. I applaud the minister for this, and I applaud the remark that he made in his budget speech when he stated that lower tax rates will increase incentives to work, save and invest. I only wish that previous ministers of finance had had that same attitude and had not run up the level of the tax rates in this country.
However, his other actions of giving with one hand and taking away with the other will antagonize those very same people-the creative people in Canada, the entrepreneurs, the job producers-and undermine the efforts that he wants to take to encourage them to work harder and produce more jobs in this country. I fear that the gesture he has made toward the entrepreneurs and toward encouraging initiative is little more than a public relations gesture. In the battle against inflation and against this recession we are in today, we must be encouraging the entrepreneurs, the risk-takers and the creative people to the maximum extent possible because they are the people who will create the jobs which will move us out of the recession we are in today.
The key to what I have been referring to over the past few months is productive economics and the generating of incentives to get the productive side of our economy moving.


Some hon. Members:: Hear, hear!


Michael Holcombe Wilson: We must improve the productive capabilities of our economy by helping people to improve themselves and to upgrade their skills through training programs. We must help
November 13, 1981

businesses to become more competitive through encouraging them to expand their research and development activities. As I said a few minutes ago, there is not enough incentive in this budget, and there was not prior to it, to generate that research and development activity.
There are some broad statements in this budget as to the importance of trade, but again, as I mentioned before, we are facing a very serious crisis in this country with the size of the balance of payments deficit we have today, and apart from a general statement toward encouraging trade there is no acknowledgement in specific budget measures which will encourage trade through export promotion, and so on, in this country.
We must also do everything we can to improve and modernize our transportation systems, because with a country the size of Canada and with the distance that Canada is from our markets it is very important that manufacturers and others in the country bring those goods to markets as cheaply and as efficiently as possible. These are the programs that will help the country produce more goods and services in a more efficient and productive way. They help private individuals and companies create jobs and they help Canadians become more efficient and more skilled in their jobs. Productive economics will lead to an increase in productivity, lower costs, and therefore lower inflation, and through lower inflation, lower interest rates. A major drop in inflation and a major drop in interest rates is what this country needs the most.
Productive economics involves two other elements to be successful. It requires a commitment to encourage the private sector, and a positive attitude to see our business succeed. It also requires an understanding by government that too much government, either through excessive government spending, as we have this year with this 22 per cent increase in government spending, or an increase in regulation, which seems to be held out by this economic development plan presented with the budget papers, will inhibit productive economics from working.
The combination of this broad package of productive economics 1 discussed just now, plus the positive attitude toward private individuals, will give Canadians a sense of direction that has been missing in recent years. That combination will give Canadians the confidence to build their businesses and create jobs and opportunities for other Canadians. This may have some of the same ring as the minister's statements last night. They are both going in the same direction, but they do it in a different sort of way.
Apart from my comments on the lack of a visible commitment to achieve some positive result today when it is needed to fight the recession we have with us and to put some of those one million people who are out of work back to work, I want to draw the attention of the House to another distinction. Liberals today prefer to set the rules and intervene heavily in the decisions of entrepeneurs and risk-takers in this country. The minister clearly indicated that in the answer to some questions last night at a press conference I attended. The
The Budget-Mr. Wilson
Conservative Party prefers to set the over-all environment, to establish the ground rules, and then encourage private individuals to get on with the job without a lot of government intervention and regulation. This is an important principle that we must establish here.
Whether the government uses grants or incentives, that method of participation is the key to whether or not we are going to succeed in the economic development of our country. Grants involve politicians and bureaucrats making decisions. They are arbitrary and they can tend to play favourites. They are slower because the whole government decision-making process by its nature is slow. It also results in more regulation at a time when the Economic Council of Canada has issued an extensive report calling for less regulation.
Let me also recall a story which was set out in a book recently about the Wall Street Journal. In 1976, sending out a questionnaire interviewing a number of key economic advisers to various presidents over the ten or 12 years prior to 1976, all of these key presidential advisers were asked what they would have done differently, in retrospect, to avoid the economic problems the United States suffered from in the two or three years leading up to 1976. There was absolutely no consistency in what the right solutions could have been, with one exception, and that one exception was that they allowed monetary policy to run wild during that period. Apart from that there was no consistency in the actions that should have been taken by the government of the United States.
The conclusion I draw from this is that if these experts did not know what should have been done to solve those problems after the fact, how can they tell us how to solve the problems before the fact? That is why I am so concerned that we not fall into the trap of having too much bureaucratic control over the economic development policies that companies should follow.
In its place I think we should encourage more incentives rather than grants; for example, having the government set the broad rules to let the businessman understand what the rules of the game are and then let the businessman go out and make his decision whether or not to take advantage of that incentive. It is a faster means of approaching problems and it provides for much freer choice. It also provides for the strengths that a series of decisions brings to the solving of problems as opposed to a concentration of decisions by politicians and bureaucrats.
Concentration of decision making, whether it is in the private sector or the public sector, or a combination, is bad, and I believe should be avoided in this country.
I do not want to dwell on this topic too long. It is an important principle and it provides a real distinction between the approach the Liberals or NDP would follow and the approach the Conservative Party would follow. But most important for us to understand here is that this is the key difference between the degree of success or lack of success that Canada will have in its industrial future.
Let me conclude my remarks today by returning to the themes from the budget, equity, restraint and renewal or growth. Having regard to equity, I ask Liberal members
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opposite what is equitable, what is fair, in a pensioner losing his savings to the ravages of inflation? I have heard the Minister of Finance say a number of times in response to why there was no tax credit in previous budgets-I am sure he would give the same answer now-that he provided an increase in the guaranteed income supplement and therefore has looked after that problem. It does not look after that problem, Mr. Speaker. It addresses the problem for about a million and a quarter Canadians, but there are another million and a quarter Canadians who have been forced to see their savings whittled away by inflation, and there is another million and a quarter Canadians living below the poverty line. That problem has not been addressed by the minister in this budget or in previous budgets.
I believe it is wrong for the Minister of Finance to take credit for introducing the increase in the guaranteed income supplement, as he did last year. The Minister of Finance should be apologizing to those pensioners who, because of the inflationary policies of this government, are having to seek assistance from the guaranteed income supplement and also for having to increase the amount which was introduced last year. That is the problem in this country. The government takes credit for giving when it should be seeking the forgiveness of the people it has placed in the position they are in.
Returning to the question of equity, what is equitable about a farmer who is forced to sell his cattle to meet the bank's requirements? What is equitable about a home owner who is in a position totally beyond his control as a result of having to find $200, $300 or $400 or more a month to meet the increase in his mortgage payments by reason of a government decision? What is equitable about a small-business man seeing his business disappear in front of his eyes because he has to pay 20 per cent or 25 per cent interest rates? There is nothing so vicious or unfair as inflation and we have had far too much of it in this country.


Some hon. Members:: Hear, hear!


Michael Holcombe Wilson: The next theme in the budget is restraint. I have dwelt on this theme at some length as it relates to the huge increase in spending by the government this year, a full 22 per cent. How is it equitable for the government to ask Canadians to restrain themselves when it has increased its own spending by 22 per cent? Canadians are forced to restrain themselves because of high interest rates, high energy costs and high inflation.
The final theme of the budget is growth. Where in the budget is the growth which will lead us out of the recession we are in today? Where is the growth that will reduce the level of unemployment from approximately one million and develop the potential of the vast resources of this country? The only growth I see in this budget is the growth in government, and we have learned from sad experience that this is the wrong path for this country to follow. Canadians are looking at the budget and asking themselves where is the hope and where is
the path which will lead to a solution of the problems we face today. What is the direction the government will take? Canadians are losing pride in their country and losing faith in the future.

Mr. Speaker, this is a budget which continues the assault on every Canadian. It increases income tax for Canadians and does not offer any solutions for reducing inflation and unemployment. Each year during the next five years, every Canadian family will have to pay an energy tax of $1,400. At the same time the government intends to increase its expenditures by 22 per cent this year but there is no relief for the average Canadian.
And for this reason-

I move, Mr. Speaker, seconded by the hon. member for Nepean-Carleton (Mr. Baker):
That all the words after the word "That" be struck out and the following substituted therefor:
"this House condemns and rejects a budget which fails utterly to address or comprehend the recession facing Canada or to put any of the one million unemployed Canadians back to work, which offers no help to renters and assistance to home owners so meagre as to compel the immediate resignation of the minister responsible for housing, which provides a completely insignificant stimulus to rental housing construction, which fails to provide any relief from high energy taxes and which, while calling on Canadian businesses and individuals to show restraint, pumps up federal government expenditures by 22 per cent."


Some hon. Members:: Hear, hear!


The Acting Speaker (Mr. Blaker):: The Chair has received the motion and after consultation the Table finds it to be in order.


Bob Rae: Mr. Speaker, recently I was in the frozen food section at a supermarket and a senior citizen who was looking at a number of packages of frozen fish fillets turned to me and said: "I wonder whether the store will let me take some of the fish fillets out of the package and buy them one by one because I do not think I want to buy the whole package right now." Mr. Speaker, as we carry on this debate, removed as we are from what is really going on in this country, we have to regain a sense of what exactly it is that this economic crisis represents for the ordinary Canadian. It is not simply a question of high rates or a crisis in investment in abstract terms, or a question of a varied series of statistics sometimes deceptively presented by the Minister of Finance (Mr. MacEachen). We are talking about a crisis in our economy which affects Canadians in their way of life, the way they respond to each other and their hopes and aspirations for the future.
When we debate this budget we are talking about our senior citizens, for example, hundreds of thousands of whom live on less than $6,000 a year. We are talking about families, many of them new to this country, some who have been here for generations and have worked and struggled hard. These people are not the ones who the members of the Conservative Party
November 13, 1981

might call the "creative elite" of our society, but they are creative enough. They are just the ordinary working people who are paying their taxes. They are the people who have worked and struggled either on the farm or in factories, mines or mills to save their money to buy a home. They have been told this last year that they will not be able to stay in their homes. Those are the people we are talking about while we debate this budget. We are talking about the hundreds of thousands of young people who are out of work and the tens of thousands more who will be added every month as a result of this budget.
We all respond with anger and concern, but the point is that it is not simply a question of another group of people who are in some abstract way added to the ranks of those people who are are without jobs. It is a question of young people coming out of school, some of them coming out of community colleges and some of them even coming out of universities who were taught, among other things-and certainly taught by their public leaders-that this was a good country and that this was a country to which their parents, their grandparents or their great-grandparents came and worked hard. They were able to buy homes and provide. These young people were taught that they would have jobs here in Canada. When they came out of school, even those who may not be in that elite to which the Tory party refers-just ordinary people looking for the opportunity to work-they look for the challenge, the joy, the humour and the fellowship which comes from having a job. They are looking for the pride and the sense of security which comes from being able to work and at the end of the week, two weeks or a month have a pay cheque, to say with a sense of satisfaction: "I worked for that pay cheque. I can buy something with it. I can get married because I have the security of that cheque. 1 can buy a house eventually. I can save and do something with the money I am working for."
That is a noble aspiration which hundreds of thousands of our young people cannot have because we have a government which has introduced a budget which does not take into account the tragedy of unemployment. This government has made a categorical decision and said that unemployment is less important than inflation. There is a phrase in the budget, either in the additional budget papers or the shortened version the minister gave last night, which says we have to wait for a while before we can resume growth. That is almost like saying, "The disturbance you are seeing is temporary, do not adjust your sets." Two years is a long wait without a job and without training. That is a long time to look for some hope for the future based, as it is, on the phony statistics of this government.
All of us in this House have an obligation during this debate not simply to talk about all the figures as they balance out on the charts and the diagrams to which the minister referred today. He said that perhaps he will have to change his diagrams. The minister does not have to change his diagrams. The minister has to change his policies so that he can respond to what is the deepest sense in the public today. People are
The Budget-Mr. Rae
looking for leadership which responds to their deepest aspirations. Our people are looking for leadership which understands that beyond all the legalities of the provinces and the federal government there is a people out there, the Canadian people, looking for leadership. They are looking for jobs, and they are looking for a government in which they can take some pride.


Some hon. Members:: Hear, hear!


Bob Rae: All of us in public life have an obligation to respond to that quest for a sense of public purpose. I will be going into the details of the budget in a moment, but the overwhelming impact of the budget is that it is an expression of defeat and bankruptcy. The budget, in affect, says; "There is nothing we can do. We do not have solutions to your problems. We cannot deal with the problem of recession." I do not think I am giving any secrets away when I say that when we were asking the officials about the budget last night, one of them said, "I am sorry, we cannot provide you with that answer because if we do this, that will inevitably happen, and therefore we cannot do it." There is an obvious answer. If the government opposite and the officials in the department who are responding for the government cannot give the answer and cannot deal with the problem, let them move aside and let somebody else drive.


Some hon. Members:: Hear, hear!


Mr. Pepin:: That is a non sequitur.


Bob Rae: The Minister of Transport (Mr. Pepin) has been in office for so long he just assumes that if he cannot do it, nobody else can. We have seen the consequences, and the railway workers and railway consumers of Canada have seen the consequences, of that kind of attitude.


Jean-Luc Pepin: Another non sequitur.


Bob Rae: Let me give an example of what is really happening on the streets, in homes and in the factories of this country today. The minister can read about it if he likes. If he cannot see it or finds that he cannot move around enough to feel it and touch it, he just has to read the report of the task force on job opportunities. That parliamentary task force did an excellent job. One of the astonishing facts the task force pointed out is that 4.5 million Canadians are functionally illiterate.
One would think that a government which received that kind of bombshell statement would bring in a budget which would set as a great priority seeing to it that all Canadians can read and write well and have a chance to compete in a job market which is becoming much more ruthless than the one their parents knew. Does the Minister of Finance say that there will be a full scale frontal assault on illiteracy? Does the minister commit his government to full employment? Is the minister prepared to admit that the greatest problem facing the Canadian people today is the insecurity which is brought about because workers see their fellow workers being laid off? Some workers have been in factories not for five years and not for ten years but for 15, 20 and 25 years, and they are being

November 13, 1981
The Budget-Mr. Rae
told, "Sorry, boys, the plant is closing". That is not simply a problem in the sense that unemployment means we will be producing less as a country or in the sense that we are falling behind in the competitive race with other countries-although it does mean that-but in the sense that it means tremendous personal unhappiness caused by that kind of insecurity.
1 have talked about it, my leader has talked about it and it is worth emphasizing again and again: people have assumed- because they were Canadians, dammit all, and because they were proud of themselves, their jobs and their achievements- that they would be able to buy homes and that those homes would be theirs. They made reasonable plans on the basis of interest rates of 10 per cent and 12 per cent, and some even made plans based on interest rates of 14 per cent. They felt that if both mother and father and perhaps one of the kids were working at a part-time job, they could keep their homes together.
However, we now know that we are not talking about an economic system-the Liberal-Tory economic system-that gives people that sense of security. These are the parties which believe in private property. What more fundamental attack on private property can one imagine than rates of 22 per cent, 23 per cent and 24 per cent for first morgages? Those rates are not being compensated for in this budget. Those rates were the ones of last summer; people sacrificed everything in order to hang on to their homes at 24 per cent and they are getting absolutely nothing from the Minister of Finance.
The minister has a defence. He put it forward in his budget. His defence is inflation. He says he cannot do anything because of inflation. When I first came to this House three years ago, I directed my first question to the then minister of finance, who is now the Minister of Justice (Mr. Chretien). That day interest rates had gone up from 9.5 per cent to 10.25 per cent, and at that time the rate of inflation was 8.9 per cent. He said there was nothing he could do, that the Americans were doing this, the dollar was doing that, it was impossible; the problem of inflation had to be combated and the only way to fight inflation was through high interest rates. We had an election. The Tories were very critical of that interest rate policy. They promised they would bring it to an end.
The hon. member for St. John's West (Mr. Crosbie) became minister of finance and the rates went up and up and up. Four times they went up. The hon. member for Windsor West, now the Minister of Industry, Trade and Commerce (Mr. Gray), criticized, moaned and groaned as the rates went up over 14 per cent. He appeared on a television program on which I had the misfortune to appear at the same time. He said: "If the rates go over 14 per cent, I will resign." It is a pity they did not ask him the additional question: "What if you do not keep the promises on FIRA, will you resign then?" He would have said yes. He is a man of principle during an election.
The interest on the average consumer loan today stands at 21 per cent, 22 per cent and some at 24 per cent, if it was negotiated as recently as three weeks ago. Mortgage rates
hover between 19 per cent and 20 per cent. Where is inflation? Inflation is at 12.5 per cent. Inflation has gone up almost four points since I asked that first question three years ago, and interest rates have more than doubled. The policy is, quite simply, a nonsense. It is one which does not make any sense. Ask the workers in Baie Verte, Newfoundland, who have been laid off. The mines have been closed even though they were making a profit. Ask the workers in the fish plants on the south shore of Nova Scotia, the miners, paper workers and fishermen in New Brunswick, the farmers and the businessmen in Quebec, the workers at Admiral, Inco, Massey-Ferguson, Chrysler and Stelco, the beef farmers in Owen Sound, the wheat farmers in Manitoba and Saskatchewan, the cattle ranchers in Alberta and the sawmill workers in British Columbia, whether the effect of high interest rates is to bring down inflation. Since the minister used this expression in the House, I think I can use it: their answer would be "Like hell".
The only thing those interest rates have done is to squeeze jobs out of the economy. The interest rate juggernaut swept across not simply Canada but all the western economy, bringing small business people to their knees, forcing thousands of plants to close in this country, making our manufacturing sector completely and totally uncompetitive in some regards, raising the price of food and products. The minister says that the interest rate policy is an integral part of their fight against inflation. The interest rate policy has jacked up inflation. The evidence is there for the minister to see.
Reducing inflation will take patience, persistence and time. The government is not going to wrestle it to the ground. Those who have to somehow prove their manhood in their verbal assaults on the mind tell us that is what they want us to do. The policy of the government on inflation is that in order to get the inflation rate down half a point or a point, they have to reduce the real economy to a desert. No doubt they will call that desert "peace" and claim victory over inflation. However, what is the cost to people, the cost to the real economy and to Canadians' sense that their economy and lives are something that they want to take pride in? Energy costs are rising by nearly 40 per cent a year. Food costs are rising dramatically because of changes in world patterns of consumption and demand. Much of our economy has ceased to be genuinely competitive because of the nature of corporate and government power. Where is their ability to administer prices? It is nonsense to suggest that the way to deal with this kind of inflation is through an interest rate policy of 20 or 25 per cent.
Those who live in poverty are not helped by this policy, they are damaged by it. Those who live on fixed incomes are not helped by this policy. Those who live on the margins of our economy who sometimes find a job and sometimes not because they do not have the skills or the training, who may be the wrong age, in the wrong class or have a disability-those people are not helped by this policy. This policy helps only a few people. It helps the wealthy savers and the banks. It benefits the banks at the expense of consumers, farmers, small-business people, home owners, and even benefits, at the
November 13, 1981

expense of the banks' own competitors, the credit unions and the caisses populaires.
There were three parts to the minister's budget. Like Gaul, it is divided into three parts. I wish the minister's gall was divided into three parts. Restraint: that is the cocktail party word for cutbacks, in case some are wondering what restraint means. It means cutbacks or hardships. Equity: the minister had nerve even referring to the concept of equity in this budget, but I will come to that in a moment. Renewal: renewal is the Liberal word for retreat. That is what this budget represents.
The minister talked about equity. Whose tax rates were reduced the most? Canadians earning over $100,000 a year. There are not many people in my riding earning that amount, but I am sure there are Canadians somewhere who earn that much money. They must be the ones who attend the dinners at which the Prime Minister (Mr. Trudeau) asks for restraint. Their marginal rate is cut from 43 per cent to 34 per cent.
What about the single pensioners over 65, over half of whom in Canada are living in conditions of poverty and tremendous difficulty? What kind of tax reduction did they get? Zero. Not a cent, not a nickel, not a dime from the Minister of Finance. The minister talks about equity. Equity is a fancy lawyer's word for fairness. Where the hell is the fairness in that? Where is their fairness in giving nothing to pensioners? There is nothing at all in the budget for pensioners.
Then we have the claim of equity, where the minister says they are giving a tax break and the press even reported it as a tax credit. The minister has taken up the lingo. People are willing to believe the minister. They want to believe him. He is the Tinkerbell of Canadian politics. People want to believe Tinkerbell. If Tinkerbell says it is true, it is going to be true. If we all wish it were true, the lights will suddenly come on and all the people will go back to work.


An hon. Member:: Tinkerbell is a ding-a-ling.


Bob Rae: It is utterly fantastic to claim that the tax measures in this budget are in any sense an exercise in fairness. Today I read to the minister a section from his budget talking about a typical family of four being able to earn about $15,000 without paying any federal tax. The minister took some affront when I asked whether he thought it was time that the government recognized that there are women in the labour force who actually think they should be there.
Let me give an example. I see the minister of mines looking up. She is responsible for the status of women. I would like her to have a word with the minister. Let me use the example of a professional woman earning $20,000 or $25,000 a year, single, with dependent children. What is her tax break? Her tax break will be to pay an extra $146 to the government. The minister was saying that there were tax cuts for all these people earning over $11,000. What about that person? The thrust of it is that married taxpayers who have an unemployed spouse will receive some extra money; but those Canadian couples by the hundreds, thousands and millions who are married and who both work, both playing an equal role in the
The Budget-Mr. Rae
home, both playing an equal role in the marketplace, trying to get a job, hold together and pay these 20 per cent, 22 per cent and 24 per cent interest rates, what kind of tax breaks do they receive? Zero. Absolutely nothing. The minister said he would introduce an equitable budget. There is no equity.
Another example, Mr. Speaker, are the Canadians who have emigrated to this country or who have been here five, ten or fifteen years, who have a mother or father they are supporting in Greece, Portugal, Italy or Pakistan. But for all the hundreds of countries that have benefited by their contribution to the life of this country, what is the fair contribution of the Department of Finance to fairness? It says there has been a little fraud here. Instead of punishing those who have committed fraud, the department is going to eliminate the possibility of making that exemption entirely.
Let me say to the minister that there is a Greek restaurant worker in my riding whose wife works and sends $200 a month to his mother or father living in Greece. That was the purpose of their emigrating to Canada. What is the size of his tax break? He loses a $2,000 deduction. His taxes could increase by $300, $400, $500, depending on his marginal rate. That is the real effect. It is so important, Mr. Speaker, that we must come down from this sense of abstraction of deficits and balances and numbers coming from here and there. They are important; they are part of what the grim science of economics is all about. But it is time we got away and asked what is the real social effect of a budget which says to a Greek Canadian he is second-class, which says to a new Canadian he is not as good as somebody who has been here before, that they can claim an exemption for a dependant but he cannot. The reason is that there has been fraud.
If there has been fraud, then let those who are guilty be punished. Since when did we in this country ever go in for the notion of collective guilt? Since when was that an aspect of the Canadian culture we are proud of? It is a disgrace, Mr. Speaker. It is not a major money-making thing. It will not gain any terrific revenue for the government. But at a time of economic hardship I think of my constituents and the city of Toronto and of the kind of niggling attitude that is created on the streets. We are trying to create a multicultural, multiracial Canada, Mr. Speaker. There is no such thing as a second-class Canadian. We are all boat people. We are all immigrants. If there are those among us who have committed a crime, then let that person be punished. If the government wants to tighten up the regulations, then let those regulations be tightened up. But let us not abandon the very essence of the notion that if you have a dependant you are supporting, just because that dependant does not happen to live in Canada you should not be regarded as some kind of second-class Canadian.
The unfair and absurd attitude of the government's policy is what has led the NDP to move an amendment to the Conservative amendment today. It will provide some grounds for debate and add additional grounds for concerns that have not

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The Budget-Mr. Rae
been entirely expressed in the Conservative motion. I move, seconded by the hon. member for Oshawa (Mr. Broadbent):
That all the words after "high energy taxes" be deleted and the following added thereto:
"and, further, this House condemns the government for failing to provide any tax relief or pension reform for senior citizens; any help for Canadians living in poverty, fair tax measures for working women; for abandoning completely its election promises on foreign ownership, FIR A, and industrial strategy; for failing to exercise control over our Financial institutions to ensure mortgage and interest relief; and for failing to introduce an excess profit tax on the banks."
I should like to speak to that motion in my closing remarks. We come to the third theme of the budget, renewal, the Liberal word for retreat. I remember it vividly because it was toward the dying days of an election. When one is inevitably worried and is looking at the poll results, one thinks about his future. The Prime Minister, although he was leader of the opposition for that brief, glorious period, went to Toronto and spoke to the advertisement club. The Toronto Star had a large headline-the Toronto Star is sometimes unfairly called the Trudeau star-but I am not one to describe it that way. When the Prime Minister came to town that day he talked about foreign ownership and about changes that the Liberal government would bring to industrial strategy. There were very specific promises and commitments made with respect to FIR A regarding where it would be strengthened and expanded. It would deal simply not with takeovers but would carry out a comprehensive review of the role of foreign ownership and demand that multinational companies be assessed on a continuing basis for their contribution to the Canadian economy.
In the Speech from the Throne the Liberals said that this is what they would do. It was ambiguous, to say the least. We knew the retreat was on its way. But to announce, only two seats away from the patron saint of FIRA, that FIRA was being abandoned totally, and to say that this is an exercise in renewal, means that we have a new definition of a Liberal. It is one who does not know the meaning of embarrassment or shame. I cannot believe what the minister had to say when he said that this represents a renewal of Liberal policy. Listen to this renewal: "The special measures being employed to achieve more Canadian ownership and control of the oil and gas industry are not, in the Government of Canada's view, appropriate for other sectors". Why not? There is no explanation.


An hon. Member:: Why?


Bob Rae: They do not tell us why. I will come to why. Why is zinc and nickel shipped out of this country without being refined? I am thinking of one company in northern Ontario. Why are resources such as uranium or nickel sold? A pound of uranium or a pound of nickel sold is a pound of uranium or nickel gone forever, the same as oil. They are non-renewable resources. Inco did not plant nickel in the ground and reap it every year. It has been there for generations upon generations. I know the Tories do not like the NEP, but at least they can agree that what is true for oil should, for heaven's sake, be true for other non-renewable resources. Why not? There is no
explanation. We are simply told that no legislative changes will be introduced to FIRA.


Walter David Baker: Suddenly it is good for us.


Bob Rae: As the hon. member for Nepean-Carleton (Mr. Baker) just said, suddenly foreign ownership is good for us. Walter Gordon must be rolling over in the Commerce Court Building. Canada has historically benefited to a substantial degree from the application of foreign capital to our economic life. There is no mention of Watkins, no mention of the Gray report, no mention of research and development and its impact upon secondary industry, no mention of the fact that we have become a colony in our own land with respect to many of our resources. All that has been completely and totally abandoned. That is called Liberal renewal. It is more than chutzpah. It is an unbelievable expression of disdain for the intelligence of the average Canadian person.
I suggested to the minister three weeks ago that the budget would have to do four things. It would have to provide for action on interest rates. There has been no action on interest rates of any significance whatsoever. I suggested that we had to have real tax reform and tax relief, that we had to have measures on pensions, and that we had to have meausres to guarantee a continued level of social service spending by the government. The only action on interest rates has been to provide relief, not to home owners, not to tenants, but to the banks. The banks are supposed to bleed a little, in the words of the minister. Well, the plot thickens. There is no action in this budget which does anything other than increase the financial power of the banks, increase the revenue going to the banks, increase their ability to exact and enforce contracts on individuals who are in a completely unequal bargaining situation. When George Brown walks into the Canadian Imperial Bank of Commerce, he is not exactly looking at an oriental bazaar. He is faced with a contract. He cannot exactly haggle over the terms of the contract. It is written out and he signs on the dotted line.


Walter David Baker: Take it or leave it.


Bob Rae: He takes it or leaves it. A mortgage is not a contract in the sense of a totally voluntary relationship between two people. It is something which is forced on people because of their economic situation. For the minister to talk the language of contracts, as if this were some kind of totally voluntary arrangement between two people who happen to meet in the street, is so absurd as to defy description.
The interest rate deferral scheme is a con. The interest rate deferral scheme is a fraud. It is a system of permanent debt which would be outlawed by any consumer protection legislation worthy of the name. If we had a minister of consumer and corporate affairs who was doing the job he is there to do, he would be calling in the heads of chartered banks and saying, "What is this? You expect somebody who has a $60,000 mortgage to pay $8,000, $9,000 or $10,000 per year in interest payments and at the end of the year owe $62,000! You expect
November 13, 1981

us to subsidize that and guarantee that kind of scheme! "It is unbelievable that that is the government's definition of interest rate relief. The minister said, "Well, it was recommended to me by the banks". Surprise, surprise! If the Solicitor General (Mr. Kaplan) was recommended a scheme of gun control legislation by the Mafia, would he be obliged to accept it? According to the minister, apparently yes.
Finally, our motion calls for action on an excess profits tax on the banks. This kind of well-meaning but hopeless volunteer-ism expressed in the budget speech of the minister is so pathetic as to defy description. Let us listen to what he said. One would think he was just some guy expressing an opinion, rather than the Minister of Finance of the Government of Canada. He said, "I want financial institutions, especially banks, to do more." Also he said, "I particularly want them to ensure that ample funds will be available to smaller borrowers at the lowest possible margin of cost over the rates which they pay to their depositors." Where has the minister been for the last 15, 20 or 25 years? What kind of well-meaning rotarian expression is this-"I want financial institutions, especially banks, to do more?"


Some hon. Members:: Hear, hear!


Bob Rae: If the minister wants the banks to do more, he has the means to do it. He does not have to get down on his knees in the House of Commons and ask in supplication for the financial institutions to bleed a little. What a pathetic statement of defeat! I think Canadians were expecting something a little different and a little better from the minister. He is somebody who has a long history of contribution to the country. He is somebody who comes from an area for which I know he has a deep feeling. I can only say to the minister that I am disappointed-not surprised-that he, his government and all supporters of the Liberal party on the other side, have become captives of an abstract economic theory. This theory bears no relationship to people. It hurts the average Canadian. It punishes the average Canadian. It provides a statement which will only lead to even greater hardship in the months and years ahead.
I said the minister was Tinkerbell. I meant that semi-seriously, because if we look at the end of the budget speech we will see:
The key which can open the door to our future is a change in our attitudes and expectations.
All I can say is that that is a Tinkerbell kind of statement- if we all get together and really believe that inflation will come down, that jobs will be created tomorrow, or that interest rates will come down, if we close our eyes and wish ever so fervently, then it will happen; if we all wish that the banks just charge a little lower interest rate and give a break to small-business men, then magically it will happen. That is what I call Tinkerbell economics and Tinkerbell politics. It is a rejection of the deepest, most serious and most joyful aspiration of Canadians for an economy which is working, fully employed and truly fair, which takes care of all its citizens, however badly off they are, whatever colour or race they are, from
The Budget-Mr. Cosgrove
wherever they come in the world. That is the vision the New Democratic Party is proud to offer to Parliament and to Canadian people. Those are the practical policies and the policies which follow from them that we will be putting forward when we are the government.


Some hon. Members:: Hear, hear!


The Acting Speaker (Mr. Blaker):: The Chair finds the subamendment of the hon. member for Broadview-Greenwood (Mr. Rae) to be in order.


Paul James Cosgrove: Mr. Speaker, my first words in this debate are to congratulate my colleague, the Minister of Finance (Mr. MacEachen), on the measures which he has proposed in response to the economic circumstances in which the country finds itself today.
I wholeheartedly support his sensitive and sensible approach to the restoration of our national economic and financial well-being.
I particularly appreciate the minister's response to the problem which, as hon. members know, has recently absorbed so much of my time, energy and concern. I mean, of course, the assistance that will now be provided through the Canada mortgage renewal plan to those Canadians who are having the greatest difficulty in meeting their mortgage payments because of high interest rates which they must pay on renewal. These problems arise, not only because of the high rates but because the rates have risen so quickly, giving little opportunity for families to make the necessary adjustments in their household budgets. The mortgage renewal plan will give them the time they need to work out their own solutions.
I am most grateful, Mr. Speaker, to the many friends, in this House and outside it, who have expressed their concern about the unprecedented amount of public attention which has been directed toward me and my portfolio during recent months. As the minister reporting to Parliament for Canada Mortgage and Housing Corporation, I have been, quite naturally, the focus of feelings of anger and frustration among people who were in fear of losing their homes. Throughout that time, I have repeatedly given assurances that the government would abide by the commitment made in the throne speech, that we would, in the words of the speech, "-act to assist those unable to bear the burden of renegotiating their home mortgages in the present abnormal situation so that the spectre of foreclosure will be avoided."
I would ask hon. members to witness that my confidence in the Minister of Finance and my cabinet colleagues has been justified. We have kept the faith; we have kept that promise.
We have done exactly what we said we would do, and we have done it exactly as we said we would, by directing assistance to those most urgently in need of it and, again in the words of the throne speech, "-without the government embarking upon a major subsidy program."

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The Budget-Mr. Cosgrove
I have been asked many times in recent weeks, and so have my colleagues, who are the people most in need of help, how will they be defined? The answer is now quite clear. Householders in need of help are all those who have to renew their mortgage at a rate that will take up an excessive proportion of their gross incomes. We are saying that an "excessive proportion of income" will be more than 30 per cent, paid out in mortgage principal, interest, and property taxes, with some allowance for condominium fees, where they apply.
These are Canadians who, because of the present level of interest rates, and their recent rapid escalation, will be faced with the necessity of making significant adjustments in their personal financial arrangements during the next year.
There has been a great deal of speculation as to how many households would be included in this category over the next 12 months.
Much depends, of course, upon what will actually happen to the level of mortgage interest rates. These remain painfully high, but have dropped considerably during the last month. Our estimates indicate that if mortgage interest rates over the next months were in the 20 per cent range there would be something, as I indicated this morning, in the order of 50,000 householders between now and a year hence for whom mortgage payments and taxes after renewal would represent more than 30 per cent of gross income. The great majority of these householders will have some equity in their home.
People who have a substantial equity in their home can make use of that resource to help themselves through this period of high interest rates. Several mortgage lenders have offered to defer interest payments-to allow borrowers to postpone the payment of interest and to add it to the principal amount owing. That, of course, is not a permanent solution. As long as interest payments are being deferred, the debt is increasing and is, itself, bearing interest at a high rate. It is a way, however, that some people would choose in order to reduce their mortgage payments. But this alternative is not offered by all mortgage lenders to all of their clients. Some lenders are not prepared to accept what they consider an additional risk.
In order to reduce the risk entailed by the deferral of mortgage interest for borrowers who have equity, the government is offering a guarantee. Where the home owner has an equity of 5 per cent or more in the home but is paying out more than 30 per cent of household income in monthly payments, the government will assist to arrange the deferral of interest payments by underwriting the deferred interest.
This guarantee will make it easier for the lender to offer interest deferral, in cases where the borrower wants it, in order to reduce the amount of current mortgage payments.
The special guarantee, however, will not address an even more difficult problem for other Canadians. Some of the householders whose debt service ratio will be over 30 per cent as a result of renewal, will have insufficient equity in their home. Interest deferral does not answer the problem faced by these householders who need it most. To increase their mortgage debt beyond reasonable limits would, in all probability, simply add to their problems in the future. For these householders we intend therefore to make grants in order to keep their monthly payments within manageable limits.
That, in essence, is the Canada mortgage renewal plan-a system of interest-deferral guarantees and grants. It is available to people who would be paying more than 30 per cent of income in monthly payments after renewing their mortgage. For people who have substantial equity, there is help in making an interest-deferral arrangement. For people who have less than 5 per cent equity, there are grants to bring their mortgage payments to a manageable level. The plan will be in effect for one year until November 12, 1982. It will be retroactive, applying to mortgages that matured on or after September 1, 1981. There is a limit of $3,000 per household, over the next 12 months, on the amount of interest deferral subject to the special guarantee, or on the amount of grant.
I should perhaps say a special word here about a group of home owners in which the government has a special interest, those who bought homes under the Assisted Home Ownership Program.
There are two types of AHOP participants. The first are people who receive outright grants. For these people, in order to bring them parallel to the plan announced last evening by the minister, the AHOP grants will be increased to a maximum of $3,000.
The other people are AHOP borrowers who received interest-reduction loans rather than outright grants. These people will be eligible for either deferral plan guarantees or the grant under the Canada mortgage renewal plan.
In the past few weeks and months I have met with many individuals and organizations to hear their representations and to seek practical solutions to the mortgage renewal problem. I have met with hundreds of home owners in Ottawa and different parts of the country, including the large delegation which assembled on Parliament Hill, and with my own constituents. I have met also with organizations of builders and lenders and representatives of the real estate industry.
I am appreciative of all these offers of advice. After much serious deliberation, the government has chosen a plan which is precisely targeted to people's needs and which does not put an excessive demand on public resources in a time of economic restraint.
The mortgage renewal aid measures will be given effect through necessary amendments to the National Housing Act which I will put before the House at the first opportunity. I am confident, given the urgency of the situation which the legislation addresses and the concern expressed in this House for the plight of home owners, that it will be dealt with expeditiously by hon. members on all sides.
In the meantime, the Minister of Finance will be reminding the mortgage lenders that the plan is retroactive and will apply to any arrangements they have made with borrowers during
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the interim. In addition, officials of CMHC will be meeting on Monday with the lenders to discuss procedures and to enlist their co-operation. All of these measures are confined to home owners who are now renewing their mortgages or who will be doing this during the next 12 months.
I would not like to give the impression that mortgage renewals are the only difficulties facing the housing sector. There is a growing awareness of the needs of people who rent their homes and who, in many parts of the country, are having difficulty finding suitable accommodation at an affordable cost. In response to representations concerning this, I am very pleased that the government has made provision in the budget for interest-free loans of $7,500 a unit to assist in the construction of as many as 15,000 additional units. This would be affordable rental accommodation in areas where the shortage is most severe. About 5,000 of these would be available for low-income people through rent supplement programs which, with provincial cost-sharing, provide assistance geared to income.
I would hasten to add that these 15,000 new additional units, with a provision for low-income people, will be in addition to the 25,000 social housing units which will be supported under the popular co-operative programs that serve people of modest and low incomes. In all, when one combines them, 40,000 rental and co-operative units will provide suitable accommodation for people in the low, moderate and middle-income ranges.
In the next few weeks I intend to travel across the country to meet with provincial housing ministers regarding the application of the new rental program I have just described. A number of provincial governments have programs of their own to stimulate rental production, and provinces do participate in our existing non-profit programs. The new national program of interest-free loans is not being put forward to replace what the provinces are now doing. It is intended as an additional impetus to rental construction. It will be necessary for me to discuss the strategies with the housing ministers if we are to deploy the new rental program in the most effective way for all Canadians. At the same time, I intend to encourage the provincial ministers to complement our programs with any provincial initiatives designed to suit regional needs.
While we are concerned about measures to alleviate current problems, such as high interest rates and low vacancy rates, we should not allow ourselves to be distracted from our continuing attack on long-standing problems. I am thinking, for example, of our ongoing efforts to improve the housing conditions of native people and the rural poor. I am happy to be able to say that through our rural and native housing program we have been able to make very substantial improvements in the conditions of these Canadians in recent years, while attempting to assist them to achieve economic and social development. This program has been evaluated with the direct participation of the native people themselves. I hope that I will soon be in a position to propose innovations which will make the program more effective, efficient and equitable for all the people it serves. Improvement in this particular program has a high personal priority for me.
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I would like to remind all hon. members that housing for some 400,000 households in Canada, almost 5 per cent of the existing housing stock, is provided in different ways by the national government under programs such as public housing, co-operative and non-profit housing. This includes housing for the elderly and for women raising families alone who could not otherwise afford to obtain suitable accommodation without depriving themselves or their families of other necessities.
There are, however, some limitations to the existing social housing programs of which I speak. Not everyone has access to the limited stock of social housing. Most of the housing provided through this technique is new, and consequently adds to the stock. That is an important advantage. However, the disadvantage is that it also adds to the difficulties of generating a sufficient supply of housing. If we relied only on this technique, it certainly would require a long time and costly expenditure to serve the needs of Canadians.
For these reasons, as many hon. members are aware, I have been turning my attention to additional ways of providing housing for people who are not able to fend for themselves. One approach is the idea of shelter allowances, giving people money to seek out their own accommodation in the market, rather than putting them into special, subsidized units. The idea is to provide assistance to people rather than to buildings. I have raised this idea on a number of public occasions; most recently, at the all-sector housing conference in March of this year. I have raised the idea with the ministers for housing in the provinces at our meeting in June.
There are many aspects to this system which require and are receiving further study, such as the effect of shelter allowances on rents, the question of quality standards, limits on unit prices, and many more. Overriding all other considerations, of course, is the question of cost during a period of serious economic constraint. Nevertheless, I intend to continue discussions with the provincial housing ministers on this subject. It is a matter which I am continuing to discuss with my cabinet colleagues, especially those with responsibility in the area of social programs.
I would like to speak for a moment about Canada Mortgage and Housing Corporation. CMHC is, of course, the agency through which all of this assistance is delivered. Its staff has a continuing role, not only in implementing government programs, but in helping to select and develop new measures, as we did recently. CMHC will, of course, act in the government's behalf in administering the mortgage renewal plan, as well as many other forms of assistance under the National Housing Act. I think it has been well recognized for some time that CMHC has been doing an excellent job, even though it has had to operate within a legislative and regulatory framework which has often imposed serious restraints on the way in which it does business.
As I have mentioned, I intend shortly to introduce amendments to the National Housing Act to authorize the mortgage renewal plan. At the same time, I will take the opportunity to propose other amendments which will assist first time home buyers by making possible more flexible mortgage instru-

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ments, and will assist builders of rental housing by permitting higher loan levels. The mortgage renewal plan and the rental stimulus program that I have talked about today are addressed, of course, to the present problems arising from mortgage interest rates.
There are, as I have indicated, other problems associated with high interest levels. The treatment of these problems requires new mortgage lending techniques to which the present National Housing Act is ill suited. A wider variety of mortgage payment arrangements is called for to answer the needs of first time home owners and of rental entrepreneurs in the future. To insure such mortgages against different risks requires more flexibility than is allowed under the act. More flexibility is required with regard to insurance premiums, mortgage terms, payment schedules and procedures for claim settlement, all of which impinge upon the ability of the corporation to fund and to act. I will have more to say about these on another occasion.
In summary, I would like to commend to the House and to the people of Canada the plan offered by the minister last evening which will assist Canadians to cope with the problems associated with renewing mortgages at high rates of interest. The mortgage plan meets the essential requirements. First, it gives help to those who need it most. It gives people the amount of help they need to get them through the difficult times. It does all of this fairly and without adding to inflationary pressures through excessive and indiscriminate expenditure of public resources.
I would like to remind hon. members and the country that mortgage renewal problems, distressing as they are, are not the only housing issues we have to confront. Tenants have problems, and I will be exploring solutions to those problems in my discussions beginning immediately with provincial housing ministers.
I had made reference to our efforts on behalf of the native people and the rural poor, and, as I have indicated, that program has a high place in my priorities as the minister reporting to this House and the government for Canada Mortgage and Housing Corporation.
We are concerned as well with the needs of a large proportion of the population; women raising children alone, the elderly and the handicapped who cannot fend for themselves in the marketplace. We have made important strides in broadening our social housing assistance and making it more acceptable. As a result, for example, of representations made by the provincial ministers at the conference earlier this year, and as a result of the efforts of the handicapped during this year, the corporation has taken steps to make more available to the handicapped increased access to our social programs. These efforts, I am sure, will be reflected not only in improved living conditions for many Canadians but also in an impetus to the housing industry and in the creation of a significant number of new jobs.
In concluding I would like to reiterate my comments on the effect of the measures the government is taking. They will deal
effectively and equitably with the problem of mortgage renewals. They will stimulate the production of rental housing, and, when combined with existing social housing programs, they will result in 40,000 rental units being supported by the government next year.
To achieve this, the government has allocated $150 million in direct expenditures next year for these initiatives, and a further $200 million has been allocated in the fiscal framework 1983-84 because of the special guarantee of interest deferral and other housing measures that may be required.
These figures are impressive, particularly given the over-all requirement for fiscal restraint, but they do not by themselves represent the full story. The federal government through its actions will cause a further $1.6 billion in private funds from the private sector to flow to the production of rental housing across Canada next year. This in turn will create jobs and will assist in improving the health of the residential building industry. I am not ashamed to say that this is done under a program which combines not only the government and the private sector, but the national government in co-operation with provincial and local governments and the private sector. They are co-operating in achieving these housing needs for Canadians.
We are all aware as well of the spin-offs from this massive investment; the multiplier effects the industry creates in other areas such as in home furnishings and in the appliance industry, all of which are presently in need of this stimulation.
The task remaining is for the House to translate the very obvious concern, which is taken for granted, and the expression of that concern from all sides of the House during the last few months, into action to assist Canadians who are being affected at this time because of high interest rates.
As I indicated, I will table a bill to amend the National Housing Act. The legislation is important. It will enable the government and Parliament to assist householders in renewing their mortgages through the mortgage renewal plan. It will enable the government and Parliament to assist first-time home buyers through modifications to the mortgage instrument, which, as I have indicated, are not now available in the present legislation. It will enable an additional stimulus to be provided to rental production by allowing CMHC to insure higher loan amounts on rental production. This demonstrates the interface of government with the private sector to the benefit of all Canadians.
I trust and pray that, just as my confidence in the government was vindicated by the government, so too will my confidence in the good sense of all hon. members of this House be vindicated by the speedy passage of this legislation, legislation which, as we all know, is sorely needed by Canadians at this time.


Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, my first words on the amendment on entering this debate are spoken in terms of sorrow because I realize what has happened in these last few weeks. We have had a minister of the Crown, obviously sincere and obviously trying his level
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best to grapple with the problems of housing, suddenly catching the can and having to take responsibility for fundamental policies of the government which have nothing to do with finding the solution to the real problems in Canada. I am very sorry that a fine, new Member of Parliament should have to undergo this. He wrote off his right to pity. I know, when he stood up and, in his opening remarks today, said: "I praise the Minister of Finance (Mr. MacEachen) for doing this to me; I am pulling the spear into my own chest." I do fee! deeply sorry for any human being who has to carry the can on this particular isue.
What we are debating here is not just a budget. What we are debating here, in plain, blunt terms, is interest rates. We are suffering in a prison of myths started 40 years ago and carried on today by a small group of monetary and fiscal experts who have learned nothing in the last 40 years and have forgotten nothing. This whole debate hinges on the understanding we as Members of Parliament have of the use of interest rates. In the view of these experts, interest rates represent a tool of monetary policy, when in fact interest rates cause inflation. They look at interest rates as a tool to fight inflation when the truth is that interest rates cause inflation. That has shown up dramatically in the last eight or nine months with the housing industry and people who own homes being in the front lines. It has shown up dramatically in small businesses, and it has shown up in a dramatic way in big business, including great companies like General Motors, Ford, Chrysler, Massey-Ferguson, John Deere and a whole assortment of companies which operate on the technique of credit for production, for inventory and for distribution. The interest rate load has passed the boundary of economics, over the abyss and into the mess we are in today. This puts into perspective what this debate is about. Normally it is the budget. We have listened to our spokesman for the Conservative Party-who is another new member and who is equally sincere and who is trying to do his best to put into words what he felt should have been done in this budget. I think it was a credible effort for the first time he has engaged in the opening part of a budget debate. What he was trying to say, Mr. Speaker, was that the missing ingredient in this budget, during this economic cycle, was the primary objective of developing this country. Developing this country would not cause inflation. If we bring together our unused plant capacity and our unused labour supply with the great supply of cash we have in Canada through our savings programs, these great challenges which face us economically can become great opportunities. That is what the spokesman for the Conservative Party was saying.
The speech by the representative from the New Democratic Party was a demonstration of what a master of words can do in ripping a helpless government apart. The irony of it all is that this is the man who helped get this government into power. He helped to defeat a budget in 1979 which had some of the provisions which should have been in this budget. I could not help but think of the irony of it as I listened to his
The Budget-Mr. A. Hamilton
razor-edged remarks, cutting the heart out of the government members. He was one of the leaders in the movement to force the alliance between the NDP and the Liberals, who only had one objective, to get the Conservatives out of power. The good Lord, in His wisdom, is today dealing with these people in His own way.
This budget can be analysed very simply by asking yourself four or five questions. Did this budget provide a series of tax reductions for the things people need, want and would accept? Would this create a number of jobs which, in turn, would create a greater amount of tax revenue and help the government balance its budget over the next two or three years? Were there any tax reductions in this budget which met that criteria? There were six or seven of them in the Crosbie budget which the Minister of Finance (Mr. MacEachen) had so much sport with over the last two years. It is a case of one island guy buzzing another island guy. Was there any proposal in this budget to reduce taxes to get the economy moving and help the Minister of Finance balance his budget over the next couple of years? The answer is, yes, there was one. That one provision is for a reduction of gross taxes on income from that horrible high level of 64 per cent in Ontario and most of the rest of Canada down to 50 per cent. The maximum income tax of an individual in Canada, both provincial and federal, is 50 per cent. That is all the government will now take away from you, instead of the outrageous 64 per cent.
There was an editorial in The Globe and Mail this morning which stated that there are only 50,000 people in this bracket who will benefit, and I think that most of them read The Globe and Mail. Do we in our party say that this provision is bad? The answer is, no, because whether you like this provision or not, these 50,000 people who will benefit quite extensively- they already have a Cadillac and a house which is paid for, so they cannot spend much more-will put their money back in the investment field because they are the type of people who will do this. They are the ones who hopefully will create the jobs, and the record shows that they always do. This party, through the words of every member who speaks, will support this part of the budget and this, of course, is where we differ from the NDP. They want the tax raised higher on these 50,000 people who make $100,000 a year. They are against any person having that kind of income. They believe we should all be down at the same level in an egalitarian society where there is no ownership of property. That was clearly stated by the spokesman for the New Democratic Party.
I repeat that this budget does make one provision for tax reduction. However, if we review the Crosbie budget, we will note that there was a proposal to deduct interest on mortgages, a proposal to deduct property tax for home owners-the renter already has that type of thing. This was proposed in the Crosbie budget, and the Liberals and the New Democratic Party turned it down. The Crosbie budget proposed an energy tax credit wherein any person who made less than $22,000 a

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The Budget-Mr. A. Hamilton
year was not taxed at all on energy. This allegiance of Tweedledum and Tweedledee now results in taxing oil and gas and everything else. Gas is up by 36 cents to 46 cents a gallon. That is a measurement of what the present budget shows when compared with the Crosbie budget.
What I am suggesting, following the lead of the spokesman for the Conservative Party, is that there should have been a vast series of tax reductions in the budget, tax reductions for any person who would invest as an individual in ownership of this country, for any person who would invest in pipelines into the north, for any persons investing in a power grid from the Yukon through to the Hamilton River-now called the Churchill-tying up the great energy resources of coal to use thermal heat, the great power grid which made all this energy available across the country. I would like to have seen tax reductions to encourage the development of a system to move hydrogen across the country in a way similar to oil, gas or electricity. There was a task force report from all parties in the House which recommended this as a number one priority. The system of moving hydrogen is much the same as for moving gas except it requires twice the pressure.
I could go on and list a number of projects. We have the prairies which are full of great natural river basins which have been empty for millions of years. We have the facilities now available to store water in those great basins. This water could be transported across the prairies to make industrial development available at a lower cost than in any other country in the world, particularly in the petrochemical industry. I would like to see that water go back to its original channel from the prairies right through to Ontario and right across the northwest of Ontario where is used to run. It can be done. I would like to see a development on the east coast to take advantage of these tremendous iron reserves we have in Labrador and around Ungava. I would like to see a tremendous development in the Hudson Bay area on the Nastapoka Islands and the Belchers, where iron is 70 per cent, tied into the big industrial complex we have around the Great Lakes where there are millions of people. We could produce steel even cheaper than we do today, and our steel is the cheapest in the world.
I can see one project after the other-with the economics all worked out-that could have been started in this budget. We could have put our men to work, and people tell me that would not be a policy of restraint! Whenever you spend money to make money, that does not cause inflation. That is the only way to fight inflation. That money can be spent on potential things or on immediate things.
I have before me a chart covering the years 1953 to 1981, and what it is is the pulse rate of the nation. It shows the pulse beating at different rates for nearly 30 years, and as that pulse rate is beating, we can see the country growing or taking sudden drops. As I look at the last 30 years on this chart I see a drop on the chart as a result of the budget of Walter Harris
in 1956. He used the same opening philosophy the minister used last night. I see a drop in 1959 under Donald Fleming. He made his budget presentation from the same seat occupied by the present minister. I remember that budget, and I remember how that policy was changed shortly afterward and how growth increased steadily for nine years without a break. Even when Walter Gordon brought in his budget, that made only a small tremor. Then there was the budget of Benson of 1968. We were going to wrestle inflation to the ground, but that budget sent us right down in one of the steepest drops we have ever had in our economic history. Once the country gathered itself together and fought its way up out of that, along came the 1974 budget of John Turner, after which there was a real drop. That was the time he double taxed by making the taxes of the provinces on the resource industries non-deductible. This country has never quite recovered from that double taxation of the mining and resource industries in the Turner budget of 1974. We have had stagflation ever since. Along with the United States, our country has been struggling to get going. All of a sudden we have this new budget. We are already into a recession and, instead of trying to do what the hon. member for Etobicoke Centre (Mr. Wilson), the spokesman for the Conservative Party, was saying, instead of trying to get outselves going, instead of getting up and taking advantage of the fact that there are men and women who need jobs and that there is lots of money available, if the tax rate is right, and instead of taking advantage of these great opportunities, the minister walked in here and repeated the same mistakes Walter Harris made in 1956, Fleming made in 1959, Benson made in 1968 and Turner made in 1974. The minister has turned this country downhill at high speed, with all the human suffering and frustration which will result.
We will get out of it, all right. This country is too strong even for politicians to push it around, but it is an unhappy time for me to go through this.
I say that this budget could be tested by three, four or five questions. I mentioned tax reductions, not just to please voters but to balance the budget by making more money available. That is a potential thing. I mentioned that the Crosbie budget had six or seven, and I will put on the record once again a reference to a special issue of "The Public Interest" in 1980. The article to which I refer is entitled "The Dissolution of the Keynesian Consensus", and it was written by James W. Dean. The article says:
On December 13, 1979, the government of Canada fell. For just six months the Conservatives had governed with a parliamentary minority, and they were defeated on a vote of no confidence. The issue was their first budget-a budget that rejected Keynesian economic policies, replacing them with radically different recommendations. Unemployment and slow growth were to be fought not by increasing the federal deficit but by reducing it.
This was a turnabout in what the Conservatives themselves had recommended when sitting in opposition just the year before. Their turnabout mirrored that of much of the economics profession throughout the English-speaking world. It was the decade's last dramatic reflection of a dissolving Keynesian consensus. This paper traces how that dissolution came about.
I put that on the record again to show that the intellectuals of the world recognized the significance of the Crosbie budget, even though we in Parliament did not at the time. It was the
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first budget in the western world that deliberately tried to balance the budget by reducing taxes, and that is what the record will show over the centuries to come. One page of this morning's Globe and Mail was set aside for the federal budget. It says, "Little new spending in development strategy for the eighties." As The Globe and Mail read the development paper-and I read it too-The Globe and Mail does not see any new spending to make money in development in the whole decade to come.
The government had a great opportunity to pick this country up and to get it off this mythology of Keynes whereby the government frightens us with myths and bogey men that do not exist. One of the myths is that deficits are always inflationary. I have heard that for 25 years around here, and I simply say that deficits are not inflationary if the money is spent in productive enterprises. Deficits are not inflationary if the money is spent to make money. Deficits are not inflationary if the capacity of the industrial segment is available. Deficits are not inflationary if labour is available.
Surely the quantative evidence of the last 30 years should be listened to. More embarrassing still is another myth with which the government tries to frighten us, and that is that we have to have high interest rates in Canada so that money will not flow out. What a myth! Hon. members should look at the figures. Using just the number 2 to represent the total figure, in the last decade we sent out roughly $2 a year. What did we do last year after interest rates went up out of sight? Our export of capital went up from 2 to 10. If we were to add "billion" we would not be far out. High interest rates are supposed to draw money in, but the more we have raised interest rates in Canada, the more money has gone out-five times more.
I simply say that this budget fails in almost every test. I have not mentioned the transfer of social costs back to the provinces. Nor have I mentioned the question of indexing of income which is being done for one more year.
I want to conclude by stating those things in the budget that really hurt. I refer in particular to the minister in charge of housing, the Minister of Public Works (Mr. Cosgrove), the Minister of Agriculture (Mr. Whelan), the Minister of Fisheries and Oceans (Mr. LeBlanc) and any resource minister. The final question we should ask ourselves is, where are their precise policies to reduce interest rates on the fiscal side? The answer is just the opposite.
The poor housing policy just announced by the minister is simply putting off the problem of interest rates. They call it deferring it, which means adding it to your debt. Instead of paying it out over 25 or 30 years, it will be paying it out over 35 or 40 years. It is a life sentence. That is what it means.
The answer should have been what was proposed to the minister in the House last spring from this side. We should have applied the same principle of the small business development bond to several fiscal fields. If a person wanted to lend money for housing, the export industry, farming or any other
The Budget-Mr. Breau
form of activity which is productive, that person should not be charged tax on his income. He could then afford to lend his money to the productive industries at roughly 8 to 10 per cent and not be behind in the game. The government naturally would not allow the fellow who received that money to use his interest payments as deductions. Therefore, it is a fair balance.
That principle could have been applied to housing. Now with interest rates bouncing around 16 and 17 per cent, and they will soon be down to 13 and 14 per cent because the market is forcing them down, not the theorists, a man could borrow the money for half the rate plus one. No army of civil servants would be required. Let the Farm Credit Corporation and Canada Mortgage and Housing Corporation be the agencies to handle that requirement. Whatever route you work with, this could have applied to vast segments of our economy where there is a human need as well as an economic need.
These directions for industries related to homes, farms, the export business and small business would be able to make enough profit and expand to produce the jobs which are the big human need in Canada today.
When everyone is making money, the tax collector makes money. He will get back three times over what was put out originally. The tax collector would be the big beneficiary, but everyone would benefit. It would not be a case of one side winning and one side losing, what they call the zero sum society. It would be a modern society of common sense where everybody wins because everybody is participating in the common goal.
These proposals were all made by members on this side last spring. I thought the minister was listening. He spoke favourably of it. I thought the Minister of Agriculture was listening because he went out and talked the same. However, this budget has now cut the throats of these two ministers. They are destroyed. The man who really should be destroyed is the Prime Minister (Mr. Trudeau) who did not defend those two ministers in front of his own Minister of Finance, making certain that they were protected by carrying out in the budget what was promised to the people before this budget was laid down.
I wish there was another name in the amendment which the Conservative Party has moved. We are getting the guy who has to get the blame, but I think it is the wrong person. I want to conclude by saying in one sentence something I said before. This budget is not only wrong for this time of the cycle in Canada, it is a fraud on the Canadian people.


Mr. Herb Breau (Gloucester):: Mr. Speaker, I am very pleased to take part in this important budget debate now being held in the House. First of all, I would like to mention that during the past year, I was involved in two special committees of the House, one on North-South relations and the other on Federal-Provincial Fiscal Arrangements. I am glad to see that the government has made a thorough study of the two reports tabled by these two task forces and that both reports received the unanimous approval of all parties in the House, that is, of

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the parties of the members sitting on these committees, and that the government has accepted the general principles and orientation of the two committees.

I am happy to see the hon. member for Erie (Mr. Fretz) in the chamber this afternoon. He was a very active member of the task force on North-South relations which I had the honour to chair. He was of great help in that process, as were all members of that task force.
I believe we have helped in the process of reform of this place which is so important to influencing government policy and giving a philosophical framework to the government, both in North-South and in fiscal arrangements. That will be very helpful to the government and the country. I mention that because on both issues we have a reaffirmation of the government's commitment, first to North-South relations and the development assistance budget of the government and also in the area of fiscal arrangements.

I was very happy to read in the budget speech made by the Minister of Finance (Mr. MacEachen) last night, that the government is now making concrete proposals on the renewal of fiscal arrangements for the period from 1982 to 1987.1 find it gratifying to see the extent to which the minister used the report of the Parliamentary Task Force on Fiscal Arrangements in preparing the federal government's proposals. In fact, it can be said that basically, the federal proposals are in line with our own recommendations. The federal proposal is concerned with three distinct aspects of fiscal arrangements, that is, equalization payments, established programs financing and fiscal rationalization. This is more or less the order used by our task force in its report.
The conceptual framework we used, which may be found in chapter 2 of the report, identifies four basic elements with respect to the future of fiscal arrangements, that is, sharing of tax revenue by the two levels of government, economic and fiscal co-ordination, fiscal equalization and financing of provincial programs that are in the national interest. And here I am thinking more specifically of hospital care, medicare and the Canada Assistance Plan. Although the latter is not one of the programs identified under the EPF program, it is still a very important social program in our country.
To have an overview of the fiscal reality in our federal system, one must situate intergovernmental transfer payments such as equalization and EPF payments within the context of the public finances of each level of government. Since 1957, the federal government has more than quadrupled the fiscal space available to the provinces where personal income tax is concerned through the use of tax point transfers, which has enabled the provinces to finance their expenditures on health and education. The provinces have therefore received a larger share of the country's public revenue, and also more flexibility, because with the tax point system, the province is free to apply
or appropriate these public funds as it sees fit. The provinces have become stronger financially compared to the federal government.
From 1959 to 1979, the federal share of public revenue fell from over 58 per cent to less than 46 per cent, while the share of provinces and municipalities rose from 42 per cent to 54 per cent. If one subtracts federal transfer payments and considers them as provincial revenue, one sees that the federal government's share of revenue, which was 52 per cent in 1959, is now less than 34 per cent of what it was in 1979. These figures tell us a great deal, Mr. Speaker, in fact they indicate that from the fiscal point of view, Canada is probably the most decentralized federation in the world, despite the fact that it is said that the federal government, especially under the present Prime Minister (Mr. Trudeau), has been a centralizing government. Not, however, Mr. Speaker, if we look, at the figures which show that since 1959, the share of total public revenue in Canada spent by the federal government dropped from 52 per cent to 34 per cent.
Therefore, on the basis of those facts a majority of members of the parliamentary task force on tax agreements concluded that it would be unwise to proceed with new transfers of income tax points as suggested by some provinces. Such transfers would indeed reduce the means available to the federal government to make sure that provincial involvement in areas such as health and post-secondary education are consistent with the achievement of major national objectives. Should some tax fields be taken away from the federal government, it would be unable to govern in the interests of all the people. In addition, new transfers of income tax points would reduce the capacity of the federal government to manage the economy and would favour the wealthiest provinces where the value of tax points is higher.
The government proposals to renew tax agreements do not provide for any new transfer of tax points and thus they entirely agree with the conclusions of the task force in connection with the sharing of tax revenues between the two levels of government. It should also be noted that neither the Minister of Finance nor the task force suggest a reduction in the tax fields granted to the provinces in the past two years. For example, tax fields granted to the provinces in 1977 cannot be patriated.
As concerns economic and fiscal co-ordination, the task force recommended that the federal government maintain the tax agreements while still requiring that they be subjected to the three principles outlined by the Minister of Finance in December, 1980. These principles relate to the administrative practicability of tax measures, the uniformity of the direct tax base and the avoidance of fiscal obstacles to the flow of capital between provinces. We also suggested the development of a fiscal behaviour code which, without preventing the federal government from stimulating economic development in have-not regions, would subject all governments in Canada to a
November 13, 1981

certain fiscal discipline. We also suggested the establishment of a federal-provincial committee of officials which would report periodically to the Minister of Finance on the state of the economic union. This committee would look into various matters of fiscal harmonization between the different governments and could consider drafting an economic behaviour code on taxation, spending and economic regulatory processes. The Minister of Finance's proposals on fiscal harmonization are very important, Mr. Speaker, because it is essential to maintain in Canada the principles outlined by the minister himself at the 1980 finance minister's conference. He proposes consultations with all the provinces, including those not included in the tax arrangements, to look into matters of fiscal harmonization and develop corrective mechanisms if need be.
This issue of fiscal harmonization scares many people because it is very complex, Mr. Speaker. But without any fiscal harmonization or co-ordination to ensure that all levels of government in Canada, both federal and provincial, will act likewise when the time comes to collect new taxes or to legislate in this area, there would be a tremendous jungle in Canada. What would happen is that the provinces would compete against each other for taxes and, as a result, someone who did not want to pay any taxes would not pay any anywhere in Canada. I am therefore pleased that the minister has accepted this recommendation of the task force on fiscal arrangements. The members of our task force can only be pleased with the minister's proposals because they are clearly made in the same spirit as our report.
We analysed very thoroughly the question of fiscal equalization. We made some important recommendations. That topic formed the highlight of our report. It is worth noting that members of this House, or members of a committee of this House from different political parties, are able to speak with one voice on the question of equalization, as this is the issue. Canada could not exist as it exists today without the concept and philosophy of providing an equality of fiscal capacity up to the national average for every province of this country. How could the provinces of Newfoundland, Prince Edward Island, Nova Scotia or my own province of New Brunswick, for example, provide the degree of social services they provide to their citizens without equalization? Without it we would have two or three levels of Canadians. That would be intolerable in this country. We proposed that the program continue as an unconditional transfer of resources to provinces that are below the national average in fiscal capacity per capita. We also said that a program of equalization which would measure the fiscal capacity was the best way to arrive at this objective of equality or of comparable services from one part of the country to the other.
With regard to the treatment of natural resources, we could not make precise recommendations because, at the time we reported, there had not been an oil and gas pricing agreement
The Budget-Mr. Breau
with Alberta, Saskatchewan and British Columbia. However, we recommended that decisions taken in regard to this question should be inspired by certain principles that we considered important. First, the receipts from natural resources should only be included in the equalization formula to the extent that they serve to finance what can be considered normal provincial services; second, that no special category of receipts or benefits from natural resources be excluded from the equalization formula, and that all receipts of this kind be included in the formula that established the entitlement to the have-not provinces; and third, it was important to have some kind of ceiling on the proportion of equalization entitlement to either the gross national product or to some other ceiling to protect the integrity of the federal treasury. It should be noted that many people do not recognize this need. I was struck, when listening to the debate in the House and travelling across the country with the task force, by the extent to which people do not realize that while equalization payments to provinces are calculated on the taxing capacity of all provinces, but influenced mainly by the rich provinces, all payments come out of the federal treasury. It is a unique program because it indicates that automatically, without questions asked and without regard to the moneys coming into the federal treasury, on the basis of the fiscal capacity of provincial governments taking 29 tax fields, the federal treasury should pay this out. It is a unique system. On the question of equalization it indicates that the capacity of the federal treasury at any given time should not be a factor which would deprive the have-not provinces of achieving an average fiscal capacity per capital It is important to note that. We said it was an important principle. However, while it is pegged to provincial taxes or what happens in the provincial field, there should be some kind of ceiling to protect the federal treasury.
The task force considered that it was normal that the approach selected to deal with revenue from natural resources would result in a substantial reduction in equalization payments now being made on the basis of such revenue and that, as a result, Ontario's eligibility for equalization payments would be postponed for at least a few years. We also recommended abrogating the special provision on personal income, as a result of which Ontario is now excluded from equalization payments.
Those were thus the main recommendations of the task force. They are similar to the proposals of the Minister of Finance, because the minister, while wishing to retain the representative taxation system, proposes to change the present formula by broadening the fiscal capability measure on which it is based, and by setting Ontario's fiscal productivity as the norm for equalization payments. In addition, the Minister of Finance is proposing that municipal and local taxes should all be included in the equalization formula in order to determine the size of the payment to provinces receiving equalization.

November 13, 1981
The Budget-Mr. Breau

I believe that adopting the Ontario standard as the minister proposed in the budget is equitable and fair. It prevents us from adopting the special discriminatory procedures or positions that we had last year to protect the federal treasury from a rampant increase in equalization payments because of something happening, for example, in the resource field. I believe that adopting the Ontario standard is fair. Considering that the decisions on levels of municipal taxation in Ontario are not in the hands of a single government but in the hands of an array of municipal governments, I believe it will turn out to be very generous for provinces that are recipients of equalization payments.

Concerning established programs financing, we made a number of very elaborate recommendations. These recommendations deal with the terms and conditions of established programs as well as their financing. On the terms and conditions of health programs, the task force recommended that after consulting with the provincial governments, the Minister of National Health and Welfare (Miss Begin) establish clear health program conditions based on explicit criteria allowing their implementation to be monitored. We also recommended, in respect of the Minister of National Health and Welfare as well as the Secretary of State (Mr. Regan) and any other minister designated by the government, that there be an annual report to Parliament on the state of programs or on what the minister refers to as "national standards".
A comparison of the task force's recommendations in the areas of health care and post-secondary education show a striking similarity. The Minister of Finance (Mr. MacEachen) proposes that national health care standards be clarified and that an efficient mechanism be set up in consultation with the provinces to ensure that they be adhered to. Concerning post-secondary education, the minister proposes that new arrangements be worked out in consultation with the provinces, and in view of the fact that the minister asked for different treatment in cases where there is no post-secondary education agreement, it can be seen that the minister is getting near to our recommendation to separate the two, and hopefully in the course of these negotiations with the provinces, the Canadian government will show fairness in the areas of health care and post-secondary education in order that we have not only an agreement on the conditions of those programs, particularly on the matter of extra billing by physicians, but also an agreement on post-secondary education national goals and an agreement on the implementation of those programs and the way these terms and conditions will be interpreted in the future, because currently there is not even agreement on the interpretation.
On the issue of established programs financing, especially the federal contribution to health care and post-secondary education programs, and the treatment of part of the financing
transfer concerning established programs, the budget proposes that it be abolished in the interest of restraint.
Mr. Speaker, it must be said that it was not quite what the task force recommended, but what did matter to its members was that there be-and this is my own interpretation-no real basic reduction from one year to the next. With respect to the growth of the federal contribution, as well as of the expenditures, that is to say in the programs administered by the provinces we agree that in the future adjustments may be made.
I am glad to see that the government has accepted that recommendation of the task force, namely to maintain the level of financing, because, as the minister said during today's oral questions period, although the elimination of the system of revenue guarantee will cost $914 million to the provinces in 1982-83, we must keep in mind that when the minister proposes to close the loopholes-

The minister proposed to close the loopholes in the tax expenditure accounts. This will have the effect of increasing the federal tax base or the basic federal tax. All provinces except Quebec use the federal tax base to establish their own provincial income taxes. They are a percentage of the federal tax. While this will cost the provinces $914 million in 1982-83 they will receive, because of the changes, $1,083 million more in 1982-83. They will receive more in this current year, or approximately $47 million. While the net effect will be a loss starting in 1983-84, in the aggregate for the next two fiscal years the provinces will not lose one cent from the elimination of the revenue guarantee.
One must say that the revenue guarantee is a very inequitable form of fiscal transfer. I can see that the revenue guarantee was necessary in 1972 to protect provinces against sudden changes in the federal tax base because of tax reform, but the provinces have had ten years to adapt their provincial tax rates. We must not forget that the revenue guarantee is one point of personal income tax and the rest is cash. It is very inequitable toward poor provinces. It provides more of a guarantee to the rich provinces than to the poor ones. I think the way the government is dealing with this is in the spirit of the task force report. It does not effectively reduce in the aggregate in the next two years the amount of money the provinces will receive from the federal government when we take into account the moneys they will have because of the changes to the federal tax base. It will not be redressed. There will be no $1.5 billion cut in the next two years. I see the hon. member for Nepean-Carleton (Mr. Baker) smile. The only reduction will be $1.9 billion out of total transfers of $104 billion over five years. When one considers the changes to equalization, bringing in the municipal taxes at the Ontario level, I am sure that in the case of the have-not provinces at least, there will be no reduction at all, even when the elimination of the revenue guarantee is considered.
November 13, 1981

I am waiting for the cash flow figures on the changes to equalization. If we look at the budget document entitled "Fiscal Arrangements in the Eighties" which was tabled last evening by the Minister of Finance we will see on page 45 that the estimates of equalization of payments under the proposed formula will go from $4.5 billion in 1982-83 to over $7 billion by 1986-87. There will be very generous increases, and it is estimated that the average annual rate of growth of equalization payments will be 11.4 per cent.
The elimination of the revenue guarantee, accompanied by an increase in the federal tax base, and the elimination of the tax loopholes that the minister proposed will bring more equity into the system, and the have-not provinces will be protected by an enriched equalization system because their tax capacity will be equalized after bringing in municipal taxes to the Ontario level.
Everyone knows that municipal taxes in Ontario are very high. In Newfoundland there are practically none; in New Brunswick they are very low; in Nova Scotia and Prince Edward Island they are way below the national average. The result will be that municipal taxes in the poor provinces will be way down compared with the national average, while in Ontario they will be way up. There will be a more generous equalization payment to the have-not provinces.
We must not consider just one proposal of the budget in isolation from all the others. The piinister is proposing a more generous, equitable and just equalization system that will protect the poor provinces-I do not like the word poor so I should say the have-not provinces although in some cases they are richer than the others. Quebec and the others will be protected because the municipal taxes in Quebec are a lot lower than they are in Ontario. Quebec decided to structure its finances differently and increase school taxes, so property taxes there are lower than those in Ontario. By doing that, we eliminate a very inequitable form of fiscal transfer that was an automatic, unconditional transfer to the rich provinces as well as to the poor ones. Over the last quarter of a century we have established that the only unconditional payment to the provinces should be the equalization program. That is a different kind of program.
The rich provinces need money but they do not need it at a time when the federal government is in debt and has to pay 20 per cent of its budget for debt charges. The federal government not only has to look after things that come under federal jurisdiction, such as fisheries, defence, international development, foreign affairs, energy and transportation, but it must always keep in mind the dangers of developing what the Minister of Finance called last April "fiscal dualism". This is the case where rich provinces get richer and poorer provinces get poorer. That has to be a concern of the federal Parliament and that is why the elimination of the revenue guarantee, coupled with a very enriched equalization program to the Ontario standard with municipal taxes, will mean we will have a more fair system to protect have-not provinces and thereby have a better federation.
The Budget-Mr. Vankoughnet


Some hon. Members:: Hear, hear!


Mr. Bill Vankoughnet (Hastings-Frontenac-Lennox and Addington):: Mr. Speaker, at a time when many feel we are sliding into a deepening recession, the Minister of Finance (Mr. MacEachen), instead of delivering an equitable budget, has presented much gloss and little substance as a prelude to his potential leadership of the Liberal Party.
Many Canadians may not think they are in for tax increases and they may be thankful for small mercies, but they should be made aware of the fact that the present Liberal government has once again shown little mercy by neglecting the serious economic problems facing Canadians today. This budget is merely a manipulation of wealth and very little else.
Once again we have here a budget which gives the impression that the government does not know what to do about the economy of Canada. Incredible expenditures have allowed pork-barrelling and the socialization of private enterprise. This represents the worst in public spending while it continues to discourage Canadians from investing in the future of this great land, with confidence.
This government that masquerades as a Liberal government is trapped in its own snare. After a decade of depending on Gallup polls for economic decisions and governing by them, it finds itself out of band-aids, as have other socialist regimes throughout the world.
There is no question that our economic problems can only be solved by common sense. The government has failed to do this. Canadians desperately want a definite sense of direction and a policy designed to restore confidence in our economy. We desperately need public policies which will achieve sound economic growth, improved opportunities for employment, and a climate of competitive free enterprise, and which will encourage Canadians to work and invest.
Canada is a country with enormous potential yet the government is failing miserably, in the economic policies put forward in this budget, to maximize the opportunities that face us. Hard-working Canadians have become frustrated with the widening gap between our known potential and the current uncertain economic reality. The federal government's high interest rates and high inflation is ruining individuals, such as farmers, businessmen, and home owners across this land.
There is no question that our priorities must be to reduce inflation and interest rates. The question is whether we should continue to follow the policies of this government which have caused the problems we now have. Because of these policies, we are now experiencing the worst inflation recorded in Canada since the end of wartime price controls. Throughout 1981 inflation has been in double digits, which in turn increased interest rates to unacceptably high levels. This situation discourages potential growth in this country and uncertainty discourages long-term capital projects.
Businessmen and farmers cannot operate under increasing debt repayment schedules. Home owners are losing their homes because of huge mortgage renewal increases. Through no fault of their own, hard-working Canadians face extraordi-

November 13, 1981
The Budget-Mr. Vankoughnet
nary circumstances, all because of this and former Liberal policies.
The government is only paying lip service to reducing government deficits and reducing the inflationary pressures in the economy. The past spending policies to which this government is bound prevent it from effectively attacking inflation and high interest rates in an effort to change our destructive economic and social direction.
This trap, which is in evidence today in the demise of provincial government representation will either destroy Canada or the so-called Liberal party. The federal deficit has climbed to over $12 billion in the 1981-82 fiscal year.
Further confiscation and socialization under the catchy term "Canadianization" is undesirable and is wrong for our economy. Increased taxation as a means of improving a deficit caused by mismanagement is the wrong approach. New taxes on top of those imposed under the recent energy agreements will have a negative impact on risk-taking and investment.
Government restraint can be achieved only if genuine efforts are made to control public spending at the federal level if it does not renege on obligations to the provinces and local governments through transfer payment cuts.
It is politically popular to create new expectations for new programs, but people are now realizing that ultimately they pay dearly for these administrative jungles. These programs are expensive, and the money would be better left in the hands of Canadians rather than having Big Brother do it for them. Programs which are introduced must be assessed very carefully to determine if they are affordable now and in the future. The only way to ensure future affordability is to encourage a productive and growing economy which would in turn generate needed financial support.
The reduction of interest rates in the United States will benefit Canadians; but without government action here, a proper climate will not be achieved. Productivity will play an important role in raising our living standards, if given proper incentives. Co-operation in providing programs and incentives to train workers for new opportunities should be given a high priority. If we had trained people for new developments in such sectors as energy production, high technology products, biotechnology and the use of computers, it would greatly add to Canada's economic growth. Duplication and competition in the training of individuals should be avoided, and co-operation with the provinces should be a priority.
There is a need for government to ensure that the personal taxation system is designed to encourage effort, saving and investment. It has to be clear that government supports those people who are willing to devote their efforts and resources to helping Canada reach its potential. We should be neutralizing inequities in the taxation of capital gains, and providing a greater incentive to undertake necessary risk. It is wrong and makes little sense to tax gains which are solely attributable to inflation.
The business community must be given incentives for increased investment without government interference. Foreign investment, capital and expertise are needed for economic development over the next decade. Responsible foreign investment has built this nation and could continue to strengthen it if foreign investors are treated in a fair and forthright manner. Tariffs will continue to fall as a result of the latest GATT arrangements. Competition from low-wage countries and trading blocs is also intensifying. Over-regulation of private enterprise in Canada is just too burdensome. More than ever we need a new national economic strategy to combat inflation and encourage productivity and investment.
The lost time the federal government undertook to reach an energy pricing and revenue-sharing agreement with the oil and gas producing provinces has increased Canada's imports of oil, reduced international confidence in the economy and put downward pressure on the dollar, which is a major cause of double-digit inflation. The inability to deal with strikes such as that of the postal workers and grain handlers has contributed to a lower confidence in the Canadian economy. It is easier for politicians to grant increased social benefits without taxation than to pay as one goes. The fact is that people still pay. It is a well understood fact that the cause of inflation is irresponsible government spending which exceeds the real worth of production and services. The problem is therefore political.
Some 900,000 Canadians need jobs now and for the future. There is a strong need for a comprehensive Canadian industrial strategy in order to make the best use of our abundant supply of resources for the future. We need made-in-Canada solutions to made-in-Canada problems, many which were created by years of indifferent Liberal governments. Canadians need support and encouragement to lift them out of the consumer gloom and away from the negative effects of recession. Canada's potential for success is immense, and the government once again fails to take effective steps to get the Canadian economy moving.
If in fact we are slipping into a recession, as many think we are, then the federal government must stand up to this and not run away from its responsibility, because the same federal government got us into this through years of economic mismanagement. Government spending has been irresponsible, excessive and inflationary. This situation must be curbed so that we do not saddle further generations with unbearable debt built up over the years.
There are many problems here in Canada to be solved before we look for others to take on at the taxpayers' expense. Efforts must be made at home to strengthen the Canadian economy and the Canadian dollar. Before the government gives advice to others, it should prove that it is in a position of credibility by righting the economic wrongs of the Canadian economy.


Some hon. Members:: Hear, hear!


William John Vankoughnet: Canadian taxpayers deserve no less. In the fast paced world, we must keep up if we are to remain competitive. The need for post-secondary education and

research and development is imperative now and for a strong future, and the government must ensure their continuing importance through active support and encouragement.
The federal government has taken Canada from the third highest standard of living in the world in 1968, to the thirteenth, in 1980. We have so many raw materials and energy that other countries with higher standards of living import that we wonder why Canada appears to be slipping when we should be near the top. The Canadian public wants answers and a solution, one which does not appear in yet another ineffective housekeeping Liberal budget. Real problems need real solutions. The problems have been known for some time now. Why are we not getting the solutions? The economy certainly needs help. Canadians need fundamental, straightforward, no-nonsense budgets to deal with the difficult times the Liberals have created.
The finance minister is using the huge sums of energy taxes to be collected by the federal government over the next five years to help reduce the inflationary deficit and curb excessive government spending, costing Canadians an average of $1400 per family per year. There is a need to combine long and short-term planning in the framework of a comprehensive industrial strategy for Canada. In the longer run, there is a need for government encouragement and assistance, training programs, research and development, promotion assistance, modernization of Canadian industry and improvement in our transportation systems. The government should help the private sector create new jobs and develop the market in Canadian expertise.
Experience shows that people respond to strong leadership which produces positive action rather than mere words or theories. A positive, enthusiastic attitude and environment results in more effort and more results from the same resources. Other countries have done this with fewer resources.
We in Canada have a great deal of potential; but we must believe in ourselves and follow a positive sense of direction to success. The government must take positive steps to build up the productive side of the economy and instil confidence in the marketplace. This is overdue, especially at this time when recent reports indicate consumer confidence in September of 1981 was at a 20-year low. Commercial bankruptcies were some 16 per cent higher in the first three quarters of 1981 than in the same period last year and 37 per cent higher than the same period two years ago. Farm bankruptcies were 133 per cent higher than in the first nine months of 1979. Inflation has pushed consumer prices in September of 1981 to 12.5 per cent higher than in September of 1980. Transportation costs are up 20.3 per cent. Housing costs are up 13.4 per cent. Fuel oil costs are up almost 55 per cent over the same time last year.
While wages are not keeping pace with inflation, consumers are falling behind. Even with the recent reduction by 1.5 per cent in the Canadian interest rates, they remain high in comparison with historic levels and in comparison with other major industrialized nations. The Canadian prime rate today is at some 18 per cent. Two years ago, the Canadian prime rate
The Budget-Mr. Vankoughnet
was at 14.75 per cent, while ten years ago it was 6.25 per cent. The seasonally adjusted unemployment rate in October of 1981 was 8.3 per cent, the highest level in three years, with a record number of people out of work for the month of October. Last year's federal government deficit was a record $12.7 billion. The gross national debt is some $119 billion, which resulted in the expenditure of almost $11 billion last year just to service the government's debt. This amounts to almost one tax dollar in every four.
The measures announced by the government in its budget do not address the serious problems of high interest rates by taking positive action to combat them. Guaranteeing interest deferrals which are added to the struggling home owner's cost of housing in the long run does little to bring relief to Canadian home owners. This small token of assistance is of little comfort to both those eligible and those across the fine line who are not eligible for the assistance. They are faced by so many other economic hardships that anything other than an honest attempt at total economic encouragement does little to ease their burden. Canadians look for assistance with a view to a better future, not merely a deferral of the present plan with no economic improvement in sight.
The availability and affordability of housing are two serious problems in Canada and are largely the result of the government's high interest rate policy. Canada needs some 220,000 new housing units each year, but with shortfalls last year and predicted over this year and next this could result in a shortage of some 140,000 homes over the three-year period.
High interest rates have effectively ground apartment construction to a halt, resulting in a serious shortfall of rental accommodation in many areas of Canada. Tenants as well as home owners are hard hit by the current high rates of interest.
High mortgage rates are clearly having an impact on the affordability of housing in Canada. Over half a million Canadians will renew their mortgages this year. According to CMHC, 40,000 Canadian families will lose their homes because they cannot afford to renew their mortgages at current rates. The government must address itself to this serious problem facing Canadians.
Canadians may remember the Liberal promises in 1979 and 1980 that energy prices would stay low, and in particular that gasoline prices would rise by less than 14 cents a gallon in 1980. Depending on the location, gasoline prices in 1980 rose by between 22 cents and 29 cents a gallon, far in excess of the promised 14 cents. Since the election, the price of home heating fuel has risen by some 44 cents a gallon. It is estimated that by 1986 gasoline prices will climb to at least 80 cents a litre, or $3.60 a gallon in most provinces. Heating oil is estimated to go to 60 cents a litre, or $2.70 a gallon, and natural gas prices could double to some $10 a thousand cubic feet. So much for Liberal promises of cheaper energy.
The 18-month delay in reaching an energy pricing agreement caused the loss of tens of thousands of jobs and delayed the construction of two needed oil sands plants. The federal

November 13, 1981
The Budget-Mr. Vankoughnet government should take measures to ensure the oil industry is working again in an effort to keep jobs and exploration in Canada. As a result of the government's new increase in energy taxes, estimated at some $50 billion over the next five years, Canadians expect the government to direct these funds wisely.
There exists in this country today unacceptably high rates of unemployment, and yet at the same time we hear of serious shortages of certain critical skilled employees in Canada. Together with the strong need for a comprehensive economic and industrial policy for Canada to co-ordinate, plan and modernize its industries for the future, we see inadequate training and industrial policies and a lack of co-ordination among all levels of government and between the public and private sectors. We need a national employment and training plan to co-ordinate efforts to match skilled people to modern trades, and the federal government must contribute time, effort and funding to achieve this very important goal. If we are to keep industry in Canada, we must develop the technology and the training and co-ordinating programs and we must give encouragement to implement them and to modernize our industry for the future. There is a need for a strong effort at all levels to ensure we fill the important job shortages in skilled trades and preserve post-secondary education in Canada.
I have spoken in this House before about the need for a comprehensive industrial strategy for Canada and made specific reference to the need to ensure that the Canadian textile and clothing industry survives and grows so that we do not become dangerously dependent on a wide range of imports.
The federal government announced a new policy for Canada's textile and clothing industry on June 19, 1981, that reinforced investment confidence in this important industry which employs many Canadians directly and indirectly. Investors need confidence through long-term planning and stability to make the large-scale commitments necessary in high capital business today.
The policy as announced supported both assistance in modernizing viable firms in the textile and clothing industries and the provision of new employment in communities most vulnerable to foreign competition in these sectors, as the government intends to allow gradual increases of low-cost imports in the Canadian market.
In light of the October 26, 1981, press release from the Prime Minister's office, associated with the announcement of the members of the Canadian Industrial Renewal Board, it is felt by some members of the textile and clothing industry that the context and thrust of this later release confuses the thrust of the textile policy announced last June 19. The later release indicates that the Government of Canada is committed to the promotion of a freer world trade environment by offering freer market access for foreign textile and clothing products.
The release goes on to indicate that while pursuing this policy the Canadian government fully intends to help affected industries, communities and workers adjust to the reality of a less protected domestic market, and that in order to smooth the transition the government will, among other things, establish a special assistance program.
The Canadian economy needs assistance and support if our industries are to survive and prosper. The government should make every effort to ensure that different sectors of our industries grow and compete, rather than say it does not think they can compete so it will offer them assistance to readjust. This is not the kind of positive attitude required to instil the confidence in the private sector necessary for the commitment to large scale infusions of time, capital and hard work necessary for survival and growth.
The government should see to it that its programs, both in theory and in practice, give Canadian industries support and encouragement when they need it most. Only then, when all is well at home, can the government honestly look elsewhere. We simply cannot afford to let our industries disappear through lack of effort or through intellectual theorizing when other countries in the world are doing their utmost to save their own industries. The federal government must promote Canada just as other countries so strongly promote their own interests. Canada would be in a better position to help others if she were strong herself.
The federal government should promote funds and energy toward a comprehensive industrial policy that promotes, preserves and improves Canadian industry so that Canada and Canadians grow stronger as a nation with a strong economy and all the good things that go along with it.
The federal government recently raised the Farm Credit Corporation's interest rate from 14 per cent to 16.75 per cent, thereby dealing Canadian farmers another heavy blow. There is a problem regarding the lack of adequate funding for the Farm Credit Corporation which has resulted in the Farm Credit Corporation running out of funds. The government must recognize that modern Canadian farming is dependent on credit. The current high levels of interest rates and lack of funding from the Farm Credit Corporation, combined with such soaring input costs as fuel and fertilizers are creating hardships for many farmers.
In conclusion I should like to emphasize that the Canadian people needed and expected a strong budget that would face
November 13, 1981

the current economic problems head on with responsible solutions. Once again, the government did not see fit to provide Canada with such a budget. Just as Liberal governments have disappeared at the provincial level, it does not appear long before that happens federally because the people of Canada cannot and will not stand for such further indifference and neglect from this Liberal government.
The Budget-Mr. Vankoughnet


Mr. Deputy Speaker:: Order, please. It being five o'clock, this House stands adjourned until Monday next at 2 p.m., pursuant to Standing Order 2(1).
At 5 p.m. the House adjourned, without question put, pursuant to Standing Order.

Monday, November 16, 1981