1981-01-20

ROUTINE PROCEEDINGS


Mr. Don Blenkarn (Mississauga South):: Madam Speaker, 1 rise to propose a motion under the provisions of Standing Order 43. The derailment in November, 1979 in Mississauga could well have turned out to be a national catastrophe. Clearly unsafe methods with respect to the movement of dangerous commodities by rail through built-up areas must be better regulated. The Grange report makes 15 recommendations to improve rail safety. I therefore move, seconded by the hon. member for St. Catharines (Mr. Reid):
That this House do direct the Minister of Transport to implement forthwith the Grange report, not diddle around for another year, as he has indicated he will, with more studies but take rail safety seriously and show some respect for the safety of Canadians living near rail rights of way.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


REQUESTED RESCISSION OF CORN COMPETITIVE FORMULA-MOTION UNDER S.O. 43
Mr. Gordon Towers (Red Deer):: Madam Speaker, I rise under the provisions of Standing Order 43 to seek the support of this House in redressing an injustice to western farmers which has existed since 1974 when the Hon. Otto Lang forced the corn competitive formula for pricing feed grains on the producers. This corn competitive formula has had the effect of depressing feed grain sale prices and is costing the western producer millions of dollars each year. I move, seconded by the hon. member for Medicine Hat (Mr. Hargrave):
That the government accede to requests from the Canadian Wheat Board, the United Grain Growers and other grain associations, individual producers and western members of Parliament, and rescind the corn competitive formula for
feed grain pricing to allow the price to float free and to allow the western producers to derive just returns for their grain.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


HUMAN RIGHTS
Miss Pauline Jewett (New Westminster-Coquitlam):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Now that the Prime Minister (Mr. Trudeau) has been informed about the size and lethal nature of U.S. military aid to the junta in El Salvador, and in view of the Prime Minister's stated intention to meet with the new President of the United States in the near future, I move, seconded by the hon. member for Saskatoon East (Mr. Ogle):
That this House urge the Prime Minister to meet very soon with President Reagan and at that meeting raise the issue of the political deaths and human rights violations in El Salvador, last year's UN resolution against foreign military intervention in that country, and the concern of all Canadians about the escalating U.S. military involvement in El Salvador, "not a policy" as the Prime Minister said yesterday "that we would share or follow."


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


UNITED STATES
Mr. Bob Wenman (Fraser Valley West):: Madam Speaker, I rise under the provisions of Standing Order 43. Recognizing that today marks the inauguration of the fortieth President of the United States, I move, seconded by the hon. member for Laurier (Mr. Berger):
That this House extends best wishes to President Reagan and the people of the United States, and prays that his term in office will be distinguished by continued friendship and co-operation between our two nations, and greater peace and prosperity throughout the world.

January 20, 1981


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


Some hon. Members:: Agreed.


Madam Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the said -motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Miss Coline Campbell (South West Nova):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of pressing urgency. As most hon. members know, we are in the beginning of the fifth annual national non-smoking week organized by the Canadian Council on Smoking and Health co-sponsored by the Department of National Health and Welfare. The success of this event as a public education campaign on smoking hazards is reflected by the department's latest findings on the smoking habits of Canadians. I move, seconded by the hon. member for Timiskaming (Mr. Lonsdale):
That this House recognizes the importance and validity of this campaign.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADA SAVINGS BONDS
Mr. Gus Mitges (Grey-Simcoe):: Madam Speaker, I rise to move a motion under the provisions of Standing Order 43. In view of the fact that because of inflation Canada Savings Bonds no longer present an attractive investment for Canadians since banks and other financial institutions have a much more attractive rate of return for short and long-term investments, I move, seconded by the hon. member for Winnipeg-Assiniboine (Mr. McKenzie):
That the interest received from Canada Savings Bonds and other federal government bonds be considered as dividends so that people purchasing such bonds can claim a tax credit on their income tax, similar to that which now applies to dividends paid by Canadian corporations to Canadian investors.
A positive move in this direction would not only substantially increase the sale of federal bonds, but would reduce to almost nil the redemption or cashing in of such bonds.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FARM CREDIT CORPORATION
Mr. Jack Murta (Lisgar):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. The $260 million the federal government is providing the Farm Credit Corporation is inadequate to meet its demands, and under the present high interest rate conditions many farmers are finding it very difficult to continue their operations. I move, therefore, seconded by the hon. member for Crowfoot (Mr. Malone):
That extra money should be provided to the Farm Credit Corporation, possibly as much as $200 million, and interest rates for farmers borrowing this money be frozen at the existing rate of 12.75 per cent. If these measures are not taken, the survival of thousands of Canadian farmers is threatened.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


DIEFENBAKER CENTRE
Mr. Bob Ogle (Saskatoon East):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. I wish to bring to the attention of members of this House the fact that the Diefenbaker Centre at the University of Saskatchewan in Saskatoon, which is a national institution not only honouring the memory of a distinguished Canadian prime minister but engaging in living history and important scholarly research, is presently sorely beset for the lack of funds and receives absolutely no funding from the federal government. Therefore I move, seconded by the hon. member for Saskatoon West (Mr. Hnatyshyn):
That this House directs the government, through the Ministry of the Secretary of State, to establish a permanent trust fund, as was done for the Pearson College of the Pacific, so that the Diefenbaker Centre can continue to thrive and pursue its excellent work without the constant pressure of financial worries.
January 20, 1981


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


INDUSTRY
Mr. Bill Domm (Peterborough):: Madam Speaker, I rise under the provisions of Standing Order 43. The government announced yesterday that it intends to buy a $350 million band-aid to stick on communities that have been TKO'd through lost jobs. Not content with pillaging jobs from other areas and carrying them off to their own ridings-as the Minister of the Environment (Mr. Roberts) and the Minister of State for Trade (Mr. Lumley) did when they snatched 200 jobs from Parks Canada in Peterborough and as the Minister of State for Mines (Mrs. Erola) did when she snatched hundreds of jobs in east central Ontario by stopping the Eldorado Nuclear plant expansion in Hope township and moved it to her own riding-according to news reports this morning Windsor and Cape Breton are now front runners in this new Liberal sweepstake, so that areas where byelections are pending can count themselves lucky.
I move, seconded by the hon. member for Calgary West (Mr. Hawkes):
That cabinet consider that its duty is to disburse these funds fairly, on the sole basis of need and beyond the scope of partisan bias. In this way they have an opportunity to redress in some measure their previous policies of pork-barrelling patronage.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Hon. Sinclair Stevens (York-Peel):: Madam Speaker, my initial question is for the Minister of Industry, Trade and Commerce, who announced yesterday with two fellow ministers a certain program which he described as being:
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-measures to respond to serious industrial dislocation situations. These measures will be made available in communities designated on the basis that they have recently experienced large scale industry dislocation that has directly resulted in a significant increase in the level of community unemployment.
Madam Speaker, my question to the minister is simply this: Why does he persist in coming forward with such ad hoc measures, in effect bringing in measures after the fact as opposed to bringing in a proper industrial strategy for this country? Why does he not bring in an industrial strategy which, as he told his interviewers in a recent interview, he feels rightly should take second priority to such things as the constitutional debate?


Hon. Herb Gray (Minister of Industry, Trade and Commerce):: Madam Speaker, what we announced yesterday, in my view and in that of the government, certainly should be one element of an industrial policy framework. What we announced is consistent with the need in this country right now to encourage industrial restructuring and the adaptation of labour to present and emerging situations in a way which will help bring about strong, permanent economic growth in ways which meet international competition.
I am sorry the hon. member does not agree with this but I think working people in his riding and across the country would agree with what we did yesterday in carrying out a commitment made in the budget of October 28.


Sinclair McKnight Stevens: Madam Speaker, my supplementary question is for the Minister of Industry, Trade and Commerce. Let me tell the minister that what workers in Canada want are jobs, not last minute aid programs such as he is suggesting.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: Madam Speaker, I would like to ask the minister whether he is aware that the recent Bank of Montreal Business Review points out that "1980 was undoubtedly the worst year in Canada's post World War II history". According to the Business Review per worker output declined about 3.5 per cent and the gross national product in real terms fell about .5 per cent, the first drop since 1954. If the minister is aware of those statements, would he indicate to the House why he persists in saying that industrial strategy for this country should have second priority to the constitutional debate?


Herbert Eser (Herb) Gray: Madam Speaker, it is not my position that industrial strategy should have second priority. At the same time, certain types of decisions must be made to provide a foundation for putting in place the right kind of industrial strategy for this country. We provided that foundation in the budget presented by the Minister of Finance on October 28. If the House will allow the Minister of Finance to present his measures so that they can be adopted-measures providing for some $6 billion in increased expenditures under the economic development program-then those kinds of decisions will enable us to move forward in the area of industrial strategy. The test of the hon. gentleman's commitment to this will come

January 20, 1981
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in the way he responds to my hon. friend's budget presentation.


Some hon. Members:: Hear, hear!


REQUEST MINISTERS READ INAUGURAL SPEECH OF U.S. PRESIDENT
Sinclair McKnight Stevens: Madam Speaker, in view of those answers from the Minister of Industry, Trade and Commerce perhaps my supplementary question should be to the Prime Minister. Would the Prime Minister undertake to the House, perhaps even promise, that he and his ministers will read thoroughly President Reagan's inaugural speech just made, in the earnest hope that it may give him and his ministers some better inspiration to bring in economic policies which will get Canada back to work? That is to say, better than results indicate at present.


Right Hon. P. E. Trudeau (Prime Minister):: Madam Speaker, I promise to read it myself, but I cannot make that undertaking on behalf of my ministers. I point out to the hon. member that he knows from experience that making speeches is one thing but carrying out their promises, as the former government showed, is another.


Some hon. Members:: Hear, hear!


INDUSTRY AND LABOUR ADJUSTMENT PROGRAM-INQUIRY WHETHER AUTOMOTIVE INDUSTRY CONSULTED
Mr. Joe Reid (St. Catharines):: Madam Speaker, my question arises out of the same announcement made yesterday. Even this government should know that planning ought to come first, particularly with respect to industrial strategy programs. This $350 million should be supplemental and complementary to that planned program.
There was a program announced earlier with respect to Chrysler Corporation. The woes of the Chrysler Corporation are only the tip of the iceberg on the troubled waters of the automotive industry. I was assured by a senior member of the automotive industry, this morning-


Some hon. Members:: Question.


Madam Speaker:: Order, please. I think the hon. member knows that his question is too long.


Joseph Lloyd Reid: After the introduction made by the lead speaker for the opposition, I will now ask my question of the Minister of Industry, Trade and Commerce. May I ask him whether, before they announced that program of yesterday, they consulted with the automotive industry? Will he tell me whether a riding such as St. Catharines, which now has an additional 1,200 persons laid off, will benefit from that program as announced yesterday, when and how?


Herbert Eser (Herb) Gray: Madam Speaker, we have had a number of discussions with the automotive industry, including the parts industry, over the past months and the views they have expressed certainly have helped us in formulating the kind of program we announced yesterday and other types of decisions I anticipate we will be making.
With regard to the other area of my hon. friend's question, certainly an application from St. Catharines for coverage under the program, the community designated portion of it, is open for consideration. In any event, workers in St. Catharines would be eligible for the expanded critical skilled trades training program, and individual projects from firms in St. Catharines involving industrial restructuring would be eligible for consideration even if it turned out that St. Catharines was not designated under the community-focused portion of the program, although an application on that basis could certainly be considered.


Joseph Lloyd Reid: Madam Speaker, my supplementary question is addressed to the same minister. May I ask whether he or someone else in his department has set the criteria by which application might be made and approved? Does this involve the matter of high unemployment, how long must that unemployment remain in existence, does it involve a matter of regional consideration, and how long must a community such as St. Catharines wait before receiving the benefit and aid of that program announced yesterday?


Herbert Eser (Herb) Gray: Madam Speaker, the basic concept underlying designation is that communities would be designated on the basis that they have recently experienced large scale industrial dislocation which has directly resulted in a significant increase in the level of community unemployment. We will be announcing further details about the way these criteria will be applied at the time the government announces the first group of designations, and I anticipate this will be in a matter of weeks. Certainly at this time we would be willing to accept suggestions from communities which may wish to be considered under this community focused program.


RAILWAYS
Mr. Les Benjamin (Regina West):: Madam Speaker, I have a question for the Minister of Transport arising out of the commission by Mr. Justice Grange on railway safety resulting from the Mississauga mishap. While the minister wants to study the subject for a year, although it is obvious the recommendations of Mr. Justice Grange need to be implemented, will the minister immediately order the implementation of at least the first three of the recommendations of Mr. Justice Grange? Because if they are not implemented another 30 to 50 derailments will occur each year as a result of the wrong kind of equipment?
January 20, 1981


Hon. Jean-Luc Pepin (Minister of Transport):: Madam Speaker, the premise is wrong, unfortunately. I never said this was a study group, and I never said it would report after a period of one year. The question raised by a member of the press was, how long did I expect the consultative committee to stay at work, and I said it might be a full year. This is an advisory committee, which is meeting for the first time next week. I will meet with it within four weeks. It will express to me in time a position on each one of these recommendations Justice Grange has made. We are going to make decisions very, very rapidly.
Justice Grange himself suggested a number of tests and a certain amount of research. The confusion created in respect of the one year is related simply to the suggestion that the committee will go on with these tests and do this research, which may take one full year. However, I repeat that decisions will come much faster than that.


Leslie Gordon Benjamin: Madam Speaker, there is no problem about the continuation of tests. The first three recommendations of Mr. Justice Grange have called for the minister to instruct- and he and two of his predecessors have been questioned about this repeatedly for the last several years-the CTC or to request the CTC to act in the same way it did-very quickly- after the Mississauga accident last year with respect to the consist of a train. The CTC acted very quickly then. Will the minister ask the CTC to act under section 227 or section 100 of the Railway Act? The authority is already there to require the railroads to begin immediately implementing the first three recommendations of Mr. Justice Grange.


Jean-Luc Pepin: Madam Speaker, I think it would be unwise and certainly not very polite to the members of the advisory committee which I have created-three of them outsiders to the government-if I were to start announcing seriatim decisions on the recommendations. I will do it in a very orderly fashion. I will receive their views beginning four weeks from now and act quite rapidly, as the hon. member will see, as the proper information is obtained and the proper assessment is made by this advisory committee with respect to each one of the recommendations.


Leslie Gordon Benjamin: Madam Speaker, the minister is still copping out. He is still acting like a sponge. Mr. Justice Grange and every recognized authority in transportation, including management, unions and experts in the field, know that technology has been in place for 30 years with respect to roller bearings and for a number of years with respect to hot-box detectors. Recommendations of the railway brotherhoods in connection with marshalling and consist of trains have been put before the minister and his predecessors repeatedly. He does not need another committee.
I would like to ask the minister if he will now call upon his colleagues and particularly the President of the Treasury Board-since Mr. Justice Grange was so critical of the restraint program-to stop the decrease in the number of
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safety inspectors, increase the budget of the CTC and increase the amount of training and the number of railway safety personnel.


Jean-Luc Pepin: Madam Speaker, I think any person with his head squarely on his shoulders-that would include the hon. member who is asking this question-would act the way I am acting in this matter. He would not on the basis of his own prejudices, knowledge or whatever decide on the day after the receipt of a document like this which of the recommendations to accept and which not to accept. That would be foolish. What I am doing now is the normal thing to do, and even the hon. member would do that if, incredible as it may seem, he were in my position.


Some hon. Members:: Hear, hear!


ROLE OF CANADIAN TRANSPORT COMMISSION
Donald Alex Blenkarn: Madam Speaker, my question is for the Minister of Transport. The minister knows that in 1971, after 36 days of comprehensive hearings into a number of rail disasters, a whole series of recommendations were made. The inquiry was followed up and further reports were made in 1973. The minister knows from reading Mr. Justice Grange's report, which he has had for at least six weeks, that the CTC has been a sleeping policeman. Will the minister make changes in the personnel of the CTC so people can be satisfied that that organization, which is supposed to protect the interests of people generally, in fact works to do what it is supposed to do?


Jean-Luc Pepin: Madam Speaker, as the hon. member says, Mr. Justice Grange has analysed all that and has not been, shall we say, very laudatory with respect to the position of the CTC in some of these matters. However, he went on to say that there are preoccupations, which he respects, in relation to the economic viability of some of the existing regulations, and he suggests that the time has come when the onus must be tipped from the economic preoccupation more to the safety preoccupation, that a social change has taken place in recent years. He suggests that the time has now come to incorporate that change in the rules and regulations concerning train transportation and safety. It is difficult in this context to hold a number of people responsible for a change which had not taken place in society as a whole. It may be that the time has come to do that, and that will be indicated by our reaction to the recommendations which Mr. Justice Grange makes.


Donald Alex Blenkarn: Am I to gather from the minister's answer that the CTC has been more involved in economics than in safety and that it has been in bed with the railways rather than doing its job of looking after the interests of individuals, of VIA Rail and so on? If that is the minister's view, surely it is time that the minister had a little purge.


Some hon. Members:: Order.
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January 20, 1981
Oral Questions


Donald Alex Blenkarn: My supplementary question, Madam Speaker, is in connection with the report. There are a number of things that could be done right now without a long study period. Will the minister order that trains carrying dangerous chemicals be no more than 4,000 feet in length? Will the minister order that dangerous chemicals be carried only in cars having roller bearings in their journal boxes? Will the minister order that the railways immediately commence installing heat sensors every 20 miles as recommended? In other words, will the minister take his responsibilities for safety seriously?


Jean-Luc Pepin: Madam Speaker, I am inferring two things. The first one is that the preoccupation with economics is not one that should be pushed aside easily. If the CTC had done that in the past, I suggest that my Conservative friend would have been one of the first to chastise them for having done so. Secondly, I suggest that a body of people, such as the Canadian Transport Commission, cannot be held solely responsible for the behaviour of society as a whole throughout the years. Realizing now that the situation has changed, that people have changed their minds, it may well be asked to take a position which would be slightly different from the one it took in the past.


RESEARCH AND DEVELOPMENT
Hon. David Crombie (Rosedale):: Madam Speaker, my question is for the Minister of State for Science and Technology. Yesterday the minister announced his increased commitment to research and development so that it could achieve 1.5 per cent of the gross national product by 1985. Unfortunately, the minister will remember that that was an announcement which was also made in 1978 for 1983. The reason that policy died is that the government did not bring forward any specific proposals for tax incentives and grants. I should like to ask what specific proposals or tax incentives and grants-that is, tax incentives for industries and grants to universities-is the minister bringing forward so that he can achieve the new target he set?


Hon. John Roberts (Minister of State for Science and Technology and Minister of the Environment):: Madam Speaker, not only did I announce yesterday the target for reaching the objective of 1.5 per cent of the gross national product devoted to these efforts, but I also laid out the structure for planning purposes of proposed expenditures on the part of the federal government in the various areas in which it has concerns, such as support for universities, support for research in the private sector and support for the mission-oriented activities of federal government departments. Not only did we establish the target date; we indicated the kinds of expenditures which, for planning purposes, we thought would be necessary for achieving it. We also suggested that the percentage level of the federal government's effort within that 1.5 per cent target date should be .5 per cent.
I am using this planning structure as a basis for continuing discussions with the private sector and with the universities. Clearly it is not in its full form with a detailed nuts and bolts approach. Further programs will be brought forward to the government to indicate how we will achieve or hope to promote the kind of growth in the private sector, which is quite considerable, which will be necessary if we are to reach that 1.5 per cent target. I am sure the hon. member has already looked at the material which has been provided. It does much more than simply establish the target date of 1.5 per cent for 1985. A great deal more information has been provided about the government's targets in order to achieve that.


David Edward Crombie: Madam Speaker, quite clearly the industrial spokesmen simply do not believe the minister. His credibility and that of his government is strained. Northern Telecom, a very important research agency, has indicated that the minister is using mere rhetoric and that the public is being lulled into thinking that something is being done. The Canadian Advanced Technology Association says the minister is dealing with symptoms, not causes, and the Canadian Federation of Independent Business says his policy is not worth the paper it is written on, and for a very good reason-the participation of the government is going down. When will the minister come forward with some real policy proposals so that we can have real research and development in this country?


Some hon. Members:: Hear, hear!


John (Moody) Roberts: Madam Speaker, I would contest the assumption which underlies the hon. member's question. Indeed, yesterday in presenting our proposals to university presidents and a group of representatives of business associations in Toronto, I received a cautious welcome for the structure which we presented to them-


Some hon. Members:: Oh, oh!


An hon. Member:: Qualified.


John (Moody) Roberts: In view of past disappointments, to which the hon. member has alluded, they are concerned to see what further steps will be taken, but the initial response to the announcement which I made yesterday has been rather favourable on the whole.


EXTERNAL AFFAIRS
Mr. Irenee Pelletier (Sherbrooke):: Madam Speaker, my question is directed to the Right Hon. Prime Minister.
Now that the Iran-U.S. crisis appears to have been settled through agreement between Tehran and Washington, could the Prime Minister tell the House whether in the course of the
January 20, 1981

meeting of seven western heads of state here in Ottawa next June it is his intention to raise the issue of hostage takings-1 am referring to diplomats-and steps which might be taken should similar incidents occur in future? I am thinking specifically of the agreement between leading western heads of state in Bonn, thanks to the initiative taken by the then prime minister regarding air piracy.


Pierre Elliott Trudeau: Madam Speaker, I thank the hon. member for his suggestion which I feel is excellent. That subject is not likely to appear as such on the agenda but, when we get around to discussing over-all political topics, I think it will be an opportunity to implement the suggestion of the hon. member and I thank him for it.


RESEARCH AND DEVELOPMENT
Mr. Simon de Jong (Regina East):: Madam Speaker, I wish to direct my question to the Minister of State for Science and Technology. On numerous occasions I have asked the minister when he will present a detailed, long-term strategy which could achieve the goal of 1.5 per cent of our gross national product directed toward research and development, and the minister's statement in Toronto yesterday did not tell us anything new. It has been known for years that the reason we have had R&D expenditures similar to those of Portugal is that our private sector, mainly the multinationals, has a dismal record of research and development in this country. It has been known for years that the private sector must increase its R&D to some 27 per cent a year for the next five years if we are to achieve the goal-


Some hon. Members:: Question.


Simon Leendert de Jong: Madam Speaker, my question is this.


Some hon. Members:: Hear, hear!


Simon Leendert de Jong: Is there anything in the minister's statement that would force the multinational corporations to increase their research and development in this country, or is his statement just another pious hope?


John (Moody) Roberts: Madam Speaker, of course I am disappointed that the hon. member is not more enthusiastic about the statement I made, but I think, as I indicated in my response to the hon. member for Rosedale, there is a considerable amount of information and commitment in that statement which marks a significant step forward in our planning for science and technology research and development in the government. I indicated very clearly in my statement and in my discussions yesterday that the relatively poor performance in general of foreign-owned firms and subsidiaries in the research and development area is a matter of
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great concern to us and that we do have under consideration ways and means of trying to improve that performance. We are particularly anxious that foreign subsidiaries develop more than they have at present world product mandates.
The hon. gentleman asks what those steps are going to be. It was not my purpose yesterday to outline those details. I ask him to be content and to be patient for a little longer.


Simon Leendert de Jong: Madam Speaker, indeed, we have been waiting for a long period of time. The particular goal was announced in 1968 and it was announced again in 1978, but the announcements have all been pious hopes.
The other question I should like to direct to the minister concerns funding of universities. In the background paper which was provided with his speech, he suggested that the government's share of that 1.5 per cent was to be reduced to one third. However, he was also projecting an increase in the share of that projected goal by the universities. There is a contradiction there because the universities depend on government financing-


Some hon. Members:: Order.


Madam Speaker:: Order, please. Would the hon. member put his question.


Simon Leendert de Jong: How can the government increase the universities share of research at the same time as decreasing the federal government's share?


John (Moody) Roberts: Madam Speaker, there are two principal ways in which the federal government assists universities. One is through the transfer of funds to provincial governments through established program financing arrangements for the support of post-secondary education. The other major instrument at our disposal is the activities of the Natural Science and Engineering Research Council. The hon. member will know that already this year we have very considerably increased the funds going to that council by something like $42 million. It is in the five-year plan of the Natural Science and Engineering Research Council that we hope to assist universities to meet the research and development obligations which we hope they will meet.


AGRICULTURE
Mr. S. J. Korchinski (Mackenzie):: Madam Speaker, my question is directed to the Minister of Agriculture. Last week the review board under the herd maintenance program was saddled with the problem of automatically reviewing applications which had been turned down. Was there any change in the criteria which gave the review board a little more elbow room in order to operate so that some of the applications that were turned down might be looked at more favourably now? If

January 20, 1981
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they are saddled with the same stiff regulations obviously they will come to the same conclusions.


Hon. E. F. Whelan (Minister of Agriculture):: Madam Speaker, my understanding is that a meeting took place this morning in the city of Regina with the various people involved in the herd maintenance program, the forage assistance program and the review board. The review board is comprised of producers from each province. The majority of them are producers; 1 believe the three people on the review board for the province of Saskatchewan are producers. They have been instructed to be as humanitarian as possible within the realm of reason.


Stanley James Korchinski: Madam Speaker, one of the conditions in which cattlemen might qualify for assistance is that their crops would have to be less than 80 per cent of the average. Anyone who knows anything about agriculture-and I am sure the review board would know-would know that the yield one receives is in no way related to the crop yield or the yield of the hay crop because one can have a short-standing crop and a good yield, or conversely, a rank crop which lodges and there is no grain in it at all. Have any instructions gone out to change the particular criteria, which in a sense are ridiculous because many of the areas rejected were areas that did not receive freeze-out payments and simply do not have any cash to continue?


Eugene Whelan: Madam Speaker, I will know better when my colleague, the minister in charge of the Canadian Wheat Board, returns to the capital later today from attending a meeting this morning in Regina, but I understand a lot of these matters have been considered. The recommendations on how this is to be administered come from the producer sectors of Manitoba, Saskatchewan and Alberta, which is the group meeting in Regina this morning. There are 8,000 appeals, and as I said the review board is comprised of reasonable and responsible people who I feel will take the most proper attitude toward making decisions.


WILDLIFE
Mr. Tom McMillan (Hillsborough):: Madam Speaker, my question is directed to the Minister of State for Science and Technology and Minister of the Environment. During this period last year thousands of Canadian caribou were slaughtered as the two main herds moved southward from the Northwest Territories into northern Manitoba and Saskatchewan. Will the minister tell the House what steps if any the government is taking to prevent such wanton destruction this year and in future years, especially in light of reliable reports that in 1980 frozen lakes were littered with crippled and dying animals and carcasses with often only the tongues or hind quarters removed? In fact, this was wanton destruction.


John (Moody) Roberts: Madam Speaker, there have been meetings on the subject between my officials and representatives of provincial governments. An agreement under the Canada Wildlife Act between Canada, the Northwest Territories, Manitoba and Saskatchewan for co-operative action in establishing a migratory caribou board has been drafted by the Canadian Wildlife Service in Edmonton. The draft will be reviewed before the end of this month and after that it will be put in final form.


Thomas Michael McMillan: Madam Speaker, my supplementary question is directed to the Minister of the Environment. In light of what the minister just said, could he confirm that the failure of the government to control the slaughter of Canada's two main barren ground caribou herds in the past has caused one herd to decline from 135,000 to 38,000 in the last eight years and the other to decline from 105,000 to 70.000 in the last two years? In light of that destruction, will the minister tell the House whether the program he just mentioned will involve instituting and enforcing quotas on kills so as to ensure the survival of this precious part of our country's natural heritage?


John (Moody) Roberts: Madam Speaker, as I indicated in my earlier answer, the draft has not yet been reviewed. It is not in a final form for discussion, so it is not really possible for me to reveal to the hon. member today exactly what the details of that agreement will be and how it will operate. But as soon as the discussions are completed, which I expect will be in the very near future-before the end of the month-we will be able to give him more precise information about the aspects he has now raised.


AGRICULTURE
Mr. Vic Althouse (Humboldt-Lake Centre):: Madam Speaker, my question is directed to the Minister of Agriculture. It is further to the federal herd maintenance program. The chief criterion creating problems for the committee in western Canada at this time, about which the producers are complaining, is the provision requiring a crop of 80 per cent or less before farmers are eligible for the program. It happens to be a turning point for a great many people, which is why the appeal committee has so many appeals before it. Is the minister prepared to recommend to cabinet that the 80 per cent provision be done away with and the need be assessed for forage in each individual case as an alternative method?


Eugene Whelan: Madam Speaker, first of all I want to inform the hon. member for Mackenzie who questioned me about this same problem that the senator in charge of the Canadian Wheat Board was not in Regina this morning; he was here in Ottawa attending a very important meeting.


Mr. Hnatyshyn:: Sometimes it is hard to know.
January 20, 1981


Eugene Whelan: I understand the meeting with the officials is still taking place in Regina. This matter is being considered. 1 cannot tell the hon. member what the results will be, but if the recommendation comes through strong and clear that a change should be made, we will try to follow it up within reason.


Victor Fredrich (Vic) Althouse: Madam Speaker, this is the second time drought programs have run into administrative problems in western Canada. There was a committee which was supposed to keep them from running into problems. Will the minister and his associate ministers involved in the drought program continue to operate it once the program is out of the way so that we are prepared for the next one? The snowfall has not been very great out there and the prospect of drought is still quite imminent for next year.


Eugene Whelan: Madam Speaker, the hon. member knows that the government, perhaps much to his surprise and much to the surprise of other people, decided to spend an equivalent of $67 million on this program to assist farmers affected by drought. It is a new program and it is a new experience for all people involved in administering it. We realize it would be better if there was something of a more permanent nature to set up a structure so that we could act in cases of severe drought. What the hon. member says is true. We have reports now on moisture conditions in the prairies. In some areas it is adequate, but in some areas it is very poor.


AIR TRANSPORT
Hon. Walter Baker (Nepean-Carleton):: Madam Speaker, my question is directed to the Minister of Transport. It concerns the projected direct air connection between the national capital and the city of New York. My first question is with respect to time. There have been reports that it would take perhaps a year and a half before all the arrangements, both locally and internationally, can be made for that service to come to pass. Would the minister comment on that time frame and, if possible, would he be prepared to undertake to use his good offices at least here, if not in the United States, to shorten the time it will take before the final decision is made on this matter?


Jean-Luc Pepin: Madam Speaker, the subject is very popular with Members of Parliament as well as diplomats and businessmen. As my hon. friend knows, there are two ways of dealing with the matter. One method is by way of amending the Canada-United States bilateral air agreement under which Eastern Airlines now holds the franchise. The other method of dealing with the matter is if both the Canadian regulatory agency and the American regulatory agency were to agree on one of the candidates. It is with regard to the second method that it has
Oral Questions
been said it might take up to one year and a half to complete the arrangements.
I am trying to deal with this particular problem as wisely as possible. I am exploring both avenues. My interest in this case is almost as great as, if not greater than, the interest of the hon. member. I have taken, first of all, the bilateral approach to find out if Eastern Airlines expect to offer their service. Secondly, if Eastern do not wish to offer service, which appears to be the case, I would like to determine if any other American carrier would be willing to take over the route and, if so, under what conditions. An agreement with the United States would follow if this approach were successful.


Walter David Baker: Madam Speaker, the minister knows that there are two Canadian carriers which are interested in this matter. I hope that the minister will emphasize that aspect in his discussions and expedite those discussions as quickly as possible. But there is one question which arises with respect to this matter, and it is with regard to either the intervention or the proposed intervention by Air Canada for the purposes of preserving a right rather than providing a service, as is the intent of the other two air carriers.
Would the minister be prepared to use his good offices to ask Air Canada if it has filed a request with the board to withdraw and, if it has not, to request that Air Canada not intervene so that an already tedious process, as the minister has described it, will not be made even more tedious? Would the minister give that undertaking to the House?


Jean-Luc Pepin: Madam Speaker, I will bear in mind what the hon. member has asked, but I would also like him to bear in mind the fact that I must work within the existing agreement between Canada and the United States. As much as I would like to be sympathetic toward the Canadian carrier, I must keep this fact in mind. 1 must also keep in mind the apparent preference of Ottawans for certain types of aircraft as opposed to other types.
On the subject of Air Canada, I must say that I have not gone into the details as to what has been said with regard to the requests of the two airlines, Air Atonabee and First Air, but I will do so and report to the hon. member at the earliest opportunity.


RAILWAYS
Hon. Don Mazankowski (Vegreville):: Madam Speaker, I would like to direct a question to the President of Transport arising out of the Grange report. The commission saw fit to devote one section toward the CTC's inaction in various areas related to safety, as have been referred to by my colleague and particularly with respect to the general safety inquiry between 1971 and 1973 wherein firm recommendations were made with

January 20, 1981
Oral Questions
respect to the installation of roller bearings, hot-box detectors and regulations with respect to speed. The commissioner pointed out that there was absolutely no action taken by the CTC in any of those areas. Such action would not require money and there would be no impact in so far as the restraint order is concerned.
It seems that the CTC is not fulfilling its rightful responsibility in the area of safety. Would the minister seize upon this opportunity, given the ammunition which is available in this report, to call in the CTC and remind it of its rightful responsibility and obligations in this regard so that we may improve the confidence in and reliability of safe rail transportation in this country?


Jean-Luc Pepin: Madam Speaker, if I had been a lawyer and visiting the courts regularly, I would have tended to take the point of view that society as a whole tends to be guilty of sins of omission and commission more so than individuals or institutions. What I mean to say by that is that it is very difficult for me, and I would hope for my predecessor as well, to chastise an institution for its interpretation of events brought about as a result of social thinking which was not entirely or exclusively the thinking of the institution. That is the position which I take. Consequently, I am more interested in what we will do now than in what has been done in the past. I will act accordingly.


Donald Frank Mazankowski: Madam Speaker, certainly I am interested in what will happen in the future, but I wish that the minister would respond to my question. Will he call in the members of the CTC and remind them of their rightful responsibility under the provisions of the statute?


Jean-Luc Pepin: Madam Speaker, I was intending to do that, but one of the members of the CTC is on the advisory committee which will be presenting its views to me. As I will exercise this responsibility personally, I will be in close contact with Mr. Gray regularly and will debate these points with him. One thing which impressed me in reading the report-and by the way I did not receive the report six weeks ago, but just on Sunday-is the balanced approach which Mr. Justice Grange takes in his report. For example, when he talks about speed he asks how we can talk about speed without taking into consideration the quality of the equipment, the training of people on the trains, and the safety devices, techniques and procedures which are used.


Madam Speaker:: Order, please.


FORESTRY
Mr. F. Oberle (Prince George-Peace River):: Madam Speaker, I have a couple of forestry-related questions which 1 would like to direct to the Minister of the Environment who is responsible for forestry. I would like to remind him of an
occasion when he spoke to a large major audience in the country and made the statement that he would commit the government to the national forestry policy which was laid out by his predecessor, which had as its goal the rejuvenation of the Canadian Forestry Service and, by the year 2000, an increase of 50 per cent in forest production throughout the country. The minister received cautions applause and cautions enthusiasm toward this statement.
What has the minister to report today with regard to these initiatives of his predecessor and agreed to by him? In particular, has he received a report from the multidepartmental committee which was to report in October and, if so, what is he doing to implement its recommendations?


John (Moody) Roberts: Madam Speaker, the objectives to which the hon. member has alluded were worked out not simply by my predecessor-and I would give him full credit-but in conjunction with the provincial ministers under the Canadian Council of Resource and Environment Ministers of which, as the hon. member knows, I am now the chairman. We have been working actively with the provinces to reach those objectives. Some of the steps which we forecasted would take place have already taken place. For instance there has been, as the hon. gentleman knows, the appointment of an assistant deputy minister in charge of the forestry section of the Department of the Environment.
A whole series of studies has been undertaken by a variety of federal departments. Some of those studies have now been returned to the co-ordinating group in the Department of the Environment and others are still on their way. I could give an indication, if the hon. member wishes, of the status of each of the six studies which have now taken place, but perhaps he would prefer that I send him a letter outlining those studies.


Frank Oberle: Madam Speaker, there was no real requirement for further studies. We all know that there is a serious situation with respect to a declining forest inventory and the dire need for forest renewal throughout the country. This multidepartmental committee which was to report in October was to give the minister advice as to what initiatives could be taken by the federal government to assist the provinces and the industry to replenish and renew our forests. The report is now four months overdue. Has the minister received the report of the multidepartmental committee and, if so, is he prepared to table it? If the minister has not received the report, does he know when the report will be available for study by those who will make the decisions?


John (Moody) Roberts: Madam Speaker, I am not sure whether or not there is a misunderstanding between the hon. gentleman and myself. The departmental committee chaired within my department has had a series of meetings. That committee has assigned a variety of subjects to a variety of departments and asked them to report to the co-ordinating committee so that it can inform me. Some of those reports from other departments have come in on schedule but one or two have been delayed
January 20, 1981

and we expect to receive them within the next couple of months.
The short answer to the hon. member's question is not as simple as he would like, but a variety of the studies that we expected to come forward have indeed come forward and we are waiting for a couple more. I am not sure if that satisfies the hon. gentleman but it is as accurate a description as I can give him of the process that has taken place.


STATUTE LAW (MILITARY AND CIVILIAN WAR PENSIONS, COMPENSATION AND ALLOWANCES) AMENDMENT ACT, 1980 INQUIRY RESPECTING POSSIBLE REDUCTION IN PHASING-IN PERIOD
Hon. Stanley Knowles (Winnipeg North Centre):: Madam Speaker, may I put a question to the Acting Minister of Veterans Affairs. My question relates to this session's Bill C-40 under which the widows of veterans whose pensions were below 48 per cent may now qualify for pensions as widows. May we anticipate that some time soon the acting minister will bring in legislation either to eliminate or to shorten the six and one-half year phasing-in period in that legislation so that these widows, many of whom are getting on in years, will be able to receive their pensions while they are still alive?


Hon. J. Gilles Lamontagne (Minister of National Defence and Acting Minister of Veterans Affairs):: Madam Speaker, I can assure you that my interest in the question put by the hon. member for Winnipeg North Centre is equal to his. I am also very interested in improving the lot of veterans. As hon. members know, the pensions and allowances of veterans in Canada are among the best in the world. I am realistic enough, however, to realize that Bill C-40 could be improved. I have just asked my department to give me a medium-term social policy objective for the next few years. I can assure the hon. member that the phasing out of the six and one-half years for these veterans' widows' pensions will be included in our consideration.


Stanley Howard Knowles: Madam Speaker, I thank the minister for the interest he has shown in that answer. May I ask if, while he is studying veterans legislation, he will also give serious consideration to amending the Pension Act so that the basic rate of the disability pension will automatically be tied to the average take-home pay of the five categories in the public service designated in 1972?


Mr. Lamontagne:: Madam Speaker, the question asked by the hon. member has already been discussed at some length. What we are trying to find out in these modifications or improvements of the legislation for veterans is basically to determine whose needs are greatest. Sometimes it happens that modifying the basic pension rate, for example, does not
Privilege-Mr. Ogle
necessarily correct the situation for the person in greatest need. That is what we are trying to do in this basic pension system and in the assessment now being carried out. I can assure the hon. member that the question of the basic rate of veterans' pensions will also be taken into consideration when we look at these matters.


NATIONAL ENERGY PROGRAM
Mr. Bill Wright (Calgary North):: Madam Speaker, my question is directed to the Deputy Prime Minister and Minister of Finance. The National Energy Program presented by the minister on budget night indicated the amount of dividends exported by foreign-owned oil companies in the year 1979. From that can be calculated the amount of savings to the Canadian people. These will come to $120 million per year after the government completes their nationalization of parts of the oil industry. From this can also be calculated the cost to the government each year in order to save that $120 million. The amount is between $1.1 billion and $1.7 billion per year. Can the minister tell this House whether he agrees with these figures and thinks that this is a saving to the Canadian people?


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, I shall take a look at the figures and if I have any reason to qualify them I shall let the hon. member know.


PRIVILEGE
Madam Speaker:: I have notice of a question of privilege in the name of the hon. member for Saskatoon East (Mr. Ogle). I want to tell the hon. member that his notice of the question of privilege was very brief and not very comprehensive. From what I gathered from it I am not sure that the hon. member is pursuing the proper channels in order to get the information he is seeking. I shall hear him, however, but he must go very clearly and rapidly to what he feels is his question of privilege, otherwise I am afraid I shall have to interrupt him.


Robert Joseph Ogle: Madam Speaker, my question is addressed through you to the Prime Minister (Mr. Trudeau). As a member of the House of Commons of Canada I believe that my privilege, as well as that of other members of the House, has been infringed upon by not having received an accurate explanation or information from the Prime Minister about his recent trip to South America, Africa and Europe. I believe it is very important that this House know what went on at those meetings that the Prime Minister had with other leaders of states, because it is extremely important that this

January 20, 1981
Petition
House have accurate information on the question of North-South.
I have been a member of this House for two years and during that time we have never had a single opportunity to have a debate on external affairs, on policy, or anything like that. The 1975-80 policy of the government came to an end at the end of 1980, so we have no policy whatsoever now.
I believe it is necessary that I and other members of this House, particularly those working on North-South relations, have some kind of report from the Prime Minister so that we can at least respond to it and have an open debate in order that the country may know where we are going on this extremely important question that relates to the poor of the world. It is a situation that is becoming more and more complicated and worse for the poor. The rich are still standing back and not entering into the North-South debate with the kind of information, knowledge, and support that the poor are seeking. That is my point, Madam Speaker.


Madam Speaker:: I gathered from the note that the hon. member sent to me that he was in need of or would like to have some more information about this question, but it is not for the Chair to obligate any minister, or even the Prime Minister (Mr. Trudeau), to make a statement in the House. That is the choice of a minister or the Prime Minister. As the hon. member knows, there are opportunities to debate these questions, such as the question period, opposition days, or the other procedures at the disposal of members. I have therefore to say to the hon. member that he has no question of privilege.



ROUTINE PROCEEDINGS


Mr. David Orlikow (Winnipeg North):: Madam Speaker, 1 have been asked to present a petition in opposition to high interest rates which are causing a crippling burden for all Canadians, and which are bankrupting businesses and causing people to lose their homes. I have checked with certain authorities and I find the petition is not in the form required by the rules of Parliament. I shall therefore send the petition to the Minister of Finance (Mr. MacEachen), with a covering letter.


CANADA STUDENT LOANS ACT
Hon. Francis Fox (Secretary of State and Minister of Communications) moved: for leave to introduce Bill C-55, to amend the Canada Student Loans Act.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. D. M. Collenette (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 87, 162, 236, 937 and 1,391.


Mr. Cossitt: 1.	(a) On what date did renovations to the East Block commence (b) what are the expenditures made to date (c) what was the original total estimate (d) what is the total estimate as of the date the answer to this question is prepared?
2.	How many rooms or offices are there in the East Block and what is a list of the planned use for each such location when renovations are completed?
3.	On what date is it estimated that renovations will be completed?


Hon. Paul J. Cosgrove (Minister of Public Works):: 1.	(a) First construction contract awarded November 15,
1976;
(b)	Expenditures as of April 17, 1980, $12,989,809.08;
(c)	$8,000,000 (January 1975 constant dollars);
(d)	$14,890,000 (Current dollars).
2.	The only portion of the East Block that is being renovated at the present time is the 1865 Wing.
The rooms in the 1865 Wing are:
Basement
22 offices
3	washrooms
30 service*rooms
5	vestibules, lobbies, waiting rooms First Floor
1 meeting room
37 offices
3 washrooms
6	service*rooms
7	vestibules, lobbies, waiting rooms
January 20, 1981

Second Floor 36 offices
1	meeting room
5	heritage rooms for public display and ceremonies
4	washrooms
6	service*rooms
3 lobbies, waiting areas Third Floor
16,000 usable square feet of open space, not assigned
6	offices
5	washrooms
7	service*rooms
2	lobbies, waiting areas
*storage, mechanical, electrical, telephone
Note
The selection of tenants for the renovated portion of the East Block is the joint responsibility of the Speakers of the House of Commons and the Senate.
3.	Basic building renovation to be completed by August 31, 1980. Tenant fit-up schedule to be established when requirements are known.


Mr. Cossitt: 1.	Will members of Parliament be permitted to nominate persons to be considered for employment in their constituencies in the various capacities that will be required for the taking of the new census and (a) if not, for what reason (b) if so (i) will this be permitted to all members regardless of political affiliation (ii) will it be restricted to Liberal Members of Parliament only and, if so, for what reason?
2.	Will it be government policy to permit Liberal Party officials in various constituencies to have an input into such nominations and, if so, for what reason?
3.	Will the government consider removing the entire matter from any political level and require that appointments be made on the basis of merit and ability?


Hon.   J.-J. Blais@Minister of Supply and Services: Statistics Canada reports: 1. A number of sources of nominations for potential census employees will be used; primary among these is the ministerial referral system. Nominations by non-government Members of Parliament will be permitted.
2.	Traditionally a list of nominations provided by government party MPs and local representatives has been a source for potential census commissioners. As this practice has proven to be extremely effective and efficient it will be continued for the current census.
3.	Appointments are made under the Statistics Act on the basis of merit and ability as determined through written tests and personal interview assessments.
Order Paper Questions


Mr. Herbert: 1.	How many persons have been refused or cut off from unemployment insurance compensation because they speak only one of the official languages?
2.	Is a unilingual French-speaking claimant who moves from Quebec to a small rural town in British Columbia where the only job opportunities were for English-speaking or bilingual workers considered as not available for work?
3.	What assistance is offered to such a person who is willing to broaden his or her job search but wishes to continue to live with his wife or her husband?
4.	How many persons refused or cut off from unemployment insurance benefits for reasons of language, have had their benefits reinstated?


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: 1. Persons are never "refused or cut off from Unemployment Insurance" benefit on the basis of language capability.
2.	Availability for work is always a question of fact to be determined by reference to the particular circumstances of each case. The circumstances may be ones beyond the control of the claimant or ones deliberately created by the claimant. A unilingual French-speaking claimant could be disentitled because of self-imposed restrictions limiting his or her availability to an area in which the only job opportunities in the requested type of employment were for English-speaking or bilingual workers. In such a case, disentitlement would be due to the self-imposed restrictions on availability for work and not to the inability of the individual to speak English. A unilingual English-speaking claimant would, of course, be treated the same in a French-speaking area.
3.	If a Canadian migrates to parts of Canada where a different official language of work is used and cannot be placed in employment due to his or her inability to communicate in the other official language, he or she may be referred for language training under the Canada Manpower Training Program. The aim of such training is to enable the individual to obtain work in the occupation of his or her choice or in other suitable employment.
4.	Not applicable.


Mr. MacKay: Does Statistics Canada have a policy of providing certain ministries of the Crown, senior public officials, and political advisers, selected statistical information prior to publication and, if so (a) which ministers of the Crown and senior officials receive such statistical data prior to release (b) which series of publications are provided (c) how many hours prior to release is each series provided (d) does the information provided prior to release differ in detail or in format from that which is later published?


Hon.   J.-J. Blais@Minister of Supply and Services: Statistics Canada maintains a policy of simultaneous release of official statistics to all data users. However, it is government policy to allow certain exceptions to the simultaneous release rule. The pre-release procedures ensure that the number of pre-release recipients is restricted only to those persons who absolutely require it. Ministers concerned with key statistical series are expected to be prepared to answer questions both in the House of Commons and from the press as soon as the new

January 20, 1981
Income Tax Act
data are released. In order for a minister to be able to make an immediate response, statistical data are made available to the persons concerned shortly before Statistics Canada release time.


Mr. Cossitt: 1.	Did postmasters or postmistresses in the eastern district Ontario region receive questionnaires asking among other things the number of Francophones living in the community and, if so (a) who authorized the questionnaire (b) what was its purpose (c) was it sent to communities where there are no Francophones?
2.	Is the Post Office Department following a policy of creating, as soon as possible, bilingual postmasters and postmistresses and specifically is this being done in areas that are primarily or entirely English-speaking?


Hon. Andre Ouellet (Minister of Consumer and Corporate Affairs and Postmaster General):: 1. No.
2. Canada Post's policy for creating bilingual positions for postmasters and postmistresses is as follows:
when there is a need to provide supervision to employees in both official languages;
when there is a need to provide a service to members of the public in both official languages.
In areas that are primarily English-speaking, the requirements for bilingual postmasters and postmistresses is based on "significant demand" where these persons are required to serve the public. In areas that are entirely English-speaking, there is generally no requirement for bilingual postmaster and postmistress positions.


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


Madam Speaker:: The questions enumerated by the 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 Monday, January 19, consideration of the motion of Mr. MacEachen that Bill C-54, to amend the statute law relating to income tax be read the second time and referred to Committee of the Whole.
Mr. Ian Deans (Hamilton-Mountain):: Mr. Speaker, yesterday when I spoke in this debate I outlined some problems which had been expressed to me by a number of people not
only in my own constituency but in a number of other constituencies across the country during the course of my travels last year. It is fair to say these concerns about income tax were expressed to me even prior to the last election. People in Canada are vitally concerned about the way in which the government redistributes the income tax it levies. Many people are asking pointed and carefully considered questions about the priorities of the government. They have asked about what role the government will play in the future in the distribution of income tax, other tax, and the management of the economy in order that we can achieve a higher level of productivity, a better distribution of wealth, and a degree of economic stability.
I was asked why it was that in 1950 personal income tax accounted for only 20 per cent of the total revenue of the country but in 1980 that figure had risen to 37 per cent. And why at the same time corporate income tax in 1950 accounted for 22.5 per cent of the total revenue of the country while now it accounted for only 10.3 per cent. I was asked why it was that people were required not only to carry the burden of inadequate management by government, but now they are being asked to carry the burden of inadequate management by the corporate sector. As I said last evening, the largest of the large in the corporate sector have now found a new way of raising money to offset the bad management decisions which they have made over a number of years. It seems as though the corporate sector has found its way into the public trough during this time. It has found a door to the treasury and it is now imposing upon the taxpayers not only the normal burden but also the cost of wrong decisions made by the boards of directors and managers of large and, in many instances, multinational corporations.
There is no doubt in my mind that there is a role for government in setting the direction the economy should take, and in co-ordinating the efforts of both private and public enterprise-I use the word "co-ordinating" advisedly-in order that we can achieve the kinds of goals which Canadians have every right to expect we should be aiming for and some day should reach.
The most often asked question is: how can it be, when a multinational company runs into difficulty, that it is able to come to the government and achieve a key to the treasury, allowing that company to obtain funds raised through personal income tax, without that company making any major commitment to an over-all economic policy and strategy, or a major commitment toward expansion and growth or toward employing Canadians now and in the future? That kind of question is very difficult to answer because the decisions are being made and, in my view, being made wrongly.
If we are going to be asked, as undoubtedly we will be in the next few years, to play a larger role in the risk areas of the funding of major corporations, and if we are going to respond positively to those requests-and I am not suggesting that in all instances we should do that-then hand in hand with those responses must go a concurrent commitment from the compa-
January 20, 1981

nies involved that they will undertake to do everything they can to secure the investment of the public of Canada.
I have always held the view that if we spend taxpayers' dollars then we should be looking at investing them, as other people do, and expecting a return on that investment. Since in many instances the investment is a significant one, we should be considering where we fit in the decision-making process on how the development is to take place and the return we expect to see not only in tax dollars but in community involvement. We cannot continue to burden the taxpayers with ever-increasing income taxes. The low and middle-income earners and workers of this country are already paying as much or more than they can afford. In some instances these people are paying far more than they can afford. Therefore they should not be asked to give the labour they are asked to give in return for the income they get and, in addition to that, to pay tax which ultimately will be channelled through the government to the very corporations which are mismanaged in the first place.
We can see today a number of sectors where we are going to be placed under severe pressure by corporate decision-makers as to whether the government will give further tax concessions, allow a more rapid depletion or depreciation, or change the rules of the game to accommodate the desires if not the needs of these corporations. I am sure that it would not surprise you, Mr. Speaker, to know that one area which concerns me greatly is that of the auto industry and what is going on within the auto industry today.
Although the auto industry representatives will not be appearing before a Senate subcommittee today because it is inauguration day, they will be appearing before that subcommittee tomorrow to place before the United States government proposals for assistance which will, hopefully, in some way rejuvenate an industry in great difficulty. At the same time as that request is being placed before the United States government, the industry will be asked to make firm commitments. These will be commitments from which no deviation can be made without permission.
It concerns me that the same industry representatives will be appearing here some day, but not before a committee of Parliament. They will be appearing in private with the Minister of Industry, Trade and Commerce (Mr. Gray). They will have one of those little fireside chats about how the government can channel further the tax moneys of the public toward assisting those corporations. But in my view when they appear, they should appear first before a committee of this House. I think they should be asked to answer some fundamental questions about the nature of the industry in order that when we are asked to take more from the people of this country by way of income tax, a larger share of their income in order to subsidize this industry, we should have before us the answers to such question as: why is it that there is such a difference between the price of an automobile in Canada and the price of the same automobile in the United States?
Income Tax Act
Why is it that instead of maximizing volume and reducing unit price they have maximized the unit price and they are, in essence, attempting to recover for themselves far more than is expected to be recovered per unit from the American consumer? This action would put people to work and give the consumers of Canada a break. I think it is vital that those questions be answered before we get around to making concessions, grants, loans, and helping to restructure the economy.
I do not know whether or not you are aware of this, Mr. Speaker, but I thought it would be of interest to you, knowing the interest you have in this matter. The average price in Canada last year of the average automobile purchased by the average Canadian rose dramatically. The average price increase this year in Canada is 36 per cent over last year. That hardly reflects an industry which is doing all it can to try to maximize sales, to encourage consumer demand to go into the marketplace and buy those products, thereby increasing the productivity and the percentage of our manufacturing capacity which is used, and thereby leading to more employment throughout this province. That would result in an increase of consumer purchasing in general.
The increase level is felt by every single major North American consumer. The average car price for American Motors this year over last year is up 34 per cent. The price for Chrysler products this year over last year is up 28 per cent. The price of Ford products this year over last year is up 40 per cent. The price for General Motors products, excluding Cadillac, is up 35 per cent. And those are the prices in Canada.
The difference between the prices of automobiles in Canada and the prices of automobiles in the United States is quite startling. The difference generally accepted by the industry as being necessary-and I am not too sure how they ever came about it-is considerable. The average price in Canada for a North American automobile is $7,061 while the same car sold in the United States goes for $6,187. That is a difference of 14.2 per cent. Those figures are with respect to the sale of the same car. In some cases the prices are considerably higher.
I put it to you, Mr. Speaker, that the reason why people are vitally concerned about the government's expenditure program and the weight of taxation which they must carry, is because concurrent with this information goes the information that taxes continue to rise and handouts continue to be made from the government of these selfsame companies in one form or another. We must take a look at why that is. We must know for sure why there is such a differential between two automobiles manufactured by substantially the same work force with the same productivity levels and the same basic capacity to manufacture almost identical vehicles. Why is there such an outrageous difference between the sale price of a vehicle here and the sale price of a vehicle in the U.S.?
I think that is part of the management which people have a right to expect of government. I think it is part of the responsibility of members of this House to be aware of the answers to these questions. Therefore, it is part of the responsibility of government to make available to the members of the

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House the opportunity to be aware of the reasons for these and other disparities which exist, before the government makes its decisions with regard to handing out taxpayers' dollars for whatever it is that management determines it needs them.
I suggest to the Minister of Finance (Mr. MacEachen) that I despair when 1 look at the programs brought in by the government. 1 fail to understand the rationale. Yesterday I attended the press conference held by the Minister of Industry, Trade and Commerce, the Minister of Labour (Mr. Regan), and the Minister of Employment and Immigration (Mr. Axworthy). At that press conference they, too, decided it would be appropriate to spend more tax dollars. They decided the income tax level would have to remain at least as high as it is today in order that they would have available to them some $350 million over the next three years to spend on a number of different programs.
I will not quarrel with all of those programs; it would be foolish to do so. Some of the programs are necessary and I understand that. However, I must say that I am not at all sure how they will be made equally accessible across the country. I fail to understand how the decisions with regard to which municipalities are to receive the benefits over and above those which are not, will be made.
It is obvious to me, and I think to anyone who understands economic conditions in this country, that there are more than six municipalities which are detrimentally affected at the moment as a result of recent high unemployment. Yet we are talking about providing assistance to five or six municipalities a year, for three years. One must ask which ones will be cut out? For example, is Brantford to be included? Is Sept-Iles or Sydney? Which communities will receive it? Will the decision be based on a geographic basis? Will it be required that you be a Liberal member to gain access? I would not think so, and I certainly hope not. But one asks those questions since there are no clear criteria from which to make judgments.
When I look at the program I see it is designed in exactly the same way as government programs have been designed for at least as long as I have been following government. With respect to special industry and labour adjustment programs, which are entitled New Industrial Assistance Measures, the first focus will be on firms in the designated community encountering difficulties as a result of a product or market decline or as the result of inefficient or uncompetitive production methods. As I said last night, it seems as if we are rewarding bad management. If someone comes in and says, "I was inefficient, can I get some money?" that is the person who receives it. That hardly seems the way to go about it. But that is the first focus.
The second focus refers to firms in the community which wish to expand existing operations and take advantage of new and expanding market opportunities. That makes some sense except there is one fundamental problem which confronts all of us in Canada at the moment, that is to say, we are only operating at 75, 76 or 77 per cent of our production capacity, depending on which month you talk about. We have a 22 per cent to 25 per cent unused capacity. Surely common sense tells
us that we should be striving to find markets for the unused capacity which exists. The primary focus should be to make it more attractive in the domestic market for people to purchase, and assistance should be provided in finding new markets outside Canada. In this way we can properly utilize our productive capacity which sits unused.
The program talks about firms from outside the designated community which wish to enter the community through the acquisition of, or merger with, the firm in the community. That may or may not make sense. The process one would have to go through in order to make that determination would surely be based on profit and loss, and the firm that is interested in merger or acquisition will certainly do that, with or without government assistance. In fact if there is any opportunity to make money in that field they will take it.
Finally, Mr. Speaker, I know you will be interested to hear what the minister said yesterday. He was asked whether these were grants or loans, and he said they were not grants and not really loans. In fact what the program says is "negotiated repayment provisions would apply to contributions." What it means is that if you succeed it is a loan; if you fail it is a grant. That is really very silly because we have no input as to whether there will be a success or failure, no say in how it will be done, and no part in decision-making other than the granting of the money in the first place.
I want to suggest there has to be much stronger provision for reporting when we are using taxpayers' dollars. That reporting must be done to a board which has an opportunity to review, wherever it appears necessary, the structure, both financial and economic, of the company involved. There has to be an ongoing test of whether the company is living up to its commitments, whether it is in fact employing people as it said it would, and there has to be a way of recovery in the case of default.
I do not want to belabour the point other than to say to you, Mr. Speaker, that the concern which is being expressed by people in the country about the level of income tax they pay, about the fact that the government is not managing the tax well, and about the fact that the private sector has now been able to gain access to the taxes paid by individual citizens in a way that heretofore it has never been able to gain access, requires careful consideration by this House. I suggest to you, sir, that the Minister of Finance would do well to spend some time talking about the criteria for expenditure as well as about the criteria for the levying of taxes.


Mr. Roy MacLaren (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, I enjoyed listening to the previous member who raised a number of questions of importance under the general rubric of this bill. I cannot say I agree with all his diagnoses, but he certainly attempted to address some of the questions which are indeed right and proper to be discussed within the broad context of taxation legislation. I wish that I could say the same for a member the other evening who somehow found in the amend-
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ments to the tax act that, and I quote him: "The bill will destroy our common languages, destroy our respect for democratic institutions and destroy the underpinnings of democracy itself." That apocalyptic vision of what is intended by a tax amendment bill I certainly do not share. By contrast, I would again simply note the contribution made by the previous member and recognize the serious intent of his remarks.
In any event, my purpose this afternoon is to address those parts of the bill which specifically relate to the petroleum industries. I propose to do so in the order in which those measures are presented in Votes and Proceedings for January 12.
The first three clauses of Bill C-54 which relate to the petroleum industry, 26, 27, and 28, are simply carried over from the budget presented by the previous government last December. Those three clauses were not implemented when that budget and the government itself were defeated. They do, however, reappear in Bill C-54 to give substance to the commitment of the government to alter the deduction on costs incurred in acquiring oil and gas properties from a maximum of 30 per cent to 10 per cent annually, on a declining basis. We hope that the effect of this measure, a goal which we share with the official opposition, will be to slow the bidding up of resource land values and thereby to permit the petroleum industry to put proportionally more of its revenues into the further exploration and development of our resources. I cannot, of course, promise that this desirable result will flow from this present portion of Bill C-54, but this is a goal which we share with the previous government. I trust that it continues to meet with its members' support.
With regard to other clauses of the bill that pertain to energy, I would note 44, 81 and 83 which I shall simply characterize as measures that attempt to close possible tax avoidance opportunities. All of us are, of course, aware of the remarkable imagination of some taxpayers in finding upon occasion loopholes to avoid the payment of taxes. Those three provisions are intended to prevent certain abuses, at least theoretical abuses.
Five other clauses of the bill, 90, 92, 93, 94 and 95, also relate to the petroleum industry in Canada. They are of greater significance than the three 1 have just mentioned. It is for that reason I want to take a moment to discuss them in some detail. They reflect the commitment on the part of the government to conservation and to substitution, two aspects of the National Energy Program which have not received the attention they so much deserve. Indeed, the success of the program in achieving the goal of self-sufficiency in oil for Canadians by the end of this decade will depend in significant measure on the success of the conservation and substitution commitments which are reflected in these clauses to amend the Income Tax Act.
Hon. members will recall that two important objectives of our total program, in addition to the supply side of the equation, are to ensure that we do conserve oil and that we do substitute more plentiful forms of energy for our oil resources. In this regard, members may recall that our goal is to reduce
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oil consumption to 10 per cent of total energy use in the domestic, commercial and industrial sectors by 1990. Two major programs are in place to help give the private sector the opportunity to join in achieving those goals. Those two programs are the Canadian Oil Substitution Program and the Canadian Home Insulation Program which is, of course, more commonly known as CHIP.
The first of those two programs, the Canadian Oil Substitution Program, will provide home owners with up to $800 to cover one half the cost of converting from oil to other energy sources, principally natural gas, but also in many areas of Canada electricity, propane, wood, and, perhaps a little later on, solar and other more unconventional forms of energy.
CHIP, on the other hand, is the principal means of providing federal funds to improve the energy efficiency of our homes. Currently households account for 15 per cent of Canada's total energy consumption. The National Energy Program provides for an increase in the total CHIP budget from about $195 million in the past fiscal year to $265 million for the fiscal year 1981-82.
I want to note for the benefit of the House the rapid growth of CHIP. It has not been without its growth problems, but the total success of that program is now evident. Certainly the increase in the number of those applying for the assistance available is reflected in the fact that in the fiscal year 1977-78 only 15,000 grants were made, whereas in the fiscal year 1981-82 there are some 500,000 grants projected at an estimated cost of some $265 million. This is a major increase in the extent and, indeed, the success of CHIP, which is given further substance in the bill before us today.
Hon. members will be aware that the goals of CHIP, that 'essential conservation program, are to reinsulate at least 70 per cent of the houses in Canada built before September 1, 1977, and, second, to achieve a one third reduction in energy used for space heating in reinsulated residences.
In our view, and I believe in the general view of the House, this program has been a successful one. It has, however, a greater role to play in the future. Is is partly for that reason that the responsibility for the policy and the financial control of CHIP will be transferred on April 1 from the Canada Mortgage and Housing Corporation to the Department of Energy, Mines and Resources. In our view this will allow the government to stress the energy conservation aspect of the program over what might otherwise be seen as the more restricted building codes and requirements of the Canada Mortgage and Housing Corporation. However, I should note that the CMHC will continue to issue payments and inspect completed insulation work.
Hon. members may be aware that currently only housing units built before 1961 are eligible for grants under CHIP. It is the intention of the government, however, that eventually all houses built before September, 1977, will be eligible. The fact is, however, that at the present time only a limited proportion of the total potential number of residences which could be

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insulated have in fact been insulated. The current goal will be to bring up to the necessary standards those houses built prior to 1961.
Clause 90 of the ways and means bill now before the House amends section 12(1) of the Income Tax Act as part of the legislative approval for these two important conservation and substitution programs, CHIP and the Canadian Oil Substitution Program. Rather than make these programs available only to low-income Canadians on some sort of selective basis, the government has decided instead to make them available to all Canadians without income testing. This is the most equitable and efficient way to help implement the conservation element which is such a leading feature of the total National Energy Program. However, as the bill states, the grants under these two programs must be included and reported as income for tax purposes.
If we move on to clause 92 of the ways and means bill, we find that the intent is to encourage individuals and companies outside the petroleum industry to invest in oil and gas exploration. With that provision, such an individual or, indeed, a company, is eligible to deduct exploration expenses from tax. As some hon. members will be aware, that provision has been in place since 1976, but the effect of the amendment is to extend this benefit into the future.
With regard to clause 93, I should like to take a moment because it is of real importance to the Canadian petroleum industry. In my view it reflects the flexibility of the government in implementing its energy objectives. Here we have part of the elaboration of the National Energy Program which was tabled in the House on October 28. This amendment results from representations made by the private sector, which has such an important role to play in ensuring the achievement of our energy goals.
We have heard criticism in this House and elsewhere that the National Energy Program places undue importance on the role of government. Certainly, as the chairman of Imperial Oil noted the other day, governments have and will increasingly play a leading part in the energy economy of any country. But in Canada so too will the private sector play a major part in the future energy development of our country. In this amendment we see reflected the representations the private sector has made to the government. We have found that the interests of the private sector can be accommodated within the framework of our general national energy policy.
The National Energy Program had the unforeseen effect of unduly restricting the definition of petroleum exploration expenses. We have now moved to widen that definition- loosen the definition, if you wish-so that the private sector will be eligible to deduct these expenses. For example, any dry well will be eligible for exploration expenses. Hon. members who are interested in this point may wish to refer to pages 78 to 80 of the bill. They will see there an amendment which has been welcomed by the private sector as a means of giving it greater flexibility in joining the government in achieving our common energy goals.
I might note parenthetically that the government is also working toward integrating the 8 per cent petroleum and gas revenue tax with the incentive grants system to make the program as flexible as possible for the petroleum industry. Here again I believe that we have an example of the government's flexibility in moving to meet practical suggestions made by the petroleum industry.
Clause 94 of the ways and means bill is another measure which relates to the encouragement of the active exploration in Canada for new energy supplies. Let me just explain this provision, or note this provision with an example. Let us assume that an entrepreneur invites me to participate in his drilling fund. Let us say that in December I gave him $1,000 for exploration, but the entrepreneur does not employ my money for, let us say, five years. Would I then be eligible to deduct $1,000 as an exploration expense this year? Of course not. The expense should be deducted only in the year in which the activity actually commences. The amendment in clause 94 of the bill ensures that that is the case.
By contrast, clause 95 arises from the petroleum incentives program, which makes a variety of cash incentives or grants available to the petroleum industry for the further development of our Canadian resources and in so doing, puts emphasis, on a greater degree of Canadian ownership of the petroleum industry. Both Canadian and foreign-controlled companies on Canada lands or frontier lands are eligible to receive depletion allowances at the rate of one third of exploration expenses. The same rate also applies to all companies for non-conventional and tertiary oil projects, and to crude oil upgraders. In addition to such measures, Canadian-controlled companies with at least one half Canadian ownership will be eligible for grants covering 15 per cent of exploration costs on provincial lands and one half on Canada lands. Canadian-controlled companies with more than three quarters Canadian ownership will be eligible for grants of 35 per cent on provincial lands and 80 per cent on Canada lands. The development cost grants of 10 per cent and 20 per cent respectively will apply to Canadian companies for expenditures in the non-conventional, tertiary and upgrading products.
Now that the government is moving in a decisive fashion to make incentives available to the petroleum industry, there arises a question of duplication with provincial incentives. Again let me note the intention here by providing an example. Suppose that an oilman drills in Alberta at a cost of $1 million. The provincial government gives him $400,000 for drilling and the federal government gives him $350,000. So the oilman in question spends only $250,000. But, in addition, the oilman can deduct the $ 1 million against his taxes. Assuming, as it is probably safe to assume, that he is in the 50 per cent income tax bracket, he reduces his over-all tax by $500,000. In essence, provincial and federal governments together have given that oilman $1.25 million for $1 million drilling.
This provision of the ways and means bill now before us avoids such situations by reducing the eligible expense by the
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amount of any assistance which that oilman receives from another level of government.
The amendments which I have noted today in the sections of the ways and means motion pertaining to the petroleum industry might be described as secondary aspects of our total energy policy, but they do represent a further implementation of the program. Bill C-48, which is now before the national resources committee, deals with exploration and development in Canada lands. The present amendments help to provide incentives, both on the supply side and on the restraint of demand side for all of Canada. Accordingly, these amendments form an important part of our total energy policy.
In conclusion, Mr. Speaker, I should simply like to note that the energy policy incorporates a variety of goals, goals of Canadianization, of supply and of conservation. Reflected also in that policy is the proposition that investors should receive a reasonable return on their investment but that profiteering will not be permitted. Also included in that policy, and indeed in the ways and means motion before us, is that ownership rights must be respected but royalty rates should not be excessive.
In tabling the National Energy Program, indeed in legislation which we recently debated in Bill C-48 and in the ways and means motion before us, the government is moving to balance many factors in the total energy equation in Canada. I hope that others during our discussion will wish to discuss some of these points as well. In any event, I hope that by drawing attention to those aspects of the bill which relate to the petroleum industry, the House will have further evidence of the determination of the government to provide incentives to the private sector, both to conserve oil and gas as well as to find additional petroleum for the benefit of all Canadians.


Mr. Doug Neil (Moose Jaw):: Mr. Speaker, several years ago when the Hon. John Turner was minister of national revenue, I recall sitting in this House in Committee of the Whole dealing with the Income Tax Act. A number of members on this side of the House made certain representations to the minister requesting certain amendments to one of the clauses, and the minister agreed that he would bring forth such an amendment the next day. It was a fairly simple amendment, and one would have thought that when it came in it would consist possibly of one paragraph. However, much to our surprise, the next day when the minister presented the amendment, we found that it was some two and one half pages long and it was couched in such language that we wondered if it covered the situation it was intended to cover.
I happened to know the draftsman who drafted that particular clause and I called him and chided him for the lengthy, convoluted, and almost incomprehensible amendment. I suggested to him that it could have been drafted much more simply. The draftsman pointed out to me that because the department made use of computers, drafting of the legislation had to be done in such a manner as to comply with some arithmetical or algebraic formula so that the computer would understand it.
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The situation has not changed because today we are dealing with a bill some 200 pages long containing amendments to the Income Tax Act, many of the clauses of which only the computer can understand. Yet we, as Members of Parliament, are called upon to pass judgment on these amendments, and the taxpayers who are affected by them are called upon either to interpret them themselves or else hire lawyers or accountants at considerable expense to interpret what should be a very simple provision.
I suggest to the minister through you, Mr. Speaker, that possibly the time has come to draft a new Income Tax Act in language not drafted for computers but for the taxpayers of this country.


Some hon. Members:: Hear, hear!


Douglas Charles Neil: The drafting should be done in such a manner that the people of Canada can understand it, in people's language, not in computer language. Not only is the legislation complicated because of computers, but I suggest the use of computers has completely depersonalized our tax system. It is becoming more and more difficult for taxpayers to receive clarification of their assessments.
For example, at one time it was fairly simple, at least in Saskatchewan, for a person who had a problem, or a client with a problem, to pick up the telephone and call the district taxation office in Regina. He could explain the problem and, generally speaking, in a matter of minutes he would have the solution. If the problem was more complicated and could not be handled on the telephone, then he could pick up the telephone and request an appointment with one of the assessors. He could drive down to Regina and the assessors were very happy to see him. They would sit down with the person, pull out the files and go over them. Generally speaking they would arrive at a solution to the problem because the files were in Regina.
There are still offices in Regina and Saskatoon, but the fdes are in Winnipeg; they have been centralized. One cannot go into Regina and see the assessor, one cannot telephone because he does not have the files. One must write a letter to Winnipeg, and if the assessor in Regina requests it, the file might filter down from Winnipeg two, three, four, five or six weeks later.
The other day I telephoned a lawyer friend and asked him for some comments about the Income Tax Act. He told me that such a simple matter as requesting an income tax clearance certificate in an estate required weeks, and sometimes months. He said that if a letter requesting the clearance was attached to the return and sent off to Winnipeg, apparently the letter requesting the clearance certificate was pulled off the return; the return went up one stream, the letter went up the other stream, and the streams never met. He said that it was a case of sending perhaps two or three follow-up letters before the income tax clearance certificate came through for the estate.

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Has the hon. minister ever given any thought to suggesting the appointment of some senior department assessors who have experience in the field to be sent out to discuss the various problems with the lawyers and accountants who, on a daily basis, are dealing with them? It would seem to me that some senior assessors, after consultation, could make some excellent recommendations to speed up the assessment of and dealing with the returns of Canadian taxpayers.
It is not my intention to go into a detailed commentary on this bill, but there are one or two points I should like to discuss. I am pleased to see that the government is repealing sections 74(3), 74(4) and 74(5). In particular section 74(3) was the one which prohibited a taxpayer from paying his or her spouse a wage or salary and deducting same as an expense for income tax purposes, unless, of course, the taxpayer was incorporated, and then it was perfectly legal. Lawyers, accountants and taxpayers could never understand the magic of incorporation-why, because of simple incorporation, one could pay his wife a wage and deduct it as an expense for income tax purposes, whereas, if one did not incorporate, one could not do the same thing. For many years the government and the tax authorities have resisted that change. It was only after pressure from members of the official opposition that such a change came about. I would say it is a change that will be welcomed in all areas of the country, whether it is in the small business field or in the farming community.
However, I was disappointed in noting that the bill gave no relief with respect to capital gains. In the Progressive Conservative government's budget of December, 1979, there was a provision which granted relief to the farming community. It did not go as far as many of us hoped, but it was well received. Unfortunately that budget never became law, but I recall in the campaign for the 1980 election that the Liberal party, in trying to gain votes and popularity in western Canada, called a news conference in Regina, with great fanfare. Some of their big guns were there and they made pronouncements on what they would do if they formed the government. They announced the double tracking of the railway, but of course no one ever thought they were serious about it. They may have been, but the producers and people of western Canada knew it was a foolish idea.


Donald Frank Mazankowski: It was a lunatic idea coming from a lunatic spokesman.


Douglas Charles Neil: No one took it seriously, but western people took seriously the undertakings of Liberal candidates that if they formed the government they would update valuation day from December 1, 1971, to 1974. There is absolutely nothing in the budget or in this bill to implement that policy. It does not look as if these promised changes will ever be implemented.
Last year when the Deputy Prime Minister and Minister of Finance (Mr. MacEachen) tabled his budget, he also tabled a white paper entitled "A Review of the Taxation of Capital Gains in Canada". It is an interesting document, but after reading it one has the distinct impression that the authors would like to see taxation of 100 per cent of capital gains
instead of the present 50 per cent, and possibly a return to estate tax or succession duty tax, both of which were withdrawn when capital gains tax was introduced in 1972. What does the white paper indicate? I should like to look at the conclusions on page 54, and read a few excerpts. Under conclusions, the review starts off by saying:
Taxation of capital gains is an important element of the income tax system. Capital gains add to a taxpayer's ability to pay.
It goes on to say:
From various perspectives, the current tax treatment of capital gains is imperfect. Taxation of only half of capital gains, and other tax preferences that lower their effective rate of tax, are counter to the principle of tax equity-
And the review says further on in the conclusions:
Taxation of gains when realized, rather than when accrued, induces taxpayers to continue holding a particular asset longer than may be economically desirable.
Further along is says:
A number of imperfections would be removed if Canada taxed all capital gains in full as accrued.
It seems to me in reading that document that it is a move toward 100 per cent taxation of capital gains. Let us examine what has happened since the capital gains tax was imposed in 1972. There has been a rapid increase in government spending. Our budget increased from some $16 billion to over $50 billion. There has been a rapid increase in inflation of anywhere from 8 per cent to 10 per cent per year.
If we set aside gains which are made on the stock market we can see that the value of property generally has increased in step with inflation. Real property, and particularly farm land, has increased by some 300 per cent, 400 per cent, or 500 per cent. But this is an inflationary increase, not an increase in true value. As a result we end up with a tax on inflation rather than a capital gains tax.
I am concerned about the effect of capital gains tax on farm lands and small business. The capital gains tax has a drastic effect on inflating land values far beyond reason, simply because every time a farmer tries to sell a piece of land, the first thing he determines is what his capital gains tax will be, which he then adds to the asking price for the land. If the farmer gets that price for his land, then that price becomes the guiding price for all farm land in the area. When another farmer in the area sells, he asks himself the same question and determines his capital gains based on the sale price of the neighbouring farmland and, in turn, adds that to his asking price. And on it goes as land prices spiral ever upwards.
Of course tax officials and some members of the government will argue that there are roll-over provisions of which the farmer may take advantage. For example, if a farmer sells his holdings to his son or his daughter at the valuation day price, or leaves his holdings by will upon his death, then there is no capital gain. But if the farmer sells his holdings to his son or his daughter at more than the valuation day price, then there is no roll over and he must pay the capital gains tax. The situation works only if the farmer has one son or one daughter.
January 20, 1981

But if the farmer has more than one child to whom he would like to leave equal shares of his holdings, then there are problems. In most cases he ends up paying the capital gains tax, and in many cases the land is sold outside the family. As a result there are fewer and fewer family farms because of the effect of capital gains tax on farm land. Prior to the capital gains tax family farms were becoming fewer and fewer because of the effect of estate taxes or inheritance taxes or succession duties, or whatever one would like to call it.
I listened with interest on Friday to the hon. member for Broadview-Greenwood (Mr. Rae) when he spoke in this debate. It seems to me that the hon. member supports the taxation of wealth through capital gain and estate tax. I suggest that he and his socialist friends are rather naive. They do not seem to understand that our country was built on hard work and individual initiative, that Canadians are prepared to take risks to develop business whether it be large or small, a farm, a grocery store, a garage, a mine, or in the manufacturing industry. People took these risks to build a future for themselves and for their families. If hon. members will read page 6295 of Hansard they will find, part way down the page, the condemnation by the hon. member for Broadview-Greenwood of the government of 1972 for having abandoned the field of taxation of wealth by inheritance tax and estate tax. He then went on to say:
The point is that we cannot continue with a series of minor income tax proposals which fiddle here and fiddle there without recognizing that we face a major crisis, what I call a "crisis of fairness", in our tax system. I think of the people in my riding who receive their pay packet every two weeks and know exactly from where the taxes come. They see it every two weeks. They do not receive any fancy deductions, because they are employees and receive wages. They have none of the whole range of deductions which are open to those people who are self-employed, those who are able to turn themselves, as if by magic, into a personal corporation or those who are able to use a marvellous invention called the inter-vivos trust in order to split family income.
It seems to me that the hon. member does not realize that it is the self-employed, the small businessman and the large business concerns, which create jobs for his constituents through their sacrifice and initiative. In many cases the proprietors or owners of small businesses, whether they be individually-owned or incorporated, take home less pay than their employees. The employtr risks putting more money, tax paid dollars, into his business to enlarge it, to create more jobs, and to build up assets for his family and for his old age. Capital gains tax, estate and inheritance taxes, destroy and stifle the initiative that is necessary in order to expand or enlarge business and to create jobs for many constituents.
I listened with interest to the remarks of the hon. member for Hamilton Mountain (Mr. Deans) last night and today. He condemned Chrysler and Massey-Ferguson for applying to the government for assistance. I did not hear him or members of his party say, "Let Massey-Ferguson or Chrysler go down the drain. They are the large corporations which we, as socialists, dislike and which we use as whipping boys." It seems to me that his party has been encouraging the government to grant assistance to these corporations in order to protect the jobs of
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their employees. They cannot have it both ways, Mr. Speaker; they are either for the corporations or against them. They cannot blow hot and cold at the same time.


An hon. Member:: Or suck and blow.


Douglas Charles Neil: I think it is time for members of the New Democratic Party and members of the government side of the House to examine the direction they have taken this country in the last 13 years. In those 13 years we have moved down the road toward socialism. Our productivity is down and we are rapidly losing the incentives necessary to expand our economy and to create the jobs required for our young people. The government has operated on political expediency rather than on a policy of what is good for the country.
The many give-away programs brought in by the government with taxpayers' money, higher and higher taxes and deficits that are bringing our country to the verge of bankruptcy, have taken away individual and community incentives. If the trend continues, I am afraid that instead of being one of the leading countries in the world as we were at the end of the last world war, we will become a Third World country, like those in which the Prime Minister (Mr. Trudeau) is taking such an interest.
I believe that these remarks should give all Canadians some food for thought, Mr. Speaker.


Some hon. Members:: Hear, hear!


Mr. Jim Peterson (Willowdale):: I would like to say "thank you" to my colleagues in caucus, Mr. Speaker. They are very understanding and perspicacious colleagues.
I am delighted to have the opportunity to follow the hon. member for Moose Jaw (Mr. Neil). He made a point about the Income Tax Act with which I have to agree. The wording of the act is pretty difficult.


Mr. Kempling:: It is terrible, not difficult.


James Scott (Jim) Peterson: I am not sure that I would go as far as the hon. member for Burlington (Mr. Kempling), Mr. Speaker. Just the other day I saw the hon. member for Portage-Mar-quette (Mr. Mayer) and the hon. member for Kamloops-Shus-wap (Mr. Riis) sitting in the hall with a copy of the Income Tax Act which they were reading through. They were chuckling and seemed to be enjoying themselves, reading it like a novel. For most of us it is a very complicated document, one which was drafted in 1972 mainly by accountants for accountants.
This brings a story to mind, Mr. Speaker. Hon. members are probably aware of the provision in the Income Tax Act application rules to the effect that when establishing a capital cost allowance base, the cost, for income tax purposes, will be neither the greater nor the lesser of A, B, or C. It is very difficult to try to figure that out as the wording is so complicated. A friend of mine went to the restaurant one morning just before he was scheduled to make a speech on the bill. When the waitress asked him how many eggs he wanted, he

January 20, 1981
Income Tax Act
replied that it would be neither the greater nor the lesser of one and three. He certainly made the point about the wording in the Income Tax Act.


An hon. Member:: She gave him an omelette.


James Scott (Jim) Peterson: I suggest that perhaps, as someone said about Mozart's music, the Income Tax Act is not really as bad as it sounds!


Some hon. Members:: Oh, oh!


James Scott (Jim) Peterson: We have to consider the intent.
One of the major problems brought up by the hon. member for Moose Jaw is capital gains. He referred to the study that was made of the Income Tax Act and spoke of the needs of small business and of farmers. I should like to add some concerns that I have such as the problem of the entrepreneur, where we are going to get the tremendous amounts of money that we will require in the future to meet Canada's investment needs, and what would happen if we were to change the income tax system and increase the rate of capital gains tax.
I think one thing that we should look at very seriously is the method of raising the funds necessary to meet our investment requirements for the future. That means that if Canadians who have built up their investment in Canada are prepared to reinvest in Canada, to re-deploy their funds in this country, they should be considered in the roll-over category. In the future, we will have to reconsider how those roll overs for Canadian entrepreneurs can assist Canadians to build the type of infrastructure, the type of economy and the type of country that we will need. That is why I think it is important that the study was published. It is not government policy but it was published in order to evoke thought, to provoke ideas. This is an exercise in which we should all be involved on all sides of the House. No firm position has been taken, and the provisions have not been implemented.
There is a great disparity at the present time between the position of the New Democratic Party and the Tories on what the role of capital gains taxation should be.


Mr. Mayer:: I should hope so.


James Scott (Jim) Peterson: Perhaps that difference will have to be ironed out, but above all else the major consideration must be to meet our investment and reinvestment needs in Canada in the years ahead.
I should like to say a few words about the budget, Mr. Speaker. First of all, it is a very responsible budget in the approach adopted toward fiscal policy which involves a gradual reduction in the deficit. No one likes to see the deficit so high, but in this time of recession to have undertaken more dramatic cuts would have served to stimulate inflation further. As the Minister of Finance (Mr. MacEachen) so eloquently and forcefully put it, inflation is Canada's most gnawing and pressing problem.
In addition, in its approach to monetary policy the Bank of Canada, since 1975, has adopted what I believe to be a very responsible position.


Mr. Wilson:: Tell that to Herb Gray.


James Scott (Jim) Peterson: I have heard members on the other side of the House suggest that we should get away from this approach. Perhaps the hon. member for Etobicoke Centre (Mr. Wilson) has some different ideas.


Michael Holcombe Wilson: I do.


James Scott (Jim) Peterson: If he thinks we should expand the money supply at a rate faster than the growth in the economy, I am ashamed of him. I do not think he would have the courage to tell that to his constituents.


Michael Holcombe Wilson: Tell it to Herb Gray.


James Scott (Jim) Peterson: Herb Gray has never advocated that our monetary policy should be other than it has been since 1975.


Michael Holcombe Wilson: That is absolute nonsense. You should have been here a year ago.


Mr. Deputy Speaker:: Order, please. It is the practice to refer to hon. members either by constituency or, in the case of a cabinet minister, by his ministry.


Michael Holcombe Wilson: Absolutely. Let us have a little bit of decorum in here.


James Scott (Jim) Peterson: Thank you for drawing that to my attention, Mr. Speaker. I shall try to bring it to the attention of the hon. member for Etobicoke Centre. I will not call him by the other names that I was thinking of.


Mr. Cullen:: All of which should be polite.


James Scott (Jim) Peterson: Very polite, but more appropriate, I think.
Based on the fiscal policy and this concept of monetary policy, this is a responsible course of action to take at a difficult time in our economic history and the economic history of all the western civilized world. If we are going to control inflation, we will do it by a gradual policy, not by any of these magical quick fixes that we have heard about. As members from the parties surrounding the hon. member for Etobicoke Centre have advocated from time to time since the budget was brought forward, it will not be by introducing a whole raft of new spending policies, even though they would like to see them.
Where we will have the most impact in helping to cure inflation is in the area of increased productivity. The budget was multifaceted. It looked at the problem of our economy from many directions. It was not just a fiscal document, it was a document which dealt with many aspects that impinge upon our economic life. I would like to cite one of them to hon. members, and then speak about it.
January 20, 1981

Since the budget was introduced, the Minister of Finance has stood up under the most scathing criticism which the opposition from both parties have been able to deliver. He still looks stronger than the day he started. His policies have stood up. They have been unable to come up with any alternatives to counter those fine policies-


Ramon John Hnatyshyn: He has turned grey.


Charles James Mayer: He is going down the drain. He is doing just fine.


James Scott (Jim) Peterson: Let me quote what he said in his budget statement-


Some hon. Members:: Oh, oh!


James Scott (Jim) Peterson: If the hon. member over there wants to discuss agriculture, I will be happy to do so afterwards.


Charles James Mayer: It will be a short discussion.


James Scott (Jim) Peterson: These western farmers have lots of land. The eastern farmers have to farm on a much smaller acreage. Therefore we have to be more economical and more conscious of our costs, and work every inch of our soil. We do not talk in terms of sections, we talk in terms of acres. I hear the hon. member from Burlington making a comment. I invite him to help me do the chores one day. I am sure that he could show me a lot.


An hon. Member:: Another easterner putting a westerner down.


James Scott (Jim) Peterson: I am not putting the hon. member down. I think you are good. I am jealous that we do not have the land that you have, nor the farm income that you have. I look forward to discussing these agricultural policies when we get through with this three-hour speech I am going to deliver on the merits of our budget.
I would like to bring to the attention of hon. members the budget statement by the Hon. Allan J. MacEachen.


Stanley Howard Knowles: He is the Minister of Finance.


James Scott (Jim) Peterson: The Minister of Finance. I get carried away each time. The Minister of Finance said:
We intend to reduce the burden imposed on the economy by unnecessary regulation. The work of the Parliamentary Task Force on Regulatory Reform and of the Economic Council of Canada will be of great assistance in this endeavour.
That is why I am talking about the multifaceted aspects of the budget. Regulation has been defined as the means by which the government controls or determines the economic behaviour of the private sector. One of these means is through the Income Tax Act. I want to address some of my remarks to the question of federal regulations.
Our task force consisted of two members from the Tory party, one member from the NDP, and four members from the Liberal party. Incidentally, the idea of the task force was set
Income Tax Act
by the previous government, a precedent which I think was a sound one and one which I hope will be followed in the future. I give them credit for the idea.
Our task force discovered that there are 140 federal statutes and 1,608 provincial statutes which deal with government regulation of the private sector. There are over 10,000 pages of federal regulations alone. Many of them are outdated, unnecessary, and unresponsive to the needs of the private sector and the business community. Many of the regulations came into effect not through parliamentary debate, where hon. members from all sides can bring forth opinions and views of their constituents, but by order in council.
Many regulations never see debate or the light of day until they are published in The Canada Gazette. Many of these regulations come out of the multiplicity of boards and agencies which have the power to regulate and to control our lives. We have two sets of laws, those which govern and regulate us, and those which are debated here in the House. I am sure that many members opposite wish we had more laws coming through here, the way they have been filibustering some of the ones presented so far.
Our task force was faced with a number of horror stories which this multiplicity of regulations has produced respecting the impact they have had in the private sector. Let me cite one example. We found that fire marshalls' regulations said that the boiler room door of a building had to open inwards so that in the case of an explosion it would be contained. On the other hand, the fire marshall said that the door had to open outwards. With such conflicting regulations the poor contractor did not know whether to hang the door opening inwards or opening outwards. In addition, we found that 13 federal departments deal with the area of occupational health. One chemical company wanting to establish itself in Canada had to go through 43 different municipal, provincial and federal regulatory agencies before it could get a licence to operate. There were other examples of multiplicity of regulations. I can think of provincial and federal inspectors going into food processing plants, some inspecting meat and some inspecting vegetables.
In our task force report we have proposed 29 recommendations to deal with many of these problems of regulation which is, like taxation, a means of controlling our economic behaviour. We have adopted a two-phased approach. One is a consultative approach, and the other is accountability.
First, let me talk about consultation. Most of these regulations never see the light of public debate. Because Parliament is already bogged down, instead of debate we have proposed that the public servants who are consulting and regulating the private sector must enter into a consultative process before making regulations. This will involve publishing a public list of people with whom they will consult. It involves an agenda of regulatory measures which will give notice of what is coming up so the public will be informed. We hope this will involve free publication of regulations so that the private sector will have an opportunity to consult with the bureaucrats, with the public servants, and with the ministers before regulations

January 20, 1981
Income Tax Act
become law. We also hope that from the moment any public servant has an idea about a regulation, that that will go into the regulatory agenda to be published. That way regulations will not become cemented in law or the subject of partisan political advantage when it comes to trying to change them.
The hon. member for Moose Jaw entered into the debate on capital gains. This was a debate stimulated by the government publishing a study. I hope we will have more green papers and study papers and that members opposite will take them seriously and enter into debate about them.
Another aspect we feel will have an impact on slowing down the rate by which regulations are made-someone has referred to it as regulatory birth control-is the requirement of an impact assessment. Regulators will have to justify why they are regulating. The tendency whenever anyone has a problem today is to say, "Let the government fix it." We do not think this philosophy is always the best and will be applicable in every circumstance. Very often people should fix things themselves. The private sector should be concerned with fixing up a mess. This is why we want this impact assessment, to outline the problem and the possible solutions, to indicate who has been consulted, and also to show the costs and benefits to make sure that the costs of the regulations will not outweigh the benefits.
One of our approaches here is flexibility. We believe each department has different requirements. These different requirements are as a result of different constituents and the different public with which each will consult, being business, big or small, industry, labour, environmentalists, naturalists, consumers or whatever. Their requirements will be different. Therefore, within the guidelines which we have laid down, we believe each department and agency should create its own rules to meet the needs of its own particular constituents.
We are delighted with the report published by the Atomic Energy Control Board over a week ago. The AECB issued an invitation to all the people with whom it deals, to come forward and discuss with it the processes by which it will be governed. 1 would like to say that in the past this has been the practice of the Department of Finance to consult in many areas with its affected community. It has developed a good reputation, among accountants and tax lawyers, of consulting before it introduces certain measures in order to find out whether these will work or what is the best way to deal with a particular problem. I know they are doing that right now in terms of some loopholes which have been raised and discusssed in our finance committee.
The second point of this report again affects our economic performance in a fundamental way. One way I mentioned is through accountability. Our regulators, public servants and ministers who are regulating, our agencies which are regulating, should be held accountable to Parliament. This was determined unanimously by our task force. After all, we, as Members of parliament, are the ones who have to be accountable to our constituents for what goes on. We must answer to
them. This is why I think the accountability aspect will be of great interest to all members in the House.
Since Parliament is at a bottleneck under its present rules of procedure, we have made certain recommendations. For example, some people who want changes in their statutes say they have been waiting for years to get them on the Order Paper. But we have not been able to deal with them, we have not had the time. So, we will not bring every regulation before Parliament. Over the long term, what we have suggested is that the standing committees should fulfil this function. The standing committees are experienced with respect to certain subject matters. The hon. member for Portage-Marquette has been discussing this with me. He sits on the agriculture committee and he would be the one who would more appropriately be seized with the responsibility of determining what regulations are best in the area of agriculture. He should be the one to determine which areas are the most worth while and which ones should be eliminated. Over the long run the standing committee should have that responsibility.
What are the barriers to the standing committees being seized with that type of problem at this moment? In our experience the present committees are too large. They number 20 to 30 members and, as a result, a committee does not function as a cohesive whole. Discussion in a committee is often highly partisan, and this is aided by the approach that what is before it is only things that the government asks it to consider, such as bills after second reading. We do not think that even the standing committees at this stage are adequately equipped to deal with this, until serious reforms are undertaken.
Our solution is an interim committee called "A Special Committee on Regulatory Reform," which would last for only two years and would be subject to a sunset provision whereby it would disband sooner if long-term parliamentary reforms are entered into. This special committee would consist of ten members. There would be a serious limitation on substitution of members. Staff would be hired. The committee would have the power to oversee the whole process of regulatory reform and to hold public servants accountable to ensure we are cleaning up this mess of existing statutes and regulations.
We also suggest this special select committee of no more than ten members could also fulfil a second role, apart from being the force and conscience of regulatory reform. It could also serve as a model for longer-term parliamentary reform. As parliamentarians we would have a free look at how this one type of small committee with staff and dedicated members works. It might serve as a precedent for overhauling all our committees so that members could have a more effective committee system.
I think implementation of these recommendations will have a major economic impact. They would help increase the spirit of co-operation between the public and private sectors through this process of consultation. We would end up with better and more cost-effective regulations. There would be a reduced burden of regulation on the private sector. It could serve as a model of parliamentary reform.
January 20, 1981

In conclusion, Mr. Speaker, I would like to say that the experience of working together with members of the opposition on a small task force was one which was of great benefit to me personally. It was an experience I enjoyed. We had wonderful co-operation. We had very fine people working with us. I want to thank them, too, for the effort and the co-operation which they put into this report.
I think it is this type of approach, Mr. Speaker, which was embodied in the budget and is being carried through at this time by the minister and the government which will aid and assist in getting our economy moving through increased productivity, which is driven mainly by the private sector.


Michael Holcombe Wilson: Mr. Speaker, I have been listening to the very well reasoned arguments of the last speaker. I have listened as he stated with righteous indignation how he would change the whole approach to government by the party of which he is a member. He tells us how they would govern by regulation and order in council. He says there are 10,000 pages of regulations which must be changed. He says we are being strangled by regulation and that we must have changes in the rules.
The member should know that for years members on this side of the House have been making the same arguments but they have not got past first base with the government. The government has ignored them. I certainly hope that the committee, which I believe he was the chairman of, will have a greater degree of success. All of the problems he has been talking about are as a result of the Liberal approach to government, which is to keep things out of Parliament because they do not want to make Parliament too strong. They say, "Let us not change the rules because, if we change the rules, we might have to answer for some of the things we do." I suggest to the hon. member that rather than haranguing the House he should take those arguments into caucus and lay them on the table, taking the members of the government to task with those same questions. That is where we must get the action from. He will have no problems from this side of the House. We are on the record, we want to do the things he wants to do. But the Prime Minister (Mr. Trudeau) and other members of the government will fight him, and fight him hard.
I am very pleased to be able to participate in the debate on Bill C-54. I will be dividing my remarks between some general comments with respect to financial matters relating to the ways and means motion and, second, commenting on some of the aspects of tax policy as they are affecting the National Energy Program, and through that program, the future outlook of supply and Canadian ownership of our oil and gas industry.
The first comment I would like to make is in relation to the direction which the government appears to be going in this budget in the area of savings and investment. There is a direction here which concerns me greatly because it appears the government is moving toward discouraging savings and the accumulation of investment capital.
Income Tax Act
I asked myself right after the budget was brought down, why it was so slim and why it was primarily energy policy. I asked why the normal budgetary elements were so very, very slim. The answer, or the conclusion, I came to was that we have only heard the first shoe; I think the other shoe is yet to fall. The initial direction which appears in this budget is that we are moving away from the directions which have been taken by the government in previous Parliaments and from the direction taken by the hon. member for St. John's West (Mr. Crosbie) in his budget.
There are two things which have been removed from the December, 1979, budget, the first being the allowance to a farmer to transfer $100,000 of capital gain from the sale of a farm into a Registered Retirement Savings Plan, and the second is the provision for a Canadian common stock investment plan. Mind you, Mr. Speaker, that was to allow for contributions initially of $20,000 and subsequently $10,000, up to a maximum of $100,000 into an investment plan, and within that investment plan the income would be taxable but the capital gains tax would be deferred until the investment plan had been wound up. It allowed for the accumulation of capital and, therefore, the contribution of that capital toward the creation of jobs in this country.
The significance to me of the removal of these is that we are seeing a discouragement now of the accumulation of savings. There is no statement of intent, no statement as to why the government has chosen to exclude these from the ways and means motion. I ask myself whether this indicates a shift by the government away from encouraging savings, and I ask myself whether we have stopped there or whether we are going to carry on further into such areas as registered retirement savings plans, registered home ownership savings plans and the tax deductions of $1,000 of interest and $1,000 of dividend income.
In recent years the Canadian personal savings rate as a per cent of disposable income has been increasing, and increasing quite significantly relative to that in the United States. The figures are of the order of 5 per cent now for the United States as against about 10 per cent to 12 per cent here in Canada. In the 1960s and early 1970s it is my recollection that we were in about the same position, or possibly a little on the lower side, but because of the policies we introduced-policies which I believe encouraged saving-we improved our position. That helped in the creation of investment capital and, therefore, in the building of factories, plants and equipment. That is what creates jobs in this country and that is why it is important that we maintain these savings rates at the levels at which they have been.
If we look over the past two or three years we find that one of the primary areas of strength in our economy has been the area of private capital formation which created jobs. That was one area in which we did better than the United States. I would hope we would be able to continue to do better in the future.
The overwhelming significance of this is that in the 1980s there will be a tremendous demand for the large creation of

January 20, 1981
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investment capital in the areas of energy. The figure of $200 billion is widely used as the amount of investment capital needed for this country to achieve energy self-sufficiency by 1990. Other areas of energy investment amount to somewhere in the order of $100 billion to $150 billion involving such things as electrical and nuclear energy, pipelines, and this sort of thing. The Canadian Manufacturers' Association is calling for a capital need over the next ten years of about $150 billion. Those figures total somewhere around $450 billion to $500 billion, a very large amount of money particularly when you put it in contrast with the size of our economy today which is roughly of the order of $350 billion.
It is very important that we have these savings incentives in place if we are to be able to create jobs, achieve self-sufficiency in energy, create a proper research and development environment, and also solve the very tough problem we have with our manufacturing balance of trade, which I remind you is a deficit in the order of $17 billion to $18 billion. What that means is the exportation of jobs from this country to other countries of the world.
As I said, I am unsure why these two provisions were removed from the ways and means motion. Whether this is a harbinger of things to come I do not know, but I am very concerned about the impact this may have on savings and investment in this country. We in this House must look very closely at what is going to happen in the next budget. Canada needs the high savings rate we have had over the past few years. I urge the government, if it is thinking of moving in this direction, to have a second thought, because this is going to be very important to the vitality of our economy in the 1980s.
The next point I should like to consider is the matter of the Small Business Development Bond. This was first introduced, again by my colleague, in the December, 1979, budget. It was very well received by the small business community which was suffering greatly from the high interest rates in place at that time.
It was next introduced by the Minister of Finance (Mr. MacEachen) in his April mini-budget, if that is what we can call it, and now it has been extended, in the course of this recent budget, by a full three months, to the end of March, 1981. Why has the government not acted to expedite this program which has been so well received? During the same period not only have we seen a continuation of the high interest rates, we are experiencing interest rates even higher. The Minister of Industry, Trade and Commerce (Mr. Gray) said he was going to resign if the earlier high interest rates were retained, yet the rates are even higher now. We are seeing more bankruptcies and more difficulties on the part of small businessmen in competing with large companies in the marketplace.
The small business community is the backbone of our economy. It creates about 60 per cent of the jobs created in Canada every year and accounts for approximately the same amount in total employment in the economy. The small business community is the future of this country and it is the means by which we can gain back a greater degree of control,
particularly of the manufacturing community in Canada. It is the sector of the economy where new big companies of the future will start. You remember that old adage that every oak starts from a small acorn. The small business community is where those acorns are nurtured. At this time the policies of this government are stifling the growth of those acorns. The small business community is being crucified by the high interest rates policies of this government.
The minister has blamed high interest rates on the federal reserve. I can hardly believe that, because about a week ago I asked the minister why the Bank of Canada sold $1 billion worth of securities to keep interest rates up when it clearly had the option of lowering interest rates. The Canadian dollar has gone up about 1.5 cents and American interest rates are down from their peaks. The option to lower interest rates was clearly there. The answer I got from the minister was that we are keeping interest rates up so they will go down. That answer causes one to scratch his head. It is difficult to understand when you hear that sort of gobbledygook or, if I can recall a word used by the former member for Hamilton West, "bafflegab". Tell that to small businessmen who are fighting to stay in business in the face of high interest rates. They hear the Minister of Finance say that we have to keep rates up so that they will come down sooner.
May I call it five o'clock, Mr. Speaker?



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
[ Translation]

The Acting Speaker (Mr. Blaker):: Order, please. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Winnipeg North Centre (Mr. Knowles)-Canada Pension Plan-Inquiry respecting coverage for spouses working in the home; the hon. member for Edmonton South (Mr. Roche)-United Nations-Special session on international development-Government policy; the hon. member for Saskatoon West (Mr. Hnatyshyn)-Nuclear energy-National inquiry into domestic and international policy-Government position.

It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's Order Paper, namely, public bills, private bills, and notices of motions.
January 20, 1981


PRIVATE MEMBERS' PUBLIC BILLS
[Stage Direction]
Items Nos. 17, 18, 22 and 25 allowed to stand by unanimous consent.

Mr. Howard Crosby (Halifax West) moved: that Bill C-226, respecting minerals and hydrocarbons in submarine lands adjoining the province of Nova Scotia, be read the second time and referred to the Standing Committee on National Resources and Public Works.
He said: Mr. Speaker, it is my honour and privilege to present for second reading and reference to the Standing Committee on National Resources and Public Works Bill C-226, which would enact the Nova Scotia Boundary and Submarine Lands Act which I had the honour to introduce in this House.
First let me say very quickly that the basic purpose of this bill is to resolve the dispute between the province of Nova Scotia and the Government of Canada concerning ownership of offshore resources like oil, gas and coal. These would also include all hydrocarbons and minerals which fall within the normal description.
How would the bill resolve this dispute? It would do so by extending the boundaries of Nova Scotia seaward from the existing coastal land mass. In the result the submarine area of the Atlantic Ocean encompassing the continental shelf, or 200 nautical miles seaward, would become part of the province of Nova Scotia.
Let me review very briefly the historical facts which give rise to the federal-provincial dispute concerning offshore resources on the Atlantic coast which are pertinent to Nova Scotia's case for ownership of those resources. King James I granted a Royal Charter to Sir William Alexander in 1621. That Royal Charter included a band of sea extending seaward for 120 miles, including Sable Island. There were subsequent treaties involving England and France which confirmed the ownership of coastal territory by Nova Scotia, over the centuries. And those treaties and agreements continued up until the time of confederation in 1867. In 1867, of course, the British North America Act confirmed, in section 7, that Nova Scotia had the same limits at confederation as before. The BNA Act also gave the provinces all land, mines and minerals which belonged to them by virtue of section 109.
It also transferred Sable Island to the Government of Canada, thus confirming and indicating that Sable Island was indeed part of the province of Nova Scotia prior to 1867. The result is that Nova Scotia claims its submarine lands and resources, and it has passed legislation to enforce those rights of ownership. In particular, Nova Scotia has passed legislation respecting coal mines and, more recently, in 1958, it passed legislation respecting the harvesting of sea plants.
Submarine Minerals and Hydrocarbons
In 1980, the legislature of the province of Nova Scotia passed the Petroleum Resources Act, which defined "Nova Scotia lands" for the purposes of that legislation. Very briefly, section 7 said that the act applied to "Nova Scotia lands", and those lands included Sable Island and the seabed and subsoil off the shores of the land mass of Nova Scotia. In addition, the Petroleum Resources Act purported to apply to the seabed and subsoil of the continental shelf and slope and the seabed and subsoil seaward from the continental shelf and slope to the limit of exploitability. So Nova Scotia very clearly, by its legislation enacted in 1980, claimed the submarine lands and the minerals, including oil and gas and coal, which might be contained in those submarine lands.
At the same time we can contrast that legislative claim of Nova Scotia with the claim made by the Government of Canada in Bill C-48 which is now before the House of Commons and which is entitled the "Canada Oil and Gas Act". The Canada oil and gas act does just the opposite. It claims to apply to "Canada lands" and defines those lands in similar terms. In the result the Government of Canada, if the Canada oil and gas act is enacted, will lay claim to ownership and exercise jurisdiction over that area of the submarine lands adjoining Nova Scotia, extending seaward for 200 nautical miles and including the continental shelf. So the problem is evidenced by the passage of those two pieces of legislation: in Nova Scotia, the Petroleum Resources Act and, in the Parliament of Canada, the Canada oil and gas act.
The dispute with respect to ownership of offshore lands and resources must be resolved. Why must it be resolved? It must be resolved because we hear reports daily that it is delaying and hindering the development and exploitation of our natural resources off the coast of Nova Scotia and off the coast of Newfoundland.
Reports have indicated that executive officers of the Mobil Oil Company, which heads the syndicate exploring off the coast of Nova Scotia and off the coast of Newfoundland, have said time and time again that the continuance of this dispute and the failure to resolve the dispute concerning jurisdiction over offshore resources will delay and hinder future development and exploitation of those very resources.
How can this dispute be resolved? Of course, always by negotiation and agreement between the Government of Canada and the governments of the provinces affected by this dispute. However, for years such negotiation has failed to resolve the matters in issue.
On October 28, 1980, the National Energy Program was introduced in this House. The documents comprising that National Energy Program refer to this dispute. Briefly stated, the dispute was sought to be resolved by the Government of Canada giving to the provinces which have coastal lands 75 per cent of the wealth which would result from the development of those lands and resources. That was not acceptable to the provinces involved, and similar attempts to negotiate other arrangements have failed. What can we do to resolve the dispute? There is one other method, and that is to refer the matter to the Supreme Court of Canada.

January 20, 1981
Submarine Minerals and Hydrocarbons
However, 1 think parliamentarians, and all Canadians, would agree that this is a very poor way to resolve an intergovernmental dispute. 1 believe the dispute is constitutional in nature because it arises from provisions in the British North America Act and from the arrangements which were made between the provinces which originally formed the confederation which became the Canada we know today. Because of that I think it should be resolved outside the courts. If it cannot be resolved by negotiation between governments, it ought to be resolved by the Parliament of Canada to the extent that the Parliament of Canada has the necessary jurisdiction and capability to resolve the dispute.
We know that all the provinces of Canada, as a result of meetings between them and at the first ministers conferences, have agreed to provincial ownership of offshore resources. With that in mind, we know that if the Parliament of Canada acts in this area, unlike the constitutional decisions that have been taken by the government, we will act with the consent and concurrence of the provinces of Canada.
Under section 3 of the British North America Act of 1871, the Parliament of Canada clearly has the authority to extend the boundary of a province. This is what Bill C-226 proposes. It will extend the boundaries of the province of Nova Scotia pursuant to the authority granted by that section. Of course, the result of extending the boundaries in this manner will be that the resources contained in those submarine lands will then vest in the province of Nova Scotia. This technique is similar to that used in relation to the extension of boundaries of other provinces, including the province of Ontario and the province of Quebec. A better example, however, is the extension of the boundaries of Manitoba in 1912 by the Manitoba Boundaries Act which was enacted by the Parliament of Canada.
The bill which I am proposing in the House today for second reading follows the precedent of the Manitoba Boundaries Act. As I have said, it extends the boundaries of Nova Scotia, it defines the area involved in the extension, and it provides for the specific location of those boundaries by the executive authority. At the same time it preserves existing rights in submarine lands and, as required under the British North America Act, it provides for the consent of the province of Nova Scotia to the extension.
I have said that the dispute between the province of Nova Scotia and the Government of Canada with respect to offshore ownership must be resolved. I have said that it is slowing and hindering the pace of exploration of the resources off the coast of Nova Scotia, and certainly it is slowing the pace of the investigation and of the exploration off the coast of Newfoundland because officers of Mobil Oil have said so time and time again. But more important, the exploration of our offshore resources in Nova Scotia has a tremendous effect on the resolution of our energy problems in the province. As has been pointed out to the House time and time again, Nova Scotia and the other maritime provinces are at the whim of the foreign powers which supply oil through the OPEC agreement.
In Nova Scotia we pay the world price for oil, and this has a disastrous effect on the cost of electricity generated through the use of oil-fired thermal units. So we have to move to resolve these problems. We are doing so in the province of Nova Scotia in a number of ways. First and foremost is the conversion of oil-fired thermal units to coal and the development of the coal mines and resources which accompany that change. Second, we have instituted pilot projects to develop tidal power on the Annapolis River, and we hope that some day we will be able to develop tidal power in the Bay of Fundy. In addition, we seek the extension of the natural gas pipeline from Quebec to the Atlantic coast and to Nova Scotia. The fourth possibility is the use of natural gas delivered to the province of Nova Scotia by some other method. However, our long-range plan and our hope for the future is in the exploration and development of offshore resources.
I believe that Nova Scotia's energy future is dependent on the development of offshore resources, just as much as it is dependent on the delivery of natural gas to Nova Scotia, on the development of tidal power, or indeed on coal conversion. So I think that the failure of the Government of Canada to act to resolve this dispute is having an adverse effect on Nova Scotians and on all Canadians, because under our petroleum subsidization program all Canadians are called upon to support the price of oil delivered to the east coast of Canada and utilized in the maritime provinces and in Quebec.
The extent of this subsidy at the present is $3 billion a year. As you know, the actual subsidy program involves the Government of Canada paying the difference between the world price or the OPEC price for oil and the price for Canadian oil which prevails at the time of the delivery. As I have said, this subsidy program is costing millions and millions of dollars a day and is a drain on the resources of Canada, so it is in the interests of all Canadians to resolve these problems. One way to resolve them is to settle the offshore resources dispute so that the companies and the private sector involved and interested in offshore exploration can get on with their work and produce the results we all seek.
Mr. Speaker, I thank you and members of the House for their indulgence. Let me point out again that while Bill C-226, which enacts the Nova Scotia Boundary and Submarine Lands Act, appears to be a local matter, it is indeed a matter of national significance because I believe it would resolve the federal-provincial dispute with respect to offshore resource ownership which will enable the quick development of our offshore resources, thus resolving in part the energy problem in Nova Scotia.
I know that other colleagues of mine on this side of the House, particularly the hon. member for Central Nova (Mr. MacKay), will want to make a contribution to the debate on Bill C-226, and I will yield the floor in the hope that members will see fit to give this bill second reading.


Roy MacLaren: Mr. Speaker, the purpose of Bill C-226 is clearly to extend the boundaries of Nova Scotia to the greater distance of the continental margin. I shall want
January 20, 1981

to address that point in a moment. Before doing so, however, I want to say how many points the hon. member opposite made with which we on this side of the House agree. While I do not intend to support his bill, for reasons which I believe will become evident, I do want to say that we agree with him that the differences between the government of Nova Scotia, and indeed of Newfoundland, and the national government should be resolved by negotiation. Failing that, there is the route of reference to the Supreme Court, but it continues to be our view that, if possible, this disagreement should be resolved, as the hon. member has suggested, by negotiation.
I also agreed with the hon. member when he outlined some of the energy projects that can be taken to benefit the people of the maritime region, from where my ancestors came. I have in mind particularly his comments about the extension of the Q & M pipeline, a policy which the government fully supports and which is an important aspect of the National Energy Program.
As stated in that program, the government believes that the ownership of the territorial seas is vested with the federal government, as are the rights and responsibilities conferred under international law out to the 200-mile limit. It is the right of the national government to dispose of or exploit the natural resources situated in those submarine areas adjacent to the coast of Canada. Indeed, the Supreme Court confirmed this when it judged that beyond the lower water marks and outside the inland waters, the Government of Canada owns the area, has a right to exploit and explore it and has legislative jurisdiction over it.
However, the government, although committed to the proposition that large revenues generated from the exploitation of natural resources must benefit all Canadians, also recognizes that substantial benefits should go to the provinces. In that connection, I recall the statements of the Prime Minister (Mr. Trudeau) during the last election campaign at Memorial University in Newfoundland, when he made a clear commitment on the part of the national government to ensure that the people of the coastal provinces and in the maritime region received the full benefit of the potential riches which should flow from the development of offshore resources.
The National Energy Program indicated that the government is anxious to resolve the ownership issue, if necessary, through the Supreme Court for many of the same reasons which the member opposite mentioned. It read:
-uncertainty about the legal control over such vital areas is not conducive to the rapid development of the oil and gas potential of this promising region.
It might be useful to look for a moment at the efforts made in recent years to correct this situation. As early as 1976 the government indicated its willingness to proceed with a joint reference by both the provincial government and itself to the Supreme Court to have the matter settled. The government has been awaiting the approval of Newfoundland in such a reference. In the case of Nova Scotia, its provincial government has consistently indicated that it did not wish to address
Submarine Minerals and Hydrocarbons this issue in the Supreme Court but, as the hon. member opposite indicated, would rather reach an agreement through discussion and negotiation.
Ownership is not the only issue, and in the particular case of Nova Scotia it appears not to be the key issue. The government of Nova Scotia puts more emphasis on the following issues: first, the management and administration of offshore resources; that is, the rights to issue licences, leases, permits and so forth; second, the control of the pace of development of offshore resources; third, the possibility to determine the conditions under which goods and services are supplied to the industry in order to obtain a share of these business activities; fourth, the ability to provide preference in hiring for Canadians living in Nova Scotia. I must say that this last point would give me some difficulty. Those issues have formed the heart of negotiations over the past several years. However, the government of Nova Scotia clearly indicated in the past its confidence in having the matter resolved through negotiations with the federal government.
I should like to refer to the memorandum of understanding of 1977 between the federal government and the maritime provinces in which Ottawa proposed a provincial 75 per cent and a federal 25 per cent split of offshore resources revenue. The government was prepared to bear all costs of administering these areas. The 1977 proposal was rejected only by the government of Newfoundland. However, in 1980 the government of Nova Scotia terminated its earlier agreement of 1977 and claimed offshore ownership. On that basis, it introduced the legislation which the hon. member opposite mentioned- the petroleum resources act, the pipeline act, the gas utilities act and the energy and mineral resources conservation act.
In September, 1980, the question of natural resources and offshore resources ownership was on the agenda of the first ministers' conference on the constitution. Several options were reviewed at that time. While Nova Scotia reiterated its claim, interest was expressed in examining administrative mechanisms to resolve the issue. I should like to quote from page 43 of "The National Energy Program" where it refers to the efforts in September to reach agreement. It reads as follows:
Seeking a speedy and fair resolution to this issue, the Government of Canada offered to:
Provide 100 per cent of provincial-type resource revenues to the adjacent province, subject to arrangements whereby, when the province reached an agreed level of wealth, these revenues would be shared with other Canadians. Give the provinces a substantial voice in matters of direct concern to them, including in particular the need to minimize social, environmental and economic disruption in the region.
Unfortunately, the offshore resource issue was not resolved.
Following the September discussions which I just mentioned, the Premier of Nova Scotia made a distinction between his position and that of Newfoundland. I refer hon. members interested in this subject to the October 31 edition the Chronicle-Herald of Halifax which indicated that the premier, while still wanting 100 per cent of the benefits from offshore oil and gas to go to the province, thought the ownership question "can be put aside". Given the premier's viewpoint of a few months ago that ownership can be put aside and his concurrent view
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January 20, 1981
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that a federal presence is essential, the bill presented this afternoon appears inappropriate and unwarranted at this time.
The bill does not address many issues which the government of Nova Scotia has brought forward on many occasions. Furthermore, it challenges the federal jurisdiction of the Canada lands offshore Nova Scotia. It does not offer anything of a constructive character to enable us to get on with the essential development of offshore resources so as to benefit the people of the region and indeed all the people of Canada. It would merely render a complicated situation somewhat more difficult of resolution.


Hon. Elmer M. MacKay (Central Nova):: Mr. Speaker, I should like to begin by congratulating the hon. member for Halifax West (Mr. Crosby) for his foresight and loyalty as a Nova Scotian in bringing forward this piece of legislation to espouse a very just cause and to establish an important principle.
I think it would be useful to remind the House, as did the editorial which appeared in the Chronicle-Herald of Halifax some months ago, of some of the historic bases for the claims of the maritime provinces for greater equity in participating in the submarine resources adjacent to these provinces. I listened to the hon. Parliamentary Secretary to the Minister of Energy, Mines and Resources (Mr. MacLaren) who, I think, said at one point that this did not espouse a very constructive course of action and intimated that we had not made a particularly great contribution. I do not want to misquote him, but I want to emphasize that we in the Atlantic region, particularly those of us in Nova Scotia and Newfoundland, have some very valid historic claims to our undersea resources.
Also the parliamentary secretary referred to the 200-mile limit. I think it is true-and my opinion is shared by the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton) who is a most knowledgeable Member of Parliament on questions of energy and offshore resources-that the international law which is still relevant dates back to a 1958 law of the sea conference whereby Canada sponsored a resolution indicating that littoral states had sovereignty over their offshore lands on their submarine shelves, slopes, coastal flats, and so on.
As far as that goes, they had unlimited sovereignty until they were met by the claims of the other littoral states, even if they were many hundreds of miles away. I believe enough states ratified this convention so that it is still international law. Despite pressures which have not yet culminated in changing the international law, that is still the case.
With regard to our contribution to confederation, I would like to quote again from the Halifax Chronicle-Herald editorial. It might be constructive to acquaint the House with just what happened with respect to the Atlantic provinces as opposed to what was done for many other Canadian provinces. The article reads in part:
Prior to the creation of Saskatchewan and Alberta as provinces in 1905, and the enlargement of Manitoba, Quebec and Ontario a few years later, the lands that Ottawa gave those provinces were mutually owned by all Canadians,
including the three maritime partners in Canada-Nova Scotia, New Brunswick and Prince Edward Island.
Not only were the maritimes required to relinquish rights to lands and resources in which they had previously held shared entitlement, they were not considered, consulted or compensated. Geographically disadvantaged, in that they are not butted by northern lands, they remained small in area, receiving no additional territory.
It is interesting to look at the respective geographical areas of our provinces. Prince Edward Island has only 2,000 square miles, Nova Scotia 21,000 square miles, and New Brunswick 28,000 square miles; as compared to the other provinces in Canada such as Quebec which has 595,000 square miles, Ontario 412,000 square miles, Manitoba 251,000 square miles, Saskatchewan 252,000 square miles and Alberta 255,000 square miles. The latter group of provinces was created out of lands which were the joint property of the maritime people and the maritime provinces.
As to making contributions, I am reminded of a story. A pig and a chicken, while sauntering down the street saw an advertisement in the local restaurant which said "Bacon and eggs, 69 cents!" The chicken said to the pig, "Isn't it wonderful, the economic contribution we are making?" The pig said, "To you it may be a contribution, but to us it is a total commitment." The maritime provinces have made a very great commitment, not only by coming into confederation under terms which disturbed our previous prosperous state when we were world traders and a major maritime power, but under terms which grafted us on to the then troubled colonies of Upper Canada and Lower Canada, and we have been disadvantaged ever since.
The approach espoused by the hon. member for Halifax West gives the Government of Canada an opportunity to do what the hon. member for Qu'Appelle-Moose Mountain and his government of that day attempted to do, to give every region in Canada rough equity so that they can realize and be endowed with resources which will help them to grow and strengthen the total economic face of our nation, as opposed to the approach, as the hon. member for Halifax West has pointed out, in Bill C-48. His bill C-226 provides for a positive approach to strengthen our country by making available to areas of Canada that have been disadvantaged in the past, out of resources that are available, additional territory to bring their areas into a more equitable balance with some of the other provinces which had their territories increased some years ago.
There is no difficulty for such a move in so far as the precedents are concerned. The hon. member for Halifax West cited the British North America Act. One neat and tidy technique would be to follow the precedents in our constitutional history, some of which are the Canada and Ontario Boundary Act of 1889, the Ontario Boundaries Extension Act of 1912, the Quebec Boundaries Extension Act of 1912 and the Manitoba Extension Act. There is also the Alberta Act of 1905, the Saskatchewan Act of 1905, the Alberta Natural Resources Act of 1930 and the Saskatchewan Resources Act of 1930. Surely there is no lack of constitutional historic precedent for taking that move.
January 20, 1981

It is interesting to highlight and contrast the approach as epitomized by my colleague and that of the Minister of Energy, Mines and Resources (Mr. Lalonde). On the one hand the government under Bill C-48 is taking hydrocarbon resources away from not only the territories, which is bad enough, but prematurely, before court action, from some of the senior provinces in confederation. It is not merely the simple act of taking these resources away which bothers me, but the attitude which can be found in the proposed Canada lands act.
There is a tremendous amount of discretion of a totalitarian nature in this bill. I will cite only one section of the proposed Canada lands act which bothers me in this respect, and it is with regard to the assessment of royalties. Clause 43(9) reads:
Proceedings in an appeal to the Federal Court of Canada under subsection (5) shall be held in camera on request made to the court by a party to the appeal.
Subsection (5) deals with royalty disputes. As a lawyer, Mr. Speaker, I sense that this must trouble you as well. This particular piece of legislation also talks about privilege. But to come back to the attitude and posture of this government, why in the world would a party to an appeal to our Federal Court in this country be directed-and there is no choice, the court is told-to hold proceedings in camera. Is this piece of legislation equivalent to the Official Secrets Act? Are we getting back to the same kind of infamous section which we see in the Federal Court Act, section 41(2)? This is the kind of attitude which troubles me, apart from the idea of taking away from the residents of the Northwest Territories and the Yukon valuable natural resources which is bound to impede their progress toward provincial status.
It is worse for the people in my own province and the Atlantic region to see our historic grants which were given to us, as was pointed out by the hon. member for Halifax West, by James I hundreds of years ago being totally ignored, as this government is ignoring the territorial claims of Newfoundland which were laid out when that province joined confederation. Then the government draws boundaries around our offshore lands and directs, thanks to this unparalleled ministerial discretion, any oil company, great or small, multinational or Canadian, as to where they shall drill, when production shall start, where the oil shall be stored, where it will be transported, where it will be refined, when it will be sold and what they will receive for it. Is that the kind of development which will help exploration take place in our offshore areas in Atlantic Canada and our territorial lands? 1 do not think so.
I do not believe that Bill C-48 can stand as it is presently drafted. I do not believe that any self-respecting company, whether it be in the petroleum industry or any other industry, would willingly work under such strictures. I see this Bill C-48, as opposed to the kinds of approaches espoused by the hon. member for Halifax West, as wrecking the chance for this country to develop the trillions of dollars needed to get us out of the unholy financial mess in which we find ourselves. I see it wrecking our chances for energy self-sufficiency, and I see it as being directly opposed to the traditional tenets of helping
Submarine Minerals and Hydrocarbons regions, helping people develop and giving them the resources to work with themselves.
After all, what the hon. member is asking for and our province follows the same philosophical approach that was once available to individuals, and still may be available in certain parts of this country, when lands were granted to people on the understanding that they would improve them, develop them and pay taxes on them for the greater good of the country. Surely, this kind of approach is preferable to this arbitrary, totalitarian grab for resources which is implicit in Bill C-48. 1 know, as the parliamentary secretary has said, that there are many problems inherent in a statute such as Bill C-48. There are bound to be some very tough negotiations as to what would be encompassed in these increased territorial grants to the provinces and the Atlantic region, but that can be worked out. It is not a great problem.
The attitude of this government is a problem, Mr. Speaker. This has been highlighted by putting the government on the spot by means of Bill C-226, and by pointing out that there is a just and equitable way to increase the economic potential and to redress past wrongs against the Atlantic provinces.
I commend this bill to the House of Commons. I hope my colleagues will give it sympathetic consideration; not talk it out, but let it go to the committee to see if it may not be the means of developing a different approach to offshore mineral and hydrocarbon development in the Atlantic region.
You probably know, Mr. Speaker, that at this very moment coal is being mined several miles off the coast of Cape Breton Island. This is not a very large precedent, but it illustrates there is no reason why a territorial grant of a substantial amount could not be made to benefit the Atlantic region. It would not affect navigation, fisheries or the rights of other maritime nations but it would greatly strengthen Canada's position in the years ahead.


Some hon. Members:: Hear, hear!


Hon. J. Robert Howie (York-Sunbury):: Mr. Speaker, I welcome the opportunity to join in the debate this afternoon and to support the substance of the bill before us. I should like to congratulate the hon. member for Halifax West (Mr. Crosby) who proposed the motion. I believe it identifies the very real problem that affects confederation and proposes a solution which is quite commendable.
In 1867 when Canada was formed, our land area was only a fraction of what it is today. British Columbia, Prince Edward Island and Newfoundland were not part of the dominion. The northwest, stretching from Lake Superior to the Rockies, was owned by the Hudson's Bay Company.
Two months after the dominion was formed in the federal election of 1867, anti-confederationists captured 18 of the 19 seats in Nova Scotia. Indeed, the following year a delegation of Nova Scotian politicians travelled to London to seek the repeal of the British North America Act. Two years later, in

January 20, 1981
Submarine Minerals and Hydrocarbons
1869, the Eludson's Bay Company agreed to sell its vast territory, which included the future provinces of Manitoba, Saskatchewan and Alberta, to the new Dominion of Canada for $1.5 million. Unhappy westerners who wanted no part of the new country instituted a rebellion under the leadership of Louis Riel. That is a moment in Canadian history. The creation of Manitoba followed, and Saskatchewan and Alberta were created in 1905.
Significantly, at the time of the Eludson's Bay sale of land to Canada, there were only four provinces, New Brunswick, Nova Scotia, Ontario and Quebec-Upper and Lower Canada. We might make a case that both Nova Scotia and New Brunswick had a one quarter interest in the newly-acquired land that was later erected into our western provinces.
It is a matter of history that in 1912 Manitoba, Ontario and Quebec were greatly expanded to include the lands to their north which were very thinly populated and essentially unsettled. The maritime provinces, on the other hand, had been land-locked and could not be similarly expanded.
I therefore suggest that New Brunswick, Nova Scotia and Prince Edward Island have an historic claim to that portion of the continental shelf that is owned by Canada and which joins their respective coast lines. A similar case can be made by Newfoundland.
The additional lands given to Quebec and Ontario just about doubled their land area, while the northern expansion of Manitoba to include parts of Keewatin, and the addition of parts of Athabasca and Assiniboine to Saskatchewan, more than doubled their original land areas. The addition of part of Athabasca to Alberta in consequence of its northern expansion just about doubled its land area.
In my view, it is quite significant that the tremendous resource wealth in these provinces is to be found to a great extent in the northern territories added to the original provincial boundaries. The pre-Cambrian shield around Hudson Bay in northern Ontario, the spectacular resources in northern Quebec and the energy resources in the western provinces are cases in point.
The natural area of expansion for the maritime provinces is in the coastal areas adjacent to their boundaries. In my view, the case is well made for the maritime provinces to have their boundaries expanded to include the coastal areas under the sea.
The maritime provinces have an historic, legal and moral claim to these areas. So, too, has Newfoundland. The Atlantic provinces, together, suffer problems related to regional disparity. One half of their provincial revenues are now in the form of transfer payments from the federal government.
I suggest to the House that the wealth contained in the offshore resources would help alleviate these problems and would certainly strengthen confederation. I should therefore like to support the bill introduced by the hon. member for
Halifax West whom I hold in great esteem and I congratulate him for introducing it.


Some hon. Members:: Hear, hear!


Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, I think this subject can be approached from a very non-partisan point of view. In 1957 I took over as minister of resources or, as it was called then, national resources and northern affairs. This was a new department of government which was created in 1953 because we had been regarding our north and other resources with a kind of absence of mind.
When checking through the records of that new department in 1957, I discovered evidence that the problem that has been raised today by the hon. member was already in the minds of the administration of the Right Hon. Louis St. Laurent. I spoke to the then leader of the opposition about it from a legal point of view, as he was very proud of his background and experience in that field. He said that he thought the only way we could expand the territories of the Atlantic provinces was to divide up the Gulf of St. Lawrence. Being a considerable authority on constitutional matters as well as matters of law, he proposed that the boundary line of the Gulf of St. Lawrence should run from Anticosti Island in the north, down to the Gaspe.
I enlarged on that idea, Mr. Speaker. I knew that the Department of External Affairs and my own department of northern affairs, in co-operation with all the other nations of the world, were working on what was called the international geophysical year. There was a worldwide conference which lasted two or three years, although it was only supposed to last a year and one half. I knew the kind of information that was being fed into that conference. The theory of how the continents were formed had changed dramatically from previous beliefs. All the current theories were being questioned. It was realized that the eastern seaboard of North America was once part of Europe, that we had been drifting apart and that the geology of the Appalachian region which runs from Greenland, through Baffin Island, down through the Labrador trough, the Atlantic provinces and into the northeastern United States, has the same geology as that of western Europe. The coal and iron mines of Germany, Sweden, Luxembourg, France and Great Britain are of the same structure as the coal and iron mines of the Appalachian region.
It was also abundantly clear, as the hon. member for Central Nova (Mr. MacKay) has pointed out, that this wealth does not stop at the high water mark but continues underneath the sea.
As part of the vision of the Diefenbaker period, we thought we could give the Atlantic provinces an equal chance with the prairie provinces, Ontario, Quebec and British Columbia by giving them enough territory with resource potential. We thought we could also give them an industrial strategy by combining in that area all the forms of energy we could get. For instance, coal, iron from the Labrador trough and the give-away gases from Venezuela, which we could get for long-term agreements at almost nil prices. We could build into
January 20, 1981

that whole structure an energy network which would give this part of Canada, with perfect position for trade purposes with Europe, Africa, South America and the Eastern Seaboard of the United States, with access to supply from the Arctic as well as the Labrador trough, one of the great potential mineral areas of the world, some form of hope for the future.
I visited various governments, including Quebec. 1 suggested that we consider such a scheme. I wanted to include Gaspe because geographically it is part of that whole picture. Gaspe could tie up with the Labrador trough. An energy network could be built crossing from Cape Breton to Newfoundland to Labrador, picking up the power in the Hamilton River, and bring it down to Quebec City, Montreal and New York. We could develop the Fundy tides, develop the coal and use the cheap energy from Venezuela. We could then build an energy base which would economically give that area one of the strongest that any industrial complex could have.
It is rather difficult when you first make a proposition like that to have unanimous support among administrative governments which are busy with their problems. All I could get out of that first round of discussions was what appeared on the books in this House in 1957, which was the Atlantic Provinces Power Development Act.
I repeat again, that act was not called an act for New Brunswick and Nova Scotia, it was called the Atlantic Provinces Power Development Act. I had the pledge of the Quebec government that it would co-operate to develop and participate in this industrial complex. In the actual act passed by this Parliament, as hon. members will see if they go back to read it, we were only able to arrange anything tangible with Nova Scotia and New Brunswick. That was the Beechwood project on the Saint John River, and the tying up of the two grids into a bi-province grid. We had long discussions with the province of Newfoundland about building that grid into Newfoundland and getting access to the power in the Hamilton River. All of this is history, but very important as a backdrop to what is in this motion today.
We missed our opportunity 20 years ago because there was a reluctance to give up that tremendously strong and historic pride which each of those island areas have. Nova Scotia is an island, connected a little bit with New Brunswick, Cape Breton is an island and so is Newfoundland.
However, I think I have said enough to point out that even though we did not succeed in achieving our full purpose in 1957-1958, we did succeed in going to the Law of the Sea Conference in Geneva and fighting hard for the fishing rights, along with all of the other causes we fought for, and we got unanimous approval that the littoral state could develop the resources at the bottom of the sea as far out until you met the other nation coming from the other side of the ocean with the technology of the time. That is the international law today, which was pointed out by the hon. member for Central Nova. We should take advantage of this opportunity even though it is 20 years later. We should push this idea forward because it is
Submarine Minerals and Hydrocarbons
unfair and inequitable to leave four eastern provinces which have not received the same treatment as British Columbia, Alberta, Manitoba, Ontario and Quebec have received out of this federal system and I think this motion could advance things very rapidly.


Mr. Pat Nowlan (Annapolis Valley-Hants):: Mr. Speaker, 1 will be brief. Bill C-226 introduced by the hon. member for Halifax West (Mr. Crosby) interests many from Atlantic Canada but, as the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton) said, its dimension is much wider than just the geographical parameters of Atlantic Canada. The hon. member for York-Sunbury (Mr. Howie) gave a historical review of the expansion of other provinces where a lot of the natural resources are now. The hon. member for Central Nova (Mr. MacKay) in his development of this matter shows the very real interest in it. But what has never ceased to surprise me in terms of the federal position versus the Nova Scotia and provincial position is that under our tax sharing proposals now and/or the equalization grants-let alone the cost of these imported oils-it is almost six of one and half a dozen of the other. If a province can develop that offshore mineral resource and thereby get the benefit and the money from it, then in time Nova Scotia or another province will become a have province in terms of the expected potential wealth. This will help offset what the federal government is paying now under the equalization formula. I was interested in the historical background which the hon. member for Qu'Appelle-Moose Mountain described. There is no doubt, as the hon. member for Halifax West said, the conflict has impeded development and we are losing out with this constitutional conflict on the shore.
I would just like to add that with the extension of the provincial boundaries, this will enable a province to develop its resource, in which all Canadians share. For instance, if the Nova Scotia revenue base is better, that province will then need less input and/or subsidy from many subsidized programs, let alone the basic equalization formula. Somewhere along the line I hope that the mandarins of the world will get together and say let us not impede development, let us expand it so that all Canadians can benefit. I compliment the hon. member for Halifax West for bringing to the attention of the House something which rankles eastern Canadians. We know at the moment there are more resources developed in the west. We do not begrudge them that. We obviously benefit from it in terms of sharing. We do not deplore the fact that as four of the original partners, the boundaries were extended to the western provinces and although we have a vicarious ownership in that land being part of the original entity, we are not small-minded Canadians. As the boundaries were extended for provinces in the west, and Quebec had its boundaries extended north, under the various statutes of this House, all we ask for Atlantic Canada is that we be treated the same by having the only land we have, which is under the sea, extended as proposed by the hon. member for Halifax West.

January 20, 1981
Income Tax Act


Mr. Doug Frith (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, I will be a very popular fellow among the Members of Parliament from Nova Scotia after I talk out this particular bill. In the short time remaining, I would like to explain-


The Acting Speaker (Mr. Blaker):: Order, please. I just want to advise the parliamentary secretary that he has succeeded in his purpose. It is six o'clock, and the time for consideration of private members' hour has expired. I do now leave the chair until eight o'clock this evening.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of the motion of Mr. MacEachen that Bill C-54, to amend the statute law relating to income tax, be read the second time and referred to the Committee of the Whole.
The Acting Speaker (Mr. Ethier):: When the debate was interrupted at five o'clock, the hon. member for Etobicoke Centre had the floor.
Hon. Michael Wilson (Etobicoke Centre) Mr. Speaker, I am pleased to see such an attentive group of members who have come back from a nice healthy dinner. I hope that during the course of the next 28 minutes I will be able to give them some knowledge of what the problems are in this country and what changes they might encourage upon their government to change the very difficult position we are in today.
When we adjourned for dinner, Mr. Speaker, I was talking about the problems which small businesses are facing in this country and the very serious concern which small businessmen have with respect to the Small Business Development Bond, which has not been introduced in as expeditious a way as that community had hoped.
The minister clearly had an opportunity to help the small business people who are facing very difficult times with the high interest policy which he is following. Under this bond, interest would be treated as a dividend and, therefore, would not be taxable in the hands of the financial institutions, such as the banks, the trust companies and so on. In that way the small businessmen would be able to raise money at about 60 per cent or 70 per cent of the normal interest rate. We are
talking about interest rates in the range of 20 per cent. The Federal Business Development Bank rate is at 22 per cent or 23 per cent today, I believe. That saving of 30 per cent to 40 per cent is a very significant amount.
The action we have seen is to extend this program for three months. By the time this legislation is passed, that will leave only two months. So, it is a very sorry and inadequate response to a very serious problem. Small business, the banks and other financial institutions have been waiting for over a year for action to take place. All we get is three months, one of which will have expired before the program is in place.
1 am concerned about loans which were made in 1980, before the legislation was passed, but in anticipation of the legislation. I hope we will have a quick response from the government with respect to the action they will take and what their attitude will be with respect to loans which are made during that period. These loans have been taken out in anticipation of receiving the lower rate, in those few cases where banks would allow loans to be taken out. If those loans are not subject to the higher rate, it will cause hardship to the businessmen in this area. When you look at them, the small businessman's problems really are the same problems as those of many Canadians. The economy today is mired in stagflation. We have high unemployment, high inflation and low economic growth. Can you think of one policy, Mr. Speaker, which has been introduced by this government during the course of the last 11 months which is attacking that problem? I have thought about that and 1 have looked around for policies. I have seen the knee-jerk response to the Chrysler problem, a policy response which seems to be falling apart at the seams right now.
We have seen the government's interest rate policy. I sat in the television studio with the Minister of Industry, Trade and Commerce (Mr. Gray) when he said under pressure from the interviewer that he would resign if interest rates did not fall from the high levels they were at this time last year. It is almost a year ago since he said that. I watched him squirm. He did not have the guts or the honesty to back down from the pressure the interviewer was putting him under. He allowed himself to be pressed into saying he would resign if interest rates did not come down after his party became the government. He made that comment in the heat of an interview. We all know of that famous statement: If you can't stand the heat, get out of the kitchen. The minister would do a great service to this country and to this House if he would get out of the kitchen.


Some hon. Members:: Hear, hear!


Michael Holcombe Wilson: The government has had an opportunity to get us out of this stagflation, and that is in the area of energy policy. In last year's report of the Economic Council of Canada, the council identified two areas of potential growth that were going to help the Canadian economy. The first area was the U.S. economy and the second was energy development
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policy in Canada. This year the council comments, and this was before the budget, that the U.S. economy has turned soft, so all we have left is energy development. As a result of the National Energy Program, all the signs are there to show it is an abject failure in generating economic development in this country. Those hopes which were expressed a year ago have now been dashed. It is a disastrous policy and it has to be changed. We have just seen a litany of criticism of the national energy program before the National Energy Board.
A National Energy Board hearing has been called to look into the area of supply, and we have evidence that we are not going to see the balance of supply and demand which has been projected by the National Energy Program in 1990. Instead we will see imports in this country of 600,000 barrels per day, about one third of our requirements. That is the evidence from a number of very knowledgeable observers in the industry. That is the problem we have to face in this country, and it will mean a tremendous outflow of capital just to purchase that oil. We have the opportunity to reverse that if we can get our house in order here. If we do not, we will find that the government is sacrificing jobs, sacrificing energy security, sacrificing economic growth into the 1980s and sacrificing the development of high technology in these new areas of energy development. It is doing this with a program which is the most ill-conceived anybody in this country could imagine. The voices are clear, whether it is from the Independent Petroleum Association of Canada, representing Canadian owned companies, the Royal Bank of Canada, the Canadian Manufacturers' Association, the C. D. Howe Research Institute or the Economic Council of Canada. The evidence is all there and it could not be more powerful, yet the government is digging itself into a bigger and bigger hole by promising no change. The government is going to stick with its policy, damn the torpedoes.
It is not enough that security of supply in this country will be threatened through higher and not lower imports, and through a very insecure world with the things going on in the Middle East, but in addition, jobs are being lost. That is the subject I would like to address this evening.
We have heard the Canadian Association of Oilwell Drilling Contractors advising us that oil wells drilled in this coming year will be down from the anticipated 10,000, and the actual 9,000 wells which were drilled last year, to 6,000 or possibly fewer.
That is the leading edge of a much greater problem which is going to affect other parts of this country, particularly Ontario and Quebec. It is in Ontario and Quebec where the compressors, the tubing, the steel, the trucks and the electronic equipment are produced. Alberta recognizes it cannot produce that equipment in that part of the country and it has to look to us. It will be communities like Welland, Hamilton, Stratford, Mississauga and maybe even Etobicoke, Orillia and Ste. The-rese; many communities in this part of Canada, which will suffer. In the area of oil sands development, 40 per cent of the economic development from those projects affects western Canada, but 25 per cent affects Ontario and 10 per cent to 12
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per cent affects the province of Quebec. This is not just a western problem, it is a Canadian problem.
Let me describe the significance of this as it relates to Bill C-54. What is significant is the impact of the tax on oil and natural gas. Consumers will have to pay the price, regardless. We sometimes tend to forget that, but in the end result it is the consumer who has to pay.
The federal tax grant will be three times higher than that in the December budget; $37.5 billion as against $12.5 billion in the December, 1979 budget. It is not just the amount of the tax we are talking about. It will be high, but it is the impact of the tax I want to address this evening.
Let us look at the reasons the National Energy Program is such a disaster and so ill-conceived in the area of self-sufficiency, Canadianization andjCanadian unity.
We had set self-sufficiency as the number one objective in our program. When-you ask what should you tax and what should you be trying to do through your tax system if you want self-sufficiency, you must conclude that you should try to encourage production and you should try to discourage consumption. We left the industry free to go out and develop the resources of this country. At the same time, we put on an excise tax to try to dampen consumption.
What is the Liberal policy? It has taxed production through the 8 per cent production tax and it has made natural gas exploration and development less profitable by introducing an excise tax on natural gas. This government is holding down production, and through low prices it is encouraging consumption. How backward can you be if you are trying to achieve self-sufficiency through your tax policies?
Let us look at Canadianization. Our policy was to encourage the acquisition of shares in this country by Canadians. I discussed the Canadian investment program earlier in my remarks. We encouraged the growth of the industry. Over the past ten years we have seen foreign ownership of the industry drop from 90 per cent to 70 per cent, and it was going down further.
What has happened as a result of this Liberal program? It has taxed production and that tax is going to hit the Canadian industry much harder than the multinationals because the Canadian industry is primarily production oriented.
That is their operational base, and they have a smaller capital base, but the multinationals have all the petrochemical manufacturing and marketing over which to spread that tax load. The multinationals are in a relatively better position as a result of this budget than the Canadian companies which we want to help the most. That is the problem with respect to the impact of the taxes which are levied under this budget and which are part of this ways and means bill. The result is that independent Canadian-owned companies are redirecting their investment activities offshore, and the multinationals are saying, "We will get by; we can make it through." That is the tragedy of this budget.

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The House will recall that I was concerned about the incentive to save being reduced by this government, possibly in the next budget. The concern I expressed was that a void would be created into which the government might have to move to do the things which are not being done by the private sector because of the lack of investment capital.
I see that this energy program is creating the same kind of void in the oil industry. The multinationals will be stalled because they are not getting access to the exploration incentives they had before. The independent companies are weakened and are moving out. What does that leave? We must develop our energy resources in this country. It only leaves the state to do it, and that, apart from being something I believe is wrong philosophically, is wrong in very clear practical terms because the oil industry has always benefited from good, keen competition.
If I might remind hon. members of the West Pembina discovery about two or three years ago, that West Pembina field was like Swiss cheese. It had been drilled and drilled over the years, but someone came along with a new idea and said: "Let's try another way; we will go down deeper; we will go down 12,000 feet instead of 5,000 or 6,000 feet." That was the biggest oil discovery Canada has had in the last few years. That is why competition and a number of points of view and a number of ideas being brought to bear on a problem will discover oil and gas reserves in this country. That is why I think it is wrong to concentrate too much power and too much decision-making power in the state.
The desire on the part of the government to create these voids for the state is a very disquieting trend to me and to our party. We must be alert to this, try to stop it and draw it to the attention of people in this country because the implications will be bad for Canada.


James Scott (Jim) Peterson: Don't exaggerate.


Mr. Nielsen:: Have the guts to stand up.


Michael Holcombe Wilson: The final dangerous impact of Bill C-54 and the National Energy Program is the impact on Canadian unity. Again let me discuss this from the standpoint of the impact of the tax because that is what we are here for this evening. There are two key taxes in the National Energy Program. One is a production tax, which is basically a royalty. The other is a natural gas excise tax, which is basically an export tax or a wellhead tax. We can call it by different names, as the minister did in his budget, but it is still an export tax, and it is still a wellhead tax. Surely there are other ways by which the revenues the federal government wanted could have been raised, but no, it has chosen to do this and to have a head-on conflict with the producing provinces, which has led to the production cutback with which no one on this side of the House is happy.
We think that there have to be other ways of proceeding, but this is what has happened. Oil sands projects and the Cold Lake heavy oil project have been stopped. There has been an increase in the degree of alienation on the part of people in
western Canada. I urge the government to make changes with respect to the impact of these taxes so that we can move ahead in this important energy area in the fields of self-sufficiency, Canadianization and national unity because we will all suffer if changes are not made.


James Scott (Jim) Peterson: Tax the consumer is what you are saying.


Erik Nielsen: Have the guts to stand up if you have something to say.


Michael Holcombe Wilson: There has been some suggestion that the province of Alberta will cave in with respect to oil sands development and that it will allow oil sands development projects and heavy oil projects to go ahead. However, that is misleading and it is a misreading of the problem. Alberta's problem today as a result of the National Energy Program is not in the oil sands area; it is in the conventional area. That is where jobs are being lost today. Canada's problem is in the oil sands.
Alberta's problem has to do with conventional discoveries and the fact that work is not proceeding in the conventional field. The solution- ot Canada's problem is to solve Alberta's current problem, and that means an agreement on conventional as well as megaprojects. That is why we need a total energy package, and time is very much of the essence.
I think we all noted last week that Nova, an Alberta corporation announced its application respecting a $570 million ethylene project. There are others to come. Others are sitting waiting for approval to go ahead from the Alberta government. If these proceed, as my colleague, the hon. member for Athabasca (Mr. Shields), said the other day, and then the megaprojects are piled on top of that, there will be tremendous social and economic strain in that part of Alberta. That is very much a concern to people in that part of the country, and we in this House must understand that because the pressure on the consuming provinces is there now. We in Ontario or Quebec-in the eastern part of the country- should recognize that we must come to grips with this problem in Alberta. We must understand Alberta's problems if we are to find a proper solution to the deadlock we are in today. That is why I say that the Government of Canada must change the impact of the taxes in these three areas.
In devising ways by which those changes are made, I think it is important that the federal government respect the jurisdiction of the province of Alberta in such a way as to encourage production, conservation and Canadian ownership.
From time to time hon. members opposite have said that we on this side are apologists for the industry or that we are looking out for the interests of multinationals. I do not feel sorry for the multinationals. I do not feel sorry for the independent companies.


Mr. Regan:: You don't?


Michael Holcombe Wilson: However, I do feel sorry for people in Nova Scotia, Toronto or Montreal. Those are the people who will suffer. The independent producers put out some figures about
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a week or two ago which show that there will be a little blip in their profits, but then they will be on the way back up as a result of the program. However, that misses the point that if the independent companies and multinationals are not able to produce what we are capable of producing in this country, we will all suffer through lack of economic growth, insecure supply and possibly the breakup of this country.
In closing, let me point to one area in which 1 believe Bill C-54 is deficient. There is no relief for low and middle-income earners. There is no relief for farmers and fishermen under the National Energy Program. Hon. members will recall that back in December of 1979 we introduced an energy tax credit which did provide these elements of our society with some relief from higher prices. There is no doubt in my mind that there will be higher prices as a result of this energy program. The prices will probably be much higher than they would have been had we concluded the agreement which was clearly in place in December of 1979. The hon. member for St. John's West (Mr. Crosbie) proposed relief, and I urge the government, when it brings in these changes-and I say "when" not "whether" or "if'-to have regard for the proposal made by my colleague, as it has in practically every other area of the ways and means bill. Very few have been left out. That is the nature of the genius of the budget of December, 1979. It is all coming home to roost.
I ask members opposite to bring in this energy tax credit and so protect the people in this country who are less able to protect themselves. That is the only decent and humane way of handling what is going to be a problem of higher energy prices in this country. That is a plea that I leave in front of hon. members opposite.
Finally, to sum up, I urge the government not to discourage the creation and development of savings in this country, because if we introduce policies which will result in a reduction of savings and an increase in the inflation rate in this country, we will be rewarding spending, and when you couple those two elements, it will lead in the direction of weakening the productive capacity of this country to create jobs, to create new plant equipment, to create new technology. When we look ahead to the 1980s with the tremendous volume of investment capital that must be put in place, whether it is in energy manufacturing, mining or forest products, we find there is a huge demand for capital ahead of us. We must encourage savings to enable the financing of job-creation investment which is required in this country. Second, we must extend the Small Business Development Bond by at least nine months so that we can look forward to a full year of that very worth-while instrument. Finally, we should revamp the National Energy Program to change the tax impact and to bring in the energy tax credit.
Those are only a few of the steps necessary for this government in order to regain the confidence of the people.


Mr. Ralph Ferguson (Parliamentary Secretary to Minister of State (Small Businesses)):: Mr. Speaker, the Income Tax Act before this House today has a number of timely provisions
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that are of particular interest to our economy, our industry, our business sector, our farmers, our fishermen, and Canadian taxpayers in general.
Reflecting on the comments of the hon. member for Etobicoke Centre (Mr. Wilson) regarding the Small Business Development Bond. I would remind him that, first of all, the passage of this act makes the Small Business Development Bond issue retroactive to December, 1979. These development bonds must not be less than $10,000 and not more than $500,000 for the issuer in the case of a Canadian-controlled corporation. The borrower, however, cannot deduct those interest costs as an expense, nor does the lender have to pay tax on the interest income.
The legislation has been available to the public since June, 1980, and the public was advised that it was to be retroactive. While this was intended to be a break for the small business people, I am alarmed at the fact that some lending institutions have been reluctant, particularly in rural communities, for various reasons, to give loans under this provision. Perhaps it is partly related to the fact that the lending institutions can make more money or gain a better net return by charging 2 per cent or 3 per cent over the bank prime rate. However, the passage of this bill will enable the lender to treat the interest payments as dividend payments. Therefore, they will be able to reduce the rate of interest charged on these loans. Thus a bank or other financial institution which would otherwise pay income tax of approximately 50 per cent on such interest should be able to offer rates which are approximately half of the rates charged on convention loans.
As I indicated earlier, there was some initial slowness in the acceptance of the small business development schemes. The proposed draft amendments were initially issued in June of 1980 as some lending institutions were reluctant to make contractual arrangements until these were available. After the details were made known, a period of time was necessary to design and initiate the schemes. It was because of these factors that the period of eligibility was extended from the end of 1980 to the end of March of this year, 1981. However, most major institutions now have these intruments available and loans are being made. I now expect the measure to be of significant benefit to small businesses.
The intent of this act, which incidentally continues the indexation concept, in reality meets our needs. The provision of an exemption for the volunteer firemen, for example, recognizes the contribution that these people make to their communities by contributing their time and expertise to ensure the safety of their homes, their families, their places of business, and to ensure that their communities are protected against fire and other hazards.
When the alarm sounds or the call comes, these persons drop whatever they are doing and answer the call for help. In many cases they are dressed in business clothes or suits that are not washable and which become soiled or damaged so badly that they must be replaced, and these people have had to pay the cost themselves. Therefore, the increase in the exemption has been raised to $500. It is welcomed by the volunteer
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firemen across this nation who contribute much of their time to ensure the safety and well-being of our citizens in the towns and villages, and particularly in the rural sectors of Canada. I am pleased to see this exemption included in this legislation. Again it is retroactive to January 1, 1980.
Another of the priorities of this act is to recognize the needs of the family operated small businesses which could include farmers, fishermen and all types of unincorporated businesses where husband, wife and family members work together as a team.
One of the reasons I entered federal politics was out of a sense of obligation, to ensure that the quality of life in rural Canada was preserved, maintained and enhanced. That quality of life is found in the towns, the villages and the rural countryside where there is a different set of values from those in the larger centres; a quality of life that reflects and respects the needs of others, a quality of life that is conducive to working together with a deep sense of appreciation and accomplishment.
As I travelled across this nation on many occasions through the towns and villages, past the family farms, 1 could not help but be impressed by the fact that so much time, effort and ingenuity had been invested in developing this nation. Canada was not developed from urban sprawl but from a strong and vibrant rural base which has spread from coast to coast. It was developed by people who invested and worked to improve and maintain their operations, people who believed in their creator, people whose first sense of obligation was the family unit.
Rural Canada is not only a way of life for those thousands of individuals who have chosen to work, to live and to raise their families away from the crowds and the hectic pace of the large city, but rural Canada is the sound economic base of all of society. Rural Canada and its contributions to our economy makes Canada one of only four nations in the world that are net exporters of food.
Whether we travel in the east, in central Canada or in the west, that quality of life is the same, and it provides an education for life. No other occupation teaches so much about birth, growth and maturity in such a variety of ways, about the splendour of the sunrise, the rapture of wide open spaces and the exhilarating sight of land greening each spring. This is the part of Canada where a person expects to give more to the world than he takes from it, where life is measured by what he has done for his fellow men, and as he sums up his days, he can stand tall and feel pride in the life he has led.
Small businesses and farms are interdependent upon each other to provide services and food for this nation. Small businesses supply 42.5 per cent of the jobs in the private sector. Gross farm receipts last year were over $ 14 billion, and we exported over $6 billion of this to contribute to our balance of trade, yet only 1.3 per cent of our total budgetary expenditures are spent on the agriculture sector. This is because farmers and small businesses are the product of a society dedicated to the work ethic and the ability of individuals to
work co-operatively for the common good. In spite of the fact that our percentage of the total expenditures is so low, we are the most productive in terms of output per man in the agricultural sector of any nation of the world, and our research in this sector is among the best. We have provided our people with the best quality and the lowest cost food in the world, but Canadian farmers are the least subsidized of any nation and have the most stable income. Perhaps some day those producers will be like those brave people of World War II described by Sir Winston Churchill when he said, "Never have so many owed so much to so few."
It has been unfortunate that through the years the very people and entrepreneurs who epitomize the essence of rural Canada and the small business service sector have been discriminated against by our tax structure. I refer to spouses affected by the attribution rules which in the past did not allow a taxpayer to deduct as a business expense remuneration paid to a spouse who worked in an unincorporated business. Also it should be noted that any remuneration received by the spouse is not considered to be her income. As well, where a member of a partnership employs his spouse, a proportional part of the spouse's remuneration relating to her share of the business is deemed to be his income and not that of the spouse. Although I am mindful not to assume that the spouse was always the wife, in the vast majority of instances this has been the case. The law has been seen to discriminate against thousands of women who worked with their husbands in the operation of their family farms or in the establishment of small businesses.
The ways and means motion introduced on April 21, 1980, by the Deputy Prime Minister and Minister of Finance (Mr. MacEachen) included the proposed amendment to the Income Tax Act which would remove the attribution rules with respect to the remuneration received by a spouse of a taxpayer employed in his business or partnership. Draft legislation regarding this matter was prepared and published in August. I hasten to add that appropriate amendments to the Canada Pension Plan have also been prepared.
So that no further inequity or hardship may be encountered by the people affected by the law, amendments to both the Income Tax Act and the Canada Pension Plan are intended to be retroactive to January 1, 1980. I am pleased to endorse this major change in the Income Tax Act which will be of benefit to so many Canadians from coast to coast.
Another provision of Bill C-54 is the extension of the investment tax credit to a level of 50 per cent for specified regions of the country. I would anticipate that such regions, when defined, would be areas which have suffered hardships over the years for many reasons. Some of these regions no doubt would be victims of modernization and advanced technology which has rendered their particular industries obsolete, or it may be a region of this huge nation which, due to geographical location, has not developed as quickly as the rest of Canada.
Regardless of the reasons, the existing investment tax credit is a measure which allows for a tax credit for equipment
January 20, 1981

purchased on a farm or in a business. This additional tax credit is an incentive which will allow for new capital investments made between October 28, 1980, and before 1986. This new investment tax credit applies to plant, machinery and equipment for manufacturing or processing as defined under the Regional Development Incentives Act. Such investments will be entitled to a 50 per cent investment tax credit. This compares with the existing tax credits of 7 per cent, 10 per cent or 20 per cent depending upon the region where the investment is made.
I am pleased to speak on behalf of this powerful incentive for investment in the slower developing regions of this nation which do not have the potential resources some other regions enjoy. When the Minister of Finance presented his budget, he indicated that the concept of sharing seems to be close to the distinctive fibre of the Canadian tradition. This concept of sharing, whether it is in equalization payments to the poorer provinces or increased incentives for development in those provinces, has one common objective-equality of opportunity for all Canadians.
The bill before us today is part of a package which will ensure the continuance of our high standard of living, ensure that increased personal exemptions are of assistance to all Canadians, and as a result of continued indexing, ensure taxpayers will not be pushed into a higher tax bracket by increased income which merely keeps pace with inflation. Also, I point out that indexing the refundable child tax credit maintains its real value.
Last but not least, this afternoon the newly-inaugurated President of the United States spoke of a new beginning and the need for an end to inflation. If we in Canada are to maintain a positive growth in our economy, then the Income Tax Act must be an integral part of the budget which will reduce our deficit over the next four years, enhance our share of world markets, and increase our energy price structure in an orderly manner which will assist in the fight against inflation. Previously, for every dollar the price of oil rose, the inflationary impact was about one half of one per cent. Therefore, by implementing the energy price increases in a planned and structured manner as we have, the economy will strengthen, we will encourage expansion in those poorer regions referred to earlier and be cushioned from inflationary pressures. The bill is designed to lower our deficit in a way that will not stagnate our economy. As the interest rates moderate, which has been the trend in the last four weeks, the Canadian dollar will strengthen. This was the case today; it closed today at 84.07 cents United States.
Bill C-54 provides the balance required to ensure a continuation of sharing and equality, the basis upon which the nation was built. Sharing and equality are the mechanisms which will build a stronger economic base and ensure an even brighter future for all Canadians.
Income Tax Act


Some hon. Members:: Hear, hear!


Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, before commencing, I would like to congratulate the hon. member for Lambton-Middlesex (Mr. Ferguson) on his well read but rather soporific departmental style speech. The subject under discussion tonight is Bill C-54, which deals with supposed amendments to the Income Tax Act. At least, that is what it was described as in the ways and means motion which was introduced in the House on January 12 by the Minister of Finance (Mr. MacEachen).
However, upon reading the bill and turning to the first page, we find that it not only includes amendments to the Income Tax Act, but that it also contains a $14 billion borrowing authority. It was bad enough that Bill C-30 was brought in last year asking for $ 12 billion borrowing authority. It seems to be going up by $2 billion per year. I believe hon. gentlemen opposite were trying to sneak this by on us. It is yet one more sneaky trick in a very long line of Liberal sneaky tricks. But fortunately, Madam Speaker, when this matter was raised as a question of privilege a few days ago, ruled in favour of the view put forward on this side of the House, that insufficient notice had been given for the introduction of this matter. She ordered that the bill be reprinted and that proper notice be given on these important matters.
This type of action, this sneaky behaviour on the part of the government will not do. We will insist that the Liberal borrowing plans be brought out into the open, that they be inspected and investigated under the full light of day. In the election campaign of one year ago, promises were made by members opposite to the effect that they would work toward a balanced budget and that they would engage in responsible financial and fiscal policies. Canadians know that after years of Liberal misrule, the finances of this nation are in one horrendous state. Yet, they were once again conned into voting for that very party and, indeed, that very Prime Minister (Mr. Trudeau) who had got them into the mess in the first place.
Where are the promises of financial responsibility now when the government is looking for this $14 billion borrowing authority. I would suggest that, like some other Liberal promises, they have just gone by the board. Before approving this borrowing authority, there are things which Parliament will want to know. Parliament will want to know to what use the money is to be put. Is it to pay for yet more current account expenditures?
As an example of this, we can cite the oil subsidies which have been provided to eastern Canada and Quebec for some time. Are we borrowing money so we can burn it up, so to speak? Is that what the government proposes to do with the money it borrows and which will eventually have to be paid back with interest by Canadian taxpayers? Or is it, for instance, to be given to Petro-Canada so that it may carry out the policy imposed on it by the government, that of buying out existing oil companies in this country, an action which will not result in one additional barrel of oil being produced? Or, is it

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to drill for oil wells in Senegal, instead of Alberta or the Northwest Territories.
Parliament will want to know what type of borrowing plan is in existence and where the money will come from. How much of this money will be borrowed abroad on world financial markets? In so doing, to what extent will Canada's future become mortgaged to foreign lenders or, if we are to borrow parts of this money in Canada, what upward effect will it have on the already high interest rates in this country? If we borrow these very large sums, and I noticed that in today's newspapers there were reports of borrowing, just today, of $1.5 billion, if the government takes out that surplus capital which has been saved by the people of this country, how much will be left for the private sector? What interest rates will the private sector have to pay for the use of that money?
I suggest that this House remains dissatisfied with the reckless spending and borrowing of the government and that it demands the pursuit of responsible financial policies, which will strengthen, not weaken, Canada as a leading nation of the western world. So much for the borrowing authority aspect of the bill. Now I would like to look at the income tax amendment provisions in general.
In looking through the provisions of the bill and, more particularly, the ways and means motion-and I must admit that I have a certain amount of difficulty, which I am sure is shared by most members of the House, in reading this taxation legislation in detail-one must give a certain amount of credit to the Minister of Finance, credit to the extent that by and large when it comes to the technical provisions of the bill, he has been intelligent enough to follow the lead of the hon. member for St. John's West (Mr. Crosbie), a man of undisputed financial acumen.
However, there are certain very important omissions. In their lust for yet more and more of the Canadian taxpayers' money, his hardgot gains, our colleagues opposite completely forgot about the humanitarian aspects of the Crosbie budget. In their lust for more control over all parts of the daily lives of the citizens of this country, they deliberately omitted those aspects of the Crosbie budget which would strengthen the private sector and assist the small investor.
Let us take a look at some of those omissions. Although it is not really an omission, I would like to merely mention the Small Business Development Bond because a number of speakers on this side have already referred to that topic. I would like to mention some of the other omissions. Probably most important is the energy tax credit which would have been brought in had the Conservative government not been defeated just a little over one year ago. People throughout the country and members of this House have to recognize that energy costs must rise. It is inevitable; it must happen. Under the Crosbie budget, measures would have been brought in which were designed to alleviate the burden which falls disproportionately on the less fortunate. It is not so in the present budget or with the amendments to the Income Tax Act which are being considered in this legislation, which socks it equally to both the rich and the poor.
The provisions laid down before us do not include the amendments which we would have introduced to the Income Tax Act, namely, mortgage deductibility, to give people the opportunity to own their own homes, thereby stimulating the Canadian construction industry in these times of hardship.
The Liberal approach is entirely opposite. By the deliberate retention of unnecessarily and unnaturally high interest rates, they again sock it to the average Canadian and they destroy any hope that the average Canadian has of ever owning his own home.
Now I come to a couple of omissions with respect to the measures that we would have taken to encourage investment, especially by the small Canadian investor.
Let me deal first with registered retirement saving plan investment. If you recall, Mr. Speaker, this was the system whereby taxable dividends paid into RRSPs would only be taxed at the capital gains rate rather than the income rate when that money was withdrawn from the plan. That was a simple yet effective treatment of taxable dividends from an RRSP, which would have benefited small Canadian investors and would have helped them put money into Canadian industry. This, in turn, would have helped industry finance the expansion we all wish to see.
Along the same lines, we could talk about the Canadian common stock investment plan. Perhaps I should refresh the memory of hon. members about this, which was a plan to be administered by a trust company under instructions from the investor. The capital gains on Canadian common stocks in the plan would not be taxable until withdrawals were made. This would, in effect, be a system of tax deferral for the small Canadian investor. Presumably when he drew money out of the plan, it would be at a time when his rate of taxation would be less than when he was building the plan up and it would therefore be to his advantage because he would pay not only a deferred tax, but a lower rate of tax. This was a measure designed to help the small Canadian investor invest in the future of this country.
This aspect of the Crosbie budget is missing, presumably because the government does not want Canadians to directly own Canadian industry. They are opposed to the view that Canadian citizens should own-and when I say "own", that necessitates that they be able to dispose of their holdings- because they have their own plans for the nationalization of industry. They want industry in this country to be under the direct control of government.
I could go on listing measures that would have helped farmers, fishermen and plain ordinary Canadians in general, but by now I think hon. members will realize that the sins of this government, in this particular instance, are not those of commission because what they have done is basically good; it is based upon what the former minister of finance, the hon. member for St. John's West proposed some 14 months ago; rather their sins are sins of omission. They have omitted the
January 20, 1981

interests of the Canadian population, those interests which the Crosbie measures would have done so much to protect.
Perhaps, Mr. Speaker, for a few minutes you would allow me the opportunity to digress from detailed study of the measures and to talk in terms of general taxation philosophy.
Let us try to examine the differences in the philosophy of taxation which divides this House, one side from the other. On one side we have our colleagues in the Liberal Party, supported by their NDP bedmates. As they have stated so many times in unison, the prime objective of taxation in this country is the redistribution of income. That is really why they engage in taxation, because they want to redistribute income from some people to others and, presumably, mainly to themselves. Under such a theory, rates of taxation would remain very high even if there was no real need whatsoever for the money.
Although most people in Canada would support some form of progressive taxation based to a certain extent on the ability to pay, our colleagues opposite and to our left have taken this to the extreme with results that not even they expected. They have created a monster government which seeks to control and regulate every aspect of every Canadian's private and public life; a monster with an insatiable demand for yet more and more money.
Who provides this money, Mr. Speaker? Which section of the Canadian population? It is obviously not the poor because they do not have any. It is not the very rich for two reasons: first, because they are not very many of them, and, second, because very wealthy people can hire the right advice, the right lawyers, the right tax accountants and thus largely avoid paying a high rate of taxation. In the final analysis, people can leave the country. I understand that some have gone to that extreme.
The brunt of the Liberal and NDP high taxation policy is borne by the average Canadian. It especially falls on the wage earner who is unable to protect himself. Because of deductions at source, the taxpayer often does not realize what is happening. Sometimes I think it would be a good idea if deductions at source were to cease altogether and at some point in the year the taxpayer wrote a cheque to the Receiver General of Canada for $5,000, $10,000, $15,000 or whatever amount was due. He would then see how much money this government is taking out of his pocket and would realize the burden that is being imposed upon him.
Of the wage earners who are so badly hit, it would be, in my opinion, that those getting it in the neck, the miners, loggers, construction workers-people who work very hard and often in unpleasant conditions and as a consequence earn more and in my opinion in consequence deserve more-are the people who really get it socked to them. They are the people hardest hit by the Liberal and NDP lust for yet more and more public revenue, a lust that is bleeding the country dry. The policy of creating a socialist paradise with everyone reduced to the same level of mediocrity has been a failure. It has not worked and has resulted in practically everyone paying into the taxation system more than they should. On the other hand, we on this side of the House take the view that the interests of Canadians
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are best served by minimizing the impact of taxation. Of course, we have to raise revenues. All governments have to do the things which legitimately fall within the sphere of government, in order to provide for a national defence, to operate a justice system, and to undertake necessary and advantageous public works. These are the types of things on which governments have to spend money and for which they have to raise money. But on this side we never forget that every dollar spent by government comes, in the final analysis, out of the pockets of the citizens of this country.
There you have it in brief, Mr. Speaker. On the one hand you have the Liberal-NDP view. Let me reiterate. In their view you have high taxes, a complicated and manipulative tax system with the brunt of the tax system falling on the hardest working and the most productive Canadians. On the other hand, you have the Progressive Conservative view of low taxes, taxes as low as possible commensurate with the government doing its legitimate job. This is a simplified and equitable tax system, one designed to stimulate rather than stultify initiative and enterprise.
I want to say a few words on a subject very dear to my heart, that is taxation as it affects the northern territories of this country. First, I would like to congratulate the Yukon Territory in following the lead of the Northwest Territories in imposing their own territorial income tax. I notice that there are provisions within Bill C-54, which amount to enabling legislation.
In general, especially as it applies to federal income tax in the north, we must point out that of all the inequities in the taxation system, one of the most unfair burdens falls on the people of the northern territories. Unlike, say in Russia or Denmark, Canada seems to go out of its way to dissuade people from going into and living in the northern areas except those working possibly for the government or large companies.
The problem with taxation comes down to this: in the north living costs are considerably higher. According to statistics, they are anywhere from 25 per cent to 100 per cent higher than in the south. Because of the progressive nature of the income tax system, something like this happens: for someone earning $20,000 a year in the south with an income tax rate of 25 per cent, they pay $5,000 in taxes. But to enjoy the same amenities of life in the north, a person would have to make, say, $30,000 a year. However, the tax on that $30,000 is not in proportion. It is not $7,500, it is probably $10,000, giving a tax rate of 30 per cent. In effect, what you have is a higher rate of taxation for those people living in the north than for those living in the south. Governments and large companies give certain benefits to employees, especially for vacation travel and housing allowances to compensate for some of the more expensive aspects of living in the north.
Hon. members are all aware of the recent history of northern taxation in that until a year ago these benefits were not taxed, although they were supposed to be under the Income Tax Act. Governments had up to that time turned a blind eye

January 20, 1981
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to them. When the Department of National Revenue went out of its way to start levying taxes on these various benefits, there was a public outcry. This problem has been addressed by the Minister of National Revenue (Mr. Rompkey), who appears to be fairly sympathetic to the interests of northerners, if for no other reason than he represents Labrador. A remission order on the collection of certain taxes has been issued. It was initially issued for a period of one year, expiring on the last day of 1980. That date has now been extended to 1981. However, it is just a temporary measure, and everyone recognizes it as such. It still has many inequalities built into it. For instance, certain vacation travel allowances are not taxed whereas an educational travel allowance is taxed. That is obviously very unfair. The only real solution to these problems is to adopt measures similar to those adopted in Australia.
We need to amend the Income Tax Act to allow for some form of tax credit or to allow for a deduction for those people who make their home in northern Canada. As I said just a moment ago, we have reason to believe that the Minister of National Revenue is rather sympathetic to this view. On this side of the House, the hon. member for Prince George-Peace River (Mr. Oberle) has been active in developing possible schemes which could be put into effect. Other representatives of northern interest, such as northern governments, employer organizations, such as the Chamber of Commerce and the chamber of mines and employee organizations such as the various unions and the Northwest Territories Federation of Labour, made submissions along the same lines.
Let us hope the Minister of Revenue can persuade his colleague, the Minister of Finance to make the necessary changes in taxation policy which will take note of some of these common sense proposals.
Could you advise me how many minutes I have remaining, Mr. Speaker?


Mr. Deputy Speaker:: The hon. member has approximately 11 minutes.


Dave Nickerson: I have some comments in closing which concern the costs of raising revenue in this country. Today I was reading an interesting publication called "Inside Taxation" which was published under the authority of the Minister of National Revenue. Two figures caught my interest. Apparently in 1970 it cost 79 cents to collect S100 worth of taxes. Ten years later, in 1980, the cost was SI.09 per $100 worth of taxes. In that ten-year period there has been an increase of 30 per cent. That is a real increase which is not due to inflation at all. In that time the $100, so to speak, has been subject to inflation as has everything else. It is a real increase in the cost of collecting revenue by the Government of Canada of something over 30 per cent in that ten-year period.
I would attribute that to several factors. First is the increase in the complexity of the taxation system. The Income Tax Act, and this is only a small part of it, in fact only a few amendments have been proposed as a result of a ways and means motion, but every year the Income Tax Act and the regulations made thereunder and various Treasury Board rules all
combine to make taxation much more complicated than it needs to be. I recognize a necessity that it be fairly complicated, but I think it is getting out of hand. Second, in that ten-year period there has been an increase in tax rates in general, and the more money you make, the higher precentage you pay in taxes. The more incentives there are for you to avoid, or even occasionally evade taxation, the more taxes you pay. Of course, if that happens, then the more money the Department of National Revenue must pay to enforce that legislation, to force people to pay and prevent them from evading taxes.
There has also been a fantastic increase in the amount of paperwork which must be processed by the Department of National Revenue. I understand that the child tax credit provisions which were brought in necessitate the processing of an additional 1.5 million returns a year. In general, I think the people who work for Revenue Canada are doing a good job, even if it is with no help from their political masters. But because of the factors which I have cited, it seems that the cost of collecting taxes in Canada is escalating very rapidly. In comparison with many other countries, I still think we do a good job. The cost of collection is still just a little over 1 per cent. I understand in many countries it is significantly higher than that. But, in my opinion, it is a trend which must be watched. We should try to make the necessary changes to our taxation system so that those increases in the cost of collection do not continue to grow higher and higher.
In conclusion, Mr. Speaker, I would be prepared to vote in favour of most of the provisions contained in Bill C-54 derived from the ways and means motion. At the same time, I would record my objection to several of the many important omissions which I referred to previously-omissions from the original Crosbie proposals. As far as the $14 billion borrowing authority is concerned, let us separate it and deal with it as it should be dealt with; that is, as a separate piece of legislation on which we can have a full-scale debate to find out what the government's intentions really are.


Some hon. Members:: Hear, hear!


Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, I must say that I listened with a great deal of fascination and some surprise to the comments of the member for Western Arctic (Mr. Nickerson).
I must say I object to an accusation levelled at me earlier in the day by the hon. member for Willowdale (Mr. Peterson) when he suggested that he noticed I was sitting with a Tory member reading this particular bill, C-54, and enjoying it. I would like to tell the hon. member that we were certainly not enjoying this particular bill. It is the kind of document which is difficult to enjoy. As the member for Western Arctic indicated, it is difficult to read. It is a complicated document and, most important, it simply is an amendment to a much larger document dealing with the income tax system of this country.
January 20, 1981

Although Bill C-54 does address a number of taxation problems facing Canadians, I certainly find it to be generally a disappointing bill. It fails to make the serious changes required in terms of working toward an equitable and rational taxation system for Canada. I think most Canadians today from one end of the country to the other would recognize that our present taxation laws are discriminatory. They are unjust and unfair. In a sense, I must agree with the member for Western Arctic when he suggested that when you look at our taxation system and ask who pays taxes, part of the answer is that the poor do not pay taxes. They do not pay any taxes because they do not make any money, he says. I hope I am not misquoting him. He says the rich do not pay taxes because they have all kinds of fancy lawyers. They can take advantage of the numerous loopholes which are in our taxation system, which is biased in favour of certain groups within our society.
When I talk to the workers throughout my riding of Kam-loops-Shuswap, and we talk about the taxes they pay, they express a hesitancy with respect to the taxation system and the amount of money they are required to pay. They feel this for a number of reasons. One is that they feel they are paying an unjust proportion since they know of certain groups, primarily those which are self-employed, those who are using one method or another to turn themselves into a personal corporation, as someone said, and are able to take advantage of the legal minds we have to use the loopholes in the existing taxation system to get around paying taxes. The people in my riding know that and it frustrates them. I suppose that is a reason why one of the best sellers of recent weeks has been a book indicating clearly how to get around taxes in Canada. It tells you how to find and take advantage of the loopholes. At this time of year it becomes almost a national preoccupation to be asking your colleagues, your accountant, and so on, how best to take advantage of Canada's tax laws.
I think one has to ask this question: Why is it Canadians are so anxious to avoid paying taxes? Why is it we are going out of our way and hiring myriads of individuals to police the voluntary taxation system of Canada, as the previous speaker indicated? Why is it that we are having this difficulty? Why is it people are hesitant to pay taxes? It is obvious. It is because of the unjust nature of taxation. People feel they are not being treated equally. Of course, they are also concerned with the way taxes are being spent.
One does not have to look far at all to see where that money is being spent. One has only to look at the topic which we will likely see emerging in the House in the next number of days with respect to, perhaps, tens of millions of dollars needed to conduct an advertising campaign to promote a certain viewpoint with respect to the constitutional discussions. That is the kind of thing which frustrates Canadians. Using hard-earned taxpayers' money in that way makes it difficult for one to rise to the challenge of the taxpayer. However, it is an unjust system and, presumably, this particular bill is an attempt to close off some gaps. It opens up some as well.
I still have some difficulty when I meet some of my constituents, particularly at this time of year, when people are filling
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out their income tax forms. They ask me to justify why some people who have incomes in excess of $200,000 do not pay any income tax at all. Why is that? Why do the members of the House of Commons perpetuate this particular system? I must admit, Mr. Speaker, I have a difficult time explaining that.
However, one could go on and on and indicate some of the problems associated with this particular bill. A number of my colleagues have done this, but I want to focus tonight on one particular area. That is the area of small business. All of us in this House would agree that high interest rates impose a relatively greater burden on small businesses than on large businesses. This is so, in part, because small business relies heavily on the chartered banks and other financial intermediaries for credit. Small business does not have access to the range of financing alternatives which large corporations have.
As record high interest rates began to take their toll in 1979 by pushing small business bankruptcies to post-war record levels, the Conservative government of Mr. Clark proposed interest rate relief through the Small Business Development Bond introduced in Mr. Crosbie's budget of 1979.
The Liberals promised lower interest rates during the 1980 election campaign. Again, true to their track record and to their word, they saw to it, once they were elected, that interest rates were raised even higher than the Conservatives would have raised them. Small business bankruptcies in the first nine months of 1980 rose 18 per cent over the corresponding period last year. But the value of the liabilities involved in these bankruptcies increased 28 per cent, to $560 million. However, this, of course, is only part of the story; the level of official bankruptcies do not take into account those thousands of instances involving thousands of individuals who are no longer able to make ends meet, quietly closing their doors and going out of business without going through the formal bankruptcy process.
In addition, the official statistics fail to account for the social strain business failures place on the general health and well-being of our Canadian communities. Under increased pressure from the business community and lacking a coherent policy of their own, the Liberal government dusted off Mr. Crosbie's Small Business Development Bond proposal for Mr. MacEachen's April 21, 1980, economic statement.
When the finance department, however, began formulating the details of Small Business Development Bonds, they discovered in June, 1980, that financial institutions held approximately $16 billion in existing small business debt, debt that would qualify for the interest rate subsidies through this new program. If rolled into Small Business Development Bonds, this alone would have meant a loss of somewhere between $500 million and $600 million to the federal treasury. With the federal deficit running at over $14 billion, as the previous speaker indicated, the Department of Finance could hardly view with enthusiasm a further massive loss of revenue to this degree.

January 20, 1981
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The Liberal government began to impose qualifications, limitations and exclusions on Small Business Development Bonds. Small Business Development Bond loans then cannot be granted to unincorporated small businesses, including all sole proprietorships. They cannot be used to provide working capital, the most important capital requirements of almost all small businesses. They cannot be used for less than $10,000 or for more than $500,000. They cannot be used to acquire equipment or property for lease or rental to others. They cannot be used to buy second-hand capital equipment and machinery. It may result in stiff penalties at the end of the taxation year if a business holding a Small Business Development Bond ceases to be an eligible small business corporation because its lifetime cumulative earnings surpass $700,000.
Remembering now that the purpose of this legislation was to provide interest rate relief to small business, the effect of the restrictions, excluding the great majority of Canadian small businesses from benefiting under this legislation, is absolutely staggering. We have heard speaker after speaker indicate that one of the highlights of this particular bill was the fact that it would provide interest relief to the small businessman, and indeed it does that.


An hon. Member:: You are right.


Nelson Andrew Riis: However, of the approximately 930,000 small businesses across Canada, the first restriction excludes over 625,000 firms that are unincorporated small businesses from receiving interest rate relief under the Small Business Development Bond program. Small businesses in the wholesale, retail, construction and manufacturing sectors are required to carry and finance relatively large amounts of inventory in goods and process. Inflation and high interest rates raise dramatically the operating costs of these enterprises.
The great majority of these businesses will not benefit from the Small Business Development Bond legislation because of the second limitation mentioned, expressedly restricting the use of Small Business Development Bond loans from providing working or operating capital, again one of the most crucial financial areas of the small entrepreneur.
Many small businesses are able to hold their start-up or expansion costs down by purchasing used equipment and used machinery. If this second-hand capital stock has been idle or underutilized, its purchase will have contributed to increased production and over-all capacity utilization in the Canadian economy. Under the proposed legislation, Small Business Development Bonds cannot be used to purchase used plant and equipment. This restriction will exclude many small businesses which simply cannot afford the high cost of new plant and new machinery.
Finally, the Small Business Development Bond program as now amended expires on March 31, 1981. The exceptionally, short lead time, the failure of the finance department to effectively communicate the details of the program to the financial institutions and the virtually hopeless task of the head and regional offices of those financial, institutions to communicate the details to their branches really dooms this
program to a large extent before it is even passed in this House.
Contrary to the comments made earlier by the hon. member for Lambton-Middlesex (Mr. Ferguson), saying that this program was available, of course, in the summer and autumn of 1980, which is true, by and large, if one is to look at the way the financial institutions were introducing it across the country, and I think one can realistically say it has been in effect in any real way only in the last number of weeks. In addition, I would agree with what he had to say, that it will really serve in a disproportionate way the large metropolitan centres of Canada rather than the more rural parts of Canada.
The objective of this legislation, that is the Small Business Development Bond, is to provide interest rate relief to Canadian small businesses. Our best and most optimistic estimates of the number of Canadian small businesses which will actually benefit from a Small Business Development Bond is approximately 40,000. This is slightly higher than the unofficial rough estimate of spokesmen for the Canadian Federation of Independent Business and the Canadian Organization of Small Business.
Under the Small Business Development Bond program, less than 5 per cent of small businesses across Canada will receive Small Business Development Bond loans at approximately half prime plus 2 per cent or 3 per cent.


An hon. Member:: Only losing companies would want them anyway.


Nelson Andrew Riis: That is interesting.


An hon. Member:: Only those which are not making a taxable profit.


Nelson Andrew Riis: The hon. member across the way indicates that only businesses that are losing would be interested in a Small Business Development Bond. That is an interesting observation coming from the Liberal benches.
The question one has to ask is, who benefits from the Small Business Development Bond? If the point I am making, that 40,000 businesses at best are able to_benefit out of 930,000, is correct, who is it that benefits from the SmalfBusiness Development Bond program? I think that is a fair question to ask.


An hon. Member:: The ones that are losing money.


Nelson Andrew Riis: Under the legislation, interest payments on a qualifying small business loan entered into after December 11, 1979, and before March 31, 1981, will be treated for tax purposes as dividends. As a result, the interest will not be taxable to the corporate lender, or deductible as a business expense by the small business borrower. Because the corporate lenders will incur no tax liability on the interest received, they will be able to reduce the rate of interest charged.
The legislation not only provides interest rate relief to qualifying small businesses, but also provides a tax shelter to corporate lenders, in particular the chartered banks of Canada.
January 20, 1981

Over the last number of weeks I have carried out an extensive analysis of the balance of benefits accruing to both corporate lenders and small business borrowers using different interest regimes through the proposed Small Business Development Bonds. On the bases of these calculations, the following observation can be made.
If the conventional loan rate formula is prime plus 1 per cent or 2 per cent, then the banks charging a risk administrative premium of 2 per cent above prime on Small Business Development Bonds will increase their after-tax interest income by a slightly smaller percentage than the small business borrower will have reduced his after-tax cost of credit.
Put another way, perhaps a bit more simply, the small business borrower will benefit relatively more than the corporate lender from the use of a Small Business Development Bond when the rate formula is prime and less than 2 per cent. However, if the conventional loan rate formula is prime plus 2 per cent or more, then banks charging a risk administrative premium of more than 2 per cent, that is prime plus 2.5 per cent, 3 per cent or perhaps even more in some cases, will increase their after-tax interest income by a larger percentage than the small business borrower will have reduced his aftertax cost of credit.
Put another way again, the corporate lender will derive relatively more benefit from the use of Small Business Development Bonds than a small business when the rate is prime and more than 2 per cent.
In order to get a better idea of how benefits from the small business development program are likely to be distributed between small businesses and corporate lenders, I surveyed the average conventional small business loan rates and Small Business Development Bond rate currently offered by a representative sample of banks right here in Ottawa.
It is clear from these interest rate quotations that the chartered banks will be adding sufficient risk administrative premiums above half prime on Small Business Development Bonds to ensure that the benefits under this program is in their favour.
In other words, the real beneficiaries of the small business development bond are the banks of Canada. At the rates they are charging-half prime plus 2 per cent, 3 per cent and 4 per cent-the great beneficiaries are the lending institutions themselves.


James Scott (Jim) Peterson: Why do you want them extended to other types of small businesses?


Stanley Howard Knowles: Go to your seat if you want to speak.


Nelson Andrew Riis: Although the Small Business Development Bond will provide badly needed financial assistance only to a minority of small and medium-sized businesses in Canada, at the most 40,000 it is a step in the right direction-again I recognize that it was not the kind of step the Tory government was prepared to take-in providing recognition that interest rates
Income Tax Act
for small businesses are too high. However, the main beneficiaries will be the banks of Canada. Hundreds of thousands of other businesses in Canada, employing over 2.5 million Canadians, will continue to suffer the burden of high interest rates resulting from the Liberal government's misguided monetary policy.
What is this government saying to the small business community in Canada with this and other policies? Where is the leadership, vision and substance that Canadians have been searching for, hoping for and suffering without for over a decade?
I am a new member of this House. I am also my party's spokesman with respect to matters pertaining to small business, but I find my job of representing the concerns of my constituents and providing responsible input into the legislative process in order to help build a more effective and prosperous small business sector compounded not only by the difficult nature of our economic problems, but also by the secretive and misleading way this House and this country are being manipulated by this government.
Let me give a concrete example of what I mean by being misled and misdirected by this government. We debate today a bill to provide interest rate relief to small business in Canada through the introduction of Small Business Development Bonds. 1 hope 1 have been successful in showing that the benefits of this legislation will go to large corporate lenders in the form of higher after-tax profits and a small percentage of Canada's small businesses in the form of lower effective borrowing rates.
The lost revenue to the federal government, approximately $100 million to $200 million, will be made up by Canadian taxpayers.
Only two months ago the Liberals, together with the Conservatives, voted in this House together, over the objections of New Democrats, to pass Bill C-6, revisions to the Bank Act. Our objections centred around the certainty that the legislation, as amended, would not make the banking system in Canada more competitive and would not provide Canadian depositors and borrowers with better services at more competitive and reasonable costs.
What has been the legacy of Liberal and Conservative banking legislation in Canada over the past few decades? Let us have a look at this. An article on the performance of Canadian banking has just been published in the latest issue of the Canadian Journal of Economics. What is interesting about this article is that the study was completed while the author was working with the Economic Council. Though Parliament was considering the latest ten-year revision to the Bank Act, Members of Parliament were never apprised of or provided with the results of this vital and critical analysis. What did the study show? Permit me to quote from the report as follows:
In this study I have supplied quantitative estimates of the costs to the Canadian public of market power and protection in banking. Although a number of approaches are used, all point toward the existence of extensive market power in Canadian banking markets and the fact that banking services would be priced lower in a more competitive environment.

January 20, 1981
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Another important conclusion in the report is that the federal government is a party to, and apparently gains from, the maintenance of this protection provided to the banks of Canada. In his conclusion the author says, and I quote:
The current status of bank legislation appears to raise costs to Canadian firms and households.


David Orlikow: Who is the author?


Nelson Andrew Riis: The author is a fellow by the name of George Lermer. What has been the cost? The cost to Canadians of an uncompetitive banking system is not in the thousands or millions of dollars, but in the hundreds of millions of dollars annually in excessive charges to Canadian businesses and Canadian consumers. The author calculated these costs for the year 1969 through 1973 to be hundreds of millions of dollars.
In 1973, for example, Canadian consumers and businesses paid $686 million too much-I emphasize too much-for loans and other bank services provided by Canada's chartered banks. Of this total, $504 million represents excess charges and profits, net of taxes, resulting from the monopolistic structure and practices of the chartered banks. In addition, more than $182 million in excess taxes were paid by the banks to the government on their super-profits. Let us look at what the Bank Act in its amended form has done for Canadian banks. Investment advisers across this country are advising investors, yes, to purchase a number of energy stocks-perhaps mining stocks in certain parts of the country-but there is one stock with which there is no risk attached, and that is stock in Canadian chartered banks. That should tell us something. That should tell hon. members opposite particularly something about what this new legislation has done in terms of protecting Canadian consumers and Canadian borrowers.


Mr. Evans:: May I ask a question, Nelson?


Nelson Andrew Riis: In a moment. For decades Liberal and Conservative governments have hailed successful revisions to the Bank Act in the name of greater competition, better service and lower cost to Canadian businesses and consumers.
But that has not been the case. They have created in Canada a banking system which in 1973 overcharged Canadians $686 million, and that allowed the federal government to share in that plunder to the tune of $182 million. These figures are for 1973. In that year the excess charge was equivalent to one third of domestic value added attributable to Canadian chartered banks. I shudder to think what the-magnitude of such excess charges are today in 1981. They are likely in excess of $1 billion.
Flow can the Minister of Finance (Mr. MacEachen) come before this House in good conscience and with a straight face telling the Canadian people he is concerned about the cost of living, inflation and the high interest rates small businesses and consumers have to pay? Out of one side of his face the Minister of Finance introduces the Small Business Development Bond to provide limited interest rate relief, and out of the other side of his face-with, 1 might add, the support of the Tory party-he puts in place banking legislation which will
ensure that Canadian small businesses and consumers will be over-charged perhaps billions of dollars in the next ten years for the loans and services the banks will provide.
This is not responsible government. This is government manipulation on a colossal scale. This government has become a master of the politics of wilful deceit, opportunism and certainly of financial irresponsibility. This government has deceived the Canadian people and manipulated the Canadian people, kept from the House of Commons critical information during the debate on the amendments to the Bank Act and throttled the Canadian economy for over ten years with bankrupt and counterproductive economic policies. When one examines the alternatives to small business funding in Canada, one finds that a number of changes are required. I want to take a moment or two to articulate three or four of these. All hon. members of this House who have a great deal of sensitivity would recognize that the Federal Business Development Bank has some problems attached to it in terms of the services it provides to the small entrepreneur.
Here is a bank which started out with excellent intentions and with a mandate to provide that risk venture capital which provides innovative opportunities for Canadian entrepreneurs, and yet I think that unquestionably all members of the House would now recognize that the Federal Business Development Bank has not been successful in carrying out that mandate and that serious changes are required of it.
In my own riding, for example, serious limitations arose recently when a number of very innovative entrepreneurs with a most interesting concept to establish a manufacturing firm, which would certainly assist Canada in the deficit in its balance of payments, went to the Federal Business Development Bank and obtained a loan at an excessively high interest rate which was locked in for a considerable length of time just when the new legislation, the Small Business Development Bond legislation, was being brought forward. They qualified for that relief and then returned to the FBDB and asked to be let out of the commitment they had there, but were told that it would cost them about $35,000 to get out of the commitment. It seems to me that this is the kind of conflict we often find within government where one arm of the government is going one way to provide some assistance and another arm is going another way to provide a similar assistance, and yet there is conflicting legislation which, in a sense, hinders and frustrates the small entrepreneur.
In talking with members of the House from all parties, it becomes clear to me that providing an opportunity to the small entrepreneur to obtain working capital at a lower rate than is possible at present is highly desirable. I urge the Minister of State for Small Businesses (Mr. Lapointe) to give serious consideration under the Small Businesses Loans Act to provide changes in the act to make available similar opportunities for entrepreneurs to obtain working capital. That is one of the handicaps of that act at the moment, and some changes would
January 20, 1981

provide a very exciting and encouraging bonus for Canadian businessmen.
Some years back when government recognized that indeed there was a serious housing crisis looming in Canada, that young people were having a difficult time finding enough money to provide a down payment, the Registered Home Ownership Savings Plan was brought in as a scheme under which persons could set aside money in an effort to accumulate enough money for a number of years for a down payment. One of the problems that working Canadians encounter, as I mentioned earlier in the evening, is the inability to set aside funds from their income and to protect them from the tax man as do other sectors of society. I wonder if it would not be worth looking seriously at providing legislation whereby Canadians from all walks of life could set aside a sum of money protected from the tax man over a five-year period, set aside $1,000 to $5,000 in an account so that in five years' time an individual could get together with two or three of his partners and they would have at their disposal $100,000, or $80,000 for a down payment on a small venture, on a new idea. This would provide an incentive, a model, an encouragement for Canadians to invest in the future of their country, to take advantage of that dream, that idea, that concept which I suggest probably exists in one way or another with every Canadian.


Charles James Mayer: It sounds like capitalism to me.


Nelson Andrew Riis: It might sound like capitalism to some people. To me it is an opportunity to invest in Canada's future, to provide the much needed venture and risk capital.


Charles James Mayer: For the individual.


Nelson Andrew Riis: Call it what you must. I think we all agree in this House that something like this is well overdue. It is the kind of thing which government should provide. It should provide an opportunity and leadership for that particular venture. It does not come from other areas, and perhaps where we differ is in the terms of the role that the government could play.
I should like to conclude, Mr. Speaker, by suggesting that high unemployment, double-digit inflation, a weakening Canadian dollar, plant closings, mammoth deficits in government spending and our balance of payments all point to mismanagement on a scale perhaps unequalled in Canada's history.
This government's preference for manipulation and deceit, its lack of confidence in the Canadian people is nowhere better demonstrated than in its present monetary policy.
The primary objective of monetary policy should be control of the money supply and credit conditions so as to maintain a healthy, stable economic environment. But this government has abandoned this objective in favour of maintaining the value of the Canadian dollar.
It is not coincidental that the countries in the world that are well managed have strong national currencies, and those countries that are poorly managed have weak currencies. Canada's currency is weak because our balance of payments deficit has
Income Tax Act
deteriorated over the years to intolerable levels. No industrial nation in the world relies more heavily on the export of non-renewable resources to maintain foreign exchange earnings than Canada. Our balance of payments deficit on finished manufactured goods per capita is the highest in the world, and we finance much of this deficit by going deeper and deeper into debt through foreign borrowings.
That is why the Canadian dollar is weak. It is weak because of the historical failure of successive federal governments to provide leadership and a sound industrial strategy to ensure a balance between economic growth and manufacturing development in Canada.
The Canadian people know there is something wrong in this country. They want to understand. They want a government that is honest with them, that sees them as responsible participants and that will confide in them. They are prepared to make the necessary sacrifices if these are seen to be fair and equitable.
A policy of maintaining high interest rates to support a dollar that is fundamentally weak is more than an exercise in outdated cosmetics, it is an act of deception wreaking economic havoc from one end of this country to the other. Sooner or later we will be forced to make the difficult adjustments that should have been started years ago. The growing deficit in our balance of payments means that we must consume less from the rest of the world and produce more of what we need at home. We must also begin to sell more in the way of finished goods abroad.
I suggest we should free the Canadian dollar from the grip of this gradualist monetary deception. Interest rates should reflect the requirements for internal stability, and let the balance of payments impose a badly needed discipline on our behaviour as a consuming and producing nation.
We are a resilient and creative people. All we need is a government dedicated to democracy, willing to address the problems head-on and involve the Canadian people in their solution. The present government has failed on all three counts.


John Leslie Evans: Mr. Speaker, I rise on a point of order. In the minute that remains, would the hon. member entertain a question?


Nelson Andrew Riis: I certainly would, Mr. Speaker.


John Leslie Evans: Mr. Speaker, I listened with interest to Mr. Lermer's analysis which was put forward. I worked with Mr. Lermer in the Economic Council. I wonder if the hon. member knows that Mr. Lermer's suggestion was to let more foreign banks into Canada to improve the banking competition. Could the hon. member tell us where the NDP stood with regard to the entry of foreign banks into Canada in the banking legislation which was just passed?


Mr. Deputy Speaker:: The hon. member has ten seconds in which to answer.

January 20, 1981
Adjournment Debate


Nelson Andrew Riis: That is a difficult question to answer in ten seconds. I think the answer to the question is clear in that the chartered banks in Canada were quite open and were prepared to welcome foreign banks, which indicates just how successful the legislation was in providing competition.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Stanley Howard Knowles: Mr. Speaker, on Friday, October 31, 1980, I put a question to the Minister of National Health and Welfare (Miss Begin) with respect to reports attributed to her that she would be bringing in amendments to the Canada Pension Plan which would provide pension coverage for certain persons not now covered, including women who work in their homes. This was my specific question:
I want to ask the minister if she will make a statement at an early date concerning this legislation, and will she make it clear that any coverage for spouses, women who work in their homes, will be universal, not just a case of something made available to those who can afford to pay the premiums?
In her reply, the minister congratulated me on underlining the challenge we face, which is to open up the Canada Pension Plan to housewives. She said that in her view, it was not bad to permit women to pay $35 per month or something over $400 per year to obtain Canada Pension Plan coverage. But her reponse to my concern for those who cannot afford to pay such premiums was that she would not be able to come to the House in the near future with any proposal covering those who work in the home and cannot afford to pay premiums into the Canada Pension Plan.
I do not want to oppose any opening up of the Canada Pension Plan to let people in who are not now covered, but I think it is a gross mistake to open it for those who can afford to pay $400 or $500 per year, yet provide nothing for housewives whose income in the whole family is such that they cannot afford to pay.
As the parliamentary secretary knows, I am an unrepentant and unrevised universalist in social security systems, but I find that frequently when we press for improvement in our universal programs, the government comes back and says, "We must be concerned first with those who are most needy." We all know that the group of people who suffer the most in terms of pensions are unattached women from 55 years of age up and women who never worked in industry and therefore do not
have coverage under the Canada Pension Plan. Those are the people who need it most, to use the government's language.
But what has the government done with respect to women in that general age bracket? First of all, a number of years ago it brought in the spouse's allowance and argued that the reason for the spouse's allowance was that two people could not live on one pension. So, the spouse's allowance was provided, but when we argued that it was even more difficult for one person to live on no pension, we got no satisfactory response. I say the spouse's allowance began at the wrong place in trying to cover women who are in need in terms of pensions.
Now what do we have? We have a desire to open up the Canada Pension Plan in two ways. The income tax bill we are debating when we are on government time, Bill C-54, contains a provision which will permit women who are paid by their husbands in any kind of family corporation or family business such as farming to contribute to the Canada Pension Plan and get the coverage they do not have up to this time. In addition, it will permit women who are not being paid by their husbands but who can afford $400 or $500 per year to pay in and get coverage. But that great mass of spouses, women who work in the homes, who never get any special pension coverage, are not touched or covered at all.
Both in the answer the minister gave me on October 31, 1980, and in the statement she made yesterday when she was speaking to Bill C-54, she stressed the point that she would not be able, because of the extreme cost, to cover these people on whose behalf I am speaking. If the government intends to take this action, let it not mouth the idea that it is bringing in plans to help the needy. It is coming at it from the wrong end.
I suggest very strongly, and, Mr. Speaker, you will know to what I refer, that the department call in some of the people who made up the task force which built the Canada Pension Plan. Most of them have retired and some of them may have died, but there are still a few around. I suggest that they be called in and asked to propose ways in which there can be universal coverage for women in the home. I suggest that the simplest way is to provide coverage to anyone who, in any year, is not a contributor to the Canada Pension Plan, by giving such a person a credit of so many percentage points which at retirement would result in an increase in that person's old age pension by what those percentage points amounted to.
I believe the parliamentary secretary will find that some of the members of that ancient task force would agree with that idea. As I say, I do not oppose any increase in the number of people who will get better pensions. I am all for opening it up, but I am terribly disappointed that the minister has gone back on the principle of universality and is making a proposal that will benefit those who can afford to pay the $400 or $500 a year, but which will not help those who need it most. Although the parliamentary secretary cannot give me an answer as to what will be done, since that is a matter of policy, I hope he will pass on my suggestion that there should be a new study of this whole matter.
January 20, 1981


Royce Herbert Frith: Mr. Speaker, the women who stay in the home represent 60 per cent of the females of this country. Of the five million females in this country, roughly three million stay at home. The minister has pointed out in the House that the government is now studying ways to provide some form of pension coverage for these women who stay at home. The hon. member for Winnipeg North Centre (Mr. Knowles) has pointed out that part of the problem which we face, as we learned while investigating other countries in which pension coverage for women in the home is contemplated, is that only those who can afford to pay the contributions will receive benefits at the age of retirement.
This leaves open the whole question of those who are in need but who cannot even afford to pay into the pension plan. The minister is more than aware of the fact that this is one of the major drawbacks which the government must address when it looks at pension reform. I believe the hon. member is aware of the national pension conference which is to be held in Ottawa on March 31, April 1 and 2. This conference will attempt to address many of the problems which face the female component of our population.
There must be a study on this whole question of providing pension coverage to women who stay at home. Some of the alternatives at which we are now looking are a system of mandatory CPP contributions for homemakers, a separate national contributory plan for spouses working in the home, improved survivors' benefits under the existing Canada Pension Plan to mention a few. I realize that there is very little time left to me, but other parts of the plan include, for example, increasing benefits for single persons under the Guaranteed Income Supplement program. These are parameters which must be studied and which the government is actively studying at the present time. One of the government's commitments is to alleviate the situation which largely affects our female population.


UNITED NATIONS-SPECIAL SESSION ON INTERNATIONAL DEVELOPMENT-GOVERNMENT POLICY
Mr. Douglas Roche (Edmonton South):: Madam Speaker, I am glad to see the Parliamentary Secretary to the Minister of National Health and Welfare (Mr. Frith) in the House at this great moment because he is one who understands the North-South issue as he, with the hon. member for Erie (Mr. Fretz) who is also present, and myself, is a member of the North-South task force that has spent a great deal of time on this issue which we are trying to profile in this House.
Tonight I want to ask the parliamentary secretary what he is doing to advance a one-day debate in this House on a government motion to discuss foreign affairs. The last time that this House had a debate on foreign affairs was December 19 and 20, 1977, more than three years ago. An awful lot has gone on in the world since then, particularly regarding the North-South issue. This year the economic summit will meet in Ottawa, as Canada is to be the host. As the Prime Minister
Adjournment Debate
(Mr. Trudeau) said in the House yesterday following his trip, the North-South question will be foremost on the agenda. It is also likely that a summit of North-South leaders will meet in Mexico next June.
This, then, is the year to discuss North-South issues. But what is the Canadian government's policy on this? That is the fundamental question I am putting to the parliamentary secretary tonight. What is the government's policy? It is a reasonable question.
The North-South task force in which we participated made 38 recommendations and I should like to know which of them the government will take seriously. The Prime Minister has spoken in vague terms about increasing agricultural production and about a recycling process for OPEC funds, but I want to know the details. How can Members of Parliament respond on this issue which is of tremendous importance to the economic stability of our planet and Canada's participation in the North-South dialogue? How can we play our role as parliamentarians following on the committee work if we do not get a handle on what government policy is? I want the parliamentary secretary to address that question.
The Brandt report which has received international acclaim and which studied this issue has put out a full and exhaustive analysis of it. It focused sharply on what ought to be done to break the North-South dialogue so that we can make some progress toward closing the gap between rich and poor. It issued the following four point emergency provisions: first, a large scale transfer of resources to developing countries; second, an international energy strategy; third, a global food program; and fourth, a start on some major reforms to the international economic system. The North-South task force accepted those four emergency provisions and put them not only in the main report but also in the interim report so they have been on the table of this House since last summer. When 1 raised the question last May, I asked what the government was going to do about the four emergency grant proposals.
I put the question to the Prime Minister yesterday and I invite you, Mr. Speaker, to search Hansard assiduously, as I know you do every morning, and I know you will be unable to find an answer to the question because he did not answer. I ask the parliamentary secretary to address this question tonight.
There is no mystery about how to form a policy, Mr. Speaker. All we need are some basic principles; then we put the policies behind the principles. The six basic principles that ought to be the basis of a guideline for the formulation of a Canadian government policy in this crucial year of 1981 so that Canada can play its role in helping to break this North-South deadlock are the following.
The first principle is to put a floor under poverty. Under that principle would be policy implications about when Canada will reach the .7 per cent of gross national product as official development assistance that is the international target advocated by the UN.
The second principle is international food security. We must do more to increase production, to increase food reserves and

January 20, 1981
Adjournment Debate
we must do a better job on emergency assistance and food crises. Policies could be formulated to support that principle.
The third principle is to have international energy security. In support of that conservation would be highlighted, investment in energy development would be increased, and in particular there would be support for the World Bank's new affiliate on energy to develop energy in the developing countries. Under that principle there would be greater efforts to secure stability of pricing by OPEC, giving them stronger voting rights in international financial institutions so that they too, could play a responsible role in formulating a sound economic policy for the world.
Fourth is to have economic stability to help the developing nations, those which are hardest hit, the oil-importing, least developed nations which had a cash deficit last year of $50 billion while OPEC had a surplus of $115 billion. Something serious has to be done to help rectify that terrible imbalance in the world.
The fifth principle is very simple. It is self-reliance through trade. The North-South task force recommended several sound measures to promote more import and export with developing nations and to do more business with the vastly increasing population-based marketing potential for Canada in many parts of the world.
Sixth is to do something to reduce the terrible disparity between what is spent in the world on arms and what is spent on development. A sum of $500 billion a year is spent on arms; a sum of $30 billion a year is spent on development assistance. This is immoral and does not make any sense. Those are the principles, sir. I have already used up my time and I have not even started. It just shows you how badly we need some time in the House of Commons for those members who really want to participate and help the over-all formulation of a policy by critical input and analysis for which we have a responsibility as parliamentarians.


Royce Herbert Frith: Mr. Speaker, there are two basic questions which the member opposite has raised. One is a major issue and one which he rightly calls for, that is to have some time in this House to debate the whole issue of North-South relations.
With respect to some of the other questions the hon. member has raised, I thought the Prime Minister (Mr. Trudeau) attempted to answer some of his concerns on the various issues that affect the whole North-South dialogue.
Our government has a fair amount of legislation which has to be passed respecting measures included in the budget of 1980. We have a fair amount of legislation which has to come through in terms of enacting the National Energy Program which is a priority for the government. But, at the same time, if the member opposite would get the ear of his House leader and as well if we could have the same take place with members in the New Democratic Party, I am certain, given the importance which the Prime Minister places on the whole North-South dialogue, that perhaps we could have an all-party agreement to arrive at a suitable two-or-three-day debate prior to the summit in July, 1981.
The member has pointed out correctly that the Prime Minister has taken the North-South issue as one of the prime areas he wishes to address in termes of foreign affairs. His recent trip to Europe, Africa, South America and Mexico, which found him meeting with various presidents, is only the first step in which we hope the Prime Minister can play an important role as a facilitator. That is a role I strongly believe Canada can take in trying to get this whole North-South dialogue moving better than it has over the last decade.
I think the member opposite knows about some of the problems inherent when anyone starts to discuss the North-South issue. It is no easy task to convince industrialized countries of their mutual interests respecting countries in the Third World; in other words, the poor countries. Although this government's record is not the best in the western industrialized world, it is by no means the worst. Certainly there is room for improvement. However, the answers which the Prime Minister gave yesterday afternoon were in that vein. The Prime Minister mentioned the government has accepted the 0.5 per cent of gross national product to be the aim of the government by 1985. It accepts in principle the position that it should be at 0.7 per cent by the end of the decade. I think the Prime Minister recognizes that if we are going to accept the 0.7 per cent figure by the end of the decade, there will be a need for a tremendous selling job by parliamentarians on all sides of the House, regardless of party affiliation, to convince Canadians that the funds expended in the area of foreign aid are well spent. That is not simply the job of the government members. If you believe the whole issue of North-South is of paramount importance, 1 would say that every parliamentarian in this building will have to convince his home county.


NUCLEAR ENERGY-NATIONAL INQUIRY INTO DOMESTIC AND INTERNATIONAL POLICY-GOVERNMENT POSITION
Ramon John Hnatyshyn: Thank you, Mr. Speaker. I rise again on a persistent and continuing attempt to extract from the government some kind of information concerning what they are doing with respect to a nuclear inquiry. Let me just outline some of the background in brief, to put it in some context or perspective.
You will recall, Mr. Speaker, that while we were in government the previous administration had, in fact, brought before the House terms of reference with respect to a national inquiry. This would be a parliamentary inquiry which would review, assess and obtain extensive public input into the consideration of our domestic and international nuclear policy. We considered that a very important initiative taken by our government, since at no time in the course of Canada's history has the national government gone out to obtain public input with respect to nuclear policy. In fact, a number of provincial governments have conducted inquiries to set the basis upon
January 20, 1981

which their policy would move toward. By way of example, I can mention two, Saskatchewan and Ontario. Both of these provinces have had inquiries with respect to the nuclear side of things and also with respect to uranium policy. Yet, the national government has been singularly absent from this kind of inquiry, although it has responsibility and jurisdiction over that particular aspect of our energy policy.
When I first raised this matter last year, Mr. Speaker, the Prime Minister (Mr. Trudeau) indicated to me that there would be an internal inquiry conducted, at which time there would be some provision for public input. Subsequently I raised the matter with the Minister of Energy, Mines and Resources (Mr. Lalonde). He also responded to me that there would take place an internal inquiry by way of a number of studies which would be released and made available to the public for their input, consideration, observation and, in fact, that there would possibly be an opportunity for a parliamentary inquiry. The basis upon which the Prime Minister responded to me on that first occasion was that he did not think a parliamentary inquiry or a national inquiry, which we had proposed, was appropriate. This was because he felt time was of the essence and quick decisions had to be made in order to determine what the future of our nuclear industry would be.
What I have since discovered is that there is, in my view, none, or very little, action taking place on the part of the federal government with respect to our view of the nuclear policy.
In my estimation and submission, Mr. Speaker, the government has decided the course of action they will take. It has established a team to sell nuclear reactors abroad. It has already made its decision. Mr. Speaker, this is a shell game. There is absolutely no intention on the part of this government to have any sort of public input into what our policies ought to be.
The other side of the coin is that as a result of the lack of any type of inquiry or involvement on the part of the public, or an opportunity for the public to come to grips with this situation, there is a sense among the nuclear and the uranium industries that there is no leadership. In fact, we are facing a government which is giving absolutely no leadership and respect to the nuclear or uranium industries in our country. People do not know where we are going with respect to this matter. There is no indication whatsoever. As I say, Mr. Speaker, it is a shell game because decisions are being made.
If the inquiry which we had originally set up had been proceeded with, we would have had a report to the government by this time with respect to the situation in Canada today. Our government had set a time limit of one year on the original nuclear inquiry. The present government says we must have an internal investigation. They say we must have reports and that these reports will be made public. Our government had internal papers prepared which would have been available for a national inquiry. These papers and studies were available to the government when it took office. I suggest to the parliamen-
Adjournment Debate
tary secretary, if he is attempting to answer again today, that what has happened is that these papers have been available to the government on the basis of a discussion and on a basis upon which there could be public input, yet we have heard nothing, no announcement and we have seen no interest. My only conclusion can be that there is no serious interest on the part of this government in respect of having any kind of inquiry at all. We are faced again with something that is the opposite of the truth from the Prime Minister and from the Minister of Energy, Mines and Resources, and they are going to proceed on their own basis without an opportunity given to the people of Canada to in fact have a full public open discussion as to what our policy should be on the domestic and international side.
I will be interested in hearing whether the parliamentary secretary, again at this late date, almost a year after the government has been in office, can give some explanation as to what in fact the government's intentions are, or some indication as to whether we are going to have any kind of inquiry at all with any opportunity for public input.


Roy MacLaren: Mr. Speaker, the hon. member has mentioned the previous discussion on this subject which he raised back in May. At which time the Prime Minister (Mr. Trudeau) indicated that the government, in light of the pressing problems facing the nuclear industry in Canada, would undertake an internal review.
Since then the government has indicated on several occasions that the background papers which would form in part the basis for such a review would be released. They include those papers to which the hon. member opposite has referred, the background papers which were prepared for the study proposed by the previous government, which have subsequently been updated. I am pleased to indicate to the hon. member opposite that those papers will be released in the next weeks. Comments and contributions of the Canadian public will be welcomed; indeed, will be solicited in respect of those papers.
The hon. member opposite may also be aware from a recent press comment that additional studies were undertaken; two in fact by the Woods, Gordon consulting group. Those papers will also be made available, with whatever restrictions may be necessary for commercially confidential purposes, a point which I am sure the hon. member opposite would recognize.
Beyond that, of course, we have had the benefit in Canada, as the hon. member has noted, of commissions and inquiries in a number of provinces in Canada; the hon. member mentioned Saskatchewan and two in Ontario. In addition there have been inquiries in British Columbia and New Brunswick. Those papers and contributions have also been taken into account in the review which has been conducted.
At the same time, I should point out to the hon. member, when he refers to what he considers lack of direction in the

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Adjournment Debate
nuclear policy for Canada, the government has in the specific area of commercial enterprise, which he mentioned, been pursuing new opportunities for sales of Candu reactors abroad. At the moment we are actively pursuing new possibilities in Mexico and Japan and additional possibilities in Korea and Roumania. I do not think in that area there is any lack of direction by the government, as the hon. member suggests.


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 2 p.m.
At 10.30 p.m. the House adjourned, without question put, pursuant to Standing Order.

Wednesday, January 21, 1981