1981-02-03

Madam Speaker:: Today marks the sixty-fifth anniversary of the destruction by fire of the old House of Commons. To remind us of this event, I have asked the Sergeant-at-Arms to bring into the House the wooden Mace. It was used in place of the one normally used in the House of Commons until such time as the beautiful silver and gold one was ready for our daily use here.
By the way, this wooden Mace has enriched itself with a bit of history. It was lent to parliaments in the West Indies when I believe their Mace was stolen.



ROUTINE PROCEEDINGS


Mr. Benno Friesen (Surrey-White Rock-North Delta):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the fact that the policy announced by the Minister of Fisheries and Oceans (Mr. LeBlanc) to close the Fraser River to gill netters for the 1981 season places an unfair emphasis of sacrifice on this group rather than a more equitable and reasonable compromise with the corporate fleets and other fishing interests, and in view of the fact that this policy will leave unrestrained the U.S. fishermen around Point Roberts, who will continue to take the very catch destined for the Fraser River, thereby nullifying any positive results for management and conservation, I move, seconded by the hon. member for Richmond-South Delta (Mr. Siddon):
That the Minister of Fisheries and Oceans redesign his policy to incorporate fairness and equity to ensure that the small gill netters are not sacrificed to the corporate fleets and other fishing interests, and do further urge the minister to take appropriate steps to monitor effectively U.S. catch of fish destined for the Fraser to provide for better management and conservation of fish stocks than has to date been realized.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ADMINISTRATION OF JUSTICE
Mr. Gordon Towers (Red Deer):: Madam Speaker, I rise under the provisions of Standing Order 43 to seek the unanimous consent of this House in expressing our tangible and intangible support for the difficult, dangerous and delicate job our police are performing in making our environment relatively safe. If we have adequate, efficient and more community support for police in this country, people and property will be much safer. Therefore I move, seconded by the hon. member for Durham-Northumberland (Mr. Lawrence):
That this House assure the police of this country of our unequivocal support and that police forces and police associations will be full partners in amending and implementing the laws of this nation.


Madam Speaker:: I have been reluctant to accept congratulatory motions or motions of encouragement. Although I think the sentiments expressed in the hon. member's motion are quite commendable, 1 am afraid I cannot see the urgent and pressing necessity.


ASTRA TRUST
Mr. Bob Rae (Broadview-Greenwood):: Madam Speaker, I rise under the provisions of Standing Order 43 to move a motion. Since a select committee of the Ontario legislature has heard evidence concerning the chartering of Astra Trust, which evidence raises the most serious questions as to political influences at work in the granting of this federal charter, and since the collapse of Astra Trust and associated companies has caused hundreds of Canadians to lose millions of dollars, worthy of the title "Bilking Ontario in the Eighties", I move, seconded by the hon. member for Hamilton Mountain (Mr. Deans):
That the matter of the circumstances surrounding the chartering, operation and collapse of Astra Trust be referred for a full investigation to the House Standing Committee on Finance, Trade and Economic Affairs.


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

February 3, 1981


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL ENERGY PROGRAM
Hon. Bud Cullen (Sarnia-Lambton):: Madam Speaker, I rise on a matter of urgent and pressing necessity pursuant to the provisions of Standing Order 43. Given the submission made yesterday to the National Energy Board by Dome Petroleum that it expects Canada to be self-sufficient in oil by 1990, given today's announcement by Petro-Canada of its acquisition of Petrofina and given the embarrassing revelation by the Leader of the Opposition (Mr. Clark) that his original position on Petro-Canada was an error, I move, seconded by the hon. member for Lambton-Middlesex (Mr. Ferguson):
That this House urges the government to pursue with vigour the implementation of the National Energy Program.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ROYAL CANADIAN MOUNTED POLICE
Mr. Lome Greenaway (Cariboo-Chilcotin):: Madam Speaker, I rise under the provisions of Standing Order 43. Unreasonable changes in the policing cost formula proposed by the federal government are causing great concern to many cities, towns and small communities in the eight provinces that have policing contracts with the RCMP. In many instances, sound financial planning has suddenly been completely disrupted by the proposed unrealistic increases. Any divergence from the present formula should have been phased in gradually, after careful consultation with all concerned. Therefore I move, seconded by the hon. member for Esquimalt-Saanich (Mr. Munro):
Thai this House urge the Solicitor General to continue with the present formula as it applies to RCMP contracts with the provinces, and that any proposed changes to cost sharing arrangements be instituted only after careful consideration and consultation.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


STATUTE LAW (MILITARY AND CIVILIAN WAR PENSIONS, COMPENSATION AND ALLOWANCES) ACT, 1980 POSSIBLE INTRODUCTION OF LEGISLATION RESPECTING PHASING-IN PERIOD-MOTION UNDER S.O. 43
Hon. Stanley Knowles (Winnipeg North Centre):: Madam Speaker, under the provisions of Standing Order 43, and seconded by the hon. member for Oshawa (Mr. Broadbent), I
move:
That this House assures the Acting Minister of Veterans Affairs that any legislation he introduces to shorten or eliminate the phasing-in period respecting pensions for widows of disabled veterans where the veteran's disability rate was below 48 per cent, and likewise any legislation to tie the 100 per cent basic rate of the disability pension to the average take-home pay of the five categories of public servants designated in 1972, will receive speedy passage, and this House expresses the hope that such legislation will be introduced at an early date.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE PRIME MINISTER
Hon. W. G. Dinsdale (Brandon-Souris):: Madam Speaker, tomorrow the Prime Minister (Mr. Trudeau) is visiting Brandon and western Manitoba, an underdeveloped area of Canada with great prospects now that jet service is becoming available. In view of its strategic location, close to the geographic centre of Canada and the North American continent, I move, seconded by the hon. member for Portage-Marquette (Mr. Mayer):
That the Prime Minister seize the opportunity provided by his visit to announce development projects, such as the reactivation of the community services program, the decentralization of a federal department into the area, the broadening of the herd maintenance and fodder procurement program and other similar programs that would help the process of reconciliation so urgently needed in the Canadian body politic.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


HAZARDOUS SUBSTANCES
Mr. Girve Fretz (Erie):: Madam Speaker, I rise on a matter of urgent and pressing necessity concerning recent press reports which indicate that American industry and government dumped toxic and radioactive wastes into the Niagara River
February 3, 1981

during the Second World War. If these reports are well founded, the health of residents of the Niagara peninsula is seriously threatened. Therefore I move, seconded by the hon. member for Haldimand-Norfolk (Mr. Bradley):
That this House urge the Secretary of State for External Affairs to investigate the veracity of these stories immediately, and to report his findings to the House.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


SUPREME COURT OF CANADA
Mr. Stanley Hudecki (Hamilton West):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. This morning three judges of the Supreme Court of Canada refused to grant leave to appeal to the full court on the crucial question of the human rights of unborn children in Canada. I move, seconded by the hon. member for Mississauga South (Mr. Blenkarn):
That the Minister of Justice look into this matter immediately and report to this House.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Right Hon. Joe Clark (Leader of the Opposition):: Madam Speaker, my question is addressed to the Secretary of State for External Affairs who on Sunday said that the Government of Canada had received from the Prime Minister of Great Britain, to quote his words, "an assurance in writing" as to the response of the British government to any Canadian request. Will the minister now tell the House of Commons the nature and extent of that assurance in writing?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, that assurance was contained in a letter from Prime Minister Thatcher to our Prime Minister
Oral Questions
and it was to the effect that the government of the United Kingdom would accept the responsibilities which it had already assumed and follow the tradition of proposing to the British Parliament, with its recommendation, our joint resolution.
I might say, Madam Speaker, that this is not a matter of a single letter; this is a matter of a course of conduct in which we have received repeated assurances from the government of the United Kingdom through its ministers since the time the hon. Minister of the Environment and 1 met with Prime Minister Thatcher in October. Beyond that it is a question of the explanation which British governments have always given of the tradition and independence of our country.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: I am rather surprised that the Secretary of State for External Affairs, knowing there had been a request yesterday for that document to be tabled in the House, did not take the opportunity to table it. I hope he will do that when he responds to my supplementary question. I notice he chose his language very carefully and said that the assurance of the British government was limited to proposing and recommending acceptance; there was not a guarantee, not an assurance of passage.
Will the Secretary of State for External Affairs first undertake to table that letter on the floor of the House of Commons so we will know the whole truth about the communication in writing from the British; and, secondly, will he tell us whether the undertaking by the British extends to passage or simply to presentation?


Mark R. MacGuigan: Madam Speaker, it is not traditional in dealings between governments to reveal the precise nature of the dealings which have occurred. We have no quarrel with the government of the United Kingdom with respect to these exchanges. There is certainly no reason why we should depart from the normal position in this case, and we do not propose to do so. If the government of the United Kingdom wishes to reveal the letter, that is their prerogative.


Charles Joseph Clark: What about passage?


Mark R. MacGuigan: With respect to the question of passage of the legislation, that is a very naive question for a member of Parliament to ask. No government and no member of Parliament can ever give an assurance of passage. All a government can ever do is to undertake that it will require that the measure be supported by its supporters.


Charles Joseph Clark: The Secretary of State for External Affairs says no one can give a commitment as to passage. He said in his "Question Period" remarks on television the other day as a member of Parliament, "not only have they given a commitment to us to put it through"-in other words, passage. In other words, the Secretary of State for External Affairs is denying in the House something he said on television the other day.


Some hon. Members:: Oh, oh!

February 3, 1981
Oral Questions


Charles Joseph Clark: The Secretary of State for External Affairs says there is no reason to depart from that tradition. There is a very good reason. The Prime Minister admitted yesterday that he has been engaging in what he calls less than candour in telling the people of Canada the whole truth about what has been going on regarding our constitution. In light of the interest in Canada in the treatment of our Constitution by another country, will the Secretary of State for External Affairs not reconsider his refusal; and will he not seek all the permissions necessary and give us an undertaking now that that written assurance will be tabled on the floor of the Elouse of Commons so that all Canadians will have an opportunity to see exactly what was said about our Constitution?
While he is at it, will he tell us whether there were any other written assurances, whether there is any other documentation that the Secretary of State for External Affairs is keeping hidden from this Parliament, for any reason at all, that would inform the Parliament and people of Canada as to what exactly the attitude of the government of Britain is with regard to our Constitution, which we want to have home here in our country so we can deal with it?


Mark R. MacGuigan: Madam Speaker, as usual, the Right Hon. Leader of the Opposition is failing to see the woods for the trees. This is not a question of a single letter or a single assurance. To the best of my recollection there is only one reference to this in writing, but we have received a series of assurances-some half dozen-from three or four members of the British ministry since the time when they fully understood what was proposed in the constitutional package. We have received those, and indeed they could have done nothing else because there is an unbroken tradition that British parliaments and British governments will respect the joint resolutions of this House on constitutional matters.


Some hon. Members:: Hear, hear!


PREVIOUS DISCUSSIONS WITH BRITISH MINISTER
Hon. James A. McGrath (St. John's East):: Madam Speaker, regarding these assurances I would like to direct a supplementary question to the Prime Minister. We know of one meeting with one member of the British government which took place in Ottawa in December. That, of course, was with the Right Hon. Francis Pym, who is now the government House leader of the parliament at Westminster.
Did Mr. Pym tell the Prime Minister during that meeting that the thinking of the U.K. government was that, "Yes, we will give you patriation with an amending formula; what you do with it beyond that is your business"? Further, did Mr. Pym tell the Prime Minister that he had some concerns-and he was speaking as the person who was nominated to be House leader-as to whether or not that bill would receive swift passage in the British parliament?


Right Hon. P. E. Trudeau (Prime Minister):: Madam Speaker, the answer to the first question is no. The answer to the second question is yes.


James Aloysius McGrath: Madam Speaker, during his press conference last week-this is very germane to what was discussed with Mr. Pym and a matter of public record-the Prime Minister indicated to the press that he had been told by the British that, with respect to a request from the Canadian Parliament asking Britain to amend the BNA Act, the government of Britain would have no choice, that it would be a government bill and that there would be a three-line whip?
Today in the British House of Commons in London Prime Minister Thatcher indicated that there was no such assurance and there in fact could be no such assurance. A three-line whip would indicate that the government would expect its backbenchers to fall into line and there would be limited debate. Yet the Prime Minister of Britain said today that there could be no assurance. The only way such an assurance would be given is if a bill was on the table of the house and, as no such bill has been received, no such assurance was given. What the British parliament is going to be asked to do is very important to its process.
Will the Prime Minister tell the House just exactly what assurances he did get? Perhaps while the Prime Minister is at it he might agree now to let us see the contents of that famous letter in which the Secretary of State for External Affairs puts so much faith.


Pierre Elliott Trudeau: Madam Speaker, in reply to what the hon. member has asked I have a CP wire here which begins with these words:
British Prime Minister Margaret Thatcher today repeated with slight variation that a request from Ottawa for patriation of the Canadian Constitution must be dealt with quickly and in accordance with precedent and the law.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: How the British government in its wisdom decides to manage its business before the House is something which only the British government can decide, and I would not be in a position to demand that it proceed one way or another. What we are demanding is that they put the measure through.
As the Secretary of State for External Affairs said, the British government has made it clear that it wants to make it a government measure, that it wants it to be proceeded with and that the whips would be on; but the way in which they will decide this and when they put the whips on is certainly something for the House leaders over there to decide.
Since the hon. member and his colleagues have been quoting so intently from the conversation 1 had with Mr. Pym, I am surprised that they have only quoted part of it. Maybe they do not have the whole record, or maybe they are hiding the part of the report that they do not want to show, so perhaps they could table their documents on the conversation I had with Mr. Pym. I would be happy to give the House the unequivocal commitment that Mr. Pym told me, on behalf of the British government, that they would not look through the measure,
February 3, 1981

that it would look beyond it. Mr. Pym went further and said that the British government would pay no attention to opposition from the provinces. Thus spoke Mr. Pym to me.


Some hon. Members:: Hear, hear!


MEDICAL CARE ACT
Mr. Edward Broadbent (Oshawa):: Madam Speaker, I have a question for the Minister of National Health and Welfare. Approximately five years ago the government announced its abandonment of the 50-50 cost-sharing program for medicare services which ensured that for every dollar the federal government spent on medical services in a province, that province would be required to spend a dollar. At that time the Prime Minister said that he was willing to gamble that the provinces would live up to their obligations. We said that we did not like the gamble. I have just obtained a copy of a government study which indicates that the gamble taken by the government has not paid off.
Considering that over the past five years federal expenditures to the provinces for medical services have increased by some 12 per cent but provincial spending has actually declined by 13 per cent-leading to all kinds of practices which are destroying our medicare system, such as extra billing, opting out, increased premiums and even bankrupt hospitals-when will the minister take steps to ensure that the provinces live up to the basic principles of medicare?


Hon. Monique Begin (Minister of National Health and Welfare):: Madam Speaker, with regard to timing, 1 am not sure that the impending election in Ontario is the best climate in which to discuss these very important matters. 1 am surprised that the Leader of the New Democratic Party would wait five months after the report by Mr. Justice Hall was made public before asking such a question. 1 suggest that to put into practice the recommendations of Mr. Justice Hall would be welcomed by all members on both sides of this House who believe that medicare is the best program for Canadians.


John Edward Broadbent: Madam Speaker, after five months the minister's answers have not improved. The hon. member for Winnipeg-Birds Hill has been trying to obtain straight answers from the minister on the recommendations of that report for many months.
1 repeat, I have just received a copy of this federal government document. Very appropriately, the minister calls reference to the province of Ontario. This document shows that the province of Ontario is the worst offender with regard to refusing to spend its fair share of money on health care. Considering that the federal government contributions for medicare to the province of Ontario increased by 26.4 per cent over the past five years, while provincial spending by Bill
Oral Questions
Davis' government actually dropped by 64 per cent, when will the minister take action to ensure that Bill Davis implements universal medicare in Ontario?


Monique Bégin: Madam Speaker, the facts about the decreased proportions of investment by provincial governments into health care expenditures should be well known to the hon. member by now. I also include the government of Saskatchewan in this category. I will answer the hon. member with a question: Would the hon. member want me to withdraw payments to the province of Ontario, with the eventual consequence of disrupting services? Would he want me to do that immediately, and does he think that this is the solution?


John Edward Broadbent: I suspect the report is only a matter of days or weeks old. It actually points out that there are two provinces which increased their spending; one was Prince Edward Island and the other was Saskatchewan.


Some hon. Members:: Hear, hear!


John Edward Broadbent: 1 would like to come back to the basic principles involved and have the minister play straight with the House just for once with regard to this matter, since she has talked in nice general terms about her concern with medicare.
There were five basic principles established in the Medical Care Act when it was passed in Parliament many years ago, which are being undermined in most provinces in Canada. I want to ask the minister when she will bring legislation before this Parliament which will say that for a dollar to be obtained by a province for medicare it must spend a dollar for medicare.


Some hon. Members:: Hear, hear!


Monique Bégin: Provincial rights and jurisdiction in matters of health are well known. The report of Mr. Justice Hall has clearly indicated that rushing into action by the federal government can do one thing, which is withholding monthly payments to provinces which do not meet the five conditions under medicare of accessibility, and so on, which would disrupt services. He said very clearly the matter must be dealt with by the provinces at the provincial level.


John Edward Broadbent: What do you say?


Monique Bégin: 1 suggest the hon. member phone Mr. Cassidy and ask him to organize a campaign on that matter in Ontario.


John Edward Broadbent: We will.


THE CONSTITUTION
Hon. Ray Hnatyshyn (Saskatoon West):: Madam Speaker, 1 want to return to the representations which have been made by

February 3, 1981
Oral Questions
members of our government to members of the government of the United Kingdom. I want to preface my remarks by simply pointing out that, again, the Prime Minister was less than candid with respect to the report he made to the House. He did not read the complete paragraph of the Canadian Press release which says that Prime Minister Thatcher:
-avoided a direct answer as to whether any assurance had been given to Canadian government authorities that a "three-line whip" requiring government supporters in the House of Commons to vote the party line would be used to push patriation through the British parliament.
Of course, the Prime Minister conveniently, tongue-incheek, as a joke, forgot to mention that.
I would like to ask the Secretary of State for External Affairs-


Pierre Elliott Trudeau: Ask me the question. You have prefaced it for me.


Ramon John Hnatyshyn: The Prime Minister will have his opportunity if he wants to speak in the House. I want to ask the Secretary of State for External Affairs-


Pierre Elliott Trudeau: What is the matter, have you no guts? Are you afraid?


Ramon John Hnatyshyn: The Secretary of State for External Affairs said there was to be a commitment for a three-line whip. The Prime Minister says not.


Madam Speaker:: Order, please. Was the hon. member for Saskatoon West rising because he wanted to ask a question?


Some hon. Members:: Oh!


Ramon John Hnatyshyn: 1 apologize, Madam Speaker; the Prime Minister had trouble with his sphincter.
I want to ask the Secretary of State for External Affairs, who is telling the truth? Was it, as he reported in "Question Period" last Sunday, the fact that he got a commitment for a three-line whip, or is the Prime Minister leading us on again? Tell us the answer to that question.


Mark R. MacGuigan: Madam Speaker, in none of the conversations in which I participated did I ask for any commitments from the British government. I received some in conversations, which they offered voluntarily in light of the tradition and their understanding of how they should best proceed. 1 did not at any time receive a commitment for a three-line whip, or any whip. 1 did not ask for such an agreement, but I did receive from them commitments with respect to the fact that they would follow the normal practice.


Ramon John Hnatyshyn: 1 have a short supplementary, Madam Speaker. According to the Secretary of State for External Affairs I gather the Prime Minister is misleading us about this three-line whip. There is a plethora of legal actions going on. I want to find out what did take place.
Maybe the Secretary of State for External Affairs can answer this question. Did the Prime Minister, the minister himself, or any minister of the government, inform the Right Hon. Francis Pym that it was open to the Canadian cabinet to consider the option of a reference to the Supreme Court of Canada after the Manitoba court had rendered judgment, regardless of whether or not the judgment of the Manitoba court favoured the federal government?


Mark R. MacGuigan: Madam Speaker, I am pleased the hon. member has referred to the Manitoba judgment. I think it is probably time that it was mentioned in the House today, since that court has resoundingly endorsed the federal position.


Some hon. Members:: Hear, hear!


Some hon. Members:: What was the vote?


Mark R. MacGuigan: Madam Speaker, the commitment with respect to the whips was made not to me but to the Prime Minister, from Prime Minister to Prime Minister.


PREVIOUS DISCUSSIONS WITH BRITISH MINISTER
Hon. Perrin Beatty (Wellington-Dufferin-Simcoe):: Madam Speaker, the resounding endorsement referred to by the Secretary of State for External Affairs was a split decision of three to two.


Some hon. Members:: Oh, oh!


Mr. Epp:: Another three-line whip.


Henry Perrin Beatty: Madam Speaker, I would like to ask the Secretary of State for External Affairs if, in his meeting with Mr. Pym on December 19, he suggested to Mr. Pym that it might be easier for Mrs. Thatcher to keep her own troops in Westminster in line if she gave a more clear public assurance to the federal government in Ottawa that she would support the federal government's position.


Mark R. MacGuigan: Madam Speaker, I am not sure, without checking my notes, if 1 recall precisely all of the things which were discussed. I asked Mr. Pym a great many questions during the course of my meeting with him with respect to what would make the passage of the bill in the British parliament simpler. That may well have been one of the questions which I asked, but I would have to check my notes on that.
With respect to the Manitoba decision, I might say it is a question of which question you look at. If you look at question No. 2, it was three to one. In any case, the important fact is that it was a judgment in favour of the federal argument.


Henry Perrin Beatty: Madam Speaker, I trust that the minister will get back to the House and report whether, indeed, his minutes show that he did make that suggestion to Mr. Pym, since he suggested earlier that he did not make any such suggestion.
February 3, 1981

In view of the fact that both the Prime Minister and the Secretary of State for External Affairs have referred extensively to a letter which they have said was sent by Mrs. Thatcher to the Canadian Prime Minister, in which they purport it was stated that the British Prime Minister committed herself to supporting the Canadian position, will the minister undertake to the Elouse that he will contact the British government to ask for permission to table that letter in the House of Commons, so that it will not be suppressed and withheld from the Canadian people?


Mark R. MacGuigan: Madam Speaker, in that letter the Prime Minister of Great Britain repeated that she would live up to the commitment which she had previously made to our Prime Minister.


Henry Perrin Beatty: Table it!


An hon. Member:: Let's see it.


Mark R. MacGuigan: That is a commitment which goes along with all of the other commitments, the whole series of commitments which we have received from the British government.


Charles Joseph Clark: Why hide it?


Mark R. MacGuigan: There is no magic in that commitment.


An hon. Member:: Table it then.


Mark R. MacGuigan: The same commitments were given in every contact we have had with the British government on this matter since it first arose. In addition to that, as I have pointed out before, that is what British governments have always done. We certainly have no intention of embarrassing the British government, or any other government, by publishing diplomatic correspondence.


JUDGMENT OF MANITOBA APPEAL COURT-GOVERNMENT POSITION
Mr. Jean Lapierre (Shefford):: Madam Speaker, my question is for the Right Hon. Prime Minister. Notwithstanding the brief announcement made by the Secretary of State for External Affairs and in order to dispel the concern and the alarming doubts which have haunted the conscience of several members of the official opposition concerning the legality of the government's constitutional approach, would the Prime Minister reassure the House and the Canadian public by informing them about the essence of the conclusions reached by the Manitoba Court of Appeal?


Pierre Elliott Trudeau: Madam Speaker, unfortunately I cannot give specific details because I have not seen the text of the ruling, but the Minister of Justice and Minister of State for Social Development informed me a few moments ago that, on the three aspects on which a judgment had been sought, the Manitoba Court of Appeal has
Oral Questions
ruled in favour of the initiative which is before the House by stating that it is legal and does not encroach on provincial jurisdiction.


EXTERNAL AFFAIRS
Mr. Bob Ogle (Saskatoon East):: Madam Speaker, my question is for the Secretary of State for External Affairs. I should like to ask about his discussions with General Haig last week. In light of the fact that the Americans are indicating that they are going to cut back by 25 per cent on external aid, in light of the fact that some of the aid they are now giving, to El Salvador in particular, is anything but aid for the poor, and in light of the fact that the minister described his discussions as excellent, I should like to ask him if he really brought up the question of El Salvador with General Haig? Secondly, did he speak to him about the North-South Summit to be held in Ottawa and the way that the Americans will approach it?


Mark R. MacGuigan: Madam Speaker, if I can recall all those questions, I will try to answer them. I did raise both questions. I raised the question of the North-South Summit with Secretary Haig, but I did not ask for a reply from him because the administration has just taken office. It has that question under active consideration, however.
With respect to El Salvador, I made the position of this government clear. It is one of opposition to the supply of offensive arms and I enunciated that to Secretary Haig. He was also able to tell me some facts about the situation in El Salvador which I had not previously known. We generally had a very good discussion of the issues in Central America.
With respect to the overall American aid program, my hon. friend has suggested that the Americans would be cutting back in their aid. There seems to be a controversy within the American administration at the moment. I made very strong representations, as the European community did subsequently, that it would be a tragedy for the world as well as for the United States if they were to cut back on their present aid programs.


INQUIRY WHEN PRIME MINISTER WILL MEET UNITED STATES PRESIDENT
Robert Joseph Ogle: Madam Speaker, my supplementary question is directed to the Right Hon. Prime Minister. I should like to ask if he has made any contact with President Reagan yet and, if not, what he plans to do about bringing President Reagan into the North-South Summit in Ottawa?

February 3, 1981
OraI Questions


Pierre Elliott Trudeau: Madam Speaker, 1 think the hon. member probably involuntarily misstated the case. The North-South Summit is not to be held in Ottawa; the North-South Summit which is projected will be held in Mexico, if, as we hope, it takes place.
In so far as the Ottawa Summit of seven economic countries is concerned, North-South relations is one of the items on the agenda. 1 hope it will be dealt with very thoroughly by the participants. 1 have not personally contacted President Reagan on the subject yet.


THE CONSTITUTION
Arthur Jacob (Jake) Epp: Madam Speaker, I should like to direct a question to the Right Hon. Prime Minister. Now that we agree on the happenings on December 19 and the assurances that the Secretary of State for External Affairs has said were given, 1 should like to take the Prime Minister a step further. Could he confirm that he learned in November, because of definite information that was given to the Secretary of State for External Affairs after constitutional proposals were revealed in October and after the provinces launched their court challenges, that it was the official and considered view of the government at Westminster that their parliament could not act if the constitutional proposals were being challenged before the Supreme Court of Canada?


Pierre Elliott Trudeau: Madam Speaker, in answer to the question of the hon. member, 1 will do as his colleague from Saskatoon West did a moment ago and preface my answer by dealing with some other subject. I want to tell the hon. member for Saskatoon West that if 1 was, in his words, partial and selective-


Some hon. Members:: Order, order!


Ramon John Hnatyshyn: Send me a memo.


Pierre Elliott Trudeau: -partial and selective in quoting from the CP wire, it is because the question that had been asked of me was partial and selective in quoting the other part of the wire. So 1 read the part that was missed by the Tory questioner.


An hon. Member:: Shame!


Pierre Elliott Trudeau: Madam Speaker, if the hon. member says shame because one of his members just quoted part of a despatch, then I think 1 share his view. Madam Speaker, the position of this government until now has been that we tried to be as open as possible with the British government-


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: -in referring to my meetings with Prime Minister Thatcher and to other meetings of ministers with
their opposite numbers in the United Kingdom. I want to tell the House very candidly-which is a word that 1 use-that what the British will do is something I cannot foretell. 1 have told this House what assurances we had. The Secretary of State for External Affairs and others have repeated those assurances. If the Conservative Party of Canada does not want to accept those assurances, that is up to them. I am not intent upon convincing them of the details of any conversation that went on.


Charles Joseph Clark: Why don't you answer the question?


Pierre Elliott Trudeau: I am answering the question, Mr. Clark. If the British government and British parliamentarians want to choose some other course than the one they promised us to follow, that is up to them. I cannot, of course, dictate any conduct to the British parliament.
I just want to make it clear that, from the point of view of this government, the request put to the British parliament for amendment of the Constitution, as it has been put many times since the BNA Act was passed in 1867, must result in the British parliament acceding to the will of the Canadian Parliament. That is our position. If the British do not take that position, as apparently the official opposition does not take that position, it is for them to say; then we will take the argument from there.


Charles Joseph Clark: Answer the question.


Arthur Jacob (Jake) Epp: 1 should like to ask the Prime Minister a supplementary question, Madam Speaker, even though 1 did not get an answer to my first question. The Prime Minister indicates that the Conservative Party can decide what it wants. I am asking him whether he had assurances. He speaks about assurances. Did he have the assurance, as I asked him in my first question, that the parliament of the United Kingdom could not act if in fact the matter was before the Supreme Court?
Further, given that the Prime Minister has known for months now that the government at Westminster has officially said that it could not proceed if the constitutional proposals were being challenged before the Supreme Court, why does he then persist in saying that he has assurances, contrary to those views?


Pierre Elliott Trudeau: Madam Speaker, the first point is that the British have not said for months, as he says, what he said they said.


Charles Joseph Clark: November 9.


Pierre Elliott Trudeau: Nor since November 9, Madam Speaker. From now on the position I am taking in this House, and I hope my ministers will take the same position, is that the British can speak for themselves. I do not think they need the Tory party in Canada to speak for the British parliament or the British government. As far as we are concerned, we have stated our views. I will not enter into any more-


Charles Joseph Clark: I won't tell you anything else.
February 3, 1981


Pierre Elliott Trudeau: -cross-questioning about private meetings between our ministers, or between the British Prime Minister and myself. The Elouse may not like this, but if they do not like it they can address themselves to the British parliament or to the British government.


Charles Joseph Clark: This is our Parliament.


POSITION OF PROVINCES ON CHANGE OF POWERS
Hon. David Crombie (Rosedale):: Madam Speaker, I should like to direct a question to the Prime Minister and ask if it is his view and the view of his government that the British parliament should be able to change the powers and responsibilities of the provinces without their consent.


Pierre Elliott Trudeau: Madam Speaker, I think that would come under the heading of a legal opinion, certainly a constitutional opinion.


Mr. Lawrence:: It is not hypothetical anyway.


Pierre Elliott Trudeau: I would point out to the hon. member that it seems to me that is exactly the position of the official opposition.


Charles Joseph Clark: Not at all.


Pierre Elliott Trudeau: They have suggested they want patriation and an amending formula without the consent of all the provinces, and they have added to this that they want to entrench part of the charter, to wit, aboriginal rights and native rights. So they arc saying that we can enact some part of the charter without the consent of the provirfces. They are saying we can patriate the Constitution with an amending formula without the consent of the provinces. Therefore, I think basically they are saying the same thing. Their constitutional position is the same as ours, except that they do not have the courage to entrench the whole charter; they just want to entrench part of it.


Some hon. Members:: Hear, hear!


David Edward Crombie: Madam Speaker, 1 know the Prime Minister would like to play politics with my question, but it is seriously meant.


Some hon. Members:: Oh, oh!


David Edward Crombie: I know there are a number of people who are concerned with the answer. I shall direct my question in this fashion, Madam Speaker. It is an important one because it is not a question of law, as the Prime Minister said yesterday; it is indeed a question of understanding our politics. People would like to know whether it is the government's view that the British parliament can change the rights and responsibilities of the provinces without their consent. It is a simple question; I would like a direct answer.


An hon. Member:: Yes or no.
Oral Questions


Pierre Elliott Trudeau: Madam Speaker, I gave the answer. The answer is yes. What I am saying is that the Tory party said the same thing this week in committee-


Allan Frederick Lawrence: Nonsense.


Pierre Elliott Trudeau: -when they said they would impose on the provinces by asking Great Britain to pass a statement in London affecting the rights of the provinces and saying that aboriginal rights will be imposed on the provinces without their consent.


An hon. Member:: Read the transcript.


Charles Joseph Clark: It is tough to destroy the public record.


PETRO-CANADA ACQUISITION OF PETROF1NA-EXTENSION OF PUBLIC OWNERSHIP
Mr. Ian Waddell (Vancouver-Kingsway):: Madam Speaker, my question is for the Minister of Finance. It concerns the takeover of Petrofina by Petro-Canada. In spite of this takeover, which we on this side of the House welcome and have long advocated, will the minister agree that Imperial, Gulf, Shell and Texaco still dominate the oil industry?


Some hon. Members:: Oh, oh!


Ian Gardiner Waddell: As a matter of fact, the combined company represents only 8 per cent of the revenues of the industry.


An hon. Member:: Why not take over Kuwait?


Ian Gardiner Waddell: If my friends will just be patient, my question to the minister is this. Is the minister prepared to announce any set policies or plans to bring the real substance and future control of the industry under public ownership?


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, the hon. member's question tailed off into the customary indecision of the NDP, not knowing whether they embrace the policy we have adopted in the national energy plan.


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: For my own part, the government is very pleased that Petro-Canada has been able to negotiate arrangements which will lead to this acquisition and add to the public sector, as indicated in the national energy plan.


Some hon. Members:: Hear, hear!


Ian Gardiner Waddell: Madam Speaker, I think the minister is being unfair.


An hon. Member:: That is right.

February 3, 1981
Oral Questions


Ian Gardiner Waddell: I am asking him to make some real dints into private industry, so let me ask the minister this. He referred to the national energy policy. When the policy came out, shares of Petrofina were $60 to $65 on the market. Now the government is buying the shares for about $120, at a much inflated price. Can the minister indicate how he would control in future takeovers the price paid. Could the minister also tell this House and the public how Petro-Canada will pay for those shares of Petrofina?


Mr. Malone:: Tell us, Allan.


Allan Frederick Lawrence: Make the rich pay.


Mr. Paproski:: How about Canada Savings Bonds?


Allan Joseph MacEachen: Madam Speaker, on the first point which the hon. member has made, it has been the experience in previous acquisitions, either by Petro-Canada or by private companies, that in order to acquire control of a new acquisition usually a premium is required for the purchase of shares. The hon. member can debate the validity of that, but that has been the experience in this and in previous cases.
It has not been determined finally how the acquisition will be paid for, although the hon. member will recall that in the budget it was indicated there would be a Canadian ownership charge that would be used to finance acquisitions. It will be through this method that equity by the Government of Canada will be provided.


AGRICULTURE
Mr. Eymard Corbin (Madawaska-Victoria):: Madam
Speaker, my question is for the Minister of Agriculture. It is in connection with the report of the National Farm Products Marketing Council which he released yesterday. The minister will recall that the council makes a very serious statement in its report respecting questionable marketing practices in the potato industry. These are widespread and it seems producers have been intimidated from talking publicly about their problems within the industry.
When will the minister establish a commission of inquiry into all aspects of the potato industry? This is a request I have made on a number of occasions in this House.


Hon. E. F. Whelan (Minister of Agriculture):: Madam Speaker, I do not know whether I can go as far as the hon. member would like when he mentions a commission of inquiry into aspects of the potato industry. The National Farm Products Marketing Council has held some pretty detailed hearings. I am very concerned about some of the statements which are in their report to the effect that some producers appeared to be scared to give the evidence they really wanted to. We are investigating that and if we find that this is substantially
correct, I intend to recommend some kind of commission of hearing.


FISHERIES
Mr. Thomas Siddon (Richmond-South Delta):: Madam Speaker, my question is for the Minister of Fisheries and Oceans. A few days ago the minister announced a complete closure of the Fraser River which will affect some 1,000 gill net fishermen whose livelihood is dependent upon that fishery. The decision was taken because of the seriously threatened state of the chinook salmon stocks.
My question is this: Why has the minister not chose to adopt some of the other management options put forward by his consultants and departmental officials which would have spread the burden of conservation more equitably among other sectors of the industry in British Columbia waters?


Hon. Romeo LeBlanc (Minister of Fisheries and Oceans):: Madam Speaker, what happened some days ago was that, as a result of consultation, all groups in the industry seemed to recommend very stringent conservation measures. 1 discussed that this morning with the assistant deputy minister who is stationed on the west coast. We are looking at ways to make other groups of the industry share in the conservation measures that we are envisaging. The final decision on this issue will possibly be made before next week.


Thomas Edward Siddon: Madam Speaker, I am pleased to know that the decision is not final, but it has come to our attention that by shutting out the Fraser River gill net fishermen from the sockeye runs, that unfulfilled catch will be granted to the sein fish fleet. Would the minister clarify that question? Would the minister also admit that the problem with chinook stocks really results from a lack of effective enforcement over the years with regard to poaching in particular, and from the lack of this government's commitment to get on with resolving the Canada-U.S. agreement which is crucial to the completion of enhancement projects on the Fraser River?


Roméo LeBlanc: Madam Speaker, everyone who knows a little bit about the Pacific fishery knows that if we had enhanced, or if we were to have enhanced, the Fraser River stocks without bringing some equilibrium to the wild stocks, we could do very serious damage to the chinook stock which is so precious to us. We are endeavouring to take action with the full co-operation of the industry.
February 3, 1981


ADMINISTRATION OF JUSTICE
Mr. Ray Skelly (Comox-Powell River):: Madam Speaker, my question is for the Solicitor General. I gave him notice of it, but 1 am sorry it was so late in coming. The minister is aware that three people have committed suicide in the Courtney lock-up in Courtney, British Columbia. Two of them were teenagers, and the most recent case of suicide had been arrested on a mischief charge. The major problem would appear to be a lack of adequate supervision of prisoners in the lock-up and that the lock-up is a completely inadequate facility. The lock-up has been talked about since 1972 and a new one promised since 1977, but it seems to have been held back for restraint reasons.
Would the minister investigate the details of these recent deaths? Would he also ensure that prisoners in the Courtney lock-up receive constant supervision and would he further undertake to give us a date on which construction of the new facilities will begin?


Hon. Bob Kaplan (Solicitor General):: Madam Speaker, I would like to thank the hon. member for giving me a chance to check the facts following the unfortunate death of this 18-year-old youth. I concede that the cells are not in an ideal condition. In fact, a coroner's jury made recommendations for improving the cells, and I am glad to report to the House that every one of the recommendations that were made I am told has been implemented. There is a construction program in place; it has not been delayed by restraint. The target for completion of the new facilities is the end of 1982, and they will be completed on schedule.


Raymond John Skelly: Madam Speaker, the stories that I have heard indicate the problem has been there for some time. Is the minister aware that the problem is not just the lock-up conditions, but the fact they are located in a blind spot and the supervisor is locked outside and cannot see in? With previous deaths in that particular area, one involving a 15-year-old girl and another an adult, there was a problem of supervision. Will the minister undertake that there will be no delay in bringing this matter before Treasury Board quickly, because I understand it is still pending? Will he also undertake to look carefully at the problem of supervision by civilian guards who work in that area?


Robert Phillip Kaplan: I will do that, Madam Speaker. I want to repeat that the understanding 1 have is that all of the recommendations made by the coroner's jury have been put into effect. I will look into the situation to see if some temporary improvement can be made that will carry the present cells to the completion of the new facilities, which have been approved by Treasury Board and will be completed by the end of 1982.
Point of Order-Mr. McKnight POINTS OF ORDER


MR. TOWERS-PROCEDURE RESPECTING S.O. 43 MOTION
Thomas Gordon Towers: Madam Speaker, I rise on a point of order. I recognize that it is not given to members of Parliament to reflect on decisions of the Chair, but with regard to a motion 1 moved under Standing Order 43 today, 1 believe there is a misunderstanding between the Chair and myself. After looking at the "blues", perhaps the Chair might give a decision on that tomorrow. My motion was not a congratulatory message, but rather called on the communities of Canada to give support to police forces and police associations so that our country will be a better place in which to live.


Madam Speaker:: It is often difficult at first glance to see whether a motion is in order. I had the feeling that it was a congratulatory message, or a message of encouragement. I was afraid that if I accepted the motion of the hon. member for Red Deer (Mr. Towers), tomorrow and on following days I may be in the position of having to accept motions with regard to nurses, doctors, and other members of the community without whom our life would not be the same. I will look at the hon. member's motion. If I have been unfair, I will certainly allow him to bring it forward on another day.


MR. NIELSEN-NOTICE OF INTENTION TO RAISE POINT OF ORDER
Hon. Erik Nielsen (Yukon):: Madam Speaker, I rise on a different point of order. While the Chair is looking at the motion under Standing Order 43 of the hon. member for Red Deer (Mr. Towers), she might at the same time look at the motion under Standing Order 43 moved by the hon. member for Sarnia (Mr. Cullen) which might commend itself for a comparison between the urgency of both.
I rise now to give notice of a point of order that I intend to raise tomorrow. The Prime Minister (Mr. Trudeau) made extensive references to and citations from a letter from Prime Minister Thatcher to himself. Extensive references to and citations from the letter have been made by the Secretary of State for External Affairs (Mr. MacGuigan), both in the public media and in this House. I wish to correlate all those three sources of statements to the rules. I am now simply giving notice that 1 intend to raise the matter on a point of order tomorrow and give the Table officers an opportunity to advise the Chair in advance as to the precedents, and to offer the government House leader the same advantage.
mr. Mcknight-a problem in mathematics


Mr. Bill McKnight (Kindersley-Lloydminster):: Madam Speaker, 1 rise on a point of order. I will be very brief. I wish to bring to the attention of the House the courtesy which the Minister of Agriculture (Mr. Whelan) extended to those on this side by supplying us with 125 apples from the province of Quebec. However, in order to be fair, we received more cards than apples from the Minister of Agriculture. Knowing his

February 3, 1981
Status of Women
penchant for good housekeeping, 1 would like to return these cards to the Minister of Agriculture.


Some hon. Members:: Oh, oh!


MR. WADDELL-STATEMENT MADE BY MR. TAYLOR
Ian Gardiner Waddell: Madam Speaker,
I rise on a point of order. As reported at page 6805 of yesterday's Hansard the following exchange took place:


Monique Bégin: Name a better country than Canada.


Mr. Taylor:: Alberta.
1 wonder if the hon. member for Bow River (Mr. Taylor) would take the opportunity to correct Hansard in that regard.


Gordon Edward Taylor: Madam Speaker, I would like to say that the rest of what I said is not in Hansard. 1 said "without Alberta the federal government would be broke", and I stand by that.


Ian Gardiner Waddell: It is clearly in the record of Hansard at page 6805:


Monique Bégin: Name a better country than Canada.


Gordon Edward Taylor: Alberta.
The hon. member refuses to change that. Are we in this House to understand he really believes that?


Madam Speaker:: If the hon. member for Bow River (Mr. Taylor) does not wish to correct Hansard, that is his prerogative. If he wants the text to stand as it is, it will stand as it is. The hon. member for Vancouver-Kingsway (Mr. Waddell) cannot force the hon. member for Bow River to change words he thinks the hon. member said in this House.


Gordon Edward Taylor: Madam Speaker, I would like to say that I am not in any way responsible to any member of the NDP. If the hon. member does not like it, he can lump it.


Some hon. Members:: Hear, hear!



ROUTINE PROCEEDINGS


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, under the provisions of Standing Order 41(2) I should like to lay upon the Table a file copy of a letter I sent to the executive committee of the Advisory Council on the Status of Women requesting that they make public their affidavit concerning the minutes of the January 9 meeting.


Mr. Walter McLean (Waterloo):: Madam Speaker, having tabled the letter as he has done upon request, will the minister also table the reply he has received to the letter?


QUESTIONS ON THE ORDER PAPER
[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. 28, 1,459, 1,705, 1,706, 1,707, 1,808 and 1,815.


Mr. Cossitt: 1.	With reference to the answer to question No. 253 of the Third Session of the Thirtieth Parliament which states in part "It is not the practice of Canadian National to disclose the names of persons or firms submitting tenders for the supply of services", on what date was this practice established and (a) who established it (b) for what reason?
2.	Since Canadian National Railways is owned by the taxpayers of Canada, will the government institute an immediate policy of making public any information legitimately requested in the House of Commons about its operations and, if not, for what reason?
3.	With further reference to the answer to question No. 253 of the Third Session of the Thirtieth Parliament which states in part "The amount of gross revenue paid by Blue Line Taxi Company Limited to the Crown is considered confidential to the parties involved during the term of the agreement" (a) who considers this to be confidential and for what reason (b) what are all the reasons the government permits any publicly-owned operation to keep its expenditures confidential (c) will the government now make this information public?


David Michael Collenette: I am informed by the Department of Transport, the management of the Canadian National Railways and the Prime Minister's and Privy Council offices as follows:
1.	The cited practice is based on the needs and customs of the competitive commercial environment in which CN operates, including respect for confidentiality regarding the affairs of others proposing to contract with it. The time when that specific practice was adopted is unknown but doubtless predates the tenures of office of the present members of the board of directors and senior management officers of CN. The reason may be taken to be the protection of CN's ability to negotiate or call tenders advantageously.
2.	Because Canadian National operates in a commercial and competitive environment it is not deemed desirable to impose upon that corporation disclosure policy which would place it at a disadvantage with its competitors.
3.	Blue Line Taxi Company Ltd.'s contract with the Department of Transport for the provision of taxi service at Ottawa International Airport was a negotiated agreement dating from 1969. This agreement was terminated on April 30, 1980.
(a)	It is standard business practice that financial information contained in such agreements is not released with-
February 3, 1981

out the consent of both parties. To the knowledge of the Department of Transport, Blue Line has not consented to such release, either during the term of the agreement or since its termination.
(b)	The question refers to payments by Blue Line to the Crown. As Blue Line is not a publicly-owned operation, this subquestion does not appear applicable.
(c)	The government will not release the information in question without the consent of Blue Line.


Mr. Deans: 1.	From 1965 to June 1980, how many ordersincouncil were issued affecting General Motors and its subsidiaries operating in Canada and what was the actual wording of each order in council?
2.	What amount of customs duty was remitted for each order submitted concerning General Motors and its subsidiaries?
3.	What were the commitments from General Motors and its subsidiaries in exchange for remitting each customs duty?
4.	Did General Motors and its subsidiaries meet each commitment?


Hon. Herb Gray (Minister of Industry, Trade and Commerce):: In so far as the Department of Industry, Trade and Commerce is concerned: no orders in council were issued to General Motors by the Department of Industry, Trade and Commerce.


Mr. Cossitt: 1.	Did the government receive any funds for payment of the swimming pool at the official residence of the Prime Minister at 24 Sussex Drive and, if so, in what manner?
2.	(a) Were such funds made by (i) cash (ii) cheque or cheques and, in either case, who gave the money or who signed the cheque or cheques (b) did the name of any organization appear on the cheque or cheques, specifically the Liberal Party of Canada and, if so, was there any obligation under the law to report such disbursements and the origin of such disbursements in existence at the lime they occurred?
3.	On what date was each amount received and who received it on behalf of the government?
4.	Were records kept of any cheque or cheques and, if so, what was the (a) name of the bank (b) number of the bank account (c) actual address of the branch of the specific bank (d) name of the holder of any account involved?
5.	What are the details of all or any knowledge possessed by the government in regard to sources of funds for building the swimming pool and is there any method by which the government can determine whether any of the individual donors could have been considered in any manner as being in conflict of interest?


Hon. Yvon Pinard (President of the Privy Council):: See
replies to questions Nos. 1,233, answered October 28, 1975, Hansard page 8611; 1,294, answered July 14, 1975, Hansard page 7529; 2,211, answered May 20, 1975, Hansard page 5919; 2,691, answered July 22, 1975, Hansard page 7813; 2,692, answered October 14, 1975, Hansard page 8136; 2,773, answered October 14, 1975, Hansard page 8147; 3,323, answered November 7, 1975, Hansard page 8959.
Order Paper Questions


Mr. Cossitt: 1.	Did the Department of Public Works have any connection with the construction of a swimming pool along with its surroundings and contents at the official residence of the Prime Minister at 24 Sussex Drive during the term of office of the Prime Minister and, if so (a) what is a detailed description of all such connections (b) what are the names of all persons in the department who had any connection with the matter?
2.	Can the department absolutely assure the Canadian people that any donors involved were not in conflict of interest?
3.	(a) What was the name of the contractor and the names of all subcontractors (b) what were the dates, amounts of all payments made to the general contractor or subcontractors and for what work?
4.	Did Mr. William Teron, former head of Central Mortgage and Housing Corporation, have any connection with the project and, if so, in what way?
5.	Docs the department have any knowledge of the identity of the donors and, if so. docs it know from whom any of the money was received and on what dates?
6.	(a) What was the full cost of everything connected with the construction of the swimming pool (b) did any money come from public funds and, if so (i) what was the amount (ii) what is a detailed explanation?


Yvon Pinard: Sec
reply to question No. 1,705 answered this day.


Mr. Cossitt: 1.	What are the names and addresses of all persons who gave financial gifts to the government between January 1, 1973 and December 31, 1975 and, in each case, what was the (a) amount (b) purpose of the gift?
2.	What are all of the details of how the money was spent?


Hon.   J.-J. Blais@Minister of Supply and Services: 1 and 2.
The information requested in this inquiry is not available through any records retained in finance branch, services administration, or filed in Archives on its behalf. No record has been kept of detailed documentation supporting the Public Account preparation prior to the 1976-77 fiscal year. The only reported amount available starts with the fiscal year 1974-75. In the working papers for Public Accounts, there is a combined total for "Donations to the Crown" of $29,454. However, this cannot be broken down by individual donations and would include a significant amount from anonymous donors.
This lack of detail makes it impossible to identify the purpose of the gifts as requested in part 1(b) of the inquiry. If however, no restriction were attached to the donations, as is generally the case, they would be deposited into the Consolidated Revenue Fund to become part of the total cash available to the government. This would, in essence be the response to part 2 of the inquiry.


Mr. Herbert: What percentage of repair and maintenance contracts were awarded by Defence Construction (1951) Limited on a fixed-price basis?


Mrs. Ursula Appolloni (Parliamentary Secretary to Minister of National Defence):: All repair and maintenance con-

February 3, 1981
Order Paper Questions
tracts awarded in the fiscal year 1979-80 were on a fixed price basis.


Mr. Herbert: Are copies of the current government contracts regulations which pertain to the limits of authority under which Defence Construction (1951) Limited may increase the amounts payable under a contract available to the public?


Ursula Appolloni: Yes, the amendment to the Government Contracts Regulations as approved under P.C. 19802279, 27 August, 1980, was published in The Canada Gazette, Part II, Volume 114, Number 7, on September 10, 1980.


David Michael Collenette: Madam Speaker, if question No. 864 could be made an order for return, this return would be tabled immediately.


Madam Speaker:: Is it the pleasure of the House that question No. 864 be deemed to have been made an order for return?


Some hon. Members:: Agreed.
[ Text]


Mr. Gass: 1.	What has been the minimum size limit for lobster in the (a) Gulf of St. Lawrence area (b) Victoria-Cape Breton County area (c) Richmond County to Halifax area (d) Halifax to the U.S. Border area and are the minimum size limits expected to increase in the future and, if so, to what size?
2.	Will Canadian lobster fishermen be compensated by the government for decreased catches resulting from increased minimum size limits and, if so, to what extent and in what manner will the compensation be paid?
Return tabled.


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 stand?


Some hon. Members:: Agreed.
[ Translation]


Madam Speaker:: Under the provisions of Standing Order 54, I now leave the chair for the House to go into Committee of the Whole.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Monday, February 2, consideration in Committee of the Whole of Bill C-54, an act to amend the statute law relating to income tax-Mr. MacEachen-Mr. Francis in the chair.
The Chairman:: The House again in Committee of the Whole on Bill C-54, to amend the statute law relating to income tax. When the committee rose on Monday, February 2, 1981, clause 1 of the bill was under consideration and the hon. member for Peterborough had the floor.
On clause 1 -


Mr. Domm:: Mr. Chairman, dealing with Bill C-54, what is most concerning to me as a member of Parliament from Peterborough, central Ontario, is that during this session of Parliament the Liberal government through acts and bills is gradually moving this country to what I perceive to be a socialist republic. It tends to impose this plan on the Canadian people through a program introduced first with the budget, followed by an energy policy, and now through methods of taxation, in particular this Bill C-54.
I am concerned that the members to our left, the New Democratic Party, in co-operation with the government of today, are making this move toward socialism possible. The danger about this gradual move to a form of socialist republic is that if we, as Canadians, are inclined to accept socialism here in Canada, we as Canadians may forget that was a word invented back in the late nineteenth century to make us believe it is different from communism. The recent troubles in Poland have demonstrated a real lack of freedom in that country, and the Russians have illustrated in their official news releases that socialism and communism are one and the same.
If there is any doubt in this House about the simile of socialism and communism and the right to own property, I would refer them to the statement just two nights ago on national television by the President of the United States. When he was appearing before the news media he said, "Call it socialism, call it communism, call it what you will."
The other very disturbing thing is that socialism or communism eventually leads to totalitarianism, and we have evidence of that start in our country today.


Some hon. Members:: Oh, oh!


William Henry (Bill) Domm: I can understand why members to our left are somewhat upset on this subject of socialism.


An hon. Member:: Because it is a lie.
February 3, 1981


William Henry (Bill) Domm: They are upset because there is substantive proof, and an indication by this present government in concert with the New Democratic Party in Canada, that together they are going to adopt the kinds of policies which will move our nation, our country grown through the free enterprise system, into a form of socialistic government where we can take from those who have and give to those who have not, with no consideration of reward, incentive, legislation or tax measures that would add to the incentive of the free enterprise system.
Last night during the debate a member of the New Democratic Party used as an example of the kinds of policies they would like to see in place in Canada the case of a hairdresser in Hamilton who was finding it difficult to pay taxes. The very simple and basic answer the New Democratic Party would give, and this is recorded in my response last night was: can you not find some company, a major corporation, from which you can take that money-he was directing these remarks to previous statements by one of my colleagues-and pay the taxes for that person who is having a great deal of difficulty making that $6,000 payment? 1 remind the member from Hamilton-


Mr. Deans:: On a point of order, Mr. Chairman-


William Henry (Bill) Domm: Mr. Chairman, it is my turn, and 1 have 20 minutes.


Cyril Lloyd Francis: Order, please. I recognize the hon. member for Hamilton Mountain on a point of order.


Ian Deans: On the point of order, Mr. Chairman, the member is attempting to put words into my mouth. He is stating I said something last night which I did not say. 1 ask him to point to that portion of Hansard in which I said anything even vaguely resembling what he has now said, and if he cannot find it, withdraw it.


Cyril Lloyd Francis: The hon. member has made his point.


William Henry (Bill) Domm: The answer by the New Democratic member, the hon. member for Hamilton Mountain, to the problem of the hairdresser who found it difficult to pay this tax on $6,000 was: why cannot this Liberal government find that money to make it more easy for that constituent not to have to pay that tax? In reality the reason that hairdresser cannot pay tax on $6,000 income is because this government, in concert with the New Democratic Party of Canada, has failed to introduce policies, tax measures and incentives that would allow the free enterprise system to produce on its own. Free of government intervention in the marketplace it could produce on its own the profits necessary to generate the funds for this government to pay the bills. However, it insists, with the help of the New Democratic Party, on introducing policies in Canada which inflame government requirements for funds in order that it can satisfy this insatiable desire to spend money. We expect in Bill C-54 income tax measures which will encourage small businesses to function in order to produce the necessary profits.
We had hoped there would be some relief for the farmers in respect of capital gains tax in Bill C-54. What in reality is
Income Tax Act
happening under this tax measure. Bill C-54, is that farmers are going to be forced to sell their farms to pay all the accumulated capital gains tax which could amount to a sum greater than a farm's selling price. The non-exemption for farmers under the capital gains tax has been a major factor in the decline in the number of Canadian farms. Farmers are being forced to add the cost of their tax to the selling price, and this has led to immensely high set-up costs for new farms.
The Clark government would have allowed farmers to roll over the proceeds of a farm sale into an RRSP. Whatever the Prime Minister might think of it, Canadian farmers are looking ruefully now for some assistance. They have major questions of concern, as does the public, as to why the government has eliminated the farm community from assistance through RRSPs to avoid capital gains tax. Members opposite in the government will answer that they can put it on hold, that they do not have to pay that capital gains tax if they hand it down from father to son. However, it just sits there and, with inflation growing at the rate it is today, and with the devalued dollar like it never has been before, reality will fall on those farmers maybe two generations from now in that they will have to pay that tax.
We had hoped for an energy tax credit as well for the low and middle-income groups. I can remember not a year ago that members opposite, when they were in opposition, and NDP members as well, just a little over a year ago, were asking for some assistance for low and middle-income groups in order to offset some of their increased costs of energy. In the Crosbie budget, defeated by the NDP and the Liberals, we had offered an energy tax credit to assist every individual on low and middle incomes in Canada in offsetting stress and strain brought to bear by increased energy prices. That was and is denied. It is not in the present tax measures brought forward either in the budget or in this new income tax legislation.
I say to the members of the New Democratic Party and of the Liberal Party of Canada, which I like to refer to as the "Liberal-Democratic Party of Canada", that we need to introduce into our economy systems of taxation which will add incentives to businesses and encourage the construction industry so that homes can be built to supply the needs of all those people who are finding it virtually impossible to acquire homes today.
As a Conservative government we introduced a mortgage interest deduction. We brought it in, but it was turned down. It was not passed. Not all Liberals voted against the mortgage interest deduction. Some of them had the guts to stand up in this House and support mortgage interest deductions. What happened was that the New Democratic Party members did not want mortgage interest deductions. They did not want to help low and middle-income people acquire homes. They felt it would only benefit the rich or those who have, and that it would not help those who have not.
I remind the members of the New Democratic Party to my left that there are many low and middle-income people in

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Canada today who are losing their homes through foreclosure, who are unable, because of high interest rates, to make their payments. What is the response when we in opposition say assistance is needed for people so that they can build homes, so that there can be added incentives for the construction industry and so that we can create jobs and a climate which will allow this country to grow? We get no co-operation from hon. members opposite. They do not feel these measures are necessary.
As late as last night in television releases it was noted that all the programs introduced on behalf of the construction industry of Canada have down sides. That came from a minister in the present government. The down sides of introduced programs were referred to, and 1 say that we want some up sides. We want some turnarounds in our economy. We will get turnarounds only if we encourage the construction industry, which is the greatest producer of jobs in the labour force I can think of which we can mobilize and put into action today. We could offer interest savings to home owners to encourage them to buy homes. In doing so we could then add an incentive to the construction industry which is very badly needed today.
What did Liberal members opposite do with respect to a property tax deduction? Do I hear any cries from the New Democratic Party because we no longer have that in our income tax program? We had to rely on the Conservative government of Ontario to offer relief to the people who find it most difficult to pay their property taxes. The provincial Conservative government of Ontario introduced legislation which provided property tax relief for home owners in Ontario in lower income groups, senior citizens and people on fixed incomes, the people most seriously affected, because hon. members opposite have lost their credibility and have no responsibility when it comes to energy tax credits, mortgage interest deductions, property tax deductions, and so forth.
What is happening? This government will take away from the provinces of Canada, through tax measures and energy policies, their revenue-producing resource base. Through expropriation and through legislation this government will acquire control of major corporations in Canada. When hon. members opposite seize that control through energy tax measures, they take away from the provinces of Canada the royalties they have always received and have grown to expect. They remove royalties from the provinces of Canada, because once the federal government takes an interest in those corporations, that opportunity and that revenue are taken from the provinces of Canada.
1 warn the people of Ontario not to be taken in by the idea that always to acquire, to seize public ownership, to take state control of the free enterprise system is best for the people of Canada because, in view of what this government has done in the west with its present policies, I say, watch out, Ontario. Watch out for Inco. Watch out that this government down the road a piece does not feel it can set the world market price for nickel. How would the people of Ontario like it if the Liberal Government of Canada were to decide to set the price of nickel
at 50 per cent of the world price? What would we in Ontario say? We would say exactly what we are saying now.
The main object of this government in the energy field should be to seek self-sufficiency. Because of tax measures, budgets, and income tax legislation, we are the poorest example of moving toward self-sufficiency in the energy field. Non-renewable resources will be gone, with them will go revenue, and when it is gone it cannot be reclaimed. We will have to go to the world price somewhere down the road. If we do not, we will have to continue to subsidize.
Let us look at the promises made by this government in the last election campaign. I could find only five made by the Prime Minister of Canada, and all five have been broken. This government has not lived up to one of them. First, the Liberals would "manage more rigorously the nation's finances in order to make more effective the use of the taxpayer's money". The Prime Minister made that pledge just before the people went to the polls and were conned into voting for him. He said, and I quote, "We will hold the line on government expenditure growth under the rate of gross national product". That is the promise; what is the performance? For the coming fiscal year the MacEachen budget calls for an increase of 12.8 per cent in total federal spending. It forecasts an increase of 11.1 per cent in the gross national product, including inflation, so government spending is not being held in line.
Second, the Prime Minister promised "to achieve energy security at a fair price for all Canadians". He ridiculed the Tories for having failed to make a deal with the producing provinces, and he said, "We will negotiate an increase of less than 14 cents" in the price of a gallon of gasoline. A year later negotiations with the producing provinces are completely stalled, and energy security is a fading dream. When I filled up to come to Ottawa from Peterborough this week, I found that there has been an increase in one year of 50 cents a gallon.
Third, the Prime Minister promised a "development and industrial strategy which will provide jobs, spur growth and increase Canadian ownership and control". The Prime Minister said, "This party will not simply stand by and let the recession come". The then leader of the opposition and now Prime Minister said, "We will fight it and overcome it". He said that every economic tool at the disposal of a Liberal government would be used to save Canadian jobs and to maintain Canadian growth. In the year since that speech the Trudeau government has made no effort to use any economic tool to stave off the recession. In fact it did not even bring in a budget until it had been in office for seven months.
As for the promised industrial strategy, it is still to be produced, and Statistics Canada has just reported that more than 30,000 more Canadians are out of work now than a year ago.
The fourth promise of the Prime Minister in the last election campaign was that he would lead "a national government that uses its strength to realize the aspirations and economic potential of each of our provinces". It would be "a national government that builds up rather than tears down" and would make
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the 1980s "a decade of opportunity rather than a decade of doubt."
Mr. Chairman, I will finish with just one sentence. Fifth, the Prime Minister promised to "enhance the security of every individual by helping those who most need assistance". He has neglected to do that. We are minus new capital gains tax provisions, energy tax credits, mortgage interest deduction, property tax deduction and energy savings for the people of Canada.


Mr. Roy:: Mr. Chairman, I am happy to take part in this debate concerning a taxation bill which once again will help the Canadian people while stimulating the economy. I hope that these tax proposals will be reflected in the 1980 tax returns of all Canadians. 1 trust further that, as soon as this bill is passed, all the members on this side of the House will welcome it as a beneficial impact on the economy.
Mr. Chairman, I listened very carefully to the member who spoke before me. He still seems unable to distinguish between a socialist party and a Communist party since he still associates socialism with communism. During the time available to me, 1 shall try to explain that on February 18 of last year, the Canadian people chose, not the capitalistic philosophy of the Progressive Conservatives nor the socialist doctrine expressed by the NDP, but rather a party whose objective was to Canadianize these industries. This is why, as a member of the Liberal party, 1 have always disliked the leftist or rightist parties which go by that name in European countries. As for us in the Liberal Party, our objective is not to belong to the left or to the right, but rather to extend the centre so that the aspirations of all Canadians, whether from the west, the centre or the east will be reflected in our social legislation and economic incentives. This is why I say that the philosophy of the Liberal Party aims at extending the centrist position, and this is why on February 18 of last year the Canadian people chose our party rather than one or the other of the two extremes.
1 listened yesterday evening to the hon. member for Calgary South who told us about a trip which I also made as a member of the task force on the national trading company. The hon. member talked about the economy of Sweden, which has been administered for a long time by a socialist government, and he quoted the following figures: if you earn $25,000 a year, you will pay $13,000 in taxes, and you can be taxed at a rate of up to 75 per cent if you earn $32,000, and at a rate of up to 85 per cent if your income is higher.
1 have witnessed this situation and I think that my hon. colleague described it very well. He said that he bought a pair of galoshes for 159 kroner, to which I was also a witness. I told him, "John, if you had bought those galoshes in Canada, you
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would have paid $10, because this is what 1 paid for galoshes before leaving for this trip."


An hon. Member:: What are 150 kroner worth in Europe?


Marcel-Claude Roy: In Canadian dollars, 150 kroner are worth about $50. I believe that this is a good illustration of what is the situation in Canada and how often we forget it.
1 shall try to describe the pattern of the Canadian economy. During that trip, Mr. Chairman, I was proud to wear the Canadian flag, as 1 am proud today to wear a Canadian tie.
I was proud to see to what extent Canadians are well known for the reliability of their passport and also for the way they behave, for the role played by our embassies throughout the world, for the efficiency of our trade representatives in the industrial field. I would like to pay tribute to all those people for their outstanding dedication in representing Canada abroad. 1 would ask the parliamentary secretary who is here in front of me, to convey my congratulations to the people responsible for the excellent work they did and are still doing. 1 am speaking in the presence of the chairman of the special committee on the national trading company who was with me during that trip. We could see how anxious those people were to represent Canada as it should be. They are indeed good will ambassadors and worthy spokesmen for Canada's economic leaders.
I have other comments to make on the role played here by our commercial attaches who have visited all Canadian provinces as well. We also paid visits to the major Canadian cities where we met the industrialists and manufacturers with small and medium-size businesses, but the relationship between management and staff as we know it here in Canada-I do not want to reveal the contents of the report which will be tabled in the House but I would have liked to see our commercial attaches here in Canada show the same motivation as we have witnessed outside the country.
Mr. Chairman, 1 would rather restrict my comments to economic indicators and the progress made here in Canada. I will not use selective or partisan references, nor figures originating from political sources. The data and statistical tables 1 rely on were issued by the World Bank, by American statistics agencies and by the OECD, the Organization for Economic Co-operation and Development. The significant aspect is that we are all aware that inflation is rampant, that it is an affliction which knows no boundaries, an evil found all over the world. But what matters as well after we have paid our taxes is the money left in our pockets to buy a house, appliances, food, consumer goods or any other products. I think that is what really matters and I will refer to economic indicators to depict Canadian conditions as they are. 1 alluded earlier to the role played by our trade representatives, our ambassadors throughout the world. Members of the official opposition are saying today that they are blind, deaf, that they lack objectivity or else that they are solidly anchored by
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partisanship and want to make Canadians and their economy appear as though they are mediocre and reflect a disastrous situation.


An hon. Member:: They have a negative approach.


Marcel-Claude Roy: It is a negative approach and what was rejected last February 18 was indeed that negative approach which makes them criticize everything without objectivity. Everyone talks about inflation and, of course, we have inflation in Canada but, between 1960 and 1979, unemployment went up 520 per cent in Australia, 443 per cent in West Germany, 108 per cent in the United Kingdom, 90 per cent in Japan and 40 per cent in Sweden. At 27 per cent Canada ranks second behind the United States in job creation. I have here some figures which reflect the situation as regards job creation. In Australia, for example, a country with a rather rightist government, the number of jobs has increased by 12 per cent. In Sweden, under the socialist administration, the increase was 9 per cent. I should have liked, had we had more time, to speak a little longer about the Swedish socialist party, since the PQ government wanted to somewhat imitate or copy Sweden's socialist administration. 1 hope Quebeckers, come the next election, will remember the economic performance under the socialist or social-democrat system in Sweden where today more employees or workers are employed in the public than in the private sector. That is not what we intend to do, Mr. Chairman, absolutely not. But that is what some try to have us say or to make people believe. Members of the Progressive Conservative Party suggest that the Liberal Party has become a socialist party. On the contrary, we are a centre party and we want to enlarge the centre. We want to reduce the budgetary deficit, but we are aware of our responsibilities to the disadvantaged people as well as to small and medium-sized businesses in need of economic incentives. I intend to revert to that later. As for job creation, Canada was first among OECD countries. Our economy had the best growth rate for the years 1970 to 1979 with 55 per cent, as compared to France with 41 per cent, Japan with 38 per cent, the United States with 29 per cent and Sweden with 19 per cent.
What is important and what I realized on this trip is that food is less expensive in Canada than anywhere else in the world. That is consistent with the statements made by the Minister of Agriculture who often refers to the cost of a food basket in U.S. dollars-but unfortunately people do not quite realize it. Let us compare the cost of a food basket in Canada and elsewhere. In Canada, it costs $55.58, in the United States, $58.02, in Australia, under a fairly rightist government, $66.70, in Sweden, under a socialist government, $99.68, in Japan, because we are often asked to compare Japan's economy or economic performance to Canada's, the same food basket which in Canada costs $55.58 U.S., costs $135.10.
Let us now consider the number of hours of work needed to purchase those groceries. In Canada, seven hours of work are required and about the same in the United States. In Australia, a few more hours are needed; in Sweden, it takes 14 hours of work to purchase those groceries; and in Japan, 25 hours of work. Mr. Chairman, I could go on and on. That is an indicator of the Canadian economy, an indicator which members opposite never mention. They say, "The economy is in a slump. The government is going socialist." Well, let us talk about that. Reference is also made to the flight of capital, to an unfavourable climate for investment.
I have here a speech made by Senator Bud Olson, Minister of State for Economic Development, at the "Business Outlook for 1980" conference held in Toronto by the Conference Board of Canada. The minister mentioned that capital is an important source of growth for our economy, and 1 quote:
We can always borrow abroad, of course, and that is what we have done in the past. In fact, the foreign percentage-as opposed to the national percentage-of investment capital in Canada has gone from approximately 5.5 per cent at the beginning of the decade to 9 per cent at the end. This is an increase of some $3.75 billion in foreign borrowings in that period.
So then, those foreign countries chose to invest in Canada and their investments doubled in the last ten years. They chose Canada because it was in their interest to do so. It is our responsibility to develop a climate favourable to investments. I think that these new tax measures contained in the budget brought down by the Minister of Finance are yet another government initiative designed to encourage job creation, stimulate small and medium-sized businesses and develop our industry.
I should also like to reply to the hon. member for Qu'Ap-pelle-Moose Mountain who spoke last night. I have considerable respect for the hon. member who, at one time, was minister of agriculture. However, when he mentioned yesterday that we should encourage Canadians to participate increasingly in energy programs, in fact he was preaching Canadian ownership of Canadian industries. He mentioned how important it is for Canadians to invest in Canadian institutions and industries. That is precisely what we are doing. We are striving to Canadianize increasingly the oil industry. That is the Liberal program, the Liberal policy which was rejected by big business on February 18: they would rather continue squeezing money out of the Canadian provinces, the Canadian people, and continue to fatten up the oil industry. What have we done? One need but read what the hon. Minister of Energy, Mines and Resources announced: an amount of $100 million to help co-operatives and credit unions take a more active part in energy development.
The discussions launched last May with the various co-operative unions, whose membership exceeds nine million Canadians, should result in total investments estimated at over $1 billion. That is what we are doing now, Mr. Chairman. It seems to us that on the other side, because of partisanship or lack of objectivity, hon. members keep on preaching, without
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ever seeing the end of the tunnel. They are still in the dark or almost total darkness. That is the difference between an optimistic Liberal philosophy and that of the Progessive Conservative Party which is essentially capitalistic. It is that difference which tipped the scales last February 18. That is why the Liberal Party stands neither to the left nor to the right, and is trying to widen the centre. We want to listen to the Canadian people. We want to meet their aspirations making them a reality through positive legislation. That is what we want to keep on doing.
Mr. Chairman, we heard the hon. members of the opposition speak of a disastrous economic situation. Last week, once again some good news was announced with regard to the economy; mention was made of another favorable economic indicator, namely, a trade surplus of $8 billion. This is very encouraging. Furthermore, in order to promote the further development of our Canadian industries, of the small and medium-sized businesses, we must protect them because some countries also want to expand their wo-ld markets through a mixed credit system by favouring an interest rate to develop their foreign trade. We wanted to protect our industries. The minister announced a three-year program that was not designed to subsidize exports but simply to prevent Canadians from losing potential markets, because some countries use mixed credit to support their interest rate somewhat and thus deprive Canadian companies of contracts.
We took action. The government looked into the problem. The special committee v.nch considers the advisability of setting up a national trading company had received representations from manufacturers. They pleaded with us to do something because contracts were being lost, because they were not competitive. The government decided to act, and over a three-year period projects worth $900 million will be protected in order to prevent the loss of jobs in the Canadian industry. That's leadership. One does not wait until the train has gone by to react. And that is what we are being told now. I have tried somewhat to feel the pulse of the economy in the housing sector, and I could do the same in other sectors. It has been done with regard to the food basket and the creation of jobs. I could deal with the development of small businesses through various economic incentives, but that is the objective we are aiming at through these new income tax amendments, Mr. Chairman.
In conclusion, Mr. Chairman, I should like simply to say this: Canada is the country of the world which will meet the greatest challenge over the next few years. The Canadian people themselves are facing this challenge. It is our responsibility to take advantage of our geographic situation as well as our natural and human resources if we are to meet this great challenge.
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Mr. Bosley:: Mr. Chairman, it is normal during first reading of a bill, or during Committee of the Whole stage, that most interventions do not come from the government side so it is nice that we had one on this bill. We can expect the odd one- and that certainly was an odd one. As a Canadian, not as a Conservative, I get a little tired of the defence that government members make of their policies based on the fact that they have not ruined this country quite as badly as other policies have ruined other countries. I find that a very tiresome defence of policies for which the government is responsible.
The hon. member for Laval has charged that we are not being objectively critical when we say that we do not believe the government intends to reduce its deficit. We base this criticism on the demonstrated record of the government so far. I believe that evidence from the past is more useful than objective criticism and promises for the future. The record of the government is very clear on that. If I am not being objectively critical but am somewhat suspicious of the government's projections with regard to the deficit, I apologize to the hon. member and to you, Mr. Chairman. I am suspicious, however, and I think I have good reason to be.
Perhaps the most critical thing in the speech which may be indicative of the problem we face when we are accused of being partisan, is that having made a budget presentation which argued at length, as the hon. member for Qu'Appelle-Moose Mountain expounded upon so eloquently last night, that the single best thing to get the Canadian economy going is to get Canadians to invest in it, the hon. member for Laval then refuted that argument by saying more money is being given to caisses populaires. No one objects to the government helping those who need help. What I object to is the government's philosophy that says, "We will take more, give out a little of it, and in this way give help." That is the philosophy which has landed us with our present problems.
I should like to compliment the government, however. Perhaps the hon. member for Laval would be interested in knowing that a number of Conservatives welcome some of the measures in this bill and believe that the government should be complimented on them. A measure that was welcomed in my constituency was the spouse's allowance introduced by the Minister of National Health and Welfare. The inclusion of a deduction for spouses' income in unincorporated businesses in this bill is a fantastic idea.
There are others that we like as well, and I will mention them with tongue in cheek. That seems to have become fashionable in this House; the Prime Minister is making a track record of it.
One provision that will help a small but unusual group of people is the provision for an employee aircraft deduction. Until the present time only businesses have been able to deduct aircraft expenses but now employees who have to use planes will be able to deduct that expense. I thank the minister for including that provision because it is going to be helpful to

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some workers in my constituency. I suspect the reason the Liberals included it is that they know how many Canadians may need planes to get to work in future if the economy continues to fade.
The overseas employment deduction will probably be just as useful as the last one. A number of my constituents are now finding that in order to do the work for which they are trained, they have to leave the country.
The volunteer firemen's credit will be welcomed in some of the small communities in Canada. It may turn out to be extremely useful because, looking ahead at the prospects for the economy, it seems there may be a lot of fires to put out. I am sure the government does not think of such things when it includes such deductions in legislation, but they will be needed.
Seriously, Mr. Chairman, there are a number of matters in the bill that will be useful, but I want to turn now to some things which are not in the bill but which should be in it. After 1 deal with them I shall expound upon why 1 believe they are not in the bill as 1 think the reason is indicative of the philosophy of this government.
I am very sad that the small business tax credit has not yet been extended. One of the problems facing Canadians today is the growing fear that not only will they not be able to create more wealth for themselves and others but that they may end up losing their present jobs. One way to combat that is to allow the small business sector to grow as quickly as it can because it is the foundation of employment in this country. I urge the government not to let the small business credit expire. In the tough times ahead it will be one of the few things to encourage people to invest in the small business sector, and that investment is vital if we are to survive this period.
For different reasons than those put forward by the hon. member for Peterborough I would urge the government-and 1 suspect without any hope-to reconsider its position on mortgage interest deductions. The argument for the deduction of interest on mortgages is often made by those who are currently paying off mortgages. I think there is another argument, however, that goes to the question of iax equity in our system. This point is not often made, but I should like to make it now.
Under the present system a young, struggling couple are rewarded through the tax system if they invest their money in RRSPs, and rent rather than own their home. That is the first problem. Anyone who does the mathematics of that proposition will find that there is in fact an incentive to remain a tenant and no incentive to become an owner. That is very well if one chooses to do that, but I believe it is silly to have a system that creates an incentive for people to remain dependent on landlords.
It is usual for young couples to struggle along and pay their mortgage without any help. That is the way they begin to build an estate. They discover, however, that once they have an asset they can borrow against it in order to increase the estate-to invest in Canadian stocks and bonds, to buy a piece of property or an asset that may increase in value. They discover that they
can deduct the interest. They have built up an estate without any help. Home owners often do not realize that they are relatively well-off compared to those who rent a home. Once they get rid of the mortgage and are secure, they can borrow against that asset and become better off. That is all well and good, Mr. Chairman. But it is like telling them that when they are well off the government will help them become better off, but when they were not well off in estate terms there was no help for them to begin an estate.
There is a tax bias in this which, in my view, in addition to all the very sensible help offered to those who want to build rental property has partly led to the dramatic decline in the last 40 years in the number of Canadians who own their own homes.
I make that case, Mr. Chairman, because I think the case is usually made the other way-help for those who have trouble keeping up their mortgages. While that is a valid case, 1 would urge the government to help those who do not now own their homes to become owners. They are discouraged from doing so by the tax system. The community, as a result, has fewer home owners and it follows that there is less sense of commitment to the community.
1 find it tragic that the investment tax credit in the last budget was so narrow. The Crosbie budget would have encouraged Canadians to invest in Canada. This budget encourages Canadians to invest in DREE areas. That is well and good because the underprivileged and underdeveloped areas need help as well to improve their position in the Canadian family. However, I would urge the government to remember that the idea of the investment tax credit was to encourage Canadians to invest everywhere in Canada. In the final analysis we cannot afford the luxury of saying that we only need investment in some parts of Canada. We are not that well off.
I am saddened to find there is no provision for an energy tax credit. There was no provision in the budget, and therefore there was no provision for one in this document. 1 am more saddened than ever not only because of the Liberal promise in the election that Canadians would not pay what we said they would pay for gas but that promise was made phony the moment the Liberals omitted the energy tax credit. The poorest Canadians are now without the tax credit and will pay more for their gas, even if it has only gone up ten cents a gallon, and every Canadian knows that it has gone up two or three times that already.
However, I am disillusioned because of this morning's announcement about Petro-Canada and Petrofina. Let me be clear in what I have to tell you about this. I will concede that most Canadians demonstrated in the election they believe Petro-Canada is not a bad thing. I think that was very clear from the polls. Certainly it is clear in my area. But most Canadians expect their dollars to be spent well. I for one do not like the idea that we will pay $1.5 billion for an asset worth $1 billion. But worse still, because of the way the system
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will go, Canadians will pay for that asset twice by borrowing. They will pay for it as far as I can tell, because there is no official announcement about how they will pay for it, through the petroleum compensation charge which will become another income tax, although it will not be represented as such in this kind of a document. Because it will be a petroleum compensation charge levied on gas and oil, it will be paid for by all Canadians, regardless of income. We shall all realize the effects of the failure to include energy tax credit in this bill.
Not only is the Government of Canada proposing that Canadians pay more indirectly for their oil and gas through wellhead levies, but now it is proposing that Canadians pay 50 per cent more than the assets which they propose to buy are worth. Canadians of all income levels will pay for that through their oil and gas without an energy tax credit for either of those matters. This will hurt those who can least afford the bill. That is precisely why the Crosbie budget included an energy tax credit for all households of moderate and low income. One of the tragedies of the re-election of this government is that it has failed to see that. I say to hon. members, if you are going to do what you are going to do, you have an obligation to protect those who can least afford these things, and you have not done it.
I suppose, Mr. Chairman, in a strange way none of these failures to include measures that will reduce the tax take of the government should surprise me. Last night in the late show I made some reference to the Minister of Finance's comments about what the government will take out of the gross national product. Members will find these references in yesterday's Hansard. The hon. member for Laval referred to the fact the government plans ultimately to reduce its spending and its deficits. The only problem with that is that the method the government proposes to use will not work, and the numbers which the government uses deny its own case.
If hon. members look in the appendix of the ways and means motion behind the budget on which this income tax is based, and look at table 4.1 in the appendix, which is a comparison of the national and public accounts of Canada, they will find that the Government of Canada proposes to increase its real spending from roughly $54 billion in 1979-1980 to roughly $91 billion in 1983-1984. As a percentage of the gross national product of Canada, that represents an increase from 20.9 per cent of the GNP to 22.3 per cent of the GNP. In other words, the government's own numbers indicate it plans to keep taking more out of the economy of Canada. Those are not the numbers the government quotes in the budget. The public account numbers are quoted in the budget. Those are the numbers which are created by taking the national accounts and eliminating from them all the figures which the government nets in.
What that means, for example, is that in the petroleum compensation charge, the government will take the money in and pay it out. It will never show on the books of the government. Any Canadian who does not believe what I have just said only has to read the budget because that is precisely what the government proposes to do, that there should be no
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accounting for that money in the books of the public accounts of Canada. It is on that basis the government claims it is not going to increase its spending dramatically. The real figures show that it is. The government then argues, and this Income Tax Act is to support this argument, that if it takes more out of the system now, as the member for Laval said, and then spends it, somehow the economy will grow again, in fact, in 1983 to 1984, and in 1982 to 1983, we will see a great increase in the GNP in Canada. That is the Minister of Finance's budgetary argument, Mr. Chairman.
If that is an argument which will work, then every Canadian has a right to ask why, having done it for 12 years, has it produced the situation that we are in today? Why are Canadians out of work in greater numbers than before? Why is Canada's inflation so rampant? Why does our dollar continue to fall on world markets? If it is such a good argument to restore the economy of Canada, why has it not worked when it has been used as the single Liberal economic policy to date?
I should mention one small matter, if I may, to correct the hon. member for Laval's figures. He has made a great deal out of Canada's job-creation record. I accept that Canada has done better than some other countries in the world. The premise of the member's argument is that because we have done better than other countries in the world, we should be satisfied. I have never understood being satisfied at reaching 50 per cent or 25 per cent of the country's potential. This country has the potential to keep everybody at work and to be, in significant ways, a much more vital and energetic country than it is today.
It is interesting to note that the figures which the member was using were 1979-1980 figures. This was during the period when we were in power. During the nine months we were in power the private sector of Canada created 300,000 jobs. The government did not do that because government does not create jobs or wealth. The private sector does that. The private sector created these jobs because it had faith in the economic future of this country. Some of that, in my view, was because of the then government. In the first nine months of this government's term, 75,000 jobs were created in the private sector. I suggest, as is true in that area, as it is true in the energy field and also in the investment field, it is because those on whom we must rely to create wealth, jobs, income and security for Canadians, have less faith in this government.
In conclusion, while there are measures in this Income Tax Act which are welcome, the tragedy is the omission of measures that are needed. Because they are not here is another indication that the government, when it was out of office, learned nothing about how to solve the real economic problems in the country. The government is back before us with yet another bill which, in the final analysis, intends to take more out of Canadian taxpayers' pockets because the government believes it can spend Canadian money better than Canadian taxpayers can. It is that philosophy which will destroy the economy of the country.


Mr. McRae:: Mr. Chairman, I listened with a good deal of interest to the hon. member for Don Valley West. He has a

February 3, 1981
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well reasoned argument. 1 do not entirely agree with all of what he says. However, I must say that a majority of economists will conclude that most economic measures take about a year to come into play. If his figures on unemployment are correct, then I will have some problems with what he is saying. If it is true that it takes a year, then the 300,000 jobs created when his government was in power were a result of economic policies of the previous government. And the problems of the last year were as a result of this government being in power. That may be a bit facetious. It has about as much value as the statement itself.
I have one other general criticism. It is a sweeping kind of criticism. It has to do basically with the whole business of housing mortgages in which that government was involved. There are good reasons for doing that kind of thing when one has plenty of money to do it. However, at certain times governments have to move with their limited resources in the directions that are most important.
In this budget the government has said that investment in energy is the key problem that will face the country over the next ten to 15 years. Money will have to be found to solve this problem. There is a lot that can be said about directing capital into the housing industry and consumer industries at this time when so much capital will be needed for energy.
I enjoyed the rationale of the hon. member's speech. I must say that he presents himself very well. However, two speeches I listened to last night prompted me to speak today. I heard part of the speech of the hon. member for Calgary South, and the remarks by the hon. member for Winnipeg-Assiniboine. I found them to be completely one-sided in their approach. Canada has a mixed economy. We have a bit of socialism, and private enterprise. With a population of 25 million people and such a vast area, the only way we can operate is with a mixed economy.
I will try to correct some impressions. I do not want it to appear as though I am anti-oil industry. I want to put on record what I believe to be the relationship between the Tory party and the oil industry as I have determined it in my eight years' experience here.
The hon. member for Etobicoke Centre came to my constituency where he made a very strong defence of the industry. He boxed himself into a corner as a strong supporter of the oil industry versus the consumers of Canada.
Before I came here, the industry was constantly preaching the notion that we have so much oil in this country we must do everything we can to create markets. They made arrangements with the government, and the Borden line was drawn. Those people living west of the Ottawa Valley line obtained their oil from Alberta, and paid a premium for it. That was one way of using some of the large amount of oil that we apparently had.
The Hon. Joe Greene was getting his information from the industry, the National Energy Board, and the department. It was to the effect that we had between 100 and 120 years'
supply of oil and 700 years' supply of natural gas. We had nothing to worry about.
When I came here in 1972 the Department of Energy, Mines and Resources was a relatively small operation. It dealt mostly with geological surveys, making maps and that kind of thing. The energy side was not all that important in the totality of it. The National Energy Board and the department obtained most of their information about reserves from the industry. They did not have the resources to determine this for themselves.
In early 1973 the 1972 reserve figures were presented to us. They indicated that the ultimate recoverable reserves of conventional crude oil in this country were 101 billion barrels. I am going back to this to try to show why Canadians do not believe this industry. 1 will try to indicate why there is a great deal of skepticism about that industry.
Some of us began to wonder about that figure of 101 billion barrels. We received bits of information from the department and from talking to various people. A very eminent petroleum geologist, Professor Ken North of Carleton University, appeared before our committee and told us that the figures were not realistic. He said that, if the figures were true, we must have a couple of Saharas in our midst, and this would have to be especially true with regard to the far north and the Arctic islands.
Some of us, including the minister, began to ask questions. Donald Macdonald, the then energy minister, stated in 1973 that the figures were not correct, that we did not have those kinds of reserves and we would have to cut back on exports to the United States. You should have heard the howls from the other side. They said it was terrible, "there is all kinds of oil in this country, it is ridiculous to cut back on exports."
The first stage was that we had so much oil we did not know what to do with it. We were looked upon as being some kind of strange animal for not wanting to sell our oil when we had so much of it. The second stage was that the oil was there, but we would have to find it and, in order to do that, more money was needed. The industry said that in order to find the oil more money would have to be spent and this would involve raising the price to consumers.
The industry said that if the price of oil were raised from $4 to $8 a barrel, there would be an 800 per cent increase in reserves. Seven years later we have had an increase, not from $4 to $8, but to $18, and the reserves are 35 per cent less than what they were in 1974.
That is the kind of information that has been given to the Canadian public. No wonder the public has become skeptical. I am not saying this to tear down the industry but to point out what the industry has presented to this nation and the fact that it has been wrong.
I remember visiting the Ranchmen's Club in Calgary where I met some people in the oil industry. I asked how they thought the Canadian people could believe them when they presented this kind of material. They told me that they were not lying or trying to distort the truth, but that they had been
February 3, i 981

able to refine their information. They were doing a better job of determining the real reserves because of technological advances.
During a six-year period we went from 101 billion barrels to 15 billion barrels, even though we had only used approximately four billion. This is why the Canadian people are skeptical. I firmly believe that we in this country and, in fact, throughout the world, are in serious difficulty in terms of oil reserves. I have been saying that in this House for eight years. I would not have been saying that had I listened to the oil industry. The Canadian public have many reasons for not believing what they have been told.
I now want to deal with the position of the Conservative party over the past several years. Every time we have tried-


Some hon. Members:: Oh, oh!


Paul Edmund McRae: The point is 1 am glad to have your support. I just think you should be supporting us now because 1 think we have something good going now and you should be here. That is another argument.
Every time we tried to take some step to ease the situation, for instance we brought in the petroleum administration bill, when we brought in the emergency allocation bill-two of them as a matter of fact-when we brought in the petroleum monitoring bill to find out what costs were, and so on, and when we brought in PetroCan, we had virtual filibusters from the other side on every one of them. All these bills were attempting to do something about a declining oil and natural gas situation. But the response was, "We do not need these things. The industry will find it," and so on. There was that absolute faith on the other side that this industry could solve the problem.
The industry is going to have to be part of the solution, there is no question about that. I do not want to say the industry has been all wrong. The point of fact is that there has to be some kind of meeting between industry and government, and some corrections on the part of government to make sure we do solve these problems.
We are talking about the present budget, and I would just like to comment if I have a minute left or so about that budget. There are a number of things in it which I think will help correct this situation. There is no question but that there is a government interjection or intervention which has not been there in the past. This is why 1 find it so difficult for the NDP not to support what we are doing at this particular stage, because there is a government intervention in this budget in terms of the energy program. 1 do not think there is any question about that fact. It is a budget which says we are going to give more power to PetroCan, and buy some other multinationals, and so on. These are some of the things in this particular package.
It is also a program which 1 think does something most important. When looking at the total oil scene in this country, and I think this is important, the real future is in tar sands and
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in heavy oils. 1 do not think there is much more in strictly conventional areas. 1 do not think there will be many more increases in conventional crude. This is one of the criticisms, one of the reasons people talk about it being a bad thing that rigs are leaving Canada, but that is something I wonder about.
I wonder why the rigs are leaving Canada and is that a bad thing at this particular point. Let us talk about gas at this particular point. We have thousands and thousands of gas-


An hon. Member:: And if we have all this gas you are going to export it.


Paul Edmund McRae: 1 wanted badly to say that myself. The NDP members are just agreeing with the whole program. We are giving all kinds of incentives to the industry-


An hon. Member:: And that is why the rigs are leaving.


Paul Edmund McRae: -to go out, explore, find this gas, then cap it, and then they want to export it. I do not want to export it, industry wants to export it. The industry says we must keep exporting. I wonder why governments give incentives to discover and export a resource that 20 years from now we are going to need desperately in this country. 1 will admit that if there is more oil to be found we should find it. 1 do not believe there is a great deal more conventional crude oil to be found, certainly below the 50th parallel in this country. 1 think they are correct incentives, but if some of them are not correct, and I am worrying about no one suggesting-


An hon. Member:: You are talking about greater oil but-


Paul Edmund McRae: I am worried about no one saying that there is not enough incentive in secondary tertiary treatment. 1 want to find that out and, if it is true, perhaps there should be more.
Basically let us go to where I think the real crux of the answer is, and that is in tar sands and heavy oil. We sat in our own committee when we were in opposition and were told through letters and so on that $20 a barrel was about what it was going to cost to bring on a barrel of tar sands oil. That is the figure we were given by the industry. That may have been a little low, and I will accept that. Now about a year later we are told that $38 a barrel is not enough.


An hon. Member:: Why are you accepting it?


Paul Edmund McRae: 1 would love to give another speech to explain it to the NDP, but that is not possible at this particular point. They are saying $38 is not enough and will not quite do it. I wonder why-


An hon. Member:: Your minister is saying that.


Cyril Lloyd Francis: Order, please. The hon. member for Thunder Bay-Atikokan has the floor.


Paul Edmund McRae: I am wondering why it is that because the world price goes up to $38 all of a sudden we must have world price, and all of a sudden we cannot possibly produce at less, when two years or a year before all we needed was half as

February 3, 198!
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much. That has been the history of pricing all the way along. If we went from $4 to $8 in 1974 we would have had an 800 per cent increase in reserves of conventional crude oil. Every time there is another big jump, and we are now at $18, reserves are down, and they have been reduced by 35 per cent.
I want to conclude at this particular point by wondering whether there are not many things about this industry that must be severely corrected, and whether there is not a need for a company like PetroCan, which provides an eye and an ear on the industry, to get to know these things and find out what is going on. I wonder if there is not a strong place in the industry for the government and the industry to work hand in hand. 1 do not think we can just rely totally on an industry which is providing us with this faulty kind of information, and has been for the last 15 years, with the government saying, "You do it, you are the only ones who can; the public sector has no business being involved in this."
Basically I think Canada has always grown as a country with a private and public mix. We are in a situation in this industry where there is a real crisis, and when that kind of crisis comes on in the petroleum, gas and energy industry, it is incumbent upon the governments of the country to take control of the situation and work the problem out along with the private sector.


Mr. Shields:: Mr. Chairman, it gives me a great deal of pleasure to continue with this debate. I should like to make one small observation in response to the previous speaker, the hon. member for Thunder Bay-Atikokan. I have been wondering for a long time what the attitude of the government was to oil rigs leaving Canada and going to the United States. Now we have heard it very strongly put by the previous speaker who has said, or asked, is it really bad that rigs are leaving Canada? Let me suggest to the hon. member that it certainly is bad.
Each rig one sees out drilling for oil in western Canada in the prairie provinces represents an individual factory employing 25 to 30 people. I would like to ask the hon. member for Thunder Bay-Atikokan what he would say if 75 small factories from his province were leaving the country and going to the United States. I would like to ask him how he would feel about that. His view is that it is really not bad. He asks the question, is it really bad ? You are damned right, it is bad, it is a shame, it is deplorable, and it is the result of the policy of the present government.
The previous speaker said that tar sands and heavy oil are probably the future for Canada. I agree with that. They certainly are. The hon. member referred to oil pricing. He implied that with the National Energy Program we cannot tie the price of this commodity to the world price; we must bury our heads in the sand and ignore the fact that we are part of the western world and that other countries are all raising their prices for this commodity. If we search through the national energy policy, we find that the price of neither conventional nor synthetic oil is tied to the world price when the world price
goes up. However, the National Energy Program does tie that price to the world price if the world price goes down.
The National Energy Program clearly states that the price of synthetic crude or heavy oil from plants in northern Alberta will be $38 per barrel tied to the consumer price index as the world price goes up, but as the world price comes down the price will be $38 tied to the consumer price index or the world price, whichever is the lesser. In other words, the government opposite wants to tie the price to the world price if the world price goes down but not if it goes up. Why in God's name do hon. members opposite not make up their minds? I suggest to the members of the government that this is history. They need only look back in history to see exactly the same thing.
Hon. members opposite talk about not trusting information we get from the oil industry. I suggest that the people of western Canada are not prepared to trust the information they are getting from the present government, which is dominated by central Canada.
Let us look back in history for a moment. Let us look back to the First World War. The price of a commodity produced in western Canada was frozen. It was frozen with the same excuse that we could not tie the price of cereal grains to the world price. It was to be a made-in-Canada price.


Paul Edmund McRae: It has been tied since, though.


Jack Wendele Shields: During the Second World War exactly the same thing took place. History repeats itself time and again, and I suggest it is being repeated right now. If hon. members look through the national energy policy and read it again, they will see that the price of production from synthetic crude plants-I am talking about Syncrude, GCOS, Cold Lake, and any other plant which will come onstream in that area-has a ceiling of $38 a barrel tied to the consumer price index, which has no relationship, but if the price of oil goes down on the world market lower than $38, to hell with the cost of production; the price will go down with the world price. The price is being tied as the world price goes down, but this government will not tie it to the world price when the world price goes up. That is not very logical.
With respect to increases in prices I point out that inflation has robbed us of more than half our cost of living dollar in the past ten years. For gasoline our dollar is worth 33 cents in 1980 compared with what it was worth in 1970. With respect to our utility bills it is worth 38 cents; for food it is worth 46 cents; for home purchases it is worth 35 cents; for used cars it is worth 54 cents; for university education it is worth 50 cents; for rent it is worth 58 cents; for new cars it is worth 60 cents; and for clothing it is worth 66 cents. That is what inflation has done to our dollar. And we wonder why prices go up!
Between 1970 and 1980 over half the purchasing power of the Canadian dollar disappeared because of inflation. What has the government done about it? It has done absolutely nothing. It creates more inflation by purchasing offshore and by subsidizing. I shake my head at the ridiculous situation we find ourselves in today. I cannot help but wonder whether we have lost our marbles completely. We are prepared to import
February 3, 1981

oil and pay horrendous subsidies at the expense of the taxpayer. At the same time we do not get on with the job of oil self-sufficiency in Canada. We are the one country in the world which has it within our grasp to achieve oil self-sufficiency, and we are not doing it.
The government across the way says that it cannot come to an agreement with Alberta, which is one of the major producers, but this government does not sit down and negotiate with Alberta. That is why there is no agreement. There were two things which Alberta would not negotiate. Alberta would not negotiate an export tax on natural gas and a tax at the wellhead. Through its National Energy Program this government has brought in the very two things it was asked not to bring in because they threaten ownership of the natural resource.
This takes us back again to the history of our country. Western Canadians want to be full partners in this federation. They do not want to feel that they are a colony which has no control on an equal basis with the other provinces. That is all they are asking.
In Calgary we read the headline "Oil drilling is booming," but it is not booming in Alberta or Saskatchewan any more. It is booming in the United States because the industry here is slowly packing its trucks and moving individual factories to the United States. Why? The industry is doing this because in the United States it can get a return on its investment much quicker. This is much to the delight of the United States government, which welcomes these people with open arms. The United States government is not putting up any barriers whatsoever.


Mr. Daudlin:: Nonsense.


Jack Wendele Shields: The hon. member across the way says "nonsense". He is right; it is nonsense. Why does he not tell the minister that it is nonsense? I know it is nonsense. I have been there, and I have seen. Has the hon. member been to the border to watch the rigs go by? If the hon. member is saying the whole energy policy is nonsense, I agree with him. Let him tell that to his Minister of Energy, Mines and Resources.
The measures in the budget dealing with energy actually discourage production. How can we get people to invest the vast amounts of money required for a new tar sands plant in Cold Lake or for a new tar sands plant at the Alsands project north of Fort McMurray? Each company is requesting the minimum, which they are prepared to accept as the maximum, of a 20 per cent return on a discounted cash flow basis. When the figures are worked out it amounts to about an 11 per cent or 12 per cent return on the actual investment. That is what the companies want. Without these companies in place in Alberta and Saskatchewan, there would not be much of an oil industry in Canada. In fact there would be nothing.
The hon. member for Thunder Bay-Atikokan mentioned in the course of his remarks the subsidy which the province of Ontario paid to the producing provinces, and particularly to
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Alberta, for western oil during the 1960s. I ask hon. members opposite to research this matter. Subsidies of ten cents per barrel, 20 cents per barrel, and one year it even went as high as 30 cents per barrel, were paid. But the total subsidy for that ten-year period prior to 1970 was less than $1 million. I would ask hon. members opposite whether they know the total subsidy, which has now gone the other way with Alberta subsidizing Ontario, for the ten-year period 1970 to 1980. The amount stands at just under $30 billion. Yet they ask why people in western Canada are upset-because they are not being listened to, and the government is not attempting to understand their feelings or the position in which they find themselves.
I ask each government member to search his or her conscience. I love my country, and I do not like what is happening. The proudest moment for me was the day I walked through the doors into this chamber to represent the great constituency of Athabasca. But 1 have watched the arrogance of the government. When I go home, sometimes I want to lie down and cry because of the attitude of the government and because it will not listen. I ask government members to go out to western Canada where they can see what is happening.
I would now like to talk on the Income Tax Act, particularly the portion which allows for the discrimination against men and women in the area of child care expense deductions. I thought that we lived in an enlightened society and in a country which would not discriminate against men and women who are single family parents. However, the Income Tax Act does discriminate. A man who supports a child or children cannot claim on the same basis as a woman who supports a child or children. There is something wrong here and the matter should be addressed.
I hope that hon. members opposite will read the national energy policy and make notes in the margin with the thought in mind of trying on the shoes of the people in western Canada who have invested their life savings in small drilling companies, small service companies, and small trucking companies. Many of these companies are now facing bankruptcy and receivership because the industry is moving away. I ask hon. members opposite whether they would feel threatened by a central government which is obviously moving toward a centralized approach to running the country. How would hon. members opposite feel if they saw their life savings disappearing and they were facing the prospect of starting over? Indeed, how would hon. members opposite feel if they felt that their only alternative was to leave the country of their birth and move, lock, stock and barrel, to the United States?
I am not being an alarmist. I am merely trying to outline what is happening in Alberta. Many friends of mine have invested every cent they have. Their wives work teaching school, nursing, and so on, to build up a small business in the oil industry. Many of these friends are now faced with the question of remaining Canadian or moving to the United States. These people are the kinds of entrepreneurs Canada needs to develop, but this budget is encouraging many of these people to pack up and move out. I hope with all my heart that members opposite will think the matter through, read over the
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energy policy of the government, and put their feet in the shoes of those people out west. I would be interested in their conclusions.


Mr. Munro (Esquimait-Saanich):: Mr. Chairman, in participating in this debate I wish to confine my remarks to two elements, if time permits. I am sorry that the Minister of Energy, Mines and Resources and the minister responsible for CMHC are not present. One element to which I would like to refer has been badly neglected in the proposal which is before us. Perhaps neglected is not the right word, but, rather, converted. The approach of the government in terms of inducements is completely upside down.
The area with which I am concerned relates to the conservation of energy. On page 98 of the budget papers there is a paragraph relating to energy conversion grants and their impact on income tax contributions. It is worth reading this entry because it displays very clearly the attitude of the government toward encouraging people to take conservation measures. The paragraph reads as follows:
Grants will be provided under the National Energy Program to assist individuals and small firms in the conversion off-oil.
That is the conversion from oil to another means of home heating.
As is the case with grants under the Canadian Home Insulation Program, an amendment is proposed to the tax law-*
And here are the important words:
-to ensure that these energy conversion grants will be included in the income of the beneficiary. In the case of a married person the grant will be taxable to the spouse with the higher income.
A measure of this sort ought not to contain this form of inducement, but I suppose it is a method of extracting more taxes from the Canadian public. Goodness knows, and the Canadian people know as well as 'Goodness', that this government needs all the taxes it can get. Even then it is not doing too well in helping itself in its debt service. Giving with one hand, if you like, and taking it back with the other is very much the philosophy of this government. Whereas I think the matter ought to be done, and I am satisfied in my own mind that it would achieve the end which I like to think the government hopes to achieve, namely, fuel conservation, if it were turned the other way around, if a person were to spend for "conversion off-oil", as the expression is, or if he were to insulate or change the windows in his house to double-paned windows in order to effect heat conservation, and then the expenditure which he makes in this area could be deducted from the taxable amount of his income, not at the end but as a deduction in the course of calculating his income tax. I am speaking in domestic terms but, of course, it does apply in greater measure to industries as well.
The Canadian Home Insulation Program, known as CHIP, is a very strange program. It has its advantages. The $500 to the individual who insulates his home or instals double-paned windows is to be entered in his income tax return as taxable income, as revenue. But it is not revenue, it is an expenditure,
and a legitimate one. It is legitimate because the home owner has intended to save fuel by involving himself in this particular domestic expenditure. Furthermore, in the industry there are-and I regret to have to say this-a number of fly-bynight organizations which pretend to know about home insulation. These companies do insulate homes, whether it be with fibreglass batts or urea formaldehyde and the dangers that that involves-and we certainly have had our dose of urea formaldehyde in the House this last few weeks.
But there are a great many enterprises which have gone into the business of insulating homes without any training whatsoever. They claim that they know how to perform this service. There is no proof that what they do will save the home owner any money. Therefore I feel there ought to be an additional element to this CHIP program. I see that the minister responsible for CMHC is back in the chamber. I like to think that his organization might very well take this into account.
There ought to be a method of measuring whether the insulation has been properly applied. We might call this a heat audit. There are thermo-metric scanners, infra-red scanners, if you like, which can indicate where heat losses occur. 1 suggest that it would be most appropriate, in addition to the actual insulation, to have this heat audit component as a requirement to a grant under the CHIP program. Someone mentioned to me that this heat audit would be very expensive, but I suggest it is not all that expensive.
I received an offer to have my house examined with one of these infra-red scanners. The charge was to have been $40. I asked if there was a special rate being given to me because I happened to be the man's Member of Parliament. He told me that that is what he would charge anyone to perform this service. We are perhaps fortunate in Victoria this year not to have had weather sufficiently cold to have carried out this scanning test. But I warn the House, when the weather does get colder-and it will-I will have this test carried out. I will then determine whether or not I actually need to instal more insulation.
There is one thing the minister responsible for CMHC may or may not know, and I suppose this also involves the Department of Supply and Services. It is that there are a number of these infra-red scanners, which are reputable. Their functions vary from those which will produce a read-out on a television screen, which can be seen at the time the examination takes place, to one which is rather similar to an electro-cardiogram, which fluctuates as the scanner goes across the roof or the front of the house. It indicates where the heat losses are occurring. There are five or six of these particular infra-red scanning machines which are fairly new.
I believe the Department of Supply and Services, in conjunction with the Department of Consumer and Corporate Affairs, has set up a standard for these particular machines. Curiously enough, the specifications for a standard which would be acceptable to the Canadian government are drawn almost entirely from one particular make of infra-red scanner. Furthermore, I am told that one of the government departments has acquired five, six, seven or ten of these scanners.
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Apparently these scanners meet the government specifications which were taken from the makers' specifications and incorporated into a standard acceptable to the Canadian government. These particular scanners have been offered to a development corporation in Alberta. I understand the operators and the machines are to be flown to Alberta in order to carry out this audit for this development corporation, even though similar machines already exist in Calgary in the hands of independent operators.
The government has moved into this field, and taken the bread and butter, or the dollars if you like, out of the hands of some private enterprises which can just as easily do the operation in Calgary for the development company. I hope to develop this notion sometime in question period in order to find out exactly why the federal government entered into this field already occupied by private industry. I suppose, when one considers what has been happening in the past two weeks in the constitutional committee, and what we are seeing in terms of Petro-Canada's absorption of other facets of our industry, it is not surprising that the federal government should be moving in on private industry and destroying the livelihood of a number of companies.


The Assistant Deputy Chairman:: It being five o'clock, it is my duty to rise, report progress, and ask leave to consider the bill again later this day.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Ethier):: 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 Surrey-White Rock-North Delta (Mr. Friesen)-National Security-U.S.S.R. cruise ship "Odessa"-Inquiry whether security checks conducted; the hon. member for York North (Mr. Gamble)-National Revenue-Inquiry whether taxes will be reduced; and the hon. member for Mission-Port Moody (Mr. Rose)-Communications-Licence renewals and transfers-Provision of policy guidelines.
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, notices of motions.
Prairie Farm Assistance Act


PRIVATE MEMBERS' PUBLIC BILLS
[Stage Direction]
Items Nos. 17, 18, 22, 25, 27, 29, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42 43 and 44 allowed to stand by unanimous consent.

The Acting Speaker (Mr. Ethier):: Before putting the question on Bill C-245, an act to repeal the Prairie Farm Assistance Act, the Chair ought to register reservations and enter a caveat as to the procedural acceptability of this bill. I am of the view that certain provisions of the bill may involve the expenditure of public funds, which can only be authorized by way of a Royal recommendation. However, since the Chair does not want to take too much of the time of private members' hour to rule now, I intend to allow the debate on the bill without prejudice to the decision which may have to be made on the procedural acceptability of the bill at the conclusion of the debate on second reading.


Mr. Doug Neil (Moose Jaw) moved: that Bill C-245, to repeal the Prairie Farm Assistance Act, be read the second time and referred to the Standing Committee on Agriculture.
He said: Mr. Speaker, I appreciate your comments. I do not want to get into a procedural debate with respect to whether the bill applies; I would simply say that the moneys referred to in the subject matter of the bill are not government moneys but moneys belonging to the producers of western Canada. I do not think they would come within the purview of the remarks you have made.
I appreciate the opportunity to speak on Bill C-245, a private member's bill, the effect of which is to repeal the Prairie Farm Assistance Act and to set up a trust for the purpose of taking certain moneys and using the interest on those moneys for the purpose of research and development. I will not go into a detailed history of the act or the administration of the act as I expect to have the opportunity to do so at some future time. Suffice it to say that the PFAA was passed in 1939. Its purpose was to give crop failure assistance to western grain producers.
The money for that purpose was raised by a 1 per cent levy against deliveries of all grains by producers in western Canada. The levy was paid into a fund set up under the act entitled the prairie farm emergency fund. For various reasons that plan was phased out in 1972 and, in August of that year, collection of the 1 per cent levy on the producers' deliveries was discontinued.
If one examines the Public Accounts of 1978-79 one finds that under the prairie farm emergency fund there is to the credit of that fund some $9,066,972. This money has been on deposit in that fund since 1972. It represents the balance

February 3, 1981
Prairie Farm Assistance Act
remaining of moneys contributed by the western grain producers under that 1 per cent levy. In other words, it is producers' money; it is not taxpayers' money. I emphasize that, Mr. Speaker, it is not taxpayers' money. That money has been in the account since August, 1972, and has not drawn one cent of interest. If one uses the modest interest rate of 8 per cent, and if interest had been paid on that amount, the fund today would total some $16,78U528, but possibly a more realistic rate would be 9 per cent if averaged from 1972 until the present time. If interest had been paid on the fund at a rate of 9 per cent since August, 1972, today it would total $18,066,505. In other words, the western grain producers have lost some $7 to $9 million in interest on that account.
There is a great need today for research and development in all fields of endeavour, and agriculture is no exception. If we are to increase our production to meet the target of 30 million tonnes of grain as western farm organizations and the Wheat Board predict, in order to meet the demand for food in the world in the future, it is essential that we carry out an intensive program of research and development for cereal grains and oil seeds.
While Agriculture Canada does an excellent job in research and development, over the years it has spread itself very, very thin. Its funds are limited. I believe it is generally accepted in western Canada and, indeed, throughout all of Canada, that there is a need for funds specifically earmarked for research and development of cereal crops and oil seeds suitable for cultivation in western Canada.
If one examines the estimates for 1979-81 it is interesting to note that the Government of Canada, or Agriculture Canada, pays about $1.3 million to universities and other scientific organizations for research and development. At current rates, interest on the $9 million-odd in this emergency fund would about equal that $1.3 million.
It is with the need for funds for research and development in mind that I propose the bill we are debating today. The bill provides, first of all, for the repeal of the Prairie Farm Assistance Act. Second, it provides for the setting up of a prairie cereal and oil seed research and development trust. Third, it provides for the transfer of the $9,066,972 to the trust for investment. As I said earlier, that fund would generate well over $1 million in interest at today's rates. Fourth, it provides for the use of the interest on this fund for research and development on cereal grains and oil seeds suitable for production in the western prairie region.
The bill further provides for four trustees. Three of those trustees would be elected by the producers of western Canada who are listed as producers in the permit books, and they would be elected at the same time as the advisory board members of the Canadian Wheat Board. These trustees would have to be producers named in a permit book, and each of the three trustees would have to come from each of the prairie provinces.
O)
These three trustees would name a fourth man who would be chairman of the trust. He would be an expert in the field of research and development in cereal and oil seeds. The trustees would hold office for a period of four years and they would determine what use would be made of the interest earned on the $9 million-odd. They would decide whether the money should go to a university or to individuals doing research in the area to which I have referred. Of course these trustees would be empowered to accept gifts or bequests from individuals or organizations to add to the capital of the fund.
This bill has received good press in all of western Canada. As well, the bill has been circulated to all the various farm organizations, local pool organizations, local UGG organizations and local elevator agents. I was most pleased with the support I have received for my bill. I have received many letters, and copies of them were turned over to the Minister of Agriculture (Mr. Whelan) for his consideration.
I might add that on October 30 last, a few days after the bill was printed, I wrote to the minister, sent him a copy of the bill, and solicited his support. I have had several conversations with the minister and I continue to hope that he will give speedy passage to the bill. He told me that he supported the concept of using these monies for research and development. He did, however, have some doubts as to my proposed method of dealing with the fund as set out in the bill. The minister was good enough to advise me earlier today that he would be proposing a motion this afternoon which, while it will not result in my bill becoming law, will open the matter to public discussion and input. Presumably it will result in a government bill some time in the future.
1 do point out the urgency of the matter, however. At present day interest rates, interest accrues at the rate of some $3,000 a day on this fund, and that is money lost daily to research and development. 1 urge the minister to talk to the cabinet about this matter and try to persuade his cabinet colleagues to start paying interest on the money in this fund because that money is producers' money. Interest certainly could be paid on that fund at the same rate at which the Government of Canada pays interest on dominion government bonds. By following that course, when the trust is set up money would then be available immediately for the trustees who can decide to pay out funds which will get the whole process of research and development in motion.
I might say that since proposing my bill I have learned there is a move afoot by some farm organizations in western Canada to press for a check-off on the sale of grain deliveries for the purpose of research and development. This idea was proposed several years ago. It did, however, require a vote, which did not pass at that time. Undoubtedly any move for a check-off now or in the future would require a vote. 1 would suggest that such a vote could not be held for at least a year.
I would urge the minister after due consideration by the committee and by him, rather than waiting for a decision on any check-off, or a vote on any check-off, that he bring in a bill which would make provision for the board of trustees, or
February 3, 1981

whatever type of structure upon which he decided, to have the power to receive the moneys which might be derived from the checkoff of funds. These could be added to the funds which are available from the prairie farm emergency fund.
I see that my time is almost up and I know there are other speakers who wish to make a contribution to this debate. I do look forward to the minister's comments and the motion which I understand he will propose at the close of his remarks.


Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, I am pleased to be able to speak on Bill C-245. I thank the hon. member for Moose Jaw (Mr. Neil) for putting this bill before the House.
For almost a century now agricultural research has been supporting commercial agriculture and related industries in Canada. Initially, Canadian agriculture was faced with the challenge of farming in virgin territory, with limited resources. Early research focused on that fact. It did a good job of providing the kind of information which was necessary to provide the pioneers with the cultural success necessary to grow crops under those circumstances.
It is necessary that the knowledge about how crops can be grown be disseminated to farmers. Agriculture Canada has built up a research capacity as well as an educational distribution system. This has worked very well. It did not always get the information out, but it has worked very well compared to many other systems. There is no doubt about the need for research. I support the bill in its main approach because of this requirement. 1 support the idea of immediately making arrangements to put the prairie farm emergency fund into use for research rather than letting it remain in its present position as part of an account of the Government of Canada.
There is no doubt about a continuing need for increased funding for research. Development into cereals and oil seed production is an area which requires extra funds.
In several recent agricultural conferences in the west and in Ottawa during the last few years a great deal of time and consideration has been given to the increase in our export level of grains and of oil seeds to a suggested level of 30 million tonnes. To do that, it is necessary to increase not only the amount of land in production but also to increase production from each area of land. A great portion of this increased production, which would require about a 4 per cent increase in production per year, when at present we are only increasing at the rate of approximately 2 per cent a year, could be achieved through research if it is used in the right way.
We have committed our farmers to a great increase in production. The increase would be based on the increase in fertilizer, weed control, reduction of summer fallow, improvement in varieties, better moisture control, snow control, and expansion of irrigation areas. All of this can be increased by providing more knowledge to the farmers about their land and how to increase production on it. If the research is not carried out and the information given to the farmers, there is very
Prairie Farm Assistance Act
little chance of reaching the potential sales levels indicated by the Canadian Wheat Board and other agencies.
There is no doubt that there are potential sales if we can raise the grain. As we know, our trade deficit would be much greater without the sale of grains and oil seeds from western Canada. For the well-being of our economy it is necessary to recognize the need for research and increased production in the west in those areas.
The hon. member for Moose Jaw presented one method by which these funds could be used. I commend him on his initiative in this direction. I agree with his basic approach, but only to the extent that it suggests one method of getting government funds into research. Several farm organizations have also agreed, but some have expressed concern that the hon. member's approach would set up one more administrative structure to administer a particular amount of money, without the kind of co-ordination which should be available for research in this area.
As a westerner I share the hon. member's concern that research into cereal grains and oil seeds for use in the prairie region should be expanded. The commitment of funds to another foundation will further fragment the public approach to research and development and allow the government to withdraw easily from yet another area of publicly funded research. This is a real danger in this area.
Research budgets in the Department of Agriculture have decreased in real terms. Increases have run at about 10 per cent annually. The director general of the western research branch says that 10 per cent does not keep face with inflation. They also say there have been necessary staff cuts each year because of that lack of increase. Researchers in the west have indicated that they need an increase of between 50 per cent and 70 per cent in research funds for equipment, travel, energy, and manpower.
On many occasions this government has indicated that it is striving mightily to increase production of western agriculture. However, this lack of funds in the research area does not indicate that much concern. The research component of getting to 30 million tonnes in export levels has been ignored to some extent. Ministers do not put their money where their mouths are.
There are some dangers in this area as well if we follow the hon. member's approach. The new prairie cereal and oil seed research and development trust would possibly overlap with present public programs by funding private, competing research. This may be another case of public funds-I know the hon. member indicated that these funds belonged to the farmers, but they are public funds-going to private ventures for the benefit of the private sector first, in plant development, and for the benefit of the public and producer second.
We face a number of problems in our transportation system because the function of that system is not an instrument of public policy. We have demanded that the CNR and CPR be integrated and publicly controlled in order to provide better service to the people of Canada. Rail transportation is a mess

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Prairie Farm Assistance Act
because private and public interests cannot work together. The same concerns apply to plant research. Public institutions suffer when private interests begin to gain control.
The government advocates the fragmentation of public plant research by its support of plant patent legislation. Corporate and multinational involvement in seed breeding will neglect the specific need of the Canadian market. It has happened in pesticide controls and is likely to happen in seed controls. Pesticide controls have been developed for other climates and markets. By shifting to small and private research, the process may be endangered and will not guarantee that optimum levels of research will be maintained.
There is a danger that this type of foundation will fund agrichemical firms, and these firms have demonstrated that private research focuses on development rather than research. Byron Beeler of Ciba-Geiby told the Canada Grains Council that he personally sees research divided into the discovery phase, and the exploitation phase; that discovery research will continue in the public institutions. Conversely, he believes that the exploitation of research can best be done by private enterprise.
In general, there is a need to support long-term research that is directed in the public interest. Public interest is not restricted to producers, but to Canadians. There is a need for an integrated food policy for Canada, and only the central government can orchestrate the development and realization of such a policy.
1 appreciate the suggestion of the hon. member that the trustees of such a fund would be producers. This recognizes the dependence the producers have on research and development in agriculture. However, there are two problems inherent in this suggestion. First, the lack of input of non-board people fails to address the very serious problem of an integrated food policy for Canada.
The danger exists that the role of producers in this instance could lead to a more widespread belief that producers, and not Canadians as a whole, should be responsible for agricultural research. It is very necessary that we continue to recognize that basic research in agriculture in Canada should be funded by all the people of Canada, not only the producers.
In conclusion, I agree that the money should be taken out of general trust funds and put to work for the farmers, to whom it really belongs. I agree also there is a great need for research, and that is a good place to put the money. Unless the government is ready to come up with a more co-ordinated project which will not bury these funds or lose them to the farmers, unless the government is willing to refer the content of the measure to the committee, as suggested by the hon. member, then I think we should pass this bill in its present form so we make use of these funds as quickly as possible.
Again I commend the hon. member for Moose Jaw for his initiative in bringing forth this bill. If it does not pass, I hope at least the content of it will have some effect on the development and expansion of research in agriculture.


Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, my remarks will deal with other parts of this bill which have been debated. The part I refer to is the repeal of the Prairie Farm Assistance Act.
I had the promise of a minister of the Crown, the Hon. Mitchell Sharp, that the PFAA would not be abolished or repealed until certain things happened. These things have not happened, yet I am standing in my place today to say I am withdrawing my objection and freeing the government from any promise made by that minister, Mr. Sharp.
What I am talking about here is that the PFAA was good legislation. Money was collected from the farmers and paid for crop loss, apportioned where the need was the greatest. Unfortunately a political machine developed around this organization. People were hired on a political basis and certain decisions were made on political grounds.
In 1959 Parliament passed the crop insurance legislation. Now that this crop insurance legislation is widely accepted by farmers on the prairies, the Prairie Farm Assistance Act has become obsolete and, therefore, should be repealed. In the 1974 election certain queer and distorted things began to happen. After the election was over several members of the House-the hon. member for Red Deer (Mr. Towers), the hon. member for Swift Current-Maple Creek (Mr. Hamilton), and myself-did certain things. We reported these happenings to the Auditor General's department. Later on we reported the information to the criminal fraud squad of the RCMP. Charges were laid against some of the people who had done the things I have mentioned. The case was recommended by the magistrate at the preliminary hearing to go to court. That case has never been to court because the Attorney General for Saskatchewan, Mr. Romanow, has seen fit not to let it go to trial. Since this is a responsibility of the province, there is nothing the federal government can do about it.
The part I have not mentioned is that in addition to the criminal fraud which took place, the stealing of the farmers' money to be spent on political purposes, there was political fraud. This political fraud was aimed, to my certain knowledge, at three Conservatives and one NDP. It is not the type of thing one wants to mention. I think the supporters of the NDP in my area, certainly the supporters of the Conservative Party, and I am very sure all the supporters of the Liberal Party, wish it would die and go away. In essence I am saying I am prepared to let it die and go away; I hope it does not happen again. I just wanted to get this intervention on the record because of my personal feelings and my stand. As a Privy Councillor I think I have some responsibility to maintain the law in Canada. When I see the law broken, I think it is my duty to do what I can to report it and to see what action can be taken. 1 have never had the chance to bring before the Standing Committee on Privileges and Elections what that political fraud was, to let my fellow colleagues in Parliament judge what happened and make whatever ruling was necessary.
1 am giving up that right to my privileges for the purpose of letting this very positive proposal of the hon. member for
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Moose Jaw (Mr. Neil) go forward. When the Minister of Agriculture (Mr. Whelan) speaks, I hope he will accept the concept of moving this forward and will remember that I deserve a bit of the credit, as I have had to suffer a pretty rough time about this matter and will have to keep pretty quiet as a result of this speech.


Eugene Whelan: Mr. Speaker,
I want first of all to say that we are very interested in the presentation by the hon. member for Moose Jaw (Mr. Neil), a bill to repeal the Prairie Farm Assistance Act and to use the revenues collected for research to the benefit of prairie farmers.
Bill C-245 proposes that funds remaining under the PFAA prairie farm emergency fund should be put into a trust administered by four trustees from the prairie provinces.
If I understand the bill correctly, the trustee's job would be to allocate interest paid on the moneys remaining in the prairie farm emergency fund to individuals or groups to carry out research on cereal grains or oilseeds.
I agree with the intent of the bill. It has the interest of the prairie farmers at heart. I am also happy the bill gives members of the House the opportunity to debate the issue and bring it to public attention.
However, I am sure the hon. member knows we on the government side have not been idle on this issue. A great deal of research and planning has taken place. We are in the process of putting the final touches, as I told him at the time he presented the bill, on a bill to accomplish much the same thing the hon. member's bill would propose and sets out to do. We feel ours may be a little bit better and will do this a little more efficiently, with even greater ultimate returns to the prairie farmers.
Before I talk further about the government's intention in respect of PFAA, I would like to discuss some of the background which directly affects any decision to be made about PFAA funds. Let me say this to the hon. member for Prince Albert (Mr. Hovdebo) who talks about the research budget: I do not have the exact figures with me, but if all other aspects of my department had held the status quo as well as has been the case with research, I would have no complaint about what we are doing in agriculture. The department for which I am responsible this year is spending about $156 million on research. That is the largest research budget for which any minister has responsibility in the government. When we talk about what we are doing in research, etc., I just hope we are not trying to get across to the people that we are doing nothing.
All other countries in the northern hemisphere are very envious of us for what we have accomplished in research, especially in cereal grain production, and also with the new varieties of canola seeds, commonly called rapeseed.
The Prairie Farm Assistance Act was introduced in 1939 to help prairie farmers when they suffered crop failure. A levy of
Prairie Farm Assistance Act
1 per cent was deducted when grain was sold to licensed purchasers, and this amount was transferred to a special account called the prairie farm emergency fund. This fund played an important role in helping stabilize the incomes of grain farmers on the prairies for many years. I agree with the hon. member who just spoke that the administration of that fund lent itself to political finagling and political "everything you can think of." As a politician and as one who abhors those kinds of things, I was glad to see crop insurance become a reality. 1 think the fund did a good job. The intent was good; however, by 1972 crop insurance programs had become available in most parts of western Canada, and collection of levies was discontinued. Crop insurance was made available to all provinces in Canada in 1974.
Since 1974 the federal-provincial crop insurance program has provided farmers with protection against crop losses. I do not think any other country in the world has a crop insurance program like we do. I do not know of any.
In the United States there was a program called the disaster program. The former secretary of agriculture told me that is just what it was, a disaster. The program had all the things in it which should not be in a program designed to provide security for farmers.
How does our crop insurance program work? Farmers pay half the premiums, the federal government pays the other half and the provinces administer them. Since 1974 the federal contribution to crop insurance in the prairie provinces has been about $375 million. A man out there asked me the other day, "What have you ever done for farmers?" This figure does not include this year. It includes the years up to this year. The figure this year for federal participation will be one of the highest, because there were substantial losses in certain parts of the prairie provinces, especially in Manitoba and Saskatchewan. There were some losses in Alberta also, but prior to this year our outright contribution to crop insurance has been $375 million since 1974.
When the prairie farm emergency fund was discontinued, a bill was introduced to revoke the PFAA and transfer the money remaining to the western grain stabilization fund. If hon. members will recall, that was the intent at that time. There was much discussion; it was said that there would be no agreement to pass the bill. The debate would have continued, so the bill was allowed to die on the order paper, as was a second bill introduced in 1976.
At present the prairie farm emergency fund-and this is something the hon. member for Moose Jaw should know-is a non-interest-bearing account with a balance of more than $9 million. This is money the hon. member for Moose Jaw proposes to put into a trust.
Having this money work for prairie farmers through research is the ideal situation because, after all it is the farmers' money. It was money which farmers set aside to provide for income security. In my view there is no more important aspect to future farm stability and prosperity than the increased production potential afforded through research.

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Prairie Farm Assistance Act
The hon. member for Prince Albert mentioned a desire to raise our production figures by 1990 to 36 million tonnes. I recently met heads of research departments at Saskatoon, and we discussed that. Some of them are very optimistic, as I am, that we can do that. One said we should not do that and that we should not wear out the soil because of the fact that people in other parts of the world are doing nothing about controlling their populations. The area in Canada I come from has probably some of the oldest farm land in Canada. 1 can show hon. members land there which is well taken care of and has been for many, many years. I am told that one farm was first cultivated in 1730, and it is one of the most productive in the whole area. It produces a variety of crops. Only the imagination could limit the productivity of that land. In my view there is no more important aspect to future farm stability and prosperity-and I am repeating this-than the increased production potential afforded through research. Some of my economists can show that for every dollar invested in research we get back nine. That is a pretty good investment.
Agriculture Canada has set a priority on production research in the western provinces. Already about 1,350 person-years in the department are allocated to the western region of the research branch, and more than $40 million is being spent annually by my department on western research. Some say that is not enough in view of the amount of production which comes out of that area, but let us look at our accomplishments in research in cereal grain and in canola seed. They have been phenomenal with respect to production in that area. We are doing the kinds of things which are needed to promote that kind of production, but 1 do not say we should cut back.
I come back to what the hon. member for Prince Albert said. This year we are adding 59 man-years to research in Canada. We can always say we are not adding enough, that we are short of bodies and so forth. Any good researcher always wants more. If he did not, he would not be a good researcher. The kinds of activities I have talked about have paid off in the past. Just as an example, almost three-quarters of the total wheat acreage planted on the prairies last year was sown with five hard red spring wheat varieties developed at Agriculture Canada's Winnipeg research station. That accomplishment is the envy of the world.
I am reading a book written by Grant MacEwan with respect to how agriculture in western Canada was developed. In the early days people were more interested in fur-bearing animals and that type of thing, but they said that the land would never be productive. They said it should never be cultivated. Palliser and the man who was head of Rupertsland gave evidence to the British, before the British sold that part of the land to Canada, saying that the land would never be productive. How wrong they were! We have become the envy of the world, but that is mainly because of the research which has been carried on. That is why the Chinese want researchers from western Canada who know how to farm in semi-desert and dry land conditions. These western Canadian researchers know the varieties of grass which will withstand the tremendously hard winters in that part of the world. We have some of the world's leading expertise in that type of research.
The government's research program to develop double-low canola varieties of rapeseed allowed that industry to grow-we call that the Cinderella story-from almost nothing to a billion dollar industry in just a little over 20 years. The expansion in that industry again can only be limited by the imagination. 1 learned the other day that by 1990 producers will be growing two million acres of rape in the far northern portion of Ontario, the clay belt, in other regions in the east, and also in parts of Quebec. It will be grown because new varieties will be productive and even better with regard to protein content and with regard to the oil, which we know is good for human or animal consumption, or for whatever we might want to use it. This is due to the research carried out by people in western Canada.
Research in canola seed in Canada in 30 years has superseded anything Japan has done in 300 years and anything Poland has done in 1,000 years. Those are the two oldest cultures which have used canola seed, previously commonly called rapeseed. With respect to the tremendous value of research and how it has improved production, I say that in many instances we have done more than any other country in the world. 1 only give these examples to illustrate that the government is fully aware of the value of research to the western farmer, and we are always ready to listen to any proposal from the western agriculture industry as to how to improve the service we provide.
We have advisory committees for our research stations, not in all areas but in those areas where producers make those kinds of representations. 1 think this system works very well.
There is a challenge before us. The Canadian Wheat Board estimates increased demand for Canadian grain on world markets could permit us to export 30 million tonnes or more each year by 1985. The only way to meet this demand is to increase production, and that means more production research.
My department intends to strengthen its research programs in western Canada. Proposals for additional research on production technology at the research branch's 15 western stations are now being developed. There is a special $4 billion program for western Canada. As far as I am concerned, a big part of it will be going toward-and we have already made proposals-increased research.
There are a number of new grain varieties which will be released shortly. They will go a long way toward increasing the production potential of that 30 million tonnes per year up to 1985. Many of these are resistant to diseases which have been important contributors to crop losses in the past. We are also sensitive to the need to diversify western agriculture and develop varieties of new crops suited to prairie growing conditions. The federal new crop development fund has already paid for a lot of valuable new crop research. I am sure the hon. member for Moose Jaw is aware of this fund, because each time I announce a program for an area, 1 send notice to the
February 3, 1981

hon. member who represents the area. These matters should be of interest to hon. members, and they should be informed generally of what is occurring in the private sector, in the universities or in perhaps a private group of farmers working through their organizations which may be carrying on some unique research.
Results show that crops such as lentils, fababeans and a number of spices can be economically grown in the prairies. The first explorers on the prairies were searching for land which was rich in myrrh, spices and pearls. We are now able to produce some of those spices in the prairies. The researchers say that we can produce these spices and effectively compete in world markets.
We agree that the money made available from the prairie farm emergency fund should go into research, but there is a need to ensure this research is not a duplication of efforts. This is probably the only area on which I agreed with the hon. member for Prince Albert. Duplicating of efforts is a waste of money. Many times, on behalf of the Government of Canada, I sign agreements with other countries with regard to their research. 1 refer to countries such as Israel, Mexico and the United States. With many of these countries the agreement is based on a research exchange basis whereby, if a country is carrying on a project of interest to us, our scientists will work with that country's researchers and, of course, we reciprocate. This sharing of knowledge throughout the world can only help to better the life of mankind.
Research is readily exchanged around the world. If the countries of the world got along as well as their ministers of agriculture in exchanging research in order that mankind may have a better way of life, there would not be nearly as much trouble as there is in the world today. The government's plan will ensure that efforts are not duplicated. Agriculture Canada will be responsible for administering the revenues from an interest-bearing account that would be put toward research. In this way any duplication of efforts will be avoided. For example, this year I refused a new crop development program simply because there were four other stations conducting the same research as was being proposed, I believe, by the Palliser people. I believe that my refusal made them mad, but their program would have been the fifth such program.
This fund would be separate from Agriculture Canada's budget and would be maintained indefinitely to benefit western farmers. I can see a number of areas in which this new research program would benefit western producers. It could be used to support co-operative variety trials, zero and minimum tillage research, or to assess the potential of frontier areas for agricultural production. I am sure hon. members who watched the national news on television last night saw an example of such benefits. These are only a few possibilities.
Many people talk about the loss of land through urban and industrial encroachment. However, I am sure many people do not realize that most of the land in Canada which is lost is lost through salinization of the soil. Every year hundreds of thousands of acres are lost in this way; we must solve this problem.
Income Tax Act
Another exciting research project is being conducted at the Lethbridge station which deals with the "transfixation" of nitrogen with cereal grains. If we are successful in this research, it will mean millions of dollars in savings to people throughout the world. If a cereal grain is able to produce nitrogen in the same manner as legumes, clover, soybeans or peas-and our researchers say that it will come about-there will be tremendous savings in energy simply because nitrogen takes more energy to produce than any other fertilizer. Concentrated work is necessary in such areas.
Before any money is spent, there would be consultation with producers in western Canada on what type of research would be most beneficial. As the government's bill on this matter is still in the preparation stage, I cannot discuss the details at this time. Once again, I applaud the hon. member for Moose Jaw for his intent in introducing this bill.
Therefore, I move:
That the motion be amended by deleting all the words after the word "That" and substituting the following therefor:
"Bill C-245, to repeal the Prairie Farm Assistance Act, be not now read a
second time but that the order be discharged, the bill withdrawn and the
subject matter thereof referred to the Standing Committee on Agriculture."


The Acting Speaker (Mr. Ethier):: Is it the pleasure of the House to adopt the amendment?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: Shall the motion, as amended, carry?


Some hon. Members:: Carried.


The Acting Speaker (Mr. Ethier):: Accordingly, the order is discharged, the bill withdrawn and the subject matter thereof referred to the Standing Committee on Agriculture.
Order discharged, bill withdrawn and subject matter referred to the Standing Committee on Agriculture.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration in Committee of the Whole of Bill C-54, to amend the statute law relating to income tax-Mr. MacEachen-Mr. Ethier in the chair.
Denis Éthier: It being six o'clock , 1 do now leave the chair until eight o'clock.
At six o'clock the committee took recess.

February 3, 1981
6848___________________________________
Income Tax Act AFTER RECESS
The committee resumed at 8 p.m.


Denis Éthier: The House again in Committee of the Whole on Bill C-54, to amend the statute law relating to income tax.

When the committee rose at five o'clock, clause 1 of the bill was under consideration and the hon. member for Esquimalt-Saanich had the floor.


Mr. Munro (Esquimalt-Saanich):: Mr. Chairman, just
before I called it five o'clock, I was talking about the various types of infra-red scanners. I was urging upon the government the inclusion of charges for scanning, certainly for domestic premises or houses, as part of the CHIP program, so as to ensure people receive value for their money.
At the beginning of my comments I was also urging upon the government that instead of making grants outright to people who undertook to insulate their houses, or to add double windows-in order to conserve fuel, that the costs for doing this be permitted as a legitimate deduction for income tax purposes, including the cost of a pre-installation and post-installation scan. 1 mentioned the cost of that scan would be in the neighbourhood of $40 for each operation. 1 do not think that is too much.
The criticism which may be levelled at me would be that perhaps a number of people who are having their houses insulated would not normally pay income tax. In this particular instance what could happen is that the person, who would not normally pay income tax, might very well apply for a refund for the expenditure up to a certain limit. This could also encompass the cost of scanning. This could be done through the submission of an income tax form indicating that there was no taxable income but that funds were paid out for insulation purposes under the CHIP program. Since they were not paying income tax, they were claiming a refund for moneys they had expended.
The message I want to give the government at this time is that there should be an allowance, not as a grant under CHIP but claimable as a legitimate domestic expense, whether or not a person pays income tax. Scanning should be included as part of the whole CHIP operation.


Mr. Bussieres:: Mr. Chairman, as 1 understand it, we had agreed to put an end to the debate on Clause 1. I shall take a few moments before-


Denis Éthier: 1 am sorry to interrupt the hon. minister, but I would not want to mislead him. Another member has asked to be recognized, but he is not yet in his seat. Would the hon. minister agree to listen to the hon. member before beginning his comments?


Pierre Bussières: I have no objection.


Erik Nielsen: Mr. Chairman, I rise on a point of order. 1 think there might be a disposition to move away from clause 1 at this stage. There may well be other members who wish to speak on subsequent clauses, but the minister has a number of questions which he must answer. Perhaps he might be given the opportunity to do so now.


Stanley Howard Knowles: Mr. Chairman, I rise on the same point of order. I confirm what the hon. member for Yukon has just said. I realize that there is no House order and any individual member can exercise his right. But we are prepared, as result of discussions this afternoon, to consider the debate on Clause 1 as concluded, except for the answers to questions. Then, as we move to other clauses, various members may want to speak on some of those individual clauses. But we are prepared to let this be the end of the discussion on Clause 1.


Denis Éthier: I therefore recognize the hon. Minister of State for Finance.


Pierre Bussières: Thank you, Mr. Chairman. I think that if I try to comment on every question that has been raised, we shall spend many more hours discussing this bill because there have been many interventions. A great many extremely interesting questions have been raised, but 1 shall try to be as brief as possible so that those members who have other points to make may do so during the clause by clause consideration of this bill.
I intend to go from the general to the specific in my comments as very general remarks have been made and very specific issues have also been raised during the debate on Clause 1 of the bill.
My first general observation will be to comment briefly on the remark made by several hon. members to the effect that this bill is extremely complex. Some members have even referred to clauses or parts of clauses which contain only figures or the numbers of subparagraphs, designated either by Roman or Arabic numerals or by small letters or capitals. This does not seem to make much sense, and it even seems to confirm that all tax or fiscal legislation is overly complicated.
However, I believe we must distinguish between common legislation which applies to all individuals who have to pay income or property taxes and those measures which apply to more complex tax-paying groups or companies, as the tax laws applicable to these companies or firms become more complex in proportion to the complexity of these companies.
On the other hand, if we go beyond the scope of the bill before us, we realize that these are general amendments to the Income Tax Act. Of course, if only part of a clause or even an entire clause is struck from the bill, the result may seem really very complex. But once the amendment becomes part of the
February 3, 1981

over-all provision of the income tax legislation, it does take a clearly different sense, since it is then replaced in the general context of the section which this bill is designed to amend.
Second, I would like to come back immediately to certain objections or questions that have been raised. Perhaps 1 ought to deal with a general question which I wrote down, namely, the comments made by the hon. member for Broadview-Greenwood about capital gains and especially the working documents tabled by the Minister of Finance. As I recall, the hon. member raised two points. First, he was anxious to know what the government intended to do with the document. I would like to tell him what the decision is, but it has yet to be made. 1 might add that 1 fully agree with him and that we must have a debate, but it has to be properly channelled in the sense that it is not good enough to gather opinions from left and right and here and there throughout the country. We have to find a way of synthetizing and classifying these opinions so as to be in a position to make decisions concerning the relatively wide field of capital gains taxation. The hon. members also stated that the government, as such, has not taken a stand on that document. I suggest that since the purpose of the document is to launch a debate, and convinced as I am of the need to synthetize or, if you will, to channel the debate and gather information, we should wait for the feedback before taking a stand on the documents. Along with some of his colleagues, the hon. member pointed out that there are two schools of thought which might very well be at opposite ends of the spectrum. In other words-and this has come up several times in the course of the debate, some people would do away with all taxes on capital gains, yet others advocate higher tax rates on capital gains. I think as the debate progresses we will find out about public reaction to this, and it will be a lot easier to decide what is the best course of action within our taxation system.
I am not sure we will see an ideological coalition of Conservatives and Liberals and New Democrats once the government policy on capital gains is known. However, it will reflect the common sense which has always been the characteristic of Liberal policies.
One aspect of this bill has been the object of attention and lengthy comments. All members are concerned about it and I have the impression that it is of concern, more particularly and more especially, to one of my cabinet colleagues, the Minister of State for Small Businesses, for it concerns the Small Business Development Bond.
The first comment we hear about this measure is that its application is overly restricted, suffice to re-examine the expression itself to realize that its application must be restricted since it is a Small Business Development Bond.
I know that the hon. member for Mississauga South (Mr. Blenkarn) would like it better if these bonds covered the inventories, the working capital and a wide variety of the financial requirements of small businesses. In addition, the
Income Tax Act
hon. member is convinced that the government must use the available funds as judiciously as possible. And I am sure the hon. member will recognize that the decision to give priority to the development of small business by limiting this type of bond, especially in these times of high unemployment where the availability of funds is limited because of the government's commitment to restraint, is a government decision which will certainly be looked upon favourably by most people.
Other comments have been made about this provision. I think we will have the opportunity of discussing it later on tonight or at some other time.
Some members have also dealt with the greater flexibility which will be afforded with regard to the taxation of income from the sale of farm property, especially when such a sale is effected within the same family.
I would first like to indicate that those provisions already exist on the fiscal level to facilitate the transfer or sale of farm property between members of a family.
I must also add that the tax measures relating to such sales or transfers of farm property do contain certain restrictions.
For example, residence is excluded and there are various measures which encourage the sale or transfer of property to members of the same family. Now the wider question of whether or not to facilitate even more the sale or transfer of farm property relates to the taxation of capital gains, and since a working paper has been tabled, we think that it would be wiser and better to wait until the capital gains policy has been reviewed before changing the present provisions which are quite generous with regard to the sale or transfer of farm property between members of a family.
I think the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton) also referred to the provision relating to alimony for common law spouses. He was surprised to find that this provision which was in the December 1979 budget was left out of this bill. I would draw his attention to the fact that it has not been left out, and I refer him to Clause 29 of this bill.
The hon. member has also asked us to reconsider the case of common law couples who could be entitled to a married exemption. It is clear that in our present taxation system married exemptions are only granted to married couples. It seems very easy to consider positively such a request, and it is not the first time that it has been examined. The problem lies in the fact that as far as common law couples are concerned we are dealing with personal conditions which are often changeable. It is quite difficult to get a clear and specific definition covering the cases which the hon. member would like to include. However, this study is made regularly and we are trying to draw up a provision which would entirely cover those cases, without being discriminatory.

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Income Tax Act
It has also been pointed out that the non-taxable allowance granted to voluntary firemen set at S500 should be increased. I think it is essential to take into consideration the fact that the deductions granted for job-related expenses which are already set at 3 per cent can go up to $500 which gives a total non-taxable or deductible amount of $1,000. I think it would be quite difficult to consider very high deductions in very special cases such as voluntary firemen. However, such a provision recognizes the importance of voluntary work.
I would also like to use this opportunity to refer to the case brought up by the hon. member for Edmonton South. He raised the entire issue of voluntary work and possible amendments to the existing provision in the Income Tax which provides for a general $100 deduction for charitable donations.
The hon. member made some suggestions. I should like to tell him they are interesting but costly. I should like also to point out that last Friday my colleague, the Secretary of State and Minister of Communications, as well as other colleagues, had opportunity to meet with spokesmen of voluntary organizations. The whole question of how to help financially, through the tax system, the voluntary organizations or people making donations to those organizations is currently under review by the government. However we have to examine the cost of such measures and to what extent we can afford measures that would divert revenues still quite limited in the present circumstances.
The question has also been raised about benefits for parents who have to buy devices for the handicapped. I should like to point out, that a task force made up of parliamentarians will soon submit, if it has not done so already, a report on the needs of the handicapped. I am sure it will make recommendations to the Department of Finance about possible measures to help handicapped people through tax legislation. When this report is tabled, it will receive all the attention it deserves.
Some hon. members have also asked why the government has not retained the energy tax credit which was part of the December 1979 budget. I think this question has already been answered on several occasions in this House, either by the Minister of Finance or the Minister of Energy, Mines and Resources. This government has introduced an energy program which protects all Canadian consumers irrespective of their income level against increases in oil prices. This government has planned increases in oil prices which will not create as much hardship for the consumers as those forecast by the previous government. In this way, with smaller increases, there is no need to give back with the left hand what we have taken away with the right hand. That is the reason we have not retained this measure.
Some hon. members have also raised the question of the investment tax credit, especially in designated areas. I am referring to the representations made by the hon. member for Rimouski-Temiscouata and by the hon. member for York-Sunbury. The question of the areas selected for designation
which qualify for the investment tax credit, as always in such cases, concerns boundary lines. As a matter of fact, I suggest this credit is extremely generous, and as any measure-


Denis Éthier: I regret to interrupt the hon. minister but his allotted time has expired. He may, however, continue if there is unanimous consent.


Some hon. Members:: Agreed.


Pierre Bussières: Mr. Chairman, I thank the hon. members for allowing me to go on with my remarks. As for any tax expenditures, we know where they begin, namely when the legislation is passed by Parliament, but we never know where they will end with regard to financial implications. It is with this first concern in mind, as well as our desire to help the areas which need it most, that we have delineated the boundaries of those areas which qualify for this very generous investment tax credit. It is precisely because of its generosity and the fact that it is difficult to assess the cost of such tax expenditures that the government has seen fit to limit this investment tax credit to areas that need it most. Furthermore, the level of economic activity, the various rates of unemployment, the capacity of the area to generate investment and employment opportunities have been determining factors in the designation of these areas.
The member for Vancouver East was in this House earlier is concerned about housing problems and has been critical of a measure contained in this budget, namely, a tax incentive for multiple unit residential buildings commonly referred to as MURBs. 1 must say to the hon. member that this is not the kind of measure most likely to generate extensive residential development. However, it has been introduced because of the over-all economic situation and, above all, of the desire of the government to limit its spendings.
The government believes that in areas where the demand for multiple units housing is strong and consequently where housing is the least available, this measure will help generate the construction of such housing facilities and will also reduce the hardships faced by these areas with regard to their housing demand. Of course, when times are better, government expenditures would be much less burdensome and we could then afford to introduce more generous programs to help the building industry. But 1 am convinced that Canadians understand the situation the government is in now and its unwavering determination to limit its expenditures to meet only the most urgent needs.
Another question which was raised by several hon. members, particularly the hon. member for Prince George-Peace River, is assistance to workers in the north. I would like to remind the House that following the concerns expressed by several hon. members, namely, the Minister of National Revenue, the Minister of State for Mines and the hon. member who

made representations once again, the government imposed a moratorium on expenditures earmarked for northern workers. However, in spite of the apparent justification of some representations, I would point out that the danger and the inequity would be in using the taxpayers' money to make up for employment problems in some areas. I am talking about difficulties involving wages or salaries. 1 think we should find other means, such as more generous salaries to compensate workers who are experiencing difficulties in northern areas.
I still have many more comments to make, however 1 do not wish to abuse the generosity of the hon. members. When the provisions of this piece of legislation come up for study, I shall then take the opportunity to complete my remarks. I thank the hon. members for their kind attention.
Clause 1 agreed to.
On Clause 2-


Pierre Bussières: In the series of technical amendments 1 handed in yesterday, if my memory serves me right and if Mr. Short is not mistaken, we had a technical amendment to Clause 2.


Lloyd Axworthy: That subclause 2(2) of Bill C-54 be amended by substituting the following at line 20 on page 5:
"a specified employer, and"


Pierre Bussières: Subclause 2(2) of the bill provides that an amount not exceeding $50,000 may be deducted annually by certain employees of Canadian firms working overseas. That deduction is intended to improve the competitive position of our businessmen and Canadian firms working on construction contracts abroad. The addition of the word "and" to that clause in fact merely makes up for an omission when the bill was drafted.


[Stage Direction]
Amendment agreed to.
Clause 2, as amended, agreed to.
[Stage Direction]
Clauses 3 to 6 inclusive agreed to.
On clause 7-
Bob Rae: Mr. Chairman, I would like to ask the government to tell us why this amendment, if I understand it correctly, excludes from income housing loans received by shareholders and employees, which in effect gives a tax free benefit to directors and senior officers of corporations. It obviously gives tax advantages to people in those positions. 1 wish to ask the minister the estimated cost of this tax expenditure and why it is not possible for us to have, first, full taxation of this income since in effect it is income and, second, why it is not possible to have full disclosure of all loans to employees and officers of corporations, as is required in the United States.
Income Tax Act


Pierre Bussières: Mr. Chairman, I shall answer the first part of the question of the hon. member with regard to the estimated cost of this expenditure. We have no accurate estimate of it. As one can see on reading the provision involved, it extends to the spouse an existing provision. It would, therefore, be extremely difficult to make an estimate, even a rough one, of the cost of this expenditure.
The hon. member asked why companies could not be required to reveal the name of the beneficiaries of this measure. Personally, I feel it would be very difficult to draw up a list of the persons concerned or to demand that their names be revealed. It could even become somewhat childish to have a small business reveal the name of one of its employees to whom a loan was granted toward the purchase of his home at a privileged rate of interest. I doubt that this type of information could help make business relations healthier in our country.


Bob Rae: I must say to the minister that, in his answers here in Committee of the Whole or in the Standing Committee on Finance, Trade and Economic Affairs, 1 am always struck by the fact that he is a reformer for things general but a conservative for things specific. When asked specific questions, he suggests this is not possible in such a case. But I would simply like to suggest to the minister that we have here a matter of loans to employees, a substantial benefit enjoyed by a certain group, so we should ask ourselves: Why not tax this as income?


Pierre Bussières: Mr. Chairman, I feel that this is not the only benefit employees can derive from their employment. This is a known type of benefit that has appeared for a number of years in the Income Tax Act, but it is not the only type of benefit. 1 feel that if we were, for instance, to require disclosure by lending companies or other corporations extending benefits to their employees in the form of mortgages or other loans, this would penalize the employees concerned, as compared to those working for other firms or corporations that may extend other types of benefits which would be exempt from disclosure.
Coming back to the basic point, I cannot see how such disclosure would improve the management of our corporations or even public confidence in those firms. In fact, the only advantage might be to satisfy the curiosity of a very small group of people.


Bob Rae: Naturally, 1 do not agree that I represent only a very minute part of the population. When I hear the minister tell me that he advocates that idea because it has existed for a very long time, 1 wonder about the type of conservative proposal, or conservative defence he is putting forth.


Pierre Bussières: Mr. Chairman, unfortunately 1 did not base my argument merely on the fact that the provision has existed

February 3, 1981
Income Tax Act
for a very long time. That, to my mind, is a little far-fetched. The argument 1 developed is this: this provision is a fact, it exists. It is a tradition that is not necessarily conservative. I am convinced there are many traditions the hon. member holds dear, to which he clings, which he is not willing to brush away off-hand. Because he cares about those traditions, because he clings to them does not make a conservative out of him.
Clause 7 agreed to.

On Clause 8-


Erik Nielsen: Mr. Chairman, I understand, as a result of the very vigorous and articulate representations made by the hon. member for Mississauga South and many others on this side that the government is very seriously considering an amendment to clause 8 of the bill which might well become the subject of a House order tomorrow. If that be the case, perhaps we might find disposition to stand Clause 8 until these representations in respect of extending the life of the Small Business Development Bond might find their way into a suitable amendment to be brought forward by the government tomorrow.
[ Translation]


Pierre Bussières: Mr. Chairman, Clause 7 of the bill has been carried. The remarks of the hon. member for Yukon, the deputy leader of his party in the House, are accurate. 1 fully agree that the House should stand Clause 8 and proceed with Clause 9, with a view to coming back to it tomorrow with proposals that meet the wishes of all hon. members, more specifically the Minister of State for Small Businesses.
Clause 8 stood.

Clause 9 agreed to.
On Clause 10-


Bob Rae: Mr. Chairman, I want to deal with subparagraph (a) which, reading from the ways and means motion, as I understand it, makes some changes in respect of deductibility of registered defined benefit pension plans. It is my understanding that employers make contributions to defined benefit pension plans on behalf of their employees, and these contributions are tax deductible. Special payments are made for past service, or when benefit levels are increased, in order to overcome the problem of underfunding. Normally the amount of these special payments is regulated so employers do not underfund and thus put pensioners' incomes into jeopardy. I would like to ask the minister whether the government is now proposing that the maximums on these special payments, in order to avoid the problem of underfunding, be eliminated? Is that what is being suggested?
1 wonder if I might ask the minister a set of questions on this subject and perhaps he can then discuss the answer with his officials. The problem I am raising is obviously related to the impact the elimination of these maximums might have on the problem of underfunding of defined benefit pension plans.
I point out to the minister that 57 per cent of these plans, according to a recent study, are now in actuarial deficit. The minister would obviously appreciate the very serious problem this causes in bankruptcy proceedings when there is serious underfunding of these pension funds. In recent proceedings involving the bankruptcy of the White Motor Company, employees discovered to their horror that the pension fund had been vastly underfunded. This is now causing them very serious and real security problems; they are facing this difficulty.
What would the impact of such underfunding be, and why is the government removing the maximum payable and a special benefit payable, when this can clearly have an impact on the funding and on the solvency of these pension plans, many of which are currently underfunded?


Pierre Bussières: Mr. Chairman, this provision is intended to give greater flexibility in the matter of the contribution of an employer to a registered pension plan over and above $3,500, which is the present limit for each employee. I should like to point out that the application of this provision on flexibility in the payments will be subject to the prior approval of the Minister of Revenue.
[ English |


Bob Rae: I am not attempting to delay this proceeding at all, but I am attempting to deal with the problem. It is my understanding-perhaps I have misunderstood-that the amount of the special payment that is made by the employer is currently regulated by the department just to avoid the problem of underfunding, which is already very serious. Is it not possible, if we decide to remove the maximums on an application from an employer because of difficulties that employer is facing, that the consequence of an application of that kind would be to aggravate the problem of underfunding rather than to solve it?
[Translation[


Pierre Bussières: Mr. Chairman, if I understand correctly the matter raised by the hon. member, I suggest there is no connection between the legislation and the problem he has raised, because increasing the amount of contributions over and above $3,500 will certainly not worsen underfunding or funding below $3,500. As a matter of fact, the purpose of this amendment is to make the ceiling the maximum, more flexible. I can find no connection between the matter raised by the hon. member and our efforts to make this legislation more flexible.


Bob Rae: Can the minister tell us in what circumstances the government would be flexible in terms of the kind of funding which will be required, and will the employees, who are the potential beneficiaries of these plans, be informed when the
February 3, 1981

government decides it will be flexible with an employer's contribution to the plan?


Pierre Bussières: Mr. Chairman, 1 am afraid I do not understand or the hon. member does not understand the legislation. As a matter of fact, what is the purpose of this legislation? It is to allow an employer to contribute to a pension fund more than the current maximum of $3,500. Moreover, I do not think that this legislation deals directly with the matter which the hon. member has raised. There is no connection between the two realities; that is the problem.


Bob Rae: Mr. Chairman, I do not want to extend this discussion unnecessarily-


Mr. Peterson:: Bravo!


Bob Rae: The hon. member for Willowdale can say "bravo", but 1 do think this is a problem. I am sure when he is faced with employees in his riding who come from bankrupt firms and who have had their pension funds denuded by their employers, they too will be raising some questions with him.
If it is not relevant in this context, perhaps the minister can give us the assurance that this is one of the things which will be discussed at the National Pensions Conference, in which I am sure he is taking an interest, as are others.
[ Translation]


Pierre Bussières: Mr. Chairman, 1 can assure the hon. member that this is one of the subjects which will be dealt with during the conference on pensions. I am confident that this conference will propose answers not only to this particular problem but also to a great many other problems related to pensions in this country.
Clause 10 agreed to.
Clause 11 agreed to.

On Clause 12-


Mr. Riis:: Mr. Chairman, under present legislation the chartered banks of Canada are allowed to deduct from their taxable income any losses from bad or doubtful debts. This particular amendment allows banks to deduct or defer this deduction to subsequent tax years, which will presumably have the effect of increasing bank profits. Considering recent reports that banks are not doing too badly, and particularly the report coming from the Economic Council of Canada in 1978 that Canadian chartered banks actually overcharged Canadians to the tune of hundreds of millions of dollars-perhaps by 1980 reaching the $1 billion mark-has the Department of Finance determined the impact of this amendment on bank profits? Will this not allow banks to profit from record levels of bankruptcies due to high interest rates? I think this is a very crucial question, particularly in light of recent evidence brought forward regarding overcharging by Canada's banks.
Income Tax Act


Pierre Bussières: Mr. Chairman, the intent of this amendment is in fact to place the banks' reserves for doubtful debts on the same footing as those of any other type of corporation. This should have no impact whatever on bank profits.
Clause 12 agreed to.

Clauses 13 to 15 inclusive agreed to.
On Clause 16-


Bob Rae: Mr. Chairman, this proposal makes a change in the capital gains tax. Part of the explanatory note says, and I quote:
That where, as a consequence of the death of a taxpayer after September 5, 1977-
Perhaps I could ask the minister by what miracle that date was chosen. Who died on September 5, 1977, or who died on September 6, 1977?
-an object certified under the Cultural Property Export and Import Act is donated to a designated institution or public authority, any capital gain from the disposition of the object be exempt.
This clause, as well as Clauses 18 and 20, deals with the question of capital gains.

1 should like to remind the minister that when answering our questions on Clause 1 he said he agreed we should find a way to channel the discussion on capital gains. Now perhaps he should tell me how. If he does not know just now, when does he intend to tell us? Will it be in committee? How shall we discuss it?
Finally, why should we make minor changes in respect of capital gains when he admitted himself that he was waiting for the opportunity to consider the problem? We see now that he accepted some changes, and I would like to know why. What was the rationale for selecting that particular date of September 5, 1977? When will he be in a position to announce how we will, to use his own words, channel the discussion of the problem?


Pierre Bussières: Mr. Chairman, I am very glad to see that the hon. member pays so much attention to what I say when I answer questions, which is not usual if one has to answer many questions. Why September 5, 1977? What is the magic reason that made us choose that date? This is the day when the Cultural Property Export and Import Act came into force. That is the reason for selecting that particular date. That takes care of the first point. As to the second point, reverting to the argument I used with regard to the working paper on capital gains, 1 would like to point out to the hon. member that this amendment is a minor one, that it is of a technical nature and as such it does not have a significant impact on taxation.

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As to the more general question of the government's intention with regard to the working paper on capital gains, I would say that several possibilities for discussion are open to the government. However, some of those possibilities are rather uncertain at the present time. I am thinking particularly of the Standing Committee on Finance, Trade and Economic Affairs which, as the hon. member knows, is busy considering several bills and has studied a working paper on our import policy. With such a workload, it would be difficult to entrust it with another task. There is the possibility of setting up a task force similar to those which already exist-and such as the member suggests- to consider the whole question of equalization and also that of the comprehensive shared-cost programs between the federal government and the provinces. That is another avenue which could be explored. However, the hon. member would agree with me that if we use that method of assessing equalization and cost-sharing programs, the possibility of setting up such task forces is still limited since it would drain the energy of several hon. members. If we gave priority to the study of equalization and cost-sharing programs for instance, we would be granting greater importance to the hon. member's suggestion than to a working paper circulated by the government a few months ago. There are also other avenues; concerned people are invited through media advertisements to produce briefs and to make representations to the department. That is another alternative which can also be used by the government. However, no decision has yet been made, not due to procrastination, but simply because some avenues we would have liked to resort to are already rather overcrowded at the present time.

Clause 16 agreed to.
Clauses 17 to 21 inclusive agreed to.
On Clause 22-Mr. Axworthy moved:
That Subciause 22( 13) of Bill C-54 be amended by striking out line 23 on page 46 and substituting the following therefor:
"interest after October 28, 1980 and are applicable in determining the adjusted cost base of a partnership interest disposed of by a person after 1976 and before October 29, 1980, where that person so elects in prescribed form before 1982."


Erik Nielsen: Mr. Chairman, I do not know what the effect of that amendment will be, and 1 am sure our critic will not know because we have received no notice of the amendment. I am prepared to listen to the minister's explanation as to the effect of that amendment. But I would suggest that we might better facilitate an understanding as we go through the some 100 clauses left in the bill-if it is the government's intention to make further such amendments-if we are given notice.


Mr. Blenkarn:: We have received notice.


Erik Nielsen: We received notice?


Donald Alex Blenkarn: Yes, and they are okay. We received notice of these amendments yesterday from the minister. We have checked the amendments which are largely technical. They do not concern us at all; indeed they improve the bill.


Pierre Bussières: Mr. Chairman, the very brief explanation contained in the notes that were handed out yesterday is that many representations were made to change the date of the coming into force of this technical amendment. I do not see any difficulty. I think the hon. member understood very well the nature of the amendment.


[Stage Direction]
Amendment agreed to.
Clause 22, as amended, agreed to.
Clause 23 agreed to.
On Clause 24-
Lloyd Axworthy: That Clause 24 of Bill C-54 be amended
(a)	by striking out lines 9 to 18 on page 47 and substituting the following therefor:
"Canada has after April 21, 1980, received a taxable dividend in respect of which it is entitled to a deduction under subsection 1 12(1) or 138(6) as part of a transaction or event or a series of transactions or events (other than as part of a series of transactions or events that commenced before April 22, 1980, one of the purposes of which (or, in the case of a dividend under subsection 84(3), one of the results of which) was to";
(b)	by striking out lines 9 to 13 on page 48 and substituting the following therefor:
"(ii) a significant increase in the interest in any corporation of any person with whom the corporation that received the dividend was dealing at arm's length; or
(b) if the dividend was received in the";
(c)	by striking out lines 45 and 46 on page 50 and substituting the following therefor:
"(f) where a corporation has"; and
(d)	by striking out line 1 1 on page 51 and substituting the following therefor: "after April 21, 1980."


Bob Rae: Mr. Chairman, this is an area of the law which caused me headaches at law school. 1 do not mind sharing that information with the minister. I would simply like to ask him so as to better understand. He will perhaps recall the discussions of yesterday concerning the problem of the relationship between capital gains income, dividend income and earned income. I would simply like to ask him-and perhaps he could confer with Mr. Short who might come up with an opinion on this-whether the effect of this will be to deal with yet another loophole in the perennial surplus stripping problem, or whether this has the effect of creating greater equivalents between dividend income and capital gains income at the expense of earned income. Could the minister tell us the intention of the amendment? I do not know what the amendment is all about.
February 3, 1981

[ Translation]


Pierre Bussières: Mr. Chairman, one of the purposes of this amendment is to avoid that a possible taxable capital gain be turned into a tax exempt dividend. This will eliminate a loophole in the act and allow us to tax this type of capital gain. This is the exact purpose of this amendment.


Bob Rae: The minister looked as tentative in giving his answer as 1 was in posing the question. I do not mean that as criticism. 1 am still not entirely clear. Perhaps Mr. Short or one of the minister's officials could comment on this problem. I was simply citing from the discussion paper in the example 1 was raising.
Does the government have any views on the problem of the relationship between these three forms of income and the fact that we have, in the name of closing a loophole, created a greater over-all inequity in the tax system? I see them shaking their heads; obviously 1 am on the wrong track. But if that is a problem, perhaps this amendment has no relationship to it. If so, perhaps the minister could explain how it does not. I am still not entirely clear.


Pierre Bussières: Mr. Chairman, I should have been more explicit in making my comments, even though I want to keep my introductions as short as possible. In fact, the problem raised by the hon. member is not involved here. The amendment concerns a corollary problem or a problem which is related to the much larger problem raised by the hon. member. This should be discussed in the course of the debate we would like to have on capital gains. This amendment removes a possible loophole, but it does not solve the much larger problem mentioned by the hon. member, which will be discussed and addressed in some way by the government when we undertake a more in-depth study in the course of a debate on capital gains tax.
[ English |


[Stage Direction]
Amendment agreed to.
Clause 24, as amended, agreed to.
On Clause 25-
Bob Rae: Mr. Chairman, I am somewhat surprised that hon. members to the right have not risen on this clause, since it seems to be a question of some importance to them; that is to say, the question as to whether or not the conversion grant given by the government of up to $800 should be taxable as income. If it is the intention of the government to encourage conservation, then the net effect of this conversion grant may be far less than the effective cost of the project. One considers something as income when it is income, but one does not consider something as income when all it is being used for is the conversion of a furnace, the installation of insulation and so on.
Income Tax Act
For example, the government could say to Mrs. Jones, "Flow much would it cost you to change your furnace from oil to gas?" If Mrs. Jones said, "It will cost me $1,600", then the government should say, "Here is $800, Mrs. Jones, we are paying half the cost." But, the government is not saying that. What the government is saying is: "Mrs. Jones, here is $800 which you have to declare on your income tax return." So, the government is really giving Mrs. Jones $450 or $500, which may be far less than the cost of the actual conversion. I agree with the principle-


Mr. Evans:: It provides an incentive.


Bob Rae: The member for Ottawa Centre, the Parliamentary Secretary to the Deputy Prime Minister and Minister of Finance, says it provides an incentive. My answer to that is that it does not provide as much an incentive as the government is capable of providing. As my friend from Kamloops said, it is misleading. They are saying that it is income. It is not income, because that money goes immediately to the expense of the conversion. Therefore, if they are saying they want to effectively provide a real incentive to people to convert from oil to gas, then there should be a program which is clearly either a direct non-taxable grant or a reimbursement in the form of a credit. It does not matter how they do it; they can either do it through the tax system or a grant system. The purpose is to provide an incentive, and there is no need to make it taxable as income. It is not income, because as soon as one receives it one spends it; it is not income in that sense. It is income which has been used up at the point of its being given away.
[ Translation]


Pierre Bussières: Mr. Chairman, I am really surprised at the comments made by the hon. member. If we ask the taxpayer who receives such a grant to include it in his income, it is for equity purposes and because this government wants to help those who need it most. As one's financial position improves, there is a lesser need for help from the government. If we were to give a $800 grant to someone whether he earns an income of $9,000 or $20,000, this would be inequitable. However, as soon as this grant becomes taxable, the person earning $20,000 will have less money left over from his $800 grant, and thus the balance will be restored. I believe that the hon. member is sufficiently concerned about these liberal ideas to agree that such a subsidy should be taxable to achieve equity and to help first those who need it most.


Bob Rae: The minister says that I am concerned about liberal ideas. I can assure him that the minister is not now expressing any liberal ideas. If he really wanted to be progressive, he could introduce either a non-taxable benefit or a tax credit, which would be even more progressive, and this is what he would be saying if he were sitting on the side of the opposition. I recall hearing him talk about a tax credit when he was a member of the opposition. A tax credit is a lot more

February 3, 1981
Income Tax Act
progressive than the mere provision that the income will be taxable once it has been received by the individual.


Pierre Bussières: Mr. Chairman, of course we could debate at length on how to apply such an incentive to change the volume and pattern of our energy consumption. However, in the program put forward by the government we have decided to offer grants on an individual basis and, as I said earlier, to ensure a greater equity in the use of that money by making it taxable as part of a person's taxable income. This is a choice which we made, and certainly this measure will be widely used in Canada. It will benefit all Canadians, while helping us implement our energy conservation program aimed at attaining self-sufficiency within the chosen time frame.


Bob Rae: I do not want to lengthen the discussion, but I would like to suggest to the minister that for this year we will wait and see whether the program is adequate as far as implementing the energy conservation program referred to by the minister. Next year we will be anxious to get the figures to see whether the $800 taxable grant is indeed adequate for the implementation of the National Energy Program. We will want to look at the figures, and I must tell the minister that if he is genuinely sincere-and, of course, I know he is personally sincere-if the government is sincere with respect to self-sufficiency, they will have to do more than that to truly ensure that Canadians will conserve more energy.


Pierre Bussières: Very briefly, Mr. Chairman, I too am convinced that as a society we should do much more in that area of energy conservation, if we are to reach self-sufficiency. But I believe we should rely not only on government incentives but also on the awareness of Canadians to the need to conserve energy, if we are to attain self-sufficiency, and as well on their sense of responsibility and their commitment to reach the goal of self-sufficiency, in order to complement the various energy conservation measures included in the National Energy Program. Therefore, I feel that these incentives, combined with the efforts of each and every one, will allow us to achieve our goals.

Clauses 25 and 26 agreed to.
On Clause 27-


Lloyd Axworthy: That subclause 27(6) of Bill C-54 be amended
(a)	by striking out line 10 on page 57 and substituting the following therefor: "the taxpayer, the person with whom he was not dealing at arm's length or the predecessor corpo-";
(b)	by striking out line 39 on page 57 and substituting the following therefor: "the taxpayer, the person with whom he was not dealing at arm's length or the predecessor corpo-"; and
(c)	by striking out line 18 on page 58 and substituting the following therefor: "the taxpayer, the person with whom he was not dealing at arm's length or the predecessor corpo-".


[Stage Direction]
Amendment agreed to.
Clause 27, as amended, agreed to.
Clause 28 agreed to.
On Clause 29-
Lloyd Axworthy: That subclause 29(4) of Bill C-54 be amended
(a)	by striking out line 25 on page 63 and substituting the following therefor: "for the year,"; and
(b)	by striking out lines 30 to 41 on page 63 and substituting the following therefor:
"is a refund of premiums (within the meaning of section 146) under a Registered Retirement Savings Plan received by the taxpayer out of or under the plan on or after the death of the person who was, immediately before his death, the annuitant thereunder and the taxpayer's spouse, and (iii) was not deducted in computing the taxpayer's income for a previous year;"


[Stage Direction]
Amendment agreed to.
Clause 29, as amended, agreed to.
Clauses 30 to 39 inclusive agreed to.
On Clause 40-
Lloyd Axworthy: That Subclause 40(2) of Bill C-54 be amended by striking out line 5 on page 100 and substituting the following therefor:
"(2), where a person has trans-"


Bob Rae: Mr. Chairman, I simply want to indicate to the minister one of the concerns of my party and myself about the remarks of the Minister of National Health and Welfare in her speech on January 19 regarding the proposal that a spouse be paid a salary from an unincorporated business and have that payment deducted as a business expense. Also the proposal allows Canada Pension Plan contributions on behalf of the spouse. I want to raise a couple of questions about this, one of which I raised with the Minister of Finance some time ago. Perhaps tonight the minister can shed some light on this problem.
The other question was raised by the Minister of National Health and Welfare in her remarks when she indicated that this provision allows the government to say it has fulfilled its commitment to include women in the Canada Pension Plan. I want to indicate to the minister that this covers only a handful of women; it does not cover those who cannot afford the Canada Pension Plan contributions. While we are supportive of this amendment which was, after all, proposed in the Crosbie budget, we do not regard it in any sense as an excuse for the government to claim that it is resolving the problem of pensions for women who work at home.
We are just touching the surface of this problem. We have made progress, and for many people and unincorporated small businesses it is a significant advance. Still, it is a very small step for mankind, if I may say so, and not one which can be regarded as an achievement. I found it ironic that the Minister of National Health and Welfare would take a proposal from the Crosbie budget and somehow claim that it was partially implementing the promises of the Liberal Party in the last
February 3, 1981

election campaign that it would make some major reforms to the Canada Pension Plan. We are still awaiting those reforms.
Has the department given any consideration to the effect this clause will have or could have on family law provisions at the provincial level? I have raised this problem at some length with the Minister of Finance.
It concerns whether or not the payments made by a spouse to another spouse will be deemed sufficient, or will have any effect on the matrimonial property rights, in the view of the department, which have been established at the provincial level in virtually every province. As the minister will know, it is now the established law in just about every province that a spouse has, in a sense, a constructive equity interest in the case of many family businesses. This is simply because the woman has perhaps worked in the home while the husband has gone to work in a small business. There is now provision in most of our provincial laws allowing a spouse to argue on the premise: "I have an interest in that business because I have been working at home." That gives that spouse a constructive equity interest.
My concern is based on a question which has been raised with me by many women's groups across the country. It is a question which perhaps the department should at least think about. It is as follows: Will the fact that spouses are being paid allow the paying spouse to argue that there is no equity interest there because that interest, in a sense, has been bought off on a cash basis, on an annual income basis? Therefore she has been recognized for the work which she has contributed to the business. Does the minister see this having any effect on this matrimonial property law problem?


Pierre Bussières: Mr. Chairman, concerning the problem of marriage law raised by the hon. member, I must say the legislation would have no direct effects, as he explained. However, 1 would like to come back to his opening comments and assure him that the government does not believe this bill will solve every problem. The government does not believe it will solve all problems involving the participation of a spouse to a pension plan, particularly the Canada Pension Plan or the Quebec Pension Plan. We certainly understand and recognize that the scope of this amendment is quite limited, yet, it is a small step forward and small steps can go a very long way if we have patience and if we can wait for the opportunity which may come our way. In the present situation, this opportunity depends mostly on the financial capabilities of the government, inasmuch as those capacities could be involved in such legislation.
1 think my colleague, the Minister of National Health and Welfare, did not mean that this legislation would solve all problems. 1 think she is sufficiently practical and liberal to realize that the bill we are discussing may be only a small step, but it is a step forward. 1 believe that if we keep moving on in small steps we will eventually achieve great progress, as this
Income Tax Act
government usually does, but those measured steps must be in keeping with the government's ability to pay and our rate of social development.


Bob Rae: Mr. Chairman, the minister did not answer the second part of the question. I do not know whether he thought it was too speculative or whether he was not prepared to answer it at all. But in answer to the minister's comments on the importance of taking the small paces or what we used to call banana steps, I think it was Frank Scott who said of Mackenzie King that his basic rule was never do by halves what one can always do by quarters. That seems to be the philosophy the minister is presenting today.


Pierre Bussières: Mr. Chairman, I do not wish to indulge in some sort of philosophical discussion with the hon. member since my concerns before 1 entered politics were directly related to the phenomenology of perception. We might spend a night which would be most interesting for those who are interested in phenomenology, but rather boring for the others. At any rate, I would like to tell him that the legislation before us will have no conflicting or direct effects, 1 am told, with regard to provincial legislation or marriage law. 1 believe our basic concern was, through a tax measure, to bring about the answer to a problem faced by spouses who take part in the work of their partner in small and medium-sized businesses. We are adjusting to problems raised by provincial laws rather than interfering with provincial marriage legislation.


Bob Rae: Mr. Chairman, let me say 1 hope the minister is right. But I ask him if he were a spouse who had been paying his wife a salary for a number of years and was then faced with the argument that his wife had some sort of a constructive equity interest in the business, surely that spouse could argue, "No, you do not because I have been paying you a salary." If that is the case, then I suggest we may have a problem. I am not arguing this to be mischievous, and it is not because I disbelieve in the proposal that has been made. When this question was raised with me, it made a certain amount of sense. If I were counsel to the person involved it is an argument which would not have occurred to me, however, having been mentioned to me, it is something which does make a certain amount of sense; that is the question. The provisions of much of our provincial legislation are based on the fact that now the spouse has a constructive equity interest, and cases coming from the Supreme Court of Canada are clearly pointing in this direction, even for common law spouses. Therefore once you start paying your spouse a salary, surely you can argue, "You do not have any other interest other than the salary that you are being paid".
1 do not know whether or not it is a problem. I am simply raising this question with the minister. It strikes me as something which is worth thinking about, and for all we know, it

February 3, 1981
Income Tax Act
may have an impact on matrimonial property problems at the provincial level.


Pierre Bussières: Mr. Chairman, first of all, the amendment before us does not necessarily mean that a salary would be paid to the spouse. I am not a lawyer, but 1 suggest that if a problem is raised by a spouse who thinks he or she is entitled to some equity, for instance, in the business of his or her partner at the time of a divorce, it would be the responsibility of the court, according to the divorce law of that province, to rule on the matter concerning the rights of this spouse as far as his or her share in the business is concerned. I believe it should be incumbent upon the court to rule on the matter in the light of the provincial divorce legislation. I do not think we could provide in our tax legislation for theoretical cases of divorce since such conflicts come under provincial legislation and are settled through the courts.


[Stage Direction]
Amendment agreed to.
Clause 40, as amended, agreed to.
Clause 41 agreed to.
On Clause 42-
Bob Rae: I wonder if the minister could explain the purpose of Clause 42 with respect to employee loans and deal with a problem raised by Mr. Drache in a recent Financial Post article dealing specifically with this amendment. I am sure Mr. Drache is concerned. Perhaps the minister can explain the purpose of the amendment.
[ Translation]


Pierre Bussières: Mr. Chairman, the purpose of this amendment is to remove any unwanted impact or effects which could arise when an employee obtains a loan from his employer and the rate applying to that loan is about the same rate which would be charged generally to the public at large. So, that is the purpose of the amendment we are now proposing.
| English]


Bob Rae: 1 am still not entirely clear, Mr. Chairman. Perhaps the minister can explain by means of an example. My understanding is the effect of this, which one might call a VIP change, is to effectively reduce the level of the benefit that employee is receiving by virtue of the fact he is receiving subsidized loan from his employer. Is that the purpose of the legislation? If so, can the minister tell us how much it is going to cost?


Pierre Bussières: I hope I have understood, Mr. Chairman. That is a little complicated. Indeed the provision is aimed at establishing the rate with reference to which we could assume that a benefit has accrued to an individual who has obtained a
loan at a certain rate from his employer. So this provision is designed to set the rate which would be used as a standard of measurement from which we could work out the benefit by comparing the interest rate paid on the loan granted by the employer to the employee with that standard of measurement.


Erik Nielsen: That is only the first part.


Bob Rae: Yes, Mr. Chairman, the minister only answered the first part of the question. Perhaps it is a two-pronged question. Has the minister or his department conducted a study as to where this tax expenditure falls? In terms of income groups, who gets the benefit of this tax expenditure? Also, what will be the cost of this new benefit to those who receive subsidized loans from their employers? What will this new benefit be worth?


Pierre Bussières: Mr. Chairman, I will say it is a measure which is widely used especially by employees in isolated areas. Reference was made earlier to benefits granted to employees in the north. It is a type of benefit which is granted to some people who are employed in the north. We also mentioned certain classes of institutions, for instance, financial institutions, trust companies, banks, or any other financial institution which will frequently grant such loans to their employees, and not only to their employees, because that type of loan can be granted in a very general way to their employees. I see the hon. member shaking his head. I am told it is currently being done. As far as estimated costs are concerned, I must say that we have no provision for evaluation. It is very difficult to set a cost evaluation for such a measure, and I regret to say to the hon. member that I cannot indicate the amount which could be involved in this instance.


Bob Rae: Mr. Chairman, I think we are entitled to at least a rough estimate. If the minister is going to carry out these sorts of changes, although they may be minor, they will result in a benefit or a tax relief for a certain group of taxpayers. Although it may seem like a large number, more than five people, in terms of the relationship to the 15 million people who filed income tax forms last year, it would be a minuscule proportion of those 15 million. Without being ideological, we are entitled to know, if this benefit or tax relief is being given, who is receiving it and how much it will cost. As I said to the minister previously-and we said this in the House many times-one person's tax benefit is another's tax burden. If a tax benefit is to be provided for these people, we are entitled to know how much it will cost. I can then go to my constituents and tell them the reason they do not get a cost of living tax benefit is the government is giving benefits like this to other people in society.


Pierre Bussières: Mr. Chairman, I mentioned a certain number of people to whom this provision could apply. As to
February 3, 1981

the cost of the change or adjustment which is made on the basis of the rate taken as a measurement and the rate which is granted, I have been told that it would not exceed $2 million or $3 million.

Clause 42 agreed to.
Clause 43 agreed to.
On Clause 44-


Mr. Nickerson:: Mr. Chairman, under Clause 44(4) authority is to be granted to the governor in council, presumably, to establish certain rates of interest for the 1979 and 1980 taxation years. Could the minister tell us what rates he intends to establish for those two years?


Pierre Bussières: Did the hon. member say Clause 44(4)?


Dave Nickerson: It is 42(4).


Cyril Lloyd Francis: Clause 42 has been adopted.


Dave Nickerson: I draw the minister's attention to page 104.
[ Translation]


Pierre Bussières: It is Clause 40. The prescribed rate for the year 1980 was 11 per cent and the Minister of National Revenue has announced that the rate for 1981 would be 12 per cent.

Clause 44 agreed to.
Clauses 45 to 57 inclusive agreed to.
On Clause 58-


Bob Rae: Mr. Chairman, this provision allows the taxpayer to include units of mutual fund trust in his or her definition of a Canadian security for the purpose of the $1,000 deduction for investment income. 1 have some questions for the minister about this tax expenditure which arise from a series of ill-fated articles which misled the Canadian public when they appeared in The Globe and Mail following the minister's budget.
I am sure the minister recalls that this particular item of tax expenditure, along with a number of others, including the dividend tax credit, RHOSPs, changes predicted in RRSPs and so on, caused confusion when they were put forward. My questions really arise from the fact that this is a very costly deduction. It costs $665 million in forgone taxes. While it does benefit a wide range of taxpayers, obviously by far the heaviest concentration of those taking the full $1,000 exemption fall within the upper income tax brackets.
Just to show that this is fairly widespread, we know, for example, that there were 107,622 taxpayers in 1978 with incomes between $14,500 and $15,000 who each claimed an average exemption of $500 under this provision.
My question for the minister is really this: together with the RHOSP and other quite expensive expenditures this was sup-
Income Tax Act
posed to be under careful study by the department and ready for the chopping block; is it still the intention of the government to study these very costly tax expenditures? Will we ever have an opportunity to discuss these in other than a very general and fairly unsatisfactory way, such as we have today? Is it the minister's intention-or does the department have any studies-to examine the differential effect of allowing a tax credit to replace the deduction for this kind of exemption for RRSP and RHOSP deductions?


Pierre Bussières: Mr. Chairman, I do not want to be malicious but if we were to agree to the many suggestions voiced by the hon. member, I think we would have to stop sitting in the House in order to do our work in committee. It would not be an ineffective way of doing things, but still, I think that all taxation measures are constantly under review considering that the goal of this government is to have an increasingly fairer taxation system. We are continuously studying the various taxation measures. The hon. member based his statement on the premise that this measure was mostly used by people in the upper income brackets or, at least, in relatively high income brackets. 1 am told that this is not really true and that many people who have reached retirement age, or receive pensions to make that kind of investment; as well as people with average incomes as this provision is very interesting for them, while people with a much higher income will be interested in larger investments and perhaps also in more speculative investments with a much higher return. This may agree with the contention that the more you have, the more you want. So, this would confirm what we are told in connection with this particular measure.
The government is very much concerned with the various measures that imply tax expenditures, as it is difficult to estimate such expenditures. As 1 said earlier, we know where they start but we never know where they stop. Those measures are subject to permanent review by the department.


Bob Rae: It is just before ten o'clock, Mr. Chairman. 1 wonder if I could just say to the minister that our frustration about setting up so many studies arises from the fact that we would prefer to be the government making the decisions. That is not the case at the moment, so we would rather be in the position as parliamentarians involved in the study of these problems, getting as many facts as we can and being as constructive about them as we can. Rather than sitting back and letting the government carry on as though we do not exist, I suggest that would be preferable. Faced with the choice of three things-total inactivity, being the government, or having the ability to participate-as long as we are in opposition we would like the opportunity to participate.
Perhaps on that constructive note I might call it ten o'clock, Mr. Chairman.
Progress reported.

February 3, 1981
Adjournment Debate



PROCEEDINGS ON ADJOURNMENT MOTION

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

Benno Friesen: Mr. Speaker, on January 12, I rose in the House wanting to ask the minister in charge of tourism about the policy of the government regarding the activities of a Soviet Union tourist ship, the M.V. Odessa, plying the waters off the coast of British Columbia going to Alaska. The minister had to leave the chamber for a minute, so I redirected the question to the Solicitor General (Mr. Kaplan).
It boggles my mind that we should have a ship under the flag of the Soviet Union exploiting the tourist trade in Canada. Our economy is in trouble. We have thousands of people who are unemployed. The marine industry in our country is hurting. Let us forget politics for just a moment. I am talking about a ship under the flag of the Soviet Union, a country which has a planned economy, arbitrarily establishes wages and prices and which can very arbitrarily under those circumstances assign workers to that ship.
Under those circumstances there is a Soviet ship undercutting our economy. Thousands of people who would like to work in our marine industry cannot because a ship under the flag of the Soviet Union is plying our waters, entertaining our tourists and leaving our people jobless. There is an absurd situation whereby the stewards on the M.V. Odessa are serving caviar to the capitalist patrons on the ship, while their countrymen in the Soviet Union are serving rotten cabbage to the gulags. The patrons of the ship are certainly in no gulag. I am sure the brochure 1 have in my hand will demonstrate that the ship is not for gulags. It is fully colour coded, and it amply demonstrates the sumptuous fare for patrons on that ship. A nation known around the world for oppression at home is now exploiting the tourist trade in Canada. 1 cannot help but think of the insult this is to many thousands of Canadians whose places of birth are countries dominated by the militaristic regime of the Soviet Union.
In Canada we have an open harbour policy. This ship has freedom to dock in the harbour of Vancouver. It has free access to the facilities at Vancouver. As I understand it, no tourist ship from any other part of the world could go to any harbour in the Soviet Union and have the same access to facilities and the same freedom this ship has in our Canadian ports.
I have asked the Solicitor General what we have done to ensure the security of our Canadian coastline in the event that not all members of the crew of that ship are stewards, or
people in the marine industry, but are perhaps KGB officers. The Solicitor General was quick to reply that he is obliged not to answer questions of that nature because the operations of the security service are not described in this place in the degree of detail I was requesting. I was not really asking for that kind of detail. I want to know what assurance Canadians can have that there is security in Canada, in spite of the fact that that ship is plying Canadian waters. I notice that the map enclosed with this colourful brochure shows this ship hugging the British Columbia coastline, which is unguarded. We only have about two coastguard cutters in Canada, and we have almost no navy. Can the Solicitor General give the assurance-and I am not concerned with detail at the moment-that in fact normal security precautions have been taken?
The Soviet Union would gladly staff that ship with KGB officers. Just three years ago 12 so-called diplomats were dismissed from the Soviet embassy in Ottawa because they were not in fact diplomats. Is it unreasonable to suppose that some of the men and women employed on this particular ship are not in fact regular staff of the ship and have other clandestine duties to perform while serving on that ship?
Canadians deserve the assurance of the government that it has taken all the necessary precautions and that the coastline of British Columbia is being guarded.


Mrs. Celine Hervieux-Payette (Parliamentary Secretary to Solicitor General):: Mr. Speaker, it is with pleasure that 1 answer the question raised by the hon. member for Surrey-White Rock-North Delta (Mr. Friesen). I shall deal with the security issue raised in the hon. member's question and leave him to ask a question on the matter of tourism of the appropriate minister.
The hon. member asked a question of the Solicitor General (Mr. Kaplan) on January 12 of this year concerning the Soviet cruise ship M.V. Odessa and whether specific national security investigations had been carried out on that Soviet vessel. This question raised a fundamental issue. I believe it is important to remind hon. members of the necessity to reconcile the need for secrecy in the daily operations of an agency such as the RCMP security service with the well-established principle of ministerial accountability to the House. No member of this House would deny the need for a security service to safeguard the internal security of Canada. I also believe that no one could expect such a service to operate effectively with the same degree of public scrutiny and revelation of its operations as other government departments.
Since the nature of the various threats to our internal security are clandestine and covert, whether those threats be sabotage, espionage, terrorism or subversion, it is inconceivable that the security service should be forced to reveal its operations, methods and records in public and yet at the same time be expected to counter domestic security threats. Therefore, when a question is asked of our government, the answer to which would reveal information of value to those who would subvert our democratic system, the minister responsible is
February 3, 1981

forced to reconcile two competing imperatives-the need to ensure the continued viability of the security service and the responsibility to provide valuable information to this House and its members.
I believe that the commitment of this government to make more information possessed by its departments and agencies accessible is confirmed by the provisions of Bill C-43. However, even under the proposed access to information legislation, information held by the security service or details of its operations and methods are intended very largely to be exempt from public disclosure.
Even the revelation of whether an individual or group is of interest to the security service is in most circumstances of assistance to those who are involved in subversive activities. If in the process of such a revelation detailed insights are offered into the level of knowledge and operational methods of the security service, again the ability of that service to continue any particular operation or to use certain methods is undermined. Finally, if the subject of a question to the government concerns of foreign national, an organization of a foreign state or a ship such as the M.V. Odessa and if the security service interests were to be denied or confirmed, any such comment might well precipitate criticism or a complaint from the foreign government concerned.
For these reasons, the policy of successive ministers, including the Solicitor General and his predecessors responsible for the security service, is to deny specific details of security service files, operations and methods.


NATIONAL REVENUE-INQUIRY WHETHER TAXES WILL BE REDUCED
Mr. John Gamble (York North):: Mr. Speaker, on November 17, 1980, I had occasion to ask the Minister of Finance (Mr. MacEachen) whether, in light of impending tax reductions in the United States, it was anticipated that this government would follow suit and reduce taxes in Canada. The minister responded to me by referring to the provisions of his budget, which continue an indexation system. In his answer to me the minister went on to say:
-the kind of decreases in taxation which occur as a result of indexation and which occur in the United States because of such announcements.
In other words, they are the same.
These tax decreases take place automatically in Canada.
There is a substantial difference between an indexing system applied to deductions and rates in Canada which has the effect of simply placing taxpayers in the same position they would have been in had there not been the galloping inflation from which we suffer in this country, and a planned method of substantially reducing taxation.
I spoke on November 17 of the Kemp-Roth proposals which had been introduced in the U.S. Congress and from all reports with which President Reagan of the United States intends to proceed. In answering my supplementary question, the minister made the following comments. He said:
Adjournment Debate
-the Canadian tax system compares favourably with that of the United States or any other tax system from the point of view of attracting investment and from the point of view of the burden on the taxpayer.
He went on to suggest that, in any event, the proposals to which I made reference were not as yet enacted in the United States.
With respect to his assertion that our tax system is as favourable as that of the United States or anywhere else, I think it is very important to have regard not to the rates of tax alone but rather to the amount against which those rates apply; in other words, under our statute, the taxable income. The minister will know that in the United States husbands and wives are entitled to file joint returns and split their income. The minister will also know that in the United States it is permissible to deduct interest payable on such non-business assets as personal residences. The minister will also know, if he examines the facts, that businesses in the United States are entitled to carry forward their business losses indefinitely, whereas in Canada we are obliged to restrict those losses which are carried forward to a period of only Five years.
He will also know that in treatment of inventory evaluations the U.S. system is immeasurably more attractive to business than it is in Canada. Put succinctly, then, a 50 per cent tax rate against 50 per cent of one's income is decidedly less burdensome than a 50 per cent tax rate against all of one's income. So the minister's assertions, if they are based upon rates alone, are not the answer to the question.
It is well known by the business community, and by any employees of any business which has had a move to Canada from the United States, that the tax burden in this country is immeasurably greater than what it is in the United States. Therefore, the assertions which are made are not borne out by the facts. If the minister maintains his determination to sustain high levels of taxation in Canada, I submit the result will be most damaging to our entire economy. There are businesses with operations both in Canada and the United States which have their parent operations in Canada. There are businesses of the same nature which have their parent operations in the United States. In any event, businesses with operations on both sides of the border will naturally choose to conduct their sales operations and generate their profits in the area of lowest taxation. That will be extremely damaging to our future business development in Canada. It will be damaging to the opportunities for employment which are offered in this country.
It is also important to note that when expansion of a business enterprise takes place, that expansion is more likely to occur in an area of low taxation. Once the bricks and mortar, the plant and machinery, are in place in a foreign jurisdiction it will take nothing short of TNT to move it back to Canada. Accordingly, the losses to which I referred are of a permanent nature, or almost permanent, and they are something to which the minister ought to direct his attention.

February 3, 1981
Adjournment Debate
We need additional funds, after tax funds, in the hands of consumers in Canada. It is necessary that they be available to spur the economy and provide jobs for Canadians.
The Kemp-Roth proposals to which I made reference are based upon the supplyside economic policy whereby it is accepted that it is more prudent to have a lower tax rate applied against a greater tax base than a higher tax rate applied against a smaller base.
A single, small tax bite from a large segment of the population which is employed, or businesses which produce more profit, is infinitely better for the economy than a large bite from an increasingly smaller group of taxpayers. Regrettably, that latter way is the direction in which this government is headed. High taxation policies are self-destructive. I urge the government to mend its ways before it is too late.


John Leslie Evans: Mr. Speaker, at the time of the November 1978 budget, the finance minister released a study which made a comprehensive comparison of the tax systems of Canada and the United States. The conclusion of that study was that Canadian tax rates compared very favourably with American rates. The level of business taxation was less than that in the United States. This differential was particularly apparent in the vital manufacturing sectors of the economy. The differential arose principally because of the generosity of the capital cost allowance system, in Canada, and because of the lower level of statutory tax rates applied to taxable income. The level of personal taxes in the Canadian system was lower for most taxpayers, particularly for those at lower and middle-income levels. This gap has widened since 1978. This is a consequence of a number of factors. First, the Canadian tax system is indexed. This has resulted in a deduction of tax by almost 15 per cent between 1978 and 1980. On the othe hand, the American tax system is not indexed. In the United States, there has also been a substantial increase in the level of social security taxes which are based on income, further increasing the gap. For example, U.S. social security tax will increase from $1,000 to $2,000 between 1977 and 1981 for a person earning $30,000.
A recent study published by the Congressional budget office in the United States highlights the importance of indexing in reducing personal income taxes. The study shows that over the period for which indexing has been in place in Canada, an indexed tax system such as ours, with no discretionary changes, would have reduced United States taxes by $17 billion in 1979, or almost 10 per cent, as compared to the actual taxes, incuding tax cuts, which were enacted. Thus the discretionary tax cuts which had occurred over that period in the United States fell far short of protecting American taxpayers from inflationary increases in taxes. This gap will continue to widen over the next few years so that the cuts currently being considered in the United States under the Kemp-Roth proposals may well fall short, in relative magnitude to those which occur automatically in Canada, as a consequence of the indexation of the personal income tax system. Thus there is no
need in Canada-and 1 emphasize that-for specific tax cuts in order to match those contemplated in the United States.


COMMUNICATIONS-LICENCE RENEWALS AND TRANSFERS- PROVISION OF POLICY GUIDELINES
Mr. Mark Rose (Mission-Port Moody):: Mr. Speaker, both of my questions in the House on January 21 dealt with government inaction on the development of a communications policy which will ensure private broadcasting support for the objectives of the Broadcasting Act, which, among other things, states that broadcasting should "safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada". The Broadcasting Act also states that programming should be "of high standard, using predominantly Canadian creative and other resources".
The lack of movement in this direction is even more discouraging when one considers the fact that the government has had in its possession the original draft of what is called by some the Babe-Slayton report, entitled: "Competitive Procedures for Broadcasting-Renewal and Transfers", since April, 1980 and the final draft since September, 1980. This report was commissioned by the Department of Communications. It condemns the efforts of both the CRTC and the Department of Communications, the department responsible for policy decisions in broadcasting, for their total lack of success in achieving significant increases in the availability of quality Canadian programming, or in meeting the general standards which are set out in the objectives of the Broadcasting Act.
Some conclusions in the report condemn the inadequate performance because of the present licensing system. This report blames the licensing and transfer systems for much of the problems in Canadian broadcasting. Uet me quote from page 1 of the summary of the Babe-Slayton report as follows:
Canadian television broadcasting in the private sector is failing to achieve the goals set by Parliament in the Broadcasting Act, notwithstanding its extraordinarily high profitability.
As a matter of fact, profits of $88 million in 1978 are called "extranormal" at another point in the report. The report indicates that private stations rarely put Canadian programs in prime time. Sports and game shows are scheduled in prime time in the private broadcasting system. These programs tend to be low cost, of low complexity and employ few people. This is not necessarily to blame the economic objective of the private broadcasters. It is a fact that foreign shows, notably American, in terms of dollar per broadcast hour, cost Five times more than Canadian programs. Therefore, it makes economic sense to the private broadcaster to import rather than to create. That is a problem we face in the broadcasting industry in this country.
As everyone knows, when a private station makes an application for a licence, certain promises are made relating to the Broadcasting Act vis-a-vis Canadian programming, Canadian talent and so on. But once a private station has been granted a licence, there does not seem to be any policing to see
February 3, 1981

that these stations keep their promises. That is really the problem to which the Babe-Slayton report addressed itself.
Let me remind all hon. members remaining in the House that this is a report commissioned not by some outside group or by the New Democratic Party, but by the Department of Communications itself. According to the report, the major tool in the hands of the CRTC or any other regulatory body in terms of making private broadcasters live up to their responsibilities, is competitive hearings at times of licence renewal or at times of licence transfer, that is, when one licence granted on the basis of a set of promises is transferred or sold to another applicant.
In the past we have not exercised that control or discipline within the industry. Consequently, we buy and sell to the highest bidder. This is almost the way taxi licences are handled. There is really no commitment at all on the part of the person who purchases a licence to maintain the promises of the original applicant.
The CRTC licence renewal procedures virtually guarantee licence renewal regardless of the kinds of promises made by the original applicant or the person who has sought the transfer. There is a tremendously comfortable stability in the broadcasting industry, regardless of whatever promises the original applicant made, because of the virtually automatic licence renewals. This is one of the causes for the rather inadequate performance in terms of Canadian content which characterizes the whole private broadcast industry.
The report goes on to attack transfers and so on. 1 do not have a great deal of time left. However, with respect to the reports the minister's department has been receiving, 1 suggest it is time that the minister established some policies regarding transfers and licence renewals. It is absolutely clear that the present system does not aid the objectives of our broadcasting industry. A number of promises which were made to the people need to be kept. It is time the minister established a new policy based on the Babe-Slayton report which will guarantee that broadcasters in the private sector live up to their promises.


Mr. Peter Stollery (Parliamentary Secretary to Secretary of State and Minister of Communications):: Mr. Speaker, in view of the importance of the competitive procedures issue, the Department of Communications asked two independent consultants, Robert Babe and Philip Slayton to do a study exam-
Adjournment Debate
ining the issue further, and this report, on competition, was released to the public in order to stimulate informed public discussion of the issue. Over 200 copies of the study have been distributed to the public, including all members of the Standing Committee on Communications and Culture and many other members of this House.
While in their report Robert Babe and Philip Slayton recommended adoption of competitive procedures for licence transfers, they did not recommend competitive procedures on renewals. Instead of the latter, they proposed two options which, in their view, would provide the benefits held to be forthcoming from competitive renewals without entailing the costs perceived to be associated therewith.
According to the first of these options, the CBC, CRTC or other public body would be empowered to tax all or most of the surplus earnings of television broadcasting and cable licensees and to apply such funds to the financing of independent productions commissioned by this public authority.
According to the second of the options proposed by Babe and Slayton, data gathering, research and other such support staff duties would be spun off from the commission and placed in a new agency entirely separate from the CRTC. This new office would play an adversarial role in licence renewal proceedings before the CRTC similar to the role played by the director of investigation and research under the Combines Investigation Act before the Restrictive Trade Practices Commission.
The consultants suggest that in addition to bringing to the attention of the CRTC apprehended failures of licensees to comply with promises of performance and regulations and cross-examining licensees and arguing appropriate remedies before the CRTC, the new office could also support research and interventions on the part of the general public. Babe and Slayton propose that this new agency could be financed by taxation of licensees. It could, they suggest, be empowered to attain any and all data deemed relevant to further its proposed duty of ensuring compliance with CRTC regulations and promises of performance.
As you can see, Mr. Speaker, this is a very complicated issue and not amenable to quick and easy solutions.


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, February 4, 1981