1981-05-13

THE PAPACY


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, I am sure that when I make these comments I am expressing the feelings not only of the members of the House but of people throughout Canada in expressing shock and horror at the assassination attempt on the life of His Holiness, Pope John Paul II. Obviously at this stage it is difficult to know the details of this tragic occurrence. It is our hope that we will find as the day develops that the seriousness we now perceive will have been reduced. I should like to tell you, Madam Speaker, and members of the House, that the Prime Minister (Mr. Trudeau) has been informed of this assassination attempt and has conveyed a message to the Vatican foreign secretary, Cardinal Casaroli.
It is a chilling irony that a man who has given so much of himself to preaching peace and love throughout the world should himself become the target of such violence. All Canadians, I am sure, will be waiting with hope and joining with us in prayer for the life of Pope John Paul II.


Some hon. Members:: Hear, hear!


Hon. Walter Baker (Nepean-Carleton):: Madam Speaker, I want to associate myself, my leader, my party, and all of my colleagues in the House with the statement that has been made by the Deputy Prime Minister and Minister of Finance (Mr. MacEachen) on behalf of the people of the country.
We reacted when we heard of this assassination attempt, and are still reacting, with a sense of shock and sorrow that a man of his stature in the world should be struck down the way in which he was.
Pope John Paul II has inspired people of every religion, race and culture as he has reached out to the whole world in the search that has been his for peace and justice. He has amazed all of us with his vigour, his great warmth for people and how he has been able to touch them. People all over the world, believers and non-believers, have been moved by his messages of hope in which one theme has predominated, that the human right to a life of justice and security implanted in every human being must be achieved and safeguarded by policies and programs of peace.
We pray that this leader will be spared to a world so much in need of his message of faith, hope and love. I associate myself, my party and all of my colleagues, with these remarks. I hope there will be found a way to convey to the Vatican the messages that will come from this House of Commons today. I join with the Deputy Prime Minister in the fervent hope that, as the day unfolds, the prognosis for a full and complete recovery of this great leader of the world will be good.


Some hon. Members:: Hear, hear!


Mr. Edward Broadbent (Oshawa):: Madam Speaker, it was with indignation that we have learned the sad news about the assassination attempt on the life of His Holiness, Pope John Paul II. On behalf of my party I extend to him our best wishes for a prompt recovery.

As has already been indicated, it is tragic that one who has obviously dedicated his life to the furtherance of peace and justice should have been struck down in the worldwide spread of terrorism and violence. I know I speak for all Canadians when I say we wish him a complete and speedy recovery.


Some hon. Members:: Hear, hear!



ROUTINE PROCEEDINGS


Mr. Gordon Towers (Red Deer):: Madam Speaker, I rise under Standing Order 43 to seek clarification of divergent statements made by the Minister of Finance (Mr. MacEachen) and the Minister of Agriculture (Mr. Whelan). The finance minister disclaims all responsibility for high interest rates and inflation, while his colleague, the Minister of Agriculture, has publicly promised relief to farmers and small businessmen to cushion them from the effects, through amendments to the Bank Act. I therefore move, seconded by the hon. member for Pembina (Mr. Elzinga):
That this House demands an explanation of the conflicting statements being made by members of the treasury benches-to wit, the ministers of finance and agriculture. We would like to know if this was an inadvertent slip by the Minister of Agriculture while he opened his mouth to change feet.

May 13, 1981
5.0. 43


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


INDUSTRY
Mr. Donald W. Munro (Esquimalt-Saanich):: Madam Speaker, I hope I shall receive the unanimous consent of the House to a motion under the provisions of Standing Order 43 on a matter of urgent and pressing necessity.
In light of the outlay of some $6 million in federal public funds to the Trident Aircraft Corporation of Sidney, British Columbia, thereby raising the expectations of the employees of that firm to heights from which they were bound to fall, and because of the casual and covert manner in which the assets of that company have been liquidated, only last week, at a considerable loss to the federal treasury, I move, seconded by the hon. member for Winnipeg-Assiniboine (Mr. McKenzie):
That the Auditor General be required to investigate all the circumstances surrounding this unwarranted disregard of the government's responsibility for public funds by committing them, first of all, to a venture that was foredoomed to failure because of the unmarketability of an untested product the unfortunate employees were expected to produce, and subsequently permitting liquidation procedures to be carried out without proper and open accountability.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE ECONOMY
Hon. Stanley Knowles (Winnipeg North Centre):: Madam Speaker, under the provisions of Standing Order 43 and seconded by the hon. member for Vancouver East (Mrs. Mitchell), I move:
That this House records its deep concern over the massive load of debt being carried by Canadian families in the lower income brackets, a load that is made unbearable by today's higher than ever interest rates, and this House therefore calls on the government to roll back interest rates on the debts of those on lower incomes, and also to take immediate steps to raise all lower incomes so that no Canadian and no Canadian family will have to exist below the poverty line, a disgrace which must be corrected.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FISHERIES
Mr. Lloyd R. Crouse (South Shore):: Madam Speaker, I rise under the provisions of Standing Order 43 to move a motion on a matter of urgent and pressing necessity.
In view of the fact that the U.S. law prohibiting the importation of swordfish from Canada with a mercury content exceeding one part per million while permitting the catching of swordfish in U.S. waters is discriminating against Canadian fishermen and will cause an estimated loss this year to Nova Scotia fishermen alone of $10 million or more, I move, seconded by the hon. member for Halifax West (Mr. Crosby):
That the Minister of Finance in collaboration with the Minister of Fisheries contact their American counterparts at Washington requesting that this customs barrier be removed.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PRICING PRACTICES OF FOREIGN AUTOMOBILE MANUFACTURERS-MOTION UNDER S.O. 43
Mr. Otto Jelinek (Halton):: Madam Speaker, I rise under the provisions of Standing Order 43 on an urgent and important matter.
In view of the fact that Soviet-built Ladas are being dumped into Canada at prices below their real value, and because Japanese auto imports, which, by the way, increased by a whopping 71.5 per cent in April, are entering Canada at approximately 20 per cent below their established value-for example, the basic price of a Honda Civic is $937 lower than in the United States, and a Datsun 310 has a basic price which is $863 lower than in the United States-I therefore move, seconded by the hon. member for Mississauga South (Mr. Blenkarn):
That the Minister of Industry, Trade and Commerce be instructed to initiate, forthwith, an investigation under the provisions of the Anti-Dumping Act into questionable pricing practices of offshore vehicle manufacturers, particularly those of the Soviet Union and Japan.


Madam Speaker:: Is there unanimous consent for this motion?
May 13, 1981


Some hon. Members:: Agreed.


Some hon. Members:: No.


HONOURS AND DECORATIONS
Mr. W. Kenneth Robinson (Etobicoke-Lakeshore):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. The Toronto Star reported on March 28, 1981, that the Order of Canada awarded to the late M. J. Coldwell, leader of the former Co-operative Commonwealth Federation, the CCF, now the New Democratic Party, will be auctioned on May 23, 1981, in Toronto and is expected to fetch $4,000.
I therefore move, seconded by the hon. member for North-umberland-Miramichi (Mr. Dionne):
That this House deplore the sale of the Order of Canada which was given to the late M. J. Coldwell by the Governor General in recognition of his contributions to Canada and which, as such, should not be used for financial gain.


Madam Speaker:: Is there unanimous consent for the presentation of this motion?


Some hon. Members:: Agreed.


Madam Speaker:: Is it the pleasure of the House to adopt the motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. Len Gustafson (Assiniboia):: Madam Speaker, I rise under the provisions of Standing Order 43. Given the very serious economic situation facing farmers, the government's commitment to reimburse farmers for the grain embargo to Russia, and the fact that producers have lost much needed income, I move, seconded by the hon. member for Elgin (Mr. Wise):
That the Minister of Agriculture and the government bring an end to their ridiculous stalling tactics and make payment immediately to farmers for the grain embargo.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
5.0.	43


PETRO-CANADA RELEASE OF DRILLING TERRITORY MAPS-MOTION UNDER
[Stage Direction]
5.0.	43
Mr. Ian Waddell (Vancouver-Kingsway):: Madam Speaker, I too rise under the provisions of Standing Order 43. Whereas Petro-Canada has secretly been given at least three million acres and has nominated 14 million additional acres in the Mackenzie valley, and the Dene, the native people who live there, have asked Petro-Canada at least to release the maps showing where the nominated lands are so that they will know if drilling is going to take place in their front yards, and whereas the Department of Energy, Mines and Resources and the Department of Indian Affairs and Northern Development are stopping Petro-Canada from releasing these maps, in keeping with the new dictatorial and colonial attitude as the government moves to "Lalondize" the north, I move, seconded by the hon. member for Prince Albert (Mr. Hovdebo):
That this House order those departments to allow Petro-Canada to release forthwith the maps to the native people affected.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


HAZARDOUS SUBSTANCES
Mr. Bill Domm (Peterborough):: Madam Speaker, as a result of the pussyfooting of the Minister of National Health and Welfare (Miss Begin) over the decision to ban UFFI, on the dangers of which her department was advised as long as three years ago, and because as many as 100,000 Canadian homes may become serious health hazards and, on top of that, very substantial economic liabilities, I move, under the provisions of Standing Order 43, seconded by the hon. member for Hamilton-Wentworth (Mr. Scott):
That the Minister of National Health and Welfare undertake her full responsibilities to the people of this country, whose health may be endangered by UFFI, and launch a thorough identification and testing program to find out exactly what the extent of this problem is, thereby easing some of the anxiety, at least, of a great number of Canadians.
There is a moral obligation on the part of the government to pay home owners at least the cost of testing for possible foam insulation problems.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

May 13, 1981
Oral Questions HUMAN RIGHTS


CONDEMNATION OF TERRORISM-MOTION UNDER S.0.43
Mr. Roland de Corneille (Eglinton-Lawrence):: Madam Speaker, I rise under the provisions of Standing Order 43. Whereas the most basic of all human rights is the right to life, whereas assassinations and terrorism are the most brutal, cowardly and despicable forms of crime and are a radical offence against humanity, whereas the trend to such opprobrious violence has escalated, with assassinations and attempted assassinations, including those aimed at the President of the United States and His Holiness, Pope John Paul II, and whereas the House of Commons unanimously passed a resolution on October 15, 1980, condemning all acts of terrorism anywhere in the world, I move, seconded by the hon. member for Chicoutimi (Mr. Dionne):
That this House expresses its deep grief and revulsion on this day which marks the attack on His Holiness the Pope, expresses our prayers for recovery as well as sorrow and sympathy, calls for all-out international co-operation of security forces to prevent such future crimes, calls for an emergency debate in the United Nations on terrorism, and urges our government to seek ways to convene at once an international conference to mobilize world public opinion, to renounce terrorism, to assist in uncovering plots of violence, and to research new means to control terrorism and assassinations.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Hon. Sinclair Stevens (York-Peel):: Madam Speaker, my question is for the Minister of Finance, and follows some of the questions put to that minister yesterday. Faced with a soft currency, high inflation and high interest rates, all the hallmarks of government mismanagement, the government appears to be sitting rather petrified, not knowing what to do, or alternatively, perhaps having a secret plan. Would the minister indicate if, in fact, the scenario that is developing in Canada is a scenario that he welcomes in anticipation of being able to justify the reimposition of some form of wage and price controls?


Allan Joseph MacEachen: Madam Speaker, I can answer that question quite simply by saying no.


REQUEST FOR INTRODUCTION OF BUDGET
Sinclair McKnight Stevens: Madam Speaker, my question is again to the Minister of Finance who seemed to show so little concern yesterday for the small business people, for the consumers and farmers of this nation, in relation to high interest rates. Perhaps he is a little more concerned this morning after witnessing the deterioration of his own bond issue, floated yesterday, which is down a clear point in spite of the fact that it was yielding, at the long end, over 16 per cent. Would the minsiter indicate if he anticipated such an unsatisfactory bond market as is developing, especially at the long end and, if not, would he at least agree to bring in a new budget at the earliest opportunity so that the scenario we have been referring to may be corrected before it deteriorates still further?


Allan Joseph MacEachen: Madam Speaker, the hon. member calls for a new budget at the earliest opportunity. I indicated to hon. members previously that I would, in the normal course, be bringing in a budget later in the year, probably in the fall. If, in the course of debate today and tomorrow, hon. members can bring forward some new, alternative ideas that, because of their validity, would demand immediate implementation, then I would consider doing that very thing.


SUGGESTED COMMITTEE STUDY OF ECONOMY
Sinclair McKnight Stevens: Madam Speaker, again I direct a question to the Minister of Finance who may be conveniently forgetting that it is only about 14 months since his party told the Canadian public that, if it was elected to power, it knew what to do with respect to the economic affairs of the country.
Would the minister indicate to the House whether he is aware, first, that since the budget was brought in inflation has been running at the rate of 13.9 per cent, and that Dr. Peter Campbell, vice-president and director of Wood Gundy Limited, for example, now predicts that we are heading to a 20 per cent level of inflation? If the minister is aware of this, instead of coming out with this poppycock about this party simply offering some ideas, would he agree to have this matter of the economy referred to the Standing Committee on Finance, Trade and Economic Affairs so that we can hear witnesses, and we can hear the minister? Perhaps that committee will come up with some solutions if the minister is at a total loss to know what to do at the present time.


Allan Joseph MacEachen: Madam Speaker, in reply to the questions asked by the hon. member, the first answer is yes, the second answer is no, and the third is that if events justify making a special reference to the standing committee, I will be glad to undertake to do that.
May 13, 1981


NATIONAL ENERGY PROGRAM
Hon. Michael Wilson (Etobicoke Centre):: Madam Speaker, my question is a supplementary, to the Minister of Energy, Mines and Resources. I think today we have seen a very vivid illustration of the irresponsible approach of the government to the economy in the visit of the members of the oil and gas service industry to Ottawa. These companies, which are all Canadian-owned, estimate that 40 per cent of their number will not be in business in six months' time and that about 75 per cent will not be in business in one year's time, if things are not changed in the energy industry. These companies only represent a small sample of the industry, but they represent over $500 million in sales; they have seen employment in the industry drop by about 30 per cent, and their capital expenditures will drop by over 50 per cent this year alone.
Since energy development is the one area in our outlook where we can see some chance of economic growth in a very, very sick climate, does the minister fully understand the very negative effects of his energy program, particularly in relation to this very important element of the energy industry?


Hon. Marc Lalonde (Minister of Energy, Mines and Resources):: Madam Speaker, I had meetings with representatives of the service industry last month, and I had the opportunity of exchanges with them again today. I will be meeting other members of that industry later on this afternoon. Indeed it is one sector of the industry that is suffering; many of the smaller firms are facing difficulties. But I am happy to see that their visit to Ottawa followed a visit to Edmonton at which time they impressed upon both governments the importance of reaching a compromise solution to our present difficulties in the energy area.
Contrary to the hon. member, I think these people take a more objective view of the situation and recognize that this is not a matter which is totally dependent upon the federal government, but both the provincial governments, the Alberta government in particular-


Mr. Shields:: Who brought in the NEP?


Marc Lalonde: -and the federal government have a responsibility in that regard. There must be compromise on both parts.


Jack Wendele Shields: Did Lougheed bring in the NEP?
1 ;


Madam Speaker:: Order, please. The hon. member for Athabasca does not have the floor.


Marc Lalonde: I indicated to the people concerned that I appreciated their representations. I would hope, as we have indicated to the government of Alberta that we were ready to compromise, that there would be the same reciprocal feeling on the part of the government of Alberta.


Some hon. Members:: Hear, hear!
Oral Questions


POSSIBLE CHANGES IN PROGRAM
Michael Holcombe Wilson: Madam Speaker, I think the message these gentlemen left with the minister is that the key is breaking the deadlock. The minister must understand that he was the minister who brought in the program which created the deadlock we have today that is creating the problem.


Some hon. Members:: Hear, hear!


Michael Holcombe Wilson: A related but very important problem that is falling out of the deadlock we have today is the ongoing oil brain drain, the loss of very experienced technically competent people to the United States and other parts of the world who are very important to the development of energy resources in the country and who will be sorely missed if and when the deadlock is broken.
What is the minister doing to assure these people who are leaving the country today, those who left yesterday and those who will leave tomorrow, as a result of the uncertainty here and as a result of the great demand for their talents in other countries, that there will be changes in the program which will cause them to stay in Canada so that we can make use of their talents in the years ahead?


Marc Lalonde: Madam Speaker, I remind the hon. member, who has been in the House now for a couple of years and who was a member of the previous government, that the deadlock in question has been in effect for over two years. When he was in the government they did not have an agreement.


Walter David Baker: Nonsense.


Some hon. Members:: Oh, oh!


Miss MacDonald:: You will have to try harder than that.


Mr. Nielsen:: Garbage.


An hon. Member:: Where were you for the last year and a half?


Marc Lalonde: Madam Speaker, no amount of shouting on the other side will twist history as they are trying to twist it.


Some hon. Members:: Oh, oh!


Marc Lalonde: The facts are there. I have already had one meeting with Mr. Leitch, the minister of energy for Alberta. I have had discussions with the minister of energy for Saskatchewan. I am planning to have another meeting with Mr. Leitch at the end of this month or early in June. In the meantime our officials have had several meetings. We are making progress. I hope that there will be as much of a willingness to compromise, to arrive at a satisfactory solution, on the part of the government of Alberta as there is on our part.

May 13, 1981
Oral Questions


HOUSING
John Edward Broadbent: Madam Speaker, my question is with regard to the negative effects of the high interest rate policy as it affects the ordinary Canadian. My question concerns those who wish to maintain their homes. It pertains directly to the more than 1,000 families a month who are having to give up their CMHC-insured homes because they have been unable to keep up the mortgage payments. Since CMHC is now repossessing these homes and reselling them to speculators who are making a quick buck on the deal, can the minister responsible for housing tell the House why the government does not put an end to this speculation and why, simultaneously, the government does not increase mortgage assistance so that families can maintain their homes?


Hon. Paul J. Cosgrove (Minister of Public Works):: Madam Speaker, I thank the hon. member for his question. It gives me the opportunity to bring to his attention, and to the attention of members of the House, the fact that the industry which was in the doldrums approximately a year ago has picked up. Housing starts in April last year stood at 125,000, and starts this year of 242,000 show that the industry is improving. This shows that there is action in that industry, with the following results: the additional supply of housing should result in prices moderating. Prices have moderated significantly in the metropolitan areas of Toronto and Vancouver. The troubled industry has now rebounded.
At the same time 1 would like to point out to the hon. member that, although he is concerned about the rate of foreclosures at this time, I am pleased to report that the rate of foreclosures, compared with a year ago, has improved. The number of people experiencing difficulty is declining. I perceive this is related to the general strength and health of the industry.
With regard to providing assistance, we have already taken steps under the AHOP program to provide those people who are pressed with increased payments and interest rates-


Some hon. Members:: Order!


Madam Speaker:: Order, please.


John Edward Broadbent: Madam Speaker, I did not ask the minister to read the whole of his briefing notes. He covered five or six questions that were not asked.
The reality is that the average number of people losing their homes today-not last year-exceeds 1,000 a month. The reality is that the taxpayer is losing up to $20,000 a unit because CMHC is repossessing these houses and reselling them to speculators. One speculator in London ripped off the taxpayers to the tune of $1.5 million as a result of the policy the minister is pursuing. Instead of providing this kind of subsidization for speculators, up to $20,000 a unit, why does the government not come to its senses and enable families to
maintain their homes by allowing them to pay a mortgage at a rate they can afford-to keep their homes instead of subsidizing the speculators who do not need the money?


Paul James Cosgrove: Madam Speaker, I should have indicated to the hon. member, in answer to his initial question, that as a matter of policy the corporation from the outset has attempted to resell properties which have come to it by way of default back to families who choose to live in those residences. This has been our primary objective. However, 12 months ago when the market was soft CMHC was finding it very difficult to compete in the market. Some properties, which were good, were let with others which were more difficult to sell. However, since the market has tightened I am sure that the hon. member is aware that in good markets CMHC has not sold to speculators and CMHC is receiving a comparable market price for properties which have come back into the mortgage portfolio.


MEASURES TO SOLVE EMERGENCY
Mrs. Margaret Mitchell (Vancouver East):: Madam Speaker, I have a supplementary question for the same minister concerning the same problem. It is interesting to note that the minister continuously speaks about the market and never about the people who are badly hurt by the housing crisis.


Some hon. Members:: Hear, hear!


Margaret Anne Mitchell: The minister recently said that his housing policy is to stand pat. Mortgage interest rates are not standing pat. Land costs are not standing pat. Speculation is escalating. Families simply cannot afford to spend another $300 or $400 a month on their mortgages. Will the minister tell us what measures, if any, he will take or has taken to cabinet to do something that must be done to solve our housing emergency?


Paul James Cosgrove: Madam Speaker, I am sure the comment about standing pat arose out of statements made by members opposite who thought they had identified a weakening of the government's housing commitment in 1981 over 1980. That is not correct. What I was pointing out was that the government's response, for example, to increase by 5,000 units the social commitment of the corporation toward serving people of middle and lower incomes was not repeated this year. As I have indicated, it was not repeated this year because the seasonally adjusted apartment starts for the month of April past are at a five-year high-they have not been that high in five years. We are trying to balance the commitment of the government to the tune of 25,000 units annually in order to solve the social problem and the continuing cost of keeping mortgages down on those 25,000 units to 2 per cent across this country. The government is trying to balance this continuing commitment with the challenge. As I have said, the government responded with 5,000 units last year.
May 13, 1981


HAZARDOUS SUBSTANCES
Mr. Geoff Scott (Hamilton-Wentworth):: Madam Speaker, my question is for the Minister of Consumer and Corporate Affairs. Can the minister confirm that he has received a report on a two and a half year study into the combustible and toxic nature of cellulose insulation? Has he read it? When can we see it? Can the minister tell the House any specific recommendations made by the review committee which will ease the minds of consumers who have spent many millions of dollars to instal this material in their homes?


Hon. Andre Ouellet (Minister of Consumer and Corporate Affairs and Postmaster General):: Madam Speaker, the answers are, first yes, second no, third as soon as possible. Regarding the fourth question, I think the hon. member grossly exaggerates the situation.


CERTIFICATION BY CANADIAN GENERAL STANDARDS BOARD
Geoffrey Douglas Scott: Madam Speaker, my supplementary question is for the Minister of Supply and Services. Can the minister explain why the Canadian General Standards Board began certifying at least one cellulose insulation manufacturer three months before the review board study on the safety of cellulose was submitted to the products safety branch? Is this another case of a product being studied by one arm of government while being certified by another? Will this mean another financial burden placed on the shoulders of the consumer?


Hon.   J.-J. Blais@Minister of Supply and Services: Madam Speaker, the Canadian General Standards Board studied the cellulose substance in terms of its certification program and was satisfied that it could proceed with the certification from the information it had available to it.


CANADA DEVELOPMENT CORPORATION
Hon. Ray Hnatyshyn (Saskatoon West):: Madam Speaker, my question is directed to the Minister of Finance. We have had some clear indications recently that the government is considering a revised role for the Canada Development Corporation. The Prime Minister, for example, during the 1980 election campaign indicated he foresaw a revamping of the corporation in the mould of the Petro-Canada model in the manufacturing sector. His colleague, the Minister of Industry, Trade and Commerce, has indicated some disapproval over the course of the last few months with the autonomous position taken by this corporation. I would like to ask the minister,
Oral Questions
specifically, whether he is planning to move the Canada Development Corporation under closer government control so that the company's $3.4 billion asset base will be available as a tool for implementing government industrial strategy.


Allan Joseph MacEachen: No, Madam Speaker.


CHAIRMANSHIP OF BOARD OF DIRECTORS
Ramon John Hnatyshyn: I wonder if the minister would indicate why, then, he is moving to have appointed, as the chairman of the Canada Development Corporation, Mr. Maurice Strong, a long-time friend of the Liberal party, who understands very clearly the benefits of such friendship. I want to ask why he is promoting him for the position of the chairmanship of this particular organization, and whether the minister can say in this House that he subscribes to the position of the corporation as indicated in the 1980 annual report, namely, the support of so many investors for the CDC concept shows that increasing numbers of Canadians recognize the need to invest in their own future rather than leaving the job to non-residents and governments. Does he subscribe to that position taken by the CDC, and why is he pushing his friend into the top job?


Allan Joseph MacEachen: Yes, Madam Speaker, I subscribe to that position. I should remind the hon. member that the CDC is operating under a statute which has been passed by the Parliament of Canada, in which the objectives of the CDC are established, and that when it is appropriate to change the statute it will obviously have to be brought before the House of Commons. But hon. members and others who have expressed some concern about this matter ought to look at the statute and find out that there is clearly established the functions and directions and role of the directors of the CDC.


An hon. Member:: Are you or are you not interfering?


Allan Joseph MacEachen: If there is any concern, I should like to add that it is still my view that the investment decisions of the corporation are still the responsibility of the corporation.


AUTOMOTIVE INDUSTRY
Mr. Ian Deans (Hamilton Mountain):: Madam Speaker, I have a question for the Minister of Industry, Trade and Commerce. Now that the U.S. and Japan have formally agreed to limit the exportation of automobiles to the United States, and given the integrated nature of the North American car manufacturing industry, will the minister indicate whether he is now prepared to put in place quotas similar to those which have been agreed upon and then to sit down and negotiate an agreement with the Japanese manufacturers and

May 13, 1981
Oral Questions
the Japanese government to source and to manufacture those vehicles in Canada?


Hon. Herb Gray (Minister of Industry, Trade and Commerce):: Madam Speaker, my hon. friend alluded to what Japan did with respect to the United States. This step was not taken using the format suggested by my hon. friend. I think it very important that the Prime Minister of Canada and the Prime Minister of Japan, in their recent meeting, agreed on the importance of an early resolution of the question, for increasingly close relationships between the two countries.


An hon. Member:: Breakthrough!


Herbert Eser (Herb) Gray: I would like to think that the Japanese understand sufficiently how important we consider this question and how we believe it should be resolved very soon so that the need for action by Canada, along the lines suggested by my hon. friend, will not turn out to be necessary.


Ian Deans: It is clear to anyone who would care to read the statistics that there has been an appreciable increase in the numbers of Japanese vehicles imported into Canada this year over last year and that that trend appears likely to continue. How long is the minister going to wait, and make these stupid promises? When is he going to bring in a program?


Some hon. Members:: Hear, hear!


Herbert Eser (Herb) Gray: I think it shows how lacking in understanding of the matter is the hon. member when he refers-


Some hon. Members:: Oh, oh!


Herbert Eser (Herb) Gray: -to an understanding, an agreement between the Prime Ministers of Canada and Japan, as a stupid promise. I think that is a shocking comment which my hon. friend should withdraw in light of the good relationships between our two countries. I believe that action by Japan should be taken very soon in light of the close economic co-operation between our two countries, and I think the Japanese understand this.


Some hon. Members:: Hear, hear!


AGRICULTURE
Mr. Normand Lapointe (Beauce):: Madam Speaker, my question is for the Minister of Agriculture. Considering the serious financial difficulties of pork producers and the great importance of hog production in the Quebec economy, and more particularly in the Beauce economy, can the minister tell the House whether he intends to offer quick assistance to hog producers, cow-calf operators and feeders, through fair stabilization payments so that they may improve their rather shaky situation?


Hon. E. F. Whelan (Minister of Agriculture):: We met with the Canadian Pork Council representing producers all across Canada. One of their recommendations-


An hon. Member:: Change the piggy bank!


Eugene Whelan: -and these were representatives from every part of Canada

was that we should have a national program for hogs and stabilization, and some of the people went so far as to say that we should possibly have a national marketing board for hogs. Programs should be announced for stabilization very shortly, taking their recommendations into consideration.


CANADA DEVELOPMENT CORPORATION
Hon. John C. Crosbie (St. John's West):: My question is to the Minister of Finance. The price of the shares of the Canada Development Corporation has gone down in the last several days because of reports of government interference with it and its selection of a chairman. It has 30,000 shareholders who own 51 per cent of the shares. The government only has a 49 per cent interest. I remind the minister that there were two public financings arranged, based on two prospectuses and a selling memorandum that promised that the corporation would be run in the interests of all its shareholders, not in the interests of the government alone as a major shareholder.
Has the minister or has any other minister, to his knowledge, or has his deputy minister of finance, who is on the board of directors, or has the deputy minister of industry, trade and commerce, who is on the board of directors, spoken to any of the directors to suggest to them that Mr. Maurice Strong should be made chairman of the board of directors of that company to replace the present chairman, Mr. Sellers, who has only been there two and one half months? Have any efforts been made by the government at all to insert Mr. Strong in the position of chairman?


Allan Joseph MacEachen: First of all, the hon. member has raised the question of the corporation being operated for the benefit of all the shareholders, including the major shareholder, which happens to be the Government of Canada, and I certainly subscribe to that view.
I would also add that I have had discussions with the management and various directors of the corporation, as is my right as a major shareholder; but I should add that the responsibility for selecting a chairman of the board is the responsibility of the directors, and at this point it certainly would be inappropriate for me to go any further.

May 13, 1981


John Carnell Crosbie: In 1972 the slogan was "The land is strong", and now it is "The land is Maurice Strong".


Some hon. Members:: Hear, hear!


John Carnell Crosbie: The minister has avoided answering this question: has the minister, or anyone acting on his behalf or on behalf of the government, suggested to any of the directors of this company, which is a very successful company to date, led by Mr. Tony Hampson, that this Liberal lackey should be made chairman of the board of directors or given a major role, or that the role of that corporation should change so it becomes the equivalent of PetroCan in the financial and industrial area, "financey can" or something similar? Specifically, has Mr. Strong been suggested as the chairman, and, if he becomes chairman, will their bank account be moved to Switzerland?


Allan Joseph MacEachen: First of all I would like to tell the hon. member, because he has mentioned the name of the president of the corporation, Mr. Hampson, that I have complete confidence in his work as president of the corporation, and will continue to have that confidence because of the success which the corporation has had in carrying out the mandate established by Parliament.
I would also like to respond to the suggestion made by the hon. member that it is the intention of the government to transfer or transform the Canada Development Corporation into a Petro-Canada. Obviously any transformation in the purpose and function of the Canada Development Corporation would require an amendment to the statute, which would require coming to Parliament. That has not happened. Nor has the management been given from the Minister of Finance any instructions or any directives as to a new role for Petro-Canada-


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: -for the Canada Development Corporation. If that were to happen, it is obvious that management and others would know.
With respect to the final question which the hon. member asked, I want to tell him that is a matter for direction and decision of the board-


Erik Nielsen: Answer the question.


Allan Joseph MacEachen: -of the corporation. It is not appropriate, nor will it be appropriate at this time for me to comment in any detail on discussions that I have had with management, with the current chairman and with members of the board. I must say that is my position, Madam Speaker.
Oral Questions VETERANS AFFAIRS


REQUEST FOR ALLOCATION OF ADDITIONAL FUNDS
Mr. Dan McKenzie (Winnipeg-Assiniboine):: Madam Speaker, my question is for the Minister of Finance. In light of the effect that new consumer price increases, rising energy prices and interest rates have on veterans and their families, as well as the fact that over 2,000 applicants are having to wait up to two years for their pension appeals to be processed, will the Minister of Finance tell this House when he will be allocating the necessary funds so that the Minister of Veterans Affairs can bring in a bill providing some financial relief for veterans and their widows at this time of unprecedented need?


Allan Joseph MacEachen: Madam Speaker, I should tell the hon. member that it is not the particular function of the Minister of Finance to allocate funds for the department or for any program of any department. It is the responsibility of the Minister of Finance to make recommendations to the cabinet on the distribution of funds as between the various envelopes of the government. The corresponding committees have the responsibility which the hon. member has assigned to me.


A. Daniel McKenzie: You are a wealthy old bachelor who does not care or understand about veterans and senior citizens.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


PREPARATION OF AMENDING LEGISLATION
A. Daniel McKenzie: Madam Speaker, my supplementary question is directed to the Acting Minister of Veterans Affairs. There has been much speculation that legislation is now being prepared which would lower the phasing-in period for widows whose husbands were in receipt of less than a 48 per cent disability pension. First, would the acting minister confirm that he will be ready to provide the necessary funding? If not, would he inquire whether this bill is going to be introduced? Second, can he inform the House whether he is going to launch an inquiry immediately into this backlog of 2,000 veteran pension applications which are going to take two years to process? What we have is a national disgrace.


Mr. John Campbell (Parliamentary Secretary to Minister of Veterans Affairs):: Madam Speaker, with regard to the allegations made by the hon. member, first I must say that-


An hon. Member:: You are not a bachelor!


W. Bennett Campbell: No, I am not a bachelor!


Some hon. Members:: Oh, oh!


W. Bennett Campbell: I must say that the backlog is not two years but something like about 11 months.


Flora Isabel MacDonald: Shame!

May 13, 1981
Oral Questions


W. Bennett Campbell: There are not 2,000 applications but approximately 1,200 applications in process.


An hon. Member:: That is a disgrace.


Mr. Campbell (LaSalle):: The phasing in period of six and one half years has been a priority of the acting minister and I understand that he is to take that proposal before cabinet very shortly. If there is an announcement to make in this regard the hon. member will be one of the first to know.


EXPORTS OF NATURAL GAS TO UNITED STATES
Mr. Maurice Foster (Algoma):: Madam Speaker, my question is for the Minister of Energy, Mines and Resources. In view of the government's policy of oil substitution and expansion of the use of natural gas in eastern Canada, is the government prepared to limit any further exports of natural gas to the United States until there is a firm commitment by the natural gas pipeline and distribution companies to provide service to the unserved areas of the country?


Mr. Taylor:: Take off the excise tax.


Marc Lalonde: Madam Speaker, we have no evidence at the present time that the expansion of services for the distribution of natural gas to Canadians is impeded in any way by the current exports, or even by exports which would be at the authorized level. Therefore, at the present time we are not considering cutting further export permits or authorizations of natural gas to the United States. On the contrary, what we are doing is pressing the gas utilities in Canada to extend their services to as many Canadians as possible.
As the hon. member knows, under the National Energy Program we have also provided subsidies for consumers to substitute natural gas. In addition, we have a program which will help Canadian utilities extend their services to communities which would not otherwise be serviced. This is being done by the provision of a grant for extension of such services.


Gordon Edward Taylor: Take off the excise tax.


REQUEST FOR INCREASED CANADIAN CONTENT IN MANUFACTURE OF JAPANESE AUTOMOBILES
Otto John Jelinek: Madam Speaker, my question is for the Minister of Industry, Trade and Commerce. It also has to do with the ailing auto industry.
After more than a year of negotiations, meetings and discussions with the Japanese, one of the minister's officials is quoted as saying the following just this week:
We have had a telex from our trade mission in Japan saying there was progress made on both sides during the talks... There was agreement to hold further talks.
That is what the officials say is progress. Obviously, the minister has failed demonstrably to obtain concessions from the Japanese. First, when will the minister and the government insist that the Japanese increase Canadian content in Japanese imports, something which is very important to the ailing auto parts manufacturers in this country? Second when will he increase Japanese investment in Canada so that all sales of automobiles in this country, be they Japanese, American or European, can compete on an equal basis? When will this happen? We have had enough of meetings. We want action, Madam Speaker.


Herbert Eser (Herb) Gray: Madam Speaker, having a substantial increase in Canadian content in Japanese vehicles sold not only in Canada but in the United States and in third markets has been a very important priority of this government in its dealings with Japan. I think there has been some progress because there has been some increase in the level of parts exports to Japan. But this increase has been from a very low base, and I for one am not yet satisfied, nor should we as Canadians be satisfied, with the progress to date.
We are continuing these efforts, and the degree of consensus that I see on both sides of the House will be very helpful in making sure that the Japanese get the message and act on it very soon.


John Carnell Crosbie: They got the message on you long ago.


REQUEST FOR INVESTIGATION UNDER ANTI-DUMPING LEGISLATION
Otto John Jelinek: Madam Speaker, the question was how much longer must we wait. We have waited for one year and imports increased as of last month by 71.5 per cent alone.
However, I have before me figures indicating that the Japanese are indeed dumping some of their autos in Canada. As I stated in a motion which I moved under the provisions of Standing Order 43, examples are that the basic price of a Honda Civic costs $937 less than in the United States, a Toyota Tercel is $738 less, the Datsun 310 is $863 less, and so on. I consider that dumping.
Would the minister consider initiating an investigation immediately under the provisions of the Anti-dumping Act into questionable pricing practices for offshore imports, particularly those from Japan, which are taking 21 per cent of the Canadian market today?


Herbert Eser (Herb) Gray: Madam Speaker, the administration of the anti-dumping law is the responsibility of the Minister of National Revenue. I am sure that he will act very promptly and vigorously on any evidence of dumping-


John Carnell Crosbie: Dump it on the fishermen again.
May 13, 1981


Herbert Eser (Herb) Gray: -because this is a very serious allegation. He will be working effectively to enforce this very important Canadian law as the evidence requires.


SMALL BUSINESS
Mr. Nelson A. Riis (Kamloops-Shuswap):: Madam Speaker, my question is also for the rich bachelor-


Some hon. Members:: Oh, oh!


Nelson Andrew Riis: Excuse me, the Minister of Finance.


An hon. Member:: You were right the first time.


Nelson Andrew Riis: I do not think there is a member in the House who has not been approached in the last few weeks by small business people in their ridings regarding the bludgeoning they are experiencing at the hands of this government and its high interest rate policy.
The government did bring in the small business development bond some months ago in an attempt to provide some relief of the small business community. It did provide relief but only to about 5 per cent of the small business community which actually qualified under the SBDB.
The question I have for the minister is this. In an effort to provide more small businesses with access to the small business development bond, will the minister consider opening up the bond to allow, as the Minister of Agriculture indicated, the opportunity for sole proprietorships to qualify? Will he eliminate the $10,000 minimum that is now on the bond? Will he allow the bond to be used for some forms of working capital?


Allan Joseph MacEachen: Madam Speaker, I responded earlier in the year to the requests of all members of the House, and extended the small business development bond in accordance with their wishes at that time. That was greeted with a good deal of enthusiasm by the representatives of small business in the country because it does represent considerable advantage to those eligible firms.


Sinclair McKnight Stevens: A good Tory idea.


Allan Joseph MacEachen: New ideas and new suggestions are always made for changes and these will obviously be considered and, if found feasible, introduced at the appropriate time. In conclusion, may I tell my hon. friend that I hope my banker is listening to this epithet of the rich.


Nelson Andrew Riis: Madam Speaker, one of the main beneficiaries of the government's high interest rate policy is the lending institutions of this country. Many of us consider that to be a
Oral Questions
shame. If anyone is going to benefit, it ought not to be the chartered banks and other lending agencies. It is also well known that one of the main beneficiaries under the small business development bond is in fact the lending institutions. Once the rate reaches half prime plus 2 per cent and above, the lending institutions benefit substantially. Recognizing that the banks likely do not need any more help, and that the senior lending institutions do not need any more help, will the minister consider providing the small business development bond at simply half prime so that the benefits accrue to the small business community and not the chartered banks?


Allan Joseph MacEachen: Madam Speaker, the hon. member knows that the inducement for the chartered banks to enter into this market, as I understand it, is because of the advantage which they experience in those instances where they have tax liabilities. It is certainly the intention, as was originally introduced by the hon. member for St. John's West, that the chartered banks should be encouraged by that method to provide this service. That is one minuscule part of his whole approach with which I enthusiastically agree.


FISHERIES
[Stage Direction]
Fisheries and boundaries
Lloyd Roseville Crouse: Madam Speaker, I wish to address a question to the Minister of Finance concerning the economic effects upon Canada as a result of the United States unilaterally abandoning the east coast fisheries and boundaries agreements signed by both governments in 1979. In the opinion of Nova Scotia's fishermen, any boundary arbitration without a fisheries agreement in place is unacceptable since an unfavourable arbitration outcome could decimate or wipe out the Canadian offshore scallop fishery, which has the highest dollar value of any fishery in eastern Canada. Since the agreement initialled with the Americans does include a provision for significant adjustments in the allocation of stocks every ten years, and I am sure the minister is well aware of that, I would ask him what he is doing to ensure that no boundary agreement will be signed without a fisheries agreement in place, since this could have the effect of destroying this $75 million to $80 million industry in our province of Nova Scotia.


Allan Joseph MacEachen: Madam Speaker, obviously over the number of years during which the Government of Canada has been concerned both with the fisheries agreement and the boundary question, I have been involved, but 1 am not responsible at the present time either for the negotiations on the borders or on the fisheries allocations. Therefore, I will have to refer that question to one of the responsible ministers, either the minister of fisheries or the Secretary of State for External Afairs. I will, however, pick up on the very precise point of the
9540

May 13, 1981
Oral Questions
hon. member's question, namely, the economic effects, and I hope to get back to him at a later date.


Lloyd Roseville Crouse: Madam Speaker, I have one brief supplementary for the Minister of Finance. I thank him for his concern. In view of the importance of the fishing industry to Atlantic Canada's economy, and also the fact that the initialled Cana-da-U.S. fisheries and boundary agreement represents 18 months of negotiation, as the minister is well aware, and there was considerable give and take before arriving at a balance, will the minister in his capacity as Deputy Prime Minister of Canada assure this House of the government's total opposition to any major changes in the initialled fisheries agreement within at least a 20-year period, for this is the estimated life span of the vessel investment that is required by the industry?


Allan Joseph MacEachen: As the hon. member knows, Madam Speaker, the original fisheries agreement, as I recollect, was, as he has stated, the result of very intensive negotiations between our negotiator, the late Mr. Cadieu, and the representative of the government of the United States, combined with very intensive consultations with the representatives of the fisheries and representatives of the provincial governments. Ultimately there was a consensus on the Canadian side that that was what our position was. Indeed, the result from our side had to be beneficial because it received so much opposition in the New England states.
1 can assure the hon. member that in future considerations we will be equally vigilant in protecting the interests of the Nova Scotia fishermen. Also, we will be equally vigilant in conducting the necessary consultations so that all points of view are finally merged at the conclusion.


AGRICULTURE
Mr. Jack Murta (Lisgar):: Madam Speaker, I wish to address a question to the Minister of Agriculture. Since the minister has indicated he has no plans to help agricultural producers cope with high interest rates at the present time, I would like to ask him whether he considers that Ottawa has some responsibility to help the hundreds of farmers who will be forced out of agriculture at the end, or before the end of this year, because of the high interest rates brought on by the government.


Eugene Whelan: Madam Speaker, the hon. member knows full well that most of the farmers who are in financial difficulty are those who borrowed money from private banking interests. I believe, and I hope the hon. member believes, that the private banking interests also have a responsibility to these people. They are making good profits and can afford to give some of these people moratoriums on their programs. They can afford to give them longer-term mortgages with a moratorium, and amortizing the program later. We suggested that to The Canadian Bankers'
Association. I suggested that to the provincial ministers yesterday.
We are looking at different programs. We will try to adjust the Farm Credit Corporation to help some of these people. It will be impossible to help them all. Those farmers who are in difficulty are outside some kind of orderly marketing system that has a supply management system or a contract system for them, they are the ones in the most difficulty. It is not because they are inefficient, as some people have suggested. They are some of the most efficient producers in Canada, producing products being sold on world markets below cost, subsidizing such rich economies as Japan, Russia and other parts of the world.


Jack Burnett Murta: Madam Speaker, that is a callous, silly, stupid answer to a very serious question, from a Minister of Agriculture who should know better. I again ask the Minister of Agriculture, does the government have any programs in place, ready to put in place, or contemplated, to help agricultural producers through this very serious situation which has developed for farmers as a result of high interest rates? I do not want the kind of diatribe which we heard from the Minister of Agriculture in his last answer.


Eugene Whelan: Madam Speaker, I am sure you know that I may give the kind of answer I feel like, and the hon. member may not like it, but what I told him is the truth about who is in trouble and in difficulty, and who is not in difficulty in Canada. It is those who are unorganized in Canada who are in difficulty.
Those who are obtaining long-term money from us under the Farm Credit Corporation Act are getting it at 14 per cent interest at the present time. Up to the first of October of this year we will have made loans to the extent of over $500 million under that program. We have said this should be geared especially for those who are in difficulty, and that is what the Farm Credit Corporation is all about.
I know this will not supply all the needs, and that is why I am appealing to private lending interests to do their part. They have as much responsibility, or more, in this regard as I do, because they are the ones who lend them the short-term money. They are the ones who lend them thousands and hundreds of thousands of dollars in some instances on demand notes and chattels, etc. They are the ones who put them in difficulty more than anybody else.



ROUTINE PROCEEDINGS


[Stage Direction]
(Questions answered orally are indicated by an asterisk.) Mr. John Evans (Parliamentary Secretary to Deputy Prime Minister and Minister of Finance): Madam Speaker, the
May 13, 1981
[Stage Direction]
following questions will be answered today: Nos. 1,986, 2,153, 2,154, 2,219, 2,331, 2,333, 2,335, 2,336 and 2,338.
I ask, Madam Speaker, that the remaining questions be allowed to stand.
Mr. Cossitt: 1.	Was the Community Services Contribution Program discontinued and, if so, how many complaints have been received from (a) individuals (b) municipalities (c) other groups, since the announcement?
2.	Has the government received representations from Members of Parliament asking that the matter be reconsidered and, if so, how many?
3.	Is the government aware of widespread discontent in regard to the decision and will it take steps to see that the matter is reopened for active consideration of reinstatement?


Paul James Cosgrove: I am
advised by Canada Mortgage and Housing Corporation as follows: 1. Yes. Since the announcement of the termination of the program on November 12, 1980, up to January 31, 1981, written complaints have been received from (a) 18 individuals, (b) 321 municipalities and (c) 16 other groups.
2.	Yes. Written representations have been received from 71 members of Parliament up to January 31, 1981.
3.	Yes the government is aware that the decision to terminate the program has met with disapproval in many areas. The government has indicated the program will not be continued.


Mr. Herbert: Will private sector home builders be able to tender on the construction of the super energy-efficient houses to be built as part of the program that will promote design and construction of such houses suited to Canadian conditions and, if so, how and where will the tender calls be advertised?


Marc Lalonde: The Department of Energy, Mines and Resources reports as follows: All builders who construct a significant number of houses each year will be eligible for the program which will promote design and construction of super energy-efficient houses. Details of the procedure for the program (including applications) are being developed in conjunction with HUDAC (Housing and Urban Development Association of Canada).


Mr. Herbert: Will proposals be requested, in the program to promote the commercialization of solar heating, of private-sector project managers by open advertised tenders and, if so, on what date will the tenders be called and how will they be advertised?
Order Paper Questions


Marc Lalonde: The Department of Energy, Mines and Resources reports as follows: a request for proposals to manage a project in a program of accelerated demonstration of solar domestic water heating was issued by EM&R on February 12, 1981. The proposal was mailed to some 300 companies and other organizations that had responded to earlier announcements of this program in trade journals and in the national press. The address list was augmented by a selection of companies interested in solar heating provided by the science procurement centre of the Department of Supply and Services. Proposals were due on April 9, 1981. They will be evaluated by a panel comprising members from the federal government and the private sector.


Mr. Cossitt: 1.	Was there a program not publicly announced by the Department of Agriculture for filling research vacancies in Ottawa and, if so, what are all the details?
2.	Are three francophones about to be hired at the top starting salary for a biologist although they will not be working with the department but will be studying for three years at English-language schools for Ph.D. degrees and, if so, will they receive $17,000 annually and, if not, what amount will they receive?
3.	Is $8,500 the highest grant an anglophone doctorate student can obtain and, if so, for what reason?


Eugene Whelan: 1. No. The
department uses the normal public service staffing process.
2.	A competition is being held to fill three biologist positions designated as French essential. The persons chosen, whether francophones or anglophones, will become employees of Agriculture Canada. After appointment, they will be sent to university to pursue graduate studies on a subject that will allow Agriculture Canada to meet its needs for professionally and linguistically qualified personnel. The choice of university will depend on the background and qualifications of the successful candidates. The salary which will be paid is determined by Public Service Commission and Treasury Board regulations. At the present time, the recruitment rate for a person with a M.Sc. degree is $17,610. This salary may increase slightly depending on the person's related work or research experience.
3.	No. For example, the scholarships granted by the Natural Sciences and Engineering Research Council to students registered in graduate studies are as follows:
Post-graduate scholarships:	$ 8,500
1967 Science scholarships:	11,200
After September 1, 1981, they will be:
Post-graduate scholarships:	$ 9,300
1967 Science scholarships:	14,000

May 13. 1981
Order Paper Questions


Mr. Stewart: 1.	Did the Department of National Health and Welfare purchase a mobile home valued at $30,574 from Hill Court Mobile Homes, Thunder Bay, Ontario and, if so, for what purpose?
2.	Were public tenders called and, if so, what firms or companies submitted bids and what was the amount in each case?


Hon.   J.-J. Blais@Minister of Supply and Services: 1. A
contract in the amount of $30,574 was awarded by the Department of Supply and Services to Hill Court Mobile Homes, Thunder Bay, Ontario, on behalf of National Health and Welfare, for the supply of a mobile home. This unit was delivered to the New Osnaburgh nursing station in Sioux Lookout zone hospital.
2. Requests for proposals were forwarded to the following two suppliers:
(a)	Hill Court Mobile Homes Ltd.	$30,574.20
Thunder Bay, Ontario.
(b)	Altona Homes	$35,095.00
Headingley, Manitoba.


Mr. Stewart: 1.	Did the Post Office Department purchase cloth valued at $204,355 from Consoltex Inc., Montreal, Quebec and, if so, for what purpose?
2.	Were public tenders called and, if so, what firms or companies submitted bids and what was the amount in each case?


Hon.   J.-J. Blais@Minister of Supply and Services: 1. The
Department of Supply and Services awarded a contract for the amount of $204,355 to Consoltex Inc., Montreal, Quebec, on behalf of the Post Office Department for the purchase of 78,000 meters of nylon cloth. The cloth will be used for priority post mail bags, lining for weather jackets and registered mail bags.
2. Since Consoltex Inc. is the only known Canadian company capable of manufacturing this material in accordance with Post Office requirements and inspection standards, no public tenders were called for this purchase.


Mr. Stewart: Did the Department of National Defence purchase chemicals valued at $84,495 from Van Waters and Rogers Ltd., Lachine, Quebec and, if so, what were the chemicals and for what purpose were they required?


Hon.   J.-J. Blais@Minister of Supply and Services: The
Department of Supply and Services awarded a contract for the amount of $84;495 to Van Waters and Rogers Ltd., Lachine, Quebec, on behalf of the Department of National Defence, for the supply of 1-1-1 Trichloroethane, Technical. This chemical is used for degreasing operations on mechanical, electrical and electronic equipment, when air pollution and/or safety considerations preclude the use of other materials.


Mr. Stewart: Did the Department of National Defence purchase tire pressure gauges from Patlon Aircraft and Industries Ltd., Toronto, Ontario at a cost of $16,656 and, if so (a) how many (b) what was the cost per gauge (c) were public tenders called?


Hon.   J.-J. Blais@Minister of Supply and Services: The Department of Supply and Services awarded a contract to Patlon Aircraft and Industries Ltd. on behalf of the Department of National Defence for the purchase of tire pressure gauges.
(a)	1,735;
(b)	$9.60;
(c)	Yes.


Mr. Stewart: Did the Department of National Defence purchase a scooter valued at $22,365 from Yale Industrial Trucks, Dorval, Quebec and, if so (a) what are the specifications (b) for what purpose (c) were public tenders called?


Hon.   J.-J. Blais@Minister of Supply and Services: The
Department of Supply and Services awarded a contract for the amount of $22,365 to Yale Industrial Trucks, Dorval, Quebec, on behalf of the Department of National Defence for the purchase of three "Electric In-Plant Burden Carriers". These carriers are sometimes referred to as scooters in materiel handling applications.
(a)	Exact specifications for the model purchased (Taylor-Dunn 1248-B).
(b)	These vehicles are designed as indoor cargo/passenger carriers with a capacity for either four passengers or a payload of 1,500 lbs. They will be used in the warehousing operations of No. 7 Canadian Forces Supply Depot (CFSD), Edmonton and No. 1 Canadian Forces Supply Depot (CFSD), Toronto.
(c)	Requests for proposals were forwarded to six firms and three replied. Yale Industrial Trucks submitted the lowest bid for a vehicle meeting the required specifications.


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


Some hon. Members:: Agreed.


Mr. John Evans (Parliamentary Secretary to Deputy Prime Minister and Minister of Finance):: Madam Speaker, I ask
May 13, 1981

that all notices of motions for the production of papers be allowed to stand.
i


Madam Speaker:: Shall the notices of motions be allowed to stand?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


John Carnell Crosbie: That this House condemns the Minister of Finance for permitting interest rates to rise to unprecedented high levels and calls on the minister to meet his economic responsibilities or resign.
He said: Madam Speaker, this motion comes forward at a time when the Canadian economy and the people of Canada, the farmers, the fishermen and the businessmen-indeed, all aspects of Canadian life-are threatened by a most serious and unprecedented economic situation, illustrated in particular by unprecedented high interest rates.
It is also a time such as we have never seen before, with a government in Canada which is so unwilling to assume its economic and financial responsibility. This government was elected some 14 months ago on the basis that it could do better than the government which was in power then for a few months, the PC Clark government. It was elected on the basis that it could do better and on the argument that it could keep interest rates down, stimulate the economy and overcome inflation. It was elected on the argument that there was a painless way this could be done.
We have had 14 months of inactivity, 14 months of the Minister of Finance (Mr. MacEachen) hiding behind the skirts of the Prime Minister (Mr. Trudeau) on the Constitution. We now see the emperor without his clothes. The emperor has been walking down the street without his clothes, hiding behind his constitutional cloak. Yesterday he came out from behind his constitutional cloak and the people of Canada discovered there was nothing there. He was not wearing a shred, but he was still completely unashamed.
The minister said in a speech last week that inflation has been running at the rate of 13.9 per cent. The present inflation rate is 13.9 per cent. In his budget of October 28 he predicted
10.2	per cent; just five months ago the minister predicted a
10.2	per cent inflation rate for 1981. This points out another serious aspect of this situation: the forecasts of the Department of Finance can no longer be trusted. They can no longer be accepted as anywhere near accurate.
In his budget the minister predicted that this year the Canadian dollar would average 87 cents compared to the U.S.
Interest Rates
dollar. Today we see it struggling to keep above 83 cents in terms of the U.S. dollar.
We are now seeing a serious unemployment situation, with the adjusted rate being 7 per cent. There are still 886,000 people out of work. The government forecast the unemployment rate would average 7.6 per cent over the year. Statistics Canada has said there are 348,000 persons unemployed in the hidden category. This means 1.234 million Canadians are unemployed. The hidden unemployed are those who have given up looking for jobs because they know there are none there for them to find. That is a very serious situation.
Real wages are down for the fourth year in a row. The Economic Council of Canada says they will be down 2.4 per cent this year. We see productivity down for the fourth year in a row. Real growth last year was one tenth of 1 per cent. The forecast this year by the Conference Board, and I will only give one forecast, is that real growth will be 2.9 per cent if strong U.S. growth continues and if work on the oil sands and the Cold Lake projects-the tar sands and heavy oil-resumes by the end of the year. What is the government's response to that situation? It introduced a new energy policy that stopped the Cold Lake and tar sands projects and energy investment in their tracks. I will come to that later.
We must remember, Mr. Speaker, that for every one cent devaluation of the Canadian dollar, about four tenths of 1 per cent is added to the cost of living index in Canada. We must remember that when people say we should not worry about the level of the Canadian dollar. I may be in the opposition, but I am not going to be completely irresponsible as the government was a year and a half ago. For every cent the Canadian dollar goes down, the cost of living in Canada goes up four tenths of 1 per cent because of all the goods we import. We cannot afford to have the Canadian dollar go down much further. It has gone down from $1.02 in 1976 to 83 cents now; a major devaluation. I will come in a few minutes to the reason it is so important that we cannot have our dollar go into a free fall. This would cause chaos in this country, but I will expand on that in a minute.
The Conference Board says that energy investment might reach a 4.5 per cent increase this year compared to 11.4 per cent in 1979 because of the government's new energy policy. Business investment in plant and equipment is now estimated to be 3.6 per cent for this year compared to an average 9 per cent for 1979-80. These are grim economic facts which the government chooses not to deal with. The government wants to ignore them and forget they are there. The government has no policy.
The government's policy in the budget of October 28 was said to be a gradualist approach. The minister says his approach is gradualist, yet he says he supports the Bank of Canada and Mr. Bouey, and so he should. However, in the annual report of the Bank of Canada for 1980 Mr. Bouey said at page 12:
-Canada has made only limited progress since 1975 in containing inflation. The reason is not that the anti-inflationary financial policies followed were miscon-

May 13, 1981
Interest Rates
ceived but that they were pursued with such gradualism that they did not succeed in dominating the influences that were working in the opposite direction.
He looked at the last five years and said that our policies have not succeeded. Why have they not? He says they were applied too gradually. The minister says his policies are gradualist policies. This is an admission that his policies are doomed again to failure, as they have failed for the last five years. So much for the minister's approach.
The minister did not have a gradualist approach, the Liberal party did not have a gradualist approach, and members of the government did not have a gradualist approach when they were in opposition in the fall of 1979. No, their approach then was full of guts and gumption. They had the answers. They decried high interest rates, and I will come to that a little later.
The government says it wants to fight inflation, but then the government shows everybody in the country it is not serious because it will not restrain itself. You cannot convince people that you are out to beat inflation if you will not restrain yourself. You cannot ask a worker to restrain his salary demands or the executive to restrain them or the businessman to restrain his profits if the government itself is a big greedy guts colossus that will not restrain its own spending. And spending this year is up. Officially the government says 12.8 per cent, but it is really up about 20 per cent.
The government's budget deficit is $13.7 billion, and this is the tenth in a row. The deficits for the last ten years total $77 billion. Is that a government that shows itself in restraint? How can they ask us to restrain our demands, needs and wishes in Canada to beat inflation when they are acting in this way, when the money is there to burn, a penitentiary here, another expenditure there, all in Liberal districts and for political reasons. There is no restraint whatsoever.


Mr. Dinsdale:: Advertising.


John Carnell Crosbie: Advertising, and on and on it goes.
The imported oil subsidy is costing $3.8 billion this year. The government has removed it from the estimates to pretend by a piece of fiction that government spending is less than it is. They removed the $3.8 billion cost of the oil subsidy by saying there is a $3.47 billion Canadian ownership account. They are collecting that from the people of Canada through the new petroleum taxes. They are only showing the balance as an expenditure on the oil import subsidy. They show $530 million spent in that way and not $3.8 billion. That is dishonesty in the accounting of the government in the estimates. That is why the government's spending is up 18 per cent to 20 per cent by any true comparison. There is no restraint.
Before the budget came down the Bank of Canada interest rate was 11.76 per cent. The budget came down five months ago. Today the rate is 18.71 per cent, an increase of 7 per cent. That is the result of this minister's budget. That is the result of his gradualism. That is the result of his do-nothingism.


An hon. Member:: Gradually downward.


John Carnell Crosbie: The prime bank rate is 19.5 per cent. I looked at the paper today. Mortgage rates are 18 per cent. The minister says to the people who have homes in Canada, the 500,000 who have to renew their mortgages this year, I think the figure is, "You should not be out spending money; you should restrain your demands if there are high interest rates".
How can you restrain your demand if you have a mortgage for $40,000 on your home, you have to renew it this week and they tell you the rate is 18 per cent? The only way to restrain your demand is to give up your house, to sell your house and live in the poor-house. That is the minister's advice to these hundreds of thousands of Canadians suffering through his and his government's lack of attention over the last ten years. The prime bank rate is 19.5 per cent.
I have a letter from a man in British Columbia. He took out a loan with the federal small business development bank back on December 2, 1980. The rate then was 14.5 per cent. On April 8 he was paying 22.25 per cent. This is the bank which is to help small business. This is what the official government bank was charging on April 8, a month ago, before the recent increases, 22.25 per cent interest on a loan to a small entrepreneur in British Columbia who took it out just a few months earlier, in December, at a rate of 14.5 per cent. That is the government's own bank, and the Minister of Agriculture (Mr. Whelan) gets up with his nonsense in the question period about how the private banks are doing this and making profits and they do not consider the farmers. What is the minister's own fat bank doing, the small business development bank? It is charging 22.25 per cent to the small businessman. It has to because it is borrowing money to lend out at rates of 18 per cent, 19 per cent and the rest. That is the way the banking system works. Let him look at the mote in his own eye and not get up with his fat bafflegab about what the banks should be doing, and trying to excuse the government.
The government's economic policy today is to drift, to keep out of view and to hide behind skirts; but the minister is now exposed, and the Canadian people at last are starting to wake up. The constitutional mirage is in the Supreme Court. They are dealing with it, and now we are dealing with the real things that bother people here in Canada, not this constitutional business that is now, luckily, off the political scene for a while.
There is only one area this inactive government has been active in. The new energy policy is their only new creative area, and that has caused the most damage of all. If people want to know why the Canadian dollar is under pressure, why it is in danger and why interest rates have to be stratospheri-cally high to protect the Canadian dollar, it is because of the new energy policy which confiscates 25 per cent of the holdings of the oil and gas industry on federal lands without compensation, which is anti-the private sector, anti-business, anti-American and anti-foreign investment.
That is why funds are not coming into Canada. That is why funds are leaving Canada and depressing the already depressed Canadian dollar. Why is the Canadian dollar already depressed? Because for the last seven years we have had a total of $26 billion in deficits on the balance of pay-
May 13, 1981

ments on our international account. We in Canada are living off the rest of the world. We are borrowing from them. We cannot survive unless they lend or invest in Canada billions of dollars every year to meet these deficits. We are suppliants to the rest of the world. That is why the Canadian dollar is a weak dollar.
The government opposite has been in office for these last ten years, with the exception of a few months, and in those few months they did everything they could to sabotage anyone else who was trying to save the situation. They are afraid to adopt any remedies themselves but gradualism. Well, gradually they have got Canada to the point that the Canadian dollar is one of the orphans of international finance, and Canadian interest rates have to be at 19 per cent, 20 per cent and 21 per cent to get the Americans to send up some short-term money to prop up the Canadian dollar.
This did not happen overnight; it happened over ten or 12 years. There are no quick fixes, no quick solutions. When the press asks, the NDP can give them quick solutions because the NDP has never been in power, will never be in power and lives in fantasy. They have solutions to everything. You wave a magic wand, you freeze prices and you have a commission and all this nonsense. We do not get on with them. We know there are no quick solutions. The minister is bankrupt of solutions. He asks us to give him some suggestions, and I will as I go along, as other members of our party will.
The only active area is the energy policy, and that policy has driven money out of the country, has driven oil rigs out of the country and driven investment out of the country. The government likes to flex its muscles and pretend it is pro-Canadian, anti-American and anti-foreign investment, when really for the last ten years it has been begging the world to lend us money and invest money here. If they do not and if we are not successful, the Canadian dollar will go down the tubes altogether. That is the government's bold policy, the new energy policy.
PetroCan purchases Petrofina; $1.7 billion is the cost to the people of Canada who consume oil and gas. Three and a half cents a gallon was levied on oil and gas and heating products, heating oil, to pay the $1.7 billion required for PetroCan to buy Petrofina, which will not result in Canada having one more cup of gasoline or one more litre or cupful of natural gas. It does not increase the oil and gas assets of Canada at all, and we are paying out $1.7 billion, mostly to people in Belgium. Verily, the patron saint of Belgium must be Mr. Marc Lalonde because he is doing a lot for the Belgians; but he is doing nothing for us. That is another billion dollars depressing the Canadian dollar that has to be paid out over the next two or three years. This is the government's great policy, the only area that they have been active in.
The other damaging area is FIRA. The Minister of Industry, Trade and Commerce (Mr. Gray) is going to supervise all foreign investors in Canada. He is going to amend FIRA. So not only do you now have to pass his scrutiny to invest in Canada, but when you have a business here, he is going to come and look over your shoulder and say, "You are not doing
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the business as I would do the business" or "You are not doing the right thing" or "I don't think this is in Canada's interest". That is the threat. No wonder the Canadian dollar is at 83 cents U.S. I wonder that it can be kept up at all with the likes of the Minister of Industry, Trade and Commerce, with his narrow-minded view, with his narrow, parochial Canadian nationalist view, he calls it, threatening how he is going to change the regulations and explaining how he is going to operate.
Then we see the Canada Development Corporation, a government Crown corporation, doing well, operated properly, a major assistance to Canada, with $3.4 billion in assets, and the Minister of Industry, Trade and Commerce tries to get them to take over the sick. They say they have a policy of helping the successful, and it turns out to be Chrysler or Massey-Fer-guson and so on. They try to make the CDC take Massey-Fer-guson or Chrysler under its wing when they have 30,000 Canadian shareholders, individuals, small people who invested their money on the promise of the government that that corporation would operate in an ordinary profit-motive manner, concentrating its efforts on developing the resources of Canada. Now we see them attempt to make Maurice Strong, that Liberal candidate who did not even have the fortitude to run after he was nominated, chairman-he started PetroCan-so as to turn this corporation into the new PetroCan in the industrial field, and the hell with the 30,000 Canadian shareholders who were fooled by prospectuses.
Is it any wonder that the investment community lost faith in Canada? It is a wonder that the Canadian dollar is not at 60 cents, much less 83 cents. These are some of the areas where the government has been active.
Just look at interest rates in some other countries. In Germany the central bank rate is 7.5 per cent. The prime bank rate is 12 per cent. France has a 12 per cent central bank rate; Japan, a 6.25 per cent central bank rate; the United States, a 14 per cent and a 4 per cent surcharge for frequent borrowers. Look at the United Kingdom, which these people sneer at and denigrate; they tell them to hold their noses while they send over their dog's breakfast of a Constitution for them to pass. What is the bank rate in England? It is 12 per cent. The inflation rate in England is 12.6 per cent. That is what Mrs. Thatcher has done because she has guts and gumption. She has more you-know-what than all that bunch opposite put together. They have a 12.6 per cent inflation rate.
The U.S. inflation rate is 10.5 per cent; in Japan the inflation rate is 6.2 per cent; in France the inflation rate is 13 per cent; in Germany the inflation rate is 5.6 per cent. This government does not even have the defence that other countries are worse off than we are. The other industrial countries in the world are not. It is just this country, with its sorry, shabby, economically tattered, weary, tatterdemalion government, that is in this kind of shape. It cannot even look to other countries for comfort.

May 13, 1981
Interest Rates
The Bank of Canada and the minister have admitted that the reason for the present high interest rates is more because of the fear of the Canadian dollar declining if interest rates do not keep up with those in the U.S. That was in the bank's news release of May 7. The minister has said that as well.
1 want the people of Canada to try to understand this. The fault is not with the Bank of Canada. I am talking to the people of Canada because I know hon. members opposite are not listening and will not listen. They will not listen until the people of Canada shake their fists at them, until the people of Canada send them letters, until the people of Canada phone them, until the people of Canada put the pressure on. That is why, through the medium of television, I am speaking to the people of Canada, not to the tatterdemalion remnants across the floor.
The fault is not with the Bank of Canada. It is not with Mr. Bouey. Forget Mr. Bouey; he has done everything he can in his little sphere of monetary operation but he has had no help from the government in the fiscal area in ten years. The government is responsible for Mr. Bouey's interest rates. He recommends; the government decides. It can give him a letter tomorrow saying reduce the rate, do this, do that; and he has to do it. He has done his best for five years. If he had not done what he has, we would be a lot worse off today with respect to inflation than we are. So do not blame Mr. Bouey, people of Canada; blame the Minister of Finance; blame the Minister of Energy, Mines and Resources (Mr. Lalonde). Blame the Prime Minister over all. '


Some hon. Members:: Hear, hear!


John Carnell Crosbie: The Prime Minister sits in this House and shrugs. He does not care about interest rates; he does not care about you mortgage holders out there; he does not care about you small businessmen. Why should he? He has lived off you for the last 12 years and he intends to live off you for the next 12. He is so pleased with his success and his unexpected comeback of nine or 12 months ago that he no longer cares. The government should say, like Shakespeare, "the fault is not in Bouey but in ourselves". It is not Mr. Bouey. Forget Mr. Bouey-forgive Mr. Bouey. The Minister of Finance is the only man who can help the Canadian people-if he would adopt the right policy.
What should the government do? The government should start the course it stopped on December 13, 1979. This is my advice to the minister. He should take the approach of the budget of December 11, 1979 and practise real restraint. He should show the Canadian public how the government is going to reduce the deficit over four years; adopt a sensible oil pricing policy-


Mr. McRae:: Oh, oh!


John Carnell Crosbie: Never mind; it is my turn to speak. The price has to go up to 75 per cent or 85 per cent over the next couple of years.


Paul Edmund McRae: Oh, oh!


John Carnell Crosbie: Don't be so foolish, man; listen and learn!
A sensible energy-pricing policy would give the government the financial relief it needs. It is spending $3.8 billion on a subsidy that should not be spent. It is harmful to the country. That would provide $2 billion or $3 billion with which to assist. Some of that money should be used to help lower income Canadians with an energy tax credit, just as we proposed but which the government stopped. The Canadian people would have had half a billion dollars in their pockets in April if the government had not stopped us. There would have been another one billion, two hundred and fifty million dollars to help the mortgage interest and property tax needs of the householders and mortgagors of Canada, had the government not stopped us. The money is there; it can be done. You can still have restraint and do that.
A true budget, one with real restraint, would show that the government means business. That is why it is needed now. The minister's statement that he is practising restraint, when everything shows that he is not, does not influence anyone. Everyone in Canada today expects that inflation is going to get worse and they are acting accordingly. This itself makes inflation worse.
So I say, Mr. Speaker, start now. That is the immediate thing the government can do. It is a slow process. It took ten years to get Canada into the grim economic shape it is in now, and it is going to take two or three years of proper application of policy and restraint, and of choosing priorities, to get Canada back on a stronger course, to strengthen the Canadian dollar.
What can be done immediately is to reverse the new energy policy; take out the harmful effects of it and retain some of it. Eliminate the anti-foreign investment, anti-private sector, antiprovinces, parts of that policy; make it more attractive to the entrepreneur and the investor. Get an agreement with Alberta now, not tomorrow and not next week but now. Be reasonable. If the government changes its plan and shows it is being reasonable, then the government of Alberta has no choice but to follow suit. So far the government has prevented that from occurring because its proposals are so onerous and so anti-any-thing that the oil producing provinces could accept that there is no chance they could be accepted. I say reverse that situation.
I say to the government, reverse the FIRA nonsense. Leave FIRA as it is. Take Mr. Gray off the backs and the necks and the legs of the people who want to invest in Canada and help the dollar. Reverse the CDC process and let the government show it is not going to break faith with the people who listened to and believed its representations in the prospectuses issued when it sold 51 per cent of the shares of that company to the public.
The inflation rate is going to be 13 per cent at least in 1981 and 1982. These kinds of high interest rates are not needed to deal with that situation; 15 per cent or 16 per cent you might argue, but not 19 per cent or 20 per cent or wherever the rate is going. Come to grips with the situation now.
May 13, 1981

The minister has two choices. Start the process now. You are going to have to inflict some pain. People like to see money spent. We all know how politicians get popular. The Liberal party has been excellent at that; it has been in power since 1963 by these methods. Now the consequences have caught up. You have to start the process now; that is one choice. Start the process now and bring in a new budget that really means something-real restraint, a proper oil pricing policy, an energy tax credit, a shelter allowance, as I have suggested. Drop the FIRA and the CDC nonsense.
If the government continues dithering, continues drifting, Mr. Speaker, then within a number of months less than six it is inevitable that the government will go to wage and price controls. It is going there politically because of the outrage of the Canadian public, which will say "You have to do something to stop this inflation; you have to do something about these interest rates". Because there is no quick and dramatic action that they can take-because they would not start the process months ago and they would not start it a year ago- they will bring in wage and price controls. Not because they think that wage and price controls are the answer. They did not solve anything in Canada permanently five years ago in the three years that they were applied. But that is where the government is heading, to wage and price controls, Mr. Speaker. That is a complete waste of time, Mr. Speaker. It is another extension of state power and interference with the lives of Canadians, another major obstacle and impediment to the market economy that this country is strengthened by because of our resources.
If the government does not act now, it is going to wait for the inevitable and we are going to have wage and price controls or some crazy tax-based incomes policy which the minister's own department says is not the solution. The minister is going to do one of those two things within six months if he does not start the painful process now of straightening out this nation's economy.
I am totally against wage and price controls, but if the minister is going to do nothing now but just dither and continue that policy of 14 months, then I say to him he is better off having wage and price controls brought in tomorrow, rather than waiting until there is an extreme emergency in Canada and bringing them in in the midst of chaos. Is he going to wait for the emergency to arise and then bully and dragoon the provinces into going along with him?
That is the choice. Start the process now, as we started it in December, 1979. They delayed the process. They not only damaged us, they damaged Canada and the Canadian people. They put us years behind, they put the energy industry behind, the tar sands development behind, the heavy oil industry behind. They can start now, or we are going to have wage and price controls.
We need new, revised forecasts. The minister said in his speech on May 6 that interest costs alone last year were up $1 billion more than his budget forecast. We need new, revised forecasts now and he should give them to us in his speech today. Here is the government's borrowing. It cost the govern-
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ment yesterday for a $1.2 billion issue 16.25 per cent in interest. The Government of Canada is borrowing and paying 16.25 per cent interest, and the bonds are selling at a discount. How far have we fallen? The long-term bond market is gone. One must be crazy to invest money in the long term in view of what we see today-the government being afraid to do anything. People are not doing it.
We have had 11 increases in oil, gas and heating oil prices since last year. Only three of them gave anything to the producers; eight of them were tax increases. Gasoline today is 49 cents a gallon more expensive in Montreal than it was a year ago. Heating oil in St. John's, Newfoundland is up 40 cents compared to a year ago. It has gone from 75 cents to $1.15 per gallon; this is over a 50 per cent increase from the minister who promised: "Vote Liberal and the price will stay down". That minister has a lot to answer for. The people voted Liberal, and we know where the price has gone and where it is going.
The minister has a new and callous attitude. He tells the people who have mortgages that it would be wrong for him to give advice as to how to manage their affairs, as reported in the Ottawa Citizen. Also he said that the government would not bail out individuals facing mortgage renewals, and he noted that an analysis last year found most home owners could handle the payments resulting from higher rates. That is what the minister says now. About a year and a half ago he did not say it, nor did his cohorts say it. Now interest rates are 5 per cent higher than they were when gentlemen opposite were in opposition. But today, with four safe years ahead of them, they are saying to Canadians, "You can renew. You have the income. Don't be so foolish. Don't come to us telling us your troubles. You have lots of money to renew. We are not going to give you any help".
That is a callous attitude compared to what they said just a year or a year and a half ago. The seven million home owners in Canada have been kicked by the minister and shown that they will get no relief. Then there are the farmers and the fishermen. Unfortunately I do not have the time to go into all these figures now; I think I am getting near the end of my time. Apparently I only have one minute left.


John Leslie Evans: You are beyond the end of your rope.


John Carnell Crosbie: No, the government is beyond the end of its rope. The people of Canada are beyond the end of their rope.


Some hon. Members:: Hear, hear!


John Carnell Crosbie: If we were not a peaceful, law-abiding country, they would know what to do with the rope. After having somebody tell them, after getting into office on one set of promises-that they are to forget high interest rates and that they have enough income to renew their mortgages-the people of Canada would know what to do with the rope.


Some hon. Members:: Shame.

May 13, 1981
Interest Rates


Flora Isabel MacDonald: They have no shame.


John Carnell Crosbie: There is no shame. I say to the Canadian people right now that we will do what we can in the House. Do not forget, Canadian people, the New Democratic Party helped cause all this. They put us out of office and they put these people opposite back in. They stopped the mortgage interest and property tax credit. They stopped the energy tax credit. They brought on the 19.5 per cent bank rate. They helped the government; they are co-conspirators. They are the rump of the government party, so hold them responsible too.
We in this party heard the Prime Minister say that he would manage the economy in such a way that interest rates would in fact come down, as reported on February 10, 1980.


Some hon. Members:: Oh, oh!


John Carnell Crosbie: As reported in The Toronto Sun on February 4, 1980, the Minister of Industry, Trade and Commerce said:
I don't think that allowing the dollar to have some downward adjustment would do as much harm to our economy as our present high level of interest rates.
At that time they were 14 per cent and, as we all know, they are now over 20 per cent.
The minister wants suggestions. It is not our job to run the government. We were put out. Hon. gentlemen opposite had a lot to do with it. We were not politically clever enough. He was more clever then we were politically, but now the minister is the one who is responsible and the chickens are coming home to roost.
My advice to the minister, because he asked for advice, in all due modesty is that he go back and take the approach of the budget of December 11, 1979. The government should make a convincing show that they will restrain themselves; they will still help the needy, those who are the most unfortunate, as we tried to do, but they will restrain themselves after ten years of savage deficits. Give the investors some chance to feel more confident in Canada; make the outside investor feel more welcome. Never mind these other artificial changes in FIRA and the threats which come from the Minister of Industry, Trade and Commerce, who has never run anything, not even a bull's-eye factory, who says that he will tell the Americans, the Belgians and all the rest how to run their businesses. Forget that, but get together with Alberta in the national interest.
Alberta has had a hard time for the last year since it stopped its negotiations with us and had to go on with this government. They had a pretty severe pummelling; they will be in a more reasonable frame of mind. I am a national politician. I believe in the national government. The agreement must be settled in the national interest.


The Acting Speaker (Mr. Blaker):: Order, please.


John Carnell Crosbie: May I just conclude.


The Acting Speaker (Mr. Blaker):: I will accord the hon. member 30 seconds in which to conclude.


John Carnell Crosbie: Alberta is ready to be reasonable, but it is the national government which must change its national energy policy. That will let us strengthen the Canadian dollar. In turn it will allow the Bank of Canada to reduce interest rates. That is the immediate thing the government can do. It should act now. Let us have a settlement of the energy dispute by the end of May and Canadians will get immediate relief. That is my immediate suggestion. I have made more long-term suggestions. The government has put Canada in a position from which it will take a long time to recover. The process must start now. Get some courage and some gumption; they have another four years to go before facing an election.


Some hon. Members:: Hear, hear!


Mr. Bob Rae (Broadview-Greenwood):: Mr. Speaker, after that scholarly survey of the issue which perhaps can be summarized as, "Do as I did", I would like to put forward some suggestions to the Deputy Prime Minister and Minister of Finance (Mr. MacEachen), since he indicated that he is interested in listening to alternatives. We had a debate in December dealing with the critical situation facing the Canadian economy as a result of the interest rate problem, as a result of the severe problem of undercapacity in the economy, as a result of unemployment, as a result of the housing crisis which is facing so many Canadians, as a result of the crisis in bankruptcy which is affecting small business and farmers, the crisis in costs which is affecting fishermen, and the general increases in the cost of food and the cost of living which are affecting every Canadian.
In the last couple of days and in a speech which he made in Toronto last week, the minister made a very similar defence to that which he gave in December. It is the same defence. Although I do not intend to spend any time dealing with the pot-pourri of suggestions which have come forward from the Conservative party, they have ranged today from advocacy of an immediate introduction of wage and price controls to even stiffer cutbacks and harsher economic policies, than are currently being introduced. Apparently even higher interest rates are being suggested in the short term in order to produce magically lower interest rates in the long term.


John Carnell Crosbie: Don't be such a twister, don't misquote me. I never said that.


Bob Rae: The hon. member for St. John's West (Mr. Crosbie) has had his turn to speak to the House. I did not interrupt him, even though there were many occasions on which I might have wanted to say something. I would appreciate it if he would give me the same courtesy which I attempted to give him. I will not comment on those policies.


John Carnell Crosbie: Mr. Speaker, I rise on a point of order. I have no desire to interrupt the hon. member except when he starts to misquote and put in my mouth words I never said. I did not advocate wage and price controls and I have not said a couple of the other things; I have not suggested higher interest rates. As long as the hon. member quotes me correctly, I have no desire to interrupt him.
May 13, 1981


Bob Rae: Mr. Speaker, the hon. member for St. John's West is afraid of the consequences of some of his words. When we read Hansard tomorrow, I am sure we will see exactly what he had to say about wage and price controls. I stand by what I have just described in terms of the effect of what he said.
The purpose of the defence offered today by the Minister of Finance is really twofold. The first is that the interest rate policy which the government is following is necessary in order to support the Canadian dollar. The defence of the Canadian dollar and the relationship between the American and Canadian economies have been the persistent argument which the government and the bank have put forward for many, many years. The secondary defence, which the minister trots out from time to time and has put forward with even greater vigour in the last couple of weeks, is the need to have these kinds of interest rates in order to reduce inflation.
I might remind the minister that this is a significant change from what he was saying in December. If he looks at his remarks in December, he will see that he said that these rates were too high for Canada, but that they were necessary for Canada because of what was going on in the United States.
If I understand him correctly, in the last week he has been saying that these rates are necessary for Canada in order to control inflation, that these rates are not too high or excessive, that in fact they are a necessary part of government strategy.


An hon. Member:: And they may go higher.


Bob Rae: And they may go higher! He has no idea how high they will go. He is not opposed to the policy being followed by the bank and the effect it is having on the Canadian economy.
I want to say to the minister that what I call the domestic justification for the control of inflation is completely without foundation. There is no economy in the western world among the OECD countries which has real rates of 8 per cent, 10 per cent and 12 per cent as a measure of deliberate policy. Canada is alone in this regard. These are the highest real rates in our history. By any stretch of the imagination they are excessive, even for the objective which the government has set out for the control of inflation. I would ask the minister to come clean on this point: What does he think the real rates should be over time? I want the minister to tell us what rate he really thinks should go to lenders of all different kinds and whether he really thinks a rate of 8 per cent, 10 per cent or 12 per cent is required, even if one accepts the premise that the way to fight inflation is by raising interest rates.
The argument the minister put forward on the foreign exchange justification to the effect that we really have no choice is an argument which does many things. If I may say so, the hon. member for St. John's West did the same thing. He underestimated the real strength of the Canadian economy and the Canadian dollar. If we had an independent interest rate policy I do not think the consequence would be that our dollar would necessarily fall to 60 cents, 65 cents or 70 cents, U.S., as was suggested by the hon. member for St. John's West
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and many other critics who, in my view, have no real faith in the inherent strength of the Canadian economy.
The statement that we have no choice, that we must tie ourselves at every opportunity to the American policy, is an admission of our colonial status. It is an admission that there is no possibility of the government exercising any significant degree of economic independence. It is an admission and a statement that our interest rate policy is not made in Canada in order to respond to the domestic conditions of the Canadian economy but that because of Liberal party policies we have become an economic colony of the United States.
The third approach being taken by the minister, that is, when he talks about wage and price controls and the introduction of a tax-based incomes policy which would have the effect of controlling wages, is one which would create division among the Canadian people. If the minister looks back to the experiences we had under the anti-inflation board, he will see that it limited the ability of the average Canadian worker to keep up with the rate of inflation. It enriched certain Canadians and certain corporations, allowing them to take unfair advantage. It restricted the living standards of the average working person.
The interesting thing about the review released by the minister's department last year was that it showed lower income workers, many of whom work for our largest financial institutions, fell much further behind the increases in the cost of living than did almost all other workers in Canada. The argument put forward from time to time with regard to the 1975 wage controls is that it was an exercise in social justice. It is put forward that it was some kind of incomes policy, which is completely nonsensical. The minister's affection for what he calls, "market forces" and the need to restore what he calls "market discipline" to the economy will result in giving credence to the law of the jungle. The most powerful will receive the biggest increases and the least powerful will receive the smallest, which will simply increase wage disparities. This will increase the sense of unfairness in our society. This will not resolve the fundamental problem of inflation. It will not resolve the escalating prices which we see in so many parts of the economy.
I wish to turn to the alternatives, Mr. Speaker. Basically, the alternatives are fourfold. The first comes under the heading of recognition by the government of the emergency which we are facing. I remind the minister that when the government introduced the anti-inflation legislation in 1975-76 the Supreme Court took cognizance of the fact that there was an urgency and, indeed, an emergency which justified the federal government exercising its ordinary power of control over the economy. The inflation rate at that time was lower than it is today. Indeed, the government was not faced with the out of control situation with which it is faced today. So we need recognition of an emergency.
We need immediate relief-relief for home owners who are caught in a roulette game of time. These are home owners who happen to be renewing their mortgages in one month, who are paying rates two and three percentage points higher than

May 13, 1981
Interest Rates
others. Those home owners who renew this year will pay rates four and five points higher than others. Fishermen attempting to buy boats or improve their equipment are facing interest rates which are four to six points higher. Farmers are facing the same absurd situation. We need relief directed to the groups which need it. If we do not have relief we will have not only a reduction of supply-fishermen will fish less and farmers will produce less-but we will face problems of unfairness.
Monetarism represents a kind of roulette, the roulette of not knowing from week to week whether the rate will be up or down. We are creating a nation of speculators. We are making speculators out of the average home owner as a consequence of a policy which needs to be changed. It can be changed through a relief program, under the notion of an economic emergency and urgent situation. For some time we have argued that problems are structural. In a sense, the problems are built into our modern economy. We need a prices commission, not as a temporary measure brought in as a cosmetic device every two or three years but as a permanent feature of the Canadian economy, which will have the capacity to roll back price increases where they cannot be justified.
The provincial governments have a responsibility as well. They have a responsibility to end speculation in housing, to end speculation with regard to farm land. In my view, they have an obligation to encourage land banking and policies which will keep down the price of land for farming and housing. They have a responsibility to see that it is still possible to be able to afford a house in the city of Toronto while making less than $30,000 a year. The minister of housing in the Ontario legislature admitted last week that a person had to make at least $30,000 in order to be able to buy a house in Toronto. That is absurd.
Under the heading of new policies there is quite simply a need to reduce interest rates. There is a need to change the policy. I repeat what I said to the minister: there is no evidence to suggest that any other country is living with rates which are this high and which has no control over those rates. The rates currently being inflicted on the economy are dysfunctional. They do not have the effect of controlling inflation. They have not had the effect of controlling the price explosions which we have seen with regard to housing and, indeed, which we have seen in parts of the food industry. They simply have the effect of contributing to the explosion.
There needs to be a change, a step toward economic independence. There needs to be a determination on the part of the government that Canada's interest rates policy will reflect the domestic condition of the Canadian economy and not the decisions of Congress, the Federal Reserve Board or Wall Street in the United States.
The third heading under which I would suggest to the minister that there needs to be changes is on the tax side. Instead of using the tax system as a way of controlling wages, I have argued many times before in this House and will argue again today that in the context of controlling inflation and of
changing our interest rate policy the government needs to introduce general reforms to bring about fairness in the way it collects revenues and distributes tax burdens. If the government fears an explosion in wage demands because it is failing to deal with inflation and failing to give confidence to the average Canadian worker, it could take positive steps to increase the after tax incomes of working Canadians through a redistribution of the tax levels of different groups in society. That is the meaning of the cost of living tax credit.
The minister rejected the cost of living tax credit out of hand in his speech in Toronto, and I think this shows that he did not really understand it. He said he did not want to give blanket assistance to all groups in society. He said he did not think providing everyone with a set of gloves for dealing with the passage of the hot potato that he was talking about would restore what he calls market discipline.
I say to the minister that the government must give the assurance to the Canadian people, particularly those on low and on fixed incomes, that they, too, are part of Canadian society. They too, must be protected. They must not be left to the vagaries of the market. I cannot believe the minister talks constantly of the "discipline of the market". He knows perfectly well that for many people the market is a jungle; the market is an exercise in systematic unfairness. He knows very well that if we leave people subject to that unfairness they will seek their own private solutions which, in many cases, will be inflationary; they will lose hope and will seek private solutions to public problems. The problem of inflation is not a private problem affecting each individual as if they were Adams in society, but is a problem that affects the whole of society. That is the meaning of tax reform and the cost of living tax credit.
However, there are other things that can be done. We need to have tax reform which will deal with the problem of the banks. I see the Minister of Agriculture (Mr. Whelan) is present. I agree with him. I moved amendments to the Bank Act, 1 say to the Minister of Agriculture, that would have provided the minister with the power to give the assistance to farmers and small businessmen that he was talking about. Those amendments were rejected by the Minister of Finance. It is a pity I did not have his assistance during the summer when we were putting them forward. They were rejected by the Tory opposition who are now speaking so firmly about their commitment to lowering the rates. So we need to have those amendments. We need to have the government introduce tax changes that would put a damper on international speculation. Instead of rejecting out of hand the whole notion of exchange controls and considering them as if they were an undiluted whole that had to be rejected or accepted holus-bolus, I suggest to the minister that he look at changes in the tax system that would discourage international speculation, that would discourage the transfer of hot money from Canada to the United States, and that would give us a greater degree of independence.
If the minister says those suggestions are unacceptable, I remind him that when Governor Bouey appeared before the committee two years ago, when the rates were at 11 per cent,
May 13, 1981

he was asked, "What if the rates go to 15?" He said, "Then we will have to look at alternatives; at that point we will have to start considering alternatives". Well, now the rates are at 20, and the government is still refusing to consider alternatives which would have the effect of dampening speculative demand in the economy of demonstrating to the Canadian public that the government is really serious, and of giving the Canadian people the sense that they have a government which is prepared to respond with measures that are tough and swift, but measures that, above all, are fair.
My concern about the proposals which have been put forward by the minister and which are being put forward by the government now is that they are unfair; and the proposals which are being advocated by the minister as possible changes in the rules of the game, as he puts it, will be even more unfair to the Canadian people.
I therefore move, Mr. Speaker, an amendment to the motion put forward by the hon. member for St. John's West. Seconded by the hon. member for Winnipeg North Centre (Mr. Knowles) I move:
That the motion be amended by inserting therein, immediately after the words "unprecedented high levels", the following words:
"for continuing policies that not only inflict hardship on the Canadian people but make Canadian economic independence impossible",-
As a result of this amendment, the motion would read:
That this House condemns the Minister of Finance for permitting interest rates to rise to unprecedented high levels, for continuing policies that not only inflict hardship on the Canadian people but make Canadian economic independence impossible, and calls on the minister to meet his economic responsibilities or resign.
As the debate proceeds over the next few weeks-because this is not a matter which can be discussed intelligently in 20 minutes-we will be putting forward additional policies. I think the minister will see we have attempted to provide for a number of years a coherent critique of what the bank is doing, of what the minister is doing and of what the policy of the government is, to show him that there is an alternative, that it is a credible alternative and not, as has been suggested by the hon. member for St. John's West, a fantasy land alternative. In fact, it is a series of concrete and practical measures which will have benefits for the Canadian people. They are not simply sugar-coated pills that will satisfy everyone. They will deal with the problems of inflation, but will deal with them in a way which is fair and will not bring the Canadian economy to its knees. Neither will they reduce our economic independence or diminish our objective of achieving control by the Canadian people of their own economy, so that the policies of the government will eventually reflect the interest of the Canadian people and not simply respond to conditions which are taking place in the United States.


The Acting Speaker (Mr. Blaker):: The hon. member for Broadview-Greenwood (Mr. Rae) was kind enough earlier to arrange that the Chair was forewarned of the amendment that he proposes. The Chair has found that the amendment is in order. Shall I dispense?


Some hon. Members:: Dispense.
Interest Rates


The Acting Speaker (Mr. Blaker):: Agreed.


Allan Joseph MacEachen: Mr. Speaker, I welcome the opportunity to participate in this particular debate, and I welcome too the speeches which have been made by the hon. member for St. John's West (Mr. Crosbie) and the hon. member for Broadview-Greenwood (Mr. Rae).
I am certain, as they are, that the subject matter of the Canadian economy and the problems it faces will be a matter of discussion in the House of Commons for a good period of time, as it has been since the new Parliament was created. As Your Honour knows, most of the time of the House of Commons since the new Parliament has been in session has been devoted to economic matters, including opposition days and government bills relating to the economy. It is also true that a good deal of time has been focused on the all-important question of the Constitution; but nevertheless, the members of the House of Commons have not neglected discussion of the economy. They have discussed the economy on a number of occasions and on a number of important bills, and they have taken numerous opportunities during question period to examine the government on its economic policies. I hope that trend will continue because the problems that we face, especially on the inflation front, are deep-seated and, as the hon. member for St. John's West has suggested, will not be susceptible to magic, quick or overnight solutions.
As I replied yesterday in answer to a question, the inflationary psychology has become embedded not only in the minds of the public, in the minds of the economic actors in the economy, but also deeply embedded in the institutions and the structures of the economy. It has been built up over a considerable period of time.
I am not ready to engage in a debate about the historic causes of inflation in this country. I do know that in the seventies, when the governments of the provinces and the national government, especially in the early part of the seventies, were strongly pursuing expansionary policies and adding to their deficits, the public and all political parties generally supported that type of fiscal policy. I do know that as successive ministers of finance reduced taxes in the House of Commons over the years in the 1970s, probably in the total amount of $14 billion, their actions were widely applauded and never opposed in the House of Commons.
Notwithstanding that, it may be instructive to review the causes of a good deal of this inflationary psychology. It has been reviewed rather clearly in the annual report of the governor of the bank, which I recommend hon. members read. They may not agree with every part of it, but I think it is a useful survey of the background to the current inflationary situation in the country.
The hon. member for St. John's West has focused his motion on the question of interest rates. I have no complaint with that. Interest rates are high; they are worryingly high.

May 13, 1981
Interest Rates
They are a manifestation of inflation in the economic environment, and they will not be significantly reduced until the over-all level of inflation is curbed. That is absolutely clear to me.
Since I took on this job there have been three pronounced incidents of interest rate shocks, so to speak. In the spring of 1980 after I became minister, the rates went up and then down again.


Mr. Nowlan:: That was the first shock, when you became minister.


Allan Joseph MacEachen: Interest rates have been so volatile that they went up to about 20 per cent in the United States and they came down to 10 per cent, as hon. members will realize, all in the period since March, 1980. Last December they went up to an unprecedented high. They have gone down in the interim, but not as much. They are now up again. Therefore, we have been confronted with volatility in interest rates over that period of time, which have impacted in the United States on the Canadian interest rate situation. No minister of finance could be indifferent to the uncertainty created by the volatility of the interest rate policy pursued in the United States nor could a minister be indifferent to the impact which these changes have had on the Canadian economy.
I want to discuss those external developments, but I do want to say a word about the Canadian economy. The hon. member for Broadview-Greenwood drew attention to the fact that in the arguments which I advanced in December-I have not read them but I take his word and they do correspond to my own recollection-the main thrust, or the principal explanation, was pressure from the United States. Indeed, I believe I stated that the Governor of the Bank of Canada had said we were running interest rates in Canada which were higher than those required to control the money supply in this country. As I recollect, if hon. members will go back to the statement made by the governor of the bank during the ministers of finance conference in December, and subsequent to its release, he makes that point apparent.
When I brought down the budget last October, hon. members will recall that I was predicting very weak or negative growth in the economy for 1980.


Mr. Kilgour:: I cannot listen to this.


Allan Joseph MacEachen: I was also predicting a lower inflation rate for 1981 than has subsequently been the case. But that is something quite different. I believe hon. members who are looking at the economy and at what has happened in the economy since last October and last December will have to realize that we are generating considerable inflationary pressures of our own in Canada. We cannot single out pressures from the United States, though they are important, as the sole explanation because there is pressure on rates in our own country.
Hon. members may have noticed that in the statement made by the governor of the bank last Thursday following the very high bank rate announcement the concluding sentence was:
In respect of other economic developments, the bank noted that the rate of total spending and the demand for credit in Canada have both remained disturbingly high.
There is a very strong demand for credit in this country. There is a very strong demand for bank loans. There is a booming real estate market in certain Canadian cities, despite very high mortgage rates at the present time, as was pointed out by the governor of the bank in his speech delivered in Moose Jaw.


Mr. McDermid:: Who is buying the homes, Allan?


Allan Joseph MacEachen: I have to remind hon. members that in Canada, for example, real output increased at an annual rate of over 8 per cent in the last quarter of 1980. That was quite unexpected. Real output in the first quarter of 1981 ran at annual rates of 4 per cent to 6 per cent. Residential construction in the country was the main area of weakness, especially in the first half of the year. However, the merchandise trade surplus doubled from $4 billion in 1979 to $8 billion. The combined foreign deficit on goods and services fell from $5.8 billion in 1979 to $2.8 billion in 1980. That is on the output side.
I remind hon. members also that in the budget, based upon the projections which had been worked out in the Department of Finance, we projected an unemployment rate of 8.6 per cent, I believe, for 1981. I have not looked up what my predecessor projected, the former minister of finance, but in April of this year unemployment in Canada was at 7 per cent, the lowest unemployment rate we have had in the country since June, 1976.


John Carnell Crosbie: You said 8.5 per cent.


Allan Joseph MacEachen: Either 8.5 per cent or 8.6 per cent. In any event, it is the lowest unemployment rate since 1976.
With respect to employment growth, I gave the figure yesterday. I may have said 360,000 jobs were created but I think it was probably about 346,000 for the same month in 1980, or up 3.3 per cent. This is the employment growth created from April, 1980 to April, 1981. I doubt whether there is any industrialized country in the world with a better employment creation record than Canada had in the last year. Therefore, I do not think hon. members ought to talk about the Canadian economy in stagnation or a Canadian economy which has been unable to create jobs. That is not the case.
There is no doubt that, in addition to the greater strength in real economic activity, not nominal activity, there has been a very disturbing tendency for inflation and inflationary expectations to show signs of deterioration. I have admitted more than once that the outlook for inflation in 1981 is worse than it was at the time of the budget in 1980.
May 13, 1981

The hon. member for Broadview-Greenwood talks about a made-in-Canada interest policy. Whatever validity may have existed for that point of view, and I have at times argued against it, I think we are making our own pressure at the present time in the Canadian economy on interest rates. 1 refer hon. members to the comments made by the governor of the bank in his speech in Moose Jaw. He talked about the various forces at work in the Canadian economy, providing reasons for the recent tendency of Canadian interest rates to rise. He went on to say:
Let me recapitulate them: the strength of the current economic rebound in Canada; high and rising inflation and serious fears of still worse inflation to come, a continuing strong demand for credit even with interest rates at levels that normally would have discouraged domestic borrowing; and a persistent weakness of the Canadian dollar that was adding to the upward pressures on costs and prices in Canada.
That is the current situation in the country. The hon. member for Broadview-Greenwood may be right in saying that the explanation given last December has to be supplemented.
The second important influence is the pressure we have had on rates from the United States. There is no doubt about it, this second force from the United States has significantly intensified in recent weeks in the very rapid rise in interest rates which have once again occurred in the United States.
Maybe I should say a word about the situation in the United States because it is useful for all of us to know exactly how we see it. The new administration in the United States has taken a strong anti-inflationary stance and regards monetary policy as an important weapon in dealing with inflation. In the longer run, success in reducing the rate of inflation will help lower interest rates, but at this stage it appears that financial markets are focusing more on the possibility that the confrontation of restrictive monetary policy and the inflationary momentum in the economy may be particularly sharp over the next several months, with continuing upward pressure on interest rates.
Whatever one may say about the expectation of the financial markets or the explanation that is mentioned with respect to a conflict between monetary policies and the inflationary momentum within the economy, there is no doubt that we have had, for example, a two percentage point increase in shortterm interest rates over the week, leading to what has happened to the Canadian bank rate.
I ask hon. members, what alternative in these circumstances should the Governor of the Bank of Canada have? Was it a good idea? Up to the present time he has stated, and it is still a legitimate point of view, that when these pressures on the Canadian interest rate situation and the Canadian currency arise from higher interest rates in the United States, one can take some of that pressure in increased interest rates in Canada or a decline in the Canadian currency.
The fact is that Canadian currency at the present time is trading at 83.20. It may be higher. In these economic circumstances, would it be wise to permit a further depreciation in the value of the Canadian currency? A further depreciation in
Interest Rates
the value of the Canadian currency would be inevitable if there were an outflow of capital from this country, not impeded by higher interest rates in Canada.


John Patrick (Pat) Nowlan: There is a national outflow when you come to the national energy policy.


Allan Joseph MacEachen: I will come to the National Energy Program, if the hon. member wants to talk about it. It is not the problem. It may be part of the solution. I am saying that at the present time, regardless of the National Energy Program, we would have pressures from the United States in the form of very sharp increases in interest rates. How does Canada respond? By a further depreciation in the Canadian currency, a depreciation which would increase the cost to Canadians of all their imported goods, which would bring in a further blast of imported inflation from abroad and would have very little effect on the competitive capacity of Canadian exporters?
There is a great advantage now in terms of the exchange rate given to Canadian exporters. Indeed, it is so great and their incomes are so large that they can afford rather large inflationary wage settlements in the current circumstances. There is no advantage to the Canadian economy, in my view and in the view of the governor of the bank, in further depreciation because it does not give us any competitive advantage and adds to our inflationary problems.


John Carnell Crosbie: Mr. Speaker, may I put a brief question to the minister? I agree with what the minister is saying about the Canadian dollar, but my question to him is this. What policies is he going to adopt and implement to strengthen the Canadian dollar so that we can have lower interest rates and will not need to keep them high to protect a weak Canadian dollar? That is what we want to know. How is he going to do that?


Allan Joseph MacEachen: The hon. member had asked about policies to increase the strength of the Canadian dollar. He will know that the trade figures have been very strong. Indeed, for the past quarter and the quarter before that they have been very strong indeed. They have been contributing to the strength of the Canadian dollar.
The hon. member advocated in the course of his speech and yesterday that a speedy energy agreement with the oil-producing provinces would relieve somewhat the downward pressure on the Canadian dollar and put us in a position where interest rates could come down. I must say that any uncertainty that exists in the economy is best resolved. There is no doubt about that. The Government of Canada has been eager, as the former minister of finance was eager, to secure an agreement with the government of Alberta to relieve that uncertainty in the Canadian economy. Hon. members opposite did not succeed in reaching an agreement and we have not succeeded in reaching an agreement. Undoubtedly when that disagreement is cleared up, it will be better for the Canadian economy. However, I do not see that it will have very much impact on interest rates at the present time.

May 13, 1981
Interest Rates
If I took the advice of the hon. member for St. John's West I would reach a solution with the government of Alberta which would bring oil prices up to at least 75 per cent of the world level. Indeed, I read the hon. member for St. John's West as having said recently to Alberta: "Hang in there; get your maximum price".


Some hon. Members:: Shame!


Allan Joseph MacEachen: That is what he was quoted as having said: "Hang in there and get your maximum price". If that is his advice to me, I want to tell him that conceding to Alberta's price demands would have a very big impact on the inflation situation in Canada. Would acceding to their pricing agreement help inflation very much?


An hon. Member:: No.


Allan Joseph MacEachen: It certainly would have a pronounced effect on the CPI, and that is why I was rebuking the hon. member for Kingston and the Islands (Miss MacDonald) yesterday, who was complaining about increases in the CPI, when she supported a motion at her convention that would immediately increase the price of energy to 75 per cent of world prices.


Flora Isabel MacDonald: Mr. Speaker, I rise on a point of order. I certainly do not wish to interrupt the minister just because he refers to me, but when he makes a statement about me that is totally incorrect, I do feel I have to draw his attention to the fact that what he says is not at all correct. There was no such thing as a resolution passed at our convention which said that the price of oil should go to 75 per cent of world prices immediately. That simply is not true and the minister should not be allowed to make these false statements.


Allan Joseph MacEachen: Mr. Speaker, I did not attend the Conservative convention, but I did read press reports which stated quite clearly that the member from Etobicoke had argued against a proposal made by the Alberta Conservatives that the oil price should go up to 85 per cent of the world level, and that he had succeeded, because of the political dynamite behind the proposal, to get his supporters in the hall to agree to 75 per cent of world prices. That was the press report.


Gordon Edward Taylor: A point of order, Mr. Speaker.


Some hon. Members:: Oh, oh!


The Acting Speaker (Mr. Blaker):: Order, please. Whether it be the hon. Minister of Finance (Mr. MacEachen) or any other member who has the floor, the Chair has no choice but to recognize an hon. member who stands on a point of order and at least hear the beginning of his comments to determine whether in fact there is a point of order.


Gordon Edward Taylor: Mr. Speaker, I was at the convention, and the Alberta delegates did not argue the way the hon. minister just
said. He should not be talking on spec; why not get some facts?


An hon. Member:: Why don't you come to one of the conventions and find out what goes on?


Some hon. Members:: Oh, oh!


Gordon Edward Taylor: What are you going to gain by saying these things that are untrue?


Allan Joseph MacEachen: Mr. Speaker, I do not have to go to the Conservative convention, nor do I have to read the press reports, because members are rejecting all that has been attributed to them in the press, namely, that they support 75 per cent of world prices.
The hon. member for St. John's West was quoted recently as telling Albertans when he was in the west to hang in there on their pricing agreement; he was telling Alberta to hang in there. 1 am telling him that the year over year increase in the consumer price index would jump to 16 per cent. That is what would happen. For the year as a whole-


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: Hon. members opposite find this very difficult to take. I listened very carefully and intently to all the comments by the hon. member for St. John's West and he is doing the same thing. He is not protesting about the statement attributed to him in Alberta when he said: "Hang in there Alberta and get what you want". That would represent an increase in the cost of living to 16 per cent.


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: I want to tell hon. members that the price agreement which they allegedly brought about called for an increase in prices within a four-year term to 75 per cent, and then 85 per cent of world prices. Do they still stand for that?


Some hon. Members:: Get the facts.


Allan Joseph MacEachen: Do they still stand for that increase in the CPI? Do they believe that if that is brought about, these increased energy prices would not filter through to the rest of the economy? Will they not concede in those circumstances that in order to restrain the inflation which would be caused by these very substantial energy price increases embedded in the CPI, we would require a very tight fiscal and monetary policy? In my view, an immediate energy settlement along the lines proposed by the hon. member for St. John's West would not have much of an impact on the current high interest rates we are facing in this country. In fact, the hon. member said to me to get an energy agreement with Alberta, but not at any price.


An hon. Member:: We don't want it at any price.


Allan Joseph MacEachen: I am telling hon. members opposite that when they make these pricing proposals, they ought to relate them to their concerns about the cost of living and interest
May 13, 1981

rates, because in both cases they will hurt and not help. I want to remind hon. members about that.


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: I want to assure you, Mr. Speaker, that it is our intention to seek an energy pricing agreement with the province of Alberta-


An hon. Member:: When?


Allan Joseph MacEachen: -as early and as quickly as possible, but it will be an agreement that will preserve the interests of all Canadians. It will not be my intention to ransom the future of Canada because of the current high interest rates we are facing in this country.


Some hon. Members:: Hear, hear!


An hon. Member:: Your deficits are already doing that.


Some hon. Members:: Oh, oh!


Gordon Edward Taylor: Albertans are Canadians and you should remember that.


Allan Joseph MacEachen: Of course Albertans are Canadians, and no one would think of making that comment except the hon. member himself. I certainly would not make it or imply it in any way.


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: When I talk about the interests of all Canadians, I am speaking of the interests of the province of Alberta as well.


An hon. Member:: Give them a fair deal.


Allan Joseph MacEachen: I agree with all hon. members that an early energy agreement with Alberta would be desirable, but it will require accommodation on the part of the province of Alberta as well as accommodation on the part of the Government of Canada. It will require a constructive compromise between the two governments. As I have said on earlier occasions, it is not a matter of capitulation or surrender on the part of either side because neither side will do that. There will have to be compromise, adjustment and accommodation on both sides, and that is what we are seeking at the present time.


Some hon. Members:: Oh, oh!


An hon. Member:: For how long?


Allan Joseph MacEachen: To follow the hon. member's suggestion of going to the price levels he is advocating at the present time, I say, would be even more inflationary than any of the other proposals which were in his budget.
Interest Rates


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: I know I am coming to the end of my time.


John Horton McDermid: You sure are.


Allan Joseph MacEachen: I regret that the hon. member for Kingston and the Islands should be so raucous during the course of debate. She has constantly interrupted me from her seat, which is something I never do, and I hope she will stop it so that I can use my time more profitably.


Flora Isabel MacDonald: Be serious.


Allan Joseph MacEachen: I just want to make the contrast. The advice given by the hon. member for St. John's West to me was to "bring back my budget". That was his advice. He said, "We had expenditure restraint in the budget". I believe in expenditure restraint because in the expenditure line which I have projected for the next several years there is a clear commitment to expenditure growth within the growth rate of the gross national product and to bringing about from year to year a decrease in the rate of growth of public spending. We are committed to expenditure restraint, but I asked my friend, the hon. member for St. John's West, if he really believes in expenditure restraint, why he does not convince the other members of his party about expenditure restraint so that every day we will not be faced with a barrage of requests from hon. members opposite to introduce new spending programs.


Mr. Siddon:: That is not true, and you know it.


Allan Joseph MacEachen: The most notable example was the view expressed yesterday by the hon. member for Kingston and the Islands who seemed to be saying to me that I must take special action to protect every particular group in the country. I believe in expenditure restraint, I believe in bringing down inflation, and I believe that in order to bring down interest rates we have to bring down inflation, but we will not bring down inflation if I respond to every request made in the House of Commons for additional spending by adding to the deficit, adding to our financial requirements and putting further pressure on inflation in this country.


Some hon. Members:: Hear, hear!


Mr. Wright:: Mr. Speaker, I listened carefully to what the Minister of Finance (Mr. MacEachen) was saying. I did not want to interrupt him, but I wonder if he would entertain a question.


Allan Joseph MacEachen: Sure.


The Acting Speaker (Mr. Blaker):: That would require the unanimous consent of the House, in view of the fact that the time allotted to the Minister of Finance (Mr. MacEachen) has now expired. Is there unanimous consent?


Some hon. Members:: Agreed.

May 13, 1981
Interest Rates


Frederick William Wright: Mr. Speaker, the Minister of Finance (Mr. MacEachen) has said on numerous occasions in the House that interest rates in Canada are subject to influences beyond the control of the government. I understand in part what he is saying. If interest rates in Canada are lower than they are in the United States or elsewhere, then money will flow out of our country, and that would have a dramatic effect on our dollar. In part, at least, interest rates must be kept up because of this.
Just recently Premier Lougheed of Alberta made a suggestion to the Minister of Finance and the federal government in general. He said that if they would remove the export tax on natural gas and allow more gas to be exported from Alberta, that would go a long way toward solving the federal government's problem and would allow it perhaps then to decide whether it could reduce interest rates. In fact, he suggested that if the federal government would allow more exports of gas, that would certainly help reduce interest rates in Canada.
Does the minister agree with that statement by the Premier of Alberta, and would he consider taking that action?


Allan Joseph MacEachen: Madam Speaker-


Stanley Howard Knowles: Madam?


Allan Joseph MacEachen: Mr. Speaker, I think it is self-evident that our trade performance, our sales abroad and our earnings of foreign exchange have a bearing on the strength of the Canadian dollar. There is no question about that, and that is why I cited the very strong trade figures we have already experienced as an underlying strength of the Canadian dollar. Any other action to improve our exports and our trade performance would have the same effect, but in this particular case-and here it is a question of fact-I understand that certainly in recent months we have been sending to the United States under permit as much gas as the markets there can take at the price, but that is a question of fact which I would have to check out.
The hon. member talks about the effect on Canada of American interest rates. Maybe we should remind ourselves that it is not just Canada which is experiencing this impact. The hon. member may recall that just recently the Chancellor of West Germany, Helmut Schmidt, was complaining very loudly and strongly about the impact of American interest rates on the exchange rate of the German currency and about the necessity for Germany to raise its interest rates in order to meet the attraction of the higher rates in the United States, so while there may be differences in the level of rates-


John Carnell Crosbie: Six and a half per cent.


Bob Rae: You can say that again, brother.


Allan Joseph MacEachen: -the pressure arising from the United States is extending to Canada and to every European country, and I think it is better for Canadians to understand that that effect is universal.


Flora Isabel MacDonald: Do you understand the difference between 12 per cent and 19.5 per cent?


Mr. Doug Lewis (Simcoe North):: Mr. Speaker, I am pleased to have this opportunity to enter into the debate on the important subject of interest rates, but before I do, I wish to note, as the House realizes, that the Minister of Finance (Mr. MacEachen) was rushed, and because of that he did not refer in his comments to the fact that of the 11 energy price increases since he took office, eight were the result of tax measures imposed by the Minister of Finance on the Canadian people. I know the minister would want that on the record.
We heard a great number of statistics about international finance from the Minister of Finance. I would like to spend some time this afternoon talking about people because the Canadian people are faced with the monetary policies of the Bank of Canada which decree high interest rates to support the Canadian dollar and to control inflation and a federal government which completely ignores the plight of Canadian home owners, farmers and small business. As a result, the current prime interest rate at Canadian banks is 19.5 per cent. But home owners, farmers and small businessmen do not pay at the prime rate. They are paying over 20 per cent. These people, the backbone of Canada, are being crushed by the indifference of the Liberal government.
In the fall of 1979, the hon. member for Windsor West, who is now the Minister of Industry, Trade and Commerce (Mr. Gray), speaking on behalf of the Liberal party, made some comments to the House of Commons Standing Committee on Finance, Trade and Economic Affairs about the prime rate at that time. He said it would mean the loss of thousands of jobs, it would mean increases in the cost of living, it would put housing beyond the reach of middle and lower-income Canadians, it would hurt small business which depends upon bank borrowing to operate, and it would hurt farmers who have the same dependence on bank borrowing and therefore add to the cost of food. One does not normally rush to support the comments of the Minister of Industry, Trade and Commerce, but these comments were surprisingly accurate. However, if that particular member was upset at that time when he was a member of the official opposition, where is he now as Minister of Industry, Trade and Commerce? When he made those comments, the prime bank rate was 14 per cent. One would think he would be beside himself today because of the lack of action on the part of the Minister of Finance when the prime rate is 19.5 per cent. However, he has sat in the House for the past two days smug and satisfied and without a flicker of concern as we on this side of the House have expressed our concerns on behalf of the Canadian people and Canadian industry and commerce.
The high interest rate policy of the Liberals has created chaos in the housing market. On the one hand there are signs of consumer panic in some major metropolitan centres. Supply has contracted, but demand has soared as Canadians strive to own homes. The minister responsible for housing recently stated that a large percentage of Canadians do not prefer home ownership as their style of living. That is nonsense. The
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1976 census showed that 62 per cent of Canadian households were owner-occupied. Many tenants want to own a home. Canadians are buying homes at an unprecedented pace. Canadians are afraid that mortgage interest rates and prices will soar even higher. And why not? They do not see any definite action on the part of the Liberal government to alleviate the problem. Therefore, they are buying homes at inflated prices and paying absurd interest rates to carry them because they are afraid that soon they will be out of their reach.
At the same time, there is the tragedy that many Canadians are selling their homes, not because they do not want to own a home but because they just cannot afford to carry the one they presently own, or they see a mortgage renewal at prohibitive rates in the near future.
Home owners who purchased homes with 10 per cent mortgages five years ago are faced with 18 per cent mortgages today. It costs $360 to amortize $40,000 at 10 per cent over 25 years and $590 to amortize $40,000 at 18 per cent over 25 years. That increase of 61 per cent is pretty hard for the average Canadian family to find. So those home owners, discouraged and defeated by the Liberal party's high interest rate policy, are retreating to the status of tenant.
A real estate agent friend of mine in Orillia has suggested that there may not be all that much comfort for them as tenants. When the present mortgage financing of 10 per cent and 11 per cent on rental housing expires, those mortgages will be refinanced at the Liberal rate of 18 per cent. The cost of rental housing is sure to rise in the near future. Many Canadians, unable to sell their homes, are simply walking away from them.
Last year, thousands of Canadians, enrolled in the first year of the AHOP program in 1975, abandoned their homes when the five-year mortgages came up for renewal. This year, the number will increase dramatically because of increased interest rates and the fact that 1976 was the biggest year for the AHOP program. We have suggested that the minister responsible for housing study this problem and beat it to the punch, and so help Canadians to keep their homes, but to no avail.
The minister responsible for housing reported that at a meeting of representatives of banks and trust companies, he was told that the number of foreclosures was down. We can only hope that the minister was wise to their game.
There are two methods by which mortgagees can act to enforce their security upon default: foreclosure and power of sale. Foreclosure is history. Power of sale is now the popular method in Ontario. Fifteen days after default, trigger-happy banks and trust companies are starting power of sale proceedings.
In 1980 CMHC lost $231 million on the sale of repossessed real estate. Despite the comments today of the minister responsible for housing, we are all shocked at the $10,000 per unit loss and the human tragedy that is involved in those repossessions.
Interest Rates
The chaos created by the Liberal party's high interest rate policy has swept away the traditional stability of five-year mortgages. Up until the mid-1960s, some life insurance companies were still lending out mortgage money with 25-year terms. The amortization rate and the term were equal. During the years 1965 to 1979, the five-year term became standard. Now mortgages are renewed for one and two years. There is even talk of a six-month term. Certainty for five years has been replaced with one and two-year uncertainty. Canadian home owners and the Canadian mortgage market have lost stability under the term of the Minister of Finance.
Despite the hardships faced by Canadian home owners, the only action taken by the minister responsible for housing is to continue to reiterate his refusal to act. That is not action. This House does not know the reasons for the minister's apparent lack of concern. It may be his conviction that a large percentage of Canadians do not prefer home ownership as a style of living. This is a conviction which is not shared by members of the Progressive Conservative party or the public. He may be hesitant to act because the minister of housing was the only one of 11 ministries in the social development envelope that had its budget slashed. It may be that the minister is simply embarrassed by having had to reverse previous statements on the community services contribution program, shelter allowances and rent controls.
In any event this House will know that the Progressive Conservative party introduced legislation which would have assisted Canadian home owners faced with today's horrendous mortgage interest rates. Our mortgage interest and tax credit legislation would have met almost one half of the increase in mortgage interest caused by the Liberal party's high interest rate policy. But the Liberal party and the NDP voted against mortgage interest relief for Canadian home owners.
I wish to move on to comment briefly upon the effect of the Liberal party's high interest rate policy on farmers. High interest rates are driving established farmers out of business, making it difficult for young farmers to get started, and will eventually result in higher food prices. Farmers borrow money for seed fertilizer, feed and farm equipment. The cost of borrowing that money and the cost of supplies purchased has escalated. As a result, a well-respected established farmer from Mara Township in my riding, recently told me that last year his expenses had doubled but his income was only a shade higher than the previous year.
How are younger farmers to survive? If farmers have higher expenses, they must, quite properly, increase the price of the food they produce. This increases the cost to consumers. I ask the Minister of Finance how that helps to fight inflation?
A farm implement dealer outside of Orillia recently suggested that if something is not done about the Liberal party's high interest rate policy, there will soon be no inventory left in the country. The average gross margin on all performance implement dealers in Canada was 6.9 per cent last year. That does not leave enough margin to carry inventory over until next year. Farmers cannot afford to buy the equipment and implement dealers cannot afford to carry it.

May 13, 1981
Interest Rates
Is it not typical that, while the Minister of Industry, Trade and Commerce seeks to rescue Massey-Ferguson, the Minister of Finance makes it impossible for Canadian farmers to buy the product?
While the Minister of Finance ignores the problem, the Minister of Agriculture (Mr. Whelan) has not been idle. His contribution was to increase the interest rate on farm credit loans from 12.75 per cent to 14 per cent effective April 1, 1981. With friends like that, does the Canadian farmer need enemies?
The third group which is suffering from the Liberal party's high interest rate policy is small business. On Thursday of last week, I was contacted by a tourist operator in my riding with a familiar plea: Did I know of any relief for small business from today's high interest rates? She and her husband had purchased the business three or four years ago. They had worked hard together to build up their business and they were just beginning to see the results of their efforts. Unfortunately, their first mortgage was coming up for renewal in June. They had been paying 10 per cent, but now the mortgagee was demanding prime rate plus 1 per cent, or over 20 per cent. This would result in an increase of over 100 per cent in mortgage interest payments alone, and add over $30,000 to their outlay each year. She and her husband were at their wit's end. They would be forced to put their business up for sale or face losing their equity on a foreclosure.
That example is being repeated across Canada. The spirit of initiative, hard work and pride of ownership are being driven out at a time when those qualities should be protected and encouraged. Small businesses across Canada are being driven into bankruptcy through no fault of their own.
Canadian businesses have traditionally used bank financing on a permanent, semi-permanent or cyclical basis. The cost of borrowing money has been budgeted at reasonable interest rates and incorporated into fiscal planning. But now business is faced with the disastrous fiscal policy of this government which disrupts all planning.
Bureaucrats and Liberal politicians who have never had to meet a payroll are creating chaos. Business people who have worked hard, did not go to Hawaii, like the Minister of Finance, and cut every possible corner, now find their expenses escalating because of this government. Business will be forced to increase prices in order to survive. The Liberal party's high interest rate policy does not fight inflation; it fuels inflation and causes bankruptcy. The Governor of the Bank of Canada has stated that the Bank of Canada cannot fight inflation alone. Well, it is not doing so. It has provided absolutely no innovation and no policy.
Home owners, farmers and small businesses are fighting inflation and trying to cope with high interest rates. They are the army. As usual, the Liberal party has not even signed up for the draft. The battle is not being fought on the beaches of Jamaica and Hawaii where the Prime Minister (Mr. Trudeau) and the Minister of Finance, both well-known warriors, have spent most of their recess while the rest of us were in our ridings listening to the complaints of little people, Canadian
people. We were not on those beaches; we were in our ridings. The battle is being fought in Canada by little people, not on the beaches of Jamaica and Hawaii.
OO)
The Minister of Finance has not been silent on the issue; he has been very forthright. In fact, after a lifetime of circumlocution, the Minister of Finance has looked inflation full in the eye and stated with finality:
I am not going to begin to advise individuals on how they ought to conduct their personal affairs. I think that would be presumptuous.
He is correct. Indeed it would be presumptuous for anyone earning $66,700 a year, tired from the rigours of a flight back from Hawaii, to advise us common folk on how to conduct our affairs.
What can the minister tell Canadians about the costs of raising a family, making mortgage payments, meeting a payroll and raising a crop? Nothing. It would be more than presumptuous; it would be downright ridiculous. The Minister of Finance makes the captain of the Titanic look inventive.
The other spectators at the battlefront are the Canadian chartered banks. With all the personnel, with all the economists, M.As and Ph.Ds at their disposal, they have failed the Canadian people in their hour of need. How keen are the banks to put out money on small business development bonds? Are they as keen as they were under the Small Businesses Loans Act? I hope not. Are they using switch and bait techniques to go to conventional loans? Why has the average spread between what the banks pay out on savings deposits, as opposed to the prime rate they charge, increased from 2 per cent in the first two months of 1980 to 3.82 per cent in the first two months of 1981? Who is watching over that on the other side? Why are commercial mortgages almost impossible to get? They do not even look favourably on renewals. Why has the word come down from head office to get appraisals on fixed assets involved in loans to businesses connected with farming? Why are they closing down branches in towns and small villages? Why have bank profits increased dramatically? When will we see some initiative and innovation from Canadian banks? Canada may not have had a bank failure since the Home Bank in the 1920s, but I suggest that Canadian banks are morally failing Canadians every day as they face this crisis.
Our current problems are the direct result of a government which lacks the moral fibre to tackle the problem, led by a leader whose main concern is writing a political epitaph. An uninterrupted string of deficits has caused the federal government to escalate its borrowing; 16.7 per cent of the federal budget expenditure is committed to repaying interest on the government's borrowing, to say nothing of principal. The Minister of Finance blithely predicted a deficit of $13.7 billion in October, based on an inflation rate of 10.2 per cent. Since that time, he has admitted in speeches that inflation is running at 13.9 per cent. If the Liberal government were prepared to make a commitment to living within its means, perhaps we would see an end to escalating deficits which would strengthen
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the dollar. In addition, a commitment by the government would stimulate action by Canadian people.
At present we have anticipatory inflation in Canada; people anticipate that inflation will continue at rampant rates. They govern their wage demands and buying patterns accordingly. They escalate their wage demands because they know they will need more to buy food, clothing and shelter. They buy on credit because they know they will be paying with cheaper dollars. Another positive step the government could take would be to settle the national energy crisis as soon as possible. It would lead to increased production, guarantee security of supply and, eventually, a reduction in the deficit.
I would like to conclude my remarks by saying that Canada is experiencing difficult times as a result of the lack of action by the Liberal government to integrate legislative action with its high interest rate policy. Home owners, farmers and small businesses are fighting the battle against inflation with absolutely no help from the government. We call on the government to take action on behalf of Canadian people.


Some hon. Members:: Hear, hear!


John Leslie Evans: Mr. Speaker, tomorrow we will have another opposition day, at which time we will look at interest rates as well as some broader factors such as inflation, the growth of the economy and the general government economic policy. Today I would like to restrict my comments to a fundamental analysis of the interest rate situation with which we find ourselves faced today in order to help others understand precisely the causes of that problem and the necessary steps which must be taken by the government. In fact, those steps are being taken.
My interest is not so much in an historic review of why we are where we are, but it is what must be done to resolve the problem with which we are faced. If interest rates are to be reduced, there must be a reduction in the rate of inflation. There are several contributing factors to today's high interest rates, and primary among those is the unacceptable high rate of inflation. As the Minister of Finance (Mr. MacEachen) indicated in his speech in Toronto on May 6, inflation in Canada is not only high but it is growing, that expectations are increasing, that we are seeing an alarmingly high rate of inflation which is rising in an alarming way.
Also he indicated in that speech that the inflation rate for the 12 months prior to October, 1980, was 10.9 per cent. For the five-month period since October, inflation has in fact increased at a rate of some 13.9 per cent. This is the fundamental underlying cause of the high interest rates with which we find ourselves faced. It must be reduced if we are ever to see interest rates at low levels once again.
The second fundamental factor involved in this high interest rate condition is the transition through which we are going toward a more appropriate monetary policy for a lower inflation rate in the future. The transition is a combination of a reduction in the growth rate in the money supply, which is being most appropriately followed by the Governor of the
Interest Rates
Bank of Canada and on the other side, the rising inflationary expectations on the part of the public. The effect of those two factors is that we are finding a reduction in the real lending funds as a result of the reduced growth rate in the money supply. Now we have target ranges from 4 per cent to 8 per cent, coupled with an increase in demand for credit on the other side. With a reducing supply in real terms, and an increase in demand, there are upward pressures on the real rates of interest which are found in the marketplace. As the minister and others indicated earlier, our targets for the increase in money supply in 1981 are 4 per cent to 8 per cent, while demand for credit in April alone increased by 20 per cent.
The third factor which contributes to the present interest rate condition is the external interest rate pressures being imposed on Canada and other nations of the world from the United States. It is a contributing factor; I do not think it is the fundamental factor. The fundamental factor is inflation. Another major factor is the transition toward lower growth rates in the money supply in our anti-inflation policy, and the third factor is the interest rate pressures from the United States. All things being equal, certainly rising rates in the United States will lead to an outflow of funds from Canada to the United States for people to take advantage of the available higher rates of return on money. Short-term money can move across boundaries very easily. In fact, it does move across boundaries very easily. As the minister pointed out, and as the governor of the bank has pointed out, we can take this pressure which we face from short-term capital flowing in and out of the country either through a reduction in the value of our currency as money flows out, causing an imbalance in our current account, or by allowing our interest rates to rise. The governor of the bank and the Minister of Finance have, in my mind, appropriately chosen to take some of the pressure on the dollar and some of the pressure on rising interest rates.
Let me reiterate the third factor, namely, the U.S. interest rate factor. It is but one of the factors contributing to the high interest rates we now face, but it is certainly an important one. It is important to understand that the government and the minister are firmly and unequivocally committed to reducing the rate of inflation in this country. This can be seen if one reads the speech given by the minister last May 6 to the Conference Board of Canada in Toronto. To me this is a fundamentally important policy decision which the government has taken. It is one the government has had to take. It is one that all members of this House and all members of society should support. The reason I believe that this policy is so fundamentally important to the country is not only that inflation has certain obvious ramifications for our society which we all see, but, from a longer term perspective, there are much more deep-rooted, fundamental problems which arise in a society in which chronic inflation is increasing over time. We can see the obvious damage being done to farmers, small businessmen and consumers in the form of general consumer credit. Obviously, these are the damaging effects of inflation.

May 13, 1981
Interest Rates
These problems are the fundamental reason why the government must undertake, and has undertaken, an effective antiinflation policy, and why that policy must be adhered to, and why we must not back down in the face of adversity. More important, these problems have an effect on the moral fibre of the nation and on the very nature of democracy itself. I firmly believe that. Other scholars who have looked at the historical effects of inflation have come to the conclusion that inflation is a socially debilitating disease which, once it becomes entrenched and if it is not attacked by the powers which can reduce it, causes society to come apart at the seams. I think hon. members will agree with that. The hon. member for Simcoe North (Mr. Lewis) referred to this concept in his speech.
It is useful to look at the 1950s and 1960s versus the 1970s, when inflation began to get out of control. If we compare what our society was like in the 1950s and 1960s, when we had low rates of inflation, with what it was in the 1970s, and then compare those figures with those in any number of nations-I think of Latin America where there are high rates of inflation and the Weimar Republic in Germany in the 1920s-we find that low inflation societies tend to have high degrees of individual freedom. There tends to be social mobility in those societies. There tends to be a belief in opportunity through hard work, ambition and all of the values on which Canadian society has been built. In those societies people believe in the system; they have confidence in the future. If we look at a high inflation society, we find that the values of honesty, industry and saving tend to lose their virtue. We find there is no perceived assurance that the future can or will be better than it is today.
I think we are beginning to see that kind of attitude emerging in Canada today. It is an attitude which worries me greatly. When we talk to our constituents, we find among them the attitude that the future will not be as good as it is today, or at least it will not be any better. That is a cause for worry in our society. People ask themselves why they should save when the value of their savings made today will be less than what they put down in real terms. People ask themselves why they should invest when the future is increasingly uncertain. If it has one debilitating effect on society and our economic system, inflation increases uncertainty dramatically. We find people beginning to put their money in other stores of value, such as gold or real estate, and not into productive investment which leads to an increase in the wealth of society. We find there is a growing demand for government to intervene, to protect and provide that assurance which the system no longer seems to be able to provide on its own. That assurance is being taken away as a result of inflation.
Let me say in summing it up that you find people undertake a live-for-today policy. They say, "Why worry about tomorrow when tomorrow will not be as good as today? Let us live for today, let us spend today, let us not save or invest, let us not try to make things better for future generations, since future generations will have to face a much worse world than what we face." When that kind of philosophy takes hold in the
system, the democratic way of life cannot long stand and tolerate it.
That is why it is critically important for the government to move forward expeditiously and effectively in an anti-inflation program. In the transition period we will all have to adjust. The government will have to adjust as well as the individual. I will show tomorrow that the government is making that adjustment and that it is committed to making it. I will show tomorrow, when we talk about the budget and its fundamental factors, what the thrust of the budget is.
These are the reasons why the government is solidly committed to anti-inflation measures. In the minister's speech to the Conference Board in Toronto, he said:
The Government of Canada will allow nothing to take precedence over its commitment and efforts to reduce inflation over the medium term.
The minister could not have put it in more firm or unequivocal terms.
I would like to relate these comments on inflation back to the topic which is before us today in the opposition motion which specifically deals with interest rates. I wish to consider the relationship between inflation and interest rates. There is mass confusion going on in our society these days, as well as in this House from certain members, that interest rates cause inflation and therefore we must do everything possible to reduce them. Nothing could be further from the truth. Interest rates do not cause inflation; inflation causes interest rates. We must undertake fundamental policies which attack the root causes of high interest rates. The root causes are high rates of inflation. Interest rates are a function of inflation, just as a fever is a function of an illness, and not the other way around. Inflation is everywhere, it is a monetary phenomenon. I think the Governor of the Bank of Canada and the Minister of Finance realize this clearly. That is why the governor has undertaken the policy of reducing the growth rate in the money supply over time. Some hon. members may ask why the governor undertook this policy on a gradual basis, and I will refer to that in a couple of minutes.
The cause of inflation is excessively rapid increases in the money supply relative to growth in real output, or GNP. That is the fundamental cause of inflation. That is what must be attacked if we are to be successful.
The ramifications of such policies will lead to transition effects, one of which will be higher interest rates. The Bank of Canada is committed not to accommodating increases in the money supply or to use increases in the money supply to accommodate increases in relative prices; relative prices of energy, for example, or relative prices of other basic commodities. There has to be adjustment, there has to be substitution, and there has to be conservation in response to higher relative prices of goods and services, even though they are very fundamental.
The reason the governor and the government have undertaken a policy of gradualism on the monetary side and gradualism on the energy side is that the kinds of adjustments and
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transitions which must take place in our society in response to rising relative prices of food and energy are difficult. They require capital investment by individuals. They take time to accomplish. If the government did not undertake a policy of transition to allow the individuals in our society the time to make those adjustments, then the disastrous effects would be great. The government has undertaken a policy of gradualism to allow that period of transition and for individuals to make those adjustments as painlessly as possible. That is why we follow a policy of gradualism. So with this as background on the current interest rate situation, as I have indicated, we have an inflation rate which has grown over the last five months. Right now it is a rate of 13.9 per cent.


Donald W. Munro: I thought you were committed to bringing it down.


John Leslie Evans: We have expectations in our society. There is growing pressure on our credit markets and an increased demand for loans.


Donald W. Munro: Gradually higher and higher.


John Leslie Evans: It is an example, and it is a symptom of growing inflationary expectations. That is why it is so critically important that the credibility of the government's program be clearly seen by the people, because those inflationary expectations have to be broken. The people have to realize that there is an anti-inflation program that is going to be effective, that the inflation rate is going to come down, and that interest rates will be brought down in its wake.


Donald W. Munro: There is an economist for you!


John Leslie Evans: If we look at just the inflation factor at 13.9 per cent, that implies that to get a zero real rate of return, savers, those people who are saving for retirement or a home or for some future consumption purpose, will have to get an interest rate of at least 14 per cent just to break even. No one in our society should expect savers to subsidize borrowers, to take less than 14 per cent if that is the expected inflation rate. No one should expect our savers to take less than the real rate of return. As a result, we have to expect that they will demand higher than 14 per cent on their money.
How much higher? If we look at the situation back in the fifties when the effective rate of inflation was sometimes very close to zero, and ask ourselves what the mortgage rate was when inflation was next to zero-the mortgage rates then ran between 4 per cent and 5 per cent-and if we look at the current rate of inflation and add to that the mortgage rate, which was the rate when there was no inflation, of 4 per cent to 5 per cent, we find mortgage rates of 18 per cent to 19 per cent.
That is unacceptable. It is unacceptable to all of us. But the fact of the matter is that when we couple the inflation reality with the transition effects which I mentioned earlier and, at the same time, the U.S. situation, we find that those factors
Interest Rates
are putting rates where they are now. Fundamentally, the only way we will see rates come down is to solve the inflation problem. If the inflation problem is basically monetary, it means that we must bring down the growth rate in our money supply to bring inflation under control. The transition period will require interest rates which are higher than we would expect, higher than normal, and higher than we would like to see.
However, I will tell Your Honour-and I firmly believe this to be the fact-that if we renege now on the policy of anti-inflation, if we renege now on the Bank of Canada policy, if we increase the money supply, in the-


Donald W. Munro: No one suggests you do that.


John Leslie Evans: -unfounded effort or belief that by expanding the money supply interest rates will come down, we will feel inflation, and we will have a worse situation six months down the road. We will truly have an inflationary situation in this country which is out of control and we will be facing interest rates which will make today's rates look low by comparison.
The government has a policy. That policy will be effective. I encourage and urge the government to stick to that policy and to see that in the future Canadians face lower inflation and much lower interest rates.


Hon. John Wise (Elgin):: Mr. Speaker, I certainly welcome this occasion to join in the debate today on behalf of the motion put forward by my colleague the hon. member for St. John's West (Mr. Crosbie). In doing so, I would doubt very much that we have ever faced a more serious situation over the past number of years than we have here today with reference to the government's inability to deal effectively with the economy. We have record deficits, we have record inflation rates, and we have crippling interest rate levels.
Certainly we have had our share of problems over the years in all sectors of our economy. I suppose most people would agree that the agricultural industry has been no exception. In fact, that industry has probably received a greater share of problems in comparison with other sectors of the economy. I am sure that all would agree that we will continue to have these problems in certain commodity areas and in various provinces and regions of the country in the future.
In all seriousness, I can think of no other single problem that is so damaging and so devastating to all of the food producers of Canada, regardless of their location or lines of production, than the present interest rate level. One can think of the fruit producer in British Columbia; one can think of the problems experienced by the grain and livestock producers of western Canada in the prairies; one can think of the problems associated with high interest rate levels as they relate to the dairy farmers in the provinces of Ontario and Quebec; or one can consider the serious problems which face the diversified agricultural industry in Altantic Canada.
However, it is not my purpose today, nor is it really my nature, to promote more anxiety and to promote more fear or

May 13, 1981
Interest Rates
perhaps more anger than already exists in this country today as it relates to this government's deliberate high interest rate policy and the continuing high interest rate level which flows as a direct result. Rather, I want to give a few examples of how this serious problem affects the industry and some suggestions to at least provide some relief.
We have to acknowledge the fact that in 1980 Canadian farmers paid $1.5 billion on interest rate charges alone. Agriculture Canada, which is, speaking from my experience, a pretty good source of information, estimated that in 1981 the Canadian farmers will pay at least $2 billion on interest rate charges alone. A bank interest rate of 18.71 per cent and a prime rate of almost 20 per cent are crippling and are absolutely unacceptable levels. They have caused a crisis situation in the agricultural community.
The deliberate high interest policies of the federal government have forced many farmers into bankruptcy or near bankruptcy. For example, on last Monday evening, the CBC news profiled the Gershbakker Brothers of Saskatchewan. They had a $2 million livestock operation, yet they are barely able to scrape together enough cash to meet day to day expenses. Why? One of the basic reasons is the fact that their interest rate charges alone amount to some $43,000.
Again, in the April 15 edition of The Globe and Mail there is an account of a 24-year-old farmer from the province of Ontario, Glen Smith, being interviewed. He said, "Last month the bank gave me one day's notice to pay off $170,000. When I couldn't raise the money, they sent in the trucks, took away the livestock, and they left me with nothing. The farm is frozen today, and I can't even plant a crop this season."
Another Ontario farmer, Don Morrison, was quoted as saying, "I am selling to a businessman in Australia and then I am going to rent the farm back. I don't like it but I have no choice. With inflation and interest rates the way they are-I paid some $30,000 in interest rates last year-selling my land and renting it back is the only way I can keep on farming and possibly make a profit."
Cold statistics add substance to these personal stories. In Ontario, farm bankruptcies increased by 91 per cent last year, compared to an 18 per cent increase for other businesses. The Ontario Federation of Agriculture has estimated the number of bank foreclosures or the number of farmers who have sold out because they were losing money. These numbers are at least ten time higher than the number of bankruptcies in the province.
Other telling facts have been provided by the Farm Credit Corporation. As of March 31, 1981, the number of Farm Credit Corporation accounts or farm operations in arrears ranges from an incredible 33.3 per cent in Newfoundland to 6 per cent in Saskatchewan and British Columbia. In Manitoba there were some 409 farm operations in arrears in 1980, while in 1981, this figure increased by almost 200 to a total of 606 farm operations in arrears, on their loans from the Farm Credit Corporation. In Ontario farm operations in arrears
increased by 161, while in the province of Quebec the increase was 108.
These are very disturbing statistics, especially when one considers that there has already been a dramatic decrease in the number of farmers in Canada over the past four decades. In 1941, for example, there were 3.2 million farmers comprising 27.4 per cent of the total Canadian population. In 1976, there were only one million farmers, comprising 4.6 per cent of Canada's population. Of course, with this trend continuing, these figures would be much lower today.
I fear that the government's high interest rate policies will hasten this decline because the young farmers, the future of Canadian agriculture, are the ones who are suffering the most from these policies. If Canada loses its young farmers, it also loses its security of a stable and constant food supply in the future. This affects each and every one of us as Canadians, as well as people beyond our borders.
Canadian agriculture needs the help of the federal government in meeting this interest rate crisis. 1 have developed a ten-point plan of action to help the farm sector, and we on this side urge the government to give this plan very serious consideration.
First, the government should grant the Farm Credit Corporation immediately an additional $150 million. The Ontario Federation of Agriculture and the Canadian Federation of Agriculture have recommended that this be done. It should be noted that we faced the same problem when we were in government in 1979. Nevertheless, we were able to find an additional $50 million to keep the corporation going.
Second, the Minister of Agriculture (Mr. Whelan) should reconsider his attitude toward farm credit interest rates. One of his first actions upon being restored as Minister of Agriculture in March, 1980, was to increase the interest rate to 13 per cent. He set an all-time record. He was not satisfied with that, and on April 1, 1980, he again raised the rates to an all-time high in the 51 or 52-year history of the Farm Credit Corporation to 14 per cent. By choosing April Fool's Day for his announcement, the minister is only fooling himself if he believes that this record high interest rate will benefit Canadian agriculture.
I mentioned earlier that farm bankruptcies, foreclosures, forced sales and debt arrears have been increasing daily across Canada. The new farm credit interest rate will not help that situation. It will also discourage many young people from going into farming as a career, and it will discourage many established farmers from expanding their existing operations.
Third, the minister should introduce the necessary legislation which would allow the corporation to borrow supplementary funds from the private marketplace. This legislation has been promised for the past three years. Had it been in place three years ago, many farmers might not be suffering to the same degree that they are now.
Fourth, the provisions of the small business development bond ought to be extended to unincorporated farmers. The bond, first made public in the Crosbie budget, offered low
May 13, 1981

interest rates to small businessmen and to incorporated farmers who wished to expand their operations. Extending its provisions would help to reduce the level of demand on the Farm Credit Corporation, because 60 per cent of farm credit loans go toward farm expansion. Since most tax relief measures apply equally to incorporated and unincorporated farmers, the provisions of the small business development bond should be extended to unincorporated farmers.
Fifth, the federal stabilization program should be improved. At present, the stabilization payments come too late to be of maximum benefit to affect farmers. In many cases farmers, who are eligible for stabilization payments, have to borrow short-term money now at rates of 21 per cent or 22 per cent in order to pay for replacement of livestock, feed, seed, fertilizer and other day to day input costs.
The 1979-1980 hog stabilization program is an excellent example of the need for improvement. Some stabilization payments did not reach the hog producers until six months after the date on which they had applied. This has been especially unfortunate because hog producers have been one of the commodity groups hardest hit by the combination of high interest rates and low prices. Beef producers have suffered severely by finding themselves caught in the same bind.
Sixth, the minister should adopt the recommendation of the Ontario Federation of Agriculture which calls for the establishment of an independent review agency to look at each case before the banks could foreclose on a farm operation. This proposal should be extended to include all lending institutions, perhaps even to include the Farm Credit Corporation, although I must say their policy does contain far more compassion, reason and understanding than do those of most traditional lending agencies in this country.
Seventh, the Minister of Agriculture should, together with his provincial colleagues and representatives of the agricultural industry across Canada, develop-not simply get together and have a meeting and discuss the situation which occurred in Ottawa yesterday-a common approach for assisting the farm community in surviving the high interest rate problem. Because of the lack of action on the part of the federal government in solving or alleviating the interest rate crisis, they have no choice but to turn to their provincial governments.
In Ontario, for example, the OFA has called upon the provincial government to set up an interest rate assistance plan covering loans from both banks and farm suppliers to a maximum of $150,000. The plan would be based on a graduated scale. Farmers who owned less than half of their farm would receive 100 per cent of everything that the bank charged over a 12 per cent interest rate. Farmers with 90 per cent to 100 per cent equity would be subsidized at the rate of 20 per cent on everything charged over 12 per cent. Payments would be made quarterly.
My concern about such proposals is that there could be ten different assistance programs across Canada and the result could be highly discriminatory. Therefore, we urge the minis-
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ter to take a leadership role, together with his provincial colleagues, and develop a national plan of action.
Our eighth point is one of encouraging the Canadian lending institutions to be more responsive to the borrowing needs of farmers. I have noted that the Minister of Agriculture has raised this point with the Canadian chartered banks, and I want to congratulate him for his initiative. I hope he will continue to work in concert, not only with the banks but with all institutions involved in farm financing in order that a loan system can be structured to meet the long-term needs of Canadian agriculture.
The federal cabinet has to be made aware that action with respect to this problem is needed and it is needed now. I am distressed by the attitude of the Minister of Agriculture that the solution to high interest rates lies solely with the banks. In an April 18 interview on CBC Radio, the minister said:
That's why I'm suggesting that I think the banking institutions have a public responsibility to make sure that that production entity for the total good of society stays alive.
I believe the minister is putting the cart before the horse. I always thought it was the banks which responded to government policy direction, not the other way around. Therefore I do not think the Minister of Agriculture can wash his hands of the problem by saying that it is a banking problem, not a government policy problem.
The Minister of Agriculture should be able to have some influence in shaping government policy in relation to interest rates because he is a long-time member of cabinet. He should be able to persuade his cabinet colleagues to bring forward the positive measures which farm groups have proposed and we have proposed in today's debate. However, we recognize the minister's problem: he has no clout in cabinet.
The minister should not hide his head in the sand and complain that the interest rate problem is a banking problem and that its solution lies with the banks absorbing any losses on farm loans. The banks have a role in solving the problem, but high interest rates are a deliberate federal government policy decision. As such, the federal government must take a major responsibility in alleviating the financial hardships which unfairly strike certain sectors of the economy.
As the voice in cabinet for Canadian agriculture, the Minister of Agriculture must recognize that young farmers and some commodity groups like hogs and beef producers are suffering extreme financial hardships because of high interest rates. They deserve help, and they need help now.
In closing, and it brings me to my final point, I again remind this government, and particularly the Minister of Agriculture, that his failure to deal with this problem is not a recent one. Rather, the minister will recall making a commitment to do something at least to help Canadian farmers. He made that commitment here in Ottawa to 1,000 farmers. I was there. That commitment was not made yesterday, a week ago or a month ago, but rather in Ottawa in January, 1980, 16 months ago.

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The fact is that interest rates since that time have increased by 50 per cent and the minister has produced absolutely nothing. The agricultural industry is of vital importance to our Canadian economy. One in every four, 25 per cent of Canadians are employed either directly or indirectly in the agricultural and food industry. Agriculture is everyone's bread and butter.
If the Minister of Agriculture continues to simply talk, talk which borders on political mischief, and delivers nothing, if the minister refuses to recognize that high interest rates are a deliberate government policy, if he continues to refuse to accept his responsibility for resolving this problem, then he should do the honourable thing and resign. What the Canadian agricultural industry requires now, more than any time in our history, is not simply a loud voice, but rather some real action.


Mr. Pierre Gimaiel (Lac-Saint-Jean):: Mr. Speaker, once again it is a great pleasure and an honour for me to take the floor today in the House to debate a subject which affects us all to various degrees; I refer to the interest rates or the prime rate of the Bank of Canada as defined in this country.
The House is now studying a motion introduced by the hon. member for St. John's West (Mr. Crosbie) who, in a few words, condemns the minister because, it would seem, he shows apathy, fails to hold discussions and shirks his responsibilities. In my opinion it is altogether dishonest to convey such an image to the people. Being a former finance minister the hon. member for St. John's West ought to know that the role of a finance minister is not limited to reviewing the over-all economic situation of a country. He has to know what is happening in every home in every country of the world as a starting point to establishing a general strategy based on several months or several years of observation with a view to solving the major economic problems.
Of course, as the member for the riding of Lac-Saint-Jean, I hail from a region where interest rates are particularly high, since it is one of the most severely affected areas in the province of Quebec. When a small businessman has to pay high interest rates on his bank credit margin and when a company is forced to borrow at such rates, it does affect job creation to a certain extent. But worse still it is again the sales market which by far has to come to grips with the direct consequences of all those problems. In addition, a segment of the population must, of course, pay the costs of high interest rates. The home owner who is facing a mortgage renewal has to expect to pay higher rates than he is doing now. Given current conditions it seems to me there is no way out, that is part of the drawback of having to borrow to make a purchase. Someone who borrows but has the money to buy does not suffer this hardship, but the one who has to borrow to purchase something is at the mercy of the person who makes the money available to him as required.
What I am getting at, Mr. Speaker, is that there are some things which the members opposite seem to have forgotten. Those things are, in my view, of utmost importance, as they are the very basis of our society. It is true that we are faced today with sky-high interest rates. I agree. But there is a much greater problem that has been facing us for years and is still facing us, that is unemployment. There are numerous jobless in this country, especially among the young.
That is the point I wanted to make. Coming from a region where unemployment is almost at 20 per cent, I know that 60 per cent of our unemployed are young people just out of school, just out of university, or who did not have the opportunity to pursue their studies very far, and they have to cope with this problem.
On the positive side of the Minister of Finance's record for the last year and a half, it must be recognized that for the first time in five years the unemployment rate has dropped significantly, that is 0.7 per cent in one year. Those are tangible results. I think that the unemployment problem is a much more serious one than the temporary one of high interest rates. Let me briefly explain why: the young person who is unemployed or on welfare is unable to borrow, whether the interest rate is 10 per cent or 18 per cent. It is simply impossible for him or her to borrow money because, as we all know, to borrow money you must have money or at least some assets. I am not at all surprised to hear my colleagues opposite say that those who have assets or money cannot borrow at such rates. I agree. But for some workers, it is even more difficult. Someone who has been living in a house for ten years and must now renew his mortgage will have to pay a bit more for a little while, probably for one year, and at worst let us say for two years. However, the fact is that most Canadian workers are able to face this problem and tighten their belts a bit.
And I am asking them to do so, not in a masochistic context but because it is the only solution now available to fight inflation which affects the poor, those who must buy coffee or oil or oranges or any one of a vast number of other imported products every day. The worst thing that we could do to them would be to devaluate the dollar. The former minister of finance is well aware that when the interest rates are lower in Canada than in the United States, the value of the Canadian dollar drops, and this means that the people without much money, such as the unemployed, and those on welfare, will have to spend even more for food, for heat, for clothing, for all the basic necessities of life.
It is true that our government has made a choice. And it says here that the Minister of Finance has permitted interest rates to rise. It is true! By doing so, what has the government done? It has taken its responsibilities. Why did it do so? First of all, to stop inflation which affects the most needy, the poorest in our society.
May 13, 1981

Second, it is true that we are harming to a certain extent one sector of the population, the average income earners, since they will have to tighten their belts for a limited time.
It still remains that as members of Parliament in this country, as a group of citizens, we have to take our responsibilities toward the young people who have been coming out of our schools for a number of years and facing what? Very strong unions who have provided job security for certain employees who are now 55 years old on average. There are very few jobs for young people because they lack experience. Because we wanted to protect the worker, we have created a blind alley which deprives our young people of the same opportunities as their predecessors. We have to realize that these young people are living in a world where ownership is important. In Canada, nearly everyone owns a piece of land, a house, or at least a car, and maybe also a cottage, a snowmobile, a fur coat-I could go on with this list for hours. Very few countries in the world have given this opportunity to their citizens.
We are now saying to one sector of our society: You will have to tighten your belt somewhat because we have to provide for our young people, for the next generation. If we are to prevent those people from being frustrated, it must be recognized now that somewhat higher interest rates will have to be paid so that in their turn things will be somewhat less expensive, because often all they can afford is oranges and coffee. This is about all they get from our society, with some occasional help from their parents in order to make ends meet or to buy some durable good that others can afford regularly. That must be understood.
What must be overcome over the next few years is that kind of unemployment, unless we want to find ourselves in a few years with a class of frustrated people, with two different generations, one living in very small rental apartments, looking at the other class in large homes. If that is what we are looking for in this country, let us keep in mind right now that tomorrow's young people will point their fingers at us and say: The billions you thought you were putting aside for your pension plans, we feel we are entitled to use them now. Because I have a social conscience, I must state that for some time I, as a consumer, will buy somewhat less because of high interest rates. I do not believe people live in misery, because there was a time not so long ago, where interest rates were at reasonable levels, let us say 9 per cent or 10 per cent. Did that help our unemployed buy homes? Did that help people without income to live in luxury? Did it make it easier for them to borrow from the banks? No! They never had any chance with the banks. Because what they need is guaranteed survival, work, an income they can depend on year after year. And this will certainly not be achieved by blaming it on American interest rates.
If Western Germany, considered one of the strongest countries in the Western World, cannot stop inflation nor withstand
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the pressure of American rates on the German mark, how could we here succeed when so much of our goods come from the United States? Do we want to see billions of Canadian dollars fleeing south to the United States overnight? Is that our goal, the fall of our dollar? If that is the goal, let us follow the suggestion made by the former minister of finance. We could then say we had no choice, we had to assist home owners with their payments. Admittedly they are a burden. But, as a society, should we not at some point take the time to turn and look back at those who follow us? Should we not at some point tell our children: We will try to give you the same opportunities your fathers had. Our fathers could not borrow easily just anywhere. They did not build themselves empires, grand mansions. Nor did they have huge cars. They did not own all the material goods we have. Who benefited from their efforts? Who benefited from the wages they earned? Who benefited from the sacrifices they made unless we did? Who had jobs when they left school if not ourselves? And that is the important point, Mr. Speaker. The future of a country is not built on the present but on what lies ahead, the future. The present is only what we are living. It is the time for action, granted. But those who will build the Canada of tomorrow are those we are preparing mentally. Granted, I am willing to say that in years past the government made efforts to at least help the young to keep their self-respect. We gave them-and some blamed us for doing so-we gave them, as I was saying, $130 a week in unemployment insurance to enable them to at least treat themselves to a beer and a laugh once in a while, and to buy food. That was important, because when one cannot pay for one's food, one loses all self-respect, one feels hurt. It is true also that we have created temporary jobs. I remember quite well when the Clark government decided to get rid of the Canada Works program and other job-creation projects. For what purpose? Supposedly to set up stronger economic structures. But why was it established if not for those young people who with the $100 paid to them every week-which is much less than the average wage paid in Canada-could at least manage to salvage part of their self-respect? It had to be done and it was done, but this scheme could not be expected to last for years. As the government, we are beginning to talk about economic restructuring. We are starting to look ahead to the future with computerized industries, advanced technology, the development of our own energy resources and the full utilization of our millions of square kilometres of territory for the benefit of 26 million Canadians. But in order to reach this goal we need a few months or perhaps a year of small sacrifices on the part of a population which for 20 years at least, more so than any other people in the world, has enjoyed consumer goods and facilities to raise their children and live in this country.
The present generation must be ready today to pay at least a fraction of what our fathers paid to help young people get out of the hole which has been dug for them by union rights given to workers, which was legitimate, by industries that failed to

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modernize their facilities fast enough because large dividends were paid to shareholders who could be anybody. Finally, for all sorts of reasons, that is quite normal, Mr. Speaker.
This is why I cannot agree with the hon. member for St. John's West when he says that the minister has not met his responsibilities as Minister of Finance. It is quite the contrary. Just as past ministers of finance, the present Minister of Finance, under the leadership of the Right Hon. Prime Minister (Mr. Trudeau), has worked along similar lines to build the future of this country. When the time came to support our young people the Liberal finance ministers introduced legislation to do so. Today we say: Let us follow the American policy of high interest rates, let us pay the price for a while, but let us reduce the unemployment rate, make more jobs available to our young people, give them more job opportunities and especially let us control inflation which always hits the underprivileged harder so that the country will not become a living hell for the poor while the rich people continue to spend. In short, this is what I had to say, Mr. Speaker, and indeed I ask
my constituents in Lac-Saint-Jean to do what I am prepared to do myself, that is, to accept for a limited time higher interest rates. I ask them to do so for the sake of those who built our country and who are now retired and often have but the bare minimum to live on, for the sake of those who have left us when their job was done and finally for the sake of our children who will carry on. It would be totally stupid today to continue to concentrate everything on our generation when so much wealth, lands and so many assets are available to all our people. The essential thing is to share with those who will succeed us as our fathers have shared with us.


Mr. Deputy Speaker:: Order, please. It being six o'clock, it is my duty to inform the House that, pursuant to Standing Order 58(11), proceedings on the motion have expired.

This House stands adjourned until tomorrow at two o'clock p.m. pursuant to Standing Order 2(1).
At six o'clock, the House adjourned, without question put, pursuant to Standing Order.
*

Thursday, May 14, 1981