1981-01-12

Mr. Jack Murta (Lisgar):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Clearly, as the economic conditions which prompted the record long emergency debate in the House of Commons on the day before the Christmas recess continue to exist and the government's economic policies are proving to be ineffectual, I move, seconded by the hon. member for York North (Mr. Gamble):
That the Minister of Finance announce his intention to bring down a budget no later than the first week of February that will change government policies to deal with the excessive interest rates, high unemployment, double-digit inflation, stagnant growth and the decline in productivity.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE CONSTITUTION
Mr. Doug Neil (Moose Jaw):: Madam Speaker, I, too, rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Whereas David Lewis, former national leader of the NDP, stated on Friday that the inclusion of the referenda provisions in the proposed constitutional resolution were immoral, and whereas the present national leader of the NDP stated yesterday that he would attach no conditions to his support of that resolution, 1 move, seconded by the hon. member for Surrey-White Rock-North Delta (Mr. Friesen):
That the present leader of the NDP reconsider his position on what he calls a civilized document and accept the advice of his former leader and demand that those provisions be withdrawn from the resolution as a condition of his support for it.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


SMALL BUSINESSES LOANS ACT
Mr. Nelson A. Riis (Kamloops-Shuswap):: Madam Speaker,
I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Considering that bankruptcies in Canada have risen by more than 70 per cent over the past three years, and recognizing the sharp increase in the number of small businesses placed in receivership by lending institutions as the current economic crisis deepens, therefore, in order to ease the growing burden of a sadly misguided monetary policy which falls so heavily on small business, I move, seconded by the hon. member for Beaches (Mr. Young):
That steps be taken immediately to amend the Small Businesses Loans Act so that working capital will qualify for lower interest rates under this act.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


INDUSTRY
Mr. Andre Maltais (Manicouagan):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity.
All members of this House learned last Friday, January 9, that the Iron Ore Company of Canada has decided to suspend operations for an indefinite period at its concentrator and pellet plant in Sept-!les. This economic decision will result in the short term in the lay-off of 500 workers in Sept-Iles and of 150 others in Schefferville.

January 12, 1981
Since the North Shore has suffered numerous lay-offs within the past year, with the close down as well of the ITT (Rayonier Quebec) plant which brought about over 700 layoffs, as the Elouse will recall, I move, as the member for Manicouagan, seconded by the hon. member for Temis-camingue (Mr. Tousignant):
That this House set up a restricted task force made up primarily of the Ministers of Employment and Immigration and Regional Economic Expansion or their representatives, to consider what assistance can be provided to the workers laid off following the decision of the Iron Ore Company to suspend operations indefinitely at its pellet plant and concentrator in Sept-Iles.


Madam Speaker:: This motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


CAPITAL PUNISHMENT
Mr. Stan Darling (Parry Sound-Muskoka):: Madam Speaker, under the provisions of Standing Order 43 I rise on a matter of extreme urgency. All Canadians were stunned to learn of the horrendous murders which were committed New Year's night in the communities of Burks Falls and Huntsville and the wounding of a constable from Orillia. Canadians from one end of the country to the other are shouting loudly and clearly, "Bring back the death penalty". Public opinion polls clearly establish that Canadian favour the return of the death penalty.
In light of this, I move, seconded by the hon. member for Simcoe North (Mr. Lewis):
That the government refer the question of the return of capital punishment to the Standing Committee on Justice and Legal Affairs and that the committee report back to Parliament without delay so that a really free vote can be taken.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

[ Translation]


LABOUR DISPUTES
Mr. David Kilgour (Edmonton-Strathcona):: Madam Speaker, under the provisions of Standing Order 43, I request the
unanimous consent of the House to move a motion on a matter of urgent and pressing necessity.
As the dispute at the French CBC network has been going on for more than 76 days and since this government-
[Editor's Note: The Minister of Industry, Trade and Commerce (Mr. Gray), having entered the House, was greeted by applause.]


David Kilgour: -has allowed the situation to deteriorate shamefully for the Canadian people, 1 move, seconded by the hon. member for Kingston and the Islands (Miss MacDonald):
That the House urge the Minister of Communications (Mr. Fox), the Minister of Labour (Mr. Regan) and the President of the Treasury Board (Mr. Johnston) to meet as soon as possible and to appoint a special mediator fully empowered to settle this dispute.


Madam Speaker:: The House has heard the motion of the hon. member. Under the provisions of Standing Order 43, such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


LABOUR RELATIONS
Mr. Bob Rae (Broadview-Greenwood):: Madam Speaker, under the provisions of Standing Order 43, I request the unanimous consent of the House to move a motion on a matter of urgent and pressing necessity.
The Prime Minister (Mr. Trudeau) wrote in a McGill University publication in 1962 that it was unfair for workers who had spent most of their life working for a firm to lose their job overnight because of administrative decisions made by shareholders or bad capital investments. Considering this tendency of the Prime Minister to share other people's miseries, and considering the ever-increasing number of lay-offs in Sept-Iles and Schefferville, not to mention other cities, 1 move, seconded by the hon. member for Winnipeg-Birds Hill (Mr. Blaikie):
That the Prime Minister make all necessary efforts to enable workers to control their own future and thus attain employment security.
January 12, 1981


Madam Speaker:: In order to be put, this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


SIR JOHN A. MACDONALD CALL FOR PROCLAMATION OF NATIONAL DAY FOR FIRST PRIME MINISTER OF CANADA-MOTION UNDER S O. 43
Mr. Roland de Corneille (Eglinton-Lawrence):: Madam Speaker, I rise under the provisions of Standing Order 43 to ask for the unanimous consent of the House to inspire pride, honour and respect for our country. Yesterday, Sunday, January 11, was the 166th anniversary of the birthday of Sir John A. Macdonald, one of the Fathers of Confederation and the first Prime Minister of Canada. At a time when we need to give our support to symbols which unite us as Canadians rather than accentuate the things that separate and divide, I move, seconded by the hon. member for Kingston and the Islands (Miss MacDonald), whose sponsorship is especially appropriate because of the links between her name and riding and the subject of this motion:
That January 11 be proclaimed a national day for Sir John A, a day which will be observed annually to serve as a symbol of respect in recognition and commemoration of the first Prime Minister of Canada.


Some hon. Members:: Hear, hear!


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Right Hon. Joe Clark (Leader of the Opposition):: Madam Speaker, my question is for the Minister of Finance who is responsible for the economic health of the country. He will remember that on December 17 the Prime Minister said that he had seen no evidence that the movement of oil rigs and investment money out of Canada was causing any damage to Canadian jobs, to Canadian security or to the Canadian economy.
Oral Questions
Given the wide range of evidence of investment being diverted away from Canadian energy development by Canadian companies toward energy development in other countries, and given the estimate by oil drilling associations that in the neighbourhood of 40,000 existing Canadian jobs will be lost by the end of March as a result of the government's energy policy, 1 wonder if the Minister of Finance, in his capacity as the author, or at least the signatory, of the budget and in his capacity as the Deputy Prime Minister, will tell the House whether the government intends to protect the Canadian economy by proposing significant changes in the energy policy which is now driving jobs and investment out of this country?


Hon. Marc Lalonde (Minister of Energy, Mines and Resources):: Madam Speaker-


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Marc Lalonde: I want to draw to the attention of the hon. Leader of the Opposition a statement made by a spokesman of the oil drilling rigs association who stated that the figure to which the right hon. member has referred was merely an attention getting figure, that they had no basis in fact to justify the type of figure referred to by the right hon. member. Therefore, I should like to suggest to him that he read carefully those so-called statements which are made without any foundation.
So far as the general question raised by the right hon. member is concerned, I should like to state quite clearly that the government is very concerned about the impact of energy pricing on inflation and on unemployment. The right hon. member knows that every dollar increase in the price of a barrel of oil has a significant impact on inflation and on loss of jobs in Canada. It is important that we proceed on a very gradual basis, one that will make sure that the inflationary impact of high prices for energy on the Canadian consumer and on Canadian jobs will be gradual so that the economy can absorb the increases without negative effects.
Finally, Madam Speaker, we indicated just before the House adjourned in December that we were willing to make adjustments and that changes were made in the budget proposal concerning exploratory wells. These changes are in the ways and means motions before the House. We will continue the present policy for 1981 and we have suggested some changes for 1982. I think the government has clearly indicated that it has in mind the welfare of all parts of this country in its energy policy.


EFFECT OF ENERGY POLICY ON ECONOMY
Charles Joseph Clark: Madam Speaker, I was surprised when the Minister of Finance let the Minister of Energy, Mines and Resources write his budget. I am even more surprised that the Minister of Finance does not have the faith in the budget he offered to stand up and explain and defend economic policy in the House. The Minister of

January 12, 1981
Oral Questions
Energy, Mines and Resources knows that the small change he made before Christmas-made, by the way, after the House had risen so that he would not be subject to questioning here- was very minor in its implications. He left unanswered the question whether or not the government intends any more sighificant changes to stop the loss of jobs, which I might say is certainly capable of attracting the attention of the 40,000 Canadians who now hold jobs but will lose them by the end of March.
Let me turn again to the Minister of Finance to see if he is prepared to assume his responsibilities in this matter. He will know that the Economic Council of Canada, the C. D. Howe Institute, the Royal Bank, and virtually every major spokesman for the petroleum industry, have indicated that the energy policies being followed by the Government of Canada today are policies which will do very significant damage to the Canadian economy, particularly to any prospects of recovery which we might have as a country. Knowing that the Minister of Finance has read the testimony of other experts in this field, can he tell us whether the government has any contrary evidence to present to Parliament, and if it has contrary evidence which indicates the damage we know is being done to the Canadian economy by this energy policy in fact is not happening, will he present it to Parliament?


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, the right hon. member referred to a number of spokesmen who have urged the Canadian government to establish a much higher pricing schedule for energy in Canada. It is not surprising that one of the authorities the right hon. gentleman quoted should be the multinational oil companies which would normally suggest the highest possible price for their commodity.


Mr. Andre:: The Economic Council of Canada is not a multinational oil company.


Allan Joseph MacEachen: We have already put before the House of Commons the pricing schedule-


Miss MacDonald:: For Mexico.


Allan Joseph MacEachen: -in effect for energy in Canada. That schedule has been approved by the House of Commons and it is currently in effect. The Government of Canada undertook that particular pricing schedule for a number of reasons, but mainly to moderate the impact upon Canadian consumers and upon the Canadian economy of very rapid price increases in this country. When the right hon. gentleman is quoting these particular spokesmen, obviously he is urging us to establish an even higher pricing schedule for energy in Canada. We do not intend to do that.


Charles Joseph Clark: Madam Speaker, the Minister of Finance knows that the issue is not pricing; the issue is the taxing policies, the regulatory policies and the degree of discretion vested in the government by the national energy policy which is driving investment out of the country. He has confirmed what we all knew: he has confirmed his incapacity for the job of Minister
of Finance in suggesting that numbered among the multinational oil companies of the world are the Economic Council of Canada, the C.D. Howe Institute and the Royal Bank.
I am interested in protection for Canadians whose jobs and security are at stake right now. The minister does not believe the advice he has received. The minister will not tell us whether he has any advice of his own. Will the minister, as the Deputy Prime Minister in the House, let the Parliament of Canada do its job of finding the true facts about the impact of the national energy policy upon jobs, upon industrial growth in Quebec, Ontario and across the country? Will he give a commitment to refer the short-term and downstream impact of the National Energy Program on economic activity in Canada to a parliamentary committee with a mandate to hear witnesses, to subpoena evidence and to establish a factual basis for appropriate revisions to a policy which, in our judgment, is now causing deep damage to Canadians who are worried about jobs, growth and investment in the country?
[DOT] (M25)


Allan Joseph MacEachen: Madam Speaker, the Right Hon. Leader of the Opposition has stated that pricing is not the issue. It seems to me pricing is the central issue with the producing provinces and with the oil companies. It is the main reason being put forward by the companies for the alleged loss of jobs.
The right hon. gentleman has talked about the Economic Council of Canada and he has cited it as an authority. If he reads the report he will clearly notice that the difference of opinion between the Government of Canada and the Economic Council of Canada, as stated in its report, is on this very issue of pricing. The Economic Council of Canada has urged the government to lay on the consumers of Canada higher prices than those proposed in the budget and the National Energy Program. This we refused to do, since we did not intend to adopt the punitive pricing policy which was established by the right hon. gentleman when he was Leader of the Government of Canada.
The Leader of the Opposition wants to have an investigation into the true impact of the energy program upon the Canadian economy. Before the House today is the oil and gas energy legislation, which will go to committee where hon. members opposite may call all the witnesses they desire and examine them on the impact which this bill will have on the economy.


REDUCED OIL WELL DRILLING-EXPECTED JOB LOSS
Hon. Michael Wilson (Etobicoke Centre):: Madam Speaker, my question is for the Minister of Energy, Mines and Resources. I would like to discuss some specific figures, as he will not accept the more generalized statements on expected job losses. Some 38 per cent of the 570 Canadian-owned drilling rigs are now inactive or drilling outside the country. Last year at this time about 16 per cent were inactive. This means there will be 40 per cent fewer oil wells drilled in this country, which will result in jobs not being created in Alberta,
January 12, 1981

Ontario and Quebec. The minister has talked about not believing the figures with respect to expected job loss. My question is: does he have an alternative figure with respect to expected job loss caused by this obvious reduction in drilling? Has the minister the courage to report those findings to the House of Commons today?


Marc Lalonde: Madam Speaker, supposedly the hon. member is comparing the figures for last year and this. The hon. member knows that quite frequently in winter there are fewer drilling rigs operating than during the rest of the year.


Some hon. Members:: Oh, oh!


Harvie Andre: It is the other way around. They drill in winter.


Marc Lalonde: I wish to refer the hon. member to the figures which were published in Oilweek magazine. I suspect he will believe these figures a little more than some of the others he has been referring to. Oilweek says that the number of rigs drilling in Canada on January 6, 1981, was 442; on January 8, 1980, it was 442; on January 9, 1979, it was 398. These are figures from what I submit is a very reputable magazine.


Michael Holcombe Wilson: Madam Speaker, my supplementary question is for the same minister. Last year it was winter at the same time as it is winter this year. Those figures are the same year after year. If the minister would listen, the question 1 asked was in relation to the percentage of inactive drilling rigs. Last year it was 16 per cent and this year it is 38 per cent. That is a fact.
My supplementary question deals with the fact that energy development is largely within the control of the federal government. The government has been looking for all sorts of excuses on which to blame this reduction in drilling activity which is solely within its responsibility.
The incompetence of the minister and his officials in designing the program has been underlined day after day over the last few weeks by knowledgeable people in the industry. Nova, a very responsible Canadian company, has said that the National Energy Program will not sustain the business activity declared as its objective. Does the minister recognize the serious damage which delays in introducing changes to this disastrous program will create for projects which will provide jobs across the country-pipelines, petrochemical activity and heavy oil development? The delays are causing serious problems and we need action from the government.


Marc Lalonde: I can see that the hon. member is pursuing the line taken by his party, that of being the lobby for the oil industry in this House. That party may pursue that line as long as it wishes, but 1 can tell the hon. member that as of January 6, 1981, there were exactly the same number of drills in operation as on January 8, 1980. There has been no decline in drilling activity in this country.


Charles Joseph Clark: That is not true.
Ora! Questions THE ECONOMY


INQUIRY RESPECTING ACTION TO DEAL WITH ALLEGED CRISIS-SUGGESTED ESTABLISHMENT OF FAIR PRICES COMMISSION
Mr. Edward Broadbent (Oshawa):: Madam Speaker, I direct my question to the Minister of Finance. During the past three years price increases have outstripped wage and salary increases in excess of 3 per cent. What this meant in 1979 in human terms for the typical Canadian family is that they suffered a net loss in real income of some $1,200. Over the Christmas period a number of economic agencies forecast that this terrible trend will worsen in 1981. Is the minister now prepared to recognize that we have an economic crisis in Canada, and what is the government prepared to do about it?


Allan Joseph MacEachen: Madam Speaker, the hon. member urged on December 18 that the House accept the notion that Canada is in the midst of an economic crisis. I understand that over the weekend he called for the declaration of a national economic emergency. As I stated in December, I do not believe that the condition in Canada justifies the description of "crisis".
Undoubtedly, a serious attitude must be taken to our economic problems. I laid out in the budget a framework of economic policy which, in my view, barring further shocks in the oil industry or similar unexpected events, will put the Canadian economy on a course of resumed growth. That is my opinion. I have listened carefully to the views of the hon. member and other hon. members and I will consider any alternatives that are presented, but up to the present time I have not found any proposal which has been made that would not be more harmful to the economy or that would have very much value. I gave this same opinion on December 18.
I would add that the situation, since that time at least, has improved modestly with respect to interest rates and with respect to the strength of the Canadian currency, which is a rather important factor in combating inflation in this country.


John Edward Broadbent: Madam Speaker, the minister may not think there is an economic crisis, but the Parliament of Canada and the ruling by Madam Speaker just before Christmas decided that there was such a crisis. Over the Christmas holidays the results of a poll conducted across the land indicated that six out of ten Canadians believe that we face an economic crisis in 1981. When will the minister catch up with the perceptions of the people of Canada on this matter?
Further, will he not accept the implicit suggestion of his own Prime Minister, who acknowledged before Christmas that the government has the authority to establish a fair prices commission, which could order rollbacks of all unfair price increases? That is a concrete suggestion which would cost the people of Canada no money and have an impact on inflation. Why does the government not bring in a fair prices commission?


Allan Joseph MacEachen: Madam Speaker, the hon. member has been talking about the establishment of a fair prices commis-

January 12, 1981
Oral Questions
sion which in the case of price increases would have the power to roll such increases back if they were proved to be unjustified. The hon. member has not gone very much beyond that suggestion. He has not described any of the villains which he sees in the market at the present time. The hon. member ought to know, as 1 know and as every other hon. member of this House and every citizen knows, that the main upward pressure on prices at the present time is from increased energy prices and increased food prices. These are the two main driving forces behind inflation.
I ask the hon. member, is he suggesting that we give authority to a fair prices commission to establish energy prices in Canada such as, for example, the price of energy flowing from Saskatchewan, or does he believe that the fair prices commission should have the authority to set firm prices? I am sure that, on reflection, he would reject both suggestions, whereupon what would be left for the fair prices commission?


John Edward Broadbent: Madam Speaker, I wish that we were permitted half the time to raise questions that ministers are permitted to answer these questions. I would like to deal with what the minister has suggested. Considering the fact that in recent years oil companies have been making excessive profits beyond the price which is established at the wellhead level, that a number of companies in the food chain business have been making excess profits, that a number of banks in Canada have had record profits amounting to hundreds of millions of dollars-ripping off Canadian consumers-there are indeed lots of corporate villains out there if the Government of Canada did want to act and establish a fair prices commission in this country.


Allan Joseph MacEachen: Madam Speaker, that does not sound very much like a question. I would remind the hon. member that if he sees villains, he might reflect on the fact that, as a share of the gross national product, the proportion going to profits-


John Edward Broadbent: Profits are up over wages.


Allan Joseph MacEachen: -has been down over the last two years. They may increase in 1981, but the hon. member has not provided the basis for his allegation as it relates to the experience of the recent past.


PRESENCE IN GALLERY OF MINISTER OF INTERNATIONAL TRADE AND INDUSTRY OF JAPAN
Madam Speaker:: I would like to draw hon. members' attention to the presence in our gallery of Mr. Rokusuke Tanaka, the Minister of International Trade and Industry of Japan.


Some hon. Members:: Hear, hear!


NATIONAL ENERGY PROGRAM
Harvie Andre: Madam Speaker, my question is for the Minister of Energy, Mines and Resources. As the result of the minister's October 28 national energy policy, virtually every single one of the Canadian independent oil companies, which incidentally have traditionally been responsible for 70 per cent of the exploratory wells drilled in Canada, is expanding tremendously its U.S. exploration budget at the expense of its Canadian budget. Private estimates of the funds involved range from SI billion to $4.5 billion in 1981 alone. Will the minister tell the House whether he is monitoring this situation and if he has an estimate of how many dollars in the budgets of these Canadian-owned companies will be allocated to U.S. exploration? Can he say what figure his monitoring has produced?
[Translation\


Marc Lalonde: Madam Speaker, in reply to the hon. member I must tell him that we do not now have the kind of audit system he is suggesting. It is extremely difficult to arrive at those figures before some time has elapsed, after months or even at least a year. For the time being those are tentative figures and must be taken with a grain of salt. As suggested earlier, the Leader of the Opposition refers to 40,000 jobs, but the association which put that figure forward had to backtrack and qualify by saying that the job figure referred to was hypothetical and had no basis whatever in fact. The Canadian Manufacturers' Association themselves had to state they had no proof at this point that jobs had been lost in Canadian industry because of the announcement of the National Energy Program.


Harvie Andre: Madam Speaker, the minister seems to be the only one in Canada who is not aware that rigs are leaving this country and that millions of dollars are going along with them to finance exploration in the United States, to the point where American banks are advertising in Canadian newspapers, inviting firms to do business with them as this money, equipment and people go down there.
My question to the minister is, how many rigs are involved? There are estimates of 200 rigs leaving this year if they can find enough trucks to carry them. How many billions of dollars is the minister prepared to see leave Canada for the United States, which will be a great boon to their oil and gas industry? They are delighted and are running columns in the financial magazines saying "Thank you, Canada". How far is the minister prepared to see this go before he will take reparative action and amend substantially-or hopefully, as the Royal Bank suggested, withdraw-this national energy policy which is proving to be such a disaster not to Alberta
January 12, 1981

alone but to Canada, the entire nation? When will he start thinking of his national responsibilities and withdraw that disastrous policy?


Marc Lalonde: Madam Speaker, once more I must remind the hon. member that while some American companies put out advertisements in Canadian newspapers, the Alberta government suggested in American newspaper advertisements put out recently that should it ever become impossible to become a millionaire in Alberta, then there would be no place in the world where it could happen. At all times there is advertising on that subject in newspapers of both countries, Canada and the United States. Coming to the hon. member's question, if the president of a bank makes a statement, I immediately react differently, and assume that the program must have some good points if it is a matter of concern to some bank presidents. And finally, I would remind the hon. member that the National Energy Program benefits all Canadians, and it is my view that we should not necessarily bow to some companies because they are now resorting to panic tactics.


CANADA PENSION PLAN
Mr.   Chas. L. Caccia@Davenport: Madam Speaker, I should like to ask the Minister of National Health and Welfare whether, in proceeding with the national pensions conference on March 31, an initiative for which we congratulate her and the government, she will also launch public consultation on the future of the Canada Pension Plan and, in particular, on how to open up the plan to persons who are not employed and who wish to contribute the full premium on their own, thus permitting entry to hundreds of thousands of Canadians who presently cannot do so?


Hon. Monique Begin (Minister of National Health and Welfare):: Yes, Madam Speaker, we intend to do that. We have announced that we are looking into ways, for instance, of collecting moneys from people, housewives and the handicapped, who are not in the labour market and who could and do want to contribute to the Canada Pension Plan. There are, of course, technical problems to resolve. For instance, at what amount shall we attribute a value to their work for defining the contributions, and so on and so forth? This will be discussed further throughout the country. It is not, however, a specific item. It is not the focus of the conference in late March but it will be touched upon. The focus of the conference is the reform of private pensions for all Canadians.
Oral Questions ENERGY


INCREASED PRICES FOR GASOLINE AND DIESEL FUEL
Hon. Don Mazankowski (Vegreville):: Madam Speaker, my question is for the Minister of Energy, Mines and Resources. I must say, Madam Speaker, that it is no wonder we have tensions in this country, given the arrogance of the Minister of Energy, Mines and Resources.


Some hon. Members:: Hear, hear!


Donald Frank Mazankowski: A lot has been said about pricing. I should like to ask the minister how his government can justify the increase in the price of gasoline, the cost of which has risen by 30 cents per gallon since the defeat of our government. Farm diesel fuel has also increased in price by 30 cents per gallon since the defeat of our government, an increase of 50 per cent. On February 8, 1980, in a speech in Toronto the Prime Minister said that the price increase would be less than 14 cents per gallon.


Marc Lalonde: Madam Speaker, I am glad that the hon. member wants to pay tribute to my well-known humility and flexibility. He does it in an offhanded way, but I understand his real feelings vis-a-vis my attitude are not what he said.
As far as the point raised in his question is concerned, I want to remind him that the total increases provided under the budget and since this government took office are considerably lower than those that had been foreseen in the budget brought down by his government.


An hon. Member:: What are they?


Marc Lalonde: In particular, there was no 18-cent tax. As far as the increases themselves are concerned, while the increase was to be $4 for 1980 we managed to arrive at something below that figure for 1980, contrary to their last budget. So we have respected our commitment to the Canadian public that all our prices would be lower than those provided in the Conservative budget last year.


Donald Frank Mazankowski: Madam Speaker, that is absolutely incorrect. I would be pleased to produce invoices to substantiate the statements I have made. There is absolutely no question that the price of farm diesel fuel has risen by 50 per cent in this country. That contributes directly to the cost of producing food. There is no relief for pensioners, there is no relief for low-income people, and there is no relief for farmers. That is going to impact directly on the cost of food. What does the government intend to do about this in terms of living up to its commitment, particularly regarding its impact on the production price of food?


Marc Lalonde: The government is indeed very concerned about the impact of higher prices for diesel and oil on the producers of food. That is why the government has refused to follow the line set up in the Conservative budget of 1979 which

January 12, 1981
Oral Questions
would have indeed increased the price of diesel fuel to farmers by much more-


Some hon. Members:: No, no.


Marc Lalonde: -than has been provided by the last Liberal budget. There is no doubt about that.


Charles Joseph Clark: That is another falsehood.


HOUSING
Mrs. Margaret Mitchell (Vancouver East):: Madam Speaker, my question to the Minister of Finance concerns the housing disaster in Canada which now affects almost every Canadian. What is the minister going to do about young couples who now have to decide not to have families because they will never own a home, workers who cannot move to areas of economic growth because there is no accommodation, tenants who are paying over 50 per cent of their income on rent, and people that he knows well are losing their homes because they simply cannot afford 16 per cent mortgage interest rates? What is he going to do about increasing housing starts which are at an all-time low, and about speculation which in Vancouver and places like St. John's has increased prices by about $10,000 a month?
I repeat, Madam Speaker, what is the minister going to do about this crisis which is created by his economic policies?


Allan Joseph MacEachen: Madam Speaker, I am aware of the trends in housing starts in Canada. I am aware also of the impact upon housing starts of interest rates which are obviously serious in their effect. I would point out to the hon. member, however, that in addition to the impact of higher interest rates on housing starts there is the fact that there has been a very large and spectacular build-up throughout the 1970s in Canada's housing stock. There has also been a decrease in family formation in Canada, so undoubtedly we would expect something of a downturn in any event.
I would remind the hon. member that throughout the country there is a variation in the number and intensity of housing starts. For example, in 1980, because of the very strong demand for housing in British Columbia, housing starts increased, I believe, by 40 per cent.


Margaret Anne Mitchell: A supplementary question, Madam Speaker. 1 wonder if the minister is also aware that in Vancouver the cost of a simple, three bedroom home is well over $160,000, which no one can afford, especially the younger people. Although the minister is not willing to do anything about high interest rates which have discouraged the building of rental accommodation as well as new homes, and since we know that few families can afford homes, which means that the only alternative is non-profit housing, which is the only affordable
housing in Canada today, will he increase now-not in the summer, as he did last year, which was too little and too late- the budget for non-profit and co-op housing?


Allan Joseph MacEachen: Madam Speaker, there is no formula by which I can automatically increase the budget, even for such a deserving and worth-while program as the one the hon. member mentions. There is a cabinet committee which is responsible for allocating funds of a fixed sum within the over-all framework of social development. I will ensure that her representations are considered by that committee to see whether it is possible to free up funds for other purposes for the programs she has in mind.


ADVISORY COUNCIL ON THE STATUS OF WOMEN
Flora Isabel MacDonald: Madam Speaker, my question is to the minister responsible for the status of women. It concerns a press release put out earlier today by Doris Anderson, who has provided two previous governments with excellent advice of an independent nature as chairperson of the Advisory Council on the Status of Women. Given that Mrs. Anderson has charged that the government is pressing the advisory council to cancel its constitutional conference scheduled for February this year, will the minister advise what possible reason he has for interfering with the work of an independent council other than the fact, as stated in the press release, that he is afraid that that constitutional conference might embarrass the government?


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, I was very surprised to read the statement of Mrs. Anderson. It really is not a very accurate or proper statement of what transpired. Let me tell the hon. member that the idea of a constitutional conference held by women in Canada originally came from myself, was recommended to the advisory council, and the discussion held last week was at their request. They were concerned that in view of the impending announcement of changes and proposed amendments to the charter of rights, which would take into account some major representations made by women, the next step in the discussion by women about constitutional matters would be broadened to embrace a much wider range of people.
In my response to that request I suggested that if they intended to hold a conference on a regional basis over the next six months, a second round or range of discussion concerning matters dealing with federal-provincial relations and the jurisdictional question might be of far more value at that point, considering the debate that has already taken place. That debate has had a very successful result in the sense that the advisory council made its case very clear.
January 12, 1981

I would conclude by telling the hon, member that 1 said to the members of that executive committee who, by the way, agreed-


Some hon. Members:: Order.


Lloyd Axworthy: If hon. members want answers, I am trying to give them. I stated to the members of the executive committee that it did not matter one way or the other, but that it might be preferable to hold the meetings on a regional basis so that a broader range of women could be consulted.


Flora Isabel MacDonald: It is a shocking indictment of the minister's behaviour, particularly with regard to the fact that he is responsible for the status of women, that he charges the chairperson of the advisory council with having made statements that are inaccurate-in other words, with fabricating the document which was released earlier today. Is the minister now stating that Mrs. Anderson's comment "that the executive interpreted the suggestion from the Hon. Lloyd Axworthy that our conference might be slightly embarrassing to the government" is inaccurate? I would like to ask him if her statement that the government has attempted to influence the council's plans directly is also inaccurate. Are those the accusations he is now making?


Lloyd Axworthy: As I pointed out, Madam Speaker, it is the executive committee of that council which makes the decision about whether to hold a conference. It was their decision to make not mine. They requested a meeting with me to get my advice. I gave them my advice. It was the executive committee which made that decision. It is Mrs. Anderson who is going against the decision of that executive committee.


THE CONSTITUTION
Hon. Jake Epp (Provencher):: Madam Speaker, I wish to direct a question to the Minister of Justice. Later today he will be tabling the amendments to the proposed resolution on the constitution before the joint committee. Will that be the totality of the government's amendments or will the government bring in additional amendments as the committee sits for three weeks on clause by clause study?


Hon. Jean Chretien (Minister of Justice and Minister of State for Social Development):: Madam Speaker, I will be appearing before the committee, at which time I will be delighted to reply to that question. We have followed very closely the work of that committee and have listened to the many representations we have received. We intend to make a lot of modifications to the resolution, and these will be known this evening. The committee will be working over the next three weeks. We will listen to the arguments and discussions that will be brought forward. Of course, after many weeks of work the government has a clear indication of what it should do at this time.
Oral Questions
These amendments will be tabled, reflecting the many representations which have been made and the views of members from all sides of the House. If other arguments come up in the next three weeks, I will consider them, and I am known to be very flexible. This is a rather complex piece of legislation. After having these amendments before the committee for three weeks, when we come back to the House in February we will have a good package which will give Canadians a new constitution.


Arthur Jacob (Jake) Epp: 1 am pleased that the minister has listened to the Canadian people. I now understand he will not take unilateral action because the people are opposed to it. The minister says he will present a package and that he will be flexible. In addition to his package, will he accept additional amendments reflecting what we have heard from the witnesses and what Canadians have been saying through the opposition parties?


Joseph Jacques Jean Chrétien: Madam Speaker, we intend to appear before the committee this evening, and in the next three weeks we shall see what suggestions are made in addition to those received up to now. However, as I said in reply to the first question, time is running out and a bill of rights as effective as possible and likely to meet the needs of Canadians must be drawn up. We are considering further amendments, but I think that the hon. member will probably be quite pleased with the improvements we will propose this evening.


MUNICIPAL AFFAIRS
Mr. Cyril Keeper (Winnipeg-St. James):: Madam Speaker, my question is for the Minister of Finance. Since his fiscal policies led directly to the cut in the community services contribution program and this in turn led not only to a loss of services across this country but a loss of jobs and economic activity, will he now reconsider his fiscal policies and any cuts to that program?


Allan Joseph MacEachen: Madam Speaker, as I indicated in the budget statement, it is my intention to follow a certain expenditure path over the next several years whereby government expenditures will not rise above an appropriate portion of the national income. It is within that context that decisions are taken to expand or contract more programs. I have no intention at the present time of recommending to my colleagues a different fiscal framework or expenditure plan from the one I announced in the budget.


Cyril Keeper: Madam Speaker, it is sad that the minister will not reconsider his fiscal policies, particularly since they direct-

January 12, 1981
Oral Questions
ly affect the capacity to create wealth in this country. Since this is an area in which he cannot slough off responsibility, will the minister consider some new program of investment in local public activities across this country so that we can get the economy moving again?


Allan Joseph MacEachen: Madam Speaker, I think it is worth reminding the hon. member that the question of public investment was very much taken into account in the budget statement itself, where an additional $1.5 billion was provided for investment in economic development, an additional $4 billion was provided for western development and an additional $8 billion provided for energy projects over the four-year period for which the fiscal plan has been developed. I want to assure the hon. member that 1 did have concern for economic development in mind and very substantial funds have been provided in the budget for that purpose.


FITNESS AND AMATEUR SPORT
Mr. Dave Nickerson (Western Arctic):: Madam Speaker, my question is for the minister responsible for fitness and amateur sport. It concerns native sport and recreation. Are we to understand that the minister is considering the termination of this rather worth-while program at the end of this fiscal year, or is there any hope that when he meets with various leaders tomorrow to discuss this subject funding will continue?


Hon. Gerald Regan (Minister of Labour):: Madam Speaker, I thank the hon. member for his question on this important subject. The hon. member will be aware that the program to finance native sport and recreation through my department was of a temporary nature. It originated in 1974 and was aimed at upgrading the opportunities for those native communities which qualified to take advantage of the regular programs of fitness and amateur sport.
The decision has been made to terminate the program. The committee, in making that decision, took into account that a similar amount of funds would continue to be spent on other projects for the benefit of our native people, and that every effort would be made by the department to find ways in which young athletes from the native population would be able to benefit from the existing and permanent programs in the department. I have agreed to meet with representatives of the non-status Indians tomorrow to discuss some concerns they have on the matter, but I certainly cannot prejudge those discussions.


Dave Nickerson: Madam Speaker, I might say that is a rather disappointing answer. Under the guise of asking a supplementary question, I want to draw to the minister's attention a discussion paper dated November 5. In this document-


An hon. Member:: Order.


Madam Speaker:: Order, please. Will the hon. member please ask the question and not quote from a document. The question period has almost expired so I think he should make his question very brief.


Dave Nickerson: Madam Speaker, does the minister still agree with his statement of November 5 that a reduction in this program would result in increased social problems, and that at the present time the people involved are unable to continue these endeavours without proper financial assistance from the government?


Gerald Augustine Regan: No, Madam Speaker, I cannot agree with the conclusion of the hon. gentleman. The problem is that the program provided only $1,100,000 a year for the entire country. Therefore, it was not possible for very much to be spent on actual programs but instead funds were used primarily for directors or staff who would assist. The limited size and nature of my department made it virtually impossible for us to provide in different native communities throughout the country any supervision as to how effectively that money was being spent, and a number of propositions were put to the committee as to how those services might better be provided. That is the background under which the program ceased to exist.


NATIONAL SECURITY
[Stage Direction]
U S S R CRUISE SHIP '[DOT]ODESSA''-INQUIRY WHETHER SECURITY CHECKS CONDUCTED
Mr. Benno Friesen (Surrey-White Rock-North Delta):: Madam Speaker, my question is for the Minister of State for Small Businesses or whoever is in charge of tourism. However, the first part of my question is for the Solicitor General.
The U.S.S.R. cruise ship Odessa conducted tours in the inland waters of British Columbia last year. It undercut Canadian wages by its arbitrary prices and so forth. Did the Solicitor General's department do any security checks on the crew of the Odessa, or check the ship to see whether any electronic surveillance equipment was on board so as to make sure it was a bona fide cruise ship and was not conducting clandestine activities?


Hon. Bob Kaplan (Solicitor General):: Madam Speaker, as the hon. member must know, I am obliged not to answer questions of that nature because the operations of the security service are not described in this place in the degree of detail he is asking.


Charles Joseph Clark: That is not correct.
January 12, 1981



ROUTINE PROCEEDINGS


Allan Joseph MacEachen: Madam Speaker, pursuant to Standing Order 61, I am now tabling a notice of ways and means motion to amend the Income Tax Act. I would ask you to designate the required order of the day for consideration thereof.


LAND TITLES ACT
Joseph Jacques Jean Chrétien: for leave to introduce Bill C-52, to provide for the repeal of the Land Titles Act and to validate certain ordinances of the Yukon Territory and the Northwest Territories.


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

Joseph Jacques Jean Chrétien: for leave to introduce Bill C-53, to amend the Criminal Code in relation to sexual offences and the protection of young persons and to amend certain other acts in relation thereto or in consequence thereof.


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

Charles Joseph Clark: Madam Speaker, the Solicitor General (Mr. Kaplan), in response to a question from my colleague, the hon. member for Surrey-White Rock-North Delta (Mr. Friesen), gave an answer which 1 believe misstated the practices of this House in relation to the release of security information and the detail of security matters. I think that misstatement was probably inadvertent
Economic Conditions
and that the minister will want to review past practices, but I would not want our silence to be interpreted as acquiescence in the promulgation of a new precedent.

[DOT]	(1510)


THE ECONOMY
John Edward Broadbent: Madam Speaker, I rise to present a motion. Before the House recessed for the Christmas period we had a record 23-hour debate in the chamber which recognized the existence of an economic crisis, a view supported by both opposition parties and confirmed by a public opinion poll conducted across Canada between Christmas and the resumption of business today.
In the House today the Minister of Finance (Mr. MacEachen) has turned down specific proposals for a fair prices commission, and the restoration of the community services program, and has completely refused to do anything about housing, which is essential to providing homes and jobs. In short, the Minister of Finance does not admit that a crisis exists, a fact which is acknowledged by everyone else in the country.
I therefore move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the House do now adjourn.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


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


Some hon. Members:: Yea!


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


Some hon. Members:: Nay!


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


Madam Speaker:: Call in the members.


FEATHERBED FILE
[Stage Direction]
++NAYS
Messrs.
Allmand
Andre
Appolloni
(Mrs.)
Axworthy
Bachand
Baker
(Nepean-Carleton) Beatty Begin (Miss)
Blaker
Blenkarn
Bloomfield
Bockstael
Bosley
Bradley
Breau
Bussieres
Caccia
Campbell
(LaSalle)
Chenier
Chretien
Clark
(Yellowhead) Collenette Cooper Corbin Cote (Mrs.) Cousineau Crombie Crosby
(Halifax West) Crouse Cullen Cyr Darling Dawson De Bane Deniger Desmarais Dingwall Dinsdale Dion Dionne
(Chicoutimi)
Dionne
(Northumberland-
Miramichi)
Dupras
Elzinga
Ethier
Evans
Ferguson
Fleming
Forrestall
Foster
Fox
Francis
Fretz
Friesen
Frith
Gamble
Gauthier
Gimaiel
Gourd
Gurbin
Gustafson
Halliday
Hamilton
(Qu'Appelle-Moose
Mountain)
Hargrave
Harquail
Hawkes
Hees
Henderson
Herbert
Hnatyshyn
Hopkins
Hudecki
Irwin
Jarvis
Johnston
Joyal
Kaplan
Kempling
Kilgour
Killens (Mrs.)
Kushner
Lalonde
Lambert
Lamontagne
Lang
Laniel
Lapointe
(Charlevoix)
Lawrence
LeBlanc
Lefebvre
Lewis
Loiselie
MacBain
MacDonald
(Miss)
MacEachen
Mackasey
MacLaren
Maltais
Marceau
Masse
Masters
Mazankowski
McCain
McCuish
McDermid
McGrath
McKnight
Mitges
Munro
(Esquimalt-Saanich)
Neil
Nicholson
(Miss)
Nickerson
Parent
Peterson
Pinard
Portclancc
Regan
Reid
(St. Catharines)
Reid
(Kenora-Rainy River) Roberts Rompkey Schroder Scott
(Victoria-Haliburton) Shields Siddon Simmons Smith Taylor Thacker Tobin Tousignant Towers Vankoughnet Watson Wenman Wilson
Wright-136.
Madam Speaker:: I declare the motion lost.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. D. M. Collenette (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following


Mr. Cossitt: With reference to the answer to a question by the hon. member for Leeds-Grenville on Friday, November 23, 1979, at page 1638 of Hansard, which stated in part that the objective of the Featherbed File was to identify and neutralize influential persons working at high levels as agents of any foreign power against the Canadian government, what is the highest ranking job designation, excluding names, of any official appearing in the file?


Robert Phillip Kaplan: The highest ranking job designation of any official appearing in the file is kept confidential because the governor in council has seen fit to exempt all access to this category of information for reasons of national security.
One of the reasons for this policy of confidentiality of this information is to prevent disclosure of security service target categories to any hostile intelligence service. While the Featherbed File is no longer operationally active, any information a hostile intelligence service can glean from public records could be of great interest to them as they evaluate future operational activity against Canada.


Mr. de Jong: 1.	Was consideration given, during discussions between the government and the Chrysler Corporation, to establishing a manufacturing plant in Canada that has as its goal the manufacture of automobiles which (a) do not have to be re-designed each year (b) have interchangeable parts (c) have high levels of energy efficiency (d) are pollution free (e) can be recycled and, if not, for what reason?
2.	Would the Prime Minister instruct his officials to include such topics in the next round of talks?
3.	Would the government consider taking over Chrysler Canada's assets and using the facilities as a base to develop a Canadian automobile industry that uses as its objective the development of an automobile that (a) is non-polluting (b) is energy efficient (c) is designed to last for at least seven years (d) has interchangeable parts (e) is designed to meet the challenge of the Canadian winters?


Hon. Herb Gray (Minister of Industry, Trade and Commerce):: In so far as the Deparment of Industry, Trade and Commerce is concerned:
1.	Yes, the corporate operating and financing plan presented to the government the product mix for the future and this plan is part of Chrysler's agreement with the Canadian government. All the goals set out in the question were responded to positively in this plan. The situation in the automotive industry today is such that if these criteria were not met, no company would survive.
The Cordoba and Mirada currently being assembled in Windsor, the Imperial scheduled for the 1981 model year and the new small fuel-efficient car scheduled to be assembled in Windsor in 1983 meet these criteria.
January 12, 1981

The van wagon plant to which Chrysler is committed in its agreement with the government would also build a vehicle that will meet these criteria.
2.	See reply to question 1.
3.	The nature of the North American automotive market and the costs involved did not indicate this step would have been a practical one.


[Stage Direction]
Order Paper Questions Caribbean Development Bank,
P.O. Box 408,
Wildey,
St. Michael,
Barbados, W.l.
African Development Bank,
[Stage Direction]
Abidjan,
Ivory Coast
Mr. Cossitt: Did the former minister of fisheries and oceans advise the hon. member for Leeds-Grenville on October 26, 1979, that minor repairs to the government wharf at Westport, Ontario, in the constituency of Leeds-Grenville, were being considered for inclusion in the 1980-81 Small Craft Harbours program and, if so (a) has a sum of money been included for this project and, if so, what is the amount (b) approximately, on what date will tenders be called and the work commence?


Hon. Romeo LeBlanc (Minister of Fisheries and Oceans):: In a letter to the hon. member for Leeds-Grenville on October 26, 1979, the former minister of fisheries and oceans advised him that repairs at Westport were being considered for inclusion in the 1980-81 Small Craft Harbours program pending the availability of funds and other priorities.
Due to limited funds and other regional priorities, this project was not included in the 1980-81 program. This will be considered for inclusion in future years programs depending on availability of funds and other regional priorities.


Mr. Greenaway: 1.	What is the name and address of each International Bank that the government contributes to and, from which banks, if any, is capital made available to Canadian companies who wish to sell products or make investments in the country where the bank is situated?
2.	What criteria are used to decide which Canadian companies may take advantage of such capital and what amounts would be allowed?


Hon. Pierre Bussieres (Minister of State, Finance):: 1. World Bank Group, 1818 H. Street, N.W., Washington, D.C. U.S.A. 20433
Inter-American
Development Bank, 807 17th Street, N.W. Washington, D.C. U.S.A. 20577
(including the International Bank for Reconstitution and Development, International Development Association, and International Finance Corporation)
Asian Development Bank, P.O. Box 789,
2330 Roxas Boulevard, Metropolitan Manila, Philippines.
The principal functions of the above-named international financial institutions or multilateral development banks are to utilize the resources at their disposal to provide loans for the development of developing member countries; to provide technical assistance for the preparation, financing, and execution of development projects and program; to promote investment of private capital for development purposes; and to meet requests to assist member countries in the co-ordination of their development policies and plans.
Loans to developing member countries are disbursed to meet expenditures authorized under project loan agreements and specific procedures are laid down in the loan documents and in the banks' guidelines for the procurement of goods and services. The banks distribute in member countries including Canada news releases on all loans and technical assistance approvals and publish procurement notices internationally of invitations to bid or to apply for prequalification of bidders in order to promote international competitive bidding for the supply of goods and services. Canada's membership in the banks automatically enables Canadian firms to bid on all bank-financed projects.
The only institution actively engaged in the provision of equity and loan investments uniquely to the private sector is the World Bank Group through its affiliate, the International Finance Corporation (IFC).
2.	All Canadian companies are eligible to pursue procurement opportunities with the development banks. In the case of consultants, to facilitate proper review of proposals for the prequalification of suppliers of services, the banks maintain files of information concerning the capabilities and experience of a large number of firms. Consultants interested in bidding on procurement contracts financed by one or more of these institutions should pre-register with the headquarters of the bank or banks in question.
The Department of Inquiry, Trade and Commerce has set up a special office to assist prospective Canadian suppliers on bank-financed projects and regularly publishes and distributes information on export opportunities throughout the Canadian business community. Prospective suppliers should contact the Office of Overseas Projects, 33/1, Department of Industry, Trade and Commerce, 235 Queen Street, Ottawa, K1A 0H5; or the nearest Industry, Trade and Commerce regional office located in major cities across Canada.

January 12, 1981
Order Paper Questions
Procurement opportunities and project sizes range from several thousand dollars to upwards of $100 million.
On the investment side, the International Finance Corporation will enter into an investment when it is satisfied that the project is to the economic benefit of the host country and is potentially profitable. Investments must be made in conjunction with local interests with or without a foreign investor and may involve loan or equity financing in any combination depending upon the needs of the project. IFC's largest investment to date involved a $100 million syndicated loan.


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


Herbert Eser (Herb) Gray: In so far as the Department of Industry, Trade and Commerce is concerned: copy of the Flyer Industries Limited Remission Order PC 1972-1646 is shown below. This order does not relate to the Auto Trade Agreement, but allowed duty free entries of parts of a class or kind not made in Canada for use in the manufacture of trolley bus bodies.
His Excellency the Governor General in Council, on the recommendation of the Minister of Industry, Trade and Commerce, the Minister of Finance and the Treasury Board, pursuant to section 17 of the Financial Administration Act, is pleased hereby to make the annexed order respecting the remission of certain customs duty paid or payable by Flyer Industries Limited.
Jean-Pierre Cote
Approved Roland Michener


[Stage Direction]
Short Title
1.	This order may be cited as the Flyer Industries Remission Order.
Remission
2.	Remission is hereby granted of an amount not exceeding $83,000.00 representing the duty payable on components of a class or kind not made in Canada or determined by the Minister of Industry, Trade and Commerce to be not available from Canadian production, imported by Flyer Industries Limited, formerly Western Flyer Coach Limited, during the period January 1, 1970, to June 30, 1972, for use in the manufacture
of 151 electric trackless trolley bus bodies for the Toronto Transit Commission.
Mr. Mazankowski: Are all car rental concessions at Department of Transport airports up to date in the payment of rents and concession fees and, if not (a) which concessions at which airports are in arrears and by what amount (b) what steps is the department taking to collect monies owing?


Mr. Robert Bockstael (Parliamentary Secretary to Minister of Transport):: (a) The licensees in arrears as of September 30 are as follows:
Airport	Licensee	AmountSept lies	Location Auto Ray Leg (Avis)	$11,333.67Sept lies	Tilden Rent-a-Car Systems Ltd.(Tilden)	$5,135.27Winnipeg International Save Rent-a-Car Ltd. (Big Blue)	$9,259.05Grande Prairie	Trumpeter Pontiac Buick Ltd.(Budget)	$1,887.66Prince George	D.S.C. Leasing (Hertz)	$5,432.68(b)	Notices of default of licence have been sent to the first two licensees indicated on the list. Save Rent-a-Car has been advised that it is in default of its agreement. Trumpeter Pontiac Buick and D.S.C. Leasing have been contacted by departmental officials to secure payment of their amounts owing.


Mr. Mazankowski: 1.	Did the minister responsible for the Canadian Wheat Board announce increases in the initial prices for grain in March, 1980 and then again in July, 1980 with the new result being the same initial prices for most products as existed before February 18, 1980 and, if so, for what reason?
2.	Is the minister considering a real increase in initial prices to recognize world market realities and provide grain producers with a price more in line with the value of their product?


Hon. Jean-Luc Pepin (Minister of Transport):: 1. The initial payment announced in March, 1980, for wheat for 198081 was $9.19 per tonne above the initial payment established at the beginning of the 1979-80 crop year. The March, 1980, announcement also indicated that the initial payment level would be reviewed before the commencement of the crop year and adjusted if warranted by the market outlook. The initial payment for wheat for 1980-81 was reviewed in July, 1980, and adjusted upwards to $156.16 per tonne, an increase of $18.37 over the level previously announced in March. Concurrently, the initial payment for barley (No. 1 Feed) was adjusted upwards by $34.44 to $124.01 per tonne, and the initial payment for oats was held unchanged from the 1979-80 level. The initial payment levels announced in March and July were all based on the best information available at the time with regard to anticipated market conditions.
2.	An increase in initial payments with an adjustment payment for past deliveries is not considered appropriate at this time. However, prices and markets are being closely
January 12, 1981

monitored and initial payments will be adjusted prior to spring seeding if conditions so warrant.


Mr. Howie: 1.	Has the Department of Regional Economic Expansion undertaken a study related to tax incentives for industries locating in areas that suffer from regional disparity and, if so, what is the status of the study?
2.	Have outside consultants been engaged to assist in the study and, if so, what are their names?


Hon. Pierre De Bane (Minister of Regional Economic Expansion):: The response for the Department of Regional Economic Expansion is as follows:
1.	The Department of Regional Economic Expansion regularly reviews ways and means by which industries can be encouraged to locate in areas of regional disparity. In this context, the use of tax incentives is given proper consideration.
2.	Not applicable.


Mr. Cossitt: Is the government aware that 1982 represents the 150th anniversary of the Rideau Canal and to commemorate this very historical event in the history of Canada, will the government consider issuing a commemorative postage stamp for the occasion?


Mr. Gary F. McCauley (Parliamentary Secretary to Minister of Consumer and Corporate Affairs and Postmaster General):: Canada Post is aware that 1982 will be the 150th anniversary of the official opening of the Rideau Canal and it is considering this anniversary as a possible subject for a postage stamp to commemorate the occasion.


Mr. Cossitt: 1.	Within the past three years, has Air Canada carried any nuclear matter on any of its flights and, if so (a) on what dates (b) what were the points of departure and the points of destination?
2.	Were there passengers on any of the flights and, if so, were they advised of the cargo in advance so that they could decide whether or not to take the flight and, if not (a) for what reason (b) will such information be given in the future?


Robert Theodore Bockstael: The management of Air Canada advises the following:
1.	All Canadian airlines routinely carry radioactive materials. They are carried as common commodities on Air Canada flights.
(a) and (b) The volume of the shipments of radioactive materials is such that the compiling of a list would be an expensive and time consuming task. In 1977, there were 490,533 such packages shipped in Canada, of which 123,208
Order Paper Questions went by Canadian airlines, the remainder moving by surface carriers.
2.	Passengers are not advised of the carriage of radioactive materials on aircraft.
(a)	Neither the Atomic Energy Control Board nor the Department of Transport requires such notification. The fact that some packages have radioactive contents does not mean they are hazardous or dangerous. The licensing of manufacturers and processors of radioactive materials, control of handling procedures, and approval of shipping containers is the responsibility of the Atomic Energy Control Board. Goods constituting a potential hazard to airline passengers are carried in freighter aircraft rather than in the cargo sections of passenger flights.
(b)	Air Canada has no plans to advise passengers of any specific shipments in the cargo holds as current handling procedures preclude the carriage of hazardous material in passenger aircraft. Both national and International Atomic Energy Agency handling standards are met by Air Canada.


Mr. McKinnon: Did the Department of National Defence enter into contracts in 1980 for the provision of "insignia" and, if so (a) how many (b) at what cost?


Mrs. Ursula Appolloni (Parliamentary Secretary to Minister of National Defence):: Yes. 122 contracts
(a)	4,301,672 items of 256 types.
(b)	$1,702,798.


Mr. McKinnon: 1.	Did the Department of National Defence contract with a civilian firm for "Research and Development of an effective Stop Smoking program for members of the Canadian Armed Forces" at a cost of $13,908 and, if so, what were the qualifications of the firm designated?
2.	Have there been any previous similar studies done?
3.	Are there any government institutions such as NRC or NDMC that might be able to provide similar studies?


Ursula Appolloni: 1. Yes. The head of the research group as well as its members are internationally recognized as leading authorities in the field and have initiated and implemented successful smoking cessation programs in the United States and Canada.
2.	Yes.
3.	No.

January 12, 1981
Order Paper Questions DND-HOUSEHOLD FURNITURE


Mr. McKinnon: Did DND order $124,821 worth of household furniture and, if so (a) for what purpose (b) what are the items?


Ursula Appolloni: Yes.
(a)	To furnish other ranks single quarters on Canadian Forces Base Petawawa, Ontario.
(b)	Beds Bedside tables Writing desks Chairs
Chests of drawers End tables Mirrors Davenports Coffee tables.


Mr. McKinnon: Did the Department of National Defence order $33,833 worth of electric oven warmers and, if so, for what purpose?


Ursula Appolloni: Yes. To replace those currently in use in Hercules and Cosmopolitan aircraft.


Mr. McKinnon: Has the Department of National Defence been using the Cosmopolitan Aircraft for a decade and did the department spend $250,000 on publications in support of the aircraft and, if so, for what reason?


Ursula Appolloni: Yes. The Cosmopolitan has been in use for over 20 years. This contract is part of a continuing process to provide maintenance personnel with up-to-date technical information on modifications to the aircraft and its systems. This information is essential to maintain flight safety standards. In the case of the Cosmopolitan aircraft the contract provides for the technical writing, engineering validation, editing and actual printing of amendments to 39 publications consisting of more than 100 volumes, over the next two years. The aircraft is expected to be in use for another ten years.


Mr. Cossitt: 1.	Did the Secretary of State for External Affairs recently visit England to meet with the Queen, Prime Minister Thatcher and Lord Carrington and, if so (a) how many minutes did he spend with the Queen (b) how many minutes did he spend with Prime Minister Thatcher and specifically was the number 4 (c) how many minutes did he spend with Lord Carrington?
2.	Did the minister state in a letter dated October 20, 1980, to what he called therein "Special Friends", that he had been involved in "serious discussions" with the Queen, Prime Minister Thatcher and Lord Carrington on the subject of the constitution?
3.	What was the total cost to the taxpayer of the visit including the names and the cost for all persons who accompanied the minister?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: 1. Yes, in early October, and spent (a) about three hours with Her Majesty, (b) about 60 minutes with Prime Minister Thatcher and (c) about 30 minutes with Lord Carrington. The SSEA has had several other discussions with Lord Carrington on the same subject.
2.	With respect to the question concerning the "Special Friends" letter, please see the response to question No. 1,690 answered December 17, 1980.
3.	The minister was accompanied by Miss C. Anderson (senior special assistant), Mr. J. Haviland (special assistant), and Mr. A. Simard (official spokesman, departmental press office). Although all bills have not yet been forwarded, we would estimate the total cost of the visit to the taxpayer to be $12,600.


Mr. Herbert: Is the government aware of a code of ethics for federal employees adopted by the United States Congress in 1958 and is consideration being given to the adoption of a similar code in Canada?


Hon. Donald J. Johnston (President of the Treasury Board):: The government is aware of a code of ethics for U.S. federal employees.
No consideration is being given to the adoption of a similar code in Canada as current provisions governing the conduct of federal government employees are more comprehensive and explicit than those contained in the 1958 United States code and are found in specific legislation such as the Criminal Code and the Public Service Employment Act as well as in guidelines such as the Public Servants Conflict of Interest Guidelines, supplemented by departmental codes of conduct and ethics specifically oriented toward their operations.


Mr. Herbert: 1.	Does a retired senior citizen moving from Quebec to Ontario continue to be covered after the initial three-month period, by the benefits of a medicare program, while living in the adopted province and is there any difference in treatment in the other provinces and territories?
2.	Has the government considered any form of financial assistance to Canadian citizens who may not be covered in Canada for medical attention as a result of moving from one province to another?


Mr. Doug Frith (Parliamentary Secretary to Minister of National Health and Welfare):: 1. Generally speaking, when a person moves from one province to reside in another, the first province will provide health insurance benefits (i.e. for insured services of the national Hospital Insurance and Medical Care Programs) until the last day of the second month following
January 12, 1981

assumption of residence in the second province, provided any required premiums (if the plan is financed by a premium system) and other registration requirements are met. The second province will provide coverage from the first day of the third month following assumption of residence in the province, once again provided any premium and registration requirements are met. All provinces integrate health insurance coverage for residents moving from one province to another in this way. The Yukon and the Northwest Territories also participate in these arrangements in the same way.
2. Yes. The federal government, the provinces and territories, participate on a 50-50 basis in the funding of a Health Insurance Supplementary Fund which is administered by the Department of National Health and Welfare. The purpose of the fund is to provide protection for residents of Canada who either lose or are unable to obtain health insurance coverage for the insured services of the national programs from a provincial or territorial plan through no fault of their own. This fund has been in existence since 1972 and superseded a hospital insurance supplementary fund which was established in 1966.


Mr. McKinnon: 1.	Is the production model of Canadair's Challenger aircraft heavier than the prototype model and, if so (a) by how much (b) will Canadair be compensating for this extra weight by redesigning any of the aircraft's component parts?
2.	Is any part of the $20 million that Canadair recently committed to the Challenger program to be used in correcting the weight problem?
3.	Will a redesign of component parts to correct the weight problem cause an increase in the sale price of the Challenger and, if so, by how much?


Herbert Eser (Herb) Gray: In so far as the Department of Industry, Trade and Commerce is concerned: Canadair Challenger Aircraft
1.	No. (a) The manufacturer's empty weight (MWE) of
the early production models is approximately 600 pounds less than the prototype aircraft (18,600 pounds vs 19,200 pounds).
(b) A significant number of weight-saving modifications have already been incorporated into the early production aircraft, resulting in the above-referenced weight saving.
2.	Part of the $20 million committed to Challenger aircraft improvements includes additional weight saving in the order of 300 pounds near-term and 600 pounds ultimately (i.e. target MWE equals 18,000 pounds). Half of the weight saving will result from use of light-weight composite material parts in place of conventional aluminum parts.
3.	No. The selling price of the Challenger aircraft will not increase as a result of the weight-saving program. Other factors such as inflation rates, competitive aircraft prices
Order Paper Questions
and measures of what the market will bear in relation to program costs and expected return on investment will largely determine prices.


Mr. Stewart: 1.	Are the provinces consulted when immigration quotas are established and, if so, which provinces?
2.	Are provincial quotas taken into consideration when a national quota is being established?


Lloyd Axworthy: 1. In setting out the objectives of immigration policy, the Immigration Act of 1976 emphasizes the importance of federal-provincial co-operation and consultation. Section 7 of the act specifically requires the minister to consult with all ten provinces on regional demographic needs and labour market considerations before announcing annually to Parliament the federal government's determination with respect to future immigration levels. Consequently, consultations with all the provinces have become a particularly meaningful aspect of the entire level-setting exercise.
2. Some provinces do indicate a specific number of immigrants they wish to receive during the following year, based in part on numbers they expect to receive in the current year. However, most provinces refer to their needs in terms of a percentage of the total level to be set. While full consideration is given to provincial views, provinces recognize the fact that the setting of a global immigration level is not based solely on the sum of their individual views, but that the federal government has the responsibility to also take into account national economic and social development goals which have a direct impact on the level-setting exercise. Provinces also recognize the fact that since all residents have free access to all parts of the country, their provincial levels of population will increase or decrease as people move from one province to the other.


Mr. Stewart: 1.	For each year 1975 to 1979, how many applications by non-Canadian companies to take-over or acquire an interest in a Canadian company were received and processed and how many (a) were (i) approved (ii) rejected (b) are still pending?
2.	Are applications by a non-Canadian corporation to take-over or acquire an interest in a Canadian company in the public domain from the time the application is formally filed?
3.	Are Canadian companies given an opportunity to counter-offer so that ownership may remain in Canadian control?
4.	Is any effort made to find a Canadian buyer before an application by a non-Canadian company is approved?
5.	For each year 1975 to 1979, what was the total net worth of the companies which passed from Canadian control to foreign control?


Herbert Eser (Herb) Gray: In so far as the Foreign Investment Review Agency is concerned:

January 12, 1981
Order Paper Questions
1.	Proposals to Acquire Control of Canadian-Controlled Businesses
Year	Received & Certified	Processed	Approved	Rejected	Withdrawn	Pending at Year End1975	90	106	number of applications 70 18	18	221976	66	69	49	11	9	191977	134	124	110	7	7	291978	166	153	133	13	7	421979	172	185	165	7	13	29
2. No.
3.	The government accepts and acknowledges representations by alternative Canadian buyers. When it can be demonstrated that a competing Canadian bid is bona fide and credible, the existence of such an alternative is taken into consideration in the decision on whether to allow or disallow the foreign acquisition proposal.
4.	No. The government and the agency could not seek alternative Canadian buyers without contravening section 14 of the act.
5.	Figures on net worth are not maintained; however, assets are.
Year	Value of assets of Approved Acquisition Cases ($000,000's)
1975	386.9
1976	201.0
1977	301.3
1978	963.0
1979	441.4


Mr. Cossitt: 1.	What was the total cost of publishing the Post Office Annual Report and how many copies were published for the fiscal year (a) 1978-79 (b) 1979-80?
2.	For the same years, what was the name and address of the printer?
Mr. Gary F. McCauley (Parliamentary Secretary to Minister of Consumer and Corporate Affairs and Postmaster
General): l.	Cost	Quantity(a)	1978-79	$2,840.00	3,500(b)	1979-80	$4,228.00	2,5002.	1978-	79 1979-	80	Supply and Services Canada Supply and Services Canada


Mr. Murta: 1.	Was the guest list, for the tenth anniversary celebrations of the International Development Research Centre held in Ottawa, October 30, 1980, by invitation only?
2.	How many persons attended the party?
3.	What was the total cost to the taxpayer for the celebration?


Mark R. MacGuigan: The International Development Research Centre replies as follows:
1.	Yes.
2.	106.
3.	$3,043.36.


Mr. Stewart: 1.	Is it the intention of the government to revive the select committee on Foreign Investment Review?
2.	Has the government investigated any previous submissions from business that the FIRA forms are too (a) lengthy (b) complicated to complete?
3.	In the past six months, have any of the FIRA application forms been streamlined and, if not, is the government considering steps to review existing application and reporting forms with a view to making them easier to understand and complete?


Herbert Eser (Herb) Gray: In so far as the Foreign Investment Review Agency is concerned:
1.	No.
2.	The Foreign Investment Review Agency has, from time to time, examined the form and content of forms provided for filing notice under the Foreign Investment Review Act. In this examination the agency took into account general observations by businessmen and others concerning the suitability of the forms and the information requirements prescribed by regulation. In 1977, important changes in the regulations governing the procedures for application under the act were implemented which have minimized the administrative burden placed upon applicants and streamlined the internal processing within the government.
3.	A thorough review of the forms and the information requirements specified by regulations was completed by the agency earlier this year and changes to both were prepared. These changes have however been held in abeyance pending consideration of any further changes that might be considered necessary by the present government.
January 12, 1981


Mr. Stewart: 1.	Did the government carry out sector-by-sector studies of various Canadian industries and, if so (a) for what purpose (b) have the studies been completed?
2.	Have industrial responses to the studies been completed and, if so, have the studies and industrial responses been carried up by the Department of Industry, Trade and Commerce?
3.	Are the results of the studies or the industrial responses now available to members of Parliament?
4.	What was the total cost of carrying out the studies and eliciting responses from industry?


Herbert Eser (Herb) Gray: In so far as the Department of Industry, Trade and Commerce is concerned:
1.	(a) In February, 1978, at the initiative of the Prime Minister and the premiers of Canada, 23 industry consultative task forces were established to make recommendations to the provincial and federal governments on measures to promote the sound development of their industry sector. These task forces were composed of representatives from business, labour and academia. The federal government provided the secretariat for each task force and provincial governments were invited to participate as observers.
(b) The reports of the task forces were submitted to the federal and provincial governments by July, 1978, and an overview committee, composed of business, labour, and academia, was formed in July, 1978, to identify and make recommendations about factors and policies that cut across sector lines. This committee submitted its report in October, 1978.
2.	In February, 1979, the federal government issued a report, entitled "Action for Industrial Growth, Continuing the Dialogue", in which it addressed the recommendations made by the overview committee in the context of its review of the reports of the 23 industry sector task forces. Between February, 1979, and May, 1979, the federal government released responses to each of the individual task force reports. The federal government accepted some of the recommendations, rejected others and placed still others under review. Some major policy initiatives have been taken and announced, either in conjunction with, or subsequent to, the release of the response documents.
3.	In 1978 and 1979 copies of the task force reports and the government's responses were made available, on request, to members of Parliament, private individuals, industry, labour, provincial governments, schools and libraries. These publications are now out of print.
4.	The Department of Industry, Trade and Commerce has calculated the direct costs involved in carrying out the consultations involving the industry sector task forces and the overview committee, including the publication and distribution of the reports, as about $475,000. The
Order Paper Questions
indirect person-year costs involved in this process were not recorded and would be virtually impossible to estimate.


Mr. Stewart: 1.	In what year was the Unemployment Insurance Program introduced?
2.	Was the program initially established on actuarial principles with premiums designed to match disbursements from the fund?
3.	How many years since the inception of the program has there been a shortfall in employee-employer contributions requiring additional funding by the government?
4.	For each year 1975 to 1979, what was the total (a) employer/employee contributions (b) disbursements (c) shortfall?
5.	Is it the intention of the government, by raising employer/employee contributions, to return the fund to actuarial principles?


Lloyd Axworthy: 1. The UI program was introduced on July 1, 1941, for contribution purposes and on January 27, 1942, for benefit
purposes; the UI Act had been given royal assent on August 7, 1940.
2.	The UI program was initially established on a seif-financing basis, with disbursements being funded from employer-employee contributions and the government's statutory contributions. This basis still prevails today.
3.	Additional funding by the government in the form of repayable interest-bearing advances will be required whenever the accumulated employer-employee contributions plus the accumulated government statutory contributions are less than the accumulated disbursements under the UI program. Additional government funding was required during part of 1964, part of 1965 and from part of 1972 to part of 1976.
(a) employer-employee contributions (excluding self-employed fisher-	1975	1976 1977 ($ million)	1978	1979men) (b) disbursements (including administration)	1,949	2,473	2,547	2,834	2,806employer-employee share	1,627	2,172	2,336	2,507	2,897government share	1,707	1,356	1,788	2,255	1,295total (c) annual shortfall(S) or excess(E) of employer-employee contributions vs employer-employee	3,334	3,529	4,124	4,762	4,192share of program costs	321(E)	301(E)	210(E)	327(E)	91(S)Notes:	Additional government funding in the form of repayable interest-bearing advances
were required during 1975 and 1976 in view of the cumulative deficit of $418 million in the UI account at the end of 1974.
-Totals may not add, due to rounding.
5.	Employer-employee rates of contributions are set, in accordance with the UI Act, to provide for the employer-employee share of UI program costs, thus maintaining the UI account on a self-financing basis.

January 12, 1981
Canada Oil and Gas Act


David Michael Collenette: Madam Speaker, if questions Nos. 537 and 1,511 could be made orders for returns, those returns would be tabled immediately.


Mr. Orlikow: 1.	For the fiscal year 1978-79, what contracts for professional services were let for studies, surveys and analyses into (a) present or future policies, programmes or information analysis and their efficiency and effectiveness (b) the examination of the administration or internal operation of the Department of Regional Economic Expansion?
2.	How much was committed on each contract and to whom?
Return tabled.


Mr. Herbert: 1.	What are the criteria used by the Canadian Broadcasting Corporation to determine the number and type of employees that shall be given credit on television presentations for the work for which they receive pre-determined
salaries?
2.	How many persons are regularly employed by CBC on a contract basis?
3.	How many persons receiving an annual salary from CBC also receive contract payments for specific assignments?
4.	How many persons on contract have in the contract document a clause relating to credits on television programs?
Return tabled.


Madam Speaker:: The questions enumerated by the hon. parliamentary secretary have been answered. Is it the pleasure of the House that Nos. 537 and 1,511 be deemed to be made orders for returns?


Some hon. Members:: Agreed.


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


Madam Speaker:: Shall the remaining questions stand?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Wednesday, December 17, 1980, consideration of the motion of Mr. Lalonde that Bill C-48, to regulate oil and gas interests in Canada lands and to amend
the Oil and Gas Production and Conservation Act, be read the second time and referred to the Standing Committee on National Resources and Public Works.
Mr. Howard Crosby (Halifax West):: Mr. Speaker, 1 would like to begin my remarks by reviewing briefly the comments 1 made on December 17, 1980, with respect to the contents and the likely effect of Bill C-48, which enacts the Canada oil and gas act. First, I said that Bill C-48 apparently represents the government's implementation of the National Energy Program announced on October 28, 1980. Like many Canadians, I fear the real effect of the National Energy Program will be the nationalization and socialization of the nation's energy industry under the guise of the Canadianization process advocated by the government. The immediate effect of this new policy and process is to drive petroleum explorers and developers from Canada at an alarming rate. Already over 60 oil rigs have left Canada and over 2,000 jobs have been lost. The unfortunate irony of the Canadianization process is that smaller, independent, Canadian-owned companies are leaving for greater opportunities, while multinational operators are staying in Canada.
The second point is that Bill C-48 is the continuation of the federal government's takeover of submarine lands which adjoin Canada's east coast provinces without any respect for the claims of Nova Scotia and Newfoundland. That process started after the 1967 decision of the Supreme Court of Canada in the offshore and mineral rights reference which involved British Columbia. In 1969 Parliament extended the Oil and Gas Production and Conservation Act to apply to the submarine lands adjacent to the coasts of Canada to the extent of exploitability. But the act excluded those lands within the geographical limits of a province. The province of Nova Scotia claims ownership of its adjoining submarine lands on the basis that the British North America Act recognized the limits claimed by Nova Scotia in 1867. Bill C-48 removes the exemptions and claims as Canada lands Nova Scotia's submarine lands to the outer edge of the continental shelf, or 200 nautical miles seaward.
Third, I reviewed Nova Scotia's claim to ownership of its adjoining submarine lands and its basis for ownership of offshore resources. That claim is based on historical facts, which begin with the grant of a royal charter in 1621 by King James I and include the exercise of ownership rights over offshore coal mines and legislation respecting sea plant harvesting on submarine lands.
Fourth, Mr. Speaker, I reviewed Nova Scotia's energy problem, which involves dependence on foreign oil supplies. I said that resolution of these difficulties for Nova Scotia depended on a multifaceted energy program for the future. Such a program involves the development of Nova Scotia's coal resources at Donkin and elsewhere, extension of the natural gas pipeline, exploitation of tidal power, but most important it involves offshore oil and gas exploration and development. This could lead to energy self-sufficiency before the end of the decade for Nova Scotia.
January 12, 1981

Last, I reminded this House that the federal-provincial dispute over ownership and control of offshore resources could delay and damage exploration and development on the Atlantic coast. I said the dispute ought to be resolved immediately. Parliament could simply extend the provincial boundaries to include the submarine lands now claimed to be Canada lands by this Bill C-48, or the question could be referred to the courts. 1 repeat that the proper resolution is federal-provincial negotiation based not on historical facts or law but current needs and problems of eastern Canadians.
Others have dealt with the details of Bill C-48, the difficulties and dangers which they represent to the private sector in the Canadian energy industry. 1 want to deal briefly with two other points relevant to Bill C-48. The first point is the provision respecting oil and gas spills, and the second is the regulatory powers granted to the minister and the cabinet.
With respect to oil and gas spills, the east coast of Canada has experienced several disastrous shipwrecks which have resulted in extensive environmental and other damages from oil. First, we had the sinking of the Arrow and then the Kurdestan disaster. Canada now has a fund of over $50 million collected from ship owners to provide compensation for damages from spills.


Mr. Deputy Speaker:: Order, please. I regret to interrupt the hon. member but the time allotted to him has expired. He had five minutes remaining from his previous speech. He may continue with the unanimous consent of the House.


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Deputy Speaker:: The hon. member for Mission-Port Moody (Mr. Rose).


Mr. Rose:: On a point of order, Mr. Speaker, 1 would like to point out that objection to the extension of the member's time did not come from this side of the House.


Mr. Deputy Speaker:: The hon. member for Mission-Port Moody is recognized.


Howard Edward Crosby: On a point of order, Mr. Speaker-


Mr. Deputy Speaker:: The hon. member for Mission-Port Moody.


An hon. Member:: There was no objection.


Mr. Deputy Speaker:: The Chair distinctly heard a series of noes.


Mr. Kempling:: Ask the question again.


Mr. Deputy Speaker:: The Chair asked if there was unanimous consent for the hon. member for Halifax West (Mr. Crosby) to continue his remarks. The hon. member for Mission-Port Moody has the floor for the purpose of making a speech.
Canada Oil and Gas Act


Mark Willson Rose: Mr. Speaker, I am facing some difficulties today in making my remarks. I want to speak to some extent on the matter of alternative energies. I am a member of a committee which is now dealing with that issue and 1 will do whatever I can to avoid any reference to the committee's work. That is one of the problems associated with the remarks I will be making today, since I will be calling for greater reliance on conservation and alternatives, both in Bill C-48 and the National Energy Program. I will try to avoid the subject which is before an in-camera meeting of a special committee.
Having said that, Mr. Speaker, I would like to remind people that my party, along with others, including the Social Credit party, came into being during the 1930s because of the inability of the old-line parties in those days to deal with the collapse of the economy. The Minister of Finance (Mr. Mac-Eachen) indicated today that energy, food and inflation are serious problems which our country faces at present. That, therefore, has prompted the official opposition and our party to try to bring to the attention of the government and the Canadian people the severe problems which we are facing.
In Canada today we see a crisis similar to ones which we experienced in the 1930s. It is of a different magnitude and nature perhaps-certainly when we are dealing with energy it is of a different nature, if not of a different total dimension. If there were not the social measures for which this party has fought, with the assistance, and in some cases the impediment, of the old line parties, such as medicare, hospitalization, unemployment insurance and better pensions, to help people face the crisis in our economy, there would be riots in the streets. That is how serious the situation is today. The tension in this country over constitutional matters, energy matters and economic matters is extremely high and has not been this high for at least 30 years.
I would like to give some examples. We are facing the highest cost price index today of the past five years. On December 19 we had the highest interest rate ever in this country. We face an unemployment rate of more than 800,000 people without jobs. That is the seasonally adjusted figure. The former leader of the opposition, the Hon. Robert Stanfield, once said that if we could adjust the weather in the same way we can adjust the cost of living, we would have sunshine outside today, and the same applies to the unemployment insurance rate. Bankruptcies are at record levels, and housing starts are down. Our industries are operating at 78 per cent capacity.
There is no need for me to go on and list the tragedies and crises which we face.


Mr. Deans:: Go on!


Mark Willson Rose: Would you like me to go on?


Ian Deans: Yes, list some more.
6096

January 12, 1981
Canada Oil and Gas Act


Mark Willson Rose: The indexing of old age pensions amounts to a mere pittance. However, the individual who earns $45,000 per year has some protection through indexation. Even the MPs have some protection because of their higher wage. Food costs are up 15 per cent. All that the government intends to do about this crisis, the energy crisis and all the other crises, is to ride them out.
Our economy does not work any more. The American economy does not work any more. We can take very little comfort from the 1979 report of the department of commerce of the United States which said that there is no explanation for the productivity slump. What that really means is that there is very little we can do if we simply consider matters from the point of view of cause and effect. For instance, we attempt to bring inflation down by raising the interest rate, but it does not seem to work. We try to stimulate demand in other ways, but we do not reduce unemployment and often increase it.
One of our problems is that we look at the economy and the energy program strictly in a linear cause and effect way. The system does not work that way any longer because that is no longer the way the industrial society works. All of us look for people to blame. We say that things would work better if it were not for the decline of the work ethic, which is known as the "lazy bastard theory of sociology". We say that we would be better off if we had a leaner and meaner government. This is a line which we have heard before.


Mr. Deputy Speaker:: The Chair has been listening to the hon. member with great interest, but the subject before us relates to Bill C-48, the oil and gas regulations and Canada lands, and 1 invite the hon. member to direct his remarks to the subject matter.


Mark Willson Rose: I beg your indulgence here, Mr. Speaker, in a very general second reading debate because I would like to draw the point around. I admit that I did take a bit of an excursion, but it seems to me that if one were to mention energy every once in a while, one could say that energy is at the root of a good deal of our problems, and has been since 1973. However, that is not the only reason. People blame our problems on big government, over-regulation, and the Arabs. The major point, I believe, relates to the kind of industrial society we have and our expectations of this society.
I was very impressed recently with some of the remarks of some of the futurists, particularly one Hazel Henderson who has written a very interesting essay called, "Dissecting the Decline in Productivity Flap". It brings up the question of what is the appropriate new direction for industrial societies. It points out that pressure applied at one point, whether it be pressure through higher interest rates or through reducing the money supply or whatever, does not necessarily work from the approach of cause and effect.
Certainly, we cannot expect to continue the patterns which we have been following for years and years. It is beginning to dawn on people that the party is over. For example, with regard to energy, the binge of cheap energy is over. It is the
beginning of the end, but not necessarily the end of the beginning.


Mr. Evans:: That is a change of tune.


Mark Willson Rose: What tune?


John Leslie Evans: The tune which you have been singing all along.


Mark Willson Rose: I am saying that we all must change our tunes. I am pleased with the intervention of the parliamentary secretary. Many of us will have to adjust and rethink these matters.


Mr. Benjamin:: Especially the government.


Mark Willson Rose: We would like the government not only to rethink these matters, but to start doing some thinking. It would be helpful to us in our times of crisis and distress. It does not matter where one goes, there is ample evidence in the U.S., the Arab world and in Canada that there is a decreasing net production of petroleum in the easily accessible areas. This situation has already come about with regard to oil. As a result we will be pushed-and this bill attempts to address the problem-into the marginal, offshore and northern areas. This bill is attempting to anticipate this situation. It will mean billions of dollars in terms of costs of production and prices of energy, and it does not guarantee that we will find any oil. So far, we have not found any oil to speak of.
What discoveries have been made in these marginal lands so far? What will we do when we run out of oil? In the brief period of human history which includes the industrial revolution and since, we have virtually exhausted all the light oils and we have moved toward the heavy oils and, if we can get our act together, we are trying to harness the tar sands by moving into shale and coal. We have exhausted our oil supplies, and some are afraid that we will do the same thing with our gas supplies by shipping them off to our neighbour to the south. Many people are concerned about this matter. We have put ourselves in this bind in what amounts to just a wink in the life of man on earth.
What I find extremely distressing about this bill and about the National Energy Program in general is that they almost totally concentrate on increasing or at least maintaining the supply side of the equation, and they do nothing or virtually nothing to limit demand. We read, for example, in the National Energy Program booklet that the cheapest barrel of oil is the barrel of oil saved. 1 do not understand, if the government believes this statement why it does not back up this sentiment with dollars? The fact is that we are not doing it nearly as much as we should be doing it.
Billions of dollars will come out of the hides of consumers over the next 20 years. But aside from the ravages which increased prices will bring, I believe that we should have a much better balance between the side which increases demand through subsidies of one kind or another and various kinds of public investment, the R and D side and the incentive side, which is the old tried, but not necessarily true technologies or "hard paths" as some people call them-we should begin to
January 12, 1981

reduce these measures and increase the kinds of measures which will make us less dependent on hydrocarbons and far more dependent on the alternatives and the renewables. We are not doing that and I think it is the greatest flaw in the program.
The minister will say, as he said to me one day, that there is $1.2 billion in the program for the next three years, unspecified. I should like to remind him that next year alone we will spend $3.1 billion on imported oil. Regardless of the totality of the sum, which is immense, $3.1 billion is not a pittance, as 1 think we would all agree. The National Energy Program spending provides for 85 per cent on the supply side and 15 per cent of whatever the total is-and it is very hard to find out because the figures are deliberately muddied in this book and efforts to get detailed figures have proved unsuccessful up to now-but whatever it is, it seems to me there is an improper balance which will have to be changed because we are going to run out of non-renewables. Everyone knows what it means, that there is an end; it is not infinite.
We seem to have lots of money for lots of things, Mr. Speaker. From $3 billion to $6 billion-we do not know the final amount-will be spent on a plane of doubtful flying ability. Apparently the wings have been known to fall off, but that is just a little bug that has to be worked out. We do not have equivalent investment in mass transit and we are not willing to put that kind of investment into various incentives to coax people from using oil and into using other alternatives. We blindly continue to hurl more than $100 million per year at nuclear energy. Out of the total R and D budget for 1980-81 $100 million is to be spent on nuclear research. I could give the rest of the figures. In the last operating year 65 per cent of federal funds allotted for energy R and D went to nuclear research, compared to 7.6 per cent for conservation and 13.4 per cent for active solar, biomass, wind, and all of the other energy resources.
That shows the government's position regarding dependence on supply and on conventional hard path sources rather than moving in another direction. 1 do not say this can be done immediately but 1 think there needs to be more emphasis placed on this. I am sure my colleagues agree with me.
This attitude is not unique to the present government, however, Mr. Speaker. When we travelled across Canada this summer with the alternative energy committee, and I think my colleague from Niagara Falls will bear me out on this, no provincial government indicated that it intended to spend, over the next 15 years, any more than 5 per cent of its energy budget or expected more than a 5 per cent fulfilment of its energy needs from wind, biomass and solar. When we consider the possibility of running out of oil, then it seems to me that we have been somewhat blind about this and that more people will have to look in other directions for alternatives.
We subsidize all kinds of things, Mr. Speaker. We subsidize oil all the time; we subsidize coal; we subsidize gas; we subsidize nuclear. In the last 15 years the United States has
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spent $134 billion on hard path, conventional kinds of technology, plus nuclear. They ask, and we do too, why we subsidize all these other things to enable the newer technologies to stand by themselves and then find that they cannot do it? The same thing has happened in Canada with the National Energy Program.
The National Research Council, which is a fine upstanding body, spends only 11 per cent of its $244 million budget on energy research and development in this time of energy crisis. What is even more remarkable is that under the heading of "Alternatives", a budget of over $50 million for fusion is hidden. They call it a renewable. I hope we are around long enough to enjoy that renewable but I am not so sure that will be the case.


Mr. Deputy Speaker:: Order, please. I would ask the hon. member to direct his remarks to the bill before us.


Mark Willson Rose: What I am trying to say, Mr. Speaker, is that my criticism of the bill and of the energy program is that they are directed to the supply side of the problem while ignoring other ways that we might organize ourselves.
We ignore some of the obvious things that we might do in the economy as well as in our energy program, Mr. Speaker. This just goes on and on and on. 1 am speaking directly to the bill now. We have ignored all the social costs involved and just said that certain things cost so much to get them out of the ground, but we must also consider what it costs to get rid of nuclear waste-after we have spent hundreds of millions of dollars on nuclear reactors. It cost the state of Tennessee $80 million to close down their breeder reactor at Clinch River. Is any insurance company prepared to ensure a nuclear power plant? Nobody is going to do that, Mr. Speaker.
If we move to coal, who then picks up the social cost of acid rain, the social cost of polluted rivers and lakes, and dirty air? No one does, except our children. They will have to pick up those costs because we are passing them on to future generations.
A growing number of people, including the minister, admit that there is another way to tackle this problem. He gives lip service to it in his National Energy Program and in this bill, but so far I think it is not much more than lip service.
Let us see what some other countries are doing regarding alternative sources of energy and regarding a reduction in demand. In 1978 the United States allowed a 40 per cent federal tax credit for the purchase and installation of solar equipment. Combined with similar state taxes for the purchase and use of solar equipment, this sometimes amounted to a 65 per cent tax credit. In contrast, the allowance of $800 available under our conversion program is taxable, Mr. Speaker, but in the United States they get a 40 per cent subsidy from the federal government and sometimes up to 33 per cent from some of the state governments. It seems to me that their program is more realistic than ours. They have a 50-50 costsharing program with hospitals and schools for the purchase of solar and conservation equipment and a $3 billion program for the federal provision of loans to consumers for the purchase of

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solar equipment. France has a central program for solar which is much like AECL in this country. It is completely independent of the ministry.
We could do some of those things as well, Mr. Speaker. We could adopt the soft path technology which would create more jobs.
We hear criticism about the lack of leadership in the Department of Energy, Mines and Resources. David Brooks of Energy Probe has told us about that. The Auditor General's report has said the same thing about the department when it concerns anything beyond technical assistance in regard to conservation. It says it has assisted our agencies, departments and Crown corporations inadequately when it comes to the management, aims and objectives necessary for the establishment of solar energy.
Getting directly to the bill, Mr. Speaker, I admit that for the sake of explanation and effect I might have strayed just a little but during my remarks, but I felt it was necessary.
1 think we should not just let the public worry about these things but should try to bring up matters that interest and concern them. That is what this place is all about, at least in my view. Some critics of this bill have claimed that it will pauperize the oil companies. Some have said that it is not too bad in the end, but it is sure hard on the cash flow. 1 do not know whether we can totally agree with those claims. I know that big oil and energy companies, big companies of all kinds and, in fact, small companies, can cry wolf a lot.

The Globe and Mail in its report on business on December, 18, in an article by Jeff Carruthers, headed "Profitability increases for oil and gas industry" said that profits were up 40 per cent in 1980. That is pretty good, a lot better than in many other industries. I quote from the article:
In fact, the ratio of internal cash flow to shareholder equity (measured as a percentage) for the petroleum industry increased by 7.4 points to 42 per cent while the same ratio for all other non-financial industries declined on average to 27.3 per cent.
While things may not be all that terrific in some industries the oil or energy industry does not fall into that category. Its companies are doing very well, thank you very much. In addition, in the last five years they have had sufficient profitability to export, in profits, interest, dividends and various kinds of earnings, perhaps not even including various professional fees, something like $3.5 billion.
We in this party reject the notion that the multinationals are short of money. We agree with the general proposition that they are doing extremely well. This bill is not going to change anything very much as far as their profitability is concerned.
Our party believes we should nationalize the whole industry. There is no point waiting until it is all gone before we do that. If you only nationalize 50 per cent or bring in public ownership, public control, or whatever euphemism seems best or that you are most comfortable with, you have to do it reasonably rapidly or there will not be much left. We know there is no
point in nationalizing zero. That is what we are heading for by the end of this century.
We agree with Alberta that ministers should get back to the bargaining table. I see the incessant kind of war that has gone on with that province and what has happened in Ottawa from the minister on down. It is something that cannot be tolerated in our society henceforth. Canada can only stand so many tensions of this kind.
I could go into greater detail along that line, but I am not going to do so. I would, however, like to assure those members from Alberta that we in this party think it is time the minister got back to the bargaining table with the producing provinces. Nothing will be gained in terms of this country, and certainly we will not have constitutional tranquility, as long as this festering sore remains.
We hope that one way or another it will be resolved and resolved quickly, but not by giving more deals to the multinationals. If it is done that way, we may have to ride it out. We want to ensure that what ultimately comes about is a fair deal to both parties.


An hon. Member:: That is what Alberta wants.


Mark Willson Rose: Alberta does not want, as some people think, to hog all the investment dollars of the whole of the nation and hang on to them. We have to agree that their share in terms of helping Canadians has been pretty significant over the last few years. They must be given credit for that.
Our energy critic, the hon. member for Vancouver-Kings-way (Mr. Waddell), in his remarks on this bill made basic criticisms in addition to those I have raised. He outlined the fact that he feels that Canadianization, or the attempt to convince people that Canadianization will be advanced through this measure, is a lot of nonsense. Under the new legislation, a foreign-owned company such as Imperial could qualify by taking on a junior Canadian partner. The project could still be as much as 75 per cent foreign owned and qualify as Canadian.
We reject it on another ground. The hon. member for Vancouver-Kingsway mentioned that Norway has a strict requirement on sourcing, that 50 per cent to 60 per cent of all goods and services must come from Norway. There are rigs from all over operating in the Beaufort Sea. We say that the sourcing, the various rigs and anything that goes into the investment of energy production in Canada, should come from Canada, be made and used by and purchased from Canadians, providing these things are made in Canada. We believe this even if it costs 10 per cent more, because that is what this country is all about, having things cost 10 per cent more. To many Canadians it is worth it. Some people say you can buy eggs cheaper in the United States. You can also get a lot of urban crime cheaper in the United States. For many of us, being a Canadian is worth a hell of a lot more than 10 per cent, and we want to continue in that way.
My colleague also said that the 25 per cent back-in or carried interest in Canada land production is less than half of
January 12, 1981

what these same companies are prepared to give to the Norwegians and the English. That is backed up by facts. We are very critical of this. For example, a 75 per cent Canadian company that might be 70 per cent foreign owned should not get 93 cents back out of every dollar it invests. We do not think that 25 per cent is being voracious. We do not see that and we reject that kind of criticism.
People talk about the back in confiscation. That is utter nonsense. It is about time we owned our own resources. We should own more of them before they are all gone.
Recently I met with one of our messengers in an elevator. Before Your Honour says I am not in order for not speaking strictly about the bill, I want to say that he talked about energy prices. He earns roughly $13,000 a year. He owns a single family dwelling. He's lucky. He probably could not buy one in Vancouver, or anywhere else for that matter. Last year's heating bill between November and April for his 1,200 square foot home was $275. We are not more than two and a half months into that six month heating period as of this date, and he has spent $100 more than he spent last year for the whole period. He feels it will be approximately double this year. Part of it is due to the cold winter, no question about it.


Mr. Munro (Esquimalt-Saanich):: Why did you defeat the Crosbie budget?


Mark Willson Rose: If I am going to be heckled, Mr. Speaker, 1 would like a little clearer enunciation from the hecklers.


Mr. Deputy Speaker:: Order, please. The hon. member for Mission-Port Moody (Mr. Rose) has the floor.


Mark Willson Rose: 1 do not know what the hon. member said about their budget, but I wish the Tories would begin forgetting about that budget. They are paranoid about that budget. It is not just we here who rejected it, the people of Canada rejected it.


Some hon. Members:: Hear, hear!


David Kilgour: On a point of order, Mr. Speaker, this is a new year. If we are going to have a relevancy rule in this House, if you do not rule the hon. member for Mission-Port Moody (Mr. Rose) out of order, you will rule nothing out of order.


Mr. Deputy Speaker:: The Chair is attempting to administer the rules of the House in conformity with the wishes of hon. members. 1 invite the hon. member for Mission-Port Moody to direct himself to the bill before us.


Mark Willson Rose: We are talking about the price of energy facing Canadians this year. We know what it will cost to import energy. Prices are going up. We may not want to admit that, but we know it. Oil price hikes in terms of bringing on and making economically viable certain of the alternatives might in some sense be beneficial, with two provisos. What concerns us a great deal as New Democrats and nationalists is that if you are going to raise the price of oil and provide windfall profits,
Canada Oil and Gas Act
they should not go to the multinational oil companies but to the people of Canada.
The Clark budget was going to spend $90 billion over the next five years. We know that would provide huge windfall profits for the multinationals. We know also that for less than $50 billion Canadians could buy back every foreign-owned business and firm operating in Canada. That does not mean to confiscate or expropriate them, but to buy them back. We should be on that kind of path. I do not know whether that is called the hard path or the soft path, but it may be the right one. We know things will get worse. We are concerned about two, namely, who will get the money and how will we protect the lower and middle-income people from these massive energy price hikes. The Economic Council tells us that within ten years the price of oil could be as high as $155 a barrel, which will mean that a tank of gas will cost in excess of $50. It is over $20 now.
We have tried to present our criticisms of this bill. I suggested that far too much attention has been paid to increasing supply and not enough attention has been paid to decreasing demand. We have to protect people from hikes in energy prices, and we must try to get hold of the industry ourselves in Canada for Canadians.
The Prime Minister (Mr. Trudeau) is in Africa looking for ways to help the Third World. Aside from trying to bring decent order out of chaos in energy prices, he might suggest to his colleagues in the western industrialized countries that this lunacy of spending $500 billion a year on the arms race be stopped, which would help the Third World.


Mr. Henri Tousignant (Temiscamingue):: Mr. Speaker, as one of the first members to take the floor after the Christmas recess, I am convinced you will allow me to extend to all hon. members on both sides of the House, as well as to you and all Canadians generally, my very best wishes, and to express the hope that the work of this House during the current year- there are still 353 days left-will be efficient and fruitful in bringing increasing justice to all our fellow citizens, while trusting that Canadians in general will understand that it is impossible for us to bring heaven on earth to each and every one of them. We are all human; when I say human, I mean of course that we are weak and imperfect, and perhaps it is better that it should be so.
Having said that, Mr. Speaker, I should like to come back to the matter before the House, namely, Bill C-48. This bill will enable both sides of the House to express their views on exploration rights, production licences, royalties, in short, on the over-all Canadian energy policy. Naturally, several legal aspects of this bill remain hazy and difficult to grasp for the layman. This bill will show once again that in as crucial a field as that of oil and energy, the Canadian government has no intention of shirking its responsibilities. As I said, Mr. Speak-

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Canada Oil and Gas Act
er, in as sensitive an area as that of oil, at a time when we are all at the mercy of what I could call the vulnerability of supplies, there are no easy solutions or compromises. Whoever would dare claim the contrary would merely prove unrealistic.
If money is the sinews of war, one may rightly say that more and more oil is the sinews of the economy. That is why a national economy cannot be cast adrift at the mercy of a few individuals' greedy and short-lived interests. Those who take a long-term view of this country will readily accept our government's policy. The abortive government which preceded us, in order to prove conciliatory, accommodating, was ready to give the very shirt off its back. Besides, that is what it had started to do in some areas. We have seen the results. The provinces soon became more greedy and demanding. Luckily, we came to the rescue of the government on a certain December 15, otherwise that government would have lost not only its shirt but also its pants. Yes, Mr. Speaker, while the population would have been led to believe that the government was a good sport, the powerful companies for their part would have simply run the show.
But that is not the way this government sees it. Yet, what have we been hearing since last February, since we have returned to power? We have been hearing that the oil companies and the producing provinces are ill-used. Yet, these companies all made fantastic profits after taxes last year, and projections for this year show a more than reasonable rate of return. And what about poor victimized Alberta? In the 1980-1990 decade, Alberta will make approximately $100 billion, the equivalent of some $50,000 per capita.
The economy of that province has grown by leaps and bounds in the last seven years. Last year, its gross internal product increased by 44 per cent, or almost 70 per cent more than the national average. There is now approximately $8 billion in the Alberta Heritage Fund. Those who accuse the Canadian government of wanting to take over everything that does not belong to it should be reminded of the terms of the constitution regarding natural resources. Indeed, Mr. Speaker, that is what the constitution says about natural resources. Let us make it clear. Some people think that the Canadian government has no more rights in this country, that everything that suddenly becomes profitable necessarily comes under provincial jurisdiction. Well, according to the constitution, resources do belong to the provinces which may set prices internally, but when it comes to selling to another province or another country, then the federal government may and must set prices, because the national interest is at stake. Why was such an arrangement acceptable when it was in Alberta's favour? It must be kept in mind, Mr. Speaker, that the federal government controls interprovincial and international trade.
In order to clear up matters, one should take a look back. Of course, it is quite human to forget favors received and to remember mostly those granted. The Alberta premier should remember what happened in the past when the Canadian
people and their national government played a major role in promoting development of the oil and gas industry. Indeed, although it may seem paradoxical, oil sales had to be promoted in the past. Everyone remembers when oil furnaces were advertised on television. Oil marketing studies were conducted. The situation is now completely reversed. To support and develop the Alberta oil industry between 1961 and 1973, Canadian consumers west of the Ottawa Valley had to pay up to 35 per cent more for their oil than the international price or the price of imported oil. Strangely enough, the Alberta premier seems to have already forgotten this 35 per cent surcharge. As a matter of fact, he said the following to his fellow citizens on October 30 last:
It is thanks to the entrepreneurship, the creativity and the leadership of Albertans who are working relentlessly to develop this resource which is very important for all of Canada.
I should like the Alberta premier to note that the people of Alberta worked jointly with other Canadians, to develop the oil industry. Capital came from every area of Canada. It was a joint effort and the federal government played a major role by creating a favourable climate for investments through very generous tax incentives. At least 50 per cent of all investments made in new exploration and oil related expenditures are probably due to these policies. This is what all Canadians have contributed through their national government. These incentives were much more generous than those offered to other industries. In addition, as I said earlier, when there was an oil surplus in the sixties, there were TV commercials-


Mr. Shields:: Mr. Speaker, I rise on a point of order. I understood that we were discussing Bill C-48, but my hon. friend across the way seems to be Alberta-bashing and discussing, basically, the development of the oil industry in Alberta, and I just wonder if that is in order.


Mr. Deputy Speaker:: Order. I would like the hon. member who now has the floor to take note of the remarks made by the hon. member for Athabasca (Mr. Shields).


Henri Tousignant: Thank you, Mr. Speaker. I thought that my remarks were quite relevant to the matter under discussion and the hon. member opposite is simply trying to evade the question and distort the facts. Of course the facts have to be stated as they stand in order to discuss the energy policy in Canada.


An hon. Member:: Nothing ever pleases that fellow.


Henri Tousignant: Yet, Mr. Speaker, that was the contribution made by all Canadians through their national government. These incentives were much more generous, as I mentioned earlier, than those offered to other industries. Duringthe sixties attempts were made to find markets for oil and while
January 12, 1981

the oil industry as a whole at that time was experiencing lean years the Canadian government ensured a national market by levying a 35 per cent tariff on the imported oil at a time when Canadian oil companies would have been unable to meet competition from offshore oil.
Mr. Speaker, this is federalism; it is not a one-way street. Unfortunately there are people who are always here to receive but who seem to disappear into thin air when the time comes to give. Those things must be said. The people have the right to know. 1 shall refer once again to the remarks made on October 30 last by Mr. Lougheed to his fellow citizens, remarks inspired by passion rather than by reason when he said, and I quote:
Although our province is not represented in the federal government, proposals unfair to the citizens of Alberta are being introduced in the House.
Well, I will reply to that that it is their responsibility and not ours to elect people who will represent them at the federal level. We certainly tried, but we have been rejected. We agree, those are the rules of the game. In a democratic system, once the rules are set, nobody is free to change them. If we could, we would all wait for the second turn around and support the government. Finally, the west is sulky with the Liberal party and it is its privilege to be so. If a Progressive Conservative government were elected, in less than four years, this feeling of unrest, of alienation would still be felt and the new government would be strongly challenged. Why? It is merely a phenomenon created by distance. Being far away, westerners have the feeling they are governed by strangers which is far from the truth. We are all Canadians and we can also deeply feel the distress experienced by a westerner. We would be ready to struggle bravely to death for our brothers in western, eastern or central Canada. The people of this country should know and understand that. However, that is creating dissension at present, not the fair policies of this government nor the unilateral patriation of the constitution. It is merely the fact that some individuals are protecting their immediate interests. Those people discovered suddenly that the most efficient, the easiest electoral platform, one that speaks most directly to the heart of the electorate, is the defence of provincial autonomy, which amounts to campaigning against the federal government.
To come back to our subject, I am pleased to see that the objective of the federal government is a Canadian participation of at least 50 per cent in oil and gas production by 1990. Therefore, I welcome with great satisfaction the initiative to lay claim to any property in offshore territories and regions which cover an area almost twice that of the ten provinces.
Is it a good thing to note that those concessions cover 300 million acres? Those territories belong to us. We should develop them since they contain, I think, the largest reserves known to date. The present legislation on development will be amended to modernize the management of oil and gas rights, not to mention some new measures concerning the supervision
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and control of those operations which will be introduced. A fairer return for all Canadians is foreseen. Therefore, maximum use of Canadian equipment for development purposes will be required, of course. Any responsible government ought to give itself the tools and the means which are necessary to meet the national objectives.
I remember listening sometime before Christmas to the hon. member for St. John's West (Mr. Crosbie), I think, the minister of finance in the former government, who is known for his oratorical fireworks. He is very amusing at times; indeed there is a time for comedy in our debates just as there is for serious talk. The credibility of the hon. member is shaken, if not uprooted, by the lyricism of his rhetoric. When, on the one hand, he assumes the role of the great defender of one or the other of the provinces while, on the other, being very timid as a representative of the national government, how does he explain his double standard?
As a responsible MP, Mr. Speaker, the hon. member knows full well that we cannot make decisions that please all the people all the time. We cannot always say yes, just as a caring father cannot acquiesce to every request his children make. This time of the year gives us a very good example of that when we have occasion to leaf through the Christmas catalogue with our children. We all know how children ask for countless things, and all they ask for in the letters addressed to the North Pole. Children have a lot to ask. Must their fathers accede to all those requests? If, moreover, the bad neighbour comes up at that point and tells the children, "Go ahead, your father can afford it; he can even give you more than that", he does not help matters. Indeed, how you would have appreciated his help. That is exactly what the hon. member for St. John's West keeps doing all the time. He does exactly that. Not only does he appeal to your emotions, but he also intentionally and irresponsibly spreads confusion and division.
As so aptly put by Jean Dandurand, a military pilot can drop hundreds of bombs while being spared the unpleasantness of a single one of his victims' suffering. Nationalist policies often spare him the sight of his victims, encourage him to dissociate himself from them, and teach him to see his massacres as so many victories. That is precisely what the party across the way is endeavouring to do in energy policy matters. The hon. member should refrain from speaking as he did before Christmas. He spoke of the alienation, the frustrations of the people out west, of the separatist tendencies, and so on. In so doing, in fact he becomes the very propagator of those tendencies. Yes, Mr. Speaker, the Liberal government is the great architect of the outstanding Canadian energy policy that enables all Canadians to benefit from the wealth that belongs to them and that they have developed together. We would have acted like cowards had we not faced up to our responsibilities. I was one of those who helped to draw up our political platform in the last election campaign, and I am proud to see

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that the very essence of my suggestions found its way into that energy policy-first the Canadian citizens, then the multinationals.
Some so-called experts tell us that we are wrong in not exacting from Canadian consumers the world price for oil. Others claim that we are creating an artificial economy and that sooner or later we will have to face reality. But where do they come from those who speak so? Why should we not avoid certain fads or tendencies, why should we allow ourselves to be hypnotized? Who says we have to give in to publicity every time it recommends that we get a new car?
Why should we be influenced by what happens elsewhere? Canada produces this raw material. Why not take advantage of this to deal from strength with our competitors? If France were an oil producer like Canada, would it submit to having its domestic prices set elsewhere? No, it would take advantage of the situation to restructure its economy. One can truly say now that everything is governed by energy prices. Those who have travelled in Europe are well aware of it. I just came back from there and it is astonishing what one has to pay for food and accommodation. Breakfast consisting of a small piece of bread and coffee costs $12, rooms are $100 to $150, a glass of orange juice $3, a soft drink $3, and even bottled water is $3, all of course, in Canadian dollars. Why? Members opposite should know. Our self-styled experts who love to criticize our policies should know. Oil, that is all, oil, and it is easy to understand why.
Because of the price of oil, a delivery truck in Europe, what we call here a two-ton or a three-ton truck, costs $40,000 to $50,000 in gas a year, and that is before the driver's salary, the truck itself and maintenance costs are paid. No wonder a bottle of soda water costs $3. Most of the people in Europe, where I have just come from, are very simply trapped. The energy crisis has led them to dead end. They work from 6.30 in the morning till 6.30 at night, and for what? To eat and pay their rent. They must constantly do without things that for us are quite ordinary and normal. All this is related to oil prices. When I landed in Dorval and was able to have a breakfast with eggs, bacon, toast and coffee for $1.75, in other words, to eat my fill, I realized that I had just saved $10.25 which I could now use to purchase other consumer goods, and thus contribute to make other Canadians work and share this $10.25 with them instead of with the multinationals.
I heard earlier the Leader of the Official Opposition (Mr. Clark) complain that the oil companies who do research in Canada are now going to the United States and that these poor companies are always losing money in this country. On the other hand, I listened to the Leader of the New Democratic Party who said that the oil companies had made a lot of money, and I have to wonder if they are really serious. Strangely enough, I am not at all concerned about an area where there is such a great demand as the oil industry. I am certain that there will always be companies to develop these
resources to meet the demand. If restaurant owners were in demand in my region, there would be many of them even if they were forced to lower their prices. This is what is happening in the oil industry, and I wonder why members opposite want us to get down on our knees before the multinationals since they are not even complaining. Who has been complaining? The members opposite. The oil companies are not even complaining. Of course, they must make some protest, but only for form's sake. Obviously, instead of making $50 million, they would rather make more. I am not at all worried about the welfare of the poor oil companies in Canada.
Mr. Speaker, the role of a responsible government is to see to it that prices remain low so that a greater number of Canadians can purchase as many goods as possible. If our prices remain low, we are more competitive on international markets, and if we sell more, we have to produce more and put more Canadians to work. It is crystal clear, Mr. Speaker. No one needs a university degree to understand that. The energy policy of our government, which is a responsible government, is based on principles of logic and common sense.
[English]	.


Jack Wendele Shields: Mr. Speaker, I look at the time with some dismay. As we are addressing Bill C-48, I cannot help but remark that had we not been interrupted by the nonsensical motion of the New Democratic Party and its leader, possibly I would have been able to finish my speech. But now it will be broken into two parts.


Some hon. Members:: Oh, oh!


Jack Wendele Shields: All members of the House know exactly how it feels when one starts out one's comments, must stop in the middle and then carry on later.
This bill is very important because of the energy crisis which Canada faces today. Yet the New Democratic Party would rather headline hunt, clown, and present a motion to adjourn the House when we have been out of the House for a full three weeks.


Some hon. Members:: Hear, hear!


Jack Wendele Shields: They would rather adjourn the House to go back and sit in their offices. I find it absolutely ridiculous and nonsensical but, believe me, some members of the press will pick this up. We should turn on our television sets tonight and watch the news. There will be a great motion by the clowning Leader of the New Democratic Party (Mr. Broadbent) which will go out across the waves. I find that shameful also. Some members of the news media, the champions of truth and the reporters of history in the making, will take truck with what happened today, disturbing and interrupting the House for headline hunting. I am sorry to say that some of them will.
Today we are prepared to debate energy, the lifeblood of the country. If we do not have it, we freeze in the dark. If we do not have oil self-sufficiency by 1990, we will find ourselves
January 12, 1981

faced with problems. We will see unemployment in the country like we never saw before. I can only say that the action of the NDP today was despicable.
This bill is long overdue. It has been three years since the introduction of Bill C-20, but all we have in Bill C-48 is a cut and paste job. There is the backing-in of Petro-Canada into known resources and exploration which has been conducted by other companies, and many other things. The companies which invested their own money under one arrangement are now being faced with another arrangement. Under the provisions of Bill C-20 Canadian or partially Canadian-owned companies were protected from being backed into by Petro-Canada or the government. The object of the back-in provision under Bill C-20 was not to nationalize the oil industry, but by contrast Bill C-47 is a direct assault on the Canadian oil industry. It is a direct assault to nationalize the oil industry, nothing more.


Mr. Knowles:: We are on Bill C-48.


Jack Wendele Shields: There is provision in Bill C-48 to allow Petro-Can to invest money, if it has a 25 per cent ownership, to develop a resource once it is found offshore or in the north. Will Canada have the money to invest? From where will this investment money come? Will PetroCan have to go to New York, to the money markets of the world, to borrow the money? Will it have to borrow the money on debentures? If so, by borrowing on debentures will it not lose its status as a Canadian-controlled company? The possibility exists.
Royalty holidays for a period of years were allowed under Bill C-20, but now by contrast the present bill allows royalties only on reserves discovered prior to 1981. By no stretch of the imagination can it be argued by the present government that this bill will encourage increased exploration.
The bill totally ignores the priority. It is long overdue but it is not the priority. The priority facing us today is an energy agreement with Alberta and with the other producing provinces so that we can develop a secure supply from the western deep basin, develop the heavy oils and develop the tar sands. All of these matters have much more significance before bringing forward Bill C-48. When I next stand, I would like an opportunity to elaborate on this.
May I call it five o'clock?



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Ethier):: Order, please. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Burlington (Mr. Kem-pling)-Bankruptcies-Astra Trust-Re-Mor-Inquiry whether circumstances will be examined; the hon. member for Richmond-South Delta (Mr. Siddon)-Fisheries-Inquiry
Capital Gains Tax
whether catch royalty or landing tax will be imposed; the hon. member for The Battlefords-Meadow Lake (Mr. Anguish)- National Defence-U.S. fighter aircraft crashing on Canadian soil.
It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions.


PRIVATE MEMBERS' MOTIONS
The Acting Speaker (Mr. Ethier):: Notice of motion No. 14 in the name of the hon. member for Levis (Mr. Guay). Shall the item stand?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: Stand by unanimous consent.


CAPITAL GAINS TAX
Mr. Blaine A. Thacker (Lethbridge-Foothills) moved:: That, in the opinion of this House, the government should consider the complete abolition of the capital gains tax on bona fide farm land.
He said: Mr. Speaker, I rise pursuant to the following notice of motion which I filed:
That, in the opinion of this House, the government should consider the complete abolition of the capital gains tax on bona fide farm land.
I am convinced that capital gains tax on bona fide farm land is not in the national interest. My purpose today is to outline the reasons and to call on members, citizens and groups who agree, to press the government vigorously for changes before it is too late and irreparable harm has been inflicted on the country.
By way of background, Mr. Speaker, you will know that on a world scale Canada has about .5 per cent of the world's population and about 3 per cent of the world's arable land. Canada is a massive country with an area of some 2.3 billion acres. However, only 13 per cent of this area is suitable for agriculture. Only 4 per cent of our land area is either class 1 or class 2-the best agricultural lands. Over one-half of Canada's class 1 lands, and nearly 30 per cent of our class 2 lands, are located within 50 miles of Canada's major metropolitan areas. In 1971, 44 per cent of Canada's agricultural production was harvested in this 50-mile radius. Also, during 1971, over
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42.000	acres of Canadian farmland was lost to urban development. This year's census will tell us that even more agricultural land has been, and is being, taken out of production.
Mr. Speaker, you will also know that we have lost over
100.000	farmers over the course of the last several years. As well, only 45 per cent of our full-time farmers earn their entire living on the land. Some 55 per cent must work part time elsewhere. Furthermore, farmers, on average, earn less than the national average wage paid to industrial and urban workers.
Prior to 1972 no capital gains tax was imposed on agricultural land. It was under this system that we built an agricultural infrastructure which resulted in Canada, with its small population and small percentage of the world's agricultural land, developing into an enormous exporter of grains to feed the world.
The fundamental reason for this enormous production was, and still is, the family farm. Simply put, farm families care for the soil. They are efficient and they devote their entire lives to the production of food. They directly influence the quality of life in industrial Canada, too, because they purchase tractors, trucks, equipment and other manufactured goods.
In 1972 the government imposed capital gains tax on our 3 per cent of the world's land which produces so much to relieve world hunger. Because no provision is made for inflation, the current tax is a tax on capital rather than on capital gains as intended. In my opinion the capital gains tax is a time bomb which will destroy the family farm and, ultimately, the capacity of this nation to be not only an exporter of food but to be self-sufficient within our own borders.
We should not lose sight of the fact that other countries which used to be food exporters are now massive importers. Russia is a classic example, as is Poland. On our own continent there is Mexico. The reason they are massive importers is that they destroyed the family farms and took away the right of individual ownership. We should also note that no capital gains tax is levied on the values of individual homes in urban Canada, on the basis that home ownership is a "Canadian way of life".
We should not lose sight of the fact that Canada is already a massive importer of fruits and vegetables, and that the only major product which we export is western Canadian grain. The reason for this is that the present government de facto had, and still has, a cheap food policy. Capital gains tax on productive farmland is not in our national interest. I submit it is immoral, on a world scale. I believe it is equally immoral for Canadians to be competing in the world for oil when we could, and should, be self-sufficient. Indeed, we should be exporting energy to developing countries. It is also equally immoral for 23 million Canadians to be competing in the world's capital market to pay for our huge deficits when we could, and should, be exporting capital, human skills and technology to help the lesser developed countries. The capital gains tax, when added to the grotesque monetary and fiscal policies of the government and its cheap food import policy, is destroying Canada's
clear opportunity to be self-sufficient with respect to food and, indeed, an exporter of food.
I would now like to be a little more specific with respect to what is happening and the particular problems which existing farmers face when it comes to selling their farms while alive, as well as in planning their estates so as to retain an economic farm unit to put into the hands of the next generation. As you know, Mr. Speaker, the valuation day was December 31, 1971. If a farmer sells land or dies, a tax is applied on 50 per cent of the increase in value since that date. For example, in my constituency a common value at December 31, 1971, for farmland was $100 per acre. Today, common values are about $600 per acre. The capital gain is $500 and the taxable portion is $250 per acre. On the sale of one section, or 640 acres, the farmer must add $160,000 to his taxable income. Depending on which province he lives in, and on his personal rate, he will pay at least $80,000 of that in income taxes.
The problem, though, is that the seller has been able to calculate the tax and add that to the selling price, thereby increasing the price of land. This has been badly exacerbated by the loose monetary and fiscal policies of the government, whereby too many dollars were created. Unfortunately, much of that inflation money has settled on land. The present prices are in no way related to the productivity of the land. This is especially true if the money must be borrowed to purchase the land in the first place. Therefore young farmers are blocked from ever being able to purchase a farm. Also, large farmers are forced to buy the extra, expensive land in order to utilize efficiently the ever larger and more expensive machines which are being manufactured, and to remain competitive.
Mr. Speaker, the 1971 value is simply too low. In fact in my area the values were depressed in 1971 as a result of economic difficulties. The 1974 values promised by the Liberals in the last election were much closer to the true value, based on agricultural productivity. Regretfully, the Liberal government has broken its campaign promise. In fact the recent paper on capital gains tax indicates that the government intends to increase the tax, not decrease or eliminate it. The government's policy stands in stark contrast to the Crosbie budget of December, 1979, which brought in a first step relief of up to $200,000 of rollover, over and above the current 50 per cent rate of tax and the present roll-over provisions. The Minister of Agriculture (Mr. Whelan) proudly proclaims that the present roll-over provisions are adequate. I completely disagree.
One rollover provides that a farmer can transfer a farm to his or her spouse, either while alive or upon death, at the 1971 value. No tax is levied until the spouse dies. If we must have a tax then we certainly cannot, and do not, object to this particular rollover.
However, another rollover permits a farmer to transfer the farm to one or more children at the 1971 value with no tax being levied. Either the farmer, or at least one of the children, must actually be farming at the time of the transfer. The theory is that this rollover could go on for ever, that is, ten, 50 or 100 generations. Of course this is absolutely untrue because of inflation. This roll-over provision is seriously defective. First,
January 12, 1981

the 1971 value is no longer enough for the selling farmer to purchase a city home and to have a small nest-egg to cover his or her pension years.
In the example I quoted above the farmer selling a section of land at 1971 value of $100 per acre would receive $64,000. Some retirement! We know that farmers have no indexed pensions to rely on like the rest of us have. They must rely on the sale value of their land. In order to retire to town, to purchase a home and to have a nest-egg, $64,000 is not enough. If the transfer is for a price greater than the 1971 value, the farmer must pay the tax or else the child gets a double penalty, that is, the child pays more than the 1971 value but ultimately must pay tax on that same increase between the 1971 value and the sale price.
Referring again to my first example, the farmer could sell to a child for $300 per acre and receive that money, but he could elect, for tax purposes, to transfer at the 1971 value, namely, $100 per acre. The farmer would have $300 times 640 acres or $192,000 with no tax. But the child would have paid $192,000, and if he or she had to sell the next day for health reasons or whatever, would receive that same amount of money but would have to pay capital gains tax. The child would have to add 640 times $200 per acre or $128,000 to his or her taxable income. Hon. members can see that this result is absurd.
Therefore, what happens in actual practice is that farmers and families choose to increase the selling price, sell to the highest bidder, pay the tax and be done with the government. However, this keeps out the new, young family farmer, as I mentioned earlier, with all the disastrous long-term consequences for efficient food production.
Third, if farmers have more than one child but only one child continues to farm, how does the farmer leave the farm to the farming child at the 1971 value and yet still leave an equal share of the present estate value to the other child? It is quite impossible from a practical and common sense point of view. It can be done with very complicated legal agreements with charges being attached to the land to be paid by the farming child, but these charges block the placing of mortgages, interfere with bank financing, usually have interest attached which is a substantial burden, cannot adequately protect the farming child from bad crop years, and also affect close family bonds and ties of love and affection. In fact the farmer again usually lists the land, sells to the highest bidder and is gone. Once more, the family farm has disappeared.
Therefore, Mr. Speaker, it is clear to me that (1), there should be no capital gains tax on bona fide agricultural producing land; (2) if the tax is to remain, then there must immediately be a change of the valuation date to at least 1974; (3) there must be indexing of value against inflation, and (4) the government must develop specific policies to retain the family farm and too, indeed, expand the family farm onto the approximately 25 million acres of presently marginal land that lies in a band across the northern limit of our current cultivation. This in itself would be an enormous project of national
Capital Gains Tax
unity which would go a long way toward settling new Canadians and redirecting unemployed industrial workers into farms where they could own their own land and work for themselves. It would also promote the manufacture of small, efficient tractors, combines and other agricultural machinery, hopefully in Canada. Hon. members can see that this idea alone would retain the concept of the family farm which leads to family oriented communities and also results in thousands upon thousands of jobs in central Canadian manufacturing.
In conclusion, I again submit that a capital gains tax on bona fide farm land is not in the national interest, and I call on hon. members present to pass this motion so that the Department of Agriculture and the Department of Finance will have an instruction from Parliament to bring forth a strategy to rectify this serious and dangerous policy.


John Leslie Evans: Mr. Speaker, this motion comes up for debate at an appropriate time because on November 21 the Minister of Finance (Mr. MacEachen) tabled a discussion paper reviewing capital gains taxation in Canada. It provides a most valuable background for our debate of this particular proposal which calls for, as the hon. member has indicated, the abolition of tax on capital gains arising from bona fide farm land. On the whole, that discussion paper makes a most useful contribution to public discussion on our tax system.
The paper reminds us, for example, of the importance of the decision which was taken in the early 1970s to apply the income tax system to capital gains, not only because of the revenues which were involved, although those are substantial and are an estimated $1 billion, for example, for this year for the federal and provincial treasuries, but the paper also demonstrates that capital gains taxation has done a great deal to improve the fairness and the progressivity of the tax system. If taxation is to be based on the ability to pay, then capital gains cannot be ignored. The discussion paper points out that taxpayers with annual earnings of more than $50,000, a group representing less than 1 per cent of all Canadian taxpayers, received in 1978 more than 40 per cent of all net taxable capital gains reported that year.
The paper also serves as a reminder of the problems that were created for our tax system when capital gains were generally excluded from taxation-the great outlays of time, money and efforts to avoid tax by converting business income or dividends into capital gains as was the case prior to the introduction of the capital gains tax. No other area of our tax system provoked more litigation in the courts or created more uncertainty for taxpayers about the tax consequences of their business decisions.
Furthermore, the difference in tax treatment between business income and capital gains created economic distortions in the market place so that, instead of resources being invested in the most efficient and productive way, they tended rather to be invested where they could get the best tax break.

January 12, 1981
Capital Gains Tax
The discussion paper also points out that because capital gains taxation is so closely interrelated with other provisions in the tax law, a selective exemption could not be introduced without complex changes to the existing rules. Because of this, the paper concludes that "if incentives are to be provided to certain sectors of the economy, it might be more efficient and simpler to do so through an expenditure program or a subsidized loan".
These considerations I have mentioned are not irrelevant to discussing the proposals by the hon, member for Lethbridge-Foothills (Mr, Thacker) to exempt bona fide farm land from capital gains taxation. The importance of taxation of capital gains on farm land should not be overestimated. First of all, capital gains on the farm home itself is exempt, just as it is for any taxpayers' principal residence. Second, as in all capital gains, only half of the gains is subject to tax. I would suggest that the first point with regard to the farm home is contrary to the implication which was left by the hon. member for Leth-bridge-Foothills with regard to his previous discussion on the impact on farm residents versus urban residents with regard to the farm and to the home.
Third, if a farm property is passed down within the family, as the hon. member has pointed out, to a child or to a grandchild, there is a deferral of tax on any capital gain until such time as the property should be finally sold under taxable circumstances. This, of course, means an indefinite deferral so long as the farm remains in the family. The hon. member for Lethbridge-Foothills has pointed out a very interesting point with regard to the anomaly which might be created with reference to the manner in which this particular deferral has an effect on the taxable status of the child as opposed to the original farmer.
In the event that the farm is sold so as to generate taxable capital gains, the law provides methods for reducing the impact of the tax. It is important that these be looked at very carefully. The farmer can, for example, invest the proceeds in an income-averaging annuity contract. By this means the taxation of capital gain is spread over the term of the annuity and the taxpayer is not pushed into a significantly higher tax bracket, as would be the case if the entire gain were taxable in the one year alone. Alternatively, if the proceeds from the sale are received in instalments over one year, only a portion of the capital gain would be taxable in the year of the sale. Therefore, a farmer might be wise to sell the land on a contract whereby payment would be received over a period of time. In that case the remaining portion of the gain can be deferred until the proceeds are actually received. Because of these provisions the tax is levied only when funds are available to pay the tax.
These tax deferrals, whether due to transfer of the farm within the family or to spreading out the receipts from the sale, can be very valuable financially to the farmer. For example, assuming an interest rate of 10 per cent, a one-year deferral is equivalent to excluding 4 to 5 per cent of the gain from tax, and a 25-year deferral would be equivalent to
virtually complete exemption of the gain from any tax whatsoever.
These facts should be borne in mind in considering the proposal before us for complete tax exemption of capital gains on farm land. I think all hon. members recognize the forcefulness of the argument that, for many farmers, their farm is their retirement pension. During their productive years, the farm family invest their money and muscle in building up the value of the property, with the idea that when they retire the capital value will support them through retirement and, with luck, even provide an estate for survivors. What is not widely recognized, however, is the extent to which this worth-while goal is helped and assisted by the existing tax rules.
We are familiar with Registered Retirement Savings Plans and registered pension plans, through which employees receive valuable tax concessions to help them save for their retirement. The fact is that the tax treatment for farmers, and other unincorporated businesses too, provides tax treatment that is at least equally advantageous. In both cases, what happens is that pools of funds for retirement are built up out of untaxed income during the working years of the employee or the farmer.
In the case of employees, their contributions to RRSPs and/or registered pension plans are deductible, subject to annual limits, and income earned in these plans is non-taxablc until it is finally withdrawn. In the case of the farmer, the increase in the farm's capital value, as it accrues over the years, is not taxable.
Upon retirement, the employee's pension receipts are taxable at full rates. For the farmer, when his property is sold at retirement, only half of the realized capital gains is subject to income tax. And as I described earlier, the tax impact on the lump sum receipt of capital gain can be spread out over a number of years by means of an income-averaging annuity contract.
I suggest that it is clear from these facts that the tax system does not discriminate against the farmer, in comparison with employed workers, when it comes to tax treatment of their two distinctive methods of planning their retirement incomes.
The same non-discrimination does not apply, however, to the proposal we are debating today. Farmers and unincorporated small businesses currently receive the same tax treatment in most respects. Many small businessmen, like farmers, must look forward to retiring on what they can realize from the sale of their business. Yet this proposal would discriminate in favour of farmers, and at the expense of the small businessman in another walk of life.
One answer to this objection would be to shrug and say, "Well, small business could be extended the same exemption from tax on capital gain as we propose here for the farmer." I submit that this situation simply underlines the difficulties we get into when we start creating exemptions and exceptions in the tax law. It is the difficulty of where to draw the line. And
January 12, 1981

though you start out trying to help one group, you end up being arbitrary and unfair to other groups.
The proposal before the House tries to draw a line. It specifies that only bona fide farm land should receive this benefit. But if we want to apply this idea in a taxing law, we have to spell it out very precisely. Exactly what criteria distinguish a bona fide farmer as opposed to others who may own farm land, hobby farmers, for example, or developers holding undeveloped farm land? What about farmers who work part time off the farm to supplement their income? One could draw an arbitrary line as to the proportion of income that a bona fide farmer should receive from farming. But that can vary from year to year depending on markets, crops and other conditions. A bona fide farmer may have to rent out his land to someone else for a period of time because of illness or retirement. These examples illustrate that, when we come to defining who would benefit from this tax exemption, we would have to be quite arbitrary and likely would end up excluding some genuine farmers.


Some hon. Members:: Hear, hear!


Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, I appreciate the opportunity to speak on this motion today. 1 will not take a great deal of the time but I just want to draw to the attention of the House a number of factors which are part of this particular motion. As was mentioned by the hon. member for Lethbridge-Foothills (Mr. Thacker), capital gains taxation began in 1972 and is presently based on the 1971 evaluation level. Most hon. members will be familiar with what is involved here and, if they have been involved with it personally, will find it particularly annoying.
The basis of the capital gains tax established in 1972 was probably the Carter commission of 1962, which established that regardless of where income came from, it was income. The term popular at the time was "a buck is a buck". Regardless of how one received it, it should be regarded as income. The Carter commission also stated that taxation must be based on the ability to pay by the person who had received that income, again regardless of how he got it. The recommendations of the royal commission would have evened out taxation. Had they been accepted holus-bolus they would have plugged most of the loopholes which many large corporations had used for years. Some are still using them. Many financial institutions have also used these loopholes as a means of manipulating the amount of tax they pay. We have all heard of many large companies with huge incomes which pay no tax at all.
Unfortunately, Mr. Speaker, the recommendations of the Carter commission were not accepted across the board, and consequently there are situations where the present method of taxation is unfair. It is particularly unfair to those businesses which are very visible because they are part of our everyday life. To westerners one of those parts is the farming community. This particular motion, Mr. Speaker, deals only with the farming community.
Capital Gains Tax
Some hon. members will remember learning about an economist, or so-called economist, called Henry George, during their schooldays. Before 1929 he advocated a single tax concept. After considering the increase in the cost of property over a long period of time, he suggested that governments could be run on taxing not what a person earned, but the unearned part of the economy, part of that being the money one would receive because of the increase in the value of property. That might have been acceptable in the 1920s but it was not acceptable by 1929 and thereafter.
I bring this up, Mr. Speaker, because both the Carter commission and Henry George, and many other supporters of fair taxation, made a couple of points.
First, income is income regardless of where it comes from. Second, income gained without any input on the part of the receiver should be recognized as such, not as was done before 1962 when it was not considered income and therefore not taxable. However, recognition of these points has not been entirely followed through in our tax system. Although philosophically 1 cannot disagree with capital gains, the suggestion by the hon. member for Lethbridge-Foothills (Mr. Thacker) should be looked at thoroughly.
We should explore what is happening to the farm economy as a result of taxation inequities and what this is doing to the farmer. We should explore the farm situation with regard to capital gains. There are a number of factors which have been raised. I want to mention them again, but I will not go into them as deeply as the hon. member for Lethbridge-Foothills.
First, the basic level established in 1971 was a depressed level in much of Canada, particularly western Canada. Prices were low that year. They have gone up continuously since then. Regardless of what the hon. member for Ottawa Centre (Mr. Evans) suggests, valuation of farm homes as part of a farm in 1971 was either entirely ignored or a low value was put on the home. Possibly this is because in 1971 in western Canada you could buy two quarters of land next to each other, one with a home and one without, and pay approximately the same price within a couple of thousand dollars. That situation has disappeared to a great extent, although not entirely. Consequently, that area should be looked at.
When someone in the city sells his home, it is recognized as his home and capital gains do not apply. However, if the land on which your home was on in 1971 sold for $10,000 and is now worth $100,000 for the land and $40,000 for the home, capital gains must be paid on half the difference between $10,000 and $140,000.
Third, and I mentioned this earlier, farmers and small businesses are very visible. Increases in their real property is easily established. They have no place to hide. They have no protection compared to the large corporations. That is the situation in which the farm economy and community has developed.
They are unprotected in more ways than one. I mentioned their visibility in the community. They have not developed a

January 12, 1981
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superstructure which allows them to hide their capital gains or anything else with regard to their economy.
There are other problems with this motion. The hon. member for Ottawa Centre mentioned some of these. What is bona fide farm land and what is a bona fide farmer? There are a number of definitions. 1 do not raise this to downgrade the presentation by the hon. member for Lethbridge-Foothills, but to suggest this is one reason we should refer the motion to a committee to see whether some alterations can be made.
One definition suggests that a farm with $1,200 per year gross sales can be recognized as a farm. No one in my province of Saskatchewan who is attempting to farm has less than $1,200 yearly gross sales.
There is the Income Tax Act definition. If a person earns more than one half of his net income from his farm, he is a bona fide farmer. The definition of bona fide farm land varies greatly front province to province. In some provinces, this may be five acres. The Saskatchewan government has a residency requirement whereby you must be a resident to own more than 160 acres. It is these kinds of definitions which must be looked at.
Before a person can get a quota book, the Canadian Wheat Board requires that he have the equipment to farm. That is very broad. What kind and how much equipment? A pick and shovel, as my colleague said. That is another problem which should be looked at.
I do not entirely agree with the hon. member for Lethbridge-Foothills that this is increasing the cost of farm land and affecting the turnover to the young farmer. However, I recognize his argument and, again, this should be looked at as part of the whole problem.
Even under our present system there is a considerable amount of speculation regarding farm land. Sometimes it is because of the proximity to a city and sometimes it is because people have money to invest. This speculation is often blamed for increased farm land prices. This speculation has increased over the last two years. Looking back makes one wish one had speculated and bought some of the land that was then selling for $100 an acre. I paid $1,200 for my first quarter. That was the time to speculate.


An hon. Member:: You are a capitalist.


Stanley J. Hovdebo: That is the kind of speculation that has been going on for the past two years. What would be the effect of taking off capital gains entirely as far as speculation is concerned? How many more people would share in that? In the last few years people have jumped in because the land is there. We are not making anymore of it, and very little more is coming into production. What would be the effect of that speculation in allowing a young farmer to get started? If we could refer this motion to committee, there are probably some alternatives which should be looked at. The Saskatchewan government has allowed a basic $100,000 exemption for a farmer if the land is turned over or sold. The thinking behind
this is to protect the farm home or to allow the turnover of land from an older farmer to a younger one.
The problem of farm size must also be looked at. The hon. member for Lethbridge-Foothills has said on several occasions that in his area of the country three sections of land is probably enough for a farmer to get by on. What we should look at is some extension of the $100,000 exemption. Right now the only person who can afford to buy more land in many communities is the person already well established. Many communities are trying to do something about it. We might consider a certain size of farm as adequate in a particular community and it is sold or turned over that no capital gains tax will be charged. But anything above that restriction should be taxed as though it were regular income.
Indexing was mentioned by both previous speakers. Our party policy has always been to suggest that indexing can be used to alleviate some of the problems of increased cost and to alleviate some hardship for pensioners. Maybe we should take a look at the way the value of farm land is established. The 1971 dollar is now worth something like 40 cents. If we had established indexing in 1971 or in 1974, as was suggested, the price of land would not be that far out. The farmer would not be faced with paying capital gains on such huge amounts. Inflation has been a factor and should be recognized as such. If that factor has been recognized in the cost of living, it should also be recognized in capital gains.
If we can send this bill to committee, we should look at the valuation day levels. The valuation of a farm home should be examined. Indexing should be looked at and so should land values which were established in 1971. Legislation concerning turnovers should be examined, but I will not go into that.
I recommend this motion be passed. I suggest it be sent to committee to study the needs of the capital gains legislation regarding the turnover of land.


Mr. Gordon Taylor (Bow River):: Mr. Speaker, we have heard two approaches today concerning this legislation. We heard the positive approach outlined by the hon. member for Lethbridge-Foothills (Mr. Thacker). He outlined ways and means of how this tax should be avoided and why. On behalf of the Liberal party, the hon. member for Ottawa Centre (Mr. Evans) stated why it could not be done demonstrating clearly what we in the House are up against most of the time. Surely in a democracy, we should be listening to the people and reflecting the thinking of the majority in our legislation and in our administration of it.
We have been given an outline of capital gains tax which was not written by those paying the tax, but written by bureaucrats. The speech read, and I emphasize the word "read", by the hon. member for Ottawa Centre was that of bureaucrats. If the hon. member wrote the speech himself, I would be most surprised. If he did write the speech, he should be in the civil service, not representing people in this House.
January 12, 1981

In the splendid and learned address given by my colleague from Lethbridge-Foothills his major point was that agricultural land is different from every other type of land. Today other countries are finding themselves in difficulty because they do not have enough agricultural land. The world is facing increased population as well as a decrease in the amount of food production. Underlying the remarks in his address of the hon. member for Lethbridge-Foothills was the importance of preserving our agricultural land for the production of food to feed Canadians and the people of the world. That point seems to have been missed by the member who spoke on behalf of the government.
I personally oppose capital gains taxes on all businesses. 1 think it is an unfair tax and it kills initiative. I believe it cuts down production and advancement. First, let me outline how it kills initiative. I know many farmers and their wives who have worked not as speculators but who have put their strength, backbone, blood and sweat into building up their farms. They have worked long hours and many years. At the end of the tunnel they saw the hope of selling their asset and being able to retire with dignity. They did not charge wages or work on an eight-hour a day shift. They built up their asset only to find that the government comes along and says it will take half of that increased value of their farm, capital gains as it is called.
I do not think that is fair. I challenge any member in his capacity here to say that it is fair.
Take, for example, a couple sitting at their table hoping to retire, and on figuring out their finances they find they do not have enough on which to retire. Their only alternative is to stay on and work, even with failing health and advancing years. These people deserve some years of leisure. Instead of that, they have to stay on to work, but farm only to a minimum. They do just enough to keep themselves alive and to keep the farm going. They cannot run their farm as a young son would run it, or as a young man would run it, or as they ran it for many years. Production is reduced. They do not produce as much as the land can produce because there is no incentive for them to do so.
1 think we are overlooking a major point when we tell long-time bona fide farmers that they either have to give the government half of the capital gain they have built up with the strength of their backs, the work of their hands and the work of their wives and children or they cannot sell their land. Farmers have paid taxes all through the years. They have paid taxes on all their production. Exemptions for farm machinery were simply for the period of years that machinery lasted. As has already been pointed out, the farm home is not a factor in the sale of land today, whether it be with respect to our people or other people. There might be some very small effect, but when we buy land, it is bought for its production capacity and for the living it provides. It is land which is bought, and that is what the government is saying we must pay capital gains tax on.
Capital Gains Tax
We should examine the situation in some other countries. In another debate this afternoon a Liberal member mentioned the high cost of food in some other parts of the world. The cost of food has risen here because farmers have been forced to ask and receive more and more for their farms.
In many cases they have been driven off their farms, and corporations have taken over. Family farms are disappearing, and as this happens we pay more for our food. We will pay through the nose if family farms disappear. Family farms are operated by husbands, wives, children, grandfathers, grandmothers, aunts and uncles, and this keeps the cost of production down. They do not work eight-hour days. They do not get wages. They do this work because they love the land, and they are building up assets. When we kill that initiative, we do something which is not good for this country. The more family farms we can have in this country the cheaper food will be.
1 once spoke to a city group near Edmonton. This group was complaining because there was an increase in the cost of a certain food item. I pointed out to this group that if farmers, their wives and their children were not working on their farms-and they do not receive wages-and if those farms were sold to large corporations which hire people to work eight-hour days and five-day weeks, the price of the product about which this group was complaining would be doubled. That is what we are building up to in this country.
Farmers today have a difficult time remaining on their land. They are faced with frustrations. They are faced with taxes. They have to fight the weather. The whole operation is a gamble, and then the government has to get its hand in and take a chunk out of what farmers earn. There are some very sad farmers in this country. I had occasion to speak to 26 of them during the Christmas vacation. My heart bleeds when 1 see what farmers have to go through. They are given a quota for their grain, and then the elevators jam up because there are no cars. They have no cash flow and no money for Christmas. There is no money for their children to go to high school. Life on the family farm is not easy. This capital gains tax is one of the worst we have. It is a block of dynamite over farmers' heads. If we are to preserve the family farm, I plead with the government and Liberal members to show some consideration for the man on the land and exempt farm land which produces food from the capital gains tax. We would see the tremendous benefits that would bring to this country. That would be a good start. I plead with members of the Liberal party not simply to vote this down.
Let us send this matter to a committee and debate it there. Let us arrive at the very best solution possible so that production will continue, so that bona fide farmers will be able to continue to produce and so that we in this country will have enough food. Then we would be able to help the hungry in other lands as well.


Some hon. Members:: Hear, hear!
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Capital Gains Tax


Mr. Rene Cousineau (Gatineau):: Mr. Speaker, the speeches of the Progressive Conservative members prove the extreme fairness of hon. members on this side of the House in allowing them much more time to discuss a motion presented by a member of their party, despite the fact that they usually say to anyone who cares to listen that the government is unfair to the opposition.
Mr. Speaker, the hon. member is recommending that the Income Tax Act be amended to allow a special exemption in the case of the sale of real estate, and more specifically in the case of farm lands under cultivation, for income purposes. The hon. member who presented the motion, the hon. member for Lethbridge-Foothills (Mr. Thacker) described, in his own way, the problem he would like to solve through his motion. It is therefore important, Mr. Speaker, that we examine very closely whether a special exemption, an amendment to the Income Tax Act, would indeed solve the problem as described by the hon. member.
Mr. Speaker, we must look at the wording of the act that applies to the sale of a farm. First of all, the house, plus so many acres surrounding it, are tax exempt. Then, only half of the sale price applying to the balance of the farm land is taxable. Let me give you an example. A farm is sold for $100,000. The value of the house and that of the land on which it sits is then deducted: let us assume the house is worth $20,000 and the land $80,000. The market value was established on January 1, 1972; in addition, the municipal and school taxes over the ensuing period are deducted, as well as the notary's or lawyer's fees, depending on the province where the sale is made.
Back home, notaries take care of those formalities. I must add, however, that in Quebec, because of farm zoning, the question of the capital gains tax does not affect us to any extent. Let us take my riding as an illustration. Since 1976, when the act on farm zoning was passed, the value of farm lands has not gone up. The value having been set in 1972, the farmer who sells his land today has no cause for worry: the value having been established in 1972, the product of the sale once deducted from it, the resulting gains are non-existent for taxation purposes.

In addition, however, there are three very important tax provisions which serve to lessen the impact of the tax. First, the farmer, having sold his farm, can invest the proceeds in an income averaging annuity. The result is that the entire taxable gain is no longer taxable in one year pushing the farmer into a higher tax bracket. May I call it six o'clock, Mr. Speaker?


The Acting Speaker (Mr. Ethier):: Order, please. The hour provided for the consideration of private members' business having expired, I do now leave the chair until 8 p.m.
At 6 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of the motion of Mr. Lalonde that Bill C-48, to regulate oil and gas interests in Canada lands and to amend the Oil and Gas Production and Conservation Act, be read the second time and referred to the Standing Committee on National Resources and Public Works.
Mr. Deputy Speaker:: Order, please. When the debate was interrupted at five o'clock, the hon. member for Athabasca (Mr. Shields) had the floor.


Jack Wendele Shields: Mr. Speaker, as I mentioned before the interruption in the debate, we are not really facing in this bill the priorities which face this country with regard to natural gas and oil. We should be dealing with the devastating effect of the national energy policy and the devastating effect this is having on all of Canada, but more particularly as it is aimed at western Canada and the producing provinces.
Have the members opposite really sat down and analysed the energy policy presented by their energy minister on October 28? I would like to suggest that they have not. What does the energy policy do? First, it reduces very significantly the cash flow of the companies exploring for oil and gas. Imagine, at this point when we are striving for energy self-sufficiency, we reduce the cash flow of the exploring companies which are going out and finding new supplies.
Where is this cash flow going now? The risk dollars of the energy exploration companies are moving south, are moving to the United States and are being welcomed there. The United States bankers and financial institutions are now advertising in western Canadian newspapers urging the drilling companies and explorers going down to the United States to deal with them and to bank with them. They recognize what is happening and they are welcoming them with open arms because the United States is serious about reaching oil self-sufficiency by 1990.
Whom is this misdirected policy hurting? First, it is hurting the security of this country. I maintain that the very nature of Canada is being threatened by this misguided national energy policy.
Today it is hurting directly the small independent drilling and service companies which are 90 per cent owned by Canadians. The Canadian Association of Oilwell Drilling Con-
January 12, 1981

tractors said last week in a report which they released that eight more rigs left Canada and 44 were shut down in the 17-day period since the association compiled its last report on December 19. This is at a time when drilling activity in western Canada, in northern Alberta and in northern Saskatchewan should be at an all-time high. We should not shut down drilling rigs in the wintertime in those areas where they are exploring for oil. This is the time when the muskeg is frozen and the oil well trucks can drive the equipment over the muskeg, set up the drilling rigs and explore for oil. This is the peak time in drilling activity.
An additional 174 rigs are out of service. This is during what is normally the peak time in the drilling season. We are talking about 147 small factories. That is what they are, they are self-contained small factories employing upward of 30 men. If 147 small factories were shut down in Ontario or Quebec, there would be a hue and cry out of central Canada that would drown everything across Canada. But, what did we hear from the Minister of Energy, Mines and Resources (Mr. Lalonde) during question period today? He pooh-poohed the idea. He said the figures were wrong and that this is normally a time when there is no activity out there in the frontier, out there in northern Alberta, northern Saskatchewan, northern Manitoba or northern British Columbia.
The combination of rigs moving out of Canada and those which have shut down have eliminated 11,360 jobs in the Canadian drilling industry which is 90 per cent owned by Canadians. We are not talking about multinational companies now; we are talking about Canadian ones. Decisions of individual Canadian companies that have moved equipment to the United States have eliminated 2,660 jobs in Canada. Not only are jobs being eliminated; the entire industry is being eliminated.
Drillers, derrick men and all these people take years to learn their professions and trades, yet we are expected to come in here and debate a bill which is aimed directly at frontier exploration and ignores completely the conventional oil industry. There is no doubt Canadian explorers are shipping funds to the United States. One just has to pick up the Sun, the Toronto Globe and Mail or any newspaper. They are telling what is happening; we all know what is happening. I find it unbelievable that we have to sit here, listen to the answers of the Minister of Energy, Mines and Resources today, and be complacent.
Why are they going south? There are better geological formations in Canada, there are better prospects for oil. Why are they moving? We have higher drilling costs in Canada, but we have a much lower net return on production. A Canadian well drilled in Canada finding oil, similar to a well drilled in the United States finding oil, will take 20 times as long to pay out. In other words, it will take an investor 20 times as long to get the return on his money which he deserves for the risk. If one did a pro forma on opening a hamburger store in Ottawa and compared it to opening one in Toronto and found that
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one's return would be 20 times quicker in Ottawa, then the store would be opened in Ottawa. That is what we are talking about. We are talking about nothing else. There is nothing complicated in it.
The national energy policy has written off the conventional oil fields in western Canada. That is why we are debating Bill C-48 rather than addressing the problems facing the country, that is, the lack of a secure energy supply, an energy agreement with the producing provinces and a realistic national energy policy. The entire program favours development in the frontier regions; it ignores the conventional oil potential of British Columbia, Alberta, Saskatchewan and Manitoba. It is there in the deep basin. Do members not realize that the conventional oil industry now in place in the deep basin is absolutely essential to our survival as a nation in the 1980s. We will not get the very expensive offshore Hibernia oil or the oil finds of the far northern regions in the Beaufort Sea to market immediately. It will take eight or ten years. We must rely on the conventional oil industry, and we are not. We are killing it with the national energy policy. We are absolutely devastating the industry. At the same time as we are devastating that industry, we are supporting and propping up nonviable industries in central Canada.
I should like to refer to the remarks of the chairman of Petro-Canada, the white-haired boy of the industry. He runs the company which gives Canada a window on the oil industry. Now he is suggesting there is no substitute for oil and that this country, like every other one, is inextricably involved in the world and in the geopolitics engendered by the supply and demand for petroleum. Also he is forecasting that we will face sporadic or chronic shortfalls in the supply of oil. Mr. Hopper said:
-the wellhead price of Canada's oil may have to increase by more than Marc Lalonde's $2 a barrel annually through 1983-
This is necessary if we are to finance new supplies. That is something which members from the western producing provinces have been saying for the past two years. But, Mr. Speaker, it has been falling on deaf ears. Mr. Hopper also says that the wellhead price for oil should be based on the replacement cost of the oil and not on today's production cost. Does that not sound familiar? The producing provinces have been saying that repeatedly for the last 18 months. It is precisely the opposite of what the Minister of Energy, Mines and Resources has been saying.
Lo and behold, Mr. Hopper also says that the goal of oil self-sufficiency is not attainable by 1990. He says it is an unreachable goal which the government has set itself, even if Edmonton and Ottawa immediately agreed on an energy package, for example, by permitting the oil sands in northeastern Alberta to be developed. In short, Mr. Wilbert Hopper, Chairman of Petro-Canada, disputes the fundamentals of the energy minister's pricing policy. But he draws our attention to the urgent nature of energy and oil and its effect upon the future.

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Mr. Speaker, we are importing this vital commodity of oil from Venezuela, Saudi Arabia and Mexico at approximately $42 a barrel. We are subsidizing everyone who uses energy to the tune of at least $2 billion a year. More important, this $42 a barrel is going out of the country. It allows Venezuela and Mexico to improve their methods of production and their search for oil at the expense of the Canadian taxpayer. I find that absolutely incredible. What do we pay our own producers in western Canada? Some $17.75 a barrel-41 per cent of the price paid to other suppliers. Last July Alberta proposed a rapid increase in oil prices-but not that rapid, not $42 a barrel. Today, under Alberta's plan, rather than $17.75 a barrel they would be receiving $19.25 a barrel. That is $1.50 more per barrel. But this government would rather pay Venezuela, Saudi Arabia and Mexico $42 a barrel than pay Alberta another $1.50 per barrel. 1 wonder about those who are being called greedy and those who are. Who is ripping off whom? I wonder why there is a freeze in the relationship between Alberta and Ottawa? Why is there a threat to the new oil sands plants?
I would like to address the subject of these oil sands plants. Some $9 billion is to be invested in the plant at Cold Lake. There is another $9 billion waiting to be invested in the Alsands project in Fort McMurray. There is no one from either project coming to the government asking for help. The capital investment is there ready to be invested. Our oil supply will increase by 300,000 barrels a day when it comes onstream, which reduces our dependence on offshore oil. It immediately creates approximately 14,000 jobs in the construction industry. More important, it stimulates the economies of Ontario and Quebec-central Canada. Where do you think the steel comes from? Where do you think the pumps and motors come from? 1 invite hon. members from Ontario and Quebec to look around in their ridings at the economic stagnation which is taking place. I ask hon. members to envisage how it could be revitalized by the kind of investment I am talking about-$20 billion.


Mr. Deputy Speaker:: Order, please. The Chair has listened to the debate with considerable interest, but I would like to call to the attention of the hon. member that the bill before us is C-48, which deals with the specific subject of policy. It seems to be a general problem with this debate that some speakers are not directing themselves to the bill before the House. I invite the hon. member to do so.


Jack Wendele Shields: Thank you, Mr. Speaker. The point I am trying to make is that the focus of Bill C-48 completely ignores the conventional oil industry in western Canada. This bill, as it relates to the National Energy Program, focuses all incentives on frontier areas and the offshore. In so doing it ignores the question of the very necessary supply which is needed for the 1980s. That is why my remarks moved in the direction of the conventional oil industry in Alberta, It is why I was trying to impress upon the members of this House, Mr. Speaker, and yourself, that it is a very shortsighted view the government is taking in this respect. Certainly we want to Canadianize the
oil industry. Certainly we want to explore the offshore, the Beaufort Sea and in the north on Canada lands. Certainly we want to do this, but not at the expense of jeopardizing the conventional oil industry in western Canada.
Mr. Speaker, we are coming to a point where the western basin is being ignored. What we are doing is putting more dependence on offshore and foreign oil. Everyone knowledgeable in this area has said time and time again that there will be an interruption in that offshore oil supply.
An hon. member opposite earlier mentioned the Heritage Trust Fund. I would like to reply to his comments by suggesting that every province in this country has a heritage trust fund. Both Ontario and Quebec have heritage trust funds. For example, let us look at Ontario Hydro and Quebec Hydro. The trust fund which they have takes the form of a renewable resource which will go on and on and supply employment for the children of today and their children's children and will be vital to the economy. Conventional crude in Alberta will not be there in ten years or 15 years. The oil is being taken out of the ground in exchange for dollars which will be held in the fund for my children and my children's children. Why is that so hard to understand?
Of the two tar sands plants, it is estimated for each plant that $3 billion will have to be borne by the taxpayers of Alberta to pay for the costs of the infrastructure such as the expansion of highways, railroads, the building of new hospitals, schools and new towns out of nowhere and from nothing. That expense will shoot the hell out of the Heritage Trust Fund. 1 suggest that hon. members opposite get off that subject and quit harping on it.
Another hon. member mentioned the very generous contribution made by central Canada and particularly Ontario to the oil industry through subsidization in the early years. From 1962 to 1972 that total subsidy was $639,321. I will break it down into years. In 1962 Ontario consumers paid $3.06 for a barrel of oil. The price for a barrel of imported oil was $2.84. The difference in the price or the subsidy was 22 cents per barrel. The crude run in Ontario in 1962 was 85.2 million barrels at a total subsidy of $18,744. Jumping to 1970, in that year the Ontario consumer paid $3.13 per barrel. The imported oil price was $2.45. The subsidy, which was at its highest, was 68 cents per barrel. The total crude run into Ontario that year was 130.8 million barrels for a total of $88,944.
In 1975 the Ontario consumer paid $7.44 for a barrel of oil as compared to the imported price of $12.50. Hon. members will notice that the subsidy has now turned around. The subsidy borne by Alberta that year was $4.81 per barrel. From the year 1962 to 1972, the total subsidy paid by Ontario to the western oil industry and the Alberta industry was $639,321. During the period 1973 to 1980 the subsidy paid by Alberta was $9,911,850. Let's hear no more about subsidy.
Bill C-48 focuses on the offshore, the frontier and anything that is Canada lands at the direct expense of the heavy oil industry, the tar sands industry and the conventional industry
January 12, 1981

in the western producing provinces. I would like to refer for a moment to the increase in oil prices which were announced on December 31 by the Minister of Energy, Mines and Resources. This increase did nothing to encourage the further production of heavy oil or get people to go out and search for oil to carry us through. The government introduced a $6.01 tax on a barrel of sour crude. Sour crude has a high content of sulphur. Canada does not have the refining capabilities to break this sour crude down into light crude and consequently we have been shipping it to the United States. Once again we priced ourselves right out of the sour crude market to the point now where Koch Industries of Rosemount, Minnesota has reduced their purchases by 25,000 barrels per day at the direct expense of $500,000 per day to the Saskatchewan government.
The priorities of the government are not being addressed, and we are facing critical times. There are separatist sentiments developing in western Canada. Hon. members can believe me when we say they exist and they are there. Over the Christmas holidays I heard these sentiments expressed time and time again. There is a feeling of alienation, and it is no wonder when one sees self-contained factories being shut down as the result of policies of the federal government, which is insensitive to the needs and aspirations of western Canada. It is no wonder that a feeling of alienation is developing in western Canada when an insensitive document like the National Energy Program attacks the only healthy industry in Canada to the exclusion of all the other industries in Canada.


Mr. Deputy Speaker:: I regret to interrupt the hon. member, but the time allotted to him has expired. However, he may continue with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Deputy Speaker:: There is not unanimous consent.


Jack Wendele Shields: I will close immediately, but I would like to express my thanks for your indulgence, Mr. Speaker.


Mr. Deputy Speaker:: The hon. member's time has expired.


Flora Isabel MacDonald: Mr. Speaker, I wish to make some comments on Bill C-48, which is before us at the present time. I would like to make my comments in the context that this bill is part of the government's over-all energy program which daily forces Canadians to become more and more dependent on increasingly expensive offshore oil. That is the context in which we see this bill. It is an integral part of an over-all national energy program.
This bill will help to force Canadians into a position of greater and greater dependency on increasingly expensive offshore oil. There is ample demonstration of this fact in the newspapers and in the comments made on our radios and our televisions. Everybody knows that the offshore oil on which we are so dependent is going up, rising, increasing in cost steadily. In December the price of offshore oil to Canada went up by
Canada Oil and Gas Act
some 10 per cent, or anywhere from $2 to $4.50 per barrel. We are now paying this additional amount for this imported crude.
The OPEC countries and Mexico on which we are dependent for some 420,000 barrels of oil per day, raised their selling price last month by 10 per cent.
In so doing they added $585 million to Canada's international balance of payments deficit. There is no guarantee that the price for this offshore oil-which must be imported to eastern Canada if people who reside in that part of the country are to have the fuel which is necessary to heat their homes and to drive their automobiles-there is no guarantee that the price will not go up again in 1981, and there is no guarantee from the OPEC countries and Mexico that the price will not be jacked up further than the 10 per cent we have already seen this year.
Neither is there a sure and certain guarantee that these offshore supplies upon which we are unfortunately dependent, will not be cut back and reduced. That, too, is of great concern to us as is the fact that at any time the importation of crude oil from other countries could as well be cut back. In other words, Canada is vulnerable and increasingly vulnerable, to the vagaries of world oil supply and world oil price and will continue to be in that unhappy and unnecessary position as long as there is not enough domestic production to supply our oil needs.
Day after day we are reminded of the lack of security in offshore oil; of the lack of stability in offshore prices. Day after day we are reminded of the critical need for oil self-sufficiency in Canada.
The federal government's every effort should be directed to reducing our dependence on offshore oil in the face of the dangerous and costly struggles in the international oil scene. Every effort of the Canadian government should be directed toward achieving oil self-sufficiency, yet what have we seen in recent months? We have seen the introduction of a national energy policy, of which this bill is an integral part, which has done more to impede Canadian oil self-sufficiency than promote it.
Canadianization and self-sufficiency are supposedly the two main objectives that this bill sets out to attain. They are both worth-while objectives. No one can have disagreement with them. They are what Canadians want and what Canadians need. But those worthy objectives have been offset and jeopardized by the methods the federal government has used, by the divisiveness the federal government has caused and by the confrontational attitude the federal government has taken in its energy policy.
Bill C-48 is part of an energy package which has taken a toll on Canadian unity. I cannot recall a time in this country when regions were more bitterly divided, when people felt more powerless to stand the dictatorial actions of an insensitive majority government, when federal-provincial relations were at a lower ebb. I have to ask myself what has caused ordinary, decent Canadians whose belief in Canada has always been
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unquestioned, to begin now to question that belief. What is it that pushed ill-conceived ideas of domestic boycotts and threats of retaliation to the surface? These are ideas that would have been considered ludicrous a few short months ago.
Sir, what has caused this, in large measure, is an energy policy put forward by a government that is insensitive to the mood and needs of Canadians just as it is insensitive to the international oil situation.
About a year ago both consuming and producing provinces had an energy package to which they could agree, an agreement which would have accelerated tar sands development and which would have brought resources to the east coast.


An hon. Member:: Oh, oh!


Flora Isabel MacDonald: The hon. member from New Brunswick laughed, but this agreement would have helped out his part of the province.
This development would have brought resources to the east coast and would have protected those least able to afford it against price increases that even this government recognizes are inevitable. Those are the things that that energy agreement would have done. Instead of that, today we have dissention, we have dismay, we have distrust. We have no agreement and we have no protection for our consumers on fixed and limited incomes. From the reaction to this energy program and to this bill, we have no chance of reaching oil self-sufficiency before the end of this century.
The greater participation of Canadians in the oil and gas industry is something we all desire. It was very much a part of the former government's energy proposals. That participation would have been achieved by methods markedly different from the proposal set out in this bill but the goal would have been the same. The major difference is that this bill, rather than being part of an energy program which reflected a consensus, is a component of an over-all program which threatens both Canadian unity and Canadian self-sufficiency. That is the difference between the program that would have been in place under the former government and the one which this government is trying to force on the country.
The government's energy proposals have already stalled critical oil sands development and Bill C-48 will not restart them. The government's energy proposals have already driven drilling rigs and oil companies to cut back on their operations; indeed, to leave the country. Bill C-48 will not bring them back. They have already caused a serious setback to our exploration and our development potential. Bill C-48 will not make up for that loss.
If anyone has doubts about whether the statements 1 have made are correct, they need only look at the headlines in the newspapers day after day. On January 6, the headline in the Ottawa Citizen was, "Energy Policy Job Toll 40,000 say Oil Drillers". In The Globe and Mail on January 7, the headline was "New Federal Tax May Shut Oil Field in Saskatchewan". These are the things that the energy proposals are doing.
The tragedy is, Mr. Speaker, that none of this need have happened if the Liberal government had been willing to make a greater effort to produce an energy policy that did not deliberately set out to alienate the provinces and the industry, which are two necessary partners for a national energy program.
Today we could be debating a bill that really would offer Canada a larger stake in its oil industry as well as a secure energy future. But instead, we are debating a bill the goals of which have been undermined by the Liberal government.
We are debating a bill, the potential of which is sadly diminished by the context in which it is placed. We are debating a bill, of which the chances of success in achieving Canadianization and self-sufficiency are next to impossible, given the damage that the Liberal government has already inflicted on Canada's energy industry. And this damage is done at a time when both these goals of Canadianization and self-sufficiency are of critical importance. Canadianization, because we must be assured that the Canadian people, not the government corporations, not the multinational companies, but the Canadian people, have a say in how their resources are developed.
Self-sufficiency, because of the very precarious state of oil supplies internationally which could make any dependent country-even a country like Canada-hostage to external pressures.
We certainly do not want Canada to become any greater a hostage to international oil suppliers than it already is, but that is what we are well on the road to becoming, unfortunately. The proof, all too sadly, is readily apparent.
With tar sands developments stalled, with oil rigs drifting away, with money available for energy investment leaving the country, Canada's production of oil and natural gas is declining, not increasing.
With that decline in domestic production, we become increasingly dependent on unstable, expensive, unreliable supplies of foreign oil with all of the international pressures which that entails. When I spoke in this House on this subject last July, and again in December, I accused the Liberal government of allowing us to drift into greater dependency on offshore oil.


An hon. Member:: You were wrong.


Flora Isabel MacDonald: Yes, 1 was wrong. Indeed 1 was wrong. Then I thought they were allowing us to drift into greater dependency on offshore oil. Now I know they are directing us into greater dependency on offshore oil through this so-called National Energy Program.
The motion which we were debating in the House last July warned against the Liberal government's indifference to the consequence of the global oil crisis and it condemned the government's failure to provide an energy program that would
January 12, 1981

make us energy sell-sufficient. That was the motion before us last July.
At that point I and others were condemning the government's failure to produce any kind of an energy program. Little did I think their failure to produce an energy program at that time would bring on the present monstrosity. In its total preoccupation with one-upmanship in the energy field, the government appears even more indifferent than it was last July to the critical nature of the international energy crisis, what is going on in the world around us, even though that international crisis has assumed more threatening dimensions in the last six months.
At that time the minister responded to my remarks about international tensions by rehashing the February 1980 election campaign, even though I pleaded with him to consider Canada's situation in the face of increasing volatility in the oil rich Middle East. That was last July when we debated that subject. 1 urged him to look at what was going on in the rest of the world and the way in which international tensions were mounting in the rest of the world.
Since then we have seen the outbreak of hostilities between Iran and Iraq, a conflict which dramatizes the instability of that region. It, of course, accentuates the vulnerability of those countries which are dependent on that part of the world for their precious oil supplies. Canada, unfortunately, is in part one of them.
Since the Iran-Iraqi conflict began, we have seen a reduction of some four million barrels per day in the supply of oil to industrialized contries. That is the amount to date. However, there is nothing to say that reduction will not be stepped up. Neither can we be sure the conflict will not spread to neighbouring oil producing countries. We were fearful just a couple of months ago that that could happen with regard to Syria and other countries in that region.
Furthermore, we have to look at some of the other strategic points in that area, such as the Strait of Hormuz. Through the Strait of Hormuz pass two-thirds of the world's oil supply and they became of even greater strategic importance than they were heretofore. They lie not far from the eye of the Iran-Iraq storm. It is assumed that the vital lifeline of tankers through the Strait of Hormuz will continue and there will be no interruption of operation of supplies through that part of the world, but such assumptions should be regarded warily. We cannot take anything in that part of the world for granted.
Even if the Iran-Iraqi conflict were not to spread, even if there were no further reductions to western oil supplies, is the government sensitive to the impact on the western world that the current conflict would have if it were to continue for any length of time with the cutbacks that have already been put into effect? Is it sensitive to the fact that the lengthening of this war is having an increasing impact on industrialized nations which have to get their oil supplies from the Middle East? As it is, the war has already continued for much longer than was originally forecast. There is no sign of any cessation of hostilities. We only know that this cutback in production is going on day after day.
Canada Oil and Gas Act
I can almost hear government members say, "Well, it won't affect Canada much because our supplies from Iran are nil, from Iraq minimal". However, what the government must realize is that Canada, because of its dependency on offshore oil, cannot isolate itself from the impact the loss of Iran-Iraq oil supplies is having on other countries and, of course, on price.
Let me quote from an analyst who has been following the critical global situation much more closely than the Liberal government appears to be doing. Melvin Conant, a Washington-based international oil consultant, states in the November 15 edition of The Financial Post:
Whatever so-called over-supply existed before the Iran-Iraq war has evaporated. There is no evidence that OPEC will make up the production losses from Iran and Iraq. We can look forward to a major price increase in the future.
That was the analysis given at that time by Mr. Conant, who is known as an international oil consultant. His prediction in mid-November has certainly come true. When the OPEC oil ministers met in Bali last month, December, foremost on their minds was the conflict between Iran and Iraq.
Robert S. Pindyck of the Massachusetts Institute of Technology, writing in The New York Times the very day that this bill was given first reading, December 9, estimated that should the Iran-Iraqi war continue for any length of time, world oil prices could rise from 20 per cent to 35 per cent. Even though the OPEC increase is as of December only 10 per cent, we have no guarantee how long it will last or when the next increase will take place. OPEC prices went up in December and January of this year anywhere from $2 to $4 a barrel U.S.
Saudi Arabia, from which we buy 45 per cent of our offshore oil supplies, jumped its price to $38.50 a barrel Canadian, but that is not the end of those increases by any means. Sheik Yamani of Saudi Arabia made the prediction that the price of oil could hit $50 U.S. a barrel, which is $59 Canadian, by next spring, in the next two or three months, if the Iran-Iraqi war continues, and it certainly shows no sign of ending.
Sheik Yamani went on, and I quote from The Globe and Mail of Wednesday, December 17, where he said:
If the Gulf war carries on for much longer a mood of panic will develop on the markets, and if there are no reasonable reactions from western governments, then you'll get this price soon enough.
He was predicting that by this spring prices would go up to perhaps $50 a barrel U.S., $59 Canadian. We have to remember that Canada brings in 45 per cent of its offshore production from Saudi Arabia. The irony of all of this is that the government is willing to pay Saudi Arabia $2 more a barrel this month for its oil. It is willing to pay Mexico $4 more a barrel this month for the oil we receive from there. It is willing to pay Venezuela $4.50 more a barrel this month for the oil it has been selling to us, but the government has not been willing to even listen to the proposals put forward by the producing provinces in Canada. It is not willing to discuss their pricing proposals, proposals which would cost Canadians far less than the world prices we must now pay and continue to pay for offshore oil.

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We pay Saudi Arabia $38.50 Canadian for a barrel of their oil. We pay Mexico $42 Canadian a barrel for the oil they send us. We pay Venezuela $45 Canadian a barrel for the oil which that country ships to us. The Prime Minister (Mr. Trudeau) is presently shopping in Nigeria and Senegal for additional supplies of offshore oil at OPEC prices yet the government is not willing to go beyond $17.75 for the oil it gets from the producing provinces in Canada.
1 have talked to many people during this recent recess and they cannot comprehend how a government is prepared at any time to countenance prices of $45 a barrel from Venezuela or $42 from Mexico and at the same time is unwilling to discuss anything beyond paying $17.75 a barrel to producing provinces in this country. The situation is getting worse. It is not getting better. Not only will the prices rise sharply, but so, unfortunately, will the quantity, the supply of offshore oil that we have to import. That, too, will take a dramatic leap upward, mainly because of the way in which energy proposals are being foisted on this country. Every responsible forecast that I have seen projects this unpleasant truth.
If there is an uncertainty over price in the international agreement, there is absolutely no certainty whatsoever that the quantities, the supplies which oil importing countries will have to obtain-countries such as Canada-will be there just for the asking. Surety of supply cannot be guaranteed to us, especially as the amount which is required increases.
It will be remembered that the Canadian government had a severe jolt to its complacency last month over our offshore oil supplies. Surely the government needed no sharper reminder that our increasing dependency on an unstable and increasingly expensive supply of oil is courting disaster. Surely the government needed no greater reminder than the recent news from Mexico. You remember what happened in December with regard to supplies from Mexico, a supposedly reliable supplier, Mr. Speaker. Half the December shipment to Petro-Canada from Mexico has been lost because of Mexican port disruptions. It was in December we learned that our imports from Mexico had been cut from 50,000 barrels to 25,000 barrels. In January, just the other day, we learned, as reported in the Ottawa Citizen for January 7 that "Bad weather cuts Mexican shipments of oil to Canada", and that that 25,000 barrels a day was reduced to 20,000 barrels a day this month. So there is absolutely nothing guaranteed with regard to security of supply from offshore suppliers.
Petro-Canada, we are told, is attempting to make up the annual 750,000 barrels shortfall from Mexico, but it has to do so in a situation where supplies are becoming increasingly strained. In trying to make up that shortfall, Petro-Canada has encountered the reality of the world oil situation, a very clear hard reality. Petro-Canada has found, as this government has found, that the Iran-Iraqi conflict and other factors of supply and demand have caused world oil surpluses, which were of a temporary nature only, to evaporate. Shortages in the global oil supply are now predicted in the next few months. The Financial Post for November 15 estimated the global oil
shortage as possibly reaching 2.2 million barrels a day, slightly more than Canada's total consumption. That was their estimate of the shortfall by early 1981. That is an astounding figure to have presented to us, sir. It is a figure which everyone should consider as most alarming.
Last July when we were debating there might be a shortfall in the future in the global oil supply, I referred to earlier predictions by the International Energy Agency. Last July the International Energy Agency anticipated a global shortfall between supply and demand of some three million barrels per day by 1985. It was in 1985 they thought we might arrive at a global shortfall of three million barrels per day. But instead, we find, at the beginning of 1981 that the predicted shortages of 1985 are almost upon us. The global oil shortage will soon be acute. What a time for Petro-Canada to have to go shopping to make up an unexpected cutback from so-called guaranteed deliveries. But that is the situation in which we now find ourselves.
This drastic turn of events must have preoccupied the energy ministers when they got together at the International Energy Agency meeting in Paris last month. The official press release stated at the end of their meeting the following:
Ministers noted with concern the events in the Middle East which have cast new uncertainties on future oil supplies and pose a potential severe threat to the world economy.
Those remarks were in their statement at the conclusion of their meetings. The ministers noted this with concern. I bet they noted the Middle East events with concern. I bet they talked of new uncertainties in future oil supplies, and I hope our minister of energy paid heed to what was going on because these uncertainties have far-reaching implications for Canada. In a world where global oil demand will soon outstrip supply, we cannot expect to be handed a privileged place. We cannot expect to be handed a privileged position as long as we are dependent on offshore oil. We cannot presume to be able to buy priority. Increasingly Canada will have to compete with all other oil importing nations of the world. That is the situation in which we will find ourselves. We will have to compete with the rich nations, with the poor nations and with the influential nations. The demand from the Third World will not diminish nor can we afford to deny to those countries the energy they need to rise above the subsistence of abject poverty. Their demand is greater than ours, a fact increasingly apparent throughout the world's capitals.
Whether it be because of recognition of the Third World's moral right to non-renewable energy resources after decades of western extravagance and waste or because some nations find it pragmatically expedient to assist them, these Third World countries will certainly require and receive a greater share of the world's oil supplies than they have in the past. They will increasingly be dipping into the limited amount of supply which will be available on the world's oil markets.
However, the Third World is by no means the only bloc of countries which will be seeking a larger share of increasingly
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limited global oil resources. Other major international events could well drive the Soviet bloc onto the world market. The unrest in Poland poses a tremendous dilemma to the Soviet Union, which has already informed its satellites that they cannot count on petroleum supplies from the U.S.S.R. to meet their increasing demands. Despite recent reports of huge oil reserves in the U.S.S.R., most analysts feel that even if those reports are correct-and they have their doubts on that score-they believe Soviet technology is such that no significant production could take place from those reserves in less than ten years.
But the need for the Soviet Union to help provide economic stability in the Soviet bloc countries exists right now. It cannot be put off for ten years. Even though the U.S.S.R. has served notice of cut-offs of oil to the satellite countries, given the unrest in Poland and given the economic problems in that and other countries, does Russia dare to proceed with its cutoffs? If it finds that it cannot, will the U.S.S.R. then seek to purchase this oil on an already tight open market, or will it act in such a manner as to destabilize further the Middle East? Some of these may be considered imponderables, but they are matters which must be considered when we are devising our own national energy program. The reality of the global oil scene is that there is conflict, there is increasing instability in the Middle East, there is a growing need for oil in Third World countries and there is uncertainty about the source of supply for Soviet satellite countries. All these things have a bearing on supplies of oil which are available through world oil markets.
All of this has a bearing on what Canada should be doing to make itself oil self-sufficient at the first and quickest opportunity. This should be done just as quickly as possible. However, the national oil and energy policy which this government has put forward in no way aspires to meet the conditions I have described. In so way does it take them into account.
That brings us to this very bill, which is part of the government's national energy policy, a policy which is prolonging the day when this country will achieve oil self-sufficiency.
I wish I could be more charitable toward the government's energy policy and its actions, but that simply is not possible for any Canadian who is concerned about the future security of this country. The government has arbitrarily said about its energy policy, "We will do it our way", even though that way is wrong. The government does not seek consensus; it does not consider; it does not consult; it resorts to unilateral action, which is the only thing it seems to know how to do. In doing so this government damages our ability to become oil self-sufficient.
If the government had set out deliberately to decrease our production and to make us more vulnerable to Middle East instabilities and international oil pressures, it could not have been more successful.
In the past few weeks, as a result of the national energy policy the whole of the tar sands development has been stalled indefinitely. The provinces have suffered declines in the hundreds of thousands of dollars from the drop in lease sales.
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Canadian companies are complaining bitterly about this program, which the minister tries to argue is meant to aid their growth. If I were to take someone who would be considered unbiased from a Conservative point of view, I could quote Premier Blakeney of Saskatchewan, who said when he spoke last month that the first companies to go under as a result of this National Energy Program will be the small independent Canadian companies. That is what Premier Blakeney of Saskatchewan said. It is a pity some of his colleagues in the New Democratic Party did not listen to him more.


Michael Holcombe Wilson: They never listen.


Flora Isabel MacDonald: Exploration in the north has been cut by 40 per cent or more for the coming year. That is research and development for which there is no replacement on the horizon, and this bill is no panacea for the ills I have listed.
This bill will not make up for the jobs Canadians have lost and are continuing to lose. It will not make up for the decline in productivity or for the extra costs each and every Canadian will have to shoulder as a result of our increasing dependency on expensive offshore oil. If we are to avoid squandering our grandchildren's future as we have begun to squander that of our children, we must reach oil self-sufficiency, and we must do it as quickly as we can. To do that we must use a carrot and not a stick. We must use co-operation and not coercion. We must employ Canadians, not drag them away. The industry needs stimulation, not a cold shoulder. Oh, I know the government will tend to dismiss such objections with a wave of the hand and will say that Canadians will reap such and such a reward if they accept this policy. It is unfortunate that members of the government did not consider the need for a far-sighted Canadian national energy policy when they were allowing so much of our precious oil supplies to be shipped out of this country at bargain basement prices over the last ten years.
I seriously urge the government to re-examine the priorities behind the national policy of which this bill is a part. I ask members of the government to do so in the light of the realities which exist in the world today and which will continue to exist.
1 ask them to do so in the light of the shortages in oil supplies which will be facing us globally. I suggest to them as well that we cannot afford to continue adding year in and year out to our mountainous national debt. I ask them to act in unison with the oil producers and the provinces in getting on with the National Energy Program. If the government will do that, Canada will attain oil self-sufficiency and control of its resources much more quickly than anything the National Energy Program and this bill now propose.


Hon. Yvon Pinard (President of the Privy Council):: Mr. Speaker, Bill C-48 constitutes a fundamental and important element of our national energy policy. However, it should be pointed out that this is not the only bill which will result from our national energy policy. This evening, the previous speaker

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stated at the very beginning of her comments that, indeed, she considered this bill as an element, but only an element, of a comprehensive energy policy, on which point she elaborated, and I have nothing to say against this.
Following presentation of the budget, our national energy policy became public, and this has opened the door to a lengthy debate in the House on the important matter of energy. Members on both sides of the House spoke on energy matters during the six days of the budget debate. We then heard speeches on energy and the national energy policy during the six additional days of debate on the proclamation of various sections of the Petroleum Administration Act which were granted at the request of the official opposition. Hon. members have therefore had a total of 12 days to express their opinions concerning our national energy policy. This single element of our over-all policy has already been the focus of debate. We are now in the fourth day of debate at the second reading stage, and if we add these four days to the 12 days 1 have already mentioned, we get a total of 16 days of debate on energy.
I would like to point out that this is only the second reading stage, that other legislation concerning energy will be debated in the House, and that I am happy to see that hon. members have so much time to discuss this fundamental question. However, everyone will understand that if we want the business of the House to proceed in an orderly manner, we cannot allow unlimited debate on every bill concerning this issue. We had expected this bill to be referred to the appropriate committee for further consideration before the Christmas recess.
1 must say that we were disappointed because even though there had not been any specific agreement on this matter, it was still possible and logical to expect this bill to be referred to a committee while the House could then have gone on to some other legislation concerning either the economy or energy. It seems to me that it would have been logical to allow the House, through its various committees and its particular structure, to examine at the same time in committee the matter of energy, the constitution and the economy, so that Parliament could also deal with the other bills on the order paper which deserve our consideration.
Mr. Speaker, a modern Parliament should be able to react and respond to the pressing needs of daily reality in a modern state. As we now have about 40 items on the order paper and although we are compelled to deal with the economy, energy matters and the constitution, everyone will understand that it is impossible in the present circumstances to allow a single stage of a bill to take up so many days of debate at the expense of the other bills and legislation which it is our duty as a government to have the House consider in the best interests of the Canadian people.
It is therefore without hesitation-and I am not in the least embarrassed to say so-that I give this evening the notice required by Standing Order 75c. As this bill is now in its
fourth day of debate and will take up the time of the House again tomorrow and probably Thursday, which will make a total of nearly six days of debate at the second reading stage, 1 have no hesitation in stating that, under the provisions of Standing Order 75c, I shall move a motion tomorrow asking that one additional day of debate be granted at this stage.
I have not been able to come to an agreement with my colleagues, the other House leaders, under the provisions of Standing Orders 75a and 75b concerning a reasonable time limit to conclude second reading of this bill. As required by our rules, I have offered to meet with them and discuss what additional time would be required to dispose of the second reading stage of this bill, and they clearly stated that it was impossible to reach such an agreement. This is why I feel quite justified-


Mr. Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, I rise on a point of order. In the last five minutes I have been listening to a breach of rules of the House. We are discussing here Bill C-48. In no way are we discussing the procedure of the House with regard to this bill. I should like to suggest to the government House leader that if he will be found guilty of such a breach of the rules of this House, he should not be in the position he now occupies. When we want to discuss the order of procedure in the House, we do it on motions, we do not do it on the pretence of debating a bill.


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


Francis Alvin George Hamilton: You do not
follow any such procedure-


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


An hon. Member:: You are disrespectful of the Chair.


The Acting Speaker (Mr. Blaker):: I am not sure I follow the argument of the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton). On a point of order he seems to object to a procedure which has been followed by the minister under Standing Order 75c. If that is the point of order which the hon. member is raising, I will listen to it, but my understanding of his words is that he is objecting to the use of the particular procedure.


Some hon. Members:: No.


Francis Alvin George Hamilton: That is the very point, Mr. Speaker. We are debating here Bill C-48 which is a bill on part of the national energy policy, and yet a minister of the Crown has stood up and discussed procedures leading up to the announcement of a motion under Standing Order 75c. I am simply saying that he is out of order in doing it during the discussion of the bill. He can do it on motions, which is the proper time when a government announcement should be made on this sort of thing, but he should not take up the time of members for the debate of this important bill.


Some hon. Members:: Hear, hear!
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The Acting Speaker (Mr. Blaker):: The minister is probably rising to defend his right under the procedures of the House to give notice of a motion under Standing Order 75c. He is perfectly in order because a notice of motion under Standing Order 75c has been given by a minister rising in his place at various stages of the proceedings. There is nothing wrong with the minister doing so at a time he chooses during his speech. This is in order and has been done previously.


Yvon Pinard: Mr. Speaker, I certainly have no intention of discussing or criticizing in any way the ruling you have just given, nor even of congratulating you on it which. 1 think, would be contrary to our rules. So, in accordance with the Standing Orders of the House, and having been given the floor, 1 gave you the notice required by Standing Order 75c and, more officially, you know that one additional sitting day will be allotted to study this bill when I present a motion to that effect at the next sitting of the House, tomorrow.
Mr. Speaker, I now end my remarks in order to give my hon. colleague the opportunity to speak this evening, since he seems to have something to say. In any event, he will have this opportunity tomorrow and Thursday. He can also do so in committee, at the report stage, and on third reading of the bill; moreover, he will get a chance to discuss the energy policy when all the other bills come up for study; as far as I am aware, at least three other bills are to be introduced in the House in the coming weeks or months. He will then have every opportunity to express his point of view and discuss our national energy policy.
1 am not sure, but I believe he rose a while ago on a point of order on which the Chair ruled. I hope he does not take offence because we are asking that consideration of this bill take place in committee. During the oral question period today, his own leader, unless I am mistaken, or someone from his party, with the approval of his leader, asked specifically that witnesses be heard on our energy policy, to which the Minister of Finance (Mr. MacEachen) said something to that effect: of course, refer the bill to committee and hear such witnesses as may be needed to enlighten the hon. members both on the spirit and the letter of Bill C-48.
So in short the government is giving the House the opportunity to refer to committee a bill dealing with energy. Others will be studied here in the House. The House is being given the opportunity to refer this bill to a committee for consideration while the House tackles other urgent and important problems relating to the budget, our energy policy or our renewed federalism. That, Mr. Speaker, is the reason why 1 rose to speak at this time this evening. 1 do not blame any hon. member in particular but there comes a time when someone must assume the responsibilities to govern and conduct the business of the House as provided for under Standing Order 18(2). Since I know that some bills on the order paper deal with our energy policy, that others deal with the budget and
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the constitution and being aware of the limited time at our disposal, it is my duty as government House leader to see to it that this institution will remain worthy of respect. After a reasonable period of time, and in 1981 it seems to me that ultimately five or six days of debate on the second reading of a bill which is a single item of a comprehensive energy policy are a proper period of time.
We have only to consider what goes on in Parliaments which are facing like us urgent problems and want to be realistic. One only has to see what goes on at Westminster in London, for example, where a time limit is set more often than here. You will understand, Mr. Speaker, that we are justified under the circumstances, if we want to assume our responsibilities properly, in giving you notice that tomorrow I shall move the said motion. With respect to the formula, I wish to advise the House that in spite of consultations with party representatives, it was impossible to agree on the application of sections 75a and 75b on second reading of Bill C-48. I therefore have the honour to advise the House that at a later sitting I shall move a motion under section 75c to allot another sitting day to the second reading of Bill C-48.


Francis Alvin George Hamilton: Mr. Speaker, I thank the hon. member for Assiniboia (Mr. Gustafson) for sitting down and letting me make my remarks. I was shocked when I saw a minister recognized by the Chair tonight to speak on Bill C-48 and then proceed into a discussion of what the debate was about, the energy policy, and the oil and gas regulations. He did not make any announcement of his intention to move a motion under Standing Order 75c. There is no course for an hon. member on this side of the House but to object to it as a breach of what should be the subject of this debate. If he had moved his motion at the very beginning, because that is what he spoke on, it would have been in order. But, the announcement has been made, and 1 have no more to say about it.
In plain terms all I want to say is that Bill C-48 is bad legislation in principle. It is bad legislation in economics. It is bad legislation for the preserving of the national interest. This debate has been carried on for only a few days. I have heard only three or four speakers who have dealt with the principles of this bill in the debate. Several members on both sides of the House have risen on points of order to point this out. I do not fault the Chair because this bill is part of a national energy policy, but 90 per cent of the debate has dealt with an energy policy, not with this very important bill which deals with the administration of that energy policy in so far as the Canada lands are concerned.
The Canada lands are not a petty little subject to be passed away with three or four days of debate. We are talking about one of the trump cards of the resource wealth of Canada. Throughout history we in Canada have waited patiently to achieve the desired future, when the world would come to

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realize that we in the country had what they needed. We in northern Ontario and Quebec, in northern parts of the prairies and in the north generally-and I define the north as 50 miles out of Toronto-have waited patiently for our hour to strike, and it has struck now.
I recall my speeches in the House when 1 was on the government side in 1957 and 1958. The Paley report in the United States pointed out in 1952 to the American government and the American people that they would be in great danger on strategic items of energy and resources by the year 1980. On behalf of the government I stated that in our view it was Canada's opportunity. That is why we had to strike north in the northern development program; that is why the road to resources are directed toward the north; that is why the oceanography institute was put in at Bedford basin; that is why the hydrographic surveys were conducted of the north; that is why the polar continental shelf exploration program was set up and still continues; that is why we drove the Americans out of the north. It was to take every opportunity to protect the great wealth, the high trump card of the wealth of the north. These Canada lands do not concern the lands of the provinces. There are a few Canada lands in the provinces, but in the main they are located in geographic areas outside the provinces, in fact 99 per cent of them. Approximately 42 per cent of the area of this country is Canada lands in the north, that is, above sea level. But in addition under international law we have the sovereign right to develop the bottom of the sea off our coasts half way across the oceans, until we meet the other nations developing the bottom of the sea off their coasts. It includes the Atlantic, the Arctic and the Pacific oceans. It is international law, not the 200 miles mentioned in this document. It indicates that the law officers of the Crown do not even know international law.
We are debating not only oil and gas, but a philosophy of regulations which deals with all hydrocarbons in this legislation and ultimately will extend and deal with all our minerals. The wealth of the minerals will be much greater than the wealth of hydrocarbons; they are immense. I speak with feeling because this is a subject which some of us have followed for a lifetime. The oil and gas regulations of this country have been dismal.
Going back recently in history, we accepted the American-style regulations in the 1920s and 1930s in the four western provinces. Those regulations were not only lousy; they were uneconomic and unsound in every way. They led to the high grading of our oil, and when we high grade oil and leave the balance in the ground, it is waste. No matter how good or extensive our recovery systems are, the oil is left in the ground forever. In all the proven fields in Alberta, 75 per cent of the oil still lies in the ground, and they want to repeat that mistake in these regulations in an area which is many, many times greater than the western oil basin.
We can look at those regulations and see that every mistake made in the American regulations is back in there. In 1961 we got away from that in Canada when we put through the regulations on Canada oil and gas lands and mining regulations. It was a compromise type of regulation, but it accepted part of the concession principle and part of the flexible grid system. We tried to have our philosophy clear in mind. It was a big improvement.
The last time the House debated Bill C-48, the hon. member for Calgary Centre (Mr. Andre) told us that the history of regulations since 1963 has been sad indeed. The government which was elected following our government in 1963 in due course put those regulations into abeyance to study them. We did not really get new regulations until 1976 when they were announced by the then minister, Mr. Alastair Gillespie. The Conservative party supported those regulations brought in by the then minister because they were an improvement over what we had before 1961. I spent four years of my life battling with oil companies in the United States, in Britain and in Canada. The record tells the story. In the September 1959 edition of the American OH and Gas Journal, my terms for outside companies coming into Canada were set out in bold face print. They were not perfect regulations, and I knew they were not perfect. It was an effort to carry out the philosophy which all parties should and do hold. These oil resources-and I don't just limit them to oil, it applies to minerals and gas as well- belong to the people of the country. They can be in the provincial right, or in the federal right. It is our duty to see that we, the people, get the most out of those regulations, most of the value out of that oil, if one may use oil as the example. The regulations of 1976 were not perfect; they were really just a new version of the 1961 regulations, and we supported them. I do not think it is possible to ever achieve perfect regulations, but we should know what we are trying to do. We are trying to protect the interests of this and future generations so that we may get most of the value back into the hands of the owners of the resource. To achieve that purpose you must realize you are working with a partner, a partner who takes the risk of failure. You must provide in a fixed pledge how those resources will be shared so that the partner is sure that if he goes ahead and takes this risk that on the average he will receive enough return to make a profit. Years ago that figure was lower than it is today, but today you almost have to guarantee to your partner at least a 25 per cent return on a risk venture in our Canada lands.
I have proposed in this House, when the Hon. John Turner was finance minister and the Hon. Donald Macdonald was energy minister, that there was a way we could achieve this. As my record demonstrates, I have tried to be constructive with the government even though it was a different political party. The words of the former minister of finance, John Turner, bear me out. He thanked me for my proposals and the work I had done. The same goes for Mr. Buchanan. They recognized what I was trying to do with what little knowledge I possessed. But in helping the government get regulations, we not only gave the biggest share we could to the people but we also made it liveable for the partner. You cannot operate a partnership if the deal is not mutually advantageous to both sides.
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In terms of percentage we are talking about a 60-40 split in the Canada lands-60 per cent for the people and 40 per cent for the guy who is taking the risk. That gives a net return, after the debt is paid back, of about 25 per cent. That is what they are doing in the British and Norwegian oil lands by copying our 1961 regulations. So when I speak on this subject 1 do so with feeling because I have seen the high grading that went on in western Canada for 50 years. I have seen millions and billions of dollars worth of value left in the ground because of poor regulations since the provinces accepted willy-nilly the regulations we inherited from the United States. This is not a matter of debate just in Canada, it is the subject of debate in Venezuela, the Arab states and all over the world. The best book on this subject was just published by Americans two years ago about the resources of the future. It was entitled "Economic Aspects of Oil Conservation Regulation". I find nothing in these regulations which deal with the most economic recovery rate or which deals with the difficulty of getting all the oil out of the marginal areas of the field.
These are not political, partisan remarks, Mr. Speaker. I am speaking as one Canadian, as is everyone in this House. I think of all the mistakes we have made in Canada over the last 50 years with regard to oil and gas regulations and the fact that we tried to get out of those mistakes from 1957 to 1961 and again in 1976 and 1977. This party in the opposition supported the government in 1976 and 1977 on their regulations. So when I speak it is with very deep feelings since this is the end reward of the dream which many of us had, that one day Canada would become a great nation of resources, well-managed, and where you take out the most barrels you can economically and not repeat the horrible mistakes of the United States where their oil and gas regulations encouraged people to put wells side by side, creaming off the top grade oil. If your porosity and pressure is such that you lose it, you do not get the oil out.
There are tremendous numbers of people all over the world, and in Canada too, who know the principles of reservoir engineering. There is no recognition of that in the regulations which are before us. This is a vital part of the energy policy, how to get the maximum number of barrels of oil out with all the best technology we have got. That can only be done in the regulations which guide the people who run the industry. In the government we do not have very many experts on oil and gas regulations. As a matter of fact, we do not have them on oil and gas policy, as the blunders of the last two or three years illustrate. We do lack skilled people at the federal and provincial levels to deal with these oil and gas regulations. In my case, as minister in charge of all resources in the north, I could not find a single soul in my department who knew anything about oil and gas regulations, so I had the Civil Service Commission provide me with one. The man they chose was a top-level civil servant from Saskatchewan who had some idea of philosophy. He was the one who helped me draft the 1961 regulations. This government was aware of the crisis developing in 1973. I went to the minister of energy, mines and resources and pointed out to him that his department did not
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have qualified people in it to deal with the oil and gas industry. I suggested that he should get some. He got them all right, three or four of them. But one of them went out of there like a scared rabbit, and he ended up in charge of a Crown corporation called Petro-Canada. He did this because the pay was better and because there were no responsibilities to government. Others had to sneak back to the Department of Finance where they belonged-nitwits to nitwits.
I am warning the government, as a Canadian to Canadians, that this bill should be withdrawn, not by closure, but withdrawn entirely. It should be redrafted. They should try to find somebody in the legal department in the Department of Justice who understands international law. They should try to get someone who understands the philosophy and the principle of oil and gas regulations. The Americans are well aware of the tremendous amount of work which has gone into examining their mistakes. The book I referred to earlier gives a good account of this. Let us learn from their mistakes and our mistakes. After 1961 Venezuela, the Arab countries, Norway and Great Britain looked at Canadian regulations and accepted the principle of sharing. They moved away into the concession principle and brought in the principle of no charges to the oil and gas company until they had paid off the debt. Then the PIR came in-progressive increments for royalty. They moved ahead and the oil companies in the United Kingdom know that they will receive after all the money is back, 25 per cent as long as that oilfield lasts. That was in the 1976 regulations. Let us go back to what was concluded in 1976. The words were "Conservation is the key." Conservation means to get the most barrels at the most economic price and not be guilty, as the Americans are and the provincial governments in western Canada are, of leaving 75 per cent of the oil in the ground. In most cases it is gone for ever. I know about secondary and tertiary recovery-which is another subject. I appeal to the hon. members on the government side who are left to believe that I am not just making a partisan attack on the government.
The ministers of the government do not have the personnel who know the first thing about this matter behind them. There is one civil servant who I brought to Ottawa and who is still here who knows something about the matter, but he is now dealing with a cultural subject. The government always gets rid of these people who know something about the matter by putting them in a position where they are never seen again. I suggest that the government drag him back to the living world and put him to use, and bring in some other people. I could recommend some names myself. These are men who put their country high on their list and who hate to see us going ahead in this matter when there is ail this experience on the continent and in the whole world which would enable us to go out and recover 25 per cent or 30 per cent of that oil through primary techniques, secondary techniques and tertiary techniques. We can do it under the knowledge that Parliament is directing those people.
During the ten minutes I have left, I would like to speak about the current proposal. This proposal has turned back the

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clock of history with regard to oil and gas regulations in Canada by 50 years. We have gone back to the same blunders which the Americans experienced years before us and what we have experienced in western Canada over the past 50 years. There is a way out of this squabble with the producing provinces whereby the federal tax collector, who is so greedy for money he will even steal, can get more money and the provinces with their civil servants, who are so greedy for money that they will even steal, can get more money, if they use the basic economic facts before them. If one looks at the history of oil costs in Alberta from 1920 to, say, 1950-and I know those figures-one will find that 75 per cent of the cost of producing a barrel of oil takes the form of interest costs. Many of the oil companies had to spend most of their money which they made from oil to pay off these interests costs. Because they were selling reasonable volumes after 1960, the companies were able to get along and grow.
If one goes back and reads the record, one will see that I put those proposals before the minister of finance, the Hon. John Turner, in 1973 or 1974. I showed him something which his officials or the officials of the big oil corporations could not deny, that with regard to these oil sands projects, if they would recognize where the costs lay, and deal with those costs it would reduce the costs from approximately $11 per barrel down to about $3 per barrel. I am using 1974 figures which are based on 10 per cent money.
The then minister of finance and his officials looked over that proposal and it was accepted. The record will show though that the minister said that, unfortunately, the companies do not work that way. I had in my hands letters from the largest corporations of the world offering to come in and develop those oil sands, not at 10 per cent, but at 7 per cent, if I could get the governments of Alberta and the other producing provinces to sit down and look upon each other as partners, instead of trying to destroy each other, determine their needs and then the companies could make more money, the provincial government would have been a big winner and the federal government would receive as much money as it is trying to get out of a small pie through these government regulations and taxes.
I put this situation to the Hon. Donald Macdonald in his capacity of minister of energy, mines and resources in 1973 and asked him in view of this arithmetic what he thought would be a fair share knowing that the oil belonged to the people of the provinces. He suggested a ratio of 50 per cent for the provinces, 30 per cent for the oil companies-we would give them all they needed-and 20 per cent for the federal government. But that was 50 per cent, 30 per cent, out of which the oil companies had to pay all their costs, and 20 per cent of a huge pie because the cost of producing that barrel of oil was reduced from $11 to $3. So instead of having a cost of $11 per barrel of oil and selling it at $12 or $15 with hardly any profit at all, there would be this huge profit.
By doing it this way, the economic way, the provinces would not be unhappy. They would be making 50 per cent of this huge profit. The oil companies would get enough to pay off their debts and receive 25 per cent on all the money invested,
and the Government of Canada would be receiving 25 per cent of a huge pie, instead of 24 per cent of this small pie which we have now. When we see the willingness on the part of responsible ministers to accept the validity of your figures and then say, "Unfortunately, the provinces do not go for this", or "Unfortunately, the companies do not go for this", to me it is hardly credible. It is the duty of a minister to go out and get agreement from the provinces, and they never disagree if it can be shown that they will make more money.
I have in my file letters from the premiers of every province, except one, in Canada accepting this principle. With that knowledge, seeing the provinces and the federal government at war because of complete ignorance of solutions that are so simple it then becomes just basic economics that you must get rid of your early costs. The name for this theory in the industry is "front end loading". These regulations are full of front end loading charges. The government will load on the royalties and the projects will go into production, with debt going up and up and the interest rate going up and up and only five years to write off what is left. The companies know they will never pay off the debt in five years and that is why they are walking away.
I am simply suggesting that if we do not attack the cost of high interest rates, then there is no way in which we will save investments in these capital intensive enterprises. I refer not only to oil, gas, oil sands and heavy oil, but also to our farms, our small businesses and our big businesses which, caught with a debt equity ratio in which the debt is too large, are going down like nine pins. This is happening not only in our country but all over the world. The mighty General Motors is losing money because of interest rates. Chrysler and Ford are on their knees and Massey-Ferguson is flat on its stomach because of interest rates. The way out is the old-fashioned way and that is shift over into more equity. Nobody would agree with Argus, but Argus is out of Massey-Ferguson.
I am simply making the appeal that there are reasonable, practical, sensible solutions to this great quarrel, and we should not be dismayed over these difficulties when there are reasonable solutions. They are not perfect, but reasonable. I would like to close with one appeal. Oil and gas regulations will be there as a contract for years to come, so do not sell our resources away for nothing. Do not leave them in the ground because of a stupid political quarrel between civil servants, not politicians. Let us face up to the situation and go back to the 1976 regulations or the 1961 regulations, which are much the same, and then we will have in part an energy policy which is at least economically sound, and which, I am sure, will lead the way in this quarrel over revenues between the federal government and the provincial governments, and that will lead ultimately to the constitution, and these problems will disappear with good will on both sides.
Everything I say I think is right and I think my advice should be heeded. The first step in listening to my advice is not to grind it down with rules such as 75c, sending us into a committee where we are helpless unless we get that willingness to co-operate. But let us not destroy this great opportunity for
January 12, 1981

this and future generations of Canada through a silly fight where we are trying to ram everything through in the name of efficiency when all it is is the opposite.



PROCEEDINGS ON ADJOURNMENT MOTION

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

William James Kempling: Mr. Speaker, on October 10 last, I asked some questions concerning the bankruptcy of Re-Mor Investment Management and Astra Trust. I called for a judicial inquiry. I want to add a few more details now, as much as the time allotted to me will allow.
The liquidation of Astra Trust, the bankruptcy of Re-Mor Investment Management and the receivership of C & M Financial Consultants are three events that are interconnected through common ownership of share stock, common directors, and twisted, crooked business dealings designed at the outset to bilk innocent victims of their life savings.
Not only are the depositors of Astra Trust victims, but some of the shareholders have been gutted by a group of financial sharks who have left behind a trail of shattered lives, broken dreams, threats of suicide out of despair, and a cynicism so deep that it could lead to violence.
The victims of the Re-Mor scam were baited by the smooth talking trust officers who took their money, gave Astra Trust receipts to the victims, and then switched the money to worthless Re-Mor mortgages. When the victims complained they were told they were holders of good solid first mortgages, when, in reality, they own a piece of a fourth or fifth mortgage that is next to worthless.
The purists in business practice cannot invoke caveat emp-tor-"Let the buyer beware"-because most of the innocent victims entered the door of a trust company that, on its walls, windows and counters, displayed the advice that Astra Trust was a member of the Canada Deposit Insurance Corporation. You see, they had that feeling-a warm comfortable feeling, that the government was there to protect them. Add into this mixture of deception, that the words "guarantee" and "guaranteed" were prominently displayed in the office, in advertising wall charts and brochures, and so on; add as well that Astra was paying a slightly higher rate of interest than other trust companies and you then begin to see the dimension of the scam. A trust company-protection by a government corporation and guaranteed; that is the perceived picture of the innocent victims who walked into this place.
Adjournment Debate
But, as in most deceptive dealings, there was another side that was not up front or displayed. This was the fact that the trust officers were also commission agents for Re-Mor. They were paid a salary by Astra and a commission by Re-Mor. They took the money from their "mark" in a trust-govern-ment-protected-guaranteed atmosphere and switched the money to Remor worthless mortgages.
Mr. Speaker, the Minister of State for Finance (Mr. Bus-sieres) has tried to weasel out of a dirty, smelly, disgusting mess by saying that Re-Mor is a provincial responsibility. Mr. Speaker, bankruptcy is a federal responsibility and Re-Mor Investment Management Corporation is bankrupt.
There are dozens of unanswered questions that must be investigated. Let me list a few. Is the Department of Insurance adequately staffed and does it have the mandate to perform an adequate inspection of the trust industry? After all, it was only a short time ago that Argosy Trust left behind a trail of shattered certificate holders. How close were the affairs of Astra Trust monitored by the Department of Insurance? What liaison is there between the federal and provincial governments? I am sure we could write volumes about that. What leverage does the Department of Insurance have that it can get the Ontario Securities Commission to hold back on a "stop trading" order on a trust company that has violated the regulations under which it operates? Did the inspectors from the Department of Insurance put the advertising of Astra Trust to the Department of Consumer and Corporate Affairs when it is obvious that the advertising is misleading? Why did the Department of Insurance not intervene when it was apparent that the trust officers in Astra Trust were acting as commission agents for Re-Mor? Surely they saw the conflict. Surely they knew the amount of money that was passing through Astra Trust and where it came from.
If, when the trust licence was given to Astra Trust, the government instructed Astra Trust to close down C & M Financial Services, why did it act blind to the activities of Re-Mor when it knew C & M really never closed down?
Did the Department of Insurance inspector's report to the Department of Consumer and Corporate Affairs indicate that bait and switch tactics were being used by Astra Trust officers? Why did they not do it then? Certainly they were there and had enough evidence to work on.
What liaison was there between the Department of Insurance and CMHC when that agency listed Re-Mor as an approved lender? How much money was diverted from Astra Trust to a condominium development in Spain? How many million, and do we really know if it went to that development or is it in a numbered bank account in Switzerland or Liechen-stein? RCMP officials traced the money as far as they could, but were the directors of Astra Trust that inept that they would invest trust funds in a venture that was so questionable? Or was it chosen as a front to divert money to a hidden account that could be retrieved at a later date?

January 12, 1981
Adjournment Debate
With a mass of regulatory violations outstanding against Astra Trust after 12 months of operation, why was no firm action taken at that time before the whole mess festered and grew into the tangled fraud we see today?
I could go on, but in the final analysis the bankruptcy of Re-Mor and the liquidation of Astra Trust is a scar on the whole trust industry, and that industry, while some expressed their view verbally regarding the licensing of Astra Trust, not one of them put it in writing. Nor did their trade association put in writing their concerns of the licensing of Astra to the Department of Insurance or the Canada Deposit Insurance Corporation.
So, we must ask, whom do you trust? To whom do unsophisticated investors turn when they wish to invest the proceeds of the sale of their home or a bequest or other funds they have available?
We must have a wide open judicial inquiry, if necessary a joint federal and provincial inquiry. The personal assets of the officers and directors of Astra, Re-Mor and C & M should be frozen. The assets of their wives should be frozen so that the inquiry can determine if loans and other funds have been diverted or transferred to second or third persons to shield them from seizure as the result of the liquidation, bankruptcy and receivership of the tangled companies involved.
If you fail to do this, then you are confirming that you condone and are part of this mammoth conspiracy and the word trust, as we understand it today, will cease to have any meaning in financial dealings.


John Leslie Evans: Mr. Speaker, I would like to try to answer some of the charges or points raised by the hon. member with regard to Astra Trust. 1 would first like to put a little background on the record.
The Astra Trust Company was authorized to commence business in early 1977. The deposit activities of the company were generally carried out in a satisfactory way, but a problem arose through the course of 1978 in connection with a pooled trust fund operated by the company, known as the Agency Trust Fund. The documentation was inadequate and the investments were not of acceptable quality.
The Department of Insurance communicated with the Registrar of Trust Companies in Ontario and with the Ontario Securities Commission to try to solve the problem with company management. Further intake of funds through the Agency Trust Fund was prohibited.
The difficulty was apparently solved in the fall of 1978 by an agreement whereby the three principal shareholders would purchase certain assets out of the Agency Trust Fund, paying in instalments.
In the spring of 1979, it appeared that Mr. Montemurro, the president of Astra Trust, secured the incorporation of a company called Re-Mor Investment Management Corporation under the Ontario law and had it licensed as a mortgage broker. We received no information concerning this incorporation but would not normally by informed of the issuance of a mortgage broker's licence. No one supervised this company.
In the spring of 1980, the Ontario Securities Commission took action to investigate the activities of Re-Mor. It then appeared that the assets of Re-Mor were of poor quality and the company was put in bankruptcy. The Department of Insurance then learned of the existence of this company and that the company's obligations had been sold out of the branches of Astra, often being presented as insured obligations.
In Astra, problems relating to the Agency Trust Fund re-emerged at the end of 1979. In early 1980, no solution was in sight and the company's licence was severely restricted. These problems, together with potential claims arising from the Re-Mor bankruptcy, uncertainty of management and allegations of fraudulent activity by the principal shareholders of Astra led the Department of Insurance to seize control of the company's assets in April and later to seek a winding up order.
Astra Trust is now in the process of being liquidated. Practically all of the insured deposits have been paid off by funds advanced by the Canada Deposit Insurance Corporation.
Uncertainty continues respecting creditors of Re-Mor. Re-Mor is an Ontario company and is not a trust company. It is not a member of the CDIC. The matter is very complex and studies are under way to disclose the complete details of any involvements between Re-Mor and Astra. Solicitors representing the CDIC, the liquidator of Astra and the trustee in bankruptcy of Re-Mor, are working together in this investigation.
The Department of Insurance and the CDIC have requested the RCMP to press forward adequate investigations to reveal fraudulent or other criminal activities that may have been involved. The Ontario Provincial Police are also active in this regard.
Everyone may be assured that all lines of investigation are being pursued with a view to doing everything possible to minimize losses to creditors and to see that justice is done.
If I could, on two points, the hon. member opposite has indicated that the federal government-


The Acting Speaker (Mr. Blaker):: Order, please. 1 am sorry to interrupt the parliamentary secretary but if I allow him to continue I will be depriving other hon. members of their opportunity to speak. I see well-known and knowledgeable leaders of parties in the House at this hour. The tradition is an allocation of seven minutes for the question and three minutes for the reply. I cannot go beyond that time allocation otherwise I will be depriving other hon. members of their opportunity to speak.
January 12, 1981


FISHERIES-INQUIRY WHETHER CATCH ROYALTY OR LANDING TAX WILL BE IMPOSED
Mr. Thomas Siddon (Richmond-South Delta):: Mr. Speaker, at the beginning of this Thirty-second Parliament, the government promised as recorded in the Speech from the Throne at page 6 of Hansard that-legislation will be introduced to guarantee adequate investment in the fishing sector through partial cost recovery and reinvestment of enhanced earnings.
On May 8, 1980, arising out of that reference in the Speech from the Throne, 1 addressed questions to the hon. Minister of Fisheries and Oceans (Mr. LeBlanc) seeking further clarification of this reference in the throne speech which implied that another form of supplementary tax would be imposed upon the west coast fishermen of Canada in particular. This tax, sometimes referred to as a resource rent or a landing charge, would be used perhaps-although the minister has not made it clear-to finance the cost of the salmon enhancement program, primarily focusing on the Fraser River and other coastal waters. But as far as my understanding of the attitude within the fisheries department is concerned, this tax might also be used to finance the general management expenses of the federal Department of Fisheries and Oceans.
The west coast fishing industry is worth some $300 million annually, at least it was up until last year, which was a very poor year, and the administration of that fishery by the officials in British Columbia is costing some $35 million a year or one-tenth of the landed value of the catch.
It is common knowledge that the officials within the Department of Fisheries and Oceans have been contemplating the imposition of this form of income tax surcharge for several years. They have been thinking about a tax in the magnitude of 10 per cent of the value of the fish caught. If the value of the landed fish is in the order of $300 million, it would suggest a windfall tax to the government of some $30 million, which almost equals the total operating budget of the federal Department of Fisheries and Oceans on the Pacific coast.
It is a common attitude within the Department of Fisheries to consider that fishermen are making windfall profits-that is the language used by some officials of that department-and that we need to generate more revenue to manage the resource by skimming off some of these windfall profits which would presumably result from the Salmonid Enhancement Program and rising fish prices. The minister ought to try telling that to a west coast fisherman these days. I have information that in the recent weeks, as a consequence of ineffective management policies of the federal department and collapsing price structures worldwide, there have been 62 bankruptcies or near bankruptcies of vessel owners on the Pacific coast registered with the Royal Bank alone.
The whole notion of a landings tax is predicated on the concept that there is some cushion or some windfall profit which is just ripe to be skimmed off by government bureaucrats. They like any program which will enable them to do that, even if it means the average little guy out there in his gill
Adjournment Debate
net boat or troller will be faced with virtual bankruptcy when he comes to shore because of the impact of that tax.
The notion of a resource rent or landing tax was first proposed by a gentleman named Sol Sinclair, who was retained by the federal government almost four years ago to come up with certains options for improving the management of the west coast fishery. From three options, the option of controlling and regulating the resource through licensing, controlling it through quotas or controlling it by establishing a tax charged against the value of the resource, Mr. Sinclair proposed that the landings tax or royalty approach be developed.
That has been the guiding light and the guiding star for the Department of Fisheries and Oceans ever since in holding the idea of this tax over the heads of the fishermen but not really coming down to talking about how big this tax would be, how the revenues would be used and to what extent the fishermen themselves would have some say in the spending of those revenues and the investing of those revenues in their own best interests through some board of trustees and through the deposit of these funds in some clearly identified trust account. It is common knowledge that government departments fear and are very reluctant to contemplate the establishment of special trust accounts for special purposes. They would prefer to throw money, taxes and surtaxes into general revenues and then spend them as they see best fit. In this case such an approach to the administration of such a landings tax would be very improper and unacceptable to the fishermen.
Those who have taken the time to read his report will know that Mr. Sinclair did a survey of fishermen, and this is recorded in the appendix to the Sol Sinclair report. He found that a majority of fishermen oppose the notion of implementing a landings tax to finance even the Salmonid Enhancement Program.
In a random sample of some 33 fishermen only 11 favoured a royalty and some 19 opposed the imposition of a catch royalty. In addition, many fishermen argued as follows, and I am quoting from a statement by a spokesman for the Prince Rupert Fish Exchange:
It can also be argued that salmon enhancement will benefit.all Canadians by increased general taxation, creating more employment and in general improving the economic situation in Canada. Many government subsidized plans have been put into effect in the prairies for the farmers and the east coast for the fisheries. We do not know of any pay back or cost sharing and would think that expecting a cost recovery from the enhancement plan is a bit unfair.
It is the general view of fishermen on the west coast that this tax is very unfair.


The Acting Speaker (Mr. Blaker):: Order, please. Seven minutes and three minutes, not more. The Parliamentary Secretary to the Minister of National Defence (Mrs. Appoi-loni) for not more than three minutes.


Ursula Appolloni: Mr. Speaker, I will try to speak quickly.

January 12, 1981
Adjournment Debate
A condition of the federal government's approval for the Pacific Salmonid Enhancement Program was the government's investment in this program could be subject to cost recovery.
In March, 1979, an agreement on the SEP was signed with the province of British Columbia in which both parties agreed on the principle of cost recovery by the federal government through licence fees from marine fisheries and landings charges on commercial fish landings.
Following the signing of this agreement the Department of Fisheries and Oceans began an analysis of how and when such a program could be implemented. The subject of landings charges has been discussed with all interested groups participating in Pacific coast fisheries as well as with the government of British Columbia.
On October 28, 1980, the Minister of Fisheries and Oceans (Mr. LeBlanc) announced in Vancouver, B.C. that, and I quote:
Due to the poor fishing year in 1980. and the absence of necessary legislation, a plan to introduce landings charges on commercially-caught salmon will be delayed. A scheme will be reached for implementation in 1982 in the hope that 1981 will bring higher salmon catches and better prices than this year.
The rate of landings charges has not yet been determined.
The legislative authority for such a program is being examined; however, currently there are no plans as to when such legislation will be introduced.


NATIONAL DEFENCE-U.S. FIGHTER AIRCRAFT CRASHING ON CANADIAN SOIL
Mr. Doug Anguish (The Battlefords-Meadow Lake):: Mr. Speaker, I should like to address myself to a question which I put quite some time ago. In fact I raised this question in the House in the summer during the heavy fire season in western Canada and in Ontario. Until the end of the year Saskatchewan had sustained losses in excess of 3.3 million acres of forestry land, a good portion of which is what is called the commercial zone where the province lost 815,892 acres, and the balance in the secondary zone where it lost 2,497,128 acres of forestry land in the fires. The province of Saskatchewan spent a total of $15 million to maintain a crew to fight the forest fires throughout the year.
In my question in the House I addressed myself in particular to the problem which arose close to my constituency. During the early part of the year and in the summer manoeuvres had taken place at the Canadian forces base Cold Lake. They were utilizing areas such as the Primrose Lake bombing range, part of which lies within the The Battlefords-Meadow Lake constituency. During the manoeuvres in this part of Canada, two U.S. fighter aircraft crashed. One crashed within the bounds of the Primrose Lake bombing range and it has been positively identified as the cause of an extensive forest fire which burned much of the Primrose Lake bombing range and spread into the Battlefords-Meadow Lake constituency.
Since the U.S. fighter aircraft has been identified as the cause of the forest fire in Saskatchewan, either the Department of National Defence or else the U.S. government have the responsibility to pay damages. I think that someone should reimburse those who have had losses as a result of the forest fire, thus setting a precedent following forest fires which are caused in this manner in years to come. I think there should be a cost recovery for extinguishing the fire to the provincial government and I think that lost revenues should be reimbursed to those who have sustained losses, such as the loggers, people involved in mining activities, in commercial fishing and in trapping, people who have lost much revenue in the inhabited areas which were burned. Thirdly, the province should be reimbursed for the revenue which it lost from taxing the beneficiaries in the areas which have been burned out.
I admit there is an agreement in existence between the province of Saskatchewan and the federal government with regard to the range. I am not particularly happy with that agreement but I have heard it stated that if there are losses within the range, the provincial government recovers some money for extinguishing the fire and it also receives some money for lost revenue, but nothing is provided either by the provincial government or the federal government to reimburse those people who have lost some benefits from logging, fishing or trapping. Outside the range nothing is provided by the federal government to benefit people who have suffered lost revenue from which the province of Saskatchewan would also benefit.
This evening I am asking the minister, through you, Mr. Speaker, to consider the provision of some money to those people who have suffered losses as a result of the forest fire.
I think that payments to these people and to the provincial government for damages sustained outside the area to which 1 referred should be made either by the Department of National Defence or the U.S. government which should be held responsible for a fire which was caused by one of their fighter aircraft while on manoeuvres over Canada.
Before closing let me indicate that I would like to see the federal government-and I would like to hear its comments on this issue-develop a user plan for the Primrose Lake bombing range in the Saskatchewan sector whereby people can go into that area to conduct logging operations for part of the year or to harvest some of the fish or furs within the bombing range, so that the federal government, the provincial government and the people who actually wish to use the range can begin to co-operate. I am referring to places such as Canoe Narrows, Dillon, Buffalo Narrows, Pierceland, Goodsoil and many other communities. It would utilize some of the resources within the Primrose Lake bombing range which are of no benefit to anyone right now other than those involved in the military manoeuvres which take place there.
With those comments I would like to leave this matter. Although the parliamentary secretary might not be prepared to answer some of the points I have raised, I would like her to
January 12, 1981

write or contact me with information arising out of my comments this evening.


Ursula Appolloni: Mr. Speaker, the hon. member referred to the forest fires in Ontario. At this time 1 should like to pay sincere, albeit belated, congratulations to the members of our defence staff who did fantastic work in airlifting people out of the area most affected, particularly the Kenora-Rainy River area.
The two American aircraft which crashed in the area of the hon. member were participating in exercise Maple Flag, an operational exercise conducted semi-annually at Canadian Forces base in Cold Lake. The purpose of the exercise is to improve the operational capability of our fighter crews by providing realistic training in a simulated high threat environment.
Following each crash a comprehensive investigation was carried out. In each case, it was quickly determined by flight safety specialist officers that there was no requirement to ground other participating aircraft. Therefore, flying was continued with the restriction that because of the risk of forest fire no live ammunition would be expended.
The issue of fire protection and fire fighting is thoroughly covered in the agreement between the Government of Canada and the province of Saskatchewan which covers Canadian forces' use of the Saskatchewan portion of the Primrose Lake weapons range. A similar agreement exists with the government of Alberta for the Alberta portion of the range. These agreements have been in force since 1954.
Adjournment Debate
Under the terms of the agreement, the Government of Canada contributes six cents per acre, or approximately $85,000 annually, to the province of Saskatchewan to provide fire protection and fire fighting services. Additionally the Government of Canada agrees to pay one-half of costs in excess of $10,000 per year incurred by the government of Saskatchewan for fighting fires in the range area. The fires caused by the two accidents in question are covered under this agreement.
I should like to add that the minister formally replied to the hon. member's letter of November 28 on this subject and on other aspects of the utilization of the Primrose air weapons range. That letter was sent to the hon. member's office this morning.
We in Canada are fortunate to be able to offer to our NATO partners and friends some unique training facilities in terms of both topography and climate. It is very much a part of our contributions to the alliance and one that is very welcome by our allies.
Also I should like to remind the hon. member opposite that our own Canadian forces enjoy the hospitality of those friends and allies wherever and whenever they train, be it in Europe or in the United States, under similar reciprocal agreements.


The Acting Speaker (Mr. Blaker):: Order. The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 2 p.m.
At 10.31 p.m. the House adjourned, without question put, pursuant to Standing Order.
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Tuesday, January 13, 1981