1981-01-26

ROUTINE PROCEEDINGS


Mr. Gordon Taylor (Bow River):: Madam Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. Whereas in his first visit to Alberta since the infamous budget of October 28, 1980, the Minister of Energy, Mines and Resources (Mr. Lalonde) criticized the media for fomenting hostility between the east and the west, 1 therefore move, seconded by the hon. member for Lethbridge-Foothills (Mr. Thacker):
That the Minister of Energy, Mines and Resources cease and desist from blaming others. Premier Lougheed when in the east and the media when in the west, and accept full responsibility for the deteriorating economic conditions in Canada, including unemployment and shutdowns caused largely by his refusal to accept Premier Lougheed's offer of an oil agreement last July 25 and by his insistence on the levying of an export tax on natural gas.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FISHERIES
Mr. Thomas Siddon (Richmond-South Delta):: Madam Speaker, I too rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. Given the fact that the Minister of Fisheries and Oceans (Mr. LeBlanc) has announced new regulations affecting the herring roe fishery on the west coast which were developed without benefit of consultation with the herring advisory committee, and whereas these regulations propose that herring fishing privileges will be granted to a limited number of applicants on a draw-straw basis, I move, seconded by the hon. member for Esquimalt-Saanich (Mr. Munro):
That this House rejects the cruel use of a lottery draw for issuing herring roe licences, as such a scheme will create hardships for those fishermen and their families who lose out on the luck of the draw.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


SHIPPING
Mr. Jim Manly (Cowichan-Malahat-The Islands):: Madam Speaker, in view of supertanker test runs in the Strait of Juan de Fuca, which are nothing more than public relations attempts to persuade people that oil tankers pose no threat to our coast, and in view of the heroic attempts of members of Greenpeace to expose the public relations aspect of these tests and to stop them, I move, seconded by the hon. member for Vancouver East (Mrs. Mitchell):
That this House express its appreciation to Greenpeace and urge the government to make available legal aid to help those members of Greenpeace who were arrested for attempting to protect our coast and the representatives of British Columbia Television who were arrested for carrying out their responsibility of reporting this story to the Canadian public.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL ENERGY PROGRAM
Mr. Jim Schroder (Guelph):: Madam Speaker, I rise on a matter of urgent and pressing necessity. Given the comments of the hon. member for Etobicoke Centre (Mr. Wilson), who last Thursday, as recorded at page 6445 of Hansard, expressed his support for the "broad elements" of the National Energy Program, and given the comments of the Right Hon. Leader of the Opposition (Mr. Clark) in Windsor on the weekend that his policy on Petro-Canada was a mistake, I move, seconded by the hon. member for Sudbury (Mr. Frith):

January 26, 1981
That this House urges the Leader of the Opposition to listen to his energy critic and not make another mistake in fighting the National Energy Program, for which his own critic states there is unanimous agreement throughout the country.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NEW DEMOCRATIC PARTY
Mr. F. Oberle (Prince George-Peace River):: Madam Speaker, in view of the fact that the legitimacy of political institutions is important to the maintenance of a free and democratic society, and in view of the fact that the Diefen-baker bill of rights asserts that our Canadian society is rooted in principles which acknowledge the supremacy of God, the dignity and worth of the human person, the position of the family and respect for moral and spiritual values, I move, seconded by the hon. member for Nepean-Carleton (Mr. Baker):
That this House respectfully request the New Democratic Party caucus to pause to reflect upon the erosion of the legitimacy of political institutions which results from its practice of using one member to argue against these values and a different member to vote for them in the constitutional committee.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


LEADER OF THE OPPOSITION
Mr. Edward Broadbent (Oshawa):: Madam Speaker, considering the statement by the Leader of the Opposition (Mr. Clark), reported over the weekend, that if he had the opportunity again he would keep Petro-Canada as constituted and ensure that it stays strong, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House congratulates the Leader of the Opposition for his recent support of Petro-Canada and calls upon the president of Petro-Canada to send forthwith to the Leader of the Opposition a Petro-Canada credit card.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NEW DEMOCRATIC PARTY
Mr. Dan McKenzie (Winnipeg-Assiniboine):: Madam
Speaker, in an interview on Sunday, the Leader of the New Democratic Party said there is no way his party will accept the Conservative amendment to the constitution resolution calling for the right of individual Canadians to own property, as is the case in all other free nations. This very basic right to the ownership of property goes to the very heart of our Canadian way of life and that of all free nations. I therefore move, seconded by the hon. member for Yukon (Mr. Nielsen):
That this House condemns the action of the New Democratic Party and its leader for their callous disregard of the right of Canadians to own property and that the Leader of the NDP be urged by the House to abandon his support of the Communist manifesto's call to nationalize and confiscate private property, and direct his efforts to the right of every citizen to own his little chunk of Canada.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


REFORM OF HOUSE RULES-CALL FOR TABLING OF PROPOSALS-MOTION UNDER S.O. 43
Mr. Donald W. Munro (Esquimalt-Saanich):: Madam Speaker, in light of the deteriorating atmosphere in the House and the need to make the House a more effective democratic and parliamentary institution, I move, seconded by the hon. member for Nepean-Carleton (Mr. Baker):
That the government House leader be instructed to table without further delay the government's proposals on reform of the House rules.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
[DOT] * *


NATIONAL ENERGY PROGRAM
Mr. Blaine A. Thacker (Lethbridge-Foothills):: Madam Speaker, whereas on Monday of last week the number of oil industry vehicles at Coutts, Alberta, leaving Canada were backed up over one mile, whereas on Wednesday of last week 45 oil industry vehicles of one company and 15 oil industry vehicles of another company left Canada, and whereas such an exodus is not in the national interest and will particularly
January 26, 1981

harm the people of Quebec and the Atlantic provinces, I move, seconded by the hon. member for Bow River (Mr. Taylor):
That the government be condemned by this House for its sheer ignorance of the effects of the national energy policy when written, and for its bull-headed retention of a dogmatic, doctrinaire policy which is so harmful to the national interest.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


METRIC CONVERSION
Mr. Bill Domm (Peterborough):: Madam Speaker, the metric test centres of Peterborough and Kamloops have been permitted to opt out of metric in retail food stores. Should any of the 36 test centres slated to convert in January, 1982, in the retail food sector not wish to proceed at that time, they should be given a choice. Therefore I move under Standing Order 43, seconded by the hon. member for Red Deer (Mr. Towers):
That they be given the same opting-out privilege as Peterborough and Kamloops in 1982.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PARKS CANADA
Mr. Cyril Keeper (Winnipeg-St. James):: Madam Speaker, the government has a policy of housing Parks Canada offices in heritage structures across this country, and this is a good policy. However, in Winnipeg the government, in the administration of its policy, is threatening to scuttle its own policy by housing the Parks Canada office in a marginally historic building simply because it owns that building. Therefore I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the government reconsider that foolish action and house the Parks Canada offices all across this country in first-class historical buildings.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
Oral Questions THE PRIME MINISTER


MOTION UNDER S O. 43
Mr. Gordon Towers (Red Deer):: Madam Speaker, I rise under Standing Order 43 to focus the attention of this assembly on a saga of economic crises of the first magnitude. The Minister of Finance is quoted in the January 24 issue of the Financial Post as saying he has three options, fiscal restraint, monetary restraint or wage and price controls, to combat stagflation. The minister asked anyone with better ideas to come forward. 1 move, seconded by the hon. member for Okanagan North (Mr. Dantzer):
That there is a fourth option and that the Prime Minister exercise it by calling on the Governor General and offering his resignation and the resignations of the rest of the gang who could not shoot straight.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Hon. Michael Wilson (Etobicoke Centre):: Madam Speaker, last week I asked the Deputy Prime Minister and Minister of Finance why the taxes in the National Energy Program hit the Canadian-owned segment of the industry much harder than the multinationals. At that time the minister said that he disagreed with my statement. I am sure he is aware of the survey of the Petroleum Monitoring Agency which indicated that large foreign-owned, integrated companies earned about half of their income from the production end of the business, the other half from marketing and refining, while Canadian-owned companies earned about three quarters of their income from the production end.
Why did the minister place the total impact of his taxes on the production side of the business, clearly to the detriment of Canadian-owned companies, when there was the obvious option of spreading the load farther afield, on the multinationals?


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, again the hon. member returns to the theme he followed last week to the effect that the National Energy Program will adversely affect cash flow to Canadian companies-

Oral Questions


Michael Holcombe Wilson: That is not what I said; the minister should listen.


Allan Joseph MacEachen: -through the various elements of the program. I want to assure the House that whatever analysis has been conducted over the past, projecting into the future shows clearly that Canadian companies will benefit very considerably. They will have a very substantial cash flow in order to help them conduct their exploration activities. The hon. member has consistently failed to notice the benefits which will accrue to small and medium-size Canadian companies from the petroleum incentives program.


Michael Holcombe Wilson: Madam Speaker, 1 wish the minister would listen to my question; clearly that is not the question I asked. My question concerned the relative impact of the National Energy Program on Canadian companies compared to the multinationals.
I should like to quote another figure from the same monitoring survey. It shows that the integrated foreign-owned companies earned 16.7 per cent on their capital compared to the 7.7 per cent earned by Canadian producers, so it is clear the foreign-owned companies are twice as profitable as the Canadian ones. If two of the objectives of the National Energy Program are to encourage Canadianization and to be fair regarding impact of taxes, would the minister explain why the main impact of the taxes is being felt by the largest part of the Canadian-owned segment of the industry, the production side, while the multinationals can spread it over a much broader base?


Allan Joseph MacEachen: Madam Speaker, the hon. member must examine the over-all impact of the program on the Canadian sector of the industry. It is pointless to relate it to a single tax without relating it to the over-all benefits which will accrue, especially from the petroleum incentives program. I am satisfied that under the NEP a typical small or medium-size oil and gas company will be in a considerably improved financial position in the period from 1981 to 1983 as a result of the petroleum incentives program. I am satisfied of that, and that is the main consideration the hon. member must take into account as he evaluates the over-all impact of all elements of the program. If he undertakes that evaluation carefully, it will lead precisely to the conclusion I have stated.


Michael Holcombe Wilson: Madam Speaker, possibly the minister would enlighten the people of this country, as well as many of his backbenchers who are asking the same questions I am asking. The fact is that Canadian-owned companies are proposing to spend much larger portions of their budgets outside this country in direct response to the National Energy Program.
I would like to return to my first question, Madam Speaker.
I said the main impact of the new taxes under the National Energy Program is totally on the production end of the business with no new taxes on the downstream, that is, the marketing and refining side of the business. Clearly, if the government was striving for self-sufficiency it would be
emphasizing production by having the least amount of taxes at that end of the business and putting more on the downstream side. My question to the minister is this. In view of the fact that he has not answered any of my questions relating to fairness, self-sufficiency or Canadianization, would he make a statement during the debate on Bill C-54 explaining to Canadians why it is that in each of these three objectives of the National Energy Program the tax policies he has set out are totally contrary to the objectives of the National Energy Program?


Allan Joseph MacEachen: Madam Speaker, the hon. member and I obviously disagree very definitely on the impact of the National Energy Program. There will be an opportunity to debate these taxes in detail when they are considered by the House in Committee of the Whole. I hope I will be able to convince the hon. member at that time that he is mistaken in his totally unjustified conclusion.
The fact of the matter is that an analysis of the cash flow of a typical Canadian gas and oil producer demonstrates clearly that as a result of the National Energy Program the over-all cash position of these Canadian companies, of medium and small size, not heretofore eligible for depletion allowances or super depletion, will have their situation improved considerably. In my judgment that is fair. It will assist in the achievement of energy security and will accomplish one of the objectives of the National Energy Program, namely, to enhance the Canadianization of the industry.


REQUEST BY INDEPENDENT PETROLEUM ASSOCIATION FOR SPECIAL COMMITTEE TO STUDY PROGRAM
Mr. Harvie Andre (Calgary Centre):: Madam Speaker, my supplementary question is for the Deputy Prime Minister. This morning the Prime Minister had delivered to him by hand a letter from the Independent Petroleum Association of Canada, which represents the Canadian-owned sector of the business. The first paragraph of the letter reads:
After three months of careful study, we the members of the Independent Petroleum Association of Canada have concluded that the National Energy Program will have disastrous consequences not only for our industry but for Canada's national goal of energy self-sufficiency and, indeed, the over-all economy.
This is in direct contradiction to everything the minister has just finished flim-flamming the House with. In its letter the IPA goes on to make a very reasonable request, namely, that a special joint committee of the Senate and House of Commons be established to study the National Energy Program and its ramifications with regard to Canada's energy self-sufficiency and the Canadian-owned oil and gas industry.
My question to the Deputy Prime Minister is: Will he accept this very reasonable request of the Independent Petroleum Association of Canada to establish this special committee so that all the facts-the government's facts, the industry's facts and our facts-can be put on the table and the people of Canada can be given a chance to judge?
January 26, 1981


Allan Joseph MacEachen: 
Harvie Andre: Madam Speaker, this so-called ill-considered statement was written by the association which represents about 325 Canadian owned oil and gas companies. These are not the multinationals. Would the Deputy Prime Minister reconsider his quick, off-the-cuff decision in view of the fact that he is talking about four or five bills to cover a variety of areas and that no one bill covers all the aspects of this particular program? Would it not speed up House business to have this program considered in toto by a special committee? With that kind of understanding, I am quite certain that the specific pieces of legislation would receive quicker passage through the House if, after the facts are out, the government would still want to sponsor the bills.


Allan Joseph MacEachen: Madam Speaker, it is a fact that there are, as the hon. member has acknowledged, a number of bills containing components of the National Energy Program. The necessity for a number of bills, of course, arises from the rules of the House. If the government House leader can make arrangements with his counterparts in the opposition parties to find a better way to deal with these bills and to achieve, as the hon. member states, speedier passage and a more complete examination, I would be the first to support any such examination. However, we are proceeding according to the rules of the House, and these rules will provide ample opportunity for the consideration of every aspect of these bills. If a better method can be suggested, then it would receive my support.


CANADIAN ARMED FORCES
Mr. Terry Sargeant (Selkirk-Interlake):: Madam Speaker, my question is for the Minister of National Defence and it arises out of the question I directed to the Prime Minister on Friday morning. Is the minister now able to tell us why the government has repeatedly denied any involvement in product testing for Vietnam when this clearly was not so, particularly in light of the very disturbing comments which were made this
Oral Questions
weekend by Mr. Paul Hellyer, the minister of national defence at the time, that such tests were routine?


Hon. J. Gilles Lamontagne (Minister of National Defence):: Madam Speaker, I read very carefully the question asked of the Prime Minister by the hon. member for Selkirk-Interlake last Friday, and I listened to his question today. I will give his question all the importance and concern which it merits. Over the weekend I read many of the reports in the media, and I hope that the hon. member did not over-dramatize the issue merely to get press coverage, because I refuse to play politics with the nerves of the people. This report is not secret; it was unclassified and available to everyone.


Mr. Lawrence:: You did not know anything about it.


Mr. Lamontagne:: I knew of the matter last September when it first came out and I am aware of the situation.


Mr. Baker (Nepean-Carleton):: The Prime Minister did not know.


Maurice Lamontagne: It is true that DND collaborated with the United States in 1966-1967 to test the various formulations of different herbicides. I can assure hon. members that Canada's only interest in the tests was to obtain technical advice and assistance in range clearance and bush control. It has been alleged by some people that Agent Orange could be health hazardous, but there is no confirmation as yet. I do not believe that we should play with this question until we are sure that-


Madam Speaker:: Order, please.


Terence James (Terry) Sargeant: Madam Speaker, I would point out that this paper was not available through Canadian sources, that I had to obtain it through American sources by taking advantage of their freedom of information act. The minister has often said in the past year or so that chemical warfare testing in Canada was only of a defensive nature and was conducted only in the open air using harmless simulants. Will the minister kindly explain to the House how he defines the Gagetown tests as defensive, how he defines Agent Orange as a harmless simulant, and can he tell us if there were any other such tests?


Maurice Lamontagne: Madam Speaker, I think I have been very clear about this. I said the only interest of DND in this was to get technical advice and assistance on range clearing and bush control. If the hon. member wants proof that there was never any question about Vietnam or anything like that, we can take the main estimates in SCND of June 29, 1966, where Mr. MacLean asked about tenders. To his thinking, it was much too expensive to clear the bush on the Gagetown base and he asked for new tenders to see what kind of clearance we could get more cheaply.
I can assure the House that this hon. member is trying to make it appear as though we were involved in the Vietnam war. We were never mixed up in that. I listened to the answer of the Minister of National Health and Welfare on Friday.

January 26, 1981
Oral Questions
My department is ready to collaborate in any kind of investigation to see whether this test involves any health hazard in the region of Oromocto, New Brunswick.


INQUIRY WHETHER ADDITIONAL TESTS CONDUCTED
Mr. Simon de Jong (Regina East):: My supplementary is also directed to the Minister of National Defence and Acting Minister of Veterans Affairs. Since he knew about the tests last September, according to his statement just now in the House, did he at that time inform the ministry of health? If not, why not?
As a follow-up to my hon. colleague's question, if there were any further tests conducted in this country, would he please disclose what they were? Also, would he please contact the ministry of health so that they may monitor the health of the personnel as well as of people living in the immediate vicinity where the tests might have taken place?


J. Gilles Lamontagne: Madam Speaker, that series of questions could be placed on the Order Paper, if the hon. member wishes. In the meantime I can assure him that the number of personnel involved in this testing was very small, 11 military and two civilians. The area was the Gagetown base. I heard and read about this spraying over New Brunswick, and I can advise the hon. member that the spray was tested over a small area of Gagetown. Possibly the hon. member does not know that the Gagetown base is 45 miles long north-south and 30 miles wide east-west. A small portion was used for these tests, which does not mean the spray was tested over the whole of New Brunswick.

[ Translation]


RAILWAYS
Mr. Remi Bujold (Bonaventure-Iles-de-la-Madeleine):: Madam Speaker, my question is for the Minister of Transport and concerns the decision made by the minister on January 14 to hold an investigation into the problems that plagued VIA Rail and more especially the population of eastern Quebec and eastern Canada during the holidays. Has the minister decided who will undertake this investigation; that is, either the Canadian Transport Commission or the Department of Transport, when it will get under way and how long it will last?


Hon. Jean-Luc Pepin (Minister of Transport):: Madam Speaker, the investigation will be undertaken by the Canadian Transport Commission. I cannot give the hon. member the exact date when this investigation will be launched, but I shall inquire and provide him with the information.


PETRO-CANADA CONTINUATION OF EXPLORATION AND DEVELOPMENT ACTIVITY
Frank Oberle: Madam Speaker, my question is directed to the Deputy Prime Minister and Minister of Finance. It is with regard to energy policy. As the minister knows, the energy policy requires PetroCan to muster all of its resources in an effort to either back in, bully in, nose in or butt in with the activities now going on on federal lands. By so doing, of course, the Crown corporation has no resources left to continue activities in the conventional producing areas of this country. This causes all kinds of disruption in communities and the loss of jobs and technology.
Has the minister reviewed the energy policy in that context? Could direction go to the Crown corporation, asking it at least to continue last year's program in the areas of northeastern British Columbia and Alberta with regard to exploration and development?


Mr. Roy MacLaren (Parliamentary Secretary to Minister of Energy, Mines and Resources):: As the hon. member knows, Madam Speaker, the National Energy Program does indeed provide a more active role for Petro-Canada in the development of frontier lands. That activity, however, is not such as to preclude continued participation in the search for conventional oil and gas resources on provincial lands. That activity on the part of Petro-Canada will be continuing. That is not to say that in certain parts of the country where wells may not have been discovered the emphasis has not been shifted elsewhere in the normal procedures of the exploration industry. However, participation in provincial lands and conventional sources will continue.


Frank Oberle: Despite what the parliamentary secretary says, Petro-Canada rigs are crowding the highways, leaving the conventional producing and exploration areas in northeastern British Columbia. There is no PetroCan activity now, even though that is the only area in which they have any presence. It is the only refinery there. Will the government undertake to table before the House or the energy committee a program which Petro-Canada will be committed to in this and the following season in the conventional producing areas in order to restore some semblance of confidence in the energy economy throughout the country?


Roy MacLaren: In answering a somewhat similar question from the hon. member in committee the other day, the minister stated that he would provide as far as possible the details the hon. member seeks. I shall be glad to see that that is done.
January 26, 1981


ADVISORY COUNCIL ON THE STATUS OF WOMEN
Hon. Flora MacDonald (Kingston and the Islands):: Madam Speaker, my question is addressed to the minister responsible for the status of women. Having practically destroyed the Advisory Council on the Status of Women, the minister is now forced to turn-


Some hon. Members:: Question!


Flora Isabel MacDonald: I see hon. members are waiting for the question. I will be glad to put the question. I am sure a lot of women would like to put questions to the minister. The minister is now forced to turn to women's organizations across the country to try to put the council back together again. He is becoming like the original Humpty-Dumpty. 1 would like to ask how he has gone about selecting these women's organizations with which he is asked to meet or, rather, why he has left our certain key women's organizations such as the Canadian Federation of Business and Professional Women, women representatives from the Canadian Union of Public Employees or the National Association of Women and the Law, all of whom strongly condemned the minister's actions in recent weeks. Will he tell us exactly why he has been so selective and left out representatives of the groups that I have named?


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, it is a matter of some dispute as to who really is responsible for whatever damage has been done to the council. 1 ask the hon. member to examine her own conscience in that area.


Some hon. Members:: Hear, hear!


Mr. Beatty:: That is like blaming the police for the crime rate.


Lloyd Axworthy: I would simply point out that the selection of groups was done on the advice of the council's office. They represent national organizations. If there are other groups which would like to be consulted, I would certainly be open to having discussions with them as well.


Flora Isabel MacDonald: Madam Speaker, all of these groups that I mentioned would have been at the original conference in February had the minister not interfered with it. Therefore, they are surely owed the courtesy of an invitation to any subsequent meeting. All of these groups in recent days have stated very strongly that they want to see the Advisory Council on the Status of Women report directly to Parliament and not to a minister. Even Win Gardner, the interim president of the advisory council, who has described the minister as a close and personal dear friend, over the weekend said that the council as it is now constituted could be open to political manipulation.
In view of all these representations, will the minister now agree, before the meeting takes place with these women's organizations, that the council will in future report directly to
Oral Questions
Parliament and not to a minister, such as the current one responsible for the status of women?


Lloyd Axworthy: Madam Speaker, unlike the hon. member, I am not apt to judge pre-conceived solutions to problems. I am prepared to sit down with the groups we have invited to listen to their recommendations and advice. Once we have received those recommendations and advice, we will be prepared to act.
I would like to give them the courtesy of hearing them first, unlike the hon. member who has already made up her mind, as she does in most cases, without benefit of the facts.


TRANSPORT
Cyril Keeper: Madam Speaker, my question is for the Minister of Transport. 1 would draw to the minister's attention that the 2nd Cities Energy Conference is being held in Winnipeg this week. Their primary concern is to find alternatives to fossil fuels for urban transportation. In light of the fact that the federal government invests so little in urban transportation and that bus fares continue to rise all across the country, as evidenced here in Ottawa, does the minister not agree that now is the time to make a serious public investment in urban transportation?


Jean-Luc Pepin: Madam Speaker, I would debate the premise that the federal government does not do much for urban transportation. There are programs, such as those for line relocation, grade separation, crossings, branch lines and so on, and therefore this topic would have to be debated. But I want to agree that the needs are unlimited. There was a time when having the main line in the centre of the city was a status symbol in Canada. The situation has now changed. Consequently there is a need for more money to be spent on urban transportation, and we do our best in that regard.


Cyril Keeper: Madam Speaker, the minister says he would like to debate whether the federal government invests much in urban transportation, but I point out to him that only one half of 1 per cent of the $1.85 billion federal financing for transportation goes for urban transportation. Three quarters of the funds under UTAP go into grade crossings to traverse rail lines and not into mass public transport.
Would the minister reconsider his first response and assure people from cities across Canada who will be in attendance at this conference that this government will now make a major investment in urban transportation?


Jean-Luc Pepin: Madam Speaker, inasmuch as grade separation and rail line relocations are in cities, they are a contribution to urban transportation. That is the way the reasoning goes. Again, I agree with my hon. friend's proposition that more
80094 -43

January 26, 1981
Oral Questions
money could be spent. I hereby declare solemnly that I will devote much of my effort to that objective.


FEDERAL LANDS
Hon. Erik Nielsen (Yukon):: Madam Speaker, may 1 direct a question to the Minister of Indians Affairs and Northern Development, if his parliamentary secretary has finished briefing him.


Some hon. Members:: Oh, oh!


Erik Nielsen: Before doing so, may I welcome the Minister of Justice back from hospital to the House.


Some hon. Members:: Hear, hear!


Erik Nielsen: I hope he withstands the pressures of his constitutional responsibilities.
My question has to do with the disposition of federal lands in the Yukon. As the minister will know by now, a number of lots have been disposed of or are in the process of being disposed of in the Cowley Lake and Carcross road area to some rather prominent citizens, including the chief administrator of Yukon lands in the Yukon. This is being done without any public notification, without any public advertisement or without any call for public tenders. Is the minister aware of the circumstances, and what criteria were used in the exercise of discretion in accepting the applications? Does the minister know whether any public advertisement was made or whether any call for public tenders was made in the disposition of these several parcels of federal lands?


Hon. John C. Munro (Minister of Indian Affairs and Northern Development):: Madam Speaker, I did make note of some of the charges made in connection with this whole subject matter which the hon. member for Yukon is raising. I asked my department for a complete report, which I hoped to receive before question period. I have not received it as yet, but I do expect it this afternoon. I will endeavour to reply to the hon. member in considerably more detail tomorrow.


Erik Nielsen: Madam Speaker, since the right to acquire and own lands, as the minister knows and as the Minister of Justice knows having held that portfolio for a number of years, is the single and most important matter in the minds of Yukoners and the single greatest irritant to the population of the Yukon, will the minister give me his assurance today that he will instruct his officials to freeze any disposition of those several parcels of federal lands until he has conducted a thorough investigation with respect to the manner and method adopted in their disposition, primarily the question of public advertisement and public tender? Included in that full investigation, would the minister determine whether or not any conflicts exist with respect to the acquisition of public lands by public servants, and whether or not all laws have been complied with
respecting applications made by those public servants for the acquisition of federal lands?


John Carr Munro: Madam Speaker, I can tell the hon. member that prior to coming into the House I was advised in general terms that no favouritism was displayed. As I have indicated to the hon. member, I have not received the details with respect to the subject matter which the hon. member is talking about. When I do receive them, as I hope to do this afternoon or tomorrow morning, if there is any suggestion on the face of the material before me of any impropriety whatsoever, of course I will take action, if not identical with what the hon. member is talking about, certainly to correct any impropriety.


EXTERNAL AFFAIRS
Mr. Bill Clarke (Vancouver Quadra):: Madam Speaker, my question is for the Secretary of State for External Affairs. All members will be thankful that President Chun has used his considerable powers and has commuted the death sentence of Kim Dae-Jung, former leader of the non-communist forces in South Korea. Considering that originally Kim was sentenced to death for activities similar to those of Canada's present Prime Minister when he was leader of the opposition in Canada's Thirty-first Parliament, and since Canada's past protest was really only a token one, I ask the minister whether Canada will join in the international campaign for Kim, perhaps by following the lead of 3.5 million Japanese who have signed a petition demanding that Mr. Kim be set free, not just spared from death.


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, I would like to express the pleasure that I am sure we all feel at the commutation of Mr. Kim's death sentence which was taken following a motion by this House and following representations by this government. The international protest to which my hon. friend refers is not that of governments at the present time but that of citizens. The Government of Canada has no plans to join in such citizens' protests at this time.


THE CONSTITUTION
Henry Perrin Beatty: Madam Speaker, my question is for the Minister of Justice whom I also welcome back to the House. Canadian Press reports this afternoon say that the Liberal Party is considering reneging on a commitment given by the Solicitor General on behalf of the Minister of Justice last week to include property rights in the
January 26, 1981

Canadian Constitution, a commitment which was supported by many Liberal Members of Parliament. Would the Minister of Justice assure the House and the millions of Canadians whose rights are at stake that those rights will not be sacrificed by the government in response to pressures applied by the NDP?


Hon. Jean Chretien (Minister of Justice and Minister of State for Social Development):: Madam Speaker, first 1 would like to thank all members for their good wishes. I was not that sick; 1 had what you would call constitutional indigestion!


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: The doctor told me that the best remedy is to finish the job as quickly as possible!


Some hon. Members:: Hear, hear!


An hon. Member:: It is making us all sick.


Joseph Jacques Jean Chrétien: Of course, Madam Speaker, I will be delighted to answer the hon. member's question in front of the committee, should he put it tonight.


Erik Nielsen: It has already been answered there.


Henry Perrin Beatty: Madam Speaker, the commitment was given last week before the committee by the Acting Minister of Justice.
My question for the minister deals with government policy, which the House of Commons is entitled to know. Does the government put a higher priority upon the wishes of the NDP in their opposition to government policy than it puts upon the wishes of 64 per cent of Canadians who have expressed their opposition to the course followed by the government? Is the government going to buckle from this pressure applied by the NDP and sacrifice the interests of millions of Canadians who want to see property rights included in the Constitution?


Joseph Jacques Jean Chrétien: Madam Speaker, I will deal with the problem tonight, but I would like to tell the hon. member that during the summer, in the long negotiations that we had with the provinces, the main opposition to that clause was from provinces, from Conservative governments which form many provincial governments.


INCOME TAX
Walter David Baker: Madam Speaker, I should like to direct a question to the Secretary of State who is responsible within the government for the study of the voluntary sector. The Secretary of State is no doubt aware of the objectives and concerns of the coalition of national voluntary organizations in respect of the impact of federal income tax
Oral Questions
laws on the financing of voluntary organizations. What is he doing about this responsibility within government?


Hon. Francis Fox (Secretary of State and Minister of Communications):: Madam Speaker, we have initiated a number of decisions within government regarding the national voluntary organizations over the past few months. We have organized a number of meetings with officials of the Department of National Revenue and the Department of Finance. We are looking at the matter very closely indeed.
1 should also like to point out to the hon. member that there is this upcoming consultation on Friday and Saturday with government, organized by the national voluntary organizations, and this will be one of the subjects of discussion.


INQUIRY WHETHER SPECIAL COMMITTEE ON TASK FORCE CONSIDERED
Walter David Baker: Madam Speaker, my supplementary question is addressed to the government House leader. Has he given the studies we have now been informed are being carried on by the Secretary of State and other organizations within the government and outside the government some consideration, and specifically has he considered the formation of a special or select parliamentary committee or parliamentary task force in order that all of the propositions which may be forthcoming from the bureaucratic side, on the one hand, and from the public side, on the other, relating to voluntary matters may be brought to the attention of Parliament? In this way there could be a sounding board for those concerns, much as there was in a very positive way in respect of the handicapped and others, utilizing the offices of this Parliament?
[ Translation]


Hon. Yvon Pinard (President of the Privy Council):: Indeed, Madam Speaker, we have been able to see how effective this type of special committees of the House can be. Some of them reported on current matters in December and others have had their terms of reference extended and should report very shortly. The suggestion of my hon. colleague concerning the voluntary sector is interesting and I intend to discuss it with the Secretary of State and to consult my colleagues, the House leaders to see whether we could come to an agreement and establish such a special committee to examine this particular subject.


CANADIAN BROADCASTING CORPORATION
Mr. Mark Rose (Mission-Port Moody):: Madam Speaker, my question is for the Minister of Communications. As the minister knows, Radio-Canada's dispute with its journalists

January 26, 1981
Ora! Questions
has denied the people of Quebec news in both our official languages for almost three months now. The minister knows also that the union, through three mediation attempts by the Department of Labour principally, has made substantial concessions, and that the latest mediator appointed by the Minister of Labour quit last Monday, blaming the government and indicating that management was not serious. Is it now the minister's intention to urge his colleague, the Minister of Labour, to appoint a mediator with special powers to initiate real and serious negotiations so that this matter can come to a positive conclusion for both sides, plus the people of Quebec?


Francis Fox: Madam Speaker, we have indicated our interest on this side of the House in seeing the type of service the hon. member refers to resumed as soon as possible in the province of Quebec. The mediator referred to was, of course, appointed by my colleague the Minister of Labour. I have not seen the exact report to which the hon. member refers, but it would be up to the Minister of Labour, upon consideration of this report, to decide what action he wants to take. On my side, I am continuing my discussions with the Minister of Labour in the hope that we may find some way of settling this strike as soon as possible.


REQUEST FOR ACTION BY MINISTER OF LABOUR
Mark Willson Rose: I think perhaps. Madam Speaker, what is now needed is an outside, independent mediator. Failing that, will the Deputy Prime Minister undertake to this House that, failing the efforts of an independent or outside mediator, if one is appointed and fails in his duties-and hopefully that will not happen-he will consult with the Minister of Labour urging him, telling him if necessary, to assume his responsibilities and have this matter settled, even if it means calling both parties into his office and keeping them there until it is settled?


Allan Joseph MacEachen: Madam Speaker, I have every confidence that the Minister of Labour will discharge his responsibilities in a very acceptable way.


CUSTOMS TARIFF
Mr. Leonard Hopkins (Renfrew-Nipissing-Pembroke):: Madam Speaker, my question is for the Minister of State for Finance. Many individual policemen are investigating the purchase of body armour in order to protect themselves against serious acts of violence. The cost of this protection is very high but many individual policemen would like to purchase it on their own. Good quality body armour is presently imported under Canada Customs No. 56300 at a duty of 25 per cent, while police riot helmets, firemen's helmets and safety helmets are imported under Canada Customs No. 569401 tax-free.


Some hon. Members:: Order.


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


Leonard Donald Hopkins: Will the minister take an in-depth look at this tariff item with a view to removing the 25 per cent duty on body armour if it is being purchased individually or departmentally by law enforcement agencies across Canada?


Erik Nielsen: It is also made in Canada.


Hon. Pierre Bussieres (Minister of State (Finance)):: Madam Speaker, the hon. member for Renfrew-Nipissing-Pembroke has made numerous representations on that subject.
1 would like to point out to him that as a result of his efforts the department officials responsible for enforcing tariffs made a thorough inquiry into the importation of bullet-proof vests. I remind him that we cannot accept duty-free imports of bulletproof vests produced in the United States because we do have Canadian manufacturers who market that product, and they are making every effort to improve it since it is used by the Royal Canadian Mounted Police and other law enforcement agencies throughout Canada. By affording protection to those Canadian manufacturers who continue working with the RCMP and other police forces to sell a better product we may be able to extend the market for such products to all police forces in Canada and even in the United States.


KREVER ROYAL COMMISSION
Allan Frederick Lawrence: Madam Speaker, my question is for the Solicitor General who 1 know has now had time to study the provincial report of Mr. Justice Horace Krever who was sitting as a province of Ontario royal commissioner taking a look at the whole question of disclosure of medical records. During the course of those hearings counsel for the Royal Canadian Mounted Police assured the royal commissioner it had made complete disclosure to him and the force had not used any medical information, however obtained, for disruptive purposes. One of the main conclusions of the royal commission was, and I quote: "The RCMP . . . must have known that this representation was untrue." They must have known it was untrue, of course, because the matter had come before the McDonald commission.
I would ask the Solicitor General from whom, how and why would counsel for the RCMP have received instructions to make a representation that was blatantly untrue to the royal commissioner?


Hon. Bob Kaplan (Solicitor General):: Madam Speaker, 1 have indeed studied the report of the Krever commission. I do not accept the version the hon. member has given of the
January 26, 1981

statements made by counsel for the RCMP before that commission. However, there is no doubt that the commission did find fault with the RCMP in the provision of evidence to that commission.
I would prefer, however, not to comment on matters that took place in the past because of the fact, as the hon. member noted, the McDonald commission is studying these very matters and will be delivering a report on them. As I have not commented on matters coming out of the evidence before the McDonald commission, 1 do not think I should report or comment on matters which have come out before other commissions at this time. There will be a time for comment on such matters and 1 will be very forthcoming with the House when that time comes.


Allan Frederick Lawrence: Madam Speaker, I am sure the Solicitor General understood that I was not talking about matters before the McDonald commission. 1 was talking about a very serious charge by a provincial royal commission concerning the credibility and the trustworthiness of the force as a whole and about the representations made to that provincial royal commission. Obviously the McDonald commission has not dealt with this matter because the solicitor general of the day was not brought before that commission.
Has the Solicitor General not caused some investigation into how patently untrue instructions were given to a counsel before a royal commission? Those patently untrue instructions resulted in a very serious element of misrepresentation not only by the counsel for the RCMP but also by the counsel for the commission.


Madam Speaker:: Order.


Robert Phillip Kaplan: Madam Speaker, anyone can read the Krever report. It is publicly available. When people do read it, they will see that the hon. member has misrepresented the observations made by that commission about the representations made before the commission.
When I looked into the matter, I did so to satisfy myself that the RCMP had, in one way or another and at one time or another, made all relevant information available to the Krever commission. I am satisfied from the information I have that they did that and that they eventually carried out the responsibility of all good citizens to bring information forward to royal commissions.
The comments which may be made or ought to be made about the conduct and forthrightness of the RCMP are general comments which the public will want to review and about which the public ought to be commenting, but for my part 1 will reserve my comments on that until the McDonald commission-which, after all, has all these matters before it- reports in due course later this year.
Oral Questions


ADVISORY COUNCIL ON THE STATUS OF WOMEN
John Edward Broadbent: Madam Speaker, my question is directed to the minister responsible for the status of women. On Friday Ms. Shelley-Ann Clark, the secretary of the Advisory Council on the Status of Women, said that the minister lied to the House when he stated that the minutes of the January 9 meeting of the council were inaccurate. Does the minister stand by the statement he made to the House?


Lloyd Axworthy: Madam Speaker, if the hon. member for Oshawa had been a little more careful, he would have checked my statements in the House. 1 indicated solely that there was an affidavit which attested to misrepresentations.


Erik Nielsen: Where is it? Produce it.


Lloyd Axworthy: 1 simply referred to the affidavit. I did not comment on that because I have not seen those minutes. I do not know whether they are accurate or not, but 1 did say there was an affidavit which had been deposed by five members of the executive committee so attesting.


John Edward Broadbent: Madam Speaker, the credibility of the minister, who is the person responsible for the status of women in this country, is undermined every time he answers a question in the House of Commons. Has he just indicated to the House that he has not seen the affidavit and, if not, in the interests of honesty and truth on this whole subject why has he not seen it? Will he assure the House that he will have a look at it and then come back to the House, produce it and make a statement in the House as to whether he has been conveying the right information or whether the secretary of the body in question is telling the truth?


Lloyd Axworthy: Madam Speaker, as I have said many times in the House, this was a matter which should really have been resolved by the parties to that dispute. Those parties are the members of the executive committee who have publicly stated that they have signed an affidavit. 1 gather that the secretary says that what she recorded is accurate. If there is a problem.
1 suggest that the two parties to that disagreement resolve it between themselves or take the proper action. All 1 reported to this House was that there was an affidavit signed by executive members. If the hon. member wants me to obtain a copy of that affidavit, I would be prepared to ask the members of the executive committee to produce one. 1 would be glad to do that, but what I said was that I had not seen a copy of the minutes. I therefore have never commented on the accuracy of the statements, only that there was an affidavit.
Order Paper Questions



ROUTINE PROCEEDINGS

[Stage Direction]
January 26, 1981

Mr. David Kilgour (Edmonton-Strathcona) moved: for leave to introduce Bill C-626, to amend the Canada Elections Act.


Some hon. Members:: Explain.


David Kilgour: Madam Speaker, this bill would provide that the time for voting in elections be adjusted in such a way that the people in the west see their votes count as much as those of anyone else in the country.


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

Allan Joseph MacEachen: for leave to introduce Bill C-57, to amend the Excise Tax Act and the Excise Act and to provide for a revenue tax in respect of petroleum and gas.


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

Yvon Pinard: for leave to introduce Bill C-58, to amend the Canada Elections Act.


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

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. D. M. Collenette (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 1,613, 1,783, 1,809, 1,810, 1,816 and 1,835.
f Text]


Mr. Forrestall: What was the total amount spent by each department and agency under the Federal Identity Program for interior and exterior signs during the fiscal year (a) 1978-79 (b) 1979-80 (c) 1980-81 (estimate) and, in each case, how many signs were purchased?


Hon. Donald J. Johnston (President of the Treasury Board):: The Federal Identity Program sets out the policy and the design standards which must apply to signs installed by all federal government organizations. Government-wide data has not been maintained to date on the number of signs employed by the government or on the costs of all signs installed by government organizations. Signage costs are normally included in over-all relocation costs. However, an inventory of signs used at buildings owned or managed by Public Works is now being conducted. The following data is now available with respect to costs: bilingual signage conversion program. In January, 1975, a signage conversion program estimated at $21.4 million over four fiscal years (FY 1975/76 to FY 1978/79) was approved for the purpose of ensuring conformity to the Official Languages Act of all signage owned or managed by the Department of Public Works. The Federal Identity Program sets out the standards under which government signage conforms to the Official Languages Act and policies pursuant to it. The actual cost of procuring the signs for this program, however, was $11.4 million over five fiscal years. Costs and numbers of signs procured for the last three
>cal years have been	as follows:	
	Costs	Numbers of signs
FY 78-79	$2,912,520	3,14279-80	$ 267.434	1,09880-81	$ 377,169	858
Addition of the "Canada" wordmark. In September, 1980, a new Federal Identity Program policy was approved by Treasury Board calling for the addition of the "Canada" wordmark to government signage. The purpose of the policy is to provide clear and consistent identification of all government facilities and services. The cost of implementing the policy, including the upgrading and improved maintenance of government signage in general, is estimated at $1.6 million in fiscal year 1980-81.


Mr. Stevens: For the current fiscal year, what arc the estimated expenditures of Teleglobe Canada for (a) advertising (b) free or subsidized publications (c) other information conveyed to the public?


Mr. Peter Stollery (Parliamentary Secretary to Secretary of State and Minister of Communications):: I am informed by Teleglobe Canada that the reply to the above question is as follows:
(a)	Advertising: $930,000.
(b)	Free or subsidized publications-$90,000. This includes a number of brochures distributed free of charge to the
January 26, 1981

public; i.e. annual reports, folders, postcards on the corporation's satellite and cable stations, maps of Teleglobe's worldwide cable and satellite network.
(c)	Other information conveyed to the public-$80,000. Teleglobe Canada has a public information program consisting of guided tours of its satellite stations, participation at exhibitions open to the public, issuance of press releases on newsworthy developments, speeches to school groups and professional associations.


Mr. Herbert: Is all documentation issued by Defence Construction (1951) Limited in both official languages and, if not, for what reason?


Mrs. Ursula Appolloni (Parliamentary Secretary to Minister of National Defence):: The tender and contract documents issued by Defence Construction (1951) Limited are available in both official languages as are any other publications that may be issued by the company for public consumption. Plans and specifications are prepared in both official languages by the Department of National Defence for those projects that are located in bilingual areas. (Bilingual areas are detailed in Annex B of the "Official Languages in the Public Service- Statement of Policies" prepared jointly by the Treasury Board and Public Service Commission, September, 1977). In addition, all directives, circulars, etc. of an administrative nature issued to the personnel of the company are prepared in both official languages.


Mr. Herbert: To which departments and agencies has Defence Construction (1951) Limited provided technical and administrative assistance in each of the past three years?


Ursula Appolloni: 1977-	78 Department of National Defence.
1978-	79 Department of National Defence.
1979-	80 Department of National Defence. Treasury Board.
Canadian International Development Agency.


Mr. Herbert: Are all employee salary costs of Defence Construction (1951) Limited charged to administrative costs and. if not, what amount has been charged in each of the past ten years to contract costs?


Ursula Appolloni: Yes.


Mr. Herbert: Does the government have an embassy or consular office in Greenland and, if not, is it considering establishing such an office?


Mark R. MacGuigan: Canada maintains no embassy or consulate in Green-
Income Tax Act
land. The Canadian Embassy in Copenhagen is accredited to Greenland as part of the Kingdom of Denmark. Establishment of a consulate in Greenland is not under active consideration at this time.


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


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Friday, January 23, consideration of the motion of Mr. MacEachen that Bill C-54, to amend the statute law relating to income tax, be read the second time and referred to the Committee of the Whole.
Frank Oberle: Madam Speaker, I am pleased to participate for a few minutes in this debate this afternoon because I want to put on the record a few facts and figures with regard to this bill, and to demonstrate to our friends in this House and to the country just how the Canadian tax system has affected different tax-paying citizens throughout our country.
As we all know, the idea of collecting income tax in our country was not conceived at confederation. It came along after the First World War because we had to pay off some of our war debts. Later on the idea came along that the Income Tax Act could be used to redistribute wealth, equalize opportunities, adequately bring about a degree of equity and fairness to the country, and redistribute the benefits of the achievements of our industrial society.
I assume that the war debts have been paid off, in fact I know they have, certainly those that were accumulated after the First World War. But in the other area, namely, the concept of redistributing wealth, successive governments since that time have wrestled with the question of how it should be done on a more just and equitable basis. In doing so, this government in particular has been too preoccupied with the redistribution of wealth to remember how wealth is created in the first place. Soon we might be in the position of having nothing left and no new wealth to distribute. However, we can

January 26, 1981
Income Tax Act
rest assured that at least if we keep this government in power, everyone will have an equal share of nothing.
Will Rogers once said that the crime of taxation is not in the taking of it but rather in the way it is spent. If 1 were to recount in the House the horror stories to which we are being treated every year when the Auditor General publishes his report on how our tax dollars are being spent, it would be much more interesting, but instead this afternoon I want to talk a little about the manner in which our taxes are being collected in the first place.
Despite the government's assiduous attempts to redistribute our wealth, the poor in our country have become noticeably poorer and the rich have become noticeably richer in the ten years of the just society, which is entering its final phase now. Statistics tell us that the people who live in the lowest 20 per cent of the economic scale share only 4.4 per cent of the money earned in our country, and that the real income of that group has decreased by 7 per cent over the last ten years. So much for the just society. The rich have been getting richer and the poor have been getting poorer. There is a sort of inner circle, and the just society has been just for Liberals.
As you know, Mr. Speaker, the tax system operates on a graduating scale, which means that those who earn more pay a higher rate, and one's ability to pay is the guiding principle of the tax collector when he assesses our contribution. The Fraser Institute published an interesting set of statistics recently which take into account the fact that income tax is not the only form of taxation, that there are all kinds of other taxes to which individuals in our society are subjected. There is the profit tax, the income tax, and the sales tax. The sales tax includes tax on liquor, amusement, tobacco. There are excise taxes, the fuel tax, social security taxes, the pension contributions, all of which are taxes in disguise. There are property taxes, natural resources taxes, import duties, and all kinds of other taxes.
1 would recommend that hon. members make themselves familiar with this set of statistics, which show that there is an obsession with taking from the rich and giving to the poor, the Robin Hood principle. A fellow asked me the other day if I could tell him of one person who has ever been helped by Robin Hood. It challenges your imagination to figure that out. These statistics are related to the 1978 tax year. A person earning SI5,000 a year and paying all these additional taxes to which I have made reference, would have a net after tax income of $9,472 a year. A person earning $25,000, or $10,000 more, would have a net after tax income, or a disposable income, of $12,031 a year. But if you earn $40,000 a year, or $25,000 more than a person on the lowest rungs of the income scale, all you would have left after paying taxes along the way is $11,191. In other words, compared to people in the $15,000 income bracket, people in the $40,000 bracket would only have $2,000 more after all the other taxes, licences, fees, and so on have been paid.
It can be argued reasonably that a person earning $40,000 a year would purchase more consumer goods and so would pay a higher sales tax. It can be argued also that he has a larger
home so his property taxes are higher, and really he should not complain. He does not complain, but the fact remains that of the $25,000 additional income, people in the higher income brackets pay $23,000 to some form of government, be it municipal, provincial, regional or federal. These are very important statistics.
One could reasonably argue that there is a large gap between the rich and the poor in this country which has nothing to do with taxation, but instead has to do with our credit economy, credit society. The fact is that people in the higher income brackets own their home, their car, their fridge and their television set, but people in the lower-income brackets buy these commodities on credit. There is an unwritten law that everybody must have certain basic things. The government seems to encourage people to have them and to believe they are entitled to certain basic things, whether it is their home, their car-and in this country it is pretty well an essential commodity-a fridge, and a television set to plug you into the mainstream of cultural life and activity. The fact is that people in the lower-income brackets purchase these things on credit and, in so doing, as you know, pay not once or twice but three times the price of their television sets, their cars or their refrigerators. That is really why the gap between the rich and the poor occurs. In other words, people who can least afford to do so, pay three times the price of their purchases to the banks and the financial institutions, to the social planners and social engineers who sit on the other side of the House and who take their pound of flesh in the form of taxes and fees. Those people who buy on credit get no relief from income tax, sales tax, or from any of the other taxes I mentioned.
I should like to speak now about equity and fairness and about the foundation on which our tax system is predicated, namely, that you should be assessed taxes in accordance with your ability to pay. As you know, one's ability to pay in this country varies dramatically according to where one lives. Incomes are higher in Vancouver, for example, than they are in St. John's, Newfoundland. Even in that part of our country which is known as the cultural and economic corridor, which runs along the U.S. border, there are large discrepancies.
But more specifically I should like to talk a little this afternoon about the incredible cost of living gap-cost of living being the factor which affects your ability to pay more than anything else-which exists between the area which I have identified as the economic corridor running along the border, and the remote, isolated frontier areas in our country, particularly the area north of the 60th parallel where less than 1 per cent of our population lives, an area which embraces more than two thirds of our total geography, and. to a lesser extent, of course, the area which is sometimes referred to as the mid-Canada corridor, embracing the remote and isolated areas in our provinces.
I have tabled a report before the Standing Committee on Indian Affairs and Northern Development. It is the subject of an ongoing study by three departments, the Department of
January 26, 1981

National Revenue, the Department of Finance, and the Department of Indian Affairs and Northern Development. 1 have assembled a number of statistics which demonstrate in very graphic terms the seriousness of the income gap and how it affects the ability of people in northern regions to pay not only their taxes but for the so-called niceties of life which other Canadians take for granted.
In some of the remote native villages north of sixty, and in the northern portions of the provinces, people pay $5 and $6 for a gallon of gasoline. One can argue: what is the difference-there are no roads anyway? But the fact remains that people in some of those areas rely on river transportation or boats which run on gasoline. Certainly in the wintertime their only mode of travel is by ski-doo and snow machines which require gasoline. Can one imagine what it would be like if people owning automobiles in Ottawa had to pay $5 or $6 per gallon of gasoline?
There are areas of the country which have no other access to the markets of the country than by air; their perishables are flown in by aircraft. We base our standard of living and the consumer price index on the cost of a shopping basket. The cost of shopping baskets in northern communities is two and three times that of the cost in city supermarkets. Is it any wonder that we remind the Prime Minister (Mr. Trudeau), when he travels around the world in his new-found endeavour concerning the North-South relation, of the serious discrepancies which exist in Canada? There are actually people in the north who are starving. Some of them live off the land; some of the inhabitants of native villages fry and cook porcupine because they cannot afford to buy beef, veal, pork, eggs or butter. But when their income tax is charged at the end of February, it does not take account of their inability to pay.
The tax rate which applies in the north is the same as in any other part of the country. It is for that reason I have wrestled with the problem for a couple of years, but I have been unable to get my views across to the majority of members who represent city ridings. They do not readily understand how serious is the problem. It is not only the consumer price index and the cost of essential commodities; it is the cost associated with children who require special care at hospitals or medical institutions. People in northern communities should be so lucky that their young persons complete high school education. If they want to continue their education by attending learning institutions in large cities, an incredible burden is placed on the average northern family. They are faced with transportation costs and costs associated with young people living away from home. Every time one picks up a telephone, one is placing a long distance call.
People in cities have the benefit of a postman delivering mail at their doors five days per week, and they do not even say "thank you". In the north, residents must start up their cars when it is 40 below zero and drive to post offices. They rent post office boxes for $6 per year, and they say "thank you" three or four times a year to the postmaster.
There are many discrepancies and inequities which seriously affect the ability of the people to pay and their commitment to
Income Tax Act
the country. We are seeing people throughout Canada today who no longer feel that they are part of the nation as a whole; they feel left out. These people then begin to associate with another community of thought and to pursue actively and aggressively other and sometimes more radical alternatives.
I have made some proposals about which I want to speak this afternoon. It is not adequate to catalogue the problems and list the statistics. As Members of Parliament we should make constructive suggestions, which I have done in my report. Again 1 recommend it to my friends in the House. It is a non-partisan document, except on the first page in the introduction it refers to the Diefenbaker vision of the north. I think even the most partisan mind on the other side would know today that we were not really building roads from igloo to igloo, that the Dempster highway is now a very important transportation link to the storehouse of resources in the north and the Arctic ocean, and that we are really on the way to discovering the reality of the potential in store for us in the north.
The document is easy reading. It points out what other countries such as Australia and Denmark have done. For instance, in their treatment of taxpayers in Greenland, they have established precisely what I am proposing, namely, different tax zones. These tax zones are established in accordance with existing problems and along the principle of one's ability to pay, as I mentioned before. 1 have used the Australian model, as well as the criteria which the government uses in compensating its employees. This is what makes the document credible. I have used the example of people who are working for the federal government and are posted in isolated communities in the north, be it in the northern part of the provinces, north of sixty or in the Territories.
I have used the same criteria and have applied them to all Canadians living in the north. I used nothing other than the compensation which bureaucrats receive in the form of housing, travel allowances and northern living allowances and I came up with the staggering figure that Canadians living in the mid-Canada corridor north of sixty pay $470 million too much in personal income taxes every year. I applied nothing but the basic principles of equity, fairness, and ability to pay.
This is a somewhat staggering statistic, particularly when one considers that I am talking about no more than 5 per cent of our population. Less than one per cent lives north of 60, but a total of 5 per cent of our population live in the northern areas remote from what I have described as the mid-Canada corridor. The document includes a map which readily identifies the different areas. Public servants posted in the north receive between $1,000 to $12,000 per year in the form of northern living allowances. It is a straight cash payment because it is costly, difficult and inequitable for federal public servants to cope with the harsh realities of northern living. If it is difficult for federal public servants, obviously it must be equally difficult for the small entrepreneur such as the baker, plumber, shoemaker, and their employees to cope with the same realities. Is it not reasonable to say that the only way to establish any degree of equity and fairness would be through
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the Income Tax Act, rather than the way the government has been doing it?
For instance, I contend that if we applied the most basic principles in the territories, about which I have spoken, only the owners of the mines, people who earn in excess of $80,000 or $100,000 a year should be paying income tax. Everyone else who lives on low or medium wages should not have to pay any income tax. This would apply to those who live north of the 60th parallel.
My report suggests the establishment of three tax zones. For the record I would like to establish the perimeters of the zones by identifying northern Canada, which are the two zones I talk about. I say that northern Canada is that area north of the 55th parallel in British Columbia and Alberta, north of the 54th parallel in Saskatchewan, north of the 52nd parallel in Manitoba, and north of the 50th parallel in the other provinces. Naturally, the Queen Charlotte Islands and other small islands off the coast of northern Canada and the provinces would also have to receive special consideration, as would some of the maritime provinces which suffer identifiable and serious regional and economic problems.
If you want to be fair and equitable to all Canadians, to equalize opportunity and charge taxes in accordance with one's ability to pay, there is only one tool which the government has, and that is the Income Tax Act. I cannot sit idly by and watch how this government is treating northerners just because there is no political power there. The attitude is: you can just dump on them.
There are some serious problems in the north. I have said in the House that there is starvation in the north, and I am not exaggerating. Certainly, there is an incredibly poor standard of housing in most northern communities, unless you are a member of middle management or a senior bureaucrat posted to Yellowknife. If you are one of these fortunate people you may have the key to the penthouse in Yellowknife Place, or whatever it is called, where there is a quarter million dollars worth of Eskimo carvings, and all the amenities of large city living. But that is not the standard. The standard is incredibly poor housing, particularly in the small northern communities. In some of the native communities there is no housing at all. There are certainly no opportunities for the younger citizens in this area to grow up and integrate, assimilate into the mainstream of Canada life, and to participate in the immense promise which this country holds out to its citizens.
I have assembled statistics which deal with the way in which Canadians communicate with one another. I have talked about the number of telephones, television sets, and the number of electrical appliances found in an average northern home as compared with an average home in a large city. I have assembled the daily temperatures, since inclement weather has a great deal to do with one's ability to pay.
If you are building a home in the north it costs thousands of dollars more to put in additional insulation. Invariably you build in a more sophisticated and expensive heating system.
Your fuel costs are three times greater than they are in more populated areas. It is true some of our larger cities are not located in the temperate zone along the American border, and heating is much more critical in the north. You get one third of the mileage and one third of the lifespan out of a car than you would get in the city. There is no public transit in the north. You are left to your own devices. Every time you travel a long distance you must do so on a chartered carrier at great expense and, quite often, the facilities are not available to you. As I have said, you use much more gasoline in the north. You need to buy more clothing. Your children must have new boots every year. All these things add up to a monstrous bill.
There exists a myth about the north, which I hear from some of my friends who are critical of my report. They say that all northerners are making big wages. Indeed, I had a call from a member of the Steelworkers Union in Tungsten. He is a shop steward there and he is very much concerned that if my proposal were accepted Tungsten Mines would immediately say to their employees, "We do not have to pay you a northern living allowance. Since you do not have to pay any income tax, we are no longer entitled to deduct from our profits that portion which we pay to you in northern living allowance." The steelworker who called me said that all he would benefit by as a result of my proposal would be $15,000, since that is what he pays in tax. He is obviously one of those people who the average person thinks of as being so well-off in the north. He does make a good wage, and so he should. In addition to the wage, which requires him to pay $15,000 in income tax, he receives from his company $24,000 a year in a northern living allowance. The companies have no other choice. If they want people to work up there in that harsh environment they must pay out the necessary incentives in order to entice people to go there.
The steelworker says that all he would save is $15,000, the net result being that he would be out to the tune of $9,000. I sympathize with that particular situation, but it is not the rule. In fact there are a great many people working in Yellowknife, Inuvik, Tuktoyaktuk and in many other small communities who are working for less than the minimum wage which prevails in Canada as a whole, and in the provinces. People do not earn excessive wages in the north. That is simply a myth which must be dispelled. We must come to 'grips with the reality of northern living before we can look realistically at the proposals I have made.
I must say in fairness to the Minister of National Revenue (Mr. Rompkey) and to the Minister of Finance (Mr. Mac-Eachen) that, as a result of the May election and the actions of the Minister of National Revenue, I discovered that even though persons in the north were not charged income tax for the money they had earned by way of northern living allowances, travel allowances and so on, there was no provision for it in the Income Tax Act. No one has ever pursued that and charged those people. I suppose when the Conservative government was elected that was a good way to get at the government, if you were a bureaucrat who obtained your job from the Liberal government. So they moved in and said, "From now on
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everybody must pay income tax on their northern living allowances."
Let us not forget that we are only talking about people working for large corporations, which can afford to pass the cost of all the benefits they are paying to their employees on to the consumer, since they are operating outside the sphere of the guidelines and the realities of the free enterprise system. Or we are talking about people who work for federal or provincial agencies. As a result, up went the cry of "No Way!"
Then we were into an election and the liberal minister, campaigning to the north, had to make a commitment that he would bring in some remission orders which would allow northern employees to earn those benefits free of income tax. Indeed, the remission order was issued just in time to convince those people who had faith in the former Liberal administration to restore their faith in the new Liberal administration. The remission order was issued and it was extended for a year.
At the present time the government has committees dealing with finance, revenue, and northern affairs studying what should be done in the future about these northern benefits. I am told by all the ministers that my report is receiving very serious and earnest consideration, particularly in light of the fact that it proposes a solution which has served quite efficiently, with equity and fairness, in Australia. With your permission, sir, I will read into the record a certain section of the Australian tax act which deals with this matter.
Section 79a of the Australian income tax act contains a map breaking down the tax zones of the country into zone A and zone B and, with regard to these zones, section 79a(1) reads:
For the purpose of granting to residents of the prescribed area an income tax concession in recognition of the disadvantages to which they are subject because of the uncongenial climatic conditions, isolation and high cost of living in Zone A and, to a lesser extent, in Zone B, in comparison with parts of Australia not included in the prescribed area, a taxpayer who is a resident of the prescribed area in the year of income is entitled, in his assessment in respect of income in that year of income, to a rebate of tax ascertained in accordance with this section.
In other words, if one lives in zone A where the cost of living is higher, one pays less income tax. Accordingly, the personal exemptions are higher and adjustments are made in accordance with the cost of living and the consumer price index. Given the fact that there are some discrepancies with respect to one's ability to pay their taxes, a country as rich in geography as Canada can do nothing else but follow the examples of Australia and Denmark.
There are even incentives for people in the Soviet Union who make a commitment to live in Siberia or the harsher climates of that country. 1 do not suggest that those incentives be compared with anything which we are discussing, but certainly the young Soviet who goes to university receives certain advantages if he or she makes a commitment to spend the first few years of their productive lives in parts of that country which are less congenial to live in than other parts of the country.
I realize that the bill before us includes a section which deals with remission orders, but it only deals with a small part
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of the problem, namely, the employees of provincial governments, the federal government and of large multinational corporations which can afford to pay living allowances in order to entice employees to isolated areas. This government has a responsibility to all Canadians, not just to those who are protected by the federal government itself or by large unions.
The government should take as examples these other countries and remove this obvious discrepancy which plagues the people of the north. As I have said, I have assurances from all the ministers that this report will receive serious consideration. 1 was terribly disappointed that this bill did not include an indication, at least, that the government is planning its tax regime or its tax strategy into the twenty-first century to accommodate for these obvious discrepancies. Nevertheless, 1 am hopeful, and certainly it is an achievement that the report is even being studied in the first place because it is a private member's effort. 1 see that the Minister of Linance and the Minister of National Revenue are sitting together. They are probably plotting the strategy on which my proposals will be accepted.


Mr. Evans:: It is the Minister of State for Linance. The Minister of National Revenue sits over here.


Frank Oberle: Even the economic wizard who comes from the centre of the nation's capital is being aroused by the compelling argument which I am making on behalf of northerners.


John Leslie Evans: The Minister of National Revenue sits over here. That is the Minister of State for Finance.


Frank Oberle: I see. 1 am being lectured on the various titles of the ministers, none of whom have given any indication so far that they understand the reality of this country. I do not care who eventually brings in or proposes a bill to champion such a cause, whether it is the Minister of Finance, the Minister of National Revenue, or the Minister of State for Finance (Mr. Bussieres). Until there are such provisions, we will face the feelings of alienation and even of separation of the people of the north who look upon themselves as colonial subjects oppressed by an insensitive colonial regime which is in no way interested in being equitable and fair to all its citizens, but, rather, more interested in catering to political realities and securing its political fortunes, which lie, of course, in the concrete jungles or the large cities of this country.
Instead of planning effectively toward northern development to realize the legitimate aspirations and concerns of the people who live there, the government seems to be planning for even larger cities in this country. It is strange as one travels through the more densely populated areas of Europe, as in Germany, for example, that there is not a city there which is as large as Toronto or Montreal, or as large as Winnipeg or Vancouver would like to be. There are 66 million people in Germany in an area as large as the constituency of Prince George-Peace River, which covers roughly one third of the province of British Columbia.
Why do we want to place all our people in these areas, which I call "breeding grounds for human misery" or have

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people live in our concrete jungles, one on top of the other when Canada is so rich in opportunity, economy and in geography in its hinterlands? There is no way in which this country will ever achieve its potential unless we encourage more people to leave the herd. 1 suppose we can call it the herd instinct, where everybody wants to be a part of the masses which seem to gather in the large concrete jungles of this country.
Until the government holds out some very real incentives for people to move north to develop our frontier, this country will not and cannot achieve the potential of which it is capable, that of being one of the truly great nations in the universe. It is a matter which lends itself to deliberate public policy, but the direction of the development in the north has been downhill. For example, in 1930 there were more farmers in the Northwest Territories than there are today. It is a deliberate policy of this government to stifle growth in the north and to force people to leave there, because it wants the area for some kind of great national park which is forever the domain of nature.
Canada cannot afford this kind of development. I am not saying that Canadians should rush up north and build massive infrastructures to rape the north of its resources. I am saying that with today's technology and knowledge about the way in which such areas can be developed in harmony with the legitimate concerns of environment and ecology, for example, we can develop our north in a way which will offer a much better future for the people who live there, a future in which they are treated equitably in terms of taxation and which will be beneficial to our country as a whole.
The factories and economies of the large cities of the south are totally dependent on the resources of the north. It is not fair or right that the only reason for going north is to rape that part of the country of its resources for the benefit of those who have a certain romanticism for living in the north but who are in no way interested in developing and populating that part of the country.


A. Daniel McKenzie: Mr. Speaker, on entering into the debate on Bill C-54, an act to amend the statute law relating to income tax, this afternoon, I want to deal with the portion of the bill which affects the petroleum industry, the devastating effects of the energy bill and the contents of this bill, and the serious delays these bills will cause to Canada becoming self-sufficient in energy.
The budget, energy bill and this bill have been studied in great detail by many experts in all fields across Canada. I have yet to find a report favouring the contents of these bills, especially the energy package. I want to quote from a report out of Montreal last week which includes some comments by the new president of the Canadian Chamber of Commerce. I quote:
The federal budget and the National Energy Program have crushed the guarded optimism expressed by Canada's economists a year ago, says Stanley Roberts, president of the Canadian Chamber of Commerce.
'We've been pushed back into an economic slump and I don't expect we'll begin to climb out until the last half of 1981,' Roberts said at a seminar Thursday on government action and its effect on business. It was Roberts' first appearance in Quebec since he was named to head the national group.
'The energy program was designed to achieve certain goals', he said. 'However, something serious happened between the time the objectives were written and the time the details were pul behind them because they just don't go together.'
The main reason the Liberals continually push this energy package is they feel it will catch the imagination of the Canadian people who have very strong feelings against oil companies and multinationals. The Liberals thought that if they introduced a program to nationalize the industry, it would do great things for them politically. This has completely backfired. It caught the imagination of Canadians all right. However, they are concerned because the government is not backtracking and is not prepared to make changes in its energy package and this tax bill. It is strictly for political motivation that all of this is being done. They think it is best for the Liberal party. It has nothing to do with what is best for Canada.
Mr. Roberts went on to say:
'The program is ill-conceived. No one-not a columnist, an economist or a political observer who has studied (it) and its implications-favors it. Even the people it purports to help have said "no thanks.' It therefore must be stopped.'
Roberts, speaking to members of the Quebec Chamber of Commerce, also said Canadian "oil prices must rise much more quickly if we hope to be effective in conserving our resources . . . '
In a question period later, however, he stressed that Canadian prices did not necessarily have to rise to world levels. 'What we want is a Canadian price that will keep the Canadian developer, the Canadian exploration program, up to level and will encourage the tar sands and heavy oil programs to go ahead.'
That, of course, is not happening. They are all grinding to a halt.
The brunt of his criticism, however, bore on the over-all energy policy proposed by the Trudeau government-'this mistaken plan,' as Roberts called it later.
Many drilling rigs are already idle because of it, he reiterated, and some have fled to the United States.
I will be going into those figures in more detail in a minute.
As for Canadianizing the oil and gas industry, the program 'fails miserably.'
It certainly has failed miserably. Just before the beginning of question period today, we heard some excellent statistics quoted by the hon. member for Lethbridge-Foothills (Mr. Thacker). He introduced a motion calling for condemnation of the government, pointing out that on Monday of last week oil trucks at Coutts, Alberta, leaving Canada were backed up for one mile. That does not have anything to do with an attack on multinationals or the big oil barons. That is Canadian workers leaving the country with their equipment. The hon. member for Lethbridge-Foothills also pointed out that on Wednesday of last week 45 oil trucks of one company and 15 of another left Canada. That will have a devastating effect on Canada's economy. It will affect everybody, not just the oil barons and multinational companies. Imagine, trucks lined up for one mile leaving this country. What are the Liberals going to do about it? Absolutely nothing.
The budget, energy policy and this tax bill are certainly good for the economy-the economy of the United States. The
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Liberal government is the best friend the United States has ever had. It assists their economy with the exodus of our capital.
A couple of weeks ago we heard some interesting statistics with regard to the amount of money which is going into the state of New York. With one chunk of Canadian capital going there, 3,700 new jobs were created in the state of New York. That is as a result of the Liberal policy driving investment, truckers, oil companies, and everybody else out of this country.
I want to point out what it costs daily to import oil. With this policy, we have to import more and more of our oil. Approximately a year ago it cost the Canadian taxpayers $5.1 million per day for imported oil. That is not per week or per month, but per day. Today it costs Canadians $10.8 million daily for imported oil. This will be increased because we will not be becoming self-sufficient. We will have to rely almost totally on the OPEC countries for oil, at the rate we are going.
Just today I received a letter from a small Canadian oil company. 1 had never heard of it before. Perhaps most Canadians have not heard of it. I refer to Dynamar Energy Limited, a small struggling firm which is 95 per cent Canadian owned. It is not a multinational. There is not some baron in a foreign country controlling it and gouging the Canadian people, as the Liberals try to make the Canadian public believe.
Dynamar is a junior oil and gas producer, four years old, over 95 per cent Canadian owned, with assets of approximately $45 million. Its shares are publicly traded on the stock exchange. In the documentation I received today, they point out the effects that the new tax laws and energy package of the Liberal party will have on their company. 1 quote from a letter to their shareholders and to Members of Parliament:
We believe that Dynamar is representative of a rapidly expanding sector of the oil and gas industry-that is, the Canadian owned independents. The National Energy Program, as presently drafted, will reduce our ability to sustain our rate of growth and thereby seriously endanger the critical search for Canadian oil and gas self-sufficiency.
We earnestly urge you, as one of the leaders of Canada, to re-examine the energy program and to readdress the methods and priorities identified therein.
I hope government members will read this documentation when it comes to their offices and make representations to the stubborn Minister of Finance (Mr. MacEachen) and the very stubborn Minister of Energy, Mines and Resources (Mr. Lalonde), who have given no indication they will bring in corrective measures to this legislation which is having such a devastating effect on Canada's situation.
In the Dynamar documentation, they point out how the contents of this bill and the energy package are affecting them. They go into some detail. I quote:
The 8 per cent Petroleum and Gas Revenue Tax to be applied against all operating income (including royalty production) will reduce our 1981 cash flow by about $470,000. This represents an 11.2 per cent reduction in net income before income tax. On an after tax basis the reduction would be about 22 per cent.
These firms cannot operate without a proper cash flow. This struggling Canadian company is trying to make a go of it, but cannot handle the additional burden of the Liberal Party on its back.
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They also point out:
The Petroleum Incentives Program, which should be maximized for Dynamar since we are over 95 per cent Canadian owned, will have an uncertain effect on our capital planning-
Capital planning means job losses. They will not be buying goods and services front Ontario which are used for oil companies to operate in the west.
The letter to shareholders continues:
Early indications suggest that the federal government plans to adopt very restrictive definitions relative to these incentives such that their real value will be relatively modest.
Yes, it is a high cost which Canadians will have to pay for these nationalization problems. It is unbelievable that this government is continuing with such a policy when it is evident what a devastating effect it had on Great Britain which nationalized industry, bringing that great country to its knees.
The letter to shareholders continues:
For the interim we will continue work in Canada to the extent of that in progress or meeting specific commitments. Final policy decisions on expanding exploration programs will be taken after the National Energy Program is fully clarified.
That means there will be a slowdown.
The letter continues:
Expansion of our activities principally in the United States is proceeding as a major priority.
It is a major priority to send rigs and to do exploration in the United States. With the ridiculous policy introduced by the Liberal Party there will be a slowdown in Dynamar's operations in Canada. I say three cheers for socialism and nationalization.
This letter continues:
The federal government has apparently decided that new oil and gas resources can be most effectively found through large Crown corporations in combination with full state intrusion into all phases of the industry. Such a position indicates a remarkable lack of comprehension of the nature of the practical aspects of oil and gas exploration and development.
The government is doing this because the Liberal Party is strictly politically motivated. The letter continues:
The delivery of a 25.0 per cent carried interest in federal lands, at no cost, to the Crown corporation is simply a form of expropriation. The rationale that the federal government "earned" this interest through tax incentives is indefensible. This aspect of the program should be distressing to every Canadian.
The letter concludes:
It is apparent that if this federal policy as presently stated continues there will be a very substantial reduction in opportunities for investors in the Canadian oil and gas industry. We urge each shareholder to individually address this matter at every opportunity.
A lot of the shareholders are the little guys who have shares. They are the ones who will be suffering, not the big guys.
There are approximately 700 small oil companies in Canada which belong to the Independent Petroleum Association of Canada. This association has put out an excellent document. It has been distributed around the country in an effort to get the

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message to the federal government and to the people. In this handout, in large lettering it says:
Mr. Lalonde Your Energy Policy Will Harm Canadians.
This has nothing to do with multinationals or oil barons.
This handout contains five paragraphs. The first one reads:
It will make Canadians more dependent on expensive, insecure foreign oil.
I have already pointed out the cost of that to the Canadian taxpayer. The amount is something like $11.8 million a day. The second paragraph reads:
It will cost Canadians more for gasoline and heating oil in the long run.
Of course, in the last election the Liberals promised the Canadian people cheap gas. This promise has not materialized. In parts of Canada, gas has gone up 40 cents to 42 cents per gallon and the cost is increasing on a regular basis. So much for Liberal promises, and so much for cheap gas.
The third paragraph reads:
It will delay essential frontier exploration, oil sands plants and heavy oil development.
The trucks, rigs, equipment and companies which are leaving Canada do not go back and forth every other week. It does not matter whether things improve here in a few weeks, they do not come back. They go down for months and years. We will never see many of them again.
The fourth paragraph reads:
It will cost thousands of jobs that could be created by the oil industry across Canada.
We have one million unemployed and the government is introducing policies like this which is driving investment, industry, trucking companies and everything out of the country. The Liberals' alternative to all of this is the short-term Canada Works program, including Flip and Flop and all the rest. There is no way those programs will make up for this devastating policy of driving business and money out of the country.
The last paragraph reads:
Canada must achieve oil self-sufficiency.
When we were the government, that was our aim. We had a program to make ourselves self-sufficient. We did not introduce a program to drive industry and business out of the country and make ghost towns out of places such as Cold Lake, etc.
The last paragraph continues:
We are the companies your program was supposed to help-the independent Canadian companies. It doesn't help us-it has stopped us in our tracks.
These stubborn Liberals are just going to leave them stopped in their tracks because they do not care.
The last sentence reads:
We urge you to reconsider this program for the good of all Canadians.
Let us hope and pray the Liberals will reconsider.


An hon. Member:: They do not care.


A. Daniel McKenzie: Let us hope the stubborn and politically motivated Liberals will reconsider.


Mr. Paproski:: All Collenette can do is laugh.


A. Daniel McKenzie: That is fitting.
There are other effects on the consumer regarding home heating in this bill. By 1983 Canadians using natural gas to heat their homes will be paying almost $70 per year as an excise tax to their government. This is a Liberal tax. By 1983, oil heating will cost between $400 and $512 more a year. Up to $350 of this amount will be as a result of new Liberal taxes. There is absolutely nothing contained in the budget or this bill to protect the low-income earner. We introduced a tax credit plan for low and middle-income people so as to assist them with high energy costs. But there is absolutely no provision to assist the poor, the low-income and the middle-income people with the devastating effects of the Liberal policy.
Regarding transportation, by the end of 1983 gasoline prices will have risen by 15.2 cents per litre. That is 70 cents per gallon. So much for cheap gas. The average driver will pay $400 more per year, $272 of which is in new federal government taxes. The government has not missed an angle in finding ways of taxing Canadians.
The hon. member for Brandon-Souris (Mr. Dinsdale) will be going into another aspect later on this week concerning a new sales tax which the government has brought in affecting small businesses, in that it will not be economic for small business to hire the handicapped or have different handicapped workshops do work for industry. It will be cheaper to have the work done out of the country. The government then introduces another program to assist the handicapped. Last week we heard about a program to assist industry to hire handicapped. There are programs to assist them and there are other programs which do not make it advantageous to hire the handicapped. The government simply does not know what it is doing.
As I have pointed out, there is no compensation at all for low-income users of energy. I want to read from another recent article. This came from the Canadian Council on Social Development. This group studied the budget and the energy package in detail. They have pointed out the devastating impact they are having on low-income Canadians. There is absolutely no assistance in any way to assist these people with their higher energy costs. A spokesman for the Canadian Council on Social Development pointed out:
-that the new tax increases announced in the budget will add $14.3 billion to the federal treasury over the next three years, but only $345 million per year in new funds have been devoted to increasing the incomes of Canada's poorest pensioners.
We will be in for some rough times in Canada with the budget, the National Energy Program, and Bill C-54.
The present Minister of Finance probably got the shock of his life when he took over this portfolio and found the mess we are in in this country. I do not think he fully realized the
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situation, as most of his time here in Ottawa has been spent in dealing with political manipulations. I think he is getting his eyes opened. Perhaps he is a concerned man, but apparently he is not going to back down, for whatever reasons, and we are going to have to suffer the consequences.
In addition the Independent Petroleum Association of Canada has further criticism of the energy policy. That organization represents the very group the budget is supposed to help, small Canadian oil companies.
The association claims the tax regime and the national energy policy will cut cash flow by 22 per cent to 33 per cent, and that could certainly hurt small and medium-sized Canadian firms. There is no question about that; they just cannot stand those reductions. The 8 per cent tax on gross revenues is not deductible and this translates into a deduction from corporate profits of 25 per cent. There is no way small firms can stand a 25 per cent reduction in profits.
The Liberal government, through its budget and energy package, has made no allowance for inflation accounting. The government does Aot realize today that companies have to make exceedingly large profits to survive because of inflation, yet I have never heard any Liberal cabinet minister, a finance minister or any of the rest, talk about inflation accounting to make allowance for inflation when dealing with profits of oil firms or any other firms.
The IPAC says the national energy policy works against two of its major objectives, Canadianization of the industry, and security of supply. The new system is reducing investment in Canada, shifting it to the United States. The national energy policy is seen to delay energy self-sufficiency. Dow Chemical and the Independent Petroleum Association of Canada have said the Liberal energy policy will delay energy self-sufficiency, and one big reason for this view is that private investment is being reduced.
What the Liberal Party is working toward is having this country at the mercy of multinationals. That party is the best friend the multinationals and the OPEC countries have ever had. We are doing more to create work and jobs in OPEC countries than in Canada.
The Canadian Association of Oilwell Drilling Contractors reported that 11,360 rig workers have lost their jobs since the October 28 budget, and the effects of this Bill C-54 will be driving more out. As my colleague, the hon. member for Esquimalt-Saanich (Mr. Munro) says, the government has the full backing of the NDP. Another 28,000 workers in oil-related industries throughout Canada will lose their jobs by March. In total, 40,000 Canadians in oil-related jobs will be out of work by spring. They can apply for the Canada Works program, and that is the Liberal Party's alternative to all these people who are going to be losing their jobs.
The association has also said 43 drilling and 15 servicing rigs have now gone to the United States. This figure has probably increased since the latest figure quoted by the hon. member from Lethbridge today, and I am sure the figure is
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increasing daily. A record 174 drilling rigs have gone out of service and remain in Canada gathering dust.
The National Energy Program and the lack of an agreement with Alberta are causing delays in virtually every tar sands project in Alberta. Without the development of the tar sands there will be no hope of reaching energy self-sufficiency.
Additional devastating facts were revealed to me today during a conversation with the hon. member for Red Deer (Mr. Towers). He informs me there are 800 trucks in his area related to the oil industry sitting idle, doing nothing. Three cheers for the Liberals and the NDP! I am sure they are proud of this record.
Let me quote from statistics the Leader of the Official Opposition (Mr. Clark) used in a speech delivered to the Scarborough Rotary Club on January 20. He was talking about the dangers of this Liberal policy, and he pointed out:
1 emphasize, all of Canada, because it would be a serious mistake for anyone in Ontario to believe that the current dispute over energy is simply an issue between the federal government and the people in governments of western Canada or of Atlantic Canada. Certainly, the west has a vital stake in the questions that are now before the House. Without question, current federal policies-whether they have to do with transportation, energy or anything else- are threatening the economic well-being of western Canada and, far more dangerously, they are threatening the strength of the commitment of that region to our common country. So does Atlantic Canada have a direct and a vital stake. As you may well know, Mobil has pulled back from its participation and the development of the important Hibernia field, at least until the question of offshore jurisdiction is settled.
We are coming to a grinding halt in respect of self-sufficiency in this country.
The Leader of the Opposition also pointed out to the attendance:
Your stake in the energy issue, as a resident of Scarborough and of Ontario, doesn't stop with the question of the ability of the country to hold together. Your energy security, and the energy security of your children is involved directly, and so is the economic development of this province. The energy policies of Marc Lalonde put the province and the people of Ontario in double jeopardy. They mean that you may well not have the energy you need three or four years from now. They mean you may well lose the energy contracts and the energy jobs that can get the economy of Ontario and of Canada moving again.
I guess we do not have to worry too much. The Liberals are working on policies of gas rationing. I suppose that will be the next thing they will be introducing.
The Leader of the Opposition went on to say:
Let me tell you exactly how those policies threaten your energy security and threaten your economic prospects. Up until now, the people and the industries of Ontario have been able to get all the energy they need from Canadian sources. We have, as a nation, put in place production and distribution systems which ensure that all of Ontario's oil and gas needs are met from Canadian sources. That has put this province in a far more secure position than the five more easterly provinces, Quebec and the four Atlantic provinces, who have to depend today for up to 60 per cent of their petroleum supplies on imported oil-oil whose supply we can't control, oil whose price we can't control.
We are one nation, and a serious disruption in oil imports to eastern Canada- to the five provinces that have a 60 per cent reliance on OPEC-would trigger a rationing system, which is in place under Canadian law-
Just let me go into a little bit of the history of the shortage of oil. This problem was recognized in the 1950s and when the Diefenbaker government was formed in the early 1960s it recognized the problem and introduced the Roads to

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Resources program. That government wanted to put that plan into effect to develop the north, but it was highly ridiculed by the Liberal Party at the time. There were some roads built and some long-range plans put into effect, but when the Liberals were returned in 1963 they dropped the Roads to Resources program. They had other priorities, such as language and culture, and higher taxes. The devastating situation today is directly the fault of the Liberal Party going back to 1963. Members of that party have great difficulty recognizing the issues involved in running a country. They have other priorities.
The Leader of the Opposition went on to state:
-lhal would cause all Canadians to share the shortage-Canadians in Ontario, in Alberta, in British Columbia-as well as those in the five provinces directly affected. So, Ontario already sits under the shadow of rationing if some new surprise in OPEC cuts off the supply of imported oil to Quebec and to the four Atlantic provinces. That, in my submission, is only the beginning of the danger. Federal Liberal policies are increasing our dependency upon imported OPEC oil. If present trends continue over the next five years, there will not be just five provinces that rely upon OPEC for their energy needs, there will be a sixth, and the sixth will be the province of Ontario.
Ontario is our largest province and our largest industrial base. The people of Ontario will suffer along with the rest.
If trends that are now in place continue for the next five years, Ontario will be depending for part of its oil and gas requirements upon the nations of OPEC instead of relying as you now do upon Canadian sources.
The problem we face is simple. Our demand for oil continues to go up while our supplies of oil from existing conventional Canadian wells are going down. Even Marc Lalondc admits that Canada will be importing at least 260,000 barrels of oil a day by 1985.
This is all because the energy crisis which was identified back in the fifties was not recognized by the Liberals. They could have been heroes today if they had carried on with the Diefenbaker Roads to Resources Program instead of ridiculing it and dropping it. So, we are suffering today and paying through the nose.
The Leader of the Opposition went on to say the following:
We spoke earlier of the hostage situation in Iran, and we know that before the hostage situation arose there was a revolution there-
My leader was pointing out how we cannot rely on these OPEC countries. They could cut us off next week, and we would be left high and dry while the Liberal government tries to nationalize the industry in this country and drive business and investment money out. We used to import 40,000 barrels of oil a day from Iran. Of course that is cut off now, and we have seen the events in Iraq, a country from which we used to get 8,000 barrels of oil a day.
My leader went on to say:
You have seen reports of those OPEC meetings where prices arc increased and supplies are reduced without any consideration of the impact on Canada-
The Liberals have us at the absolute mercy of the OPEC countries today.
You saw too. the Soviet invasion of Afghanistan, which was not simply a neighbourhood war. but which was a deliberate move by the Soviet Union to place itself strategically in a position of access to the rich oil fields of the Middle East.
You probably know some of the details of Petro-Canada's contract with Mexico, which was supposed to yield this country 100,000 barrels a day of a fairly high quality crude, and which today is actually delivering only 20,000 barrels a day of a very inferior quality crude.
So much for importing oil. The Liberal policy is to make things as awkward and difficult as possible for everyone in this country. The Leader of the Opposition also referred to the billions of dollars which are being driven out of this country. 1 will go into that in more detail in future debates in the House.
There are 35 states which are benefiting from Canadian money leaving Canada. Some of those states have mottoes such as "Come to Kentucky", or "Come to Missouri, a state where 'profit' is not a dirty word". No doubt the NDP will be chastising those states because they invite businesses to go there and to invest there so that they can make fair profits.
The Leader of the Opposition also said the following:
You know that the Alsands plant in the tar sands is on hold, so is the Cold Lake heavy oil development. Syncrude has dropped a $2 billion plan to increase its production by 77,000 barrels a day.
The benefits of spending $2 billion go right across the country. This has nothing to do with putting money into the pocket of some multinationals or some oil baron. It has to do with buying Canadian goods and services and putting people to work.
My leader went on:
The first major tertiary recovery operation at Judy Creek in Alberta, all set to go, is now cancelled-
Thousands of jobs are being cancelled. Trucks are sitting idle in Red Deer. They are lined up for a mile at the border. They are going down into the United States.
Literally dozens of smaller projects have either been cancelled or postponed.
What on earth is wrong with the Liberal party? Why do the Liberals continue this ridiculous harebrained policy?
In all, since the federal government announced its energy proposal in October, more than $20 billion in Canadian energy investment has either been withdrawn or postponed. Twenty billion dollars of investment in jobs and security and growth for this country!
That is a devastating figure. It will have a devastating effect on the whole nation. A policy like this is not reversed overnight.
The Leader of the Opposition also said the following:
Let me stress that we are not talking here about the multinationals only. Indeed, it is simple deception to suggest that the present Liberal policy helps Canadian ownership, because the companies that arc being driven away arc the Canadian companies, particularly the smaller entrepreneurial, innovative Canadian companies. The multinationals have a wide variety of other rich holdings that can help them cushion the blow. The small Canadian companies don't. Those small Canadian companies are forced to go broke or go south.
Both are happening.
When they go south, they buy south.
They are not buying Canadian goods or hiring Canadian people down there. They are taking some of their staff with them as well as rigs, trucks and other associated equipment.
Building rigs buy trucks.
They are not buying Canadian trucks. They are buying United States trucks from United States truck dealers.
January 26, 1981

When a Canadian-based drilling rig is forced to move from Canada and operate in Texas it buys its trucks from Michigan, not from Ontario. That means that jobs that could be provided here in this province are being drained away and provided in the United States, because we are driving Canadian investment out of Canada.
Of course, there is always the fear of an NDP government coming into power in this country. That would be a nightmare. This country would be absolutely finished because it would be NDP policy to nationalize all 700 oil companies in Canada. Hon. members can imagine what a mess that would be.
My leader went on:
The special victims of the present Liberal policy are Canadian companies and Canadian workers, and because these Canadian energy companies have been so successful and so innovative, when Mr. Lalonde drives them out, he drives out the best performers in the Canadian energy industry. It's a sort of reverse reward for Canadian excellence; if you prove you are good, Marc Lalonde makes you leave.
There has been no indication from the Minister of Finance or from the Minister of Energy, Mines and Resources that they will reverse any of this policy which is having such a devastating effect. Perhaps they are just holding us in abeyance. I certainly hope they will reconsider the provisions in the budget, Bill C-54 and the energy policy because this country is being absolutely devastated.
Let us hope and pray that there will be a reversal in the very near future.


Thomas Gordon Towers: Mr. Speaker, there are a few points I would like to bring to the attention of the House at this time. 1 am glad to see that the government House leader is here to hear what I have to say.
First, the government should recognize that it is leading us on a disastrous course. It is unfortunate that this is happening because the eighties could have belonged to Canada. Instead, as we go into this new decade it seems that Canada will become a slave to the eighties. That is not necessary, but it will happen because of the direction in which the government is leading us.
I notice that there are 224 pages in Bill C-54. 1 wonder if the government recognizes what it means when it has accountants making out income tax forms for all those people who have to pay income tax. This is costing Canadian taxpayers more and more as time goes on. This is something to which nobody seems to give any thought, but there is no doubt that when Bill C-54 is passed, as 1 suppose it will be by the government majority, officials from the department will have to go out to all parts of Canada and meet with accountants in different offices across the country where income tax forms are filled for Canadians. I wonder if anyone has ever assessed what the cost involved will be, first of all, of sending out officials to instruct accountants as to the meaning of Bill C-54. I am sure that there are many accountants in Canada who would agree with me when 1 say that on occasions the officials who go out from the department are not very cognizant of what is meant or stipulated in the legislation.
Income Tax Act
A further difficulty is encountered with complications having to do with arm's length deals. As you know, Mr. Speaker, these situations are controversial, sometimes it is hard to establish what is right, what is wrong, and what is expected. This creates problems for the accountants, and it certainly creates problems for the Canadian people who are caught in this situation. 1 would rather see a simpler system adopted.
Surely ways and means could be developed to establish a simplified form of taxation which would not require fairly large companies to use one member of their personnel to do nothing else but keep up with the changes in the tax structure established by the government. I am sure that this is what will happen when Bill C-54 is passed. You must take into consideration the cost borne by individuals who have to rely on advice given to them by officials of the department with regard to the tax they have to pay.
I have to warn the government that in the past tax systems have destroyed countries. All one has to do is to look at world history to see what happened to countries overburdened by their taxation systems. I think that this is what is happening in Canada today. 1 hope that the minister is aware of the fact that Canadians are now reaching the point at which they will start rebelling if an increasing tax load is placed on them. We see it happening all around us when bankruptcies take place at an increasing rate and when people are put out of work, as is the case now.
We are experiencing now the highest unemployment rate in Canadian history. What does this mean? It means that in the year 1982 the crunch will come. Certainly people will pay their income tax this year because 1980 has been a fairly good year, but 1981 will not be such a good year and therefore there will be many refunds at the end of that year. That is when the crunch will come. At about that time we will have to face up to the reality that our oil production will be going down and we will have to use more and more of our taxation dollars to pay for the subsidy. Goodness only knows it is too high now, but under this administration it will go up even higher.
There are people in our community who phone me quite regularly, such as a welder's company, which had employed 40 welders. How many do they have working for them now? There are only 11 there now. This means that 29 welders will not be paying income tax or, if they are, they will be paying very little of it in 1982. It is the same story throughout. Those welders will not be buying cars, trucks or clothing which they would ordinarily buy. This will snowball right back into central Canada. As has been pointed out by my colleagues, of the $7 billion spent on the oil sands in Alberta, $4 billion or $5 billion will come back to Ontario. We have not felt the crunch yet, but we are starting to feel it in Alberta. As I said, people are not working as they should be. The crunch will come several months down the road.
It breaks my heart to see a minister of this cabinet, a Canadian, the Minister of Energy, Mines and Resources (Mr. Lalonde), mislead the House-I will not say he does so

January 26, 1981
Income Tax Act
deliberately because I know this is not parliamentary-on what is happening in Canada today. When he tells us that the number of wells being drilled now is comparable to that of last year, does he not realize that those corporations, those servicing units, are still operating on last year's contracts and last year's budget? What happens when there are no new contracts and the succeeding years' budgets are cut back? Surely to goodness a Canadian who is a member of the cabinet of the government of our country should accept a little more responsibility than that. There has never been a time in history when a government, perhaps unintentionally, unwillingly or unwittingly, has led our country into such a disaster which this group of people is doing at present.
The Prime Minister (Mr. Trudeau) said after the last election, when his party got little representation from western Canada, that he would listen to the elected representatives from that area. However, he is not doing that, Mr. Speaker. He is not paying attention to what we are trying to tell the government. He is allowing his ministers to continue on the disastrous course which they have chartered. It is a great misfortune that he will not listen to us and take heed. Why will he not go west himself and meet people there, instead of sending a minister who will not change the course he has taken? This means that down the road there will be no return on income tax for the Canadian government which there should have been in order to keep the country operating. We have tremendous opportunities. There is a deficit of $17 billion on our manufactured products. We could correct that. We have one million unemployed who are not paying income tax simply because there is no job for them. I believe this tax structure is wrong.
There are errors in another area which I think should be brought to the minister's attention, errors of omission. I think that sometimes wrongs are created by omission as well as commission. The omission to which I want to bring the minister's attention is the fact that there is nothing in Bill C-54, which is 224 pages long, about the capital gains tax on family farms. It was discussed in the House today; it has been in the press.
Some members, particularly some in the NDP, do not care about ownership of property, but we in western Canada take pride in owning property. Everyone should realize that the strength of western Canada is in private ownership. One of the most dangerous things which can happen to any country is to allow the taxation structure to take property away from the individual.
I suppose the best example I could give, although it is deviating just a little, would be in the province of Saskatchewan where we find young farmers selling their property to the government in order to pay off debts on machinery, and then in turn renting the land back from the government.
One of the most dangerous things which can happen in any society is to allow the state to own the land upon which food is produced. We must realize that. We can look at any other
country around the world. The state may own a building and another one can be put up like it; people can move in and out of it as they wish. But, when we allow the state to start to accumulate the property we are getting into a dangerous situation. This is the course the government is leading us on.
When I say that there is an omission, I am referring to the fact that there is no mention of a capital gains deletion on farm lands being transferred from one farmer to another. Over a period of years we have succeeded in gaining a few advantages in this regard, in trying to maintain the family farm because it is the strength of our community, but we must go a long way yet. There is still the case of many farmers caught in corporations. When a corporation was set up by individuals- whether it was the father, mother, daughter or son-and land was left outside that corporation, they did not realize there is absolutely no way under present legislation for that land to be transferred without the payment of capital gains.
What about those people who are retiring and probably put their entire life's earnings into a parcel of land? When the time comes for them to retire and they either sell it or transfer it to a member of the family who is not a farmer, then someone has to pay capital gains on it. What about the situation where a couple has purchased a house, preparing for the time when they will retire, and in the interim they rent the house in order to have a little income from it? When the time comes for them to move off their parcel of land and into that house in an urban centre, not only do they have to pay capital gains on the farm, they will have to pay capital gains on the house into which they are moving. I do not think it is fair.
I hope the minister will do something about it because it is irritating and causing problems for people in western Canada who have devoted a full lifetime to the betterment of the country. They have really received precious little in return, because the dollars they made in their earlier years are not worth very much today. When one considers that they must pay capital gains on the property they sell and then in turn buy homes at inflated prices, caused by the inflationary factor, one realizes that real hardships are being created for those people. There is a lot of animosity and dissatisfaction in the minds of many Canadians. There are many things we should be doing that we are not doing. I urge the minister to be cognizant of these things. No doubt we will ask for answers as to what the government intends to do in this regard.
I hope we get a little further away from what the Deputy Prime Minister and Minister of Finance (Mr. MacEachen) said in the speech from the throne, that we would have a white paper and another study. We do not need another white paper or study. We know what is required. All we want is some action from the government to correct these anomalies which are causing problems for the people out there. The Prime Minister said that he would listen. I hope the minister carries this message to him. Let us get the country moving again. There are many opportunities for us to progress and to develop the country. There is much work to do.
The other day I noticed that employment on farms across Canada is going down. The reason for this is that farmers are
January 26, 1981

feeling a pinch and the first place they cut is their employment. It is very obvious that they will start sliding over the jobs. With the 350,000 farms in Canada today, 1 would wager that every one of them could use one of those people who are unemployed, if the system allowed a means of paying for that help. We would have a better country as a result of it, but as long as the government is sucking tax dollars out of the system the way it is, and not putting anything back into it-not even developing programs which will lay a strong base, but rather weakening the system-then it will become worse and worse.
I think the government should be looking at some of these things. I make these suggestions to the government so that our country will be better. But allowing the bureaucracy to pour out reams and reams of paper so that it costs us more and more to pay our taxes is not the way we should be going. We should be going the other route. It is not only out there that we require extra man-hours; it is right within the department. Therefore, I think it would be in the best interests of all of us if the government were cognizant of these things and realized that in the direction in which we are going there will be disaster in another two, three or four years.
We still have time to turn it around, but time is running out. I trust the minister will take this message to the Prime Minister and remind him that he promised after the election that he would listen to what we had to say.


Some hon. Members:: Hear, hear!


Mr. Benno Friesen (Surrey-White Rock-North Delta):: Mr. Speaker, it is a pleasure to speak to the matter before the House. I say that somewhat with tongue in cheek because it is never really a pleasure to talk on a taxation bill. I suppose it is a sure thing, but it is also a disappointment that we must talk about the kind of bill before us. It really does not display any clearcut government policy, unless the policy is makeshift, patch up, or retrench, without any guidance to the economic forces in our country. There really is no pattern in this legislation by which the industrial sector, the business community, can chart its course for the next few years.
I see the Minister of State for Finance (Mr. Bussieres) is here and I gratefully watched him take notes when the hon. member for Red Deer (Mr. Towers) was speaking. I hope having made those notes he will show us later on that he will answer some of the questions which have arisen during the course of this debate. There have been serious questions asked regarding the economy in our country and the direction, or lack of it, which the government is giving to our economic forces. It is a sad commentary on our country when only two provinces out of ten show any kind of economic growth. I am fortunate to represent a riding in one of those provinces.
I am glad the people in my province do not face the kind of financial pressures which many of the people in eastern Canada face, at least to the same degree. While we have unemployment in Surrey, which is a matter of distress for those who are unemployed, it does not reach the magnitude of
Income Tax Act
many other areas in the country. Nevertheless, those people who face unemployment because of the financial policies of the government, are experiencing no comfort from knowing that it does not hurt quite so much in British Columbia as it does in Newfoundland, Prince Edward Island, Nova Scotia and the other provinces. That is of small comfort to them.
One of the things which disturbs me is the subtle directions in which we are headed, not stated, but nevertheless directions in which the government is taking us. I recall reading about a month ago an economic analyst's report in the Vancouver Province in which one of the federal government's financial statements was being examined. Apart from the details in the report, what disturbed me most was the direction of the language of the report, the direction in which the government is taking us. It was very clear in the analysis of that statement that the mentality of the government is one that it could have taxed more but that it chose not to exercise all of its taxing powers. It was as though the government was doing the taxpayer a favour.
There was a time, Mr. Speaker, when the citizens of Canada thought that all of their possessions really belonged to them, except for those which they gave to the government to enable it to continue the essential services. But it was clear from this report that we had now turned around the other way, the government now assumed that all the possessions belonged to it except those which it chose to leave to the people to dispose of as they thought fit. Mr. Speaker, that is nothing short of stateism.
Whereas it is only the subtle turn of language which seems now to indicate the direction of the government, as the hon. member for Red Deer just pointed out more and more the drift of the government is in that direction. It is a direction in which the awesome powers of the government can expropriate willy nilly what was once privately owned by an individual or by a corporation standing in the place of an individual. We saw this in Bill C-42. It used to be that the government's taxing policies were determined by the taxes available, or the spending was determined by the taxes available. Now it is the other way around, the taxes are now determined by the spending. At this point that may be a subtle shift, but every month come pay day every taxpayer in Canada knows that the shift has taken place.
Since the spending powers of the government seem to be totally unrestrained, this means that the taxing powers of the central government are more and more unrestrained. The government's policy now is to try to find more places from where it can obtain revenue to satisfy its gargantuan appetite for spending. That is wrong. It violates the principle of ownership in our country. At one time in our land it was thought that a man's home was his castle. The policy which the government is now developing seems to be that a man's home is his castle until the government wants a piece of it.
I recall listening to the hon. member for Broadview-Green-wood (Mr. Rae) at the outset of this debate harking to the Carter commission report of the late 1960s, which ultimately ended up in the 1972 tax legislation. The hon. member for Red

January 26, 1981
Adjournment Motion
Deer was absolutely correct when he said that what that new tax measure did in 1972 was to create a whole new industry in Canada-the accounting industry. There was a time when the individual taxpayer was quite qualified to file his own income tax returns, whether he was a day labourer on hourly wages or whether he was a small farmer. He was competent to file his income tax returns. Now he does not trust himself to do it.
As the minister knows, the job of an accountant is to look for all of those opportunities which the taxpayer might miss to gain the benefit of deductions. A good accountant makes money for the taxpayer since he knows all the intricacies of the Income Tax Act. Therefore he can take advantage of what are generally called loopholes, thereby saving the taxpayer some money. Because the tax legislation is so intricate, you need an army of tax accountants to defend yourself from the government. That is not the way it should be. 1 remember the member for Broadview-Greenwood talking about a buck is a buck is a buck. I do not think that has ever been true, but it has never been more untrue than today. If there was a shadow of truth to it in 1972, when inflation was within reasonable bounds, then it is totally untrue today with the kind of inflationary spiral which we are facing.
If you are to consider the Carter commission report seriously, a house should also be subject to capital gains tax, the way it is in the United States. In 1972 a house which would have sold for, let us say, $25,000 in my constituency, now sells for $125,000. With those inflated dollars in the picture can the government tell me that a buck is a buck is a buck? Perish the thought. Even on that score a dollar is only worth 25 cents now.
I would call it five o'clock, Mr. Speaker.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: 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 Nepean-Carleton (Mr. Baker)-Air Transport- Proposed service between Ottawa and New York City; the hon. member for St. Catharines (Mr. Reid)-Bankruptcies- Call for increase in guaranteed insurance coverage; the hon. member for Regina East (Mr. de Jong)-Canadian Armed Forces-Testing of chemical defoliants-Monitoring of effects.
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 and public bills.


PRIVATE MEMBERS' MOTIONS
David Michael Collenette: Mr. Speaker, I rose last week to draw to the attention of the House the fact that motion No. 14, in the name of the hon. member for Levis, who resigned his seat some months ago, is still on the order paper. I also notice that Bill C-329, also in the name of the hon. member for Levis, is still on the order paper. Hon. members may have noticed that there was an unfortunate reference in The Globe and Mail this morning to the procedures of the House concerning the fact that this motion was still on the order paper. I believe that an unfair reflection was cast upon the Chair through ignorance of knowledge of the procedures of this House.
Therefore I would propose, if the House agrees, that notice of motion No. 14 be removed from the order paper and that the order for second reading of Bill C-329, an act to amend the Criminal Code, be discharged and the bill withdrawn.


Mr. Deputy Speaker:: The House has heard the suggestion of the Parliamentary Secretary to the President of the Privy Council (Mr. Collenette). Is it agreed?


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

[ Translation]


PUBLIC SERVICE
Mr. Jean-Robert Gauthier (Ottawa-Vanier) moved:: That, in the opinion of this House, the government should consider the advisability of assessing training and development programs for public service employees with a view to establishing a general policy.
He said: Mr. Speaker, I am pleased to be able to debate this subject once again in the House. Over the past eight years I have had three or four opportunities to raise this issue, either in the form of motions or in public bills and I am anxious to review this file which has made rapid progress indeed in the past year and which again recently, two or three days ago, was the subject of releases from Treasury Board.
It will be recalled that I have been an ardent supporter of the creation of a government administration school. To my mind, it was a concept which first encompassed the development and training of public servants, and the main objective was to try to get hon. members, the House and governments to give serious consideration to the major problem of training and development in our public service.
Mr. Speaker, perhaps 1 might take a few minutes to review the background of this enduring and very important question. Indeed the problem became acute at the close of World War II
January 26, 1981

when most people who had come to work for the government went back home. Thus we lost many talented people whose duties here were to second our war effort.
In addition, the requirements dictated by new management techniques resulting mostly from the new role which the federal government was called upon to play, combined with the expansion of services, particularly social services, all that commanded a highly-trained administrative and professional technical staff. Therefore the government had to analyse thoroughly its hiring policies, conditions related to advancement within the public service, administrative classifications, salaries, ways to attract and keep the required staff. You will recall that the Gordon commission was asked to study the personnel management system. The Public Service Commission of Canada published a book entitled "History of an Institution" which covers the period from 1908 to 1968. Here is what it says on page 228 about the Gordon commission:
When members of the Gordon commission undertook to review the situation in the wider perspective they enjoyed through their terms of reference as independent investigators, they were dumbfounded.
Again I quote, from page 229:
-there is no effective mechanism to train, discover, relocate and promote promising men and women among younger employees and public servants who hold intermediary positions.
Having pinpointed the insufficiency of administrative mechanisms, the Gordon commission recommended, and I quote:
-the appointment in each department of a seasoned and competent personnel officer with the necessary title and authority.
One of the roles of this personnel director was to train the staff at the departmental level. Having thus decentralized training responsibilities, the Civil Service Commission continued to give special information to the departments and took charge of the co-ordination and management of training as it applied to departments as a whole.
In 1954, under the government of the Right Hon. Louis St. Laurent, a commission of inquiry was appointed to study the possibility of reviewing the Public Service Act and especially to consider the sensitive issue of the relationship between the Public Service Commission and Treasury Board. I will not spend too much time on that very important issue today, Mr. Speaker, and will deal with it at a more appropriate time. I would certainly not want to rekindle old feelings of animosity between the Public Service Commission and Treasury Board. Those of you who are interested in this issue can read the Heeney report which deals with it.
The Glassco report containing the recommendations of the Royal Commission on Government Organization, published in 1962, confirms the deplorable state of personnel management in the public service. As it states in one of its recommendations, the royal commission

-had lo conclude that in general for many years training and development have not received the attention they deserve in the public service.
Training of Public Servants
That opinion is also expressed on page 317 of a book entitled "History of an Institution".
The Glassco commission suggested that the Public Service Commission should relinquish several management functions. Treasury Board and the various departments were therefore given the responsibility for evaluating the performance of employees, promoting career development and organizing interdepartmental training programs. All these functions were carried out under program directives established by Treasury Board. The management of centralized training programs in effect belonged to the Public Service Commission while Treasury Board was the policymaker.
Naturally, there were many problems with the implementation of the Glassco report. The government set up a government organization office to study the recommendations. We have therefore not invented anything new since the Progressive Conservative government in 1979 and the Liberal government in 1980 only imitated their predecessor of 20 years ago. We also have within the Privy Council and the Treasury Board special committees to study the Lambert and D'Avignon reports on accountability and efficiency in the public service.
In 1965, the Public Service Commission set up the Training and Development Branch to have on hand a pool of specialists able to guide staffing managers and departmental personnel counsellors. It was in 1967 that this House passed an amendment to the Financial Administration Act which made Treasury Board responsible for determining the training and development needs of the public service in general and for establishing the conditions under which such training and development could occur.
Of course, there was some reluctance concerning this new policy. Some people questioned the effectiveness of dividing the function consisting in the determination of training needs and conditions, which would come under the jurisdiction of the Treasury Board, and the implementation of the centralized training and development programs, which come under the Public Service Commission. There is indeed much confusion between the terms training and development. The Glassco report tried to provide a better definition of these two important elements of a good personnel management policy. On page 474 of "History of an Institution", the Glassco report is quoted as follows:
Training is the process of teaching skills to an individual so that he may improve his performance on a particular job.
Development is the process whereby an individual acquires new knowledge, habits, attitudes, self-awareness, and values or maturity.
Training courses and development programs, therefore, entail different methods.
Mr. Speaker, it would be well to understand the difference between these two terms. To simplify, we could say that training has an immediate application and that it is related to needs or requirements, to particular jobs that have to be done.

January 26, 1981
Training of Public Servants
Very often, training is the responsibility of the employer. It could therefore be said that it is institutional in nature.
On the other hand, development is a much more complex process which requires long-term planning. It is much closer to ongoing education. The individual is urged to acquire new knowledge to become better qualified and better equipped for a more difficult and therefore more senior position. Development is more individual than institutional and is supplementary to already acquired training.
I would like to deal now with some recent reports and changes as they apply to training and development.
The necessity of development, as well as of training, was recognized by the D'Avignon committee. The D'Avignon committee pointed out that if the reality of a "representative public service" is to be achieved, adequate programs of both training and development would have to be made available to such groups as French-speaking Canadians, women, native people, and handicapped people. The D'Avignon committee stated that programs which help candidates improve themselves, such as the Northern Career Program, were needed to attain government objectives. The D'Avignon committee spoke against the divorce of training from development in these terms:
It is beyond understanding how governments and treasury boards have failed to recognize not just the power of training but the fundamental requirement for the continuous training and development of staff, in the interests of economy and effectiveness.
The committee pointed out that the greatest part of the funds now allocated to training is spent by a small number of large training schools.
It is one of my major concerns, which I share with the D'Avignon committee, that without a policy which covers both training and development, government objectives pertaining to a fully representative public service will not be realized in the years ahead. The needs of French-speaking Canadians, women, native people and the handicapped must be adequately addressed.
French-speaking Canadians continue to be underrepresented in the upper levels of the public service and in the scientific and technical categories.
While the proportion of French-speaking Canadians in the public service is now representative of their proportion of the Canadian population, due to the accelerated recruitment programs over the past few years, recruitment cannot be relied on to solve the problem of underrepresentation at upper levels of federal departments and agencies. Part of the solution must be a properly conceived program of training and development if this situation is to be remedied in the medium term.
The situation of women in the public service remains disadvantaged. In recent years the proportion of women public servants is gradually approaching their rate of participation in the labour force as a whole. Women public servants remain
concentrated in administrative support categories and continue to be underrepresented in the officer categories. Even in those occupational categories which are predominantly female, women are concentrated at the lower levels.
The occupational categories in which women public servants are now concentrated-those which involve clerical and information handling activities-are those which are most likely to be transformed by the impact of microelectronic technologies. Research under way at the Institute for Research on Public Policy indicates that some existing jobs in these categories will be downgraded as machines take over functions previously performed manually and that the new jobs created will require greater skill and different aptitudes. Unless such changes are anticipated and planned for, women will not obtain their share of the new employment generated and may bear the brunt of the negative effects of the introduction of new technologies in the workplace.
Despite the attention that has been given to the representation of the native peoples in the public service, these groups continue to be underrepresented. While opportunities for the handicapped are gradually being developed, as a civilized society we must do much more. Adequate programs of training and development must be an important part of this process.
As for the public service as a whole, the rapidly shortening life of knowledge acquired at specific moments in the life cycle has prompted both the OECD and UNESCO to urge governments to view learning as a lifelong process and to build in the necessary opportunities for updating and new learning into the work experience itself. It is imperative that those occupational categories in which knowledge acquired early in the life cycle is particularly shortlived be identified, and that appropriate training and development strategies be devised to maintain the original investment Canadians have made in their public servants.
A most important report, that of the Royal Commission on Financial Management and Accountability, tabled in March, 1979, identified some of the major difficulties facing the federal administration in the area of personnel management. The commission recommended that personnel management responsibilities should be centralized under a secretary for personnel management in Treasury Board. It was recommended that the Public Service Commission be relieved of its role in the staffing, and training and development process, and that training services be provided through a separate revenue-dependent organization under a secretary for personnel management.
As recently as January 22 of this year it was announced by Treasury Board that the position of assistant secretary of developmental personnel policies and activities has been created. Treasury Board views the creation of this position as an indication of the government's commitment to innovative human resources policies within the public service. The new assistant secretary, Miss Denise Moncion, will be responsible for developing and leading activities in such areas as affirmative action and the quality of working life. I was glad to hear this because I directed a question to the minister some weeks
January 26, 1981

ago about this situation. I was therefore very satisfied with the recent announcement by Treasury Board.
I warmly welcome both the latest initiative of Treasury Board and the announcement, by the President of the Treasury Board (Mr. Johnston) of a new staff training policy, in June of 1980, two months after this motion was tabled in the House.
The new staff training policy recognizes, as I have emphasized on numerous occasions in this House, that human resources are as criticial as financial and capital resources, and that training is both "an essential component of human resources planning and an accepted cost of doing business". The major thrust of the new policy, however, is to link employee training to specific operational requirements identified by management in individual departments and agencies. The new policy requires managers to identify and decide on professional and technical training needs and makes it the responsibility of the employee to develop himself or herself for future career opportunities.
A distinction is therefore made in the new staff training policy between training and development. The new policy assigns responsibility for training primarily to managers and their departments, and responsibility for development to employees themselves. The new policy states:
-employees are responsible ... for preparing for future career opportunities and for acquiring on their own time, and at their own expense, any additional training and/or education required to meet their personal development goals.
Though I welcome the new staff training policy, particularly the recognition it accords to the fact that human resources are as critical as financial and capital resources to the efficient and effective functioning of the federal administration, the new policy raises two major issues.
First, the new policy washes its hands of any involvement with employee development-employees are left to develop themselves on their own time, at their own expense, and without any form of policy or guidance to steer them. Second, how well does a policy which divorces training from development address the major issues raised by the D'Avignon committee, the Lambert Commission, the Professional Institute of the Public Service, the Public Service Alliance, civil servants themselves, and concerned members of this House?
The Public Service Alliance has expressed concern that the new staff training policy does little to guarantee the future availability of training and development courses to support staff. Since the new training policy has been put into effect, entire listings of service-wide courses offered by the Public Service Commission are no longer scheduled for delivery. The courses affected are developmental in character and their suspension affects the learning opportunities of support staff generally, and of women civil servants in particular.
The Public Service Alliance has also expressed the view that training budgets are the first to be slashed in times of restraint, a practice warned against by the D'Avignon committee, and that training opportunities have not always been dispensed on the basis of need and merit. These are points we
Training of Public Servants
have raised many times in the House, and which I still think need-to be answered. The PIPS group has expressed considerable concern over the lack of recycling facilities for those public servants who find themselves declared "surplus". While the Treasury Board has issued a directive in this regard, the feeling is still that not nearly enough is being done.
As for public servants themselves, a decisive majority of both Anglophone and Francophone public servants want more and better information on opportunities for improving their knowledge and skills according to studies previously conducted by the Treasury Board. Complaints are heard that opportunities available to middle and senior managers for both training and development are much greater than those available to other categories of employees.
It is for these reasons, Mr. Speaker, that I believe it essential that the government consider the advisability of assessing both training and development needs for public servants with a view to establishing a general policy, a well-organized and comprehensive one, which would cover not only training but development as well.


Mr. Rod Murphy (Churchill):: Mr. Speaker, I am happy to have the opportunity to speak on this matter. Unlike the previous speaker, I am not happy with the direction in which the government is going at this time. I feel the government does have a policy but, unfortunately, what that policy is, is not to assist its staff in developing the skills they need. The hon. member who spoke before me and who introduced this motion did mention some of the programs that exist. In addition, quite wisely, he raised some of the problems which exist.
Government direction, as stated in its training policy, does not really provide for an effective efficient program of staff development. It also ignores the opportunity to have an affirmative action program within the government. Although the government has sent up some trial balloons in affirmative action, if you look at the staff training policy which has been developed and some of the courses which have been cut out as a result of this staff training policy, you will see that women, the handicapped, and others who wish to rise within the public service, will find it difficult to do so.
I looked through a handout which was prepared by the Public Service Commission on October 27, 1980. The courses to be deleted by the Public Service Commission are basically deleted on the orders of the staff training council. As I look through that list of courses, I find the people who will suffer most will be those who have the greatest need for training. Some of the courses to be deleted refer to women's places in the work place, how to write your own resume and to various training techniques and skills which you would need if you are ever to develop within the public service. I was concerned when I saw that that responsibility has been taken from the Public Service Commission and given to a line department.
As the previous speaker pointed out, the D'Avignon report warned us against that. Up to the present time, there has been real neglect of training by the line departments. The staff

January 26, 1981
Training of Public Servants
training policy of the Treasury Board quite clearly spells out that most of the training done by departments will have to come out of the budgetary allotments to departments. If that is left strictly to the departments, then the money will not be there for training. The people least influential in making sure there is adequate training are those on the bottom rungs.
We all know at the present time, as the hon. member who preceded me pointed out, that women are underrepresented in the middle and senior management categories. We recognize that at the present time women, native people and the handicapped are concentrated at the bottom levels of the federal civil service. Those people do not have much political clout. Those people, as a whole, do not have much clout within their departments. Those are the people who could use the kinds of courses which the Public Service Commission was offering in the past, which are now the responsibility of the departments.
I am concerned about the policy which actually exists. The policy which the government came up with last summer is taking away rather than giving to those individuals. Day after day in this House we talk about affirmative action. The Minister of Employment and Immigration (Mr. Axworthy) has had a few problems with the Advisory Council on the Status on Women. Last year that group made some good recommendations. It pointed out some of the problems which exist in the public service. It is unfortunate that the Advisory Council on the Status of Women is under a cloud of suspicion at the present time.
There are a few other things in the D'Avignon report which I shall bring to hon. members' attention. At page 210 of that report we find "except at the level of organization where program plans are executed at the working level, training and development is often viewed as a necessary evil." That is an unfortunate characterization of what is happening within departments, but it is an understandable thought within departments. Departments which are out there to provide services to the general public, whether it be Indian Affairs, Employment and Immigration, or Health and Welfare, are not really in the training business. It is quite natural that the people who are hired to provide a service in Thompson, Manitoba, or Ottawa, Ontario, are not going to have expertise in the training area. They are not equipped with an economic background or any experience that will make them look at training as a natural goal for their department. In addition to that, they may not have any knowledge of how to go about training. It is fine to tell them to go over to the Public Service Commission to get some ideas, but that is not the same thing as having a group within government, such as the Public Service Commission, providing courses.
Upward mobility cannot be left to the individual within the public service otherwise we will always have the elitist system that we have at the present time. The previous speaker quoted a line from the staff training policy which referred to the fact that individuals will have the responsibility to do their own training as far as their own personal goals are concerned. That very line may recognize the fact that individuals may have personal goals and have a right to go out and take university or
community college training if they want, but it is also saying there is no responsibility, or very limited responsibility, on the part of government to do so. On the basis of past experience I am afraid that that one line from the training policy will not be just one line, it will be one of the paramount lines in the policy. It will be used every time somebody working in some office, factory, or what have you in the public service, wants to take training. They will refer to that and say to the individual "You can do that. You can go out to your community college or whatever you have in your community and do that on your own time, with your own money." Basically what is said in the report is that it is up to you to be responsible for your own personal goals.
Almost all the training people take, whether it is to be a lawyer, to be a teacher, to be a nurse, or to work within the government or within the private sector does relate to personal goals.
I think the government does have a leadership role. The government, above and beyond any other employer, has a leadership role to play in trying to help those individuals who need help, and also in making sure the people who are working for the Government of Canada and the people of Canada have the expertise to do a good job. If we take that role away from the Public Service Commission and give it to the line departments, this help will not be forthcoming.
I have already referred to the comments in the D'Avignon report and the fact that this is not considered top priority in most departments. D'Avignon had other things to say. He referred, of course, as I mentioned earlier, to the fact that women, the handicapped and natives have not received their fair share of training in the past. Referring to native people, the report says there is a cost to be borne for training that is clearly essential and is recognized as essential by the employer. That will not be the case with the new staff training policy of the Treasury Board.
When it comes to safety within the workplace, again D'Avignon touched on that topic, and again this is something very important. It is important for the federal government especially, to provide leadership in this field. 1 spent Saturday and Sunday of this weekend at a NUPGE conference, that is the National Union of Provincial Government Employees. It spent three and a half days dealing specifically with the topic of workplace safety. I was amazed as 1 listened to these provincial government employees list all the hazards and dangers that exist in public service jobs. Many of the jobs that provincial government employees do are the same as jobs carried out by our federal government employees. Too often the public views public servants as people who work in offices, and they do not recognize there are a lot of people in the public service who work in the same conditions that exist at any other industrial site and that the dangers faced by public servants are very similar to those faced by blue collar workers in private enterprises. It is my feeling that if we leave it to the
January 26, 1981

line departments to make sure we have adequate training within government, we are going to fall behind.
1 know this is just a minor point, but one of the courses which has been taken out of the Public Service Commission's list of courses is driver training and driver safety. This may seem like a small point but 1 wonder how many people within the federal system at this present time are driving for a living?
I suspect we have thousands of people who are driving on a full-time basis and more who are driving on a part-time basis. Defensive driving is a course which may not seem important to a lot of people, but as a high school teacher I remember reading all sorts of statistics about how valuable such a course is to drivers among the general public. If we have people driving for us for part of their living or for their entire living, I think we have an obligation to provide them with that type of course. This is why I am concerned about the present policy. It will take away those types of courses, and, indeed, it already has in the examples 1 have listed.
I have another concern about the staff training policy as approved in June, 1980. I looked at the composition of the Staff Training Council and found basically the same senior mandarins who are running everything else in the government. I feel they tend to have a conflict of interest because they are running four or five different operations within our system. The membership of the council will consist of the secretary of the Treasury Board, the chairman of the Public Service Commission, the Clerk of the Privy Council, or his nominee, the Comptroller General, four departmental deputy ministers and/or four assistant deputy ministers, one or more training experts, and that is only one or two mentioned in the list so far, the Director General of the Staff Development Branch and the Deputy Secretary of the Personnel Policy Branch. As I looked at that list 1 was surprised to see how few people are really in the business of training. Most of them are in the business of management.
If we want a training policy and a training council, the majority of people on that council should have some knowledge of training, rather than having management as their main function. Certainly we recognize the need for efficient management just as we recognize the need for efficient government, but 1 would like to see that training council restructured so that it actually can provide an efficient overview of training in the public service.
In addition, there should be some union representation on that council. If you look through the D'Avignon report and all the other submissions which have been made in the past on staff development, you will notice that PS AC and PIPS and others have been making presentations. They have a lot of expertise in training their members and they are concerned about how their members are educated for their present and future roles within government. They have a legitimate interest in protecting the rights of their members. I think such an addition should be made to this council at this time.
Let me sum up with just a few remarks. We disagree with the previous speaker. The government has a policy but, unfortunately, that policy is very similar to its policy of creating
Training of Public Servants
another large senior management group. In recent days it seems to have been attacking the public service rather than trying to work with its members. The policy of the government with regard to staff training completely ignores affirmative action. For that matter, it works directly against any affirmative action program. It ignores women and those people who are in need of training. It ignores native people and the handicapped and it puts the priority for the training of those people on the departments. Departments are basically set up to provide services to the public and when they are hit with funding cuts, which they will be hit with in the next couple of years if we believe the President of the Treasury Board (Mr. Johnston), training programs will be the first to go. This will have little impact on the public but it will have a great impact on public service employees.
I would encourage members on the government and the opposition sides who are concerned about making sure we provide adequate and fair leadership within our public service to get this government to recognize that the direction it is going in is completely opposite to the direction we are asking private enterprise to take, and directly opposite to the direction we are asking the community as a whole to take. We are talking about more fair communities; communities which are more open to women, to the handicapped and native people, yet this staff training policy and the whole treatment of employees by government is going in exactly the opposite direction.
I have risen on a number of occasions in this House to complain about the fact that the government has been dragged to the Human Rights Commission over its treatment of women workers. As far as I know, the government has lost every case that has been taken there. I would argue that as an employing agency, especially when it is the same agency that is making the laws, it should not have to be taken to the Human Rights Commission. There should be a voluntary compliance by the Treasury Board and by departments and agencies of the government. It should not be necessary for the government to be forced by its employees and their unions to abide by its own statutes. The President of the Treasury Board, the Minister of Employment and Immigration (Mr. Axworthy) and other people in charge of government departments should make sure they are complying. It should not be fighting initiatives which would allow for equality and equal treatment. Unfortunately, there is no government leadership, just as there is no government leadership in the affirmative action field. Instead, the government is fighting progress. The same thing is happening with respect to staff training.


Gordon Edward Taylor: Mr. Speaker, I had not intended to speak about this motion but, in view of what I am hearing, I feel I should say a word or two. The motion of the hon. member for Ottawa-Vanier (Mr. Gauthier) reads as follows:
That, in the opinion of this House, the government should consider the advisability of assessing training and development programs for public service employees with a view to establishing a general policy.

January 26, 1981
Training of Public Servants
1 take it from that that the government has no general policy at the present time. The hon. member who proposed this motion supports the government. I suppose it is possible that this might have been considered by his caucus or by the cabinet ministers involved; therefore, 1 have to assume that there is no general policy for training public services employees, in spite of the fact that the member of the New Democratic Party who just spoke said that there is a government policy.
Whether there is a government policy or not, the point of this motion is that the government should be assessing training and development programs for public service employees. I find this difficult to understand. The smallest businesses in the country periodically assess each program they have to find out whether they are getting results.
Is the public to understand from this motion that each department just carries out training and development programs at its whim and at the wish of the minister or deputy minister? If that is the way this is being done, it is not a great way to run a business. Is there a hodge-podge of programs which are different in each department? Are people being trained at public expense and then paid additional salaries because of the training? What public servant will be foolish enough not to accept training when he is told his salary will be increased if he undergoes training?
I cannot understand this type of motion. Surely to goodness the Government of Canada assesses all its programs periodically, throws out those which are not any good, amends others and adopts others that are good. That is just ordinary business.
I know hon. members on the government side do not like me to refer to Alberta but in the Alberta government every minister is required to assess every program periodically and report to the cabinet. There is no hodge-podge program whereby every minister acts according to his own whims. Public money is being spent, and ministers are responsible. If public money is being spent to train an employee, there has to be very definite justification.
I agree that there should be special training if the public is to be the beneficiary, but I do not necessarily agree with paying higher salaries to people who take training. I do not believe in training if trained people are already available for particular positions. Why should the public service use public money to compete with those who have educated or trained themselves? I just cannot follow that. It is not fair. I have heard people say that if they could get into the public service they would receive many benefits and they would get this, this and that at public expense. We should realize that we are spending public money, and somebody should be accountable for it.
1 assume from reading this motion that there is no accountability and that there are just hodge-podge programs operated by the Government of Canada to train certain people. I wonder who these people are. That is a condemnation of the government. Surely to goodness the government does not need to have a resolution passed in the House of Commons asking it to assess its various programs; nor should it be necessary to
have a motion asking that a general policy be established. That is just ordinary, everyday, elementary business, and I cannot understand the purpose of the motion.
1 believe in special training if the result is a contribution to the development of this country. Our native people have had many difficulties because their culture is not oriented to the white culture and white standards. However, the University of Calgary has undertaken programs, with the assistance of the Department of Indian Affairs and Northern Development, to provide training for native people because the training of our Indian people is a public responsibility. We have undertaken in treaties to do that. Even so, native training has been very skimpy. If my memory serves me correctly, 32 Indian people have graduated from the University of Calgary with degrees and are now out serving the people of Canada.
I also believe in training those who are disabled. When Syncrude started its work in the Fort McMurray oil sands, there were not enough people to do the various jobs, so Syncrude made sure that the people who were going to do jobs there knew what they were doing. On-the-job training was provided to many native people and to some white people as well. Those people became valuable employees. With that assistance they were able to do work. However, the need was there.
1 should think that the Government of Canada would provide training where the need is evident, particularly to disabled people, native people and others. I do not support any hodgepodge training for the sake of training. I do not think every department should carry out different programs simply to give certain employees higher salaries. That is not my idea of carrying out a sensible program at all.
If this motion is serious in asking the government to assess training and development programs with a view to establishing a general policy, that is a terrible condemnation of the present government and its policies.


Mr. John Campbell (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, I would like to take this opportunity to comment on the hon. member's motion regarding the provision of training and development programs for public service employees.
It is unfortunate that I will not have time to mention all the programs in the departments, but I will try to provide as much information as possible.
The subject of training and development in the public service is one to which the government has given much attention during the past few years. The government clearly recognizes the importance of effective human resource management, of which employee training and development are essential components. In this regard, we should not lose sight of the fact that the Canadian public service has earned and maintained an international reputation for its high standards of performance and competence. This is due in no small measure to the way in which human resources management and the training and development of employees take place in the federal public service.
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It is also worth remembering that the public service has developed a high degree of expertise in the management of human resources as the result of practical experience over the years in a rapidly changing and developing environment. It must be recognized as well that human resource management and training and development in the federal public service take place within a framework of established policies and procedures which have proven their effectiveness.
These policies not only contain statements of general policy orientation but also provide specific guidance on particular matters, such as the assessment of training and development programs for public service employees. They are contained in the personnel management manual produced by Treasury Board Canada. Members might wish to acquaint themselves with these policies which I believe are available in the Parliamentary Library.
Naturally, the policies are reviewed periodically, are evaluated and changed as appropriate in order to make them consistent with and appropriate to ever-changing circumstances. I want, Mr. Speaker, to mention several of them at this time. They demonstrate the government's determination to ensure that there is always in place a sound framework of policy and guidelines for managers in matters of training and development.
The policies to which I wish to refer include the following: roles and responsibilities for training and development in the public service; conditions governing education, training and development, including subsidization; identification of training and development needs and evaluation of results and annual training and education review. These can be found in subchapter 110-9 of the manual.
The existence and application of these policies on a public service-wide basis demonstrates that a framework of policies and guidelines for training and development has been developed and is in place. The guidelines for training need identification and assessment, and for the recording and reporting on training and its costs, provide specific guidance for departmental managers and personnel specialists.
The first of these policies sets out the relative responsibilities of Treasury Board Canada, the Public Service Commission and departments and agencies in matters of training and development. The policy on "conditions governing education, training and development including subsidization" provides policy direction and administrative instructions for use by departmental managers in assessing the need for training programs as well as guidelines for determining the extent of organizational support warranted in particular cases of employee training and development. The government's policy on the "identification of training and development needs and evaluation of results", is directed toward two major objectives: first, to provide specific guidelines on factors which managers and personnel specialists should consider in assessing and identifying training and development needs, and second, to set out the criteria and processes for assessing and evaluating
Training of Public Servants
training and development programs provided to public servants.
The final longstanding policy on training and development to which I would like to draw the hon. members' attention at this time is the policy on the annual training and education review. This policy sets out a process by which departments are required to record and report on training and development activities undertaken for the benefit of departmental employees. In addition to providing information for an over-all review of training which is conducted annually by Treasury Board Canada, this process encourages departments to take a hard look at the amount and the cost effectiveness of the training they provide.
We can see from the existence of these policies that there are a number of mechanisms in place and working, which provide for the conduct and assessment of training and development programs for public service employees.
The comments I have made are not intended to suggest that the management of training and development in the public service has been, and continues to be, a kind of Camelot where the sun always shines. One could expect that, with the changes and challenges which presented themselves within Canada and the Canadian public service during the past decade particularly, there has been a need for periodic reviews of all aspects of management in the public service which have led to modification and adjustments in the approach taken to such matters as training and development.
Specifically, during the past two years the Auditor General has included reviews of training and development in the context of payroll costs management as a component of regular departmental audits. The Auditor General has pointed out that there were certain weaknesses in the management of training and development activities and that certain improvements appeared to be warranted, particularly as regards providing systems for the accurate recording and reporting of training and development costs by departments.
As well, the report of the special committee on the review of personnel management and the merit principle, the D'Avignon committee made a number of useful comments about the orientation which should be given to the management of training and development in the federal public service. The D'Avignon committee emphasized that explicit recognition should be given to the value of training and development as a means of accomplishing organizational objectives, and that training and development should be considered an essential cost of doing business. The committee further suggested that employees moving into management positions be given basic training in personnel administration and human resource management prior to assuming their new duties.
In response to the observation of the Auditor General and the D'Avignon committee, a number of steps have been taken by the government to further improve the management of training and development in the federal public service.
On June 26, 1980, the Treasury Board approved a new staff training policy. This new policy defines training, specifies the

January 26, 1981
Training of Public Servants
types of training to be provided, specifies the conditions under which the training will be provided, deals with the selection of trainees, defines the roles and responsibilities of departments, the Public Service Commission, Treasury Board Canada and individual employees, and provides for the certification of trainers and for the evaluation of training. The new staff training policy is now being implemented by departments.
The policy also provides for the creation of a staff training council to provide over-all direction and co-ordination of training throughout the public service. Its specific responsibilities include determining training needs and setting priorities for meeting these needs. The council will also be responsible for setting standards for training programs and those who provide training.
Membership on the council includes: the secretary of the Treasury Board, who is to act as chairman; the chairman of the Public Service Commission; the clerk of the Privy Council or his nominee; the Comptroller General; four deputy ministers; and a number of other government officials.
The staff training policy states that training is an essential component of good management and an accepted cost of doing business. It is the government's policy that training will be provided where necessary and appropriate. The government will be committed neither to training for its own sake, nor to a specific quantity of training unrelated to need.
Furthermore, the policy states that it is the responsibility of individual employees to plan their careers and to develop their own skills. Government support of training and development will be limited to activities directly related to the operational needs of the public service.
Training will be provided for a variety of purposes including improvement of job performance, preparation for new responsibilities or changes in technology, the maintenance of sufficient quantities of necessary skills, retraining, safety training, and to give effect to government objectives regarding underrepresented groups.


Mr. Deputy Speaker:: Order, please. The hour provided for the consideration of private members' business having expired, I do now leave the chair until eight o'clock tonight.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of the motion of Mr. MacEachen that Bill C-54, to amend the statute law relating to income tax, be read the second time and referred to the Committee of the Whole.
Benno Friesen: Mr. Speaker, at five o'clock I mentioned the fact that in 1972 the fruits of the Carter commission report began to appear in the tax act with the introduction of the concept "a buck is a buck." This really does not take into account the social implications of that measure on Canadians.
If it was not true in 1972 that a buck was a buck, certainly it is not true today with the inflated dollars we use. Just over the weekend I saw a BCTV news report on real estate in the lower mainland of British Columbia. It made the point that in the lower mainland $115,000 to $130,000 is the cost of an average house which in Ottawa might cost $40,000 or $50,000. With those kinds of costs and the inflated dollars involved in the construction industry, the concept of the Carter commission report really does not work because it punishes the people who will buy those homes. Right now in the lower mainland of British Columbia according to that report the cost, of an average house rises $80 per day. That is all right for those persons who happen to own them, but it is not so good for some others, particularly young people who want to buy homes. One cannot have the advantage of selling without paying capital gains as tax as is the case with a farm. I realize at the present time that an owner does not have to pay capital gains tax on a principal home, but the developer does and that cost is added to the price of the home. When it comes to family farms 1 am particularly thinking of the social costs. All through western Canada many people are looking forward to the day when they can pass their farms on to their children.
They want to keep their families together, they want to contribute to the welfare of their children, but when they retire they must pay capital gains tax on the major part of their properties. They cannot roll it over, for example, into an RRSP as they ought to be able to; then the children must pay the increased cost of that farm. That whole policy or problem is not dealt with in this tax legislation.
The government has not taken into consideration the social implications of some of its taxation policies and what they do to people. I think of the many people who come out to my constituency and those surrounding Surrey-White Rock-North Delta to retire. Between the May election and the February election, the voters' list in my constituency increased by 6,000 names, 6,000 people in a matter of eight months moved into that area. A good many of them are people who retired. They thought that they were looking after their own interests. They wanted to maintain a life of dignity and be independent in their retirement years. They provided for their own retirement
January 26, 1981

income, and now they find that their income is being eaten away by inflation, particularly the kind of inflation being experienced in British Columbia. That is not taken care of in this tax legislation. As is so often the case, they are being punished for their thrift and their planning. This is not right.
On the one hand the government makes money on inflation. It has not taken inflation into account in this taxation measure, yet capital gains continue and people are paying capital gains tax on inflated dollars. If the value of a commercial property increases on paper from $100,000 to $300,000, the person who sells the property must pay capital gains on it. I talked to my mechanic this weekend. He does excellent work. He wants to move into commercial property. He says that he cannot buy commercial property in the lower mainland because he cannot afford to pay $100,000 for a narrow strip of commercial property. But even if that property were for sale, you would have to pay capital gains tax on it-in a matter of 18 months, some $200,000 in capital gains, which would increase the cost. And the government makes money in times of inflation by not indexing the capital gains feature of income tax. It is in the interest of the government to continue with inflation as long as it does not have to accommodate it in capital gains. It pays to keep it going.
The second thing the government does is ensure it slides out of the obligations it took on some years ago. I am thinking particularly of the obligation toward the funding of training for our RCMP officers and the contracts with municipalities. Many of us in the House know that the federal government has the lion's share of taxing capabilities. This is followed by the provinces and, last, the municipalities. The municipalities receive whatever is left over in taxing ability. So the federal government starts off the taxes, then comes the provincial government and, finally, the municipality.
The federal government also has the advantage of entering into a long-term contract with the junior levels of government. Some years ago it entered into an agreement to fund something in the order of 70 per cent or 75 per cent of the cost of RCMP policing in the municipalities. Now it wants to renegotiate that contract to 85 per cent. The municipalities will have to pick up what is, in some cases, a quarter million dollars. I remind hon. members that the municipalities are not in a very good position with respect to negotiating. The gun is at their heads. Too often the central government engages in a long-term contract and then, after the commitment has been made by the provinces and the municipalities, it begins to slide out of it-witness the transfer payments to the provinces on health care and education costs. They were itemized packages at first; now, it is block funding, which is easier to negotiate.
There is so much that this bill does not take care of, Mr. Speaker. I am reminded of a provision for the handicapped. About 14 months ago we debated a motion in this House in my name to rewrite the regulations regarding the $1,000 deduction for the care of handicapped persons, in the income tax provisions. The Clark government accepted a proposal that the
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Department of Finance should take another look at the wording of that provision. Would you believe, Mr. Speaker, that the policy of the tax department, right now, is that in order to be declared a handicapped person, and thereby qualified for the $1000 deduction, a person must be certified to spend "a substantial part of the day in a bed or a wheelchair". That is absurd! What do you do with someone who is mentally handicapped and in perfect physical condition but who needs 24-hours-a-day care? The government has a choice: it can encourage the parents to take that child and place him in a government institution, which will cost the government $15,000 or $20,000 a year to look after him; or it can increase the tax deduction so that the parents can provide better care for the child.
Looking at it in terms of pure, hard, cold cash it is in the interests of the government to provide better provisions under the Income Tax Act for the parents of handicapped children than to be so stingy, so miserly, in their description of who may qualify. We passed a measure to that effect in the House. The government has never brought that recommendation forward, even though the House of Commons passed that motion. There is no such provision in this bill. It has never been referred to committee.
If the government were really concerned about the handicapped of this country it would take seriously the recommendation passed by this House to study that proposal to provide some relief to the parents of handicapped children. These parents want to look after their children themselves and they are punished by the government for wanting to do so. All we need to do is change the wording in that regulation. I see the minister listening intently. I appreciate that and 1 hope he will take this under advisement. Something should be done to give the government some heart so that it will provide for those parents who are doing something to help their handicapped children.
1 am reminded of the Small Business Development Bonds. The government says it wants to encourage private initiative and risk-taking and therefore it went along with the Crosbie budget and announced the continuation of the Small Business Development Bond policy. That was in April. We continue to hear in this House that the policy is in place, but when small businessmen and women go to the bank to take advantage of it the banks continue to say, "We have had no clear direction from the government." I ask the minister to tell this House when that will be taken care of so that the banks have a clear direction from the government. When that policy is clearly stated the small business people of this country will be able to take full advantage of the low interest rates which will accrue to them under it.
These are just some of the things which concern me with respect to this bill, not only the measures it includes but, more important, the drift of the government as indicated by the measures it does not include. As we have heard over and over again, the budget announced last fall was not really a budget of the finance minister but, rather, a budget of the energy minister. It was an energy policy and not a finance policy. It is

January 26, 1981
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time for this government to put definite policies in place so that the business community may have some clear indication of its intent. They must know what this intent is so that they can plan for months and years ahead and so that the risks they are willing to take are minimized. Thank you, Mr. Speaker.


Mr. Deputy Speaker:: Is the House ready for the question? Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


Mr. Knowles:: On division.


[Stage Direction]
Motion agreed to, bill read the second time and the House went into committee thereon-Mr. Francis in the chair.
Cyril Lloyd Francis: Shall clause 2 carry?


Harvie Andre: Just to seek clarification, Mr. Chairman, did I hear you say clause 2? Are we not commencing with clause 1 ?


Cyril Lloyd Francis: I called clause 2. I am standing clause 1 for the moment and we will come back to it.


Stanley Howard Knowles: Mr. Chairman, I gather from what you have just said that you have a special reason for starting with clause 2. As far as the Standing Order is concerned we start with clause 2 only if clause 1 is a title, and in this case that is not so.


Cyril Lloyd Francis: Shall Clause 1 carry?
On Clause 1-


Harvie Andre: Mr. Chairman, I have a few brief remarks as we begin this stage of this legislation. Most of the remarks which I wanted to put on the record with respect to Bill C-54, 1 made in second reading debate. I would like to give the Minister of Finance some indication of the kinds of information we will be seeking as this bill proceeds, however, in order that he might be prepared with the information with some accommodation. As I and others remarked during second reading, this particular income tax bill flows from three budgets or, really, two and a half budgets. The October 8 budget, which contained very little additional information, was primarily an energy policy. Although it was delivered to the House by the Minister of Finance, it was in fact authored by the Department of Energy, Mines and Resources.
Most of the important provisions will come along later in the form of excise tax legislation and other special legislation. The other provisions of this legislation flow from the mini-budget of April, 1980, when the minister bootlegged that particular budget in through a statement on motions in the House. It was based primarily on the budget of December 11, 1979, introduced by his predecessor, the hon. member for St. John's West. In this budget, the Small Business Development Bond was introduced as a policy of this government, but with some significant changes.
The applicability of the Small Business Development Bond was restricted to certain types of expenditures and for many months there was a great deal of uncertainty as to just who
was eligible and which financial institutions were participating. A number of hon. members from our side will be interested in obtaining the government's explanation as to why there was this restriction on the Small Business Development Bond. We will be offering suggestions to the government about how the provisions might be extended beyond the current expiration date of March 31 or April 1, in the hope that it might be put to better use and to more use by the small business community and thereby generate the employment which Canada so desperately needs.
A number of speakers on this side will express their interest in why the provision with respect to capital gains and the family farm, which was contained in the budget of the predecessor of the Minister of Finance, the hon. member for St. John's West, was not adopted by this government. This provision was particularly important to the western farmer. We will be interested in knowing the government's reasons for not proceeding with it and will try to convince it to do so.
Also, at the appropriate clause, I will remark on the government's approach to Canadianization. In the budget of the minister's predecessor, the hon. member for St. John's West, there was a very important, very innovative program called the Canadian stock investment plan which would have provided very considerable stimulus and incentive to average Canadians-not people of substantial means or people known for their active involvement in the investment community, but ordinary Canadians-to participate in investment in Canadian stocks.
Had the plan of the minister's predecessor been carried on by this government, it would have had a very significant and important effect, that of causing more and more average Canadians to be involved in investment in Canadian industry. It seems strange that a government, which claims it is interested in Canadianization, would drop that particular provision which was more important to the Canadianization of Canadian industry over all, not just oil and gas, than any facet of the budget of October 28 or the mini-budget of last April.
It is sad that the government would state that its goal is Canadianization, while it cancels or fails to carry on a very innovative and important program which would achieve that aim. One can be forgiven for perhaps suspecting that the goal is less Canadianization than simple nationalization, because that is the thrust of the October 28 budget, to provide a special tax which Petro-Canada could put in place so that it might buy out oil companies. There was nothing in the budget, however, to promote or encourage ordinary Canadian citizens to become involved.
Yet, the budget of the predecessor to the Minister of Finance introduced a program which would not have been costly to the treasury. This program would have resulted in a modest deferment of taxes by a segment of our society which heretofore has not had that opportunity. For the rich and for those who can afford the high-prices lawyers and accountants, there are innumerable tax deferral systems in which one can get involved, whether they be MURBs, films, oil and gas or various real estate investments. The tax deferral opportunities to those who can afford the high-priced lawyers and account-
January 26, 1981

ants are considerable. The program we proposed was designed to give ordinary Canadians, Canadians who have modest incomes, the opportunity to participate in the future growth of this country by buying equity positions in Canadian companies and receiving a modest tax deferral. And it would only be a deferral. The government ultimately would collect; there is no question about that. Yet that program was turned down by the government.
I think it is fair to ask why a government, which claims to be interested in Canadianization, would not adopt this policy introduced by the previous government. There is also the matter of the failure of this government to proceed with the energy tax credit provisions introduced by the hon. member for St. John's West in his budget, the lack of which will increasingly be felt this year by more and more Canadians.
It is obvious to everyone in this country, with the possible exception of a few slow learners in Energy, Mines and Resources, that the National Energy Program is not going to fly. It will have to be changed and changed dramatically. Most reasonable people have already acknowledged that. As I say, it is taking a while for Energy, Mines and Resources to come around to that point of view. Presumably they want to find a face-saving way of doing it. They will put the policy in place and then make the changes, or use some other political manoeuvre. The reality is that it is going to change.
The other reality is that this government is going to impose much higher energy costs on Canadians. When it finishes making its changes, Canadians will be faced with much higher heating oil costs and fuel costs than they previously expected. The failure of the government to provide the energy tax credit which this minister's predecessor wanted to provide means that those at the low end of the sale, those who are stuck with the high heating oil bills, will find their income distribution will change very significantly. That will not be very pleasant.
I strongly recommend that the Minister of Finance re-examine his decision not to proceed with the energy tax credit proposed by his predecessor. It may be well and good for him and his colleague, the energy minister, to claim they are doing such a good job in terms of their energy policy. However, I believe he is starting to realize, and I am sure his officials are telling him and others are beginning to recognize, that the government simply cannot stay with that national energy policy. As I said, it will have to be changed dramatically. Therefore, the government should re-examine its decision not to protect the low-income scale along the lines proposed by the minister's predecessor.
There is another point I wish to bring to the minister's attention. Hopefully as this portion of Committee of the Whole proceeds, we can get his views on this subject, determine his thinking and see whether we can convince him to re-examine his decision not to proceed, and possibly even decide to introduce that energy tax credit.
Finally, before I resume my seat and allow my colleagues to proceed, I want to say that we have no particular interest in
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unduly delaying this legislation. It is our hope to proceed expeditiously. A great deal will depend on the willingness of the minister to be forthcoming with information and opinions as we proceed. If there is that kind of co-operation, there is no reason why we cannot handle this stage of the bill with some expedition.


Mr. Waddell:: Thank you, Mr. Chairman, for recognizing me. I hope you will not mind if I speak while wearing my kilt.
I believe it is traditional dress. I am returning from a Burns supper where we celebrated the great immortal poet of Scotland. I thank the hon. member for Kingston and the Islands for acknowledging my kilt.


An hon. Member:: It's a skirt.


Ian Gardiner Waddell: It is not a skirt, it is a kilt. I was asked what is worn under the kilt, and I propose to answer that question tonight. However, hon. members will have to wait 20 minutes until I have finished my speech. I will then answer the question about what is worn under the kilt.
I now want to talk about the National Energy Program and the bill before this committee. You need to be a wily Scot to analyze this bill and realize where all the money is going. This is indeed a very difficult situation. I say to the Minister of Finance that what we have is a capital strike. The hon. member for Calgary Centre did not mention when he spoke that we have a strike against the government.
Those who lived in British Columbia under a New Democratic government know what it was like. I say to the Minister of Finance that this government did not invest in forestry when we tried to do new things in forestry. We tried to do new things in mining, and it did not; it kept the money back. That is now happening with the National Energy Program. There are a lot of problems with that program.
The public in this country seriously believes that we should control our own energy resources. The public believes we should control them and not the foreign multinational companies. When you try to do that, you find the people suddenly saying they will move their rigs to the United States and not explore here any longer.
The companies give you the same old argument, "Just give us more money and we will find more oil." But that claim is not true. Since 1968, the oil supply in Canada has been going down. That is well known. It is the same situation in the United States. The rigs will come back to Canada because there is more oil here than in the United States. There is a lot of gas in Canada. The companies used the money they got from the government to find that gas, under pressure from the government. The government caved in last year on the prebuild of the pipeline in order to export the gas. This has been the traditional pattern in Canada.
I am now going to get into the bill and I hope the minister will learn something from my remarks. The strange thing is that the Canadian companies which he sought to help Canadi-anize, are now turning against him and are moving their rigs out of the country. It is rather a shame, but they are acting

January 26, 1981
Income Tax Act
just like the foreign multinational companies. Those who sit in this corner ask what is the use of replacing David Rockfeller with Conrad Black? They act in the same way. They want to maximize their profits against the long-term energy interests of the Canadian people.
Unfortunately, that is what some Canadian companies are doing. Some have problems with cash flow. Some small Canadian companies find the 8 per cent wellhead tax difficult. I do not sympathize with some of them; they have made a lot of money. They think they have a God-given right to make millions and millions of dollars, but they do not have that right. We need that energy for the ordinary people of this country.
Some companies have justifiable complaints. It would have been better if the government had not proposed this wellhead tax, but had concentrated instead on a fair system of taxation for the country. The government is in the midst of a strike by the industry. I predict the government will back off and give in to the hon. member for Calgary Centre and his Conservative friends in the oil industry and the multinational oil companies. They will give in because Liberals traditionally give in. If you are going to have a socialist program, you have to be prepared to go the other way, and I do not think this government is prepared to do that. I wish to refer from an article by John Twigg in the Regina Leader-Post.
Talking about the government's National Energy Program, he said, "While there are some moderate incentives for activity by Canadian companies and for preferred activities such as heavy oil, tertiary production, tar sands and frontier and gas substitution, the underlying price structure is clearly inadequate. As well, the tax measures are merely grabs of revenue from the provinces and companies with too little reform-" I underline this. That is what is lacking in this bill, "-too little reform of the lucrative deductions in the federal tax system and no new taxes on the refining sector which has emerged as a profit centre for the oil companies."
What the government is doing with its National Energy Program, putting on the wellhead tax of 8 per cent and the gas export tax, is forgetting one of the areas where the large multinational companies make money, what they call the downstream, the wholesaling and retailing of gas. That is where they make their big money.
I predict this government will not only cave in on the National Energy Program, but will cave in soon on the oil and gas bill. It will change that. It will cave in on the tax after the Ontario election. With regard to the price of oil and the great Liberal promise of cheaper oil than the Clark government's promise of $4 for 1980; $4.50 for 1981; $4.50 for 1982 and $4.50 for 1983, the government will cave in and the price will be raised in order that it can make a deal with Alberta. All those people in Ontario and Quebec who voted for this government because they thought they would get lower energy prices will be sold out. I think the government should come clean about that and tell the Canadian people now that it is going to put up prices. I can tell the Minister of Finance that the ordinary working people in my riding are prepared to pay
more for oil and gas, but they want a fair deal. They do not want all the profit to go to the oil companies which have been making a lot of money; they do not want the money to go into the Alberta Heritage Fund and they do not want it to go to the federal government because they do not believe the federal government knows how to use it.
In western Canada, that is a generally accepted feeling. The western Canadian people do not want the Minister of Employment and Immigration to deal with the western development fund because they know where that will go. That is the problem. Canadians know if they pay more for oil and gas that it will come out of their own pockets. Nothing will go back to the ordinary people. There will be no financial benefit for the low-income people and that is the problem with the proposal to increase energy prices.
Before I sit down 1 want to talk about two programs which are the real "people programs", namely, the program to insulate houses and the program to help people to convert from oil to gas, both of which are in the National Energy Program. They are good ideas in principle but the government is not going about them in the right way.
You cannot have a program for people to convert from expensive oil to cheaper gas when you are going to sell out all the gas to the Americans. There is a new book out by Bruce Wilson called "The Energy Squeeze". The Walter Gordon committee which studies economic policy said that we do not really have that big surplus of cheap gas that we think we have, and that we are going to sell it out like our oil. I finally found Joe Greene's speech, the former minister of energy. In 1971 he said this; "Canada's total oil reserves were 469 billion barrels at the end of 1970 while natural gas reserves were 726 trillion cubic feet. At the 1970 rate of production these reserves represent 923 years supply for oil and 392 years for gas."


Mr.   Chairman@: Order, please. The Chair hesitates to interrupt the hon. member, but according to Standing Order 55(2) speeches in Committees of the Whole House must be strictly relevant to the item or clause under consideration.


Walter David Baker: I thought he was doing fine.


Mr.   Chairman@: I just draw that to the hon. member's attention.


Stanley Howard Knowles: Mr. Chairman, 1 hope you have not forgotten the tradition, though, that on clause 1 of a bill a general discussion, provided it is on the bill, is still in order. Certainly, when we had discussions about getting into Committee of the Whole, that was the understanding among House leaders.


Mr.   Chairman@: It is a question of judgment. The hon. member is talking about a statement of a former minister of finance as to the oil reserves of the country. In terms of the taxation measure before us, the Chair would simply call to the hon. member's attention that a good deal of tolerance has been
January 26, 198 1

exercised so far. But we do have rules and we should try to observe them.


Ian Gardiner Waddell: Mr. Chairman, let me tell you how it is relevant. I will put it to you and I will put it to the Canadian people. In 1971 the then minister of energy was saying that we had lots of oil. He based that on industry estimates. But two years later he said that we only had 18 years' supply of oil. By that time, we had sold out most of our oil. This time the government is telling us we have lots of gas, and we are selling out all our gas. The government is bringing in a program in this bill to pay people up to $800-which is not a bad idea-to convert from oil to gas.


Mr. Blenkarn:: Where in the bill?


Ian Gardiner Waddell: It is in part of this bill. It is part of the clauses dealing with conversion.


Donald Alex Blenkarn: What clauses?


Ian Gardiner Waddell: If the hon. member would look at the different clauses in the bill-


Donald Alex Blenkarn: 1 have looked very carefully.


Ian Gardiner Waddell: What the government is saying is that it wants to pay people to convert to gas. What I am saying is that we had better have some cheap gas there so that when people convert, they can use it. It seems to me that makes a lot of sense. What the government is also saying is that we should aid people in insulating their homes.
The government is telling us that it is continuing with CHIP and so on. If the government really wanted to deal with this aspect, it would not say to people, "We will give you a grant up to $800". The government would go to the provinces and tell companies such as Quebec Hydro to go to people's houses to tell them how to convert their furnaces. These people would not have to pay anything right now. They would pay a little bit over a period of time. That is what Mr. Berube, the Quebec minister of energy told them. That is what he wants to do and it seems to me to be very rational. He wants to have the program so that low or middle-income people do not have to pay out money. They could have a professional person from hydro look at their houses. There would be no rip-offs. People could be advised about what to do with their furnace. They could convert and pay so much on their hydro bill. But the government on the other side, and the Quebec members especially, want to give the money directly to the people because the government thinks it is a better political pay-off. This means we will not have the best system of converting.
If the government really wants a conversion program, why not take chunks of a city, even take the whole of Toronto, for instance, and convert it? Let us get serious about energy conservation. Let us take a whole area and insulate every house. I talked to a carpenter this weekend. He told me that this government's program is a joke. He said the new houses that are being built would be blown down if a big wind came because they are so poorly built. What we have to do is to
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make really tough changes in building codes. We must make sure that every house in Canada now is built properly in order to be completely energy efficient. This program only goes a little way toward that goal. Really, it is nothing.
Drilling expenses are difficult to explain when one looks at this bill. There are clauses and clauses of income tax deductions. You would need a Philadelphia lawyer to explain them to people. But the Canadian people should keep the following in mind: for drilling in the north this government has given, out of a dollar invested, 93 cents. The government is going to give grants to Canadian companies. I have demonstrated through speeches in the House how Imperial Oil can practically call itself a Canadian company even though it is 70 per cent foreign-owned, provided that it becomes a member of a consortium with Petro-Canada. If a company has 70 per cent control of the consortium, it is classed as Canadian owned. It is a sham like much of the National Energy Program. It is rhetoric and it is a sham.
When the Canadian people consider that 93 cents in every dollar is paid by the Canadian government and only 7 cents is paid by investors, one wonders. Why do we not pay the extra 7 per cent and take control of the drilling? I do not know how the government will deal with this. I pose the following question to the minister: how will the minister propose to help northern drilling when the industry is on strike? I have quotes from a number of sources which say, "We are not going to drill in the north unless you change the National Energy Program." Under the provisions of this bill companies will receive traditional depletion allowances.
How do I explain to my constituents that a company like Dome Petroleum, that great Canadian company, is actually only 37 per cent Canadian-owned because it has sold most of its stock to the Americans, and that in spite of those hundreds of millions of dollars Dome received from that government over there, it does not pay any income tax? Go to your constituents outside and say that we pay an average of $1,500 in income tax but Dome does not pay anything, yet makes millions and millions and under the new government program, has depreciation allowances amounting to 93 cents out of every dollar! This government is going to face that situation. It is giving these people everything in order to drill and to encourage the private sector. Robbie Burns said:
Oh wad some power the giftie gie us to see oursels as others see us!
I wish others could see Canada in the sense of giving away so much money. In spite of giving 93 cents on every dollar to the industry, the industry is on strike and refuses to build.
I want to ask the Minister of Finance before I sit down what he proposes to do if, in spite of these generous tax allowances in this bill, in spite of the fantastic allowances he gives them, the companies, as they have said, will not drill in the north because they are not satisfied with the National Energy Program? Who is going to drill to find that oil, given that the Minister of Energy, Mines and Resources has said that for 60
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per cent we will rely on the tar sands, which is tied up in a dispute with Alberta-who is going to drill in the north and off the east coast at Hibernia? Mobil said today and Chevron said yesterday that they would not drill. Who is going to drill and who is going to find that oil so that Canadians down here will have supply? 1 wonder if the minister would answer that question for me. Mr. Chairman, 1 do not think my time is up.


Cyril Lloyd Francis: The hon. member for Vancouver-Kingsway has one minute left in the time allotted him.


Ian Gardiner Waddell: I would ask the minister to reply to that question when he gets the chance. Who is going to do the drilling if these companies will not do it? If he is prepared to give them this generous tax allowance of 93 cents on every dollar, why does the government not add the extra seven cents and set up Petro-Canada to do it? What does the government propose to do, other than back down? Does it propose to stand up to these companies and say we are not going to accept these strikes?


Cyril Lloyd Francis: Order, the hon. member's time has expired.


Blaine Allen Thacker: Mr. Chairman, I was wondering as 1 listened to the hon. member for Vancouver-Kingsway if we were referring to the same bill. I have looked through Bill C-54 and I do not see any part which discusses the National Energy Program or anything about the 8 per cent tax or the pricing of oil. He seemed to make an urgent call for the government to go all the way. In fact, in my opinion the NDP has gone all the way with the government for a long time. As a result, it has gone so far I can see why the NDP, as a matter of party policy, is in favour of abortion on demand!
There is no doubt that Bill C-54, being 224 pages long is just grotesquely complicated as a matter of income tax law. 1 recall when tax reform went through. The matter was debated and finally passed. Then the horrendous nature of tax reform came home to people who had to live with it, the solicitors and tax accountants. The joke went around that not one member of Parliament understood what had been passed.
1 can now say having been here and having tried to work my way through Bill C-54 that I very much doubt whether anybody understood what happened. To emphasize the point, sir, I would like to read clause 66.2(6) as follows:
Where a non-residenl person is a member of a partnership that is deemed under paragraph 115(4)(b) to have disposed of a property described in subsection 59(1.1). his share of any amount that would be an amount referred to in clause (5)(b)(v)(A) or subparagraph (5)(b)(vi) or (xi) in respect of the partnership for a taxation year of the partnership if section 96 were read without reference to paragraph (!)(d) thereof shall, for the purposes of this Act. be deemed to be an amount referred to in clause (5)(b)(v)(A) or subparagraph (5)(b)(iv) or (xi), as the case may be, in respect of the non-resident person for the taxation year of the non-resident person that is deemed under paragraph 115(4)(a) to have ended.


An hon. Member:: That's clear.


Some hon. Members:: Oh, oh!


An hon. Member:: Explain.


Blaine Allen Thacker: That is crystal clear. It is so obvious.


An hon. Member:: If the Minister of Finance can't explain it we will get Jean-Luc to do it.


Jean-Luc Pepin: It is very simple.


Blaine Allen Thacker: We need without any shadow of a doubt a total review of the tax law. It is simply too complicated.
There is no doubt, for the minister's benefit, that in 1971 a number of general charging sections were brought in, but as a result of pressure groups, of which most of us were members at one time or another, these have been chipped away so that in several cases in this act the exceptions have actually overtaken the general rules, and there are so many exceptions that the general rule might as well be changed.
A disturbing aspect which 1 have certainly shared first-hand in my capacity as a solicitor is that the present complication is causing people to fiddle, to cheat, to go well beyond avoidance, into the area of evasion. They really do not have (he respect for our tax system in the nation that they should because most people take a simplistic view. They feel the government comes up with a program, sells it to the people in a promise during an election campaign and that there should then follow a taxing bill which matches the selling job. We learn as politicians, of course, that you can cheat the people. You can promise them a program for which they do not have to pay immediately. We do that by going out and borrowing through Canada Savings Bonds. We borrow from our own people to give them a program they do not have to pay for! We then go out and issue treasury bills. We know in terms of Canada Savings Bonds there is about SI7 billion outstanding which we borrowed from our own people. In treasury bills it is $20 billion, plus or minus a few. We have even been able to take the ultimate step. As a nation and as a government we have gone to the international marketplace and borrowed $9 billion or $10 billion. We have done this so that we do not have to increase taxes to our own people. Clearly that has misled the people and is causing trouble right now.
It is clear from tax statistics that the Income Tax Act is not progressive. The bulk of people come within the high tax ranges of individual taxation. For example, the new tax statistics for 1978 point out that of some 14 million returns, if you as a citizen earn $10,000 only 43 per cent of the population makes more than you. If you earn $20,000 only 13 per cent make more; in short, if you make $20,000 in our society you make more than 80 per cent of the taxpayers of Canada. If you make $25,000 only 6 per cent earn more than you, and if you earn $30,000 only 2 per cent of the taxpayers are in a higher bracket than you. If you happen to make $40,000 you would be above the top 99 per cent of taxpayers in this country and only 1 per cent would make more. If you hit that magical $50,000 bracket that we as members want to be in, at that point only .2 per cent of taxpayers will earn more money than you and you will then be above 99.8 per cent of the taxpayers of the nation.
January 26, 1981

Another fact I would like to put on the record is that tax expenditures have become quite enormous. Even dealing with tax expenditures we should not have to get into these very complicated tax amendments which try to raise money in all sorts of ways which, to the ordinary person with common sense, should be unnecessary. The hon. member for Vancouv-er-Kingsway pointed out the massive tax expenditures under the old Dome Petroleum program, which the Liberal government in a previous incarnation introduced and which really meant that there was a tax expenditure of over 100 per cent for every dollar invested. Even under the existing program it is some 93 per cent.
However, let us look at the accumulated tax expenditures relating to RRSPs and registered pension plans. Over $20.5 billion have accumulated since 1979. Under the Canada Pension Plan $4.8 billion have accumulated. Incidentally, we do not have that $4.8 billion. That has been spent on ordinary operating budgets, so it is really just a bookkeeping entry. With respect to preferred tax treatment of income debentures and term preferred shares with which we deal in our tax law, $400 million have been lost as a result of that tax expenditure.
Marital exemptions have cost us $1,355 billion. Non-taxation of capital gains on principal residences has cost us $2.5 billion. I want to make that point in some later comments with respect to farmers and the capital gains tax. Transfer of income tax room to the provinces in respect of shared cost programs has cost us $3 billion at the federal level, and that is money we presumably could have had we not gone into it.
A major point which deals with this bill but also income tax in general, relates to the reverse onus clauses which we find in the Income Tax Act. There is now a feeling that the taxpayer is guilty until he takes steps to prove himself innocent. The general population out there in Canada has some real fear of tax administrators, tax assessors and tax collectors, who are able to get away with all sorts of statements and mistreatment of ordinary taxpayers. This leads to a great deal of lack of respect on the part of taxpayers, and there clearly is a feeling of guilt among people who come into accountants' offices or solicitors' offices and a feeling that the obligation is on them to prove themselves innocent. 1 believe the Minister of Finance should give some very serious attention to that, as should his colleague, the Minister of National Revenue.
A development which has affected us in the west a great deal is that income tax files have been moved to Winnipeg. In the past all files were held in Calgary. If a solicitor dealing with a tax problem wanted to deal with an assessor, he would simply get on the telephone, arrange an appointment and discuss the matter. It could be negotiated and solved right there. Now he puts in a call to Calgary and is told that the department is sorry but that a certain file has been moved off to Winnipeg. So the assessor in Calgary has to put in a requisition form to get the file out of Winnipeg and back to Calgary. Ordinary citizens who go to see chartered accountants learn that those accountants have filed their returns for them. Months go by. All of this causes agitation and concern.
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In addition, interest is charged if the taxpayer happens to owe a few dollars to the government. That should surely be examined and rectified.
Estates cause a very serious problem and, as my colleague, the hon. member for Moose Jaw, so aptly pointed out, time delays in obtaining income tax clearance certificates on estates are enormous. 1 want to associate myself with the comments of the hon. member for Moose Jaw because this clearly is a problem, at least in Alberta.
Some of the clauses in this bill are good clauses which I am sure everyone can support. While the spousal deduction amounts to another tax expenditure, in terms of equity and fairness most people would have to support it. Given the unfairness of the system we have and given the much too complicated tax system, until we have an over-all view-and I am hoping the minister or his parliamentary secretary will take a serious look at forming a new task force of some sort to take a genuine look at the Income Tax Act-clearly the spousal deduction is good. Citizens have to be careful with that, however, because if a small businessman is making less than about $17,000 and if he transfers much of that income to his spouse, then one or the other will be in trouble in terms of getting the maximum deduction under the Canada Pension Plan. I think the department should feel an obligation to put out some information to the taxpayer taking advantage of this to make sure either he or his spouse retains enough income in one to get the maximum Canada Pension Plan deduction. If people do not get that, they will find they will be in trouble when they retire.
The energy substitution grants of up to $800 are good in principle, but the minister should answer specifically the question as to whether the grants will be payable in the event of a partial conversion. For example, in many homes people have oil heaters, but they either do not want to get rid of the ones they have now because they were just recently purchased or they want to wait until the technology with respect to heat exchangers has improved. Meantime, they would like to put in a couple of electrical wall units. Will those qualify for a grant under this legislation? I would appreciate an answer to that.
Another advantage is brought about by the extension of the "cash" method to farmers. I think the government should be commended for that.
As far as it goes, the Small Business Development Bond is quite satisfactory, but we need to know whether it will be extended beyond the three-month period. I think most members on this side of the House would take the position that it should be and in fact must be extended.
The major defect in this bill is not what the bill contains but what it does not contain with respect to capital gains taxes. We all know that the Liberal government made a campaign promise, in the light of the Crosbie budget, of some specific tax relief for roll-overs on farm capital gain. The Liberals promised to move the valuation date from 1971 to 1974. The budget did not have that provision, and I want the minister to tell us specifically why it did not.

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I would like to argue to the minister that capital gains tax is really a misnomer in the farm industry at this point. In fact, it has become a tax on capital per se. The reason is that there was no indexing with respect to the value of farmland, so since 1971 the value of farm land has gone up, but the bulk of that increase has been the result of inflation. When we work the calculations out and apply even a modest inflation factor, the capital gains tax takes more than that and is actually biting into the capital per se. The reason is simply inflation. As a result of its policies and its borrowing internationally and through Canada Savings Bonds-in effect, turning on the printing press-the government has created more money than there are material goods, and the value of those goods has therefore gone up. Unfortunately, the bulk of that money, at least in the area with which I am familiar, has settled on land. It has not settled out on boats, cars or trucks necessarily. It has settled on land. Land which normally would sell for $100 an acre in 1971 now sells at about $600. This is just for ordinary dry land. Often it will cost $1,000 an acre for irrigation land. The 1971 valuation date is too early. In 1971 land values in the west were at a low point. The 1974 value would actually be a much closer valuation to what the agricultural productivity of the land is because the other factor the minister needs to understand is that the price of land in the west is in no way related to its agricultural productivity.
If we applied the inflation factor to that, we would have it covered completely. So there are only two simple little moves which need to be made. While naturally I would like to have the capital gains tax taken off completely, the government could go a long way by advancing the VD value to 1974 and indexing the inflation factor from that date. What is happening is this: if I were a farmer who wanted to will my land to my son at the 1971 value, I could do that because we can get a tax roll-over. But the 1971 value would no longer produce enough money to permit me to retire in Lethbridge and buy a home there, because the inflated value in Lethbridge has gone up, and to have a nest-egg for my retirement. Second, if I want to transfer that farm to my son for, say, $300 an acre when the VD value is $100 an acre, that causes a problem because I could get from my son $300 an acre which would give me enough money to buy my retirement house, and then we could elect, for tax purposes, to roll it over to his name at the 1971 value. That would mean, however, that he would ultimately have to pay the capital gains tax. But he is not going to buy that deal and he will say to me, "Dad, I've paid you $300 an acre, how can you give me that land for $100 an acre?" If I died the day after or if I had to sell it, my son would have to pay the capital gains tax. So we are locked into a dilemma.
The third situation which could arise is that I as a farmer might want to leave my farm to my son as an economical unit, but I had two other sons who had moved away to become politicians and I had a daughter who had married and was living somewhere else. How could I transfer the farm to my son at the 1971 value and still give my other children a fair share of my estate? It has become quite impossible. As a
result, people have been listing the land and selling it to the highest bidder. Often those are people with cash from the cities and industrial areas who wish to protect themselves from inflation. They are prepared to put their money into land with no thought of productivity. They just want to put their money into a safe place. As a solicitor in Lethbridge I did innumerable deals through my firm-


The Assistant Deputy Chairman:: Order, please. I am sorry to interrupt the hon. member, but I have to advise him that his time has expired.


Donald Alex Blenkarn: Mr. Chairman, one of our major concerns with respect to this bill is its excessive complications. The hon. member for Lethbridge-Foothills has alluded to them. We have a bill here which adds enormous complications to an already very complicated Income Tax Act. It is the view of many of us that the tax reform measures proposed by the Carter commission which are now in our Income Tax Act of 1971 need complete reform. We would expect the minister to speak on this clause with respect to tax reform.
The bill before us is exceedingly complicated. Clause 12 amends section 12 of the Income Tax Act. Let me remind hon. members that section 12 reads:
There shall be included in computing the income of a taxpayer for a taxation year as income from a business or property such of the following amounts as arc applicable:
And then it goes on with paragraph (a) right through to paragraph (o). This particular bill extends to paragraph (v) with one change after another. When an ordinary individual, or indeed a chartered accountant or a lawyer, is looking at this act, he must try to understand it. The act is now virtually incomprehensible to almost all except the most experienced. When looking at the problems of the ordinary taxpayer, the ordinary small businessman, we must realize that in this Income Tax Act we have created a horrendous problem. It is small wonder that a great number of people-some studies say nearly as many as 50 per cent of the population-who file income tax returns must receive some assistance in filling them out. But when you look at the complications contained in this act, you realize that a person whose source of income is in any way complicated may be required to hire not only one firm of chartered accountants but many. Indeed, they are faced with the problem that no matter how many experts they hire, they cannot in any way be assured that the experts understand the act.
1 am only a country lawyer from Mississauga who has been involved for a considerable period of time in dealing with the corporate problems of many people and I want to say with absolute certainty that I have a very difficult time understanding this statute and understanding some of the complications that the minister has brought to us in Bill C-54.
Before I go into some of the problems in the few minutes allowed me, I will repeat what I said at second reading of this bill, namely, that the bill is an effort to bring into force in law some of the suggestions made in the November budget of 1978; to reinforce some of the defeated measures in the
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December 1 1 budget of 1979; to make as part of the law some parts of the "Minnie Mouse" budget of April 21, 1980, and to try to incorporate, if at all possible, and make sense out of, some of the suggestions of October 28, 1980.
The delay has made things impossibly difficult for most taxpayers, even for chartered accountants, for people in the lending industry and for people in business in general. The delay has been such that measures which might have helped to spur on the economy, have not done so. In that respect, it is important that the minister pay attention to our concern about the provisions covering the Small Business Development Bonds. The minister will know that this feature in our tax bill is really a reincarnation of the income bond which was allowed prior to the change in the act contemplated in 1978. What happens with an income bond is that the lender is able to lend money to a corporation. The corporation pays the interest in terms of a dividend rather than in terms of interest. The dividend is, of course, not deductible as an expense in business but is received by the lender as a tax-free remittance. That is how Petro-Canada was able to finance the purchase of Pacific Petroleum. It was immediatly after the purchase of Pacific Petroleum that the minister made the changes in the November, 1978 budget which prevented the use of income bonds, or term preferred bonds as they are sometimes called, as a method of financing. The concept was reincarnated in the budget of the hon. member for St. John's West on December 11 which was defeated by these fellows who now occupy the treasury benches. It was defeated, of course, because it was not appropriate, but it was reinstituted in the statement of April 21 and reinforced in the statement of October to give some benefit to business.
During 1980 a number of small businessmen approached lending institutions with the objective of trying to finance some improvement or addition to their capital assets through the use of Small Business Development Bonds. 1 know of no small business which has been able to negotiate a Small Business Development Bond. 1 know of some which have been able to negotiate options on Small Business Development Bonds, but 1 do not know of any small business which has been able to use this provision which allegedly benefits small business.
In fact, if a small businessman approached the Bank of Nova Scotia or another lending institution, he was told, "If the statute goes through, then your interest rate will be reduced and you will be able to use the interest as a dividend. We will get it "taxfree" and you will not be able to deduct it. You can take advantage of the provision only if it goes through, but we do not know what will happen. In the meantime if you want the loan, sign at 13, 14, 15 or 16 per cent, and if it goes through, maybe we will give you a reduction." Until now I know of no small business which has been able to negotiate a Small Business Development Bond.
When this clause comes up, I will specifically ask the minister whether he can give the details of any small business anywhere which in fact negotiated an absolute Small Business
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Development Bond without regard to w hether or not the statute went through. I suggest that he cannot and that everyone who managed to get something got an option deal. Because it was only an option deal and because they could not be firmly in place on the deal, most people were unable to use the provision which was boasted about as being useful to help small business.
We have had a charade. The Minister of Finance stood in the House and said that he is helping small business. He gave people the hope that they could do something about high interest policy of the government. Let me stop here for a moment. When the last government was defeated, the interest rate charged the chartered banks by the Bank of Canada, or the Bank of Canada rate, was 14 per cent. That was the rate when we were fighting an election a year ago. The person who now occupies a treasury bench as the Minister of Industry, Trade and Commerce said on a television show that if interest rates went that high, he would resign. Now the Bank of Canada rate is 17 per cent! While he had an unfortunate accident and came into the House with a cane, he has not resigned. Perhaps he has tendered his resignation and it has been refused.
Perhaps the Deputy Prime Minister and Minister of Finance will be able to explain whether the Minister of Industry, Trade and Commerce has offered his resignation. If he has not offered it, why not? If he has offered it and it has been refused, why is the Minister of Finance prepared to accept and indicate that the Bank of Canada rate should be 17 per cent? A year ago he was traipsing around the country promising low rates of interest. At that time the Bank of Canada interest rate was only 14 per cent. How can he now say that it has to be 17 per cent and that it is low?
Let me leave that subject for now because it is somewhat off the topic. The real issue is whether small business should be able to borrow money or obtain funds to create new productive assets at a rate of interest which makes some sense. With all the programs of the Minister of Employment and Immigration-LIPs, grant programs, give-away programs, make-work programs or get a new community group to study the programs-the government refuses to recognize that small business creates most of the employment in the country and that small business is being totally tarred and feathered by the high interest rate policy of the government.
What does this bill do except provide that the Small Business Development Bond will expire on April 1, 1981? Perhaps that will be less than two months after the bill passes this House and the other place. What does the bill say? It says that unless one has done the work and unless all the improvements the loan is for are in fact in place, then one cannot write off the interest. One cannot write off the Small Business Development Bond payment scheme out of the surplus account of one's company on the basis of the dividend to the lender. The Small Business Development Bond is not that big a deal. With interest rates running from 19 per cent to 24 per cent for small businesses today, the Small Business Development Bond would perhaps allow small businesses to borrow, in after tax dollars,

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at a rate somewhere around 13 per cent. Even that is a dickens of a lot better than asking small businesses to pay 20 per cent; even that will create a great deal of employment.
In the bill before us we have misrepresentation and deceit. The government said that it will do something for small business. It said that it will allow businesses to use the Small Business Development Bond scheme, the same kind of scheme it allowed Petro-Canada to use when Petro-Canada bought Pacific Pete. The government will allow small businessmen to use that scheme and they will be well off, but they will be cut off on April 1, 1981, and will not be able to use it from then on.
The government offered a possible solution to the excruciatingly, exorbitantly and deceitfully high interest rates imposed on businesses; then it said that it cannot be used. In other words the government tries to get political marbles out of the deal and winds up teasing or pretending to do something but does nothing for small business. The deal is not all that great. Instead of paying 20 per cent, the small businessman might get away with paying only 13 per cent on the market. But that in itself would be something; it would give him some hope and would offer some employment. It would help to get the country rolling again.
Sir, before we got onto this portion of the bill I had an opportunity to speak to members on the treasury benches. I suggested to them that if they really wanted to accomplish something in this bill, what they might do is extend the provisions of the Small Business Development Bond to December 31, 1981. We brought in that provision. We suggested it to them in this House on motions under Standing Order 43 on a number of occasions. We expressed our concern over the Liberal high interest policy. They talked about the Tory high interest policy which was 14 per cent. They said it was terrible and impossible. But 17 per cent does not bother them. They do not mind 17 per cent. But if they wanted to do something in this bill at all they would immediately stand up and make an amendment to this statute, now, and extend that particular provision to December 31, 1981. 1 want to say this to you, as chairman of this committee, that if they really wanted this bill to go through and if they really wanted to demonstrate that this provision in the Income Tax Act will make some sense, then they would stand in their places immediately. I am finished and propose an amendment to this legislation to extend the date of the Small Business Development Bond to December 31, 1981.
The extension to that date would give small business the opportunity to go out into the marketplace, buy the production machinery it needs and make the new investment it needs to make. How can a man start a business, buy his equipment or get organized when he must pay 20 per cent to the bankers? Can we not give him a little break? Can we not reduce the interest rates he must pay? Can we not do something in this bill to get Canada going again?
Everything in the budget of October 28 was to turn off progress. There was not a thing in that budget which would expedite the development of Canada, make Canada grow again. Can we not do something in this bill? Can we not do one thing in this bill to make Canada grow again? Can we not be a little more reasonable with respect to the Small Business Development Bond?


Denis Éthier: Order, please. I regret to interrupt the hon. member but, as I have indicated his time has expired.


Mr. Hamilton (Qu'Appelle-Moose Mountain):: Mr. Chairman, speaking on income tax amendments is probably the most important function of a practical nature we have as members of this House. Our primary duty here is the watching of the expenditures of money to make sure that the tax system which collects that money to pay for government expenditures, is done wisely and prudently.
The previous two Conservative speakers, or maybe three, have mentioned the Small Business Development Bond. 1 can take that as an example of what I mean by being prudent. This should be the aim of the tax collectors of the federal government, and this particularly applies to the Department of Finance which lays down these amendments to the Income Tax Act in consultation with the Department of National Revenue. As has been made abundantly clear by the hon. member for Mississauga South, using this Small Business Development Bond as an example, it was a fiscal device to try to reduce the interest rates which were suicidally high in Canada because of a theory held by the Department of Finance and the Bank of Canada. So the government which preceded this government-the Clark government-tried in a small way to get at this problem on the fiscal side by reducing interest rates for at least somebody in the country. It picked on the small businessman, whether a farmer or a small businessman. It said, "We will give to you, the small businessman, the same kind of loophole in the tax law which exists for big companies like PetroCan, or any other company which is busy taking over someone else, if you call your interest a dividend."
Under our definitions in the tax law, the lender of that money is not charged tax. Therefore, he can reduce the rate by about half, plus a little bit for his own profit. This was a reasonably major effort to get interest rates down for the small businessman. Where it failed, of course, was not having included the farmer, whether incorporated or not. It should also have included all those in the export business, incorporated or not and it should have been applied to the ownership of homes, to be consistent and fair.
But what happened to this bill which we have before us? This bill simply says that the Small Business Development Bond will only be available to March 31. For the last two months the banks have been saying to small businessmen who tried to negotiate loans under this type of provision, "We will not lend money for a program which will end March 31." Small businessmen trying to negotiate loans under this type of provision have been made equal to big business in the borrowing of
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money at lower interest rates. In effect, the government wipes that situation out. So, the chaps who went ahead and took up options on the basis of the Small Business Development Bond are stuck now with this 15 per cent or 20 per cent interest rate.
I would suggest to the minister, Mr. Chairman, and to his officials that this is a perfect example of where the present government zigged when they should have zagged. He knows this country needs lower interest rates, whether they be in B.C., the Northwest Territories or in the Atlantic provinces, whether they be in Quebec, Manitoba or Ontario. Big business, small business, the little people are all being wiped out in tens of thousands by this high interest rate policy in the United States and Canada. Quantitatively it is wrong. I made that pitch on a previous occasion when I gave the figures on the rough comparative cost of using the interest rate technique to fight inflation versus the value of the dollar. I am simply repeating what previous speakers on this side have said, "For heaven's sake, stand up as a representative of the people and say this measure will be extended." Under the rules, of course, we cannot make a motion to add to the possible financial obligations of the government.
1 would like to return to my main argument, Mr. Chairman. One of the things I said in my earlier speech, which the minister remembers well-it got him mad enough to get up and answer anyway-was that the main purpose of the Minister of Finance should be to get the maximum amount of taxes that he can. Comparing the present level of taxation in Canada with that in the United States, ours is counterproductive.
I will give you a classic example of this, Mr. Chairman. If you want to get more money out of the tax system today, reduce the taxes. Then people will go ahead and do some business. They will take out these development bonds and develop something. With that development comes jobs and with those jobs comes wealth. On that wealth the tax collector will collect.
Some people call this the theory of potential, but in its simplest terms, it is merely a way to get more money out of the tax system at a certain level, by reducing the rate, than can be obtained by increasing the rate. This theory does not apply to all things and all subjects, but it does apply in certain instances. About ten or 12 years ago the government, in its wisdom, increased taxation on cigarettes which were being used by roughly 30 per cent or 40 per cent of the population. The tax was increased to such a high rate that the people who lived along the American border smuggled in truckloads of cigarettes from the American side and distributed them without paying any tax to anybody. As a result, the government very wisely backed up and reduced the tax which stopped the smuggling and, as a result, it received more money.
The same situation exists today with regard to jewelry, which is the newest wrinkle in smuggling. With the rising prices on jewelry and an ad valorem luxury tax of 10 per cent, it makes such a difference that an article of jewelry which can be smuggled easily has increased tremendously in value over
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this last year or so. According to the police the amount of this smuggling has increased to between $100 million and $400 million per year.
Jewelry is of interest to many people, and that interest goes beyond the very rich right down into the middle class. All one need do is ask the secretaries around here what they would like for Christmas, and they certainly let it be known. I would suggest, as in the situation with the cigarettes, that if the government wishes to get more money through jewelry, it should search for the right level of taxation so that we may be competitive with our main opposition in this field, the Americans. The smuggling will then stop and the government will make more money. All the ladies, and their husbands or boyfriends will be happy, and the government will make more money. That is the simple logic of the ordinary layman.
On the question of the development bonds, such logic is much more important because the government will lose millions of dollars by letting small businesses take advantage of this loophole in the tax law, whereby one can borrow money and pay interest as though it were a dividend. The number of jobs and the amount of wealth which the government will probably produce over the next five years or ten years by this move will be far beyond anything it will lose by reducing the tax. Nearly all the tax economists in the English-speaking world accept that principle. That is why the minister looked so stupid in the House when he took away this one little thing in the Crosbie budget which helped small business move toward fiscal equality with big business and which moved toward developing and stimulating the economy while at the same time giving more money to the taxpayers. This is not new economics. It is the oldest economics of the world.
When 1 heard the parliamentary secretary to the minister reading his speech the other night with the passe comments that he receives from the department, 1 was struck not just by the embarrassment in which he found himself when he learned that his whole speech was out of order, but by his repetition of this passe doctrine we are so sick and tired of hearing from the Department of Finance. I suggest that the parliamentary secretary should check with his officials, who are right in front of him, and they will tell him that what I am saying is true. But those officials should not make ministers look stupid by encouraging them to make such comments in the House. That is why I have always defended ministers of finance.
I have made my point very clear with regard to the Small Business Development Bond, but 1 could also add comments about the Farm Credit Corporation, the export operations of this country which we should be trying to increase in order to take advantage of our dollar and the building of homes which is almost at a standstill in some of our larger cities where prices are too high and rent controls exist. These things are the real needs of the people. If the government wants more money for the tax collector from these segments of the economy, it will get more money from those particular items which are marketable products by reducing the tax rate. How much the tax rate should be reduced, no one knows, but the government should feel for the point where it stops receiving more money,

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and when it stops receiving more money, then it should level the tax off.
I am putting this forward, as I have done in the House many times before, as a classic example of the utilization of quantitative analysis through which the government may find out what is happening, rather than relying on this theory which we learned in school 40 years ago.
This bill has a number of clauses which should be praised. I am glad that at long last the remuneration for spouses has been included in the Income Tax Act. This has been requested by small business people and farmers all the years that I have been in public life. Credit should go to the budget of the hon. member for St. John's West of one and a half years ago who first introduced that provision which has been retained by this government. Even though I can accuse the minister, 1 believe wisely and correctly, of being forced to look stupid as the result of some of the statements he made in that budget speech when he should have been zigging rather than zagging on taxation, on that provision, 1 want to make it very clear that every husband is damned grateful.
The next item is small but crucial, and that is that the SIN number, the social insurance number, has now been mentioned in the Income Tax Act. No longer will instructions be given to banks, credit unions or trust companies to take out 25 per cent of the interest which holders of small denomination bonds with cash coupons must pay to the income tax department and which can only be refunded to them if they file an income tax form.
Most of the holders of $100 or $200 bonds are children, housewives or older people with a little bit of pin money who like to go down to their financial institution once or twice a year to obtain their $2 or $3 in interest. Yet, the people in National Revenue and the Department of Finance who would skin a louse for its tallow stuck in the provision that 25 per cent of their bond dividends must be paid by these old people and these children, knowing very well that they would never have to pay income tax. The government stole this money from these people, but at long last it has corrected the situation, and it should receive credit.
I might say, in all fairness, that there was no such provision in the Crosbie budget. I am appreciative of the fact that it is in this budget. I cannot find in this Income Tax Act a provision which applies to common-law spouses and which was in the Crosbie budget. Does the minister not know that there are a large number of common-law relationships in Canada? The number of these relationships cannot be measured at 1 per cent or 2 per cent. I do not know the correct percentage, but 1 do know that when I walk through any part of Canada, I am told of the unfairness which a man, who is probably paying alimony to his previous wife and who now has a common-law wife, must face because he cannot claim her as a tax deduction, even though she is carrying out all the functions of a wife. That provision was in the Crosbie budget. 1 have been through this bill twice. Maybe 1 have poor eyesight, but I have looked through this 200-page bill, and I cannot find it. Why discriminate against a person who is not divorced from his wife by not
allowing him to use this common-law wife as a deduction? Is this part of the reluctance on the part of the government to treat women as equals, or is it something more realistic, namely, that the income tax people in the Department of National Revenue do not give a hoot about justice or equity? They are looking for every last penny they can find. They think they have a good, valid and moral reason because the couple living common-law are living in sin. I question whether the income tax people should concern themselves with this type of delicate question. I use that as an example of the other side of the story.
I have a list of 13 subjects I would like to raise with the minister. In some cases I hope that even in this last minute he will do something. Some of these are very important, but 1 will have to let them go.
Finally, there is something I have been raising in this House for seven years. Under the definition in the Income Tax Act and the Family Allowances Act, an orphan is not defined as being a child if that orphan is under 16 years of age. The minister in charge of social welfare agreed that is a discrimination against orphans. In 1978 the minister promised in the House to do everything possible to change it.
Who is holding it up? It must be the Department of Finance, Treasury Board or National Revenue. This bill does include a definition of a child, if they are eligible for family allowance from January to December. Why not include the word "orphan" in the definition of the word child. If a person is an orphan, he has lost both his father and mother. Why should he be discriminated against under the family allowances legislation and the child credit legislation just because he has no parents? The minister has admitted this discrimination. The previous minister of social welfare knew about it. Everyone knows about it, but nothing happens.
If this government has any principles of fairness and ethics, it will look at this question of orphans and consider including them in the definition of a child. It will get rid of these definitions and regulations which do an injustice to the orphans of this country.


William Henry (Bill) Domm: Mr. Chairman, in the few minutes remaining in tonight's session, I wish to deal with my concerns regarding Bill C-54 as they pertain to the business community in Canada. During this session of Parliament, members of the opposition have probably spent more time on what appears to be a disregard for the stresses and strains placed on the business community in Canada through measures like Bill C-54 than on any other subject. Members of the opposition like to feel that members of the government have had some business experience. We would also like to feel that their business experience would be reflected in the legislation they bring before this House.
We went through an election campaign in 1979 and another in 1980 in which members opposite pledged themselves to
January 26, 1981

bringing legislation into this House which would address the problems of the small businessman in Canada today.
During those election campaigns they made a commitment to the people of Canada to bring in legislation that would prohibit the growth of government, would increase the revenue of government for purposes of social welfare and social planning by spending less on government bureaucracy. What they have done with the introduction of Bill C-54 is bring in legislation to raise more revenue for government to cover increases in the bureaucracy, increases in government overhead expense. This government continues to spend, through increased taxes and bills like C-54, 25 per cent more than it takes in each year.
Surely members opposite believe in the free enterprise system. They believe as we on this side believe that the marketplace can function best with the government out of it, yet by creating an atmosphere which allows them to function without continually being interfered with. They have allowed the growth of government to exceed any increased percentage in the gross national product. They promised the people of Canada they would not do that. Since they have broken their promise and have increased the size and cost of government, they have no alternative but to bring in a bill like C-54, which in turn will increase revenues through increased taxation in order to cover the cost of government.
My experience in this House of Commons is not as long as my colleague who just spoke. He has 13 points he wishes to raise while this bill is in Committee of the Whole. I only have
11.1	will try to deal with half of one in the remaining couple of minutes.
Let us take the example of a small businessman who looks at page 28 of this bill which deals with a 3 per cent inventory allowance at year-end, when he determines his business tax. When the 3 per cent inventory allowance was first conceived, interest rates in this country were 6 per cent or 7 per cent and inflation was not much higher than that.
What has happened since that was first conceived? Inflation in this country is now running in excess of 11 per cent and interest rates to the small businessman are running in excess of 20 per cent, even from the government lending institutions. Therefore, the 3 per cent inventory allowance on page 28 of this legislation is totally inadequate. When a businessman carries over that inventory at year-end, there is no way a 3 per cent inventory allowance will cover the cost of that inventory as a hedge against inflation, which is the reason it was introduced in the first place.
I ask the Minister of Finance if in the process of reviewing this bill he will consider increasing the inventory allowance to cover increased inflationary pressures in excess of the present insignificant 3 per cent allowance, bearing in mind that in the last 60 days, since this budget was brought in by the Liberal government on October 28, interest rates in Canada have gone up 39 per cent and the dollar is the lowest it has been in 47 years.
Adjournment Debate
We still have the same Minister of Industry, Trade and Commerce in this House who promised that he would resign if interest rates went above 14 per cent. They have now done that and he has not kept his promise. We have an uncaring finance minister and a promise broken by the Minister of Industry, Trade and Commerce.
1 would like to move on if time will permit. If time does not permit, I will make my remarks at the next opportunity.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Walter David Baker: Mr. Speaker, on January 20, 1981, I asked a question of the Minister of Transport (Mr. Pepin). The thrust of that question dealt with the importance of establishing as soon as possible a daily direct air service for passengers travelling between Ottawa International Airport and New York City for the benefit of commercial and other users. The question arose for two reasons. First, there seems to be a long delay in the process of resolving the question before the Canadian Transport Commission and the federal communications commission in the United States. An official from the Department of Transport indicated that the delay in the U.S. would be for a period of a year and a half which, quite frankly, seems to be quite a long time. Second, Air Canada, for some reason or another which is not apparent in terms of providing service to the travelling public, has filed an objection to the applications made by two competing Canadian carriers, First Air and Air Atonabee.
You might ask why there is a requirement for this kind of direct service, Mr. Speaker. For many years there has been growing concern in the national capital area about the necessity to provide a diversified employment base for the people who live here, particularly for our young people coming out of the school system, to provide an economic base for assessment for municipalities and local government generally. There has been concern that the area was becoming historically dependent upon the presence of the federal government, a tendency we cannot deny, and that because of restraint policies which have been applied generally it is not likely to provide uninhibited growth of employment opportunities.
Something else has happened in the meantime. Into this economic milieu in Ottawa-Carleton have come the high technology industries in abundance. The cities of Kanata and
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January 26, 1981
Adjournment Debate
Nepean are gradually, inextricably but surely becoming the high technology centres of Canada. There is a feeling that we should do everything possible at the local government, provincial government and federal government levels to encourage other industries to settle here as well. There have been meetings with representatives from the cities of Kanata and Nepean, representatives from the townships of Osgoode, Rideau, Gloucester, and representatives from the local chambers of commerce. Out of all of these meetings has come the importance of quickly establishing an air service of the kind I have described, at least as a first step toward completing this industrial component. We regard this just as important as having our educational systems respond.
Two carriers have applied. Air Canada-which does not intend to provide the service itself-has for a legal reason decided that it would intervene to oppose the application. This is not the first time. The Parliamentary Secretary to the Minister of Transport (Mr. Bockstael) is here. He knows. It was pointed out by the member for Winnipeg-Assiniboine (Mr. McKenzie) that the situation had occurred in Winnipeg. It was done simply to preserve something Air Canada had, and is not using.
An editorial in the Ottawa Citizen for Tuesday, January 13, 1981, summed it up as follows:
Air Canada is supposed to be in the business of flying people, not grounding them. Yet that is exactly what it is ready to do in its opposition to applications by two regional carriers to provide an Ottawa-New York air link. Air Canada's attitude is curious-while it has no legal rights to the route itself, it doesn't want anyone else to use it.
I think it is curious, indeed, and we are entitled to an answer. We are entitled to know as well what the stance of the government is. The Minister of Transport wrote a letter which I received today in which he said that under the Air Canada Act of 1977 the governor in council may give the company directions of a general nature. The point I want to make to the minister is this: please have the government give directions of a general nature. Have the company stand aside from its objection, because as sure as God made little apples, the presence of Air Canada in this matter before our Canadian Transport Commission is going to slow the process. The whole regulatory process takes on the dimension of not being a contest between two air carriers, First Air and Air Atonabee, but of involving a third right. It becomes complicated and it interferes with the minister's other responsibilities, to indicate to that commission that the government itself has an interest in diversifying the economy in this area.
I would ask the minister whether he will intervene in this matter in accordance with the powers of the act of 1977. Have Air Canada withdraw its application for a service which it does not intend to use. Allow the two contending parties to come before the CTC quickly so that a service, which is generally recognized in the national capital community can proceed; so that what businessmen have told us can come to pass; so that what municipal officials have told us is essential can come to pass, and so that we may have a direct air link
between a commercial centre like New York which is important and which has been demonstrated as important in all the submissions which have been made.
I know the Minister of Transport has a personal interest in this because he represents a seat within the national capital. All of us who represent seats within the national capital have that interest. I ask the minister through his parliamentary secretary, who is kind enough to be here tonight, to answer my question. Will the minister intervene and, if so, to what extent? Can the time be shortened in which an application can be dealt with? Will he ask the minister or inform us whether he is prepared to reconsider the advice he gave me by letter today, and give the company "directions of a general nature" in respect of its attitude toward this application by two Canadian carriers to provide a service which Air Canada does not seem to want to provide? I think the service would be of benefit to this area, to the whole region of Ottawa-Carleton. Thank you, Mr. Speaker.


Mr. Robert Bockstael (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, the minister has asked me first of all to convey his regrets that he is not able to be present for this debate. The question of a direct Ottawa-New York air service is, of course, of utmost interest to him as it is to the hon. member for Nepean-Carleton (Mr. Baker).
The central point in considering such a service is the fact both Canada and the U.S. must work within the terms of the existing bilateral air agreement. Under the agreement the New York-Ottawa route has been allocated to a U.S. carrier. If Canada wanted a Canadian carrier to operate the route, approval of the U.S. authorities would be required.
Naturally the minister was pleased to see two Canadian carriers, First Air and Air Atonabee, take the initiative and apply to the Canadian Transport Commission for the route.
It is his hope that the regulatory process in both Canada and the United States can be dealt with as quickly as possible.
With respect to Air Canada's intervention and the applications before the CTC, I understand the minister has had the opportunity to explain his position more fully to the hon. member since his question last week. Since Air Canada is fully entitled to take this action under the existing regulatory framework and since the intervention is not likely of itself to delay the CTC's final decision, the minister does not feel it would be appropriate for him to tell Air Canada to withdraw its intervention.
In conclusion, the minister has asked me to stress his close personal interest in such a service and to assure the hon. member that he is exploring all available options to achieve it as soon as possible.
January 26, 1981


BANKRUPTCIES-CALL FOR INCREASE IN GUARANTEED INSURANCE COVERAGE
Mr. Joe Reid (St. Catharines):: Mr. Speaker, I wish tonight to bring to the attention of the House and focus in a very direct manner on the absolute necessity of increasing deposit insurance. On January 15, in reply to a direct question, the Minister of State for Finance (Mr. Bussieres) stated, and I quote:
-I have asked the Superintendent of the Department of Insurance to weigh the possibility of having the Canada Deposit Insurance Corporation review the current $20,000 ceiling. That study is under way-
The words "review" and "study" have become watchwords for inaction. The Minister of State for Finance told the House that he has asked the Superintendent of Insurance to weigh the merits of an increase in this $20,000 ceiling. 1 submit that the evidence as to the need for an increase has long been available. Inflation alone has reduced the value of the dollar, from the time that $20,000 figure was first introduced, to half its value. Since the time that figure was fixed, such programs as the Registered Retirement Savings Plan and the Registered Home Ownership Savings Plan have been introduced, and these have added to the level of deposits by Canadians.
Just as an example, the average Registered Retirement Savings Plan at maturity is worth $27,000, $7,000 over the limit. Last year the United States government increased its deposit coverage from $40,000 to $100,000 in response to needs comparable to those in Canada. The minister has in his files requests-and 1 have seen some of that exchange of correspondence-for an increase in the amount of deposit insurance from as far back as 1974. Many of those requests came from the industry itself.
What was the response? The response was that the premium costs for the relatively small number of depositors involved are not justified. That means it has taken an event like the collapse of the Astra Trust Company and the resultant tragic losses to hundreds of Canadians of their life savings before the government would begin to think about such an increase. The question now is how many more bankruptcies must take place and how many more Canadians must suffer financial loss before the government will take action.
It is the responsibility of the government to protect investments and deposits by Canadians in trust companies and institutions which have been given approval. The individual depositor should not have to feel, as many say they must, that they must be accompanied by their lawyers, who can translate the Canada Deposit Insurance Corporation Act, so that they will know whether they are insured or not insured.
Seals on doors declaring membership in the CD1C have been used to give depositors a sense of security, when in fact little security exists. People have invested $50,000, $60,000 or even more, only to find out that under today's circumstances, $20,000 is the limit of their protection, and whatever is in excess is lost, as was the case with respect to Astra Trust. This raises a related issue concerning funds being transferred and shifted into totally uninsured mortgages, or whatever, without the circumstances being fully explained to the depositor.
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The government must more closely monitor institutions upon whom it bestows its charter of trust, not only for the sake of the thousands who have deposits and investments within them but also because of the vast majority of companies whose reputations have been tainted as a result of the Astra Trust fiasco.
It is time to do something which will, first, prevent these events from occurring in the future and, second, ensure that those who use federally approved and insured institutions are adequately protected.
I return to the issue of public confidence. You cannot encourage or expect a positive response from people who feel that even if the government says it monitors and will insure their savings, those assurances appear to be without real value.
I therefore put it once again to the minister that the evidence has long been available supporting the demand for increasing the basic insurance coverage. Astra Trust has only served to magnify that need. I therefore ask that the minister provide us with an answer with as little equivocation as possible. First, in the minister's response of January 15, he stated that actuarial studies were required to ascertain whether the increase should occur according to specific criteria which would establish the amount. My question is: Have those studies been carried out and, if not, when will they be carried out and when will the results be known? If, by any criteria, the figure of $20,000 was valid in 1967, a substantial increase is warranted today.
Can the minister provide in his response some assurance to the financial institutions to allay the worries of depositors and to restore once again the confidence of Canadian financial institutions?


John Leslie Evans: The winding up of Astra Trust Company has been cited as a reason why the $20,000 limit on insurance on deposits in one institution should be increased. In this regard, I should like to point out that the Astra Trust situation is not typical in Canada. Astra is the only federal trust company to fail in more than 50 years, and it appears that its problems were not related to insured deposits but rather to other activities carried on by the principal shareholders of the company. Nearly all the certificate holders and depositors of Astra have been paid in entirety by the Canada Deposit Insurance Corporation because very few persons had amounts in excess of $20,000 due to them. Persons who did have deposits of an insurable type over $20,000 due to them stand to recover a substantial portion of the amount in excess of $20,000 when the remaining assets of the company are distributed on completion of its winding up.
Apart from the Astra Trust situation, a number of representations have been received by the government to the effect that the limit on deposit insurance should be increased. The level of coverage provided under the deposit insurance plan has been kept under regular review by the board of directors of the Canada Deposit Insurance Corporation, and up to date it has

Adjournment Debate
been thought the existing limit is adequate to provide for the savings needs in the form of deposits of the vast majority of people.
The hon. member has cited the growth in the funds accumulated under Registered Retirement Savings Plans and RHOPs as a reason for an increase in the $20,000 limit. I should mention in this connection that, to the extent that contributions under such plans are put into insurable deposits, such deposits are treated separately from other deposits with the same institution, for purposes of the $20,000 limit.
Any change in the limit would require an amendment to the legislation governing the Canada Deposit Insurance Corporation. The government plans to introduce proposals for revisions to the Trust Companies Act and the Loan Companies Act in the near future, and this will provide an opportunity to consider the question of increased limits for deposit insurance.


The Acting Speaker (Mr. Blaker):: Order, please. 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 10.20 p.m. the House adjourned, without question put, pursuant to Standing Order.

Tuesday, January 27, 1981