1981-12-08

ROUTINE PROCEEDINGS


Mr. Peter Elzinga (Pembina):: Madam Speaker, I rise under the provisions of Standing Order 43. To meet the shortage of skilled workers in Canada, and in view of the fact that at present most training costs for an apprentice fall on the training company and many firms do not have apprenticeship or on-the-job training programs because they are too costly, I move, seconded by the hon. member for Red Deer (Mr. Towers):
That the federal government institute a fairer plan for paying for facilities, instructors and equipment, and since the early stage of apprenticeship is a kind of post-secondary education and is vital to the economy, that the federal government pay a greater share of this training.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AGRICULTURE
Mr. Jack Shields (Athabasca):: Madam Speaker, the criteria set out to determine eligibility for the herd maintenance assistance program were unfair, inconsistent and discriminatory toward northeastern Alberta producers. Recommendations concerning this injustice from the Herd Maintenance Review Board fell on deaf ministerial ears. In addition to being denied herd assistance, farmers in northeastern Alberta suffered a disastrous 1980-81 winter followed by an unusually dry summer. In view of these facts, and given that the 1981 Liberal budget offers virtually no assistance to Canadian farmers struggling to survive against high interest rates and poor returns, I move, seconded by the hon. member for Pembina (Mr. Elzinga):
That this House direct the Ministers of Finance, Agriculture and Regional Economic Expansion to extend the herd maintenance assistance program or to create a new, meaningful and fair program which will allow producers in this country to maintain their herds.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADA POST
Mr. Bud Bradley (Haldimand-Norfolk):: Madam Speaker, thousands of Canadians have strongly voiced their concerns about the 30-cent stamp. It will be devastating to charitable organizations, little theatre groups, mail order businesses, senior citizens, Sports Canada, small businesses, municipalities, and in fact in some way to all Canadians. Therefore I move, seconded by the hon. member for Richmond-South Delta (Mr. Siddon):
That the minister responsible for the Canada Post Corporation accept the advice given him by so many and suggest to his cabinet colleagues that a more realistic rate be struck for first-class mail, or, since he appears so pleased with the way the Post Office Act was so well handled in committee and in this place, that he bring the issue of postal rates to the floor of the House in order to be debated by the elected representatives of the people it affects.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


UNEMPLOYMENT INSURANCE
Mr. Mark Rose (Mission-Port Moody):: Madam Speaker, I rise under the provisions of Standing Order 43. In contrast to other workers like plumbers and carpenters, Section 16 of the Unemployment Insurance Act denies farm workers all unemployment insurance credit for the days worked unless they work 25 days for the same employer. Thus, over 100,000 farm workers among Canada's poorest paid workers who are not normally covered by minimum wage legislation, health and safety protection, or workers' compensation benefits, are vie-

December 8, 1981
tims of unemployment insurance discrimination which can force these workers into the arms of labour contractors who can, by moving workers from job to job, employ farm workers for the season for a fee of sometimes up to 40 per cent of their already low wages. Therefore I move, seconded by the hon. member for Kootenay West (Mr. Kristiansen):
That Section 16 of the Unemployment Insurance Act be abolished since it discriminates against a racial minority who do at least half the farm work in the Fraser Valley and because it has been described as a "Magna Carta for unscrupulous labour practices".


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AIR TRANSPORT
Mr. Lloyd R. Crouse (South Shore):: Madam Speaker, I rise to move a motion under the provisions of Standing Order 43. At present the Canadian air traffic control system needs approximately 250 additional qualified controllers to meet today's traffic demands, and the Department of Transport proposes to hire fired United States air traffic controllers to fill these vacancies. In view of the fact that today we have more than one million people unemployed in Canada, I move, seconded by the hon. member for Halifax West (Mr. Crosby):
That all existing air traffic controller vacancies in this country be filled by qualified Canadian citizens.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


POLITICAL PARTIES
Mr. Girve Fretz (Erie):: Madam Speaker, the Ontario wing of the Liberal Party of Canada recently passed resolutions concerning the budget of the Minister of Finance (Mr. Mac-Eachen), one of which bluntly indicated that the budget, instead of encouraging risk-taking and job creation, actually increases taxes, does nothing to fight inflation, and actively discourages job creation. In light of this agreement with Tory objections to the budget, I move, seconded by the hon. member for Huron-Bruce (Mr. Cardiff):
That this House congratulates the Ontario Liberal rank and file for their miraculous conversion, and urges them to spread the good Tory word to their brothers and sisters across this land.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Benno Friesen (Surrey-White Rock-North Delta):: Madam Speaker, since the government has steadfastly refused to review capital gains provisions relief to farmers and small-business men and, instead, is using capital gains taxes to attack their retirement income, since the government income benefits most from inflation and graduated tax structure, and since the December 31, 1971, valuation day for property assessment is totally unrealistic when considering that property values have skyrocketed in inflationary rather than real terms, I move, seconded by the hon. member for Pembina (Mr. Elzinga):
That the Minister of Finance change the valuation day for fixed value to December 31, 1981.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE ECONOMY
Mr. Gordon Towers (Red Deer):: Madam Speaker, with the Canadian economy in complete disarray, the Minister of Finance (Mr. MacEachen) is in an "orderly advance backwards", and Canada burns. In order that history may repeat itself completely I move, on behalf of all Canadians, seconded by the hon. member for Pembina (Mr. Elzinga):
That at the forthcoming Liberal Christmas party the Prime Minister be presented with a violin on which would be the logo "The country is folding as it should".


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
December 8, 1981


SMALL BUSINESS
Mr. Terry Sargeant (Selkirk-Interlake):: Madam Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. Whereas more than 2,600 businesses have shut down in Quebec alone during the past eleven months, thus putting more than 67,000 Quebecers out of work; whereas there are many small businesses in that province and high interest rates are making it very difficult for them to operate, I move, seconded by the hon. member for Churchill (Mr. Murphy):
That this House ask the government to reduce interest rates immediately so as to put a stop to these shutdowns and the resulting loss of jobs.


Madam Speaker:: Does this motion have the unanimous consent of the House?


Some hon. Members:: Agreed.


Some hon. Members:: No.


BANK OF CANADA
Mr. Charles Mayer (Portage-Marquette):: Madam Speaker,
I rise under the provisions of Standing Order 43. The Liberal government has repeatedly told Canadians that its high interest rate policy can be attributed to United States interest rates. Last Thursday the Bank of Canada dropped its rate only 1/100th of a percentage point, to 15.31 per cent, while in the U.S. the Federal Reserve Bank reduced its discount rate a full percentage point, from 13 per cent to 12 per cent. Therefore I move, seconded by the hon. member for Halifax West (Mr. Crosby):
That this government be consistent in its interest rate policy and direct the Bank of Canada to drop its bank rate at least two percentage points to reduce the spread between Canadian and the United States interest rates.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE BUDGET
Mr. Bob Corbett (Fundy-Royal):: Madam Speaker, workers in the airline industry and all public transportation sectors are distraught and astounded that the government would attack
them personally by taxing travel passes which have long been considered a part of any package that forms an agreement between worker and employer. As the government intends to tax this benefit, as well as a good number of other items such as health and dental benefits, it can only, and rightly so, lead to higher wage demands by workers to compensate, which will be acutely inflationary. I move, seconded by the hon. member for Calgary East (Mr. Kushner):
That the Minister of Finance withdraw the entire provision.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


LABOUR CONDITIONS
Mr. Ray Skelly (Comox-Powell River):: Madam Speaker, given that Cape Breton is suffering from one of the highest unemployment rates in the country, which rose dramatically in November to over 17 per cent, and given that lay-offs continue in the construction and manufacturing industries, even in the riding of the Minister of Finance (Mr. MacEachen), I move, seconded by the hon. member for Nunatsiaq (Mr. Ittinuar):
That this House urge the Minister of Finance to stop his policy of complete indifference toward the people affected by lay-offs and unemployment and to provide the stimulus for direct job creation that areas like Cape Breton and his own constituency need so desperately.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NUCLEAR ARMAMENTS
Mr. Neil Young (Beaches):: Madam Speaker, I rise under the provisions of Standing Order 43. In view of the decision by Ottawa City Council to hold a plebiscite on nuclear disarmament at the next municipal election, and in view of the fact that a growing number of Canadians and world leaders are deeply concerned over the prospects of a new arms race that will escalate the growth of nuclear weapons, I move, seconded by the hon. member for Oshawa (Mr. Broadbent):
That this House call on all of Canada's local governments to include a question on nuclear disarmament on ballots that will be used to elect municipal and regional governments in the coming year, and that the results of this

December 8, 1981
Oral Questions
plebiscite be tabulated and forwarded to Mr. A. R. Menzies, Canada's Ambassador for Disarmament.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Mr. Bill Clarke (Vancouver Quadra):: Madam Speaker, my question is directed to the President of the Treasury Board who will know that the report of the Auditor General is to be tabled today. It will come as no surprise to the President of the Treasury Board that in his report the Auditor General points out the need for legislation to provide for a comprehensive audit in all Crown corporations wholly owned by the Government of Canada because Parliament needs the independent assurance that comprehensive audit would give. He would also know that the Public Accounts Committee, in its fourth report, dated February, 1981, recommended the same. Will the minister now tell the House when legislation of that type will be forthcoming?


Hon. Donald J. Johnston (President of the Treasury Board):: Madam Speaker, I thank the hon. member for Vancouver Quadra for his question. At this time I would not like to predict a specific date when legislation will be forthcoming. However, I would like to advise the hon. member that the views of the Public Accounts Committee, the views of the Auditor General, the views of senior officials, and the views of Crown corporations themselves will all be taken into account in developing policies with regard to this matter.


Some hon. Members:: Oh, oh!


REQUEST THAT MINISTERS HOLD CONSULTATIONS
William Hillary (Bill) Clarke: Madam Speaker, the minister has not indicated whether or not he is in favour of such a policy. Since the traditional financial audit cannot tell the directors or Parliament whether management practices have been consistent with the objectives approved by Parliament for Crown corporations, I want to ask the minister if he will be sure to read paragraphs 1.18 to 1.24 in the Auditor General's report, which I hope will convince him, and will he then consult with his colleague, the President of the Privy Council, to get this legislation moving?


Donald James Johnston: Madam Speaker, unfortunately I have not yet had the opportunity to read the report of the Auditor General. I look forward to doing so, and hon. members can rest assured that I will read the paragraphs in question and will consult with my colleagues with respect to those recommendations.


ROLE OF AUDITOR GENERAL IN RELATION TO CROWN CORPORATIONS
William Hillary (Bill) Clarke: Madam Speaker, I am sorry that the minister was not with us this morning in the lock-up. However, the Auditor General said in his report that he, the Auditor General, as an officer of Parliament, should be the auditor of wholly-owned Crown corporations which are dependent on the public purse for assistance. Since at the moment only 58 of 460 or so Crown corporations are audited by the Auditor General, will the President of the Treasury Board also give the assurance to the House that this is in the sphere of his desires?


Donald James Johnston: Madam Speaker, the hon. member for Vancouver Quadra knows full well how supportive I have been, and continue to be, of the concept of comprehensive audits when appropriate.


An hon. Member:: What have you done about it?


Donald James Johnston: As I indicated in response to the two earlier questions, these recommendations coming from the Auditor General will be given most careful consideration by me.


QUERY RESPECTING GOVERNMENT ACTION ON RECOMMENDATIONS
Mr. Bill Wright (Calgary North):: Madam Speaker, my question is also directed to the President of the Treasury Board. In his 1981 report the Auditor General has stated that progress in the IMPAC program, that is, the improvement of management practices and accountability, is disappointingly slow. He has also found that there are significant weaknesses in central management control over human resources and that responsibilities for financial management are split among the Minister of Finance, the Receiver General, and the President of the Treasury Board. What immediate action is the President of the Treasury Board intending to take (a) to reduce the delays in the implementation of the IMPAC program, (b) to remove significant weaknesses in central management control over human resources, and (c), to provide the Comptroller General with appropriate statutory authority to enable him to provide central direction to departments and agencies?


Donald James Johnston: Madam Speaker, it is somewhat difficult for me to give a comprehensive answer inasmuch as the Auditor General's report has only been made available today, and I have not yet had the opportunity to read it. I can respond with respect to the progress on IMPAC. In fact IMPAC has been proceed-
December 8, 1981

ing steadily across government. The Auditor General tells us that progress has been disappointingly slow. We would all like to see greater progress. However, the progress has been consistent, and I am satisfied that the IMPAC program is very much on track. 1 would urge all hon. members of the House to pay close attention to the results of IMPAC, which is probably one of the most important management initiatives ever undertaken by the federal government.


MOTIVATION OF PUBLIC SERVICE MANAGERS TO ACHIEVE VALUE FOR MONEY
Frederick William Wright: 
Donald James Johnston: That, Madam Speaker, is a very important question. It is one that we are addressing and continue to address. I should tell the hon. member that one of the projects under way that has been taken in response to the recommendations of the Lambert commission and the D'Avignon special committee has been to develop a philosophy of management across government. An early draft of this philosophy was circulated to members. It was made available to a wide number of critics, and it has now been put in final form.
I would be happy to make a copy available to all members of the House as soon as it is available. However, I think all members will recognize that this philosophy of management embodies as one of its fundamental principles the necessity of achieving value for money-to help with this philosophy of management, to vastly improve the attitudinal problems which have been addressed by the Auditor General, which were addressed by his predecessor in the past, and which have been addressed by independent critics, such as Mr. Lambert and his fellow commissioners, and the D'Avignon committee.


LABOUR CONDITIONS
Mr. Edward Broadbent (Oshawa):: Madam Speaker, I have a question for the Minister of Finance. Yesterday the Minister of Industry, Trade and Commerce admitted that the growth rate in the Canadian economy will be 17 per cent lower than was forecast by the budget. Yesterday also saw Stats Canada releasing data confirming this same point. Finally, the more than 25,000 Canadians who have been laid off since the budget was brought down show too that the minister was
Oral Questions
wrong. Considering that today is the last day for the budget debate, is the minister prepared to announce that both his predictions and prescriptions in the budget were wrong, and is he prepared now to bring in measures to put an end to these lay-offs?


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, I cannot go along with the hon. member's preamble that both my prescriptions and projections were wrong. At times anyone of us can be wrong. There is no more likely place to be wrong than in the production of projections. It may be necessary to revise the projections of growth for the Canadian economy in 1981, but if that is necessary I will do it later.


BANKS AND BANKING
John Edward Broadbent: Madam Speaker, the question is not basically about predictions and projections, but as follows. Is the government prepared to change its course of action so that jobs will be provided? That is the issue.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Since the minister indicated yesterday that he would be prepared to establish a committee that will look into bank profits, I put the following question to him. We in this House know that bank profits are up to $1.8 billion this year. We think there should be an excess profits tax. In that context, is the minister now prepared to levy that excess profits tax. It would bring in $700 million in additional revenue and it would create 110,000 jobs that Canadians need, leaving the banks' profits at exactly the level they were last year.


Allan Joseph MacEachen: Madam Speaker, it is usually not the practice to announce tax changes in reply to questions on orders of the day. When I propose any tax changes, I will announce them in the usual way.


REQUEST THAT PROFIT LEVELS BE LOWERED
John Edward Broadbent: Madam Speaker, my final question is for the Minister of Finance. I preface it by saying that $700 million would be sufficient to create the 50,000 additional homes that we need in 1982. Therefore I put this proposition to him. Considering that construction of these homes would create in addition 14,500 manufacturing jobs, why is the minister reluctant now to tell the people of Canada that he would bring the profit levels of the banks down to reasonable levels and create the jobs and the homes that Canadians need?

December 8, 1981
Oral Questions


Allan Joseph MacEachen: Madam Speaker, you may have gathered the impression by now that I am quite skeptical about statistics that are daily used by the hon. member for Broadview. The statistics today are equivalent to those which he uses regularly saying that hundreds of thousands of Canadian families lost their homes owing to high interest rates. That is patently false. The hon. member is now producing another set of figures that probably, upon investigation, will prove to be equally false.


AUDITOR GENERAL
Mr. Jim Hawkes (Calgary West):: Madam Speaker, I rise in my place to ask a question of the Minister of Finance. The minister will know that on page 12 of the Auditor General's report, in talking about the interest on the national debt, he says that paying that interest "accounts for more than one fifth of every tax dollar, and its load burdens all the people of Canada like a huge, high-interest mortgage." Some 20 cents out of every dollar, Madam Speaker, go to the bankers in Geneva, New York, and throughout Canada, so that bankers through investments receive more money than we spend on pensions, health care or post-secondary education. The solution is an issue of "political will", according to the Auditor General.
Can the finance minister give us an indication that he and his party are going to demonstrate the political will necessary to reduce the national debt and provide this country with more money for pensions, health care, and things of that kind?


Allan Joseph MacEachen: Madam Speaker, like the Auditor General I am concerned at the size of the national debt, and particularly the proportion of annual outlays that have to be spent to service the debt in the form of interest payments.
I disagree with the hon. member when he says that all these payments flow outside the country. I believe that is what I heard him say. There are many Canadians who hold Canada Savings Bonds and other debt instruments. A good deal of the debt is within the country-I would say almost all of it.
The hon. member is asking for an expression of political will. I believe I have demonstrated that political will in the budget when I indicated that next year my financial requirements will be reduced to $6.6 billion. If the hon. member will recall, earlier in the session, for the current year I introduced a bill asking for borrowing authority in the net amount of about $11 billion. The next bill will ask for $6.6 billion. I believe that is a rather substantial demonstration of my determination to reduce that proportion of total outlays assigned to the national debt.


Some hon. Members:: Hear, hear!


WASTE IN GOVERNMENT SPENDING-RESPONSIBILITY OF MINISTERS
Frederick James (Jim) Hawkes: Madam Speaker, I think what the finance minister said was that the principal of the mortgage is going to get greater and the interest payments are going to get higher, and he is bragging about it.
My supplementary question is for the President of the Treasury Board. The Auditor General on that same page indicates that one of the ways to reduce the deficit and reduce those interest payments is to reduce waste in government spending, and he says the key to that is "dedicated support of their ministers", that is, dedicated support to the civil servants on the issue of cutting wasteful spending. Can the President of the Treasury Board indicate to and promise this House that in a discussion with the Prime Minister of Canada prior to the shuffling of his cabinet, he will advise the Prime Minister to fire those ministers who are not concerned about economy and cutting down waste, and promote some backbenchers who perhaps are a little bit more concerned about cutting waste?


Donald James Johnston: Madam Speaker, the hon. member is somewhat out of date. I think he is thinking of the preceding government. The ministers on this side of the House are all concerned about the economy and cutting down waste.


Some hon. Members:: Hear, hear!


Donald James Johnston: If the hon. member for Calgary West takes the trouble to look at the budget speech, he will find that there is a specific direction to the Treasury Board, which Treasury Board ministers accept enthusiastically, to carve at least $100 million out of general overheads in the current year.


Some hon. Members:: Hear, hear!


HAZARDOUS SUBSTANCES
Mr. Geoff Scott (Hamilton-Wentworth):: Madam Speaker, my question is for the minister responsible for Canada Mortgage and Housing Corporation which approved the installation of urea formaldehyde foam insulation. I am directing my question to this minister because the Minister of Consumer and Corporate Affairs told me to do so. Did the minister tell very disgruntled Scarborough home owners last week, as reported, to rip the foam out of their homes and, if he did say that, whose advice should UFFI home owners follow? Should they follow the minister's advice to rip the foam out, or the advice of the National Research Council to keep it in?


Hon. Paul J. Cosgrove (Minister of Public Works):: Madam Speaker, at a monthly meeting in my constituency last week, I met with a group of home owners who were concerned about
December 8, 1981

the problem that the hon. member has raised. The discussion lasted for a couple of hours and covered a number of subjects, and some discussion touched upon what advice home owners should take. There was discussion as to what alternatives were available. I did not offer any specific advice. I indicated that the government, as a government, would be responding to the problem under the leadership of the Minister of Consumer and Corporate Affairs, within a short period of time.


NATURE OF MINISTER'S ADVICE
Geoffrey Douglas Scott: Madam Speaker, is the minister denying that he told the people to take the foam out of their homes, or is he saying that he and the government do not know what to tell those 100,000 home owners who have urea formaldehyde foam insulation in their homes?


Paul James Cosgrove: Madam Speaker, the advice which I gave home owners that evening was to await the decision of the government with respect to the concerns they raised at that meeting about health and finances, and I further undertook that after they had seen the government's response and had seen what recommendations the government makes on this difficult problem, and bearing in mind the many suggestions which were made that evening, if they were not satisfied I would be happy to respond to them on an individual basis.


AGRICULTURE
Mr. Normand Lapointe (Beauce):: My question is directed to the Minister of Agriculture, but since he is absent, I shall redirect it to his parliamentary secretary. In view of numerous requests from farmers in my constituency who are asking for an adjustment of target prices for industrial milk, I should appreciate it if the minister could inform the House when he will be able to table the report by Price Waterhouse Associates on Canadian production costs of industrial milk?


Mr. Marcel Ostiguy (Parliamentary Secretary to Minister of Agriculture):: Madam Speaker, the report by Price Waterhouse Associates has just been received by the Minister of Agriculture and is now being examined. Meanwhile, there is a possibility that, by the end of this month or on the 1st of January, a new dairy policy will be announced for Canadian dairy producers.
Oral Questions


LABOUR CONDITIONS
Mr. Rod Murphy (Churchill):: Madam Speaker, my question is for the Minister of Employment and Immigration. At the present time the members of cabinet are receiving lay-off notices on behalf of the people of Canada. Attached to those lay-off notices are five pages of lay-offs which have occurred in this country during the last month. My first question is to ask the minister to do me a favour and make sure that his brother Tom also receives one of these lay-off notices. Let the axes fall where they may.


An hon. Member:: The ax is worthy.


Rodney Edward Murphy: I have a more serious question, Madam Speaker. Sherritt Gordon has announced reductions in the operation of their plant's mining operations in Leaf Rapids and Lynn Lake. They have ordered a meeting for December 18 to decide whether or not there will be lay-offs, and to what degree they will occur. Has the minister met with the board of directors or senior officials of Sherritt Gordon to decide whether or not lay-offs should occur, and to make sure there are some job creation programs in that region?


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, I should first point out to the hon. member that I am not my brother's mailman.


Mr. Epp:: How about his keeper?


Lloyd Axworthy: Second, with respect to proposed lay-offs, our department has a number of services which are available to both the employers and the trade unions. Our manpower consultative services will work with them to provide for any planning of help to the dislocated workers, if the two parties are prepared to sign an agreement. I personally would be quite prepared to deal with any interview or inquiry from any employer who would like some help. I am also prepared to deal with Members of Parliament who also bring those representations to us because we are very much concerned about the impact of lay-offs on the workers. As the hon. member knows, these are decisions made by the private employers which the government can only respond to, not dictate.


REQUEST THAT ONTARIO COMMUNITIES BE AIDED WITH EMPLOYMENT PROGRAMS
Mr. Ian Deans (Hamilton Mountain):: Madam Speaker, my supplementary question is for the Minister of Industry, Trade and Commerce. There is hardly a single community in Ontario which has not suffered lay-offs. Up to this time in 1981 there are over 7,000 people who have lost their jobs permanently as a result of the inaction of the government. Exactly what programs does the minister propose could be implemented in the smaller communities of Ontario which have suffered significant lay-offs that would put those people back to work in

December 8, 1981
Oral Questions
some meaningful employment in those communities, such as the building of houses?


Hon. Herb Gray (Minister of Industry, Trade and Commerce):: Madam Speaker, the over-all thrust of the budget is to create a sound basis for economic renewal.


Some hon. Members:: Oh, oh!


Herbert Eser (Herb) Gray: Certainly its efforts in reinforcing the substantial decrease of interest rates since August is an important effort in terms of the job creation activity about which the hon. member has been talking.


An hon. Member:: That is a great answer.


Herbert Eser (Herb) Gray: Also, Madam Speaker, we have the Industry and Labour Adjustment Program. The inter-ministerial committee which is chaired by the Minister of Finance, has been considering the possibility of further designations of communities, as I reported to the House yesterday, and I look forward to decisions being made by the government in the light of the work of that committee.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


HOUSING
Mr. Bill Domm (Peterborough):: Madam Speaker, my question is for the minister responsible for housing who said in the House, just two minutes ago, that as far as UFFI foam insulation is concerned he is going to handle it on an individual basis. Never mind the groups, or delegations, or the people, he is going to take them on a one-to-one basis.
The minister said on October 26 he had undertaken in the House of Commons to follow up cases referred to him of people who were going to lose^ their homes.


Some hon. Members:: Order.


William Henry (Bill) Domm: What did the minister say just about a week ago, on November 25? He said, "Mr. Domm: I am writing in response to the petition you presented in this House... I will not be responsible-as minister of housing, I will not be responsible-"


Madam Speaker:: Order, please. It is obviously not enough for me to look at the hon. member straight in the eye so as to indicate that his question is too long. I have to stand and ask him to shorten his question. I am asking him to go to his question immediately.


William Henry (Bill) Domm: Madam Speaker, my question to the minister responsible for housing is, since he will not respond directly to these people who are losing their homes in Canada, when will
he start telling the people and Members of Parliament the truth?


Some hon. Members:: Hear, hear!


Paul James Cosgrove: Madam Speaker, with the greatest of respect, the hon. member is obviously having difficulty with his hearing today. I recommend that he look at Hansard tomorrow so he will see, as I repeat the answer that I gave a few moments ago, that I invited people who were at that meeting to await the Government of Canada's response to the UFFI question. That is what I invited them to do, to await that response.


Mr. Nielsen:: Wait for the budget.


Paul James Cosgrove: Further to that, I suggested that if they had any difficulties with that decision, any application to their particular circumstances, or if they do not understand, that just as the hon. member's leader was able to assist people on an individual basis last week in Metropolitan Toronto, I would undertake the same thing.


William Henry (Bill) Domm: Madam Speaker, our leader handled the situation on an individual basis. That minister did not.


PLIGHT OF HOME OWNERS IN PETERBOROUGH, ONT.
William Henry (Bill) Domm: Madam Speaker, my supplementary question is directed to the minister responsible for housing. On November 12, in the House Of Commons, he said, "All cases received to date have been acted on." As of noon today he has not telephoned one of the 75 people whose names were submitted to him by the United Electrical Workers Union of Peterborough. When will the minister responsible for housing start telling hon. members in this House the truth? When can the people of Canada have any faith in this government, which continues to misrepresent, mislead, misinform, and not tell the truth?


Paul James Cosgrove: Madam Speaker, as I observed the support given by the Right Hon. Leader of the Opposition to a concerned household at the weekend, I noted that he indicated he was very thankful that they had, in effect, helped themselves by persisting in looking for that kind of support. I appreciate the fact that the Leader of the Opposition undertook that particular course of action for that single household. I have done that, with my officials, for literally hundreds of Canadians in the last few weeks.
December 8, 1981


THE BUDGET
Mr. Tom Cossitt (Leeds-Grenville):: Madam Speaker, my question is directed to the minister responsible for housing. Last Friday the minister finally admitted that outsiders in Montreal had budget information before the budget was introduced in this House. I refer the minister to the statement to me by Peter Crombie, vice-president of Canada Mortgage and Housing Corporation, that such budget details on housing were obtained from the Department of Finance on the Monday before the budget. Will the minister tell the House the names of those in the Department of Finance who furnished this information to his department? Instead of daily soap opera episodes, can we now have these names? Can we now have the entire truth immediately about this incompetent and serious escapade?


Paul James Cosgrove: Madam Speaker, this question sounds like a question asked by the hon. gentleman last week. I indicated at that time that I would inquire as to the specifics. I believe it was on the next day that I confirmed that CMHC officials were supported by typesetters in a firm in Montreal in preparing ads which were shown in newspapers after the publication of the budget.
The hon. gentleman and his colleagues have been persistent in saying that they want Canadians to know what is going on in housing. They want to know what the government's programs are, and what we are doing to assist Canadians. We prepared material for publication immediately following the budget, and in that we had the assistance of typesetters so that we could release that material after the speech of the Minister of Finance in the House on November 12.


Thomas Charles Cossitt: Madam Speaker, a moment ago the minister said there was something wrong with the hearing of the hon. member for Peterborough. In view of the way the minister answers questions I suggest there is something wrong with his hearing. He has not answered anything yet.


REQUEST THAT PARLIAMENTARY INQUIRY BE CONDUCTED
Thomas Charles Cossitt: Madam Speaker, the minister refers to other ads when, in reality, there was only one ad. Would he be prepared to table in this House or make available publicly, right away-so that they cannot be drafted later-the other ads that allegedly were available? At the same time, in view of all these developments in the last few days and the four or five different stories he has told, will the minister agree to a parliamentary inquiry, which he previously refused to do, and will he do the honourable thing and announce right now to this House and get it over with that he intends to do the country a great service by resigning from office?
Oral Questions


Paul James Cosgrove: Madam Speaker, I am sure I answered almost the same question on Thursday or Friday of last week. I told the hon. gentleman that an ad was prepared. It was in five or six newspapers the day after the budget. At the weekend following, the ad I have here was published in approximately 140 other newspapers across the country.
We have to respond to Canadians from coast to coast, and that we have done in an attempt to advise them what is in the budget and what support this government has given to mortgage holders on renewal of their mortgages.


AGRICULTURE
Mr. Gus Mitges (Grey-Simcoe):: Madam Speaker, my question is directed to the Minister of Finance. It has been reported that since the budget only three farmers across the country have been extended loans by the Farm Credit Corporation, which now takes applications from farmers only after they have been turned down for Small Business Development Bonds, and there have been delays in processing these bonds, as the minister is well aware.
Will the minister tell the House the reason for this continued delay which is threatening to bankrupt farmers, and will he also tell this House when farmers can expect to have bond applications processed?


Allan Joseph MacEachen: Madam Speaker, I received some representations earlier about delays in extending these facilities, particularly to unincorporated farmers. I understand that initially the banks were uncertain as to what regulations might prevail but since that time discussions have been held between the banks and officials of my department, and that the banks are now generally ready to accept such applications for such loans. In fact, I understand that some loans have already been arranged under this program. It is certainly my intention to facilitate the very objective the hon. member seeks, namely, that farmers have access to these additional benefits provided in the budget.


REQUEST FOR TEMPORARY ASSISTANCE
Constantine George (Gus) Mitges: Madam Speaker, I am not aware that these bond applications have been processed. As of this morning I have received representations from my riding to the effect that people are still awaiting the processing of these bonds.
In view of the fact that the applications of the majority of farmers are not processed, will the minister consider some sort of financial assistance, albeit temporary assistance, for those individuals whose applications are now on hold, so that they can in some temporary way, for the time being at least, offset

December 8, 1981
Oral Questions
the possibility of bankruptcies taking place in the very near future?


Allan Joseph MacEachen: Madam Speaker, I would like to repeat that it was just about a week ago that I received assurances from the Canadian Bankers' Association that the information with respect to these loans ought to be available. If the hon. member has some particular institutions in mind, I would be happy to make some inquiries.


POSSIBLE EXTENSION OF ST. LAWRENCE SEAWAY SHIPPING SEASON
Mr. Paul E. McRae (Thunder Bay-Atikokan):: Madam Speaker, my question is directed to the Minister of Transport. Given the disruptions in grain movement this summer and the ripple effects which have followed from that-one of these ripple effects being that up until about ten days ago there was only a very small amount of shipping going into Thunder Bay-could the minister give me some indication of what plans he and his department have respecting extending the St. Lawrence Seaway season to meet the commitments?


Hon. Jean-Luc Pepin (Minister of Transport):: Madam Speaker, the slowdown created by the summer strike at Thunder Bay is being rectified very rapidly. I have figures here indicating that the same level of exports between this year and last year has almost been reached now; so much for the capacity of Thunder Bay to pick up the slack in the delivery system due to the strike.
With respect to the Great Lakes, as my hon. friend said, there is some uncertainty as to the future with respect to iron ore, grain and coal. Consequently the Canadian and American Seaway authorities are now sponsoring an in-depth study on the future of the Seaway. For the time being the Seaway Management emphasizes the progress which is being made by way of getting more out of the system through technological and administrative improvements.


HOUSING
Mr. Lyle S. Kristiansen (Kootenay West):: Madam Speaker, my question is directed to the minister allegedly responsible for housing, or the lack of it. Today in British Columbia over 15,000 forestry workers-that is over 30 per cent-are laid off as a direct result of the economic policies of this government. As a direct result of the inadequate assistance provided for housing in the budget, in the coming year housing starts in Canada will fall some 50,000 below the number needed.
In light of the fact that over one quarter of B.C. wood products and 85 per cent of plywood go to the domestic housing industry, will the minister take immediate action to bring housing starts to an adequate level and thus help create jobs in the forest industry, or is the minister simply content to let Canadians go without either jobs or housing?


Some hon. Members:: Hear, hear!


Paul James Cosgrove: Madam Speaker, of course I am not anxious that people in associated industries that are supportive of the housing sector and the housing industry should be unemployed or that their products should not be used. It was for that reason, Madam Speaker, in an attempt to address the larger market that uses the forest products-and I am now speaking of the American and Japanese markets-that I, for example, spent a week meeting with my counterpart in June, the new secretary responsible for housing in the United States government, to talk about the plans of that administration to support housing and to get an idea of what the American markets would be.
Similarly, I took the opportunity of meeting for three days in the month of August in the City of Vancouver, British Columbia, with the minister responsible for housing in Japan. I toured some of the projects that the government has supported, the co-op and non-profit projects in Vancouver, in an attempt to interest him and explain the construction methods used in this country that might have application in Japan. In addition to that, Madam Speaker, the member ought not to be so pessimistic about housing starts in Vancouver. For example, I am told that with the re-introduction of the soft costs, the MURB ancillary provision, there has been an increase of 5,000 starts in Vancouver in the last two weeks.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


FISHERIES
Mr. Ted Miller (Nanaimo-Alberni):: Madam Speaker, I think the pink slip that the previous minister received should be a permanent lay-off for that answer.


Some hon. Members:: Hear, hear!


Edward Allan Miller: I should like to address my question to the Minister of Fisheries and Oceans. The Atlantic coast fishing industry this year has been characterized by massive lay-offs, plant shutdowns, trawler tie-ups, and a bleak outlook for the future. The minister has simply responded to the concerns of the east coast fishery with vague promises, promises about orderly marketing, orderly catch of stock and more money for
December 8, 1981

quality products. Do the minister and his colleagues have any proposals to put before the House today in terms of financial assistance to fishermen and possibly to the processing industry? In view of his meeting yesterday with the ministers of fisheries of the provinces, does he have any indication from the provinces as to whether they will rationalize the processing industry in Canada?


Hon. Romeo LeBlanc (Minister of Fisheries and Oceans):: Madam Speaker, I thought the meeting was very positive, with certainly a very constructive approach. I hope to put to my cabinet colleagues very soon a program which should offer some assistance. That does not mean that we do not need to do some restructuring and long-term planning. I might say that I was somewhat disappointed to hear that, on the processing end of the industry, there does not seem to be a great deal of readiness to match the word "efficiency" on the one hand, and the word "rationalization" on the other hand. There seems to be the idea that somehow one can be "efficient" while keeping open everything that is now in existence. I was somewhat disappointed in that area, Madam Speaker.


THE BUDGET
Right Hon. Joe Clark (Leader of the Opposition):: Madam Speaker, my question is directed to the minister of housing. As reported in Hansard at page 13683, on December 3, the minister said, and I quote:
-no person was aware who was not authorized and under normal budgetary security-all employees or civil servants in the employ or control of the federal government, no person beyond those was aware or had in their possession the particulars of the ad-
That is what the minister said on December 3.
In Hansard at page 13728, on December 4, the minister said:
The Canada Mortgage and Housing Corporation officials ... were assisted by some employees of the firm of S&B in Montreal.
Will the minister tell the House of Commons which of those contradictory statements is the truth?


Paul James Cosgrove: Madam Speaker, I appreciate that the Right Hon. Leader of the Opposition was not in the House when I had the opportunity of explaining to the House that four employees of a firm, referred to in the quotes that he has just referenced, assisted CMHC employees in the actual printing of the advertisement that I talked about earlier in question period. Those four people were under the direct supervision of CMHC at all times.
The material that was prepared was taken under security by CMHC officials. It was not authorized for release until after the Minister of Finance had finished his speech on the budget in the House. That material then appeared as an advertisement the following day in approximately six newspapers in this
Oral Questions
country, and on the following weekend in approximately another 140 newspapers.
Again I would stress to the Right Hon. Leader of the Opposition that the objective of having that material available to the public was to provide information to the public, and, obviously, was to respond to their concerns, as witnessed by the petitions filed by the Right Hon. Leader in this House, in the many weeks leading up to the budget. It was an attempt to have a prompt response to concerned Canadians.


MINISTER'S STATEMENT ON DECEMBER 3
Charles Joseph Clark: Madam Speaker, the minister of housing evades my question. I shall again refer the minister back to his words in this House on December 3, in Hansard, at page 13683 when he said:
-no person was aware who was not authorized and under normal budgetary security-all employees or civil servants in the employ or control of the federal government, no person beyond those was aware or had in their possession the particulars of the ad-
That is what the minister said on December 3. Will the minister now tell us whether that was the truth?


Paul James Cosgrove: Madam Speaker, I am attempting to communicate to the Right Hon. Leader of the Opposition the fact that the firm that assisted the corporation officials in the reproduction of that advertisement, which was used the following day, were people who had assisted the corporation in that area on previous occasions. They were under direct supervision of the corporation. Their technical advice and talents were required. They had been used before. They had worked for the corporation before. They were employed, retained, and directly supervised by corporation officials.


REQUEST THAT PARLIAMENTARY INQUIRY BE INSTITUTED
Charles Joseph Clark: Madam Speaker, my supplementary question is now directed to the Minister of Finance. He will have heard the minister of housing admit that on one day the minister of housing said one thing to the House of Commons, and on the other day he said exactly the opposite to the House of Commons.
I have two questions for the Minister of Finance. One is that he evaded answering a question from my colleague, the hon. member for St. John's East, the other day when my colleague asked him whether he had taken action to satisfy himself that there were no budget leaks. His answer was that he had not heard anything in the House that would cause him to believe there were budget leaks. That was not the question. The question was, did he do his duty and satisfy himself that there was not the presentation, in advance of publication of the budget, of information to typesetters from Montreal or to anyone else? Has he satisfied himself? That is the first question.


An hon. Member:: How many questions do you have?


Charles Joseph Clark: What I am interested in is some answers.

Petitions
The second question is, since the minister of housing has directly contradicted himself on the floor of this House, saying one thing one day and the opposite the next day, and since this is a matter that goes to the heart of confidence in the government, will the Minister of Finance agree to have a public parliamentary inquiry into all aspects of this matter so that the whole truth will be known?


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: Madam Speaker, I did say in reply to the question that I had heard nothing to justify the view that there was a budget leak of any kind. I do not know of any circumstance that would lead me to conclude that there was a budget leak.


Erik Nielsen: What about the answers of the minister of housing?


Allan Joseph MacEachen: That is my conclusion. Therefore I do not see the necessity for any investigation.


Mr. Fraser:: What is your conclusion?


Allan Joseph MacEachen: Surely if there had been a budget leak in the sense to which we have learned about budget leaks-


John Allen Fraser: You would have told us about it.


Allan Joseph MacEachen: -it would have been apparent to all hands. A budget leak is hardly a leak if it is held in secret.


Charles Joseph Clark: Madam Speaker, as a supplementary question-


Madam Speaker:: Order, please. It is past the hour and I have already allowed the Hon. Leader of the Opposition three questions.


Erik Nielsen: Saved by the bell. Saved by the bell!


Some hon. Members:: Oh, oh!


PETITIONS
Madam Speaker:: I have the honour to inform the House that the Clerk of the House has laid upon the table the 152nd report of the Clerk of Petitions stating that he has examined the petition presented by the hon. member for North Vancouv-er-Burnaby (Mr. Cook) on December 7, 1981, and finds it meets the requirements of the Standing Orders as to form.



ROUTINE PROCEEDINGS


Madam Speaker:: I have the honour to lay upon the table the Report of the Auditor General of Canada to the House of Commons for the fiscal year ended March 31, 1981.
I would remind the hon. members that, pursuant to Standing Order 65(1 )(q), this report is deemed permanently referred to the Standing Committee on Public Accounts.


CANAGREX ACT
Hon. E. F. Whelan (Minister of Agriculture):: Madam Speaker, I understand that consultation has taken place among the parties and that there is unanimous consent for the introduction of an act to establish a corporation called Canagrex to promote, facilitate and engage in the export of agricultural and food products from Canada, for which notice was received this morning.


Erik Nielsen: Madam Speaker, we on this side are delighted to give our consent to the introduction of an idea initiated by the hon. member for Elgin (Mr. Wise) when he was in office. We in this party express our gratitude to the minister for perpetuating the idea of the hon. member for Elgin in this legislation.


Some hon. Members:: Hear, hear!


Madam Speaker:: Is it the pleasure of the House that the hon. minister shall have leave to introduce the bill?


Some hon. Members:: Agreed.
Mr. Whelan thereupon moved for leave to introduce Bill C-85, to establish a corporation called Canagrex to promote, facilitate and engage in the export of agricultural and food products from Canada.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
Eugene Whelan: Madam Speaker, I rise on a short point of order. I want to say thank you to the parties on the other side of the House for their tremendous co-operation.


Madam Speaker:: That is not a point of order.
December 8, 1981


POINT OF ORDER
Hon. Walter Baker (Nepean-Carleton):: Madam Speaker, while the President of the Treasury Board (Mr. Johnston) is in the House, I should like to rise on a point of order. It relates to the introduction of bills. Since Madam Speaker tabled at three o'clock the report of the Auditor General rather than at two o'clock as we had expected, I wonder if the President of the Treasury Board could respond as to whether or not it is the intention of the government to respond to the request of the Auditor General that there be an amendment to the Auditor General Act which would permit more than merely the annual report as set forth in the report tabled a few moments ago.


Donald James Johnston: Madam Speaker, in response to the inquiry of the hon. member for Nepean-Carleton (Mr. Baker), I have not yet had the opportunity to review the report of the Auditor General which has just been tabled. I shall immediately do so and I shall advise the hon. member, either in the House or privately, as to what the government's intentions might be in that regard after due consultation with my colleagues.


Erik Nielsen: Tell us all.


PETITIONS
Mr. Walter McLean (Waterloo):: Madam Speaker, I wish to present a petition to the House sponsored by the Ad Hoc Committee of Canadian Women on the Constitution. This petition requests the removal of Section 33, the override clause, from the Charter of Rights and Freedoms. It has been signed by 30 petitioners who feel that Members of Parliament should delete Section 33 in order to guarantee to Canadians their basic rights and freedoms.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. David Smith (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 3,091, 3,093, 3,113, 3,114, 3,116, 3,157 and 3,320.


Mr. Clarke: 1.	During the period 1970-80 did the Canadian Dairy Commission acquire shares or other ownership interest in any other corporation, limited liability
Order Paper Questions
company or unincorporated company and, if so, what was the (a) name of the corporation, limited liability company or unincorporated company and any subsidiaries thereof (b) percentage of equity acquired (c) cost of acquisition (d) book value of the acquisition?
2.	Does the Canadian Dairy Commission have a plan to change the present portion of ownership in any of these enterprises and, if so, what is the plan?


Eugene Whelan: 1. No.
2.	Not applicable.


Mr. Clarke: 1.	During the period 1970-80 did the Canadian Livestock Feed Board acquire shares or other ownership interest in any other corporation, limited liability company or unincorporated company and, if so, what was the (a) name of the corporation, limited liability company or unincorporated company and any subsidiaries thereof (b) percentage of equity acquired (c) cost of acquisition (d) book value of the acquisition?
2.	Does the Canadian Livestock Feed Board have a plan to change the present portion of ownership in any of these enterprises and, if so, what is the plan?


Eugene Whelan: 1. No.
2. Not applicable.


Mr. Clarke: 1.	During the period 1970-80 did the Export Development Corporation acquire shares or other ownership interest in any other corporation, limited liability company or unincorporated company and, if so, what was the (a) name of the corporation, limited liability company or unincorporated company and any subsidiaries thereof (b) percentage of equity acquired (c) cost of acquisition (d) book value of the acquisition?
2.	Does the Export Development Corporation have a plan to change the present portion of ownership in any of these enterprises and, if so, what is the plan?


Hon. Ed Lumley (Minister of State (Trade)):: In so far as
Export Development Corporation is concerned:
1.	During the period 1970-80, EDC did not acquire shares or other ownership interest in any other corporation, limited liability company or unincorporated company although it may protect itself by including shares in security arrangements it has established, (a), (b), (c) and (d) not applicable.
2.	Export Development Corporation does not acquire ownership in enterprises.


Mr. Clarke: 1.	During the period 1970-80 did the Farm Credit Corporation acquire shares or other ownership interest in any other corporation, limited liability company or unincorporated company and, if so, what was the (a) name of the corporation, limited liability company or unincorporated company and any subsidiaries thereof (b) percentage of equity acquired (c) cost of acquisition (d) book value of the acquisition?
2.	Does the Farm Credit Corporation have a plan to change the present portion of ownership in any of these enterprises and, if so, what is the plan?

December 8, 1981
Order Paper Questions


Eugene Whelan: Farm Credit Corporation advises: 1. No.
2. Not applicable.


Mr. Clarke: 1.	During the period 1970-80 did the Northern Transportation Company Limited acquire shares or other ownership interest in any other corporation, limited liability company or unincorporated company and, if so, what was the (a) name of the corporation, limited liability company or unincorporated company and any subsidiaries thereof (b) percentage of equity acquired (c) cost of acquisition (d) book value of the acquisition?
2.	Does the Northern Transportation Company Limited have a plan to change the present portion of ownership in any of these enterprises and, if so, what is the plan?


Mr. Robert Bockstael (Parliamentary Secretary to Minister of Transport):: The Northern Transportation Company advises as follows:
1.	Yes.
(a)	Grimshaw Trucking and Distributing Ltd.
(b)	100 per cent.
(c)	Proprietary information.
(d)	Proprietary information.
2.	No.


Mr. Cossitt: 1.	Did the National Capital Commission place two articles on the grounds bordering the Queen Elizabeth Driveway in Ottawa, Ontario and, if so, what are the articles?
2.	Are the articles "works of art" and, if so, what are the names and job designations of all persons who declared they were "works of art"?
3.	Does one of the items represent elongated orange crates made of wood and, if so (a) are the orange crates from California or Florida (b) is the item constructed of barnboard and, if so, is the bamboard genuine or fake (c) are the wooden extensions on the item supposed to represent parts of a Dutch windmill (d) was the item constructed in part from left-over parts of excess furniture from the Prime Minister's Office?
4.	Does the other item represent a (a) ship's anchor (b) large can opener (c) back scratcher?
5.	(a) In each case, who designed the items and who built the items (b) what is the name and job designation of the highest-ranking official authorizing the placement of the items (c) who owns the items (d) what was the cost to the taxpayer of the items?


Paul James Cosgrove: 1. Yes. One is a sculpture by Mr. Chung Hung of Vancouver, titled "12 points in a Classical Balance" and the other is by Mr. Ron Baird of Stouffville, called "Untitled".
2.	Both sculptures are considered "works of art". The selection of these sculptures was made by the National Capital Commission's Advisory Committee on Arts.
3.	No.
4.	The sculpture represents a ship's anchor.
5.	(a) Mr. Chung Hung designed and built "12 Points in a Classical Balance" and Mr. Ron Baird designed and built "Untitled".
(b)	The National Capital Commission's Executive Committee chaired by Mr. C. M. Drury.
(c)	"12 Points in a Classical Balance" is owned by the National Capital Commission. "Untitled" is rented for three years from Mr. Baird.
(d)	"12 Points in a Classical Balance" was purchased from Mr. Hung for $24,700. "Untitled" is rented from Mr. Baird for $1,500 per year.


Mr. Cossitt: 1.	To the knowledge of the government, is Burnbrae Farms Ltd. in Lyn, Ontario in the constituency of Leeds-Grenville one of the largest egg producers in Canada and is this farm approximately 75 miles from the Ottawa area?
2.	Are egg distributors prevented from purchasing eggs from such sources as Burnbrae Farms and are they forced to go to Minnesota instead and, if so, for what reason?


Eugene Whelan: 1. Yes.
2. No.


David P. Smith: Madame Speaker, I ask that the remaining questions be allowed to stand.


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


Mr. Stevens:: Madam Speaker, I rise on a point or order. Once again I ask the parliamentary secretary why there has been such a delay in answering question No. 2,042 which was put on the Order Paper on January 29. It asked the following simple questions:
What was the total cost of the Prime Minister's December-January world tour?
What percentage of the total cost of the trip will be paid by the Canadian taxpayer?


David P. Smith: Madam Speaker, I will take note of the hon. member's representations and make further inquiries.


Erik Nielsen: You must have quite a notebook by now.


Thomas Charles Cossitt: Madam Speaker, I am sure the parliamentary secretary's day would not be a good one if I did not raise the fact that it is now well over five and a half years since I placed question No. 30 on the Order Paper. The parliamentary secretary hardly needs to be reminded of the question, but it asks how many members of the Canadian Transport Commission were issued passes on Air Canada, including their wives and employees of the Canadian Transport Commission.
December 8, 1981

I draw attention again to the importance of this answer which has been hidden for five and a half years. Because of the fact that Air Canada is regulated by the CTC, Air Canada is giving gravy to members of the CTC. Therefore, something is rotten somewhere. It is about time the question was answered. After five and a half years one can only assume that it is so rotten that the government does not want to tell us the answer.
The other question about which I want to ask is question No. 136 which also concerns Air Canada. Officials of Air Canada have told me that the answer was prepared a year ago and sent to the minister, but it is still not here in the House. It concerns a jet aircraft rented in the election of May 22, 1979, to transport the Prime Minister (Mr. Trudeau) on his various political travels across the country. A bill was rendered by Air Canada to the Liberal Party which disputed the amount of the bill and wanted a reduction of some thousands of dollars. I have asked whether the bill was ever paid and what was the reduction which the Liberal Party finally got, if any. It is straightforward; there is no reason to hide it.
Always we get from "Dr. No" the answer that it will be soon. Could I end my remarks by saying in future, instead of calling him "Dr. No", instead of calling him "Dr. Soon", maybe we should call him "Dr. Maybe Soon", "Dr. Perhaps Soon", or "Dr. Someday Soon".


David P. Smith: Madam Speaker, of course I will take due note of the representations made by the hon. member, but I should point out that we are not obliged to answer questions to the House on the operations of the Liberal Party. The government, yes, but not the Liberal Party.


Thomas Charles Cossitt: Madam Speaker, I want to make very clear that I did not ask a question about the Liberal Party. I asked a question about Air Canada, a Crown corporation, renting an aircraft to the Liberal Party, which is entirely different. My words have been misrepresented unintentionally in that I was not questioning the Liberal Party. I was questioning Air Canada about whether it had received payment from the Liberal Party for the use of that aircraft and, if so, how much.


David P. Smith: Madam Speaker, I can assure the hon. member that I have made due note of his representation.


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


Some hon. Members:: Agreed.
The Budget

Mr. Pelletier



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Monday, December 7, consideration of the motion of Mr. MacEachen that this House approve in general the budgetary policy of the government.
Mr. Irenee Pelletier (Sherbrooke):: Mr. Speaker, just before the adjournment debate started last night, I informed the House of a proposal according to which an economic summit should be organized as soon as possible in Sherbrooke. I said that it would give us a chance to determine the condition of the various economic sectors in Sherbrooke and decide how we want our region to develop.
We cannot let decisions affecting our economy be made without having a say in their implementation. My suggestion for an economic summit means that someone will have to be in charge of organizing the summit. Without wishing to give anyone in particular a mandate or a set of tasks, or responsibilities, it seems to me that the industrial commissariat, in view of its fundamental role in Sherbrooke's economic development, would be able to organize a summit with the help of all economic partners in Sherbrooke. Personally, I am prepared to co-operate fully with the organizers of such a meeting.
Mr. Speaker, on a different matter, I would like to say something about the VIA Rail cutbacks announced in the last week of July by the Minister of Transport (Mr. Pepin). As soon as the government announced its intentions, I sent a telegram to the minister in which I expressed my apprehension as follows;
I read in the newspapers that in the near future, your department intends to terminate VIA Rail services between Sherbrooke and Montreal. I cannot support such a proposal. I should appreciate it if public hearings were held on this matter and the government's decision postponed until the local residents have aired their views on the present rail services provided for Sherbrooke and the general area.
Many organizations in the area and a number of private citizens informed me that they were opposed to the decision, and one of the agencies that has been most active in this respect, the Eastern Townships Regional Development Council, informed the minister in a brief and in press releases of that agency's position which reflects the region's concerns.
I realize, Mr. Speaker, and the minister has said as much many times in the House, that some passenger lines in Canada are not profitable. In a letter I received not long ago from VIA Rail, in reply to questions I asked the Director of Government Relations, Mr. Branchaud, I was informed that for the line Sherbrooke-Montreal-Sherbfooke, the user^rate averaged 30 per cent, but also that for Otterburn Park, Beloeil and Saint-Hyacinthe, the occupancy rate was 100 per cent, dropping after Saint-Hyacinthe to less than 25 per cent, that operating costs were $1.5 million and revenue only ^mounted to $140,-

December 8, 1981
The Budget-Mr. Pelletier
000, which means that on the VIA Rail route between Sherbrooke and Montreal, the railway company is losing more than $1.3 million per year. I also asked VIA Rail authorities whether they could put an LRC on the line between Sherbrooke and Montreal, and they answered that there were only eighty-eight cars of that type in Canada, that they were in high demand elsewhere in Canada, on relatively short routes, and that they could hardly justify putting another unit train on this route because of the low user rate.
I also asked whether it would be possible to establish a quicker route between Sherbrooke and Montreal and I was told that this was impossible as there is no continuous rail on a direct route, but that a project for a bus service between Sherbrooke and Drummondville, from where passengers could then go on to Montreal and Quebec, was being considered. Mr. Speaker, outside Montreal and Quebec city, Sherbrooke has been one of the busiest stops of the passenger service for over a century. I recognize that the figures provided to us for the last two decades show a substantial drop in the user rate between Sherbrooke and Montreal, but since our region is already manufacturing passenger cars for other countries and for VIA Rail, we believe in the Eastern Townships that an alternative must be found if it is not possible to maintain the present service, which is scheduled for abandonment in September 1982. We have to look at other solutions, and in my humble opinion, RDC passenger cars would be perfectly appropriate to the needs of our region. We shall continue to make representations to VIA Rail and the Department of Transport asking that an adequate solution be found to this problem before September, 1982, when the service between Sherbrooke and Montreal is scheduled to be abandoned.
Mr. Speaker, the problem of the footwear industry is reaching tragic proportions in many cities and villages throughout Canada. Nearly 4,000 workers have been laid off since the beginning of 1981. Reports published in 1977 and 1981 following the comprehensive and detailed studies made by the Antidumping Tribunal recognized that the Canadian footwear manufacturers had been seriously disadvantaged by the loopholes contained in the legislation. Both reports of the Antidumping Tribunal suggested that the government take effective action to protect the footwear industry as a whole. Mr. Speaker, imports now account for over 61 per cent of the Canadian market, and I find this completely unacceptable. In my humble opinion, it is essential that the government seriously consider comprehensive quotas, which are much more effective, and I believe that if the system is not weakened by administrative procedures as it has been in the past, the effectiveness and competitive ability of this industry will be greatly increased. I share the opinion expressed recently by Mr. Maheux in a letter to us in which he said:
We believe, and many experts agree, that the footwear manufacturing industry in Canada can be extremely vigorous, effective and better off competitively through an increased use of computers, and that it can become a positive
element in the Canadian economy during the eighties if the federal government decides to extend comprehensive quotas for a period of five to ten years.
Mr. Speaker, in that industry just as in the textile industry a larger share of the Canadian market must be opened to Canadian manufacturers. And above all, let no one argue that we are not giving enough chances to the poor countries which are anxious to compete on the Canadian market. In the majority of cases the developed countries are those which are now causing the most damage to the Canadian market. Mr. Speaker, I must say that today the minister is meeting with a good number of shoe manufacturers and that he answered a question I put to him in the House last week by saying that he was prepared to listen to representations from the industry and, if possible, to bring in amendments to the policy on footwear.
I must say, Mr. Speaker, that it is imperative that the minister seriously consider some of the amendments advocated at this time by Canadian manufacturers and, since he is meeting with them today, I hope he will understand the plight of thousands of Quebecers and Canadians who work in that industry and who need to be reassured that the Canadian government will not now let that industry down by implementing the policy which has already been announced because, in my humble opinion, it will be quite vulnerable. Mr. Speaker, I see that my time has run out.


Erik Nielsen: Mr. Speaker, this budget has been called an economic disaster and a blunder of the first magnitude. Even the Liberal members recognize that now. I will refer to the hon. member for York-East (Mr. Collenette) in a moment or two if he will just be patient, because I designed part of my speech to accommodate him. I said it was a blunder. It is a blunder of the first magnitude. Of that there can be no doubt. It warrants the appellation a "blunder budget". When the minister came into the House the other night, with great fanfare, great cheers-


Mr. McDermid:: And a new pair of shoes.


Erik Nielsen: -and a new pair of shoes, and unveiled his budget, he dropped a real clinker. It landed with a dull thud which is still being heard throughout the country.


Some hon. Members:: Hear, hear!


Erik Nielsen: Never in living memory has a budget been received with such universal criticism and disdain and such downright rejection. Those in trouble over mortgage payments, nearly one million Canadians, those in trouble over high interest bank loans, those who have been laid off and the farmers, all scrutinized the minister's announcement in a vain search for some small recognition of their desperate plight. Oh, there were lots of words: words of hope, words of good cheer and words conveying the message that help was on the way. That is what the minister responsible for housing said.
December 8, 1981

When the nature of the help was revealed, what was it? It was verbal cosmetics; nothing more and nothing less. It was a pallid, lacklustre attempt to convey an assurance of concern.
There is no concern in this budget and no milk of human kindness. It is a company report, a document exhibiting no care by a government with a total lack of care. It reads as though it were put together in a vacuum, so totally divorced is it from the real concerns of Canadians. It is quite obvious that to the minister and the gang of seven who put together the economic development formula at Meach Lake, the hardships and fears of the one million laid off and the 40,000 worrying about suddenly escalating mortgage payments were deemed to be very trivial indeed.
I now refer to the hon. member for York East. The other day we listened to him. He is highly regarded in philosophical circles in the Liberal Party. He explained his party's thoughts concerning those who were in trouble because of high interest rates. As a model of heartlessness and disregard for the facts, his speech was in a class by itself. He was placing the onus on the purchasers, and I think I quote him accurately, to look at their own financial situation. That was his remedy. He asked rhetorically, "Is it the duty of the government to subsidize lifestyle? Certainly not", he said. However, I say to him that it is the duty of the government, in a well managed economy, to so order its affairs that citizens will be assured of a measure of economic stability when they undertake large obligations and that they will not have the rug pulled out from under them by the mismanagement and indifference of an uncaring government.
This morning, on "Canada AM", the hon. member for Kenora-Rainy River (Mr. Reid) and his colleague were asked a very blunt but highly intelligent question by Pamela Wallin. She asked, "Why are you voting for a budget that is so roundly condemned?" "Oh", said the hon. member for Kenora-Rainy River, "we are not voting for all of these 120-odd budget resolutions. They are all going to come before the House and we will be voting on them. What we are voting on tonight has nothing to do with what is coming in the next month or two. We are just voting on a policy."


Mr. Paproski:: Shame, shame!


Erik Nielsen: The hon. member is not so stupid that he does not know the falsity of that kind of stand. What he and his colleagues are voting on tonight are all of those resolutions which will be before us in the weeks and months to come which are being authorized by this very budget. I know he did not pull the wool over Pamela Wallin's eyes, although I am sure he would have dearly loved to do so.
However, let us not try to pull the wool over the eyes of thousands of listeners to that broadcast. With regard to mortgage renewals, will he say that the mortgage renewal policy is not part of this budget? Does he condone what is happening to the mortgagors in this country who have been kicked out in the streets, or is that not a part of this budget policy? Will he be voting against the taxation of insurance premiums, or is that just a part of a resolution which will come along somewhere
The Budget-Mr. Nielsen
down the line? What utter tripe! I heard that hon. member this morning on "Canada AM" and I could not believe my ears. That is perhaps why he was not invited back into the cabinet after being left out in the cold. He was ceremoniously booted out.
The government's servile and heartless policy of high interest rates at 18 per cent-and that is a high interest rate-has condemned thousands of innocent people to suffer, to lose their savings, and to accept a deterioration in living standards. That is what the hon. member would be voting against tonight, unless he is for it, in which case he and his colleague the hon. member for York East will stand up and be counted on the side of implementation of that kind of heartless, uncaring policy.


Some hon. Members:: Shame, shame!


Erik Nielsen: That is exactly what Canadians are complaining about, and that is exactly the message the Minister of Finance (Mr. MacEachen) heard the other night from over 30 members of the Liberal caucus with whom he met after coming back from traipsing around Scotland and playing footsies with haggis and golf balls. The minister talked about restraint and equity.


Ian Deans: Footsies?


Erik Nielsen: I have nothing against haggis. I am sorry, I did not intend it as a racial slur at all, quite the contrary.


Ian Deans: I hope not.


Erik Nielsen: I do not like it, mind you, but I respect the taste of the hon. member for Hamilton Mountain (Mr. Deans) for haggis, at any rate.
When the minister presented his budget, he talked about restraint and equity. The words fell strangely from his lips as he spoke of increasing government spending by 22 per cent, taking $1 billion out of the economy in oil and gas taxes, and increasing his tax levies by $1.4 billion. If that is restraint, heaven help us if he ever lets go! Heaven help us if he ever takes the lid off!
There is restraint for everyone but the government. That is the policy of the government. Government members fly in formation to Winnipeg in three separate JetStars to attend the same function, for the same purpose, but they talk of restraint. The government goes ahead with its grandiose schemes for harnessing the economy-and that is the phrase it uses-for taking over resources from the provinces, for muscling in on business and industry, because, as the Prime Minister (Mr. Trudeau) says, "If the free market is not working very well, we will have to do something about it".
This government goes about its endless empire-building like a mole tunnelling in the earth, surfacing only when it needs more money to carry on borrowing further. Its requirements are endless. Close to $70 billion in the expenditure program in this budget have been allocated for purposes and objectives which remain in what I consider to be the realm of the
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December 8, 1981
The Budget-Mr. Nielsen
airy-fairy. It is the development formula produced by the Meach Lake bunch. What is that formula?


Steve Eugene Paproski: Airy-fairy!


Erik Nielsen: It is more and more expenditures for less and less results. The economy spins in an ever-narrowing circle. The bankruptcy parade goes on. The army of lay-offs and jobless grows, and the government gets fatter and fatter and does less and less. The government members are the lotus-eaters. The lotus-eaters grow fat, and ordinary Canadians, hassled by fear and uncertainty, do not know where to turn. That is the crime of this budget. It is a Shylock budget. It helps no one but the money lenders. The government preaches restraint, but then squeezes the economy like a sponge for its own debatable purposes and to indulge in its own ideological pretentions about managing the economy and manipulating the social structure. This budget virtually flattens the middle-class in this country. It lowers the living standards and expectations of millions of Canadians, wiping out savings accounts and their future hopes.


Mr. Reid (Kenora-Rainy River):: Do you believe that?


Erik Nielsen: Yes, indeed I believe that with all the fervour at my command, more than the hon. member for Kenora-Rainy River believed himself when he appeared on "Canada AM" this morning. He said that when he was going to vote for this budget, he was not going to be voting for all of these miseries that will be brought down on the heads of so many millions of Canadians. Yes, I believe it, more than he can honestly say he believed what he said this morning.
Giving the government an additional $2 billion in energy tax and additional taxation to play with is like giving a drunk a credit card for the liquor store. Sometimes it makes me wonder whether or not members on the other side might have such credit cards and are using them regularly.
Meanwhile, at the consumer level where stimulus is required, the dead hand of the government has come down hard. The palsied hand of this government is digging deeper into the pockets of Canadians more than any other government has in our history in order to seize whatever disposable income is left to them through so-called loopholes. In this regard, the government's approach is very like that of the mafia. Whatever it does not pick up is now defined as a loophole. The government is actually and literally taxing the teeth in people's mouths.
Canadians, hit with a whole series of higher taxes-and I wonder if the hon. member for Kenora-Rainy River is going to vote for that-are also being forced, to pay an extra $1,500 annually to heat their homes and drive their cars so that this government can squeeze an additional $1 billion out of the economy. That is $1,500 for people in southern Canada, Mr. Speaker. It is far more than that in the north. Imagine how this budget hits the north. Can members imagine just how hard it hits those people living north of 60 where heating and
transport are not luxuries but necessities of life, indeed, matters of life and death in the more remote Arctic communities? This hidden tax will add $2,500 annually to the cost of living of the average northerner and a great deal more for those in the more remote northern areas. This serves as a further disincentive to living north of 60 and it shows this government's total disregard for the future of northern Canada.
And still, as ministers drive around in their limousines to their $2,000 lunches or fly their individual jets in formation to party seminars, we hear the refrain "Restraint, restraint, for the end of the world is at hand". Then a few days before the election, the Meach Lake boys, the gang of seven, spent $130,000 boasting about how the government had spent $30 billion in 18 months. That is restraint? It is not the economy that needs to be restrained, sir, it is this government.
Then we had the egregious blunder of taxing assembly costs on residential housing construction which threatened to freeze 20,000 housing starts across the country. The minister, and I see him in his seat now, backed off when that matter was brought to his attention by the leader of this party. It was the first he had heard of it, although he had heard about a good many other things in the budget that somehow got out of his hands.
This raises the question of how many other situations of economic disaster have remained outside the minister's knowledge. Perhaps he just is not informed, or perhaps he just does not grasp the impact of his tax measures until disaster strikes. He should be in a position about now to realize that the budget is shoving this country into a serious recession, and that as the United States starts out of recession in the spring, we will be plunging down the slope, urged on by this feckless, tired and tattered government.
The budget simply tightens the screws on Canadians all across this land. Never was so much verbosity expended to achieve so little. The government's vaunted economic strategy can be summed up as "Loser takes all". They are steering this country to disaster amid a stream of cliches.
The Prime Minister, while addressing the party faithful a few weeks ago in one of the interim periods when he was not battling with Mr. Levesque, said this:
Canadians must come to their senses.
Canadians have been waiting for this government to come to its senses for a long time.
In his budget speech the minister dipped deep into the cliche department when he said:
It is time to overcome our anxieties.
No doubt this was addressed to the thousands of people who have lost their jobs, the thousands who have lost their homes or the thousands who have seen their businesses go into bankruptcy. The chief anxiety suffered by most Canadians at this time is a government completely out of step with the rest of the country and with the needs of the country; a government marching to a different drum.
December 8, 1981

It would take a great many doses of MacEachen soothing syrup to calm the uneasiness that exists in the economy at the present time. At a time when hundreds of thousands of Canadians are feeling the pinch of economic hardship, this budget is a positive indecency. It constitutes a betrayal by the government of the assurances given in this House to home owners by the minister responsible for housing and others in the cabinet. "Wait for the budget" was the cry of the minister in charge of housing and the Minister of Finance. "Wait for the budget and all will be well'. Home owners waited and waited, but they waited in vain. There is nothing in this budget to assist one single home owner in weathering the storm of high interest rates, only cosmetic guarantees.
The minister has accomplished the nearly incredible feat of increasing inflation while slowing down the economy and producing rising unemployment. This makes him a destroyer of the dreams and hopes of thousands of Canadians, a destroyer without mercy, without concern, without care, who hides behind textbook cliches and outmoded panaceas while Canadians suffer.
At the same time we have his acolyte, the undistinguished minister responsible for housing, who trots around telling Canadians to lower their expectations, and to sit on orange crates. How could those expectations be lower while this gang remains in power?
This government has been overcome by an attack of unmitigated nationalism and Canadians are paying the penalty as the economy grinds to a halt. They have virtually transferred to the national field the policies advocated by Mr. Levesque and his friends at the provincial level. We even now have the incredible spectacle of the Minister of Communications (Mr. Fox), in the name of his particular version of Canadian culture, threatening to tell Canadians what satellite programs they will be allowed to bring into this country. Next, they will be deciding what books Canadians can read.
So discredited is the minister's budget that rumours are flying in financial circles that it is about to be withdrawn and rewritten in its entirety. These rumours add to the prevailing uncertainty in money markets.
The budget has been rejected by the Ontario Liberals meeting in convention recently. They demanded a return of numerous incentives defined by the minister as "loopholes", including a restoration of the MURB program. That was one of the loopholes which the minister plugged, with the result that construction was frozen on some 20,000 housing units across the country. They demand tax-free interest on Small Business Development Bonds, tax deductibility for venture financing, and new incentives to entrepreneurs. The minister would do well to pay attention to these recommendations because, for once, the Liberal Party of Ontario appears to be in closer touch with what is going on in this country than this government is.
We have entered a phase of economic recession; homes are not being built, that is a fact; unemployment is spreading like
The Budget-Mr. Nielsen
a cancer across the country, and that is a fact; young people, those who have jobs, are being forced into debt by high mortgage rates, and that is a fact. Those are the miseries of this budget.
We are in this situation precisely because of the government's ill-advised and uninformed interventions in the economy, and because of the enormous spending by this government which has placed an insupportable burden on the economy as well as on the taxpayers.
Instead of cutting back on unnecessary expenditures, their solution is to increase taxes, squeeze the provinces and take more money out of the economy to finance their pet schemes, such as the $91 million loaned to a computer firm in Ottawa which subsequently went belly up, and the $6 million interest-free loan to an hotel promotion in Windsor, Ontario. These are the kinds of problems that get attention from this government. There has been a wholesale corruption of economic policy by the most blatant patronage considerations.
What is particularly disturbing is that, as the recession deepens and unemployment increases across the country, there is no sign of awareness by the minister or the government that Canadians are suffering. A recent report by Statistics Canada revealed that we have reached a zero growth situation in the economy, while inflation continues to increase without any signs of moderation. According to Statistics Canada, one of the major inflationary factors in the economy is the government's chauvinistic national energy policy, followed by the increased taxes on oil and gas, taxes which the Minister of Finance during the last election campaign said were going to be kept down as long as Canadians voted Liberal.
The budget is simply another example of the kind of authoritarian control which permeates every facet of this arrogant government's activities. What it is doing cannot be described as policies, for the benefit of the hon. member for Kenora-Rainy River, any more than the aimless fluttering of moths around a flame can be described as policy. The flame is love of power and the arrogant assumption of a right to tell Canadians what they must do and how they must think to satisfy the criteria of these men on horseback.
They have alienated Quebec, bankrupted the economy, forced thousands into the soup kitchens, brought exploration and initiative to a standstill or forced it out of the country, and pushed the frontiers of achievement in this country back to the thirties. Every single major project in the energy field has been stifled and curtailed because of their unenlightened interference in the area of free choice. The country can no longer afford the luxury of this government.
It is not the budget alone which must go. The government which produced the budget has outlived its usefulness. That, sir, is why this evening we are taking the unprecedented course on the sixth and final day of a budget debate of requiring a standing vote. It is unprecedented, yes, for it is usually the custom on the sixth day to allow the budget to be adopted on division. But this, sir, is an unprecedented budget, unprecedented in the misery it is causing millions of Canadians. It is the worst 1 have seen since I have been here.

The Budget-Mr. J. R. Reid
I urge the hon. member for Kenora-Rainy River and the hon. member for York East to have the courage of their convictions and to do right by their constituents, along with any other of those 30 colleagues who met in caucus with the minister the other night, and vote against the continuation of this misery, if they are to do a service to their constituents.


Some hon. Members:: Hear, hear!


John Mercer Reid: Mr. Speaker, I want to say how much I enjoyed the speech by the hon. member for Yukon (Mr. Nielsen). I thought he read it very well. I can recall the days before the hon. member for Yukon had the opportunity of being a cabinet minister and of spending some time in the ministry, where he usually had people to write his speeches for him, when he was able to stand in the House with a few notes written on the back of a cigar box and entertain us with witticisms we knew fell from the heart. Now what has happened? Because of the status to which he has now risen, he has fallen into the habit of having others write his speeches for him, as it was in the days when he was minister. I am one of those who regrets very much the lack of spontaneous wit with which the hon. member used to entertain the House. What we are getting now is written wit; written, I think, with a certain skill, but it certainly does not tumble from the lips the way it used to.
Now that the hon. member for Yukon has acceded to the position of House leader for the opposition, I know he would not want to accept a lesson in procedure from somebody as humble as myself. However, I did think it would be extremely useful to read to him the motion we are going to vote on tonight. The motion is found, of course, in the papers of the House of Commons and I will just read it, although the hon. member, I know, knows it full well. It says that the motion has been moved by Mr. MacEachen, seconded by Mr. Pinard:
That this House approves in general the budgetary policy of the government.
It is on that motion, which we will be voting on at 9.45 p.m., that I will be casting my vote.
What I tell the House and the hon. gentleman is that in general I do approve the budgetary policy of the government. I say that I do have, as do many other members, reservations about the proposed changes in tax legislation contained in the budget. I think that is no secret. I think it is also fair to make clear, as the hon. member for Yukon fully understands, that we will not see what that legislative proposal is until probably after Christmas, at which time the legislation will go through the House in the usual way for tax legislation. There will be a choice given to the House, I hope, as to whether that legislation is dealt with on the floor of the House of Commons or in a standing committee. At that point, in one way or another it will go through three readings in the House of Commons. I will have the opportunity, as will other members, of speaking on the specific details of the tax policy, because it will only be then that they come into effect and become law.
It is on that basis that I have decided to support the budgetary policy of the government. I believe the budgetary
policy, as distinct from the tax policy, is reasonable under the circumstances.
The hon. member for Yukon has raised an interesting point, and that is the method by which we proceed in dealing with the budget in this House. It is clear from the examples of the last four or five budgets that the procedure we follow is inherently destructive. What happens when the budget is prepared? It is prepared by a very small number of officials in the tax policy section of the Department of Finance. They do not have the ability, as they have on almost any other item, to consult with other civil servants. Nor do they have the right and are not allowed to discuss tax policy with anybody outside the governmental system. So this is an extremely small group. Furthermore, to carry it to absurdity, the Minister of Finance (Mr. MacEachen) traditionally does not discuss it with his colleagues in cabinet and usually the Prime Minister (Mr. Trudeau) is only informed after the budget is in the hands of the printer.
So we have this fundamentally important document developed in secrecy by an extremely small number of people, and consequently every Minister of Finance ultimately comes to the House saying that he made a mistake and had to change it. We have seen examples of this time and again with every Minister of Finance and it is accepted by the House as a normal part of the procedure. We have seen that when the Minister of Finance proposes tax policy changes, they are changed. If we study the tax policy changes of any Minister of Finance and then see what the final legislation says, we will find that almost every section is significantly changed.
The reason for that is simple. It is that this limited number of people simply cannot comprehend the totality of what the Canadian economy is all about. In many cases, the budgetary papers provide for a forum for the discussion of tax policy matters. That is another matter. In my judgment, it is separate from the question of over-all budgetary operations.
Why do we have all of this secrecy? I suspect there are two reasons. First, the British have it and ours is fundamentally a British system. Second, the Americans do not have it and for that reason it must be good if we have it.
It seems that we should be moving away from the tradition of secrecy and becoming more open by striking down the veil of secrecy, which does nothing more than encourage the debate of tax policy before we even have it.


Some hon. Members:: Hear, hear!


John Mercer Reid: I might say that these excessive measures to impose budgetary secrecy are one of the main reasons why budgets do not very often meet the quality which we should demand and expect.
I have other suggestions for change. I think that once we eliminate the secrecy and open up the system, we must admit that there should be the possibility of releasing this information and the concepts that the minister is working on ahead of
December 8, 1981

time so that people will have an opportunity to comment on them, the same as is done for other legislative proposals. I also think that we have to eliminate retroactive legislation. I believe that that concept is foreign to parliamentary democracy. It is especially foreign to parliamentary democracy when we see that the retroactive legislation proposed by the minister is usually changed extensively before it takes its final form in law. As a consequence, we have three sets of laws occurring at one time. There is the law as it exists, the law as it exists in the words of the minister and the law as the Parliament of Canada will eventually develop it. Often there is a tremendous difference between those three forms of law.
The process as it now exists creates a great amount of uncertainty for business and for everyone in the economic community. Is strikes me that the time has come for us to eliminate this concept of retroactive legislation, but I would suggest that there be one exception, and that is that the minister have the authority to set rates when he brings down his budget. He can take the existing taxes and change the rates but should not have the authority to do the things which he has been doing, such as legislation being enacted retroactively. I think this is important and it should be one of the matters discussed in the Standing Committee on Procedure and Organization.
I would also like to say that I am disappointed in the House leader because his long promised changes in procedures in the House of Commons have not yet appeared. This Parliament has been in session for nearly two years and I think this long delay should not be tolerated.
In examining the whole budgetary process, we must have regard to the way legislation is treated on the floor of the House. I think it is absurd that in this day and age our Standing Orders require that the budgetary bills be dealt with on the floor of the House of Commons. That requirement should be eliminated so that the legislation can be dealt with in committees so the ordinary citizens of Canada can appear before the committee and make their opinions known. It is not right that Canadians should have to make their views known through their Members of Parliament, who may or may not understand the complexity of their case. It is important to allow people to present their case directly and specifically to members sitting on the commmittee on matters as important as tax policies. That is a very important reform.
I could discuss the question of budgetary secrecy and the changes that I would like to see, but I will move now to the subject of budget basics. I generally approve of the basic thrust of the budget. For example, I think that the deficit has been far too large and that it is time we began to tackle it. It is time that the Minister of Finance and the Governor of the Bank of Canada sang the same tune, or at least sang in harmony. For the last number of years the Government of Canada and the Minister of Finance have followed one direction and the Governor of the Bank of Canada has gone the other way. I think the House should take note that for the first time they are at least trying to follow the same direction. That is a unique situation for which the Minister of Finance should
The Budget-Mr. J. R. Reid
be congratulated. It has not been an easy choice for him to make.
If hon. members were to review the speeches made during this debate, it would be evident that very few speeches have dealt with the budget itself. What we have heard from members on all sides of the House are pleas from individual groups of constituents who are being badly hurt by the current inflationary process. Those pleas should be made and listened to because there are casualties. However, if we look at what the solution would cost, the estimate is that if just the basic concerns were considered the government would be looking at an expenditure of a minimum of $20 million to protect the people who are caught up in the war against inflation. If we added all the expenditures that business has asked the government to make in one form or another on their behalf, we would be looking at another $20 million.
The fact of the matter is that at some point it must be decided how much revenue should be taken out of the system to spend on government programs. The government has decided to hold down the expenditures as much as possible in spite of the fact that it is carrying four massive spending programs in Canada at this time. The first of these massive spending programs is the subsidy to keep oil prices down. The amount of money the government has spent from 1974 to 1979 is $12 billion to subsidize the price of oil we import into Canada. That is a lot of money which comes out of the pocket of the average Canadian taxpayer. We are emerging from that program but the fact is that $12 billion has been spent from which there has been no real return.
The second large expenditure program is indexation. Most of our social expenditures have been indexed and, furthermore, we have indexed almost all of the revenue we get from individuals. Consequently, we have built into our spending approximately $2 million to $3 million every year, and the amount is increasing, to meet that indexation cost. This means that our expenditurs must go up to meet that cost. At the same time, we have built a decline into our revenue requirements because we have indexed the amount of revenue we are prepared to take. The cost of that indexation amounts to around $5 million a year. This is a massive spending program in itself. I think there is a general consensus in the House that we should continue that kind of program, but it costs a great deal of money.
The third spending program is-


Mr. Crombie:: It is not spent.


John Mercer Reid: It is money that is spent. It is money that the government must find somewhere in order to make those expenditures. For example, if the Minister of National Health and Welfare (Miss Begin) is going to spend $1 billion on, say, the guaranteed income supplement program and that is indexed to the rate of inflation, the next year she not only has to find what she started off with but she also has to find the additional; so the consequence of that is that she

December 8, 1981
The Budget-Mr. J. R. Reid
must find, or the government must find, that amount of money every year. And let us remember that the government is not taking the inflationary quotient that is in the economy any more because we have indexed our revenues. The revenue goes down, expenditures go up and, in my judgment, that is a massive spending program.
The third spending program is, of course, the deficit. If we look at the amount of money it takes to service the deficit, we find that the deficit now takes up some 20 per cent of the budget of the federal government.


Erik Nielsen: You made it.


John Mercer Reid: Let us go back and take a look at that. Where does that deficit come from? I wanted to know where it came from, so I went to the research department of the Bank of Canada and asked where the Canadian deficit comes from. Does it come from indexation? Does it come from spending money on the oil subsidization program? No, I was told, it comes from the reduction in income taxes, sales taxes or corporation taxes which every Minister of Finance has put into his budget since 1974. Of course, they were behaving in a good Keynesian way. They were trying to pump up the economy. Pump, pump, pump every year and that made up 90 per cent of the deficit of $14 billion. If in fact that deficit came from that expenditure of money, lowering taxes means that eventually we have to pay for it, and we pay for it through the service of the national debt. We have done it so much that we have created a situation in which that is now the fastest growing spending program of the federal government.
When hon. members tell me that they do not want to have taxes raised but that they want to have expenditures increased substantially to look after the people who are being hurt, I have to ask hon. members where the money comes from. Do we go back to the market and borrow more, squeeze out the private borrower and raise interest rates by competitive action? Do we raise taxes to try to pay if off and to control it? Or do we ask the Bank of Canada to start printing money and increase our inflation rate? I know of no other way that the Government of Canada can raise money than by those ways, and I certainly would like hon. members who come to the House of Commons to plead the case of their afflicted constituents to tell us where we are to get the money and how it should be expended.
We have a real problem in this country, and that is what this budget is all about. It is one of the first budgets I can recall which really tries to deal with the over-all financial state of the Canadian government and tries to relate it to what the Bank of Canada is doing and to Canada's position in the world. I think the Minister of Finance deserves a great deal of credit for that. I would have been happier with what the Minister of Finance had done had we had a debate on that subject in this budget debate, but if hon. members look at the speeches which have been made during this debate, they will find that the number of people who have tried to address this very difficult question is indeed very small. I say to the hon. member for Yukon that I am going to vote for this budget
because it tries to address the real questions in the Canadian economy.
I want to quote an economist under whose regime we are now living. Perhaps I might better say whose regime we are leaving.
-if (my) ideas are correct... it would be a mistake, I predict to dispute their potency over a period of time ... the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economics and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But sooner or later, it is ideas, not vested interests, which are dangerous for good or evil.
For hon. members who are curious as to who wrote that, it was John Maynard Keynes in the concluding page of "The General Theory".


David Edward Crombie: What year?


John Mercer Reid: It was 1936.
One of the things which concerns us is that we seem to have come to the end of the Keynesian period. The concept of high inflation combined with high unemployment is something which is not possible under Keynesian theory. It certainly was not predicted, and certainly Keynesians have no idea how to deal with it. It may well be that the Keynesian theory, which was developed at a different time and in a different place and which was implemented by governments more or less after the Second World War, is like those sub-atomic particles which physicists study and which physicists have said that in the act of studying them, you change them.
It may be that the implementation of Lord Keynes' theory has actually changed the economy so that the theory itself no longer applies to the economy which has been created as a result of the application of that theory. I do not know. I am not an economist. I am not a trained economist, but I do know that if Lord Keynes is correct about the scribblings of madmen which are followed by politicians, civil servants and business leaders, if he is correct that the theory will be important to these people because it gets into the environment in which people move and act, and if it is true that we have come to the end of that theory, what theory do we follow when we come to framing our budgetary policies? What theory do we follow when, in our own individual lives, we come to predicting the future and making our own personal investments? If we are in the corporate sector, how do we make the same kinds of judgments about the money that is saved by ordinary people? If we do not have a road map and if we do not know where we are, how can we determine where we want to go?
I think the real dilemma right now is that there is no road map that applies. There is no consensus in economic theory in North America. Having returned from a month in Europe
December 8, 1981

where I had the opportunity to talk with a great many leading politicians and civil servants about the problems their economies in the Common Market were facing, I can tell hon. members that they also have no road map at all. If we examine what is going on in the world, we will see that each country has taken a different tack. The countries of the world have tried different theories, and at the present time the world is a laboratory of conflicting economic theory being put into practice. All of us in the OECD countries are suffering from the same malaise. We are all suffering from high unemployment, high interest rates and a lack of markets, and it seems to me that if in fact these conditions of the disease are not unique to Canada but are found in almost every other country, the best we can do is try to analyse our own set of circumstances and cut our cloth according to those circumstances. We should be examining with a great deal of care what is going on in other countries so that we can see perhaps more of the forest and less of the trees, where some of the paths go and avoid going down some of the dead-end alleys.
It strikes me that we have not yet begun that part of the exercise in Canada because the debates up until now show that this has been a subject most hon. members have avoided like the plague. I admit that I have no answers, but I do say that the Minister of Finance is about the only politician in this country who has attempted to grapple with these questions and to take the Canadian economy, and particularly the financial status of the Government of Canada, and try to put it on a new track and combine what is going on in the operations of the Government of Canada with those of the Bank of Canada. As I said, this is the first time in a long time that a Minister of Finance and the Governor of the Bank of Canada have been going down the same path. While it may not lead us to the promised land, Mr. Speaker, it is a lot better than to have them go in opposite directions. On that basis, it is a decision which impresses me enough that I can happily vote for the budget, with no regret.


David Edward Crombie: Mr. Speaker, I listened with considerable care and attention to the remarks made by the hon. member for Kenora-Rainy River (Mr. Reid). The hon. member went into the question of economic theory, a matter that I shall return to in the last couple of minutes of what I have to say.
One of the great things about budgets is that they tell the truth. Whether a budget is a family budget, a national budget, a provincial budget or a municipal budget, budgets do a couple of things. First of all, it tells exactly where one is in relation to the numbers one has to work with; it tells the people in a family or in a nation what kind of vision the government might have, what kind of philosophy operates behind the budget.
Unfortunately, in the last number of years it has been very difficult for people to understand budgets. Budgets have become incredibly complicated. If I may, Mr. Speaker, let me read one quote which I had from the now President of the Treasury Board (Mr. Johnston) when he made a comment
The Budget-Mr. Crombie
with respect to what had recently happened to budgets. He said that budgets had now taken up more time and more energy by accountants and lawyers than it would have taken had they been involved in some productive labour-that is the final part of the quote. Because, indeed, it is difficult for ordinary individual taxpayers to understand how they are being affected by the budget. It is even more complicated for people in small and medium-sized businesses to understand what indeed is happening to them.
The other night the Minister of Finance (Mr. MacEachen) rose in his place and said: "I have for you a budget which does three things; it is going to give restraint"-everyone is in favour of restraint-"it is going to offer equity"-everyone is in favour of fairness-"it is going to offer recovery"-we are all desperately seeking recovery, Mr. Speaker. When he said those things, most people said, that is right, that is what we want. Those honeyed words of "restraint", "equity" and "recovery" were just what everyone wanted to hear. That is why the initial response to the budget in the newspapers, on radio and television was something like "a neutral budget". One newspaper was quoted as stating that. Someone else called it "a stand pat budget". Another said "housekeeping".
The fact of the matter is that initially everyone listened not to the budget but to the words about the budget. They did not listen to the song but to the singer. Every time one does that, one tends to lose the reality of what is happening. Indeed, many people of this country began to be seduced into saying: "Gee, I guess it is all right". That was until, of course, they were able to read more, listen more, think more, and then the whole thing began to unravel before their very eyes. Because it was a budget not of any large slash; it was a budget of one thousands cuts. The cuts were not in the budget, but it affected increasingly more and more people. As those little circles began to go towards the shore, hon. members of the House, journalists, the media and other people who observed the scene began to get the effects of those ripples. The gathering storm about this budget got bigger and bigger and bigger. It will not go away, Mr. Speaker. I should like to explain to the Chair and to the House why I believe the gathering storm hovering over the Minister of Finance and hovering over this country will not go away. The demand for the revision of the budget will increase daily. It is increasing now and it will increase in the future.
Let me look, first of all, at the question of equity. Indeed, when the Minister of Finance read the budget speech, he spent most of his time on equity. He had little to say about restraint, and even less to say about recovery. He spent most of his time on equity, because he knows that Canadians are instinctively fair-minded people who like to have fair treatment. They like to have fair treatment for themselves and they like to have fair treatment for other Canadians.
Let us look at the second principle in the budget, equity. Whom does this budget favour? Where is the equity? For whom does that equity flow in this budget? Is it fair, Mr. Speaker, to home owners? There are 1.2 million home owners who will renegotiate their mortgages over the next few months

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at interest rates which are not only unacceptable but impossible for them to manage on the money they earn. The minister responsible for housing, who is present in the House, knows that from a CMHC report from his officials. CMHC predicts that 40,000 Canadians will lose their homes in the next short while. Is that the fairness that is supposed to be in the budget? Is that the equity, Mr. Speaker?


Mr. Evans:: I want facts.


David Edward Crombie: The hon. member wants facts, Mr. Speaker. If the hon. member will allow me the short time I am allowed, and if he takes notes, he will have them. The hon. member for Ottawa Centre (Mr. Evans) should take some notes, because there are people in his constituency who would like to know what those facts are. They know the facts that are affecting them. For example, look at renters, Mr. Speaker. There is no choice now in this country as to whether or not one will rent an apartment or a home as opposed to owning a home. The vacancy rate in this country is now at 0.3. According to the budget of the Minister of Finance in 1983 the vacancy rate will approach zero. That is a fact, I say to the hon. member for Ottawa Centre. If one were to examine the budget, there is no choice any more for renters in this country. We are supposed to build 90,000 new rental units to keep up with the demand we already have. At best, if one were to use the figures to the best of their ability, the budget offers 15,000. That is not fair.
I spent yesterday in All Saints Church in downtown Toronto. It is now called the "Church of last resort". Every hostel space in Toronto now has one and a half claims on it. There are 50 per cent more people looking for space than we have available in hostels alone. Is that fair?
What about the unemployed? Maybe they see that the equity comes to the unemployed in this budget. There are almost one million people on record looking for work in this country. That is 8.2 per cent of the work force, including 62,000 people in the residential construction industry alone. Is it fair to them? The unemployment rate for native people in this country is 35 per cent to 75 per cent. Is it fair to them?
Forty-one per cent of the women in this country who are sole supporters for their families live below the Stats Canada poverty line. Is that fair? Is that what the government means by "fair"? Maybe it is fair to the young people, I say to the hon. member for Ottawa Centre. Maybe that is what the hon. member means. The unemployment rate for young people between the ages of 15 and 24 is 14.1 per cent. Every time one reads the unemployment figures, Mr. Speaker, one should remember that 44 per cent of those figures represents people between the ages of 15 and 24. That is not fair.
Is the government doing anything about job creation in this budget? There is not one new initiative in the budget with regard to job creation. Out of all of the pages in the whole of the budget, there is only one page that deals with human resource development. They did not even use the entire page. It called for a comprehensive review of job creation in the 1980s. It is now almost 1982. The time for job creation for the 1980s was in the 1970s, so that young people would have a
chance. Is there any opportunity for growth in our educational institutions to train young people in technical and technological fields? The answer is no. The government is cutting back $5.7 billion over the next five years in grants to educational institutions which engage in technical and technological education. Is that fair? Is that what the government means by fair.
Is it equity? For whom is it equity? Is it equity for small and medium-sized businesses? Do they remember small and medium-sized businesses? First, small and medium-sized businesses create the majority of new jobs.


John Leslie Evans: This is the same speech you have given for the last number of years. Get down to the details.


David Edward Crombie: Second, they make a major contribution to growth in the country through technological innovation. Third, all these businesses are technologically and research intensive. I have mentioned these things about small and medium-sized businesses because the clack over there who keep yelling will pay for it dearly when they meet with their constituents. They know this from their own mail and telephone calls. The government, through this budget, dealt a body blow to small and medium-sized businesses from which they may never recover for years to come. This is why the Canadian Federation of Independent Business, which represents 63,000 businesses in the country, declared war on the government, on the budget and on the minister. The federation did this because it knew that the budget offered absolutely no opportunity for investment, which creates jobs.
Perhaps it is fair to senior citizens. One in every three people over the age of 65 lives below the Statistics Canada poverty line; 350,000 women over the age of 65 live below the poverty line. Of those between the ages of 55 and 64, 39.4 per cent live below the poverty line; between the ages of 65 and 69, 34.6 per cent; over the age of 70, 48 per cent. I notice the hon. member for Ottawa Centre is not paying any attention to these facts. The reason I mention senior citizens is because absolutely no relief was promised them in the budget. Worse, the government has prated about the necessity of pension plans in the private sector being better so that they serve more Canadians. The budget taxed registered retirement savings plans and life insurance policies.


John Leslie Evans: That is untrue and you know it.


David Edward Crombie: That is what the budget did to people who have worked hard for decades to save money and put it away on a monthly basis against their old age. The government decided to take as much of it as it could. Hon. members opposite do not like to hear this because they know it is the truth.


John Leslie Evans: It is totally false.


David Edward Crombie: What about equity and recovery? The budget is an unmitigated and uncovered attack on incentive, individual effort and creative spirit.
December 8, 1981

The hon. member for Kenora-Rainy River (Mr. Reid) was interested in how we were to get new money. He was very interested and concerned about the theory of getting money to pay for things. One theory which has always worked is to ensure that those who want to invest and to create jobs are allowed to do it. It is not a government budget which creates wealth. Is is the people of the country who create wealth, and it is the budget which is holding them back. That is how they get money for programs.
The gathering storm will continue because there is a smell of tragedy about the budget. People really know this down deep. It said to people: "Remember how you used to think you could get ahead? Forget it. Remember how you used to think there were chances and opportunities? Forget those."
The budget needs to be revised. Indeed I predict, despite what the clack says, that the Minister of Finance will revise the budget. Because he must revise it, and he must listen to the Canadian Federation of Independent Business. The federation set out the following rather neatly in the newspaper today:
The MacEachen budget is not what it seems to be. It is a sly, devious document that nearly fooled us all.
Absolutely, and this is why the minister will change the budget. Hon. members opposite who do not want to listen to the truth will have to find something else to say, because the people of the country will not stand for a budget which locks their future behind doors.


Mr. Thomas H. Lefebvre (Pontiac-Gatineau-Labelle):: Mr. Speaker, I am pleased to have an opportunity this afternoon to speak in the budget debate. First I wish to congratulate the Minister of Finance (Mr. MacEachen) on his choice of the three important themes that form the basis of his budget: restraint, equity and economic renewal. A number of the budget's provisions, including tax relief for owners of small businesses and farmers who are severely affected by interest rates, are very important to thousands of my constituents. Many low-income families in my riding will benefit from tax reductions as a result of a tax rebate. This special rebate now stands at 9 per cent of income tax, with a minimum of $200 and a maximum of $500. From now on, it will be set at $200 for all taxpayers, while married taxpayers will be able to claim $200 more for their dependent spouse. Since indexing of personal income has been maintained, personal exemptions for a family of four will be raised from $7,230 to $8,110 next year, while the child tax credit will increase from $261 to $293 per child, as a result of indexing and the budget measures.
The average family of four will be able to earn about $15,000 in 1982 without paying income tax to the government of Canada. These measures, and others I shall be mentioning later in my speech, should have a beneficial effect in my riding. I could of course spend my allotted time on subjects of national interest only, but I prefer to use half for these and
The Budget-Mr. Lefebvre
half for issues that are directly of interest to my constituents. The first half of my speech will concern important issues in my riding. One of these is the increasing involvement of the Department of Regional Economic Expansion in my riding of Pontiac-Gatineau-Labelle. The department's financial contribution will play a very important role in boosting the region's economy. Under the Canada-Quebec subsidiary agreement on development of tourism, the Minister of DREE (Mr. De Bane) suggested to his Quebec counterpart last July that the scope of the agreement could be enlarged to include a new program to support the development of international standard ski resorts, such as Mont Sainte-Marie which is going to be one of the most important resorts of its kind in Canada.
This measure will involve expenditures totalling $13 million, 60 per cent of which is to be paid by the Canadian government and 40 per cent by the government of the province of Quebec. Thus, DREE's contribution under this agreement will be $7.8 million. Mont Sainte-Marie will be the first activity supported under this component of the agreement. The government of Canada is willing to participate financially in developing this fantastic resort location. I fail to understand why the government of Quebec has not yet made its position clear, and in so doing is postponing indefinitely an important project in a region that urgently needs jobs. DREE is also involved in road construction in the region. For instance, construction of the Maniwaki-Temiscamingue highway is being financed 60 per cent by the government of Canada, which is paying $15 million of the total cost of $25 million, while the remaining $10 million is to be paid by the province of Quebec. This permanent highway linking Maniwaki to Temiscamingue is part of the Canada-Quebec subsidiary agreement on forestry development. This access road to forest resources in the area will provide a more rational development of the huge hardwood and softwood lots while promoting tourism.
Under the Canada-Quebec agreement on forest development, another road which will also give access to forest resources and promote tourist development will connect with the Maniwaki-Temiscamingue highway in the Pontiac at Lake Nilgault. The section under construction extends from the Bois-Franc Road at Fort-Coulonge to Lake Jim. According to the agreement signed between the two levels of government and the lumber companies E. B. Eddy and Consolidated Bathurst, 50 per cent of the cost will be paid by the governments and 50 per cent by the companies involved. Under an auxiliary agreement on major roads, expenditures estimated at $36 million are earmarked for the reconstruction of highway 117 from St-Jovite in the Laurentians to Louvincourt in the Abitibi. This highway goes through Mont-Laurier in the north of the Gatineau constituency near Grand-Remous. The federal contribution is $21,600,000 and that of Quebec $14,400,000.
Mr. Speaker, I had suggested some time ago that the Government of Canada sponsor an information day in the Pontiac area of my constituency. The Pontiac Businessmen

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Association agreed to sponsor it itself and it was effectively held last March. On that occasion, four federal departments sent representatives to explain their programs and policies to businessmen and others. The Minister of Regional Economic Expansion (Mr. De Bane) attended the closing ceremony of the information day and this was much appreciated by the audience. This event gave rise to substantial achievements, since DREE decided to undertake a study on the economic revival of the Pontiac. This study has now been completed and I am convinced that it will help greatly to find the necessary solutions to promote the rational development of the Pontiac area of this large constituency.
Tomorrow night, Mr. Speaker, together with officials of the Department of Regional Economic Expansion and some Quebec government representatives, I will take part in Campbells Bay in a luncheon sponsored once again by the Pontiac Businessmen Association. I hope that during the discussions that will follow, we will be able to set in motion an action plan for the citizens of Pontiac. Again recently, the representatives of the City of Maniwaki and the Upper Gatineau Development Association appeared before the Subcommittee on Regional Economic Expansion at the hearings it held in Sherbrooke and submitted briefs in which they asked DREE to get involved more directly in the economic revival of the Upper Gatineau Valley. The DREE study group will meet shortly to consider the feasability of sponsoring a study on the economic renewal of the Upper Gatineau Valley. I certainly hope, following the studies carried out in Pontiac and those which are very likely to be carried out in the Upper Gatineau Valley, that DREE will decide to make this a designated area. DREE would thus be able to get involved unilaterally and directly in the economic renewal of this constituency, without having to wait for Quebec's requests which are sometimes very long in coming.
Mr. Speaker, another very interesting program for the constituency is that initiated on November 3 by the Canada Employment and Immigration Commission. The first Local Economic Development Assistance Agency-or ADEL as it is known in Quebec-was officially inaugurated on that day in Maniwaki. This new organization, known as the LEDA Agency of Upper Gatineau, obtained a grant of $250,000 for its first year of operation. Out of this, some $150,000 will be used to stimulate employment, and the remaining $100,000 will pay the costs of technical and administrative assistance to businesses. The financial involvement of the agency in the projects it will receive will be through loans or the purchase of shares, up to a maximum of $25,000 per business. Up to now, only twelve such agencies have been established throughout Canada. The creation of this LEDA Agency in the Upper Gatineau Valley should continue to create new jobs, thereby contributing to the fight against unemployment which is an all-permeating cancer in this region. I hope that in the near future two other areas of the constituency, namely, Pontiac and Labelle, will get LEDA agencies of their own. In order to
encourage job creation, the Government of Canada has granted, through the Department of Employment and Immigration, a $99,000 subsidy to the Societe cooperative d'action et d'ini-tiative municipale de Notre-Dame-de-Pontmain under a LEAP project. This subsidy has made possible the creation of 5 jobs over a one year period. During this planning stage, the employees of the project will look into the feasibility of setting up a plant for manufacturing chip-wood planks.
Once the planning stage is over and if the study proves that such a project would be profitable and viable, the promoters might be given additional grants to carry it out. Mr. Speaker, over the past five years the government of Canada through the Canadian Mortgage and Housing Corporation, has invested in excess of $11 million to repair, modernize and alter hundreds of houses in the various municipalities of the riding. At least a third of those $11 million were in the form of direct grants and the balance was made up of long term loans at very attractive prime rates. Besides making it possible for the owners of those houses to live in better conditions, the Residential Rehabilitation Assistance Program did create new jobs while at the same time encouraging local building material dealers.
Mr. Speaker, we should note as well the importance of all the other programs implemented by the government of Canada in the housing area, such as the low-rental houses which were built in a number of municipalities in the riding, and financed mostly by the Canadian Mortgage and Housing Corporation, as well as homes for senior citizens, the Neighbourhood Improvement Program in the urban centres of Maniwaki and Mont-Laurier, and the Community Services Contribution Program. Mr. Speaker, the farmers in my riding are among the most active in Canada. Our beef producers rank first in Quebec since they account for more than one third of the total production of the province.
Just recently I had the opportunity to meet here in Ottawa with a representative group of feed lot operators from Pontiac. Also present were officials from the Farm Credit Corporation, the small business secretariat and Agriculture Canada, including an adviser from the minister's office and representatives of two banks. These beef producers explained the reasons they are encountering very grave financial difficulties. The discussion explored ways by which the measures announced in the budget could be quickly implemented in order to help these producers. It was agreed that decisions were needed in the coming weeks in order for measures to be effective.
I support these initiatives and trust that the solutions can be found very quickly.

I also had an opportunity to meet the spokesmen for the dairy producers of my riding who told me about their worries concerning the financial difficulties they are facing, as are all Canadians. They are impatiently awaiting the announcement

which the Minister of Agriculture (Mr. Whelan) will be making about the forthcoming dairy year as soon as the special study now under way is received and analysed. Dairy production is a major component of the economy of our area and I echo the wishes of the producers that the policy will be based on hard facts, that it will be a fair policy which will continue to provide producers with an adequate income which will give them a standard of living to match their work load and their productivity. I am pleased to note that in his budget the Minister of Finance kept the farmers in mind, particularly those whose financial situation is rather shaky. They could benefit from special loans from the Farm Credit Corporation whose interest rates are lower by as much as five percentage points, which would bring current rates of 16.75 per cent down to 11.75 per cent. Thus they will henceforth be eligible under the Small Business Development Bond program. Mr. Speaker, ever since the "Petit train du Nord" has been discontinued, some 5,000 electors, mostly in my riding, have made representations and four very specific recommendations which I have been glad to support.
These recommendations were basically as follows: That the railway be maintained and that the freight train remain in operation, that the "little train" occasionally, as for special events, go up to Mont-Laurier, that the opportunity of providing an electric train service in the region be studied, and that the Mont-Laurier station be declared a heritage building. Last Sunday, I also attended a public meeting on that same issue in Mont-Laurier with about a hundred people concerned about the future of the rail service between Montreal and Mont-Laurier. We discussed these four recommendations. During the meeting, I was able to discuss with those people for three or four hours and trade views and ideas with them on this issue.
With respect to urea formaldehyde foam insulation, 1 am fully aware that this might inconvenience some homeowners of my riding as well as elsewhere in the country, but I agree with the Minister of Consumer and Corporate Affairs that we must await the results of the tests conducted throughout the country so that the action that will be decided upon is based on the recommendations and findings of the commission of inquiry. I hope that the study will be completed as quickly as possible and that the action taken is fair for all concerned.
Another important issue in my riding, Mr. Speaker, is Camp Gatineau. For several years and especially in the last weeks I have spared no effort to avoid the closing of the camp. The camp is located within Gatineau park, on NCC land, and accommodates every year several hundred mentally handicapped people from Quebec, most of whom come from outside the Ottawa Valley. I was quite happy, especially in this international year of the disabled, to hear the Minister of DREE announce that his department was immediately going to approach the Quebec government so that the Camp Gatineau renewal project and the $450,000 required, would be included in the Quebec-Canada subsidiary agreement on tour-
The Budget-Mr. Lefebvre
ism development in order to achieve the objectives of this camp for the handicapped.
In view of all the facts that I have so far highlighted in my remarks, you will no doubt have realized by now, Mr. Speaker, that I am speaking for this region. That is indeed the case because I am fully aware of the tremendous efforts made up to now in order to improve the standard of living of my constituents. But increased efforts and considerable help will be needed in order to stimulate the economy of the region and thus encourage job creation and check unemployment which is endemic in this riding. The residents of the area want stable and permanent jobs. They are grateful for the economic benefits as well as for the many temporary jobs created by community development projects, as well as for the services and equipment made available to them. However, with a budget of $1.8 million for this winter, we all know that these are only temporary jobs and these people are concerned about the future because they hope to find permanent jobs in the area, particularly in the riding of Pontiac-Papineau-Labelle, in order to stop the flow of people leaving for more promising areas.

I would now like to speak as the former chairman of the Special Committee on Alternative Energy and Oil Substitution which was established on May 23, 1980. I am pleased that the budget contains measures dealing with energy. This seven-man, all-party special committee was given a mandate to explore and report upon new energy sources, technologies and fuels of potential interest to Canada, with particular regard to the technical and economic feasibility of their introduction. One year of intensive study and research was needed before the committee was able to arrive at conclusions and make its recommendations.
On the basis of the array of information, opinion and first-hand observation, the committee tabled a remarkable document containing 65 specific recommendations. The report looks ahead 50 years and foresees a fundamentally altered energy system in Canada.

Hydro-electric generation will continue to increase until our whole hydraulic potential has been nearly exhausted, probably early in the forthcoming century. The committee has found low-heads of water of growing interest and, in particular, small generating stations; it would appear that the technology involved is also ready to be exported. Considering Canada's conventional energy infrastructure and its evolution, how can alternative energy sources which seem so promising be integrated into it? The solution becomes more obvious when one turns the question around and looks at the energy markets in need of supplies. From that point of view, the advantages of hydrogen as a fuel or energy currency become obvious. [English]
In line with one of the recommendations contained in the report, the Minister of Energy, Mines and Resources (Mr. COMMONS DEBATES
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Lalonde) announced in July that the federal government will increase funds for energy research and development by $35 million. The increased funds will provide more technical support for the following policy priorities which were established in the National Energy Program: developing new liquid fuel alternatives to gasoline; increasing the efficiency of energy use in all sectors of the economy; developing environmentally acceptable alternatives to oil and gas; and ensuring the continuing development of conventional energy for the benefit of all Canadians.
[ Translation]
The study made by the committee has enabled us to discover that converting our conventional energy infrastructure is quite a challenge especially because of its magnitude, its complexity and the massive investments it involves. If we are aiming at such a restructuring, then, according to the committee, the hard facts of life will have to be faced. We shall have to put our resources to other uses, provoking in all likelihood the protests of the affected sectors of industry. We shall have to expect new attitudes and new technologies, both of which will require considerable time. The public will have to recognize the need to change and adapt to new energy systems. In addition, as the elected representatives of the people usually know very little about technology, one wonders who in fact will advocate the change. Finally, it is becoming increasingly difficult to make radical decisions in today's society.
The members also considered it essential to formulate their recommendations in view of a guiding philosophy. Consequently the report lays out principles or concerns which the committee felt very strongly should form the foundation for domestic energy planning. These policy elements are energy conservation, progressively greater reliance on sustainable energy sources, minimal environmental disruption, greater diversity in Canada's energy mix, recognition of regional differences in energy resources and requirements, acknowledgment of strategic concerns, and consideration of the social implications of altering our nation's energy system.

At first glance, one might wonder at finding conservation under the heading "Alternative Energy Sources, Currencies and Technologies". But the committee was drawn to the conclusion that conservation should be looked upon as a source of energy, and an important one at that for Canada, especially because we have never been particularly concerned about energy efficiency in the past. Energy has always come cheap in Canada and that explains why our economy has evolved in such a way that we now use more energy per dollar of gross national product than any other industrialized country in the world. Paradoxically, this means that while our wasteful consumer habits of the past might have been regrettable, we now have a major energy source available because of conservation,
which source can be used more easily and more economically than any other existing resource. By reducing demand, we increase the relative value of existing energy supplies. Many witnesses who appeared before the committee stated that conservation should be the starting point of any alternative energy strategy, and we fully agree. We can view conservation as a reduced utilization of a resource in the short term to have more available in the long term.
The members of the committee would like all housing financed by the Canadian government to be built in accordance with conservation principles and to use passive solar heating to show the benefits of such systems. Energy performance standards should be incorporated into the National Building Code to promote innovation and conservation in building concepts. Both commercial and residential buildings should make use of lighting systems which do not waste electricity. Mr. Speaker, as those who spoke before me, I shall conclude my comments in a few moments so that other members can have an opportunity to speak as the debate will end this evening. In closing, I would simply like to say that I shall come back to the issue of new and renewable energy sources in the future. I think that the committee has tabled a very important report. The Minister of Energy, Mines and Resources (Mr. Lalonde) has already announced several initiatives based on our recommendations and I am convinced that there will be more in the future. I think that this report can be very important for our energy future in Canada because its recommendations can not only help Canada to become self-sufficient in oil supplies, but will also contribute to the creation of thousands of jobs in Canada in export industries thanks to new technologies developed in this country. Mr. Speaker, I believe that during these few minutes, I have been able to outline vitally important issues for the future of my constituents and for the energy future of Canada in general.


Hon. Roch La Salle (Joliette):: Mr. Speaker, I wish to thank you for giving me this opportunity to comment on a budget that many people have described as inadequate under the present circumstances, both as it affects my province and as it affects the entire country.
This evening we are being asked to support a budget that should normally be in tune with the present economic conditions. We are being asked to support a document that is absolutely devastating for the entire Canadian economy, a document that is totally unacceptable, and that, according to thousands of Canadians, will leave Canada in an economic quagmire. I feel it is also important to point out that in other speeches I have heard, especially from the government benches, the minister has been approached with a number of suggestions, a fact that in itself should be ample proof of the inadequacy of this budget vis-a-vis the problems facing the people in their ridings.
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It is also interesting to note, Mr. Speaker, and I think Canadians will realize this in the medium term and I hope even sooner, that the budgets we have had in the last fifteen years have been remarkable for their ineptness and that they have been unable to provide a sufficient stimulus to the Canadian economy. And going back a little over the past fifteen years, we realize that things are going from bad to worse, and that despite the projections our Ministers of Finance have given us over the last fifteen years, no solution has been found, nor has it been possible to realize this famous equity which the present Minister of Finance (Mr. Mac-Eachen) has said he would make a reality. My colleague from Rosedale (Mr. Crombie) proved earlier that the commitments made by the Minister of Finance and his concept of equity, as presented in the budget, will be impossible to realize. In his speech, the member for Rosedale proved time and time again that the budget is unfair to thousands of Canadians. In my riding, as in the rest of Canada, Mr. Speaker, farmers and workers are very concerned.
From what has been said by members from every part of Canada, it is clear that the Canadian people are anxious, they are concerned and cannot be sure what the future holds in store, and they will certainly find no reassurances in the measures contained in this budget, and, quite frankly and objectively, these measures are certainly not going to set the minister and his government the confidence he is seeking from the House. I know perfectly well, Mr. Speaker, that the members on the government benches will have to support the budget, with probably more reservations than ever before. Those members are well aware that farmers are not getting what they need from this budget, that workers did not get what they were seeking, that homeowners will have to wait and spend another winter in an untenable position, that tenants will not get what they were promised and so on for thousands of Canadians. The members on the government benches are very familiar with the reactions of the business world and various organizations and sectors. But the system being what it is, they will have to support the Minister of Finance and hope and pray.
Earlier, I heard some comments from hon. members who were quite rightly seeking from the minister a number of corrective measures to remedy the omission or absence of adequate measures in the budget. Figures have been given and statistics have been put before the House, but the fact remains that the Canadian people not only have a right to be concerned, they will also have to remain in a limbo of uncertainty as a result of a totally inadequate budget. During question period the minister will try, as he has on other occasions, to make Canadians believe that with his budget cuts, Canada will get back on the road to prosperity, and that is just not true! I feel that Canadians are at least entitled to know the truth. The situation is alarming, and the economic policies that have been
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presented by the present government during the last fifteen years have brought Canada to the brink of bankruptcy. Members opposite will consider this an exaggeration, but this is the situation which we are now facing, and thousands of Canadians, thousands of unemployed, are concerned about the absence of appropriate action.
Some will ask me if I have the solution myself. Since Canada has been left to drift for so long, it is of course impossible to find a miraculous solution in 24 hours. This would be unthinkable and it is impossible to correct such a situation immediately, but it is important for Canadians to recognize that it is this Liberal government which is responsible for that kind of brinkmanship. This is the situation. Mr. Speaker, no government member and no minister can assure Canadians that the situation will improve in the short term. This situation has been brought about by the marked incompetence of past ministers of finance and the members who have supported them in the last 15 years.
I am thinking especially about the farmers and the homeowners. The absence of appropriate action in the areas of housing and the building industry has created the dilemna now facing the country. The minister responsible for housing has demonstrated that he can no longer cope. He was unable to convince the Minister of Finance to provide sufficient funds to meet the demand. Because of this, the budget does not promote recovery of the building industry, which has been frozen for 18 months, or nearly two years, creating unemployment and putting Canadians in a terrible situation. The budget does not meet housing needs, and every member of the House realizes it.


Mr. Peterson:: Untrue!


Roch La Salle: They say that it is untrue. It is incredible, Mr. Speaker! The budget does not meet our needs and those who want to be honest will have to recognize it. This lack of policy in the field of construction and housing has been costly for Canadians. And I could say the same about agriculture. Nearly every member has met with farmers from my constituency and elsewhere and representatives of the Canadian Federation of Agriculture, the UPA in Quebec, and so on recently. Farmers are very concerned about the lack of action of the government and the minister concerning dairy policies, for instance. The minister has not applied the indexing formula to dairy producers, which he should normally have done in August. The minister has not announced his five-year plan as he was supposed to do last April, and the Minister of Finance has not provided the necessary funds for the Farm Credit Corporation. Moreover, dairy producers still do not know what to expect and they fear that the subsidies on dairy products will be abolished or reduced.
I think that all the members of this House whose constituency includes dairy producers want the minister to announce his policies as soon as possible, before January 1. I hope that he

December 8, 1981
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will do so and I take this opportunity to appeal to the Minister of Agriculture, who is responsible for a very important industry, at least in my province and also in Ontario, since the dairy industry is centralized in those two provinces. I believe that it is important for the Minister of Agriculture to make these announcements as soon as possible, to ensure dairy producers that the subsidies will be maintained and to apply the indexing formula based on production costs.
Moreover, as farmers already have told the Minister of Finance, this budget does not respond to the financial needs of the farming community, and this scarcity of funds may force our agriculture into stagnation as it did with the construction industry, a tremendously important industry, and this in turn will mean increased unemployment. The budget does not provide for these two areas, absolutely not, and this is affecting thousands of Canadians because there is no resumption of activity in the building industry and a lack of funds to maintain and promote agriculture.
An hon. member referred earlier to the victims of urea-formaldehyde foam insulation. The government has remained absolutely mute on this. They felt that there was no need to provide funds to help those victims, and this is serious in my view. We are aware that thousands of Canadians are faced with that problem. We are aware that thousands of homeowners have problems not only with their mortgage costs but also with toxic foam insulation. The government or the responsible minister have not yet seen fit to recommend a special fund to help the victims clean up those homes, at a cost of thousands of dollars. I know perfectly well that the government, aware of the scope of that problem, does not dare get involved because this will prove too costly. Can you imagine leaving the whole burden with the home owners? The minister involved suggests that when the review is completed, he will see to it that the people responsible pay the costs.
It seems to me that if the minister had any sense of responsibility, he would accept recommending to Treasury Board that a special fund be established to help the victims. After such an investigation, it will be much easier for the government to recoup the expenses from the responsible parties. For the time being the government, through the Minister of Consumer and Corporate Affairs (Mr. Ouellet) denies any responsibility in the matter. Let the investigation follow its course. But what if the government is responsible? Government actions lead us to wonder about its own responsibility. Anyway, it has a moral obligation because this is a social problem, and I submit that the government should now help the victims with something more than a promise of an investigation or of certain services.
I would also like to refer briefly to the amazing discovery made by the Minister of Finance. All of a sudden, the Minister of Finance, in his budget, has mentioned loopholes. He was going to recoup thousands of dollars, if not millions, from those loopholes. Big joke, Mr. Speaker! Because those provisions, those loopholes were developed and provided for by the
same government. These so-called tax incentives were designed to stimulate the Canadian economy. That selfsame government had allowed some Canadians tax relief in conjunction with the purchase of goods and services and in other ways. But what that government had considered as incentives for years, the minister now sees in a different light. All of a sudden he says: I have made the discovery of the century. I shall recover billions of tax dollars and sneakily trap the Canadian to whom those advantages were offered. Because in fact Canadians had been encouraged to avail themselves of those loopholes. Today, these are plugged up without notice. We know hundreds of Canadians will have problems as a result of that radical step.
I have no quarrel with changing tax measures occasionally, it has to be done. But let no one have me believe that suddenly the minister grows vigilant when taking away what Canadians were granted a few years earlier. And above all, let no one claim that those Canadians were bad citizens because they availed themselves of those loopholes. Those people have never intended to cheat Revenue Canada, not at all! They simply used what measures the government had made available which, I say it again, were considered as relief and incentives. The government may have had a change of heart because of circumstances. Still, I wish it had kept its word and honoured its long-term commitments which benefit many Canadians, even if it did have to put an end to them in due course. I think it is nothing but sheer hypocrisy, Mr. Speaker, and certainly no proof of outstanding quality, when the Minister of Finance gives the impression that he has found something really exceptional.
Two or three times, and perhaps more, I heard my colleagues from Quebec mention the difficulties which our industries in Quebec and Canada are facing, and the best example I can give is that I heard the hon. member for Richmond-Wolfe (Mr. Tardif) and the hon. member for Sherbrooke (Mr. Pelletier) say this afternoon that they regretted and deplored the decision taken by the Minister of Industry, Trade and Commerce (Mr. Gray) with respect to a particular industry in their regions. Well, I have one at home and it is the footwear industry.
Those members who sit on the government side have been down on their knees over the past few days and again this afternoon urging the minister to pay special attention to the footwear industry. That makes sense because it is now obvious that the measures announced by the Minister of Industry, Trade and Commerce fall far short of the mark. Just as I did not so long ago during question period, they acknowledged that we have already lost 4,000 jobs in that sector since 1981 and that the corrective steps or measures announced by the minister just will not solve the problem. So now the Minister of Industry, Trade and Commerce is being urged to reconsider those measures. I therefore hope that all hon. members, particularly our colleagues on the government side, will convince him that the situation has to be reviewed.
As can be seen in the industry and elsewhere, Mr. Speaker, the budget measures are not quite the remedy required in this case. This is where we have to make a choice when a measure
December 8, 1981

is introduced, and we can certainly not congratulate the Minister of Finance when we known full well that practically every day those small and medium-sized businesses have to shut down. Of course, the government will say that it has created thousands of jobs over the past five, ten or fifteen years. The fact remains that 15 years ago we had 300,000 idle workers in this country whereas we now have over one million. Something is amiss. During that period, the country was run almost entirely by the same party. I think the citizens of this country have a right to question the ability of this government and to deny it its confidence. Members on this side of the House obviously cannot put their confidence in a government which shows such blatant incompetence and which has failed once again to bring down a budget likely to restore confidence and reassure the Canadian people. I hope that when the budget bills are introduced in the House a majority of members will be able to bring the government back to reason and force it, by way of legislation, to improve the proposals made, which, in our opinion, are simply not good enough.
Finally, and I will end on this note, I cannot forget the confidence that the voters of Joliette recently put in me when I asked them to tell the government that it had failed with regard to interest rates, the fight against inflation and also with respect to energy costs, in particular the cost of gas. I will not go back to the constitutional vision, as we have just passed a resolution on that. Last August 17, Mr. Speaker, the riding of Joliette, through thousands of voters, asked me to give the government the message that the people were dissatisfied, that they could no longer tolerate the lack of adequate measures with regard to the present economic situation. It is clear, even though the government does not want to admit it to the people, that we are facing very hard months ahead. It is clear that the budget will not correct nor reverse the trend. It is also clear that unemployment will increase in the next few months. I may be accused of being pessimistic, but I think it is important for the people of Canada to realize that this government is incapable of the economic leadership required to remedy the situation.
Considering, as I say, that unemployment will increase and that the economic situation will only worsen, I can only hope that in the short term we will take the opportunity to show the government our disapproval of the blatant incompetence it has shown during the last decade. That is it. I will give others the opportunity to take part in this debate, but I want to assure you, Mr. Speaker, that on behalf of all my constituents and of thousands of Canadians, I do not intend to support this budget and pretend that we can have confidence in a government that has been deceiving us for so long with measures that are inadequate and incapable of improving the present situation.


Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, budgets such as the one presented on November 12 by the Minister of Finance (Mr. MacEachen) are quite complicated documents and deserve thoughtful attention. This is particularly
The Budget-Mr. Blaikie
true of some of those aspects of the budget which are not easily understood and which are not readily identifiable as affecting the immediate self-interests of individuals or groups but which, nevertheless, have a great impact on the lives of all Canadians.
A good example of such an area of concern, to which there is devoted a separate document in the budget papers, is the area of federal-provincial fiscal arrangements, a subject I hope I will be able to reflect upon usefully in the next thirty minutes in the context of the proposals of the Liberal government. It is a concern which I hope will command some attention, as I look at an empty press gallery, even though it must compete with such highlights as inadequate mortgage legislation, the dogmatic monetarism of the Liberal Party, tax changes supposedy for the sake of equity which hurt the middle class but leave the rich unscathed, and the shameless retreat of the Liberal Party from the pursuit of controlling our own economy.
Nevertheless, the two aspects of federal-provincial fiscal arrangements which I wish to address today are established programs financing and the cuts which the government proposes in these transfer payments to the provinces and equalization payments, or the equalization formula, and the proposal of the Liberal government to use Ontario as the standard to which all other provinces will be equalized.
I feel much more qualified to comment on these matters than I would have prior to last spring, at which time I had the opportunity of being the New Democratic Member of Parliament on the seven-person, all-party special parliamentary task force on federal-provincial fiscal arrangments which released the report entitled "Fiscal Federalism in Canada" on August 30. As a task force we visited all ten provincial capitals as well as the capitals in the territories, in addition to three weeks of public hearings here in Ottawa. It was a tremendous learning experience for me about Canada, about federalism and about what has been called the nuts and bolts of Canadian federalism, the fiscal arrangements which provide for the existence of many programs and services which Canadians take for granted.
However, at the end of a long and sometimes difficult process the task force produced a unanimous report, and later I hope I shall have cause to refer to some of the recommendations in our report.
The established programs financing, hereinafter in my speech referred to as EPF, is that part of federal-provincial fiscal arrangements which provides federal funding to the provinces in the form of block funding for those services which come under the Hospital Insurance and Diagnostic Services Act, the Medical Care Act and federal support for postsecondary education.
In 1977 health and post-secondary education shared cost programs were integrated in a block-funding arrangement between the federal government and the provinces. The purpose of this significant change was twofold. It was to provide the federal government with more fiscal predictability than it had under previous arrangements wherein its spending was directly related to provincial spending, and in the same way

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the new arrangements were to act as a ceiling for the federal government, which was a form of restraint. I think it is important to note that the restraint began back in 1977, not in 1981.
There were also a number of benefits for the provincial governments in the new arrangement in 1977. They would not have to spend a dollar in order to get a dollar from the federal government, as they did under the shared cost programs, thus giving them more incentive to reduce costs. And with block funding they would be freer to innovate, unencumbered by the task of having to meet federal cost sharing criteria, a task which sometimes distorted provincial priorities. If they could receive cost sharing for the provision of acute care beds and not for chronic care beds, they tended to provide more acute care beds and neglect the need for chronic care beds. That is just an example of what I mean by distorting provincial priorities.
The block funding arrangement for health care and postsecondary education has received much criticism since 1977. Basically these criticisms have focused on the fact that the percentage of provincial spending on health care and postsecondary education has gone down significantly since 1977, with a corresponding decrease in the quality and availability of these services. Unfortunately, most provinces did not seize the opportunity to be creative in the new arrangement. Instead, they used their newfound spending autonomy to save money at the expense of the programs by allowing the guaranteed federal moneys to form a larger and larger percentage of spending in these areas. To a certain extent this is what they were supposed to do, according to the self-understanding of the 1977 EPF arrangements or agreements.
Again, unfortunately, most provinces went overboard, combining their new fiscal autonomy with the ideological zeal we witnessed in the late seventies on the part, mostly, of Progressive Conservative provincial governments, for cutbacks in government spending as the panacea for all our problems. It is, of course, a delusion which is still alive and well and seems recently to have been adopted by the Liberal government; but the point I wish to make is that EPF block funding never really had an opportunity to show its potential strength because its first five years coincided with this other historical and political phenomena. At this point we do not know, and cannot know as yet, whether the block funding could succeed in having the creative as well as the limiting effects it was supposed to have.
In any case, over the last few years there have been great arguments between federal and provincial governments about their respective contributions to health care and post-secondary education. The federal government has made much of its increasing percentage spending in this area and expressed increasing concern about cutbacks in health care and policies which seemed to retreat from, rather than advance toward, the perfection of medicare as a universal health care program available to rich and poor alike. Provinces argued, on the other hand, that the federal government was being self-righteous, that the provinces were only doing what they were expected to do under the 1977 agreement and that, furthermore, the EPF money was not as earmarked as the federal government
claimed it was. For instance, the provinces argued that the federal division of the EPF program money into two thirds for health care and one third for post-secondary education was arbitrary. Furthermore, in 1977 there was money in the EPF package which had been included in the package as compensation for the termination of an old agreement called the revenue guarantee. The money attributable to the revenue guarantee was particularly unconditional, argued the provinces. It was unfair, they claimed, for the federal government to use this money in the calculation of its spending on health care and post-secondary education relative to the provinces' contributions.
The provinces should have known that they might come to regret this line of argument, as I am sure they now do. The federal government has now adopted their arguments and the provinces are left to ponder the wisdom of their former pronouncements.
In his proposals for fiscal arrangements in the 1980s, the Minister of Finance proposes to cut federal transfer payments to the provinces by an amount equal to that attributable to the revenue guarantee in the EPF block fund, a reduction of some $5.7 billion over five years. The Minister of Finance argues two things in this respect. He argues that, after all, the revenue guarantee was not earmarked for health care and post-secondary education; thus adopting a version of things, in my view, which goes against the theory and against the statistics this government has been using for five years. The Minister of Finance also argues, knowing the frailty of his first argument and feeling guilty about it, that a good portion of this loss to the provinces will be made up by increased revenues to the provinces as a result of tax changes in the budget, leaving the provinces with only about a $2 billion loss over five years, provided that the government's economic forecast, not known for their accuracy, are actually accurate and not overly optimistic. Even according to the figures used by the Minister of Finance, a province such as my own province, Manitoba, would come out $75 million short at the end of the next five year fiscal arrangement. This is not an insignificant amount of money when one considers a have not province such as Manitoba.
The debate over fiscal arrangements is not a matter of siding with either the federal government or the provinces. This is something that I, as a member of the opposition, feel one should not get into. It is just not that simple, as I have tried to show. There are aspects of the fiscal arrangements that I do not even have the time to go into this afternoon. I submit to you, Mr. Speaker, that both sides have been less than honest in the way they have presented the problem to the public.
The only side that I feel obliged to come down on is the side of the programs themselves and the people of Canada who look to health care and post-secondary education as established programs for the healing and for the teaching of Canadians that no inter-governmental dispute should be able to threaten.
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In this respect, I now call on the federal government to recall its proposed cutbacks for three reasons. The first reason is that there is no need for them in the first place. The federal government is anticipating new revenues as a result of the energy agreement, and besides, these programs have not been the cause of the deficit. They have not grown out of proportion to government spending as a whole. These programs cannot be blamed for the deficit. The federal government could also, if it wanted to make up the amounts of money that it proposes to save through the cancellation of the revenue guarantee, raise new moneys through the closing of corporate tax loopholes, the ones they left unclosed in this budget while slamming middle-income working people. And the federal percentage of spending in health care and post-secondary education will decrease even if the present arrangements were to continue, because the federal contribution is tied to the economy, while the provincial contribution is tied to inflation. Even if things were to continue as they are now, the federal contribution to these programs would decrease further. The Minister of Finance should be well satisfied if he could convince the provinces to continue the existing arrangements.
The second reason that I appeal to the Minister of Finance to recall his cutbacks is that if he is serious about having the Minister of National Health and Welfare (Miss Begin) negotiate the clarification and enforcement of national standards for medicare, such as the banning of extra billing by physicians, the discontinuance of user fees and. even the abolition of premiums, the Minister of Finance must not then be trying to take money off the table at the same time as the Minister of National Health and Welfare is trying to put more expensive standards on the table.
The third reason that I call on the minister to recall the proposed cutbacks is that there will be some provinces that will, quite beyond whatever legitimate anger they may express at the federal proposals, use the cutbacks to justify further cutbacks in their own commitment to these programs, while blaming the federal government.
Like it or not, Mr. Speaker, there are Progressive Conservative provincial governments in this country that still resent the existence of medicare. I say this with regret. I am not making a partisan speech when I say this. This is a political and philosophical fact, and the governments of Alberta, Ontario, and others of the same ilk should not, in the name of comprehensive federal restraint, be carelessly adding fuel to the fires they would like to set under Canada's medicare system. That is what the Minister of Finance is now doing with these cutbacks. These Progressive Conservative governments, along with the paranoid, red-necked, intellectually impoverished leadership of the Canadian Medical Association, who do great disservice to all the doctors I have ever known, pose the greatest danger to medicare. Together they represent that group of people who have not been able to put their ideological hobby horses aside and accept the will of the Canadian people that there be a publicly-funded health care system in Canada second to none in the world.
The Budget-Mr. Blaikie
I call on the provinces not to compound the stress they have already placed on these programs by cutting back even more than they have already. The federal response to provincial restraint, it seems, has been cutbacks of their own. To that I say that two wrongs do not make a right. If the provincial response to these cutbacks is more cutbacks, then I can only say that three wrongs do not make a right.
Earlier I referred to the Government of Ontario as being, among others, dangerous to the future wellbeing of medicare, and to Ontario, for that matter. If there was ever any doubt about this, it was completely erased last week when the health minister of that province announced new hospital policies that would have the effect of making fewer beds available to Canadians without private health insurance. The privatization of health care in Ontario is well under way. The Frank Millers and Dennis Timbrells can hardly contain their obscene delight that this is finally going on. They did not like medicare in the first place. They did not have the guts to levy the corporate taxes that would have paid for medicare, even when they grudgingly accepted it, and now they are perversely pleased when economic perceptions, to which the Minister of Finance is carelessly contributing with his cutbacks, give them the pretext for further dismantling of publicly funded health care in Ontario where medicare has always had only a tenuous foothold.
Ontario is one of the three provinces-and I probably do not have to remind members-and the others are Alberta and B.C., where medicare premiums are still paid, a form of paying for medicare which the all-party task force on federal-provincial fiscal arrangements found to be regressive and regrettable.
The state of medicare in Ontario brings me to the second topic with which I should like to deal today-the proposals of the Minister of Finance concerning equalization.
The new equalization plan whereby Ontario will become the standard to which have-not provinces are equalized is a very dangerous proposal in my view. Economically, if it is true that Ontario is becoming a have-not province, then other have-not provinces are tied to a sinking ship. From another standpoint, using Ontario's taxation and public services policies as a national model is dangerous indeed. Ontario's taxation and social policies are not value neutral but represent the accumulated values and decisions of decades of Conservative government. To suggest that this is the national average or the national model is an affront to all those who seek improvements and shows ignorance of the extent to which all such policies are formed by philosophical choices. For instance, as I have already indicated, Ontario drastically undertaxes its resource sector and wants to privatize health care. Is this the standard to which all provinces should be equalized? I think not. In fact, I find the whole idea repulsive in the extreme for reasons of both practice and principle, as I have said. Besides, this proposal of the government vis-a-vis making Ontario the model for equalization goes against the recommendation of the

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Task Force on Federal-Provincial Fiscal Arrangements that the new equalization formula not discriminate against any one province. The proposed formula discriminates against Ontario by definition and is therefore theoretically suspect on the basis of this recommendation alone. A new equalization formula will no doubt have to be found. I am well aware of the problems which exist with the old one. It will not be easy, but equalization is an important aspect of Canadian history, of Canadian federalism and of our new Constitution. Equalization payments to the provinces are entrenched in the new Constitution, but making the entrenched conservatism of Ontario the standard to which, hopefully, more enlightened parts of the country must conform would indeed be a mistake.
In this respect I should like to respond to the remarks made in the House by the hon. member for Gloucester (Mr. Breau) who was chairman of the special task force on federal-provincial fiscal arrangements. In his speech on November 13 he stated:
In fact, it can be said that basically the federal proposals are in line with our recommendations.
I think this statement by the hon. member for Gloucester, the chairman of the task force on which I sat, is highly debatable. The hon. member was a good chairman. He helped produce a report which recommended against any cutbacks in federal support to health care and post-secondary education. It was a report which I believe went far in stopping the more draconian measures brewing on the back burner of the mysterious mind of the Minister of Finance. The hon. member for Gloucester shoud not now blur the glimpse we have had of him as an independent spirit by pretending that the government followed the recommendations of the task force. The task force indicated:
By virtue of the federal government's own internal allocation, all fiscal transfers associated with the revenue guarantee must now be considered part of the health care and post-secondary education package, and should therefore be allocated, in the renewed EPF arrangements, to health and/or post-secondary education in proportions to be negotiated.
How does the hon. member for Gloucester square that recommendation with the fact that the budget says the revenue guarantee was never allocated the way the task force obviously said it was, and that, furthermore, this budget proposes cutbacks against which the task force recommended and proposes to cut money the task force indicated must be seen to be part of the health care and post-secondary education package? People who have read the report entitled "Fiscal Federalism in Canada" and people who have read the budget document presented by the Minister of Finance entitled "Federal-Provincial Fiscal Arrangements in the 80s" will not be tricked by the facile optimism of the hon. member for Gloucester.
Although I have dealt primarily with fiscal arrangements, I should like to wind up by calling on the Minister of Finance to respond in a general way to the almost unanimous condemnation of his budget by Canadians, whether they be home owners, tenants, workers, small businessmen or farmers. I want him to respond to the unanimous condemnation of the budget and to announce soon some significant changes in the budget which will be sensitive to the condemnation the budget
has received. He has indicated that he might consider some actions. Every once in a while we get a glimpse of reflection that perhaps he is actually thinking something over. I want to second the call of my leader, the hon. member for Oshawa (Mr. Broadbent), for an immediate excess profits tax on the banks, a measure which could raise some $700 million right away, making money available for housing, interest rate relief, job creation and many of the things left undone in the budget as it stands now. An excess profits tax on banks would still leave banks at the profit rate level they had last year, which was already too high and would make the average corporation green with envy.
I support the criticisms of all those who have pointed to the way in which the budget, rather than being fair and equitable, is actually an attack on the hard-earned savings and retirement plans of many average Canadians. The loopholes closed by the government have been selective indeed, but the government selected the wrong people in most instances.
The budget deserves all the criticism it gets. I look forward, along with other members of the New Democratic Party caucus, to Committee of the Whole House wherein we will get a chance to tear it to shreds.


Mrs. Celine Hervieux-Payette (Parliamentary Secretary to Solicitor General):: Mr. Speaker, it is my pleasure to add a few comments to those of my colleagues about the budget which was presented on November 12 by the Minister of Finance (Mr. MacEachen). This afternoon, the hon. member for Joliette (Mr. La Salle) asked if anyone could reassure Canadians with respect to this budget. I believe, Mr. Speaker, that I am better qualified than he, at any rate, to do so. The fact is that when the hon. member for Joliette was sitting on the government side, the then Minister of Finance had tabled such a budget that they were voted out.
There is no doubt, Mr. Speaker, that that budget had a disastrous impact on the hon. member for Joliette, because at that time, such regressive measures as an 18-cent tax on gasoline brought the downfall of the previous government, and why was that, Mr. Speaker? They have been talking for a few days now about the bad housing situation in Canada. They conveniently forget that when they were in power, they had proposed doing away with no less than the Canada Mortgage and Housing Corporation, Mr. Speaker, a basic agency which is responsible for monitoring the housing situation in Canada. Right now, our economic growth is not as rapid as in the early seventies, and most economists agree on that point, but it is a long way from justifying the hon. member's pessimism ... Not only has the Liberal government relied on the Canada Mortgage and Housing Corporation, but the present budget has included a program which will bring 15,000 more units and a subsidy of $7,500 per rental unit with an interest-free loan, and, according to existing programs, 25,000 units, already provided for by the CMHC, within the co-operative housing and non profit rental accommodation programs, will be made
December 8, 1981

available. So, we can see, Mr. Speaker, that 40,000 housing units will be ready for occupancy. I think those policies will meet the needs of the Quebec people and that the building industry in that province will avail itself of those measures.
Single family home owners, as far as the Montreal-Mercier riding is concerned, are in some cases experiencing difficulties and I hope the program put forward by the minister concerned, will be of assistance to them. Any home owner who has to invest more than 30 per cent of his income on housing, will qualify for a special interest rate on his mortgage. Needless to say, Mr. Speaker, most of the people in my constituency are not home owners and as their representative I shall oppose a universal financing program for mortgage loans which would bring down the present interest rate of approximately 18 per cent down to 13.14 or 12 per cent, as it used to be, because in so doing we would have to take one billion dollars or more out of the taxpayers' pockets. I think that no responsible government can present a balanced, non inflationary budget and at the same time include additional taxes to pay for the mortgages of home owners. However, I am well aware of the problems and I urge the people of my constituency to contact the department. A special service has been set up to help them if the burden of the debt were to become overpowering. Among the positive aspects of this budget, let us mention the $210 tax reduction that on the average 12,000,000 taxpayers will be granted. It is almost wizardry, nowadays, to get a budget which cuts on taxes. Yet not only does the budget allow tax cuts but more than 3.2 billion dollars will find their way back into the taxpayers' pockets through income tax indexing. This means Canadians will not be penalized by inflation since taxation will be adjusted as it was in the past. Evidently our opposition friends a few weeks before the budget was tabled, raised the spectre of the elimination of indexation and today forget to mention the important fact that Canadian taxpayers will not have to pay those additional 3.2 billion dollars.
And for the Quebec people, Mr. Speaker, it is even more important, because for years the so-called soicialist, or social democratic government of Quebec has been talking about full indexation of income tax rolls but has never implemented it. On the other hand, this Liberal government that I am proud to work with, keeps maintaining this indexation which means so much to the workers of the Montreal-Mercier constituency.
Other major programs have been not only retained but indexed, Mr. Speaker. For example, mothers in my riding can still benefit from the child endowment which is indexed on a three-month basis. A tax credit for their children will go up from $261 per child to $293 per child. Old age security pensions, which were increased in the last budget by $35 besides indexation, will continue to be indexed.
And another good piece of news for the Quebec workers: Each worker's contribution to the unemployment insurance will decrease from $1.80 to $1.65 while the employer's contribution will be reduced to $2.31.
The Budget-Mrs. Hervieux-Payette
Mr. Speaker, this budget reflects the Liberal philosophy, maintaining as it does the socially oriented programs which account for a large share of the federal budgetary envelope, and yet they will enable each family in Quebec to maintain a style and quality of life which all of us ought to be proud of. 1 suggest as well that the low-income families will be glad to learn that the $200 family deduction will be raised to $400-a 100 per cent increase. That increase is on top of all the other advantages that the average taxpayer in the province of Quebec will gain from this budget. On the other hand, Mr. Speaker, a lot has been said in Quebec about fiscal arrangements. The finance minister has been very loquacious on that subject, somewhat less about his own taxes and slightly more about the contributions of that same federal government whose existence he denies. However, he forgets to mention that under the fiscal arrangements, over the next five years Quebec will benefit from an average annual increase of about 12.9 per cent. And then they often forget-and that makes me laugh a little, Mr. Speaker-that the so-called progressive university circles dismiss rather easily the contribution made by the federal government to their own budgets. Indeed, at the present time roughly 58 per cent of the funds budgeted by Quebec universities come from the federal government.
While, Mr. Speaker, there is reason to rejoice in the federal government's contributions to these programs, we must also ask ourselves how these programs are being administered by our province. In fact, Mr. Speaker, what is Quebec's record in this respect? As far as health insurance is concerned, any profits or benefits as a result of good administration of the program are transferred to the public treasury without benefit to the program itself, and as far as hospital insurance is concerned, although the federal government contributes to the program, under the Constitution hospital administration is a provincial responsibility, and the provincial government is not a good administrator. It has been making budget cuts every year and reducing the quality and especially the volume of care provided in Quebec. Where does Canada stand, Mr. Speaker, as far as per capita income is concerned compared with the rest of the world? A report by the Tribune magazine in one of the-


The Acting Speaker (Mr. Ethier):: Order. I am sorry to have to interrupt the hon. member, but it being six o'clock, I do now leave the chair until eight o'clock.
At 6 p.m. the House took recess.


[Stage Direction]
AFTER RECESS The House resumed at 8 p.m.
The Acting Speaker (Mr. Ethier):: Order, please. When the House rose at six o'clock, the hon. Parliamentary Secretary to the Solicitor General (Mrs. Hervieux-Payette) had the floor.

December 8, 1981
The Budget-Mrs. Hervieux-Payette [Translation]


Céline Hervieux-Payette: Mr. Speaker, when the House rose, I was about to quote figures from the 1981 World Almanac to show how Canadians rank on per capita income. According to my tables, Canada is fourth in the world out of 150 countries and Canadians have an average per capita income of $7,572. West Germany, the United States and France come, respectively, first, second and third.
Mr. Speaker, I think we can be proud of these statistics. However, in its November 14, 1981 issue, The Economist says that one of the problems facing Canada today and which this budget has had to face as well is inflation. I think that my constituents realize that massive budgetary spending might have increased inflationary pressures. Our colleagues opposite, of course, advocate sound conservative principles when they speak outside the House, but here they call for further spending, forgetting that the inflation rate during the last quarter has reached 12.5 per cent. But what does a 12.5 per cent inflation rate means when in the United States the rate is 11 per cent, in the Federal Republic of Germany, 7 per cent, and in the Netherlands, 6 per cent? I think that it means that the purchasing value of the dollar is eroded.
1 think that the budget shows that the Minister of Finance is realistic and responsible when he wants to extend social measures while attempting to reduce our deficit over a five-year period. I must not forget to mention the value of our currency, because all those factors must be taken into consideration when a budget is being prepared. For example, let us consider what happened in the European Economic Community or in Europe when the German mark was recently devalued by 20 per cent, the French franc by 30 per cent, while last week the Canadian dollar was worth about 85 cents. I also feel that most Canadians agree to maintain that slight margin in relation to the American dollar.
I should like to point out to the hon. members that in terms of dollars, every dollar spent because of the monetary policy of the Minister of Finance will enable us to control inflation and to ensure finally that the weekly income of the constituents of Mercier, especially the aged, the single parent families, largely made up of women and children, is not affected. 1 feel that at present, the priority of the government is to provide every citizen with the required income to enjoy a minimum quality of life, to set fair and equitable tax rates, as does the budget and manage at the same time to reduce inflation in Canada.
Mr. Speaker, one of the major components of the budget is, of course, the national energy policy implemented by the Minister of Energy, Mines and Resources (Mr. Lalonde) as well as the agreement entered into with Alberta. Since 1979, Canada was really not in a position to prepare a budget without that major component. I am pleased to note today that the Canadian government has signed that agreement with Alberta, even though the negotiations were difficult, even
though the previous government had never succeeded in reaching an agreement.
For the information of my constituents, Mr. Speaker, perhaps I should mention some of the loopholes this budget intends to plug, to indicate what the Minister of Finance exactly had in mind when he set forth to abolish some of the exemptions that were granted to certain individuals. For instance, Quebec taxpayers are already contributing to a dental insurance plan for children aged from 0 to 16. This coverage is already provided, and some $50 millions have already been paid by Quebec taxpayers. Also, a number of employers, through collective agreements, are providing their employees with free dental care programs. These are benefits which are not included in the income and which will be taxable from now on. Mr. Speaker, as a Canadian living in Quebec I think I am already paying taxes to provide my children with dental care, and that it is only fair that if such benefits are to be provided to some people, they should not be provided to only one class of citizens, as it is the case now, a very small group of workers who benefit from collective agreements, as only 30 per cent of workers are now unionized and are entitled as such to free dental programs.
Here is another example, Mr. Speaker, of benefits which will be taxable from now, I mean, in the case of a taxpayer who owns two houses. Previously, a well-advised citizen could quite legally buy a first house and register it under his own name, then buy himself a house in the country and register it in his wife's name. I think that this was the way it went most of the time, although in some cases, there are wives who have bought second houses and registered them in the names of their husbands. So when he or she sold both houses, there were no taxable gains because the houses had been registered under two different names. From now on, it is the family unit that will be taken into account under the new taxation system. The capital gains, therefore, on the second house will become taxable. I think that the taxpayers in my riding of Mercier will feel that this is quite fair, for I do not see how they could support a second residence for other Canadians or would provide them with special benefits, when some of them cannot even afford good quality housing. On the other hand, Mr. Speaker, I am also aware that some business executives were receiving interest-free loans. I too would have liked to see my constituents in Montreal-Mercier go to the bank and borrow $100,000 without paying interest. The old provisions in our fiscal law allowed corporations to lend tremendous amounts, as high as $100,000, without tax being levied on that interest benefit. I feel that this budget is simply reintroducing equity for Canadians. The 12 million taxpayers who were granted a tax reduction through this budget cannot but agree. As far as I am concerned, I must state that in my constituency I received only one letter, and it came not from a firm but from a business association. I can understand that some adjustments have to be made. I can understand that some non-discrimina-

tory interpretations have to be drawn, and I believe the initiatives in the new budget will be interpreted in a fair and equitable way by the Minister of Finance.
Mr. Speaker, this afternoon the hon. member for Joliette (Mr. La Salle) raised the matter of the urea-formaldehyde foam insulation, and he suggested the government should commit funds in that respect in the budget. I must state that as far as I am concerned, I have followed the situation very closely because in my constituency, I know of a number of victims. The Minister of Consumer and Corporate Affairs (Mr. Ouellet) is now considering different measures to help those involved.
But what I would like to condemn at this point is the behavior of the hon. member for Joliette who in his capacity as the former Minister for Supply and Services, had agreed to an established standard for the use of that foam insulation under the previous government. And now, the hon. member has stood in his place and told us this afternoon that remedial actions had to be taken. I would point out that the product was allowed to be used when he was minister, and the people in the constituency of Joliette must know that the hon. member for Joliette approved that product. And if problems arose because of what may have been faulty application or installation, I feel that this government will take its responsibilities as it did with the budget. But I also think that this responsible government is not willing to commit $1 billion of the taxpayers' money to solve a problem where a much smaller amount may be needed.
Mr. Speaker, 1 have listened with great interest to the many well-documented comments made by my colleagues from the NDP on medicare programs. I must say how I sympathize but I find it passing strange that their arguments should always center on provincial programs and that they put so much emphasis on bank profits. I am not here to speak in defence of the banks, Mr. Speaker, and I do think that we passed an excellent piece of legislation on that matter earlier in this session. I will leave it up to the Minister of Finance to decide whether he wants to consider this issue. Still I think that it is not with our hearts but with our heads that we must analyse this budget, and that is why I ask every member of this House to think that each and every citizen of his riding, each and every taxpayer, everyone in fact must have his or her fair share of the gross national product and of the wealth of this country, and that is why, Mr. Speaker, as a Quebecer I am proud to vote in favour of a budget such as this one.


Benno Friesen: Mr. Speaker, I rise on a point of order. Would the hon. member for Montreal-Mercier (Mrs. Hervieux-Payette) permit a question? I believe she has some time remaining.
The Budget-Mr. McLean


The Acting Speaker (Mr. Ethier):: Will the hon. parliamentary secretary entertain a question from the hon. member for Surrey-White Rock-North Delta (Mr. Friesen)?


Céline Hervieux-Payette: Mr. Speaker, if the question concerns the minister's portfolio, I am unable to answer questions for him.


Mr. Taylor:: She doesn't have any answers. She just reads them.


Walter Franklin McLean: Mr. Speaker, I welcome this opportunity to add the concerns of the people of Waterloo riding to the national tide of dissatisfaction which has risen to greet this antisocial and regressive budget.
In a document which gives the government such an important opportunity to send out so many signals of its social policy, even those in my area who have supported the government so loyally for so long have found that there is nothing but a cold shoulder for the growing number of unemployed, the small family farmer, the low-income insurance policyholders, the small business community, and perhaps foremost is the sector of Canadian society made up of victims of this government's last budget and its continuing high interest rate policies. I refer, of course, to home owners. I refer also to those on fixed incomes, whether veterans, widows, single parent families or the elderly.
In this budget, which has been presented with such fine rhetoric, Canadians are blamed for inflation. They are force-fed with price increases. They are ignored if they are not working. They are taxed more if they are working. And they are forgotten if they are unable to work.
The most devastating of the finance minister's error in judgment is the one of omission. Nowhere in all the volumes that go to support this budget is there even the slightest bit of evidence that the minister, or his officials, who seem to have taken hold of him in the process, have ever considered giving encouragement to the voluntary sector.
On top of forcing cuts to community based centres and transition homes for women, the government refuses to maintain and to widen caring alternatives, which are supplied across our nation by the voluntary community. Already faced with staggering increases in the operating overhead as a result of the government's refusal to offset unprecedented postal rate increases, the voluntary sector-the YMCAs, the Cancer Society, the Red Cross and the churches-is being overloaded and discouraged just when the need is greatest for their goods and services.
It is not surprising that in recent days those looking at the fabric of our Canadian society see the potential for a great deal of social violence and social strife. Already instances of family violence are up as family after family seeks to make ends meet just to provide the basics.
At a time when unemployment in Kitchener-Waterloo, in the surrounding area and generally in southwestern Ontario, has never been greater, this budget does not create even one job. As my colleague, the hon. member for Cambridge (Mr. COMMONS DEBATES
December 8, 1981
The Budget-Mr. McLean
Speyer) said on November 18, "There is no reason to believe that this government wants Canadians to believe they have the right to make a living".
My colleague, the hon. member for Elgin (Mr. Wise), former minister of agriculture, pointed out on November 19 that the Minister of Finance's (Mr. MacEachen) elimination of the income-averaging annuity contracts and the capital gains tax reserve has tragically penalized the retirement income of the Canadian farmer.
It would seem clear that no one in this government understands the fact that a farmer's retirement income lies in the sale of his land. No other segment of Canadian society has its retirement income so severely taxed. According to the government's own Statistics Canada figures, Canadian farmers will bear the brunt of the economic effects. Their net income is expected to drop by about 15 per cent. Farm operating costs will rise faster than the return on the sale of farm products. On top of this must be added the hidden costs of energy price increases, which alone will account for a 2 per cent increase in food prices. These have not been offset by any form of energy tax credit, a feature in the Crosbie budget. The Crosbie budget now looks much more humane and compassionate in terms of the human and social side of its proposals, which brings me to this government's assault on the ability of low-income Canadians to plan a family's financial security.
At the national pensions conference held in Ottawa in April, the Minister of Finance had some interesting comments. Fie said:
I think it is universally agreed that private pension plans will continue to play a vital role in the retirement income system.
The effect of inflation on private pension plans is perhaps one of the most difficult problems that we face. I think we must deal with the harmful effect inflation can have on those with pensions from employer-sponsored pension plans and on those people in our society who are least able to protect themselves from inflation.
Finally he said:
The federal government, acting alone, cannot give Canada a retirement system geared to suit the expectations and the needs of Canadians.
Despite those statements, Mr. Speaker, made just over six months ago, the Minister of Finance, acting alone, has, without warning, knocked the bottom out of the private pension market, employer-sponsored pension schemes and the retirement plans of millions of Canadians. To rearrange the minister's own words, the federal government, acting alone, can give Canada a retirement system completely unsuited to the needs and expectations of Canadians.
Another of the many areas with which this budget has tinkered so callously is that of support for health care and post-secondary education. The budget includes an attempt to reduce the federal government's obligation to assist in the financing of health and post-secondary education by $5.7 billion over the next five years. We all remember now that on budget night the Minister of Finance argued that such reductions would be offset by $3,790 billion in additional tax revenues to be collected by provincial governments. Already he
has revised this figure downward by $662 million, meaning that provincial tax revenues will be raised by $3,128 billion, but they will have $2,562 billion less to use in the health care system and for the Canadian community colleges and universities.
It is indeed ironic that after justifying the new energy taxes, which are part of the agreements they signed with the governments of Alberta, British Columbia and Saskatchewan, on the grounds that the national government had to be able to distribute energy wealth across the country more equitably, this budget does not propose to spend one cent of the $7.5 billion additional revenue on either health care or post-secondary education. Indeed, the budget proposes to save government money at the expense of these two social programs.
I am urging, within my own riding of Waterloo, the University of Waterloo, Wilfrid Laurier University and Conestoga College, just as I urge the representative bodies from the sector of post-secondary education across the nation, not to be deluded by the finance minister's subtle and confusing schemes. Just as this budget includes no job creation incentives, neither do our community colleges receive extra funding for retraining initiatives and programs geared to the thousands of Canadian women who are seeking to re-enter the work force.
I should like to say that the mail I have received from Kitchener, from Waterloo and from the townships of Woolwich, Wellesley and Wilmot which I represent, and from across Canada since this insensitive budget was introduced, is overwhelming. It outlines the unnecessary suffering the budget inflicts on those in our society who are least able to cope. Here, is just one of several examples: I quote from a letter written to the Hon. Paul Cosgrove, minister for housing. It states in part:
There are few words strong enough to express my displeasure with both the current state of economic affairs and the recent budget. You see, I am one of the unfortunate individuals whose mortgage renewed at high interest rates. To be precise, on August 25, 1981 at 21'/2 per cent, up from 93/4 per cent. On a mortgage of approximately $44,000, the interest rate increase meant monthly payments would increase by approximately $400 in after tax dollars.
Further on the letter goes on to read:
The disappointment you have created in hundreds of individuals who put their trust in you is beyond comprehension ... it's criminal and I am both angry and depressed. Here are some alternatives:
(B) Sell and rent. Almost a (zero) per cent vacancy rate in this area.
(E) Sell more annuities and life insurance, my profession, to earn additional income. Although I'm working night and day to reach that objective, I guess it goes without saying that Mr. MacEachen's budget has blocked this alternative, the repercussions of which will be monumental and will become apparent in the immediate future.
I have another letter which has come to me from the head office of a National Company, Home Hardware. The general manager of that collection of entrepreneurial and energetic hardware operators across the country writes in this letter, addressed to Mr. MacEachen:
The provisions in your recent budget to transfer the collection of the Federal Sales Tax to the wholesaler is one that perplexes our industry-
December 8, 1981

Transferring the tax to the wholesale industry will increase the paper-work burden by more than 1,000 fold ... We urge you to reconsider this very costly proposal until it can be studied more fully by government and the industry . .. the tax should be applied on the acquisition cost and not on the wholesale selling price.
Again, Mr. Speaker, from across this area of Canada, full of representatives of working people in our industries, representatives of small business people, comes another letter which states in part:
Why are you removing the incentive for the small business?
This person goes on, as he sees the dilution of his Canadian dream, in these terms:
The shame of it all is that we are a consulting firm specializing in productivity improvement, something this country and your government needs badly. We are very successful in this and are having good results in the immediate area which, as you know, suffers from severe economic problems, plant shut downs, lay-offs, etc. However, your budget is destroying us and the people we are trying to serve. You may have been out to catch the super rich, but you caught us in the same net.
The budget, in its efforts to come to terms with the importance of responsibility in government planning, has done something which the previous budget presented by those on this side sought, has not balanced restraint with compassion. It has not offsets for those who are hurt the most.
Since the finance minister is so interested in bottom lines, as he is fond of saying, and not in social costs, let me conclude by giving him a message relating to both on behalf of the people of Waterloo riding whom I represent. This budget offers no incentive for people to invest either for themselves or of themselves. I urge the minister to withdraw the budget and realize the disastrous social effects it is having upon the morale of the people of this nation.


Hon. John C. Munro (Minister of Indian Affairs and Northern Development):: Mr. Speaker, the over-all intent of my remarks tonight will be to point out some of the very tangible benefits of this budget for the native people. But first, as far as the general thrust of the remarks by my colleague, the Minister of Finance (Mr. MacEachen) in his budget speech is concerned, it is of no less interest to the native and northern Canadians than to others. It seems to me that the task of crafting a national economic policy requires the meshing together of a multitude of considerations into a coherent over-all policy. I congratulate my colleague for his general approach to the economy and I also thank him for the consideration which his budget showed for the particular interests of those Canadians whom I represent in cabinet.
As the Minister of Finance said, the budget has three main themes: equity, restraint and economic renewal. The budget embodies two measures which will have a direct impact on natives and northerners in which these themes are clearly evident. These three elements of the budget package are combined in its approach to native economic development. According to the government's fiscal plan until 1985-86, a sum of $345 million has been reallocated from the Western Development Fund to the social affairs envelope to meet the needs of the economic objectives of the native people.


An hon. Member:: How much was that?
The Budget-Mr. J. Munro


John Carr Munro: It is $345 million. Indian people have demonstrated a growing capacity to capitalize on economic development opportunities over the past decade. Wherever I go these days, I hear native leaders describe economic development as a remedy for their peoples' social ills. Perhaps jobs and money in peoples' pockets is not the only answer, but I am satisfied that the systematic identification and exploitation of economic opportunity is one of the single most promising approaches available to us. I am indeed pleased that by agreeing to reassign moneys on the scale which was mentioned in the budget, my colleagues have made a major resource commitment in this direction.
Over the past few years, native leaders have substantially contributed to the evolution of a national approach to break the old cycle of welfare dependence. Together, we have been able to identify significant economic and employment opportunities. Our research indicates an on-reserve potential for thousands of jobs for Indians if we can build on the resources of reserves. The off-reserve potential for native people to be gainfully employed is estimated to be similar, according to our findings.
Through experience, some of it admittedly bitter, we have been able to isolate several limitations to past economic development strategies which were designed for the Indian people. Our primary conclusion was that they have not always had enough control over their own social and economic development and have not had the chance to shape it to their own particular values and widely varying needs. We must ensure that this does not happen again.
Another major impediment to encouraging appropriate economic development has been the absence of one essential ingredient, which is money. All the potential that Indian people can muster will not create jobs and wealth to get them on the road to recovery of their self-reliance without the money to make it happen. In the past, the funds necessary to generate native-run ventures have too often been consumed by the relentless demands of the welfare cycle. The government is taking a positive step in the right direction by setting aside the money identified in this budget. This is the proper direction to follow because Indian people have played a substantial part in its choice. In short, the government has shown the political will to direct a major portion of its new financial allocations toward economic development for native peoples.
To return to the main themes of the budget and how it benefits another group of people for whom I am responsible in cabinet, it is evident also that the principle of equity in taxation has particular significance to northern Canadians. I feel it is vital for northerners to understand that principle which is at stake in taxation of northern benefits. I want to do what I can in the House to clarify this issue and help people make sense of what some may fear is simply just a withdrawal of federal support to people living and working in the north, so I hope that hon. members will bear with me for a moment.
Above all, I want to assure the House that every effort will be made to see that the special needs of northerners are

December 8, 1981
The Budget-Mr. J. Munro
answered in a way that is compatible with Canada's tax system.
I recall with some vividness my first tour of the north as Minister of Indian Affairs and Northern Development in the early 1980s. I remember clearly the anxiety and sincerity with which I was greeted in numerous communities during that tour which coincidentally closely followed an administrative decision to eliminate the customary exemption of northern benefits which had been permitted until then. I, for one, Mr. Speaker, remain convinced of the necessity for finding an equitable solution.
As you know by now, a decision has been taken to discontinue the temporary remission from taxation of certain employee benefits accorded to people working in the north and in isolated posts. That remission order, or moratorium, was due to expire on December 31, 1981. After that date, low-cost housing benefits, subsidized housing allowances and travel assistance in respect of transportation and medical purposes would have become taxable like any other income.
The effect of the budget, then, is, first, to extend the moratorium for another year until December 31, 1982. The tax relief is limited to those benefits that are granted under employer-employee agreements reached before this budget was announced. All such benefits will become taxable as income from employment effective January 1, 1983. The extension will allow sufficient time for employers and employees who are directly affected by this decision to negotiate the required adjustment.
Second, beginning with the 1982 taxation year, and for the following years, the list of qualifying deductible medical expenses will be extended to include travel costs incurred by residents in isolated areas so that they may receive medical services which are not available to them in their region. I welcome this measure which contributes toward improving the fairness in the accessibility in the medical services for all Canadians wherever they may live.
It is well known that in order to attract experienced workers in the north and other remote areas, industry and governments have to offer higher financial incentives. The present system favours employees represented by unions which negotiate nontaxable benefits which are added to their members' basic wages. For the majority of employees who are not represented by unions, the additional financial incentive offered to them by small employers to work in the north has been built into their basic wages and consequently has been fully taxed. This clearly is unfair and unacceptable.
The cost of living in the Northwest Territories and the Yukon affects all northerners to some degree. Therefore, any measure to assist them should benefit everyone, and, preferably, it should be related to their economic status.
As indicated in the budget, the delay of one year will allow the government to have adequate time to review the need for and the means of providing special assistance to employees working in the north and in isolated posts. I am pleased to say that I have been assigned this responsibility and that I have
already instructed my officials to look, in co-operation with officials of other departments, at possible means of responding to the special needs of northerners in a way that is compatible with Canada's tax system. The difficulty we are faced with is how to offset termination of the moratorium without creating a precedent in the national personal income tax policy. I am confident we will find a solution in the ensuing years.
I have followed closely the budget debate and the public comment over the last four weeks. I have been impressed by the one conclusion that must be reached by any hon. member who is prepared to deal with the economic facts. The undeniable truth is that nothing which has been said in the debate undermines the fundamental premise of the budget as presented by my colleague, the Minister of Finance. The Minister of Finance set out to establish-convincingly, I believe-that there can be no deep and lasting relief from our current economic ills, including high levels of unemployment, slow economic growth rates and high interest rates, until inflation is reduced. We must do all we can to bring down the rate of inflation. This is what the measures introduced by the budget will help bring about, if we give them a chance. As my colleague, the Minister of Finance, stated in the House:
We will generate less employment, less growth and more unemployment if we attempt to live with inflation than if we resolve once and for all to see it steadily reduced.
As a trading nation, Canada has no choice but to follow this policy with determination. All hon. members are aware, but it bears repeating, that Canada is an open economy; 25 per cent to 30 per cent of our gross national product is generated by exports. If we are to remain competitive with our major trading partners, we have to make sure that the rate of inflation in this country does not exceed that of our competition. This is particularly the case at this time. The principal policy objective of the United States, which accounts for about 70 per cent of our exports, is to break the back of inflation. This is what the United States government believes it must do in order to put its own house in order and enable it to meet tough competition in its domestic and world markets. The current projection is that the United States may be able to achieve an inflation rate of 7.5 per cent to 8 per cent in 1982. This compares with an inflation rate in Canada of 12.7 per cent. Unless we are determined to bring our rate down, a gap of more than 4 per cent in the inflation rate between Canada and the United States will impose a severe burden on our ability to compete in our most important markets.
As a Member of Parliament from a so-called steel city, 1 know this could a have a major impact of a deleterious kind in terms of steel production in that city and a more exaggerated and unfortunate impact on employment rates in the steel industry.
The budget reinforces the determination on the part of the government to take the lead in bringing down the rate of inflation. In the first place, the government is taking effective measures to reduce the budgetary deficit. We believe that the vast majority of Canadians support this endeavour, since too
December 8, 1981

great a share of tax revenue is now needed to service the national debt. This process was started in the October 1980 budget. It will move forward at an accelerated rate under the current fiscal plan. The deficit and financial requirements will be reduced by $2.9 billion, to a level of $10.5 billion in 1982-83, and there will be a further reduction in 1983-84.
By bringing down the deficit, the government will ease pressure on interest rates, the magnitude of this initiative and its potential for economical stimulation can be measured by the fact that the deficit amounts to 4 per cent of the gross national product this year and, according to the strategy under the current fiscal plan, this could be reduced to 1.9 per cent of the gross national product by 1985-86.
At the same time my colleague, the Minister of Finance, has made provision to continue to assist those Canadians who need government help and to ensure that the burden in the fight against inflation is shared equitably. This is done in a number of ways, first, it establishes a greater measures of equity in the taxes Canadians will pay starting next year. For example, by taking back some special privileges enjoyed by a minority of taxpayers it will make possible a reduction in taxes for about 12 million taxpayers. Taxes will be about the same for Vh million taxpayers, and they will be higher for fewer than
800,000.	The lower taxes for the majority of Canadians hopefully will provide new incentives for individuals to work, save and invest.
Second, the budget brings a significant measure of relief to Canadians who have been hard-pressed by high interest rates, including Canadians who are renewing their mortgages and small business proprietors and farmers who need to finance their operations. The government is allocating $400 million to help Canadians renewing their mortgages, to assist small businesses and farmers and to stimulate the construction of new rental units in metropolitan centres.
Third, the budget will continue the previous measures for indexing which have assisted taxpayers to meet increases in personal and family living costs due to inflation. For 1982, personal exemptions, tax brackets and the refundable child tax credit will rise by 12.2 per cent. The personal exemptions for a family of four will rise from $7,230 to $8,110 next year. The largest percentage benefit from indexing will go to lower-income taxpayers. The total benefit for all taxpayers will amount to more than $3 billion.
The budget must also be given credit for reinforcing a new economic climate that is responsible for bringing down interest rates. It does so, I believe, by giving the strong indication that our inflationary expections have been misguided. We can do something as a country to bring down the rate of inflation, and the reduction in interest rates which all Canadians want is bound to follow. We have already witnessed with a great sense of relief over the past few weeks and months a lowering of interest rates, which certainly is some indication of confidence in the direction we are taking with this economic policy.
As my colleague, the Minister of Finance, has indicated on a number of occasions, the budget measures will be examined in detail in Committee of the Whole. The government will be
The Budget-Miss Carney
guided by the three themes which were set out in the budget itself; namely, restraint in government spending, equity for all taxpayers and economic renewal. If all hon. members are motivated by the same considerations, I believe we will be in a good position to work toward the economic recovery this country badly needs and richly deserves.


Miss Pat Carney (Vancouver Centre):: Mr. Speaker, I rise today to debate the very damaging and destructive budget which was tabled in this House on November 12 by the Minister of Finance (Mr. MacEachen). Events since then have shown that the budget has had a devastating impact on the economy of our country and on the lives of individual Canadians. The budget is so harmful that in the few short weeks since its introduction the Minister of Finance has been forced to acknowledge three major errors. He has had to change the rules affecting rental housing construction so that the 13,000 homes now under construction can proceed, he has had to give special dispensation to allow certain corporate takeovers to be completed under terms introduced in previous budgets, and he has had to confess to a $700 million error in the federal government's projections of lost provincial revenues. And that is only the start.
At a time of increasing unemployment, the minister has introduced measures which will severely cripple small business, which is one of the most important job-creating sectors of the economy. When nearly one million Canadians are out of work, he has threatened major industries such as the insurance industry, which employs thousands of Canadians, the construction industry and the forest industry. At a time of high interest rates he has brought in a budget which imposes new taxes on income before it is even received, forcing companies and individuals to go to the banks or bankruptcy courts. At a time when productivity is low he has introduced measures which create a tax structure which discriminates against young, expanding and innovative firms which need their cash reserves to finance their future growth and favours established, mature companies which have the resources to pay dividends. At a time when vast new sources of financing and saving are required to finance the projects we need to sustain our economy, he has wiped out incentives to investors. At a time when Canadianization is a goal of government, he has eliminated the right of Canadians to deduct interest on loans made to invest in Canadian companies and given foreign investors a clear advantage over Canadian investors. At a time when Canadians' confidence in the economy is at a 20-year low, the minister has launched a massive assault on our homes, our jobs and our savings. This is not merely my assessment of the havoc that he has created, Mr. Speaker, nor is it only the view of the major interest groups. It is the assessment of those Canadians who have to live with this budget.
Tonight I want you, Mr. Speaker, to hear some of the concerns that have been expressed. A good overview of the feeling of outrage in the country, was expressed by a voter in

December 8, 1981
The Budget-Miss Carney
the constituency of the Prime Minister (Mr. Trudeau). He writes:
The Liberals are now proposing to tax the insurance policy income of widows and orphans, the deferred income savings of one-shot earners and the annuity build-ups of self-employed people who have no company pension fund or fat indexed civil service retirement scheme. This is a confiscation of property on a scale not seen since the days of the robber barons of the middle ages.
The general anxiety felt by many Canadians is expressed by the senior citizen who spent her life savings of $500 and borrowed more than $1,000 to buy a wheelchair.
She wrote me:
How on earth can I pay $1,000 back with the high cost of food, shelter and phone and now this dreadful budget? This budget is making everyone live in fear and fear is foreign to me.
One of the most fearful aspects of the budget is its impact on housing and construction. The budget has not done anything to relieve the critical shortage of housing in the country. Indeed, it has deliberately eliminated tax incentives which have encouraged the construction of rental housing in the 1970s.
The Rental Housing Council of B.C. notes that in the past when incentives were withdrawn, the bottom dropped out of housing development, and vacancy rates dropped to near zero. When the present tax incentives cease at the end of the year, housing experts predict a rental housing famine for years to come.
Tenants in Canada are already suffering from a shortage of accommodation and rising rents. There is the Vancouver apartment dweller whose rent has just increased 66 per cent, from $850 to $1390 per month, and who realizes that with the withdrawal of incentives for rental housing, he will be unable to find cheaper accommodation.
Then there is the case in my constituency of the three senior citizens whose rent is soaring by 70 per cent, from $235 per month to $400 per month, because their building has been sold and they are being forced to assume the burden of the refinancing costs.
There are agencies such as the Kitsilano housing registry in Vancouver, which is in my constituency, which is trying to find housing for single parents who are only able to pay $200 to $300 a month, in a market where a two-bedroom apartment rents from $600 to $900 a month and a one-bedroom apartment from $400 to $600.
The Greater Victoria Apartment Owners Association has advised the minister that without incentives rents on new units will double, and many tenants simply cannot afford to pay.
The association president, Robert Jawl, writes:
We think people who are forced to rent can be kept housed in decent shelter. Surely Canadians are not asking for favours when they ask that much.
When the then minister of finance, John Turner, introduced the capital cost allowance on MURBs in 1974, he said:
I am confident that this measure will attract a significant amount of private equity capital into the construction of new rental housing.
History has shown that Mr. Turner was correct. History will show that his successor, the present Minister of Finance, is
wrong in removing the incentives which have provided Canadians with homes in the past.
Another concern of individual Canadians is the elimination of the right to deduct interest on loans made to invest in Canadian companies. This right has existed since 1948. This right has been in place for 33 years. Its purpose for 33 years has been to provide an incentive to cautious Canadians to take a risk on the future of our country. This budget makes it a poor risk, since many Canadians have borrowed money and have made commitments in good faith based on measures that were introduced by the past Liberal governments. Now they find they face heavy tax penalties.
There is the college professor who has written the Minister of Finance in these terms:
Please help, 1 will be placed in a serious financial situation unless you reconsider a grandfather interest deductibility for commercial as well as residential investments.
He was a small investor with a few thousand dollars who borrowed to invest in a real estate partnership under the tax laws prevailing at the time. His anticipated interest costs for 1982 are $20,000, which represents a large share of his aftertax salary, his only source of income. The investment is not liquid and will not return any income until 1990. He writes:
It seems most unfair to change the law when I cannot alter my investment which was only feasible under the previous rules.
There were thousands of British Columbians who borrowed money from the chartered banks to take advantage of an opportunity to buy $400 million worth of shares in the British Columbia Resources Investment Corporation. That was the largest share issue in British Columbia's history. People bought their shares then at $6 each. The current market price is about $3.20, reflecting the depressed economy. Yet many small shareholders and first time investors find they can no longer deduct the interest on the money they borrowed to buy a share of their own provincial resources, unless they have other investment income.
Then there is the Canadian businessman who was trying to build a group of totally Canadian employee-owned businesses in Canada, who writes that the loss of interest deductibility will have a disastrous effect on his company's operations, growth and ability to maintain a Canadian presence against its foreign-owned competitors. He writes:
I, my 100 fellow shareholders and our 500 employees, many of whom aspire to future ownership and management in our companies, have never felt so betrayed or sabotaged in our efforts, as by our own government in the new proposed budget.
Buying a share in the company which employs them, thus helping them to secure their jobs, is the dream of many Canadians. That dream has been shattered by the elimination of interest deductibility for many Canadians.
There are all those Canadians who are writing the Minister of Finance for the first time to point out the unfairness of the government's move in changing rules after commitments have been made. One Canadian writes:

I am incensed that you have the gall to close the "rich man's loopholes", while only a few years ago, you referred to these loopholes, as "tax incentives for housing".
Previous Liberal ministers introduced these measures to encourage Canadians to invest in Canada, to provide for their own financial security and to help Canadians to own a greater share of their national resources and economy. History will show that these Liberal ministers have been right. History will show that the present Minister of Finance has been dead wrong.
The elimination of the interest deductibility is particularly destructive to the very sectors of the economy that this government has sought to encourage. Those companies which require all their cash resources to finance their expansion, and thus do not pay dividends, have been particularly savaged. This group includes junior oil and mining companies which require their funds for exploration and development and high technology companies which use their cash resources to develop new product lines and thus do not plan to pay dividends in their first few years of operation.
The president of one high-tech company, with offices in my constituency, wrote the minister:
The damage that will be done to the growth section of the Canadian economy, the largest provider of new jobs for Canadians, cannot be justified.
A Canadian who located and brought four mines into production in the last 25 years wrote the minister:
The move to propose to limit the deduction of an individual to the amount of his annual taxable investment income is absolutely insane.
Where do you think the majority of money comes from for the initial and secondary financing of the resource orientated companies of this resource rich country of Canada?
This budget removes the incentive to invest in our own country.
There are other measures in the budget which have dealt a bitter blow to many small businesses, many of whom must now pay tax on income before they actually receive it and whose sources of alternative financing have been wiped out.
There is the oil field operator who finds himself being taxed on profits he has not yet made, on business decisions he made under previous budgets, or even on possible future income. He writes: [DOT]
These provisions as contained in the budget are nothing short of legalized extortion.
There is the logging truck operator in southern British Columbia who bought a tandem trailer truck under financing provided through the Small Business Development Bond first introduced in the budget of the hon. member for St. John's West (Mr. Crosbie). Under the budget of the Minister of Finance, this development bond has been downgraded to a "bail-out" bond, available only to companies in trouble. Since his bank refuses to proceed under the new budget measures, he is left with an expensive piece of equipment, high interest rates and no source of financing.
The Budget-Miss Carney
Then there is the small developer who has been effectively put out of business through the elimination of mortgage reserves. He writes that it normally takes him 10 years to get a subdivision plan approved before he starts to market the property. In the past he usually negotiated a downpayment in cash and then took back a mortgage on the property he sold. He was allowed to declare the profit and pay tax each year as the mortgage payments were made. Now he must declare the entire profit and pay the tax in advance, even though it may be years before he receives his full payment. He wrote to my office as follows:
I was just reaching the stage where lower interest rates made it feasible to start developing some property. Now it wouldn't matter if rates dropped to 5 per cent. I would still be out of business.
Then there is the small developer who has been working for more than a year negotiating the rezoning of his building in a lower mainland municipality. He has written to the minister responsible for housing as follows:
How in the world is an individual supposed to plan in today's economy when you change the rules with no warning and give no time for individuals to prepare or plan their business policy?
There is the Victoria businessman who, with his family, purchased a parcel of land with the intention of developing it as a site for a commercial office building under previous budget provisions. The new budget alters the entire economics of his proposed development. He has been working on his project since November, 1980. He may now be forced to abandon it and face carrying costs of $20,000 per month.
Of course one of the outrageous aspects of the new budget is the provision which taxes accrued income on life insurance policies. In effect, the government proposes to tax income long before it is received. The hon. member for Waterloo (Mr. McLean) dealt with this matter earlier this evening.
Then there are all those measures which impact personally on individuals who run their own business or whose union has negotiated employee benefits in the form of dental plans and medical insurance. Under the new budget people receiving such benefits must pay tax on them. One union official advised me that this provision alone could destroy years of work by the union movement in approving the over-all pay package of Canadians. It will also encourage union negotiators to increase wage demands as compensation at a time when the government is asking Canadians to accept lower wages.
Another unfair blow deals with the small businessman who now finds that he cannot utilize his company's deferred profitsharing scheme, his hedge against future years when his earnings may be low. Many small businessmen do not know how much money their companies will earn in a year. Thus they draw very limited salaries and, in the event that there are any profits, they allocate funds to their deferred profit-sharing plan. Now these principals are effectively penalized for setting up their companies, assuming risks and putting their money on the line to create the jobs Canadians need and the goods and services Canadians want. Similarly, the 12.5 per cent tax on dividend contributions to small business will make it harder to finance small business from internal cash flows and increase

December 8, 1981
The Budget-Miss Carney
their reliance on bank financing. Clarkson-Gordon estimated that the dividend tax credit amounts to an increase in income tax of nearly 40 per cent for a small businessman who before the budget took his salary in the form of dividends, if and when he made them. The frustration of many small businessmen is echoed in the one who wrote:
Canada did not attain its present state of prosperity and advancement through a system of penalizing personal initiative.
There is another measure in the budget which hurts individual Canadians, and it deals with income averaging. In the past, individuals who receive severance pay or writers and artists whose annual income varies could roll their funds into income-averaging annuity contracts or registered retirement savings plans. This provision has been eliminated. The result is that the financial security and the retirement plans of many people have been shattered. There are the public servants and other employees who no longer have an opportunity to transfer severance benefits, without tax penalty, into registered retirement savings plans or to use such plans for the purchase of other types of income annuity plans. Initially this tax deferral mechanism was introduced in other budgets to encourage savings and to help people prepare for their retirement years. Now people who planned their entire retirement income under existing budget provisions will also find themselves paying taxes. The fact that they will now be taxed on their retirement allowance means many people will have to rethink their retirement plans. They are also writing to the minister and to their Members of Parliament.
When RRSPs were first introduced in 1957 by Liberal finance minister Walter Harris, he said:
Whatever the subsequent loss of revenue may be, it can, however, be regarded as an indication of the volume of provision being made by Canadians toward freedom from financial worry at a time when their earning power has lessened.
To me, this policy makes good sense. Moreover, the broad effect of this new policy will be anti-inflationary, since it will be an encouragement to increased immediate saving which will be productively employed.
History has shown that Mr. Harris was right; history will show that the Minister of Finance is wrong. The budget provisions which affect income averaging do not just affect the wealthy. They affect farmers who sell their only asset, their farm, and plan to live off the proceeds. Now they too face a heavy tax penalty. They affect thousands of Canadians who bought a registered home ownership savings plan and now realize that they will never be able to buy a house. Before the budget they could roll that money into an income-averaging annuity contract. Now, without any warning, they face the prospect of paying a heavy tax penalty at the time of the rollover. Many people affected by this category have been in touch with me. They are senior citizens who quite simply need the extra money which they must now pay in taxes to keep themselves above the poverty line.
The loss of the general averaging provisions also removes an element of financial stability for people whose incomes vary from year to year. There is a logging operator in northern British Columbia who spent years building up his business. Now, through the elimination of the provision, he will get hit for taxes the first year he meets with any success. There is the
west coast fisherman who did well during this summer's salmon season after several years of poor runs. He operated the whole season under the existing general averaging provisions, and now he feels he will have to pay extra taxes. The loss of this provision hits hard on small business people who earn very little in their first years of operation while they build up their business and then face high taxes in their first good year of operation.
I have attempted to convey some of the views of ordinary Canadians who have been affected by the budget. One of the best views comes from a British Columbian who wrote to the Minister of Finance as follows:
Please explain to me how a budget that creates unemployment, stops construction of housing units, bankrupts the middle class and hamstrings Canadian investors can help Canada at this time.
But I think the best summation of all comes from another British Columbian who wrote the minister as follows:
I'm mad as hell and I'm not gonna take it anymore!
Canadians will not accept the budget. It has caused too much pain, too much anguish and too many broken commitments. The problems are too big for band-aid treatment. The budget must be withdrawn.


Some hon. Members:: Hear, hear!


John Leslie Evans: Mr. Speaker, in light of what the hon. member for Vancouver Centre (Miss Carney) just said, it would be worth repeating that the minister indicated on a number of occasions that where serious problems are being caused for individuals who made plans and provisions under the old tax rules, he is prepared to consider them seriously and to bring about adjustment provisions for the transition from the old regime to the new regime. It is really unfair to stand in the House of Commons and indicate that the new regime will come into effect immediately without any adjustment or transition provisions, when the minister indicated clearly that such measures would be forthcoming if it could be shown that serious difficulties were being caused for Canadians as a result.
The hon. member for Vancouver Centre raised another point and before I get into my discussion I should like to deal with it. The hon. member discussed a great many of the incentives that have been put into the tax system in past years.


An hon. Member:: Loopholes!


John Leslie Evans: Some hon. members opposite say there are loopholes. The same word has been used before. I would say it is an unfortunate word to use, and if I have ever used it myself it was unintentional. Some incentives were put into the tax system in order to achieve certain economic objectives. If those incentives have been used over the years for tax avoidance as opposed to the achievement of economic benefits for Canadians and Canadian taxpayers through the generation of addi-
December 8, 1981

tional wealth, then it behooves the government and this House to ask why they are not achieving their original purpose.
Every time a Canadian taxpayer defers one dollar of tax, that means that other Canadian taxpayers have to take up the burden.


Sinclair McKnight Stevens: If the government spends it.


John Leslie Evans: Hon. members opposite will say that government expenditures should be drastically reduced, and some members on this side and in the corner opposite will agree. We can talk about expenditure restraint, of course, but that does not apply to tax policy. Tax policy is established in order to generate the revenues necessary to finance the operations of government. Given the level of expenditures, the tax policy is then established to raise the revenues sufficient to fund that.
If some people use deferrals or other measures to avoid taxation, it means that other Canadians have to pick up the extra burden. They will pick it up in the form of higher tax rates, as was indicated today by the hon. member for Kenora-Rainy River (Mr. Reid); in the form of inflation when the Bank of Canada finances the government deficit, or in the form of higher interest rates when the government has to borrow in the marketplace in order to finance deficits. Certainly, however, the government will have to finance a given level of expenditures. Its operations will be financed and Canadians will have to bear that burden. For every dollar that is rightfully deferred by one Canadian for a good reason, another Canadian has to pick up the additional burden.
Deferrals in the system are a fact of life. If economic benefits greater than the amount of the deferrals themselves are generated, then that is good for Canada. An analysis has to be made, however, and I am sure hon. members opposite would demand it, to determine whether every dollar handed out by the government will return more than one dollar to the Canadian taxpayer.


Sinclair McKnight Stevens: Show it to us.


John Leslie Evans: That is a fundamental tenet with which I am sure the hon. member for York-Peel (Mr. Stevens) would agree. I do not argue that it holds true in all cases; I am arguing that it is a fundamental principle, and if the hon. member for York-Peel does not agree, I wish he would say so, but I think he does agree with it.


Sinclair McKnight Stevens: Why don't you do it?


John Leslie Evans: If the federal government or a provincial government decides not to collect certain tax dollars, then some tests have to be made. Over the last two years an analysis has been carried out. In fact it was started by the hon. member for St. John's West (Mr. Crosbie) who introduced the tax expenditure account in his budget of 1979. That was the first time tax expenditures were examined and listed in a systematic way. They were listed again in 1980. In October of 1980 the Minister of Finance (Mr. MacEachen) indicated that he
The Budget-Mr. Evans
intended to examine these expenditures very carefully for his forthcoming budget.
When questions were raised, in some cases it was seen that the incentives were not leading to benefits for the Canadian taxpayer sufficient to justify the non-collection of the revenue which is, by its very nature a tax expenditure. That was the basis on which we started.
I am rather sorry that during these six days of debate we have not had a more careful analysis of the situation that faces this country, the United States, Great Britain and western European countries. The situation that we face, the fundamental problems that we face and the kinds of policies that we will require-


Mr. Lewis:: Tell us about Coutts.


John Leslie Evans: -irrespective of whether there is a Liberal government, a Conservative government or an NDP government in office, the kind of policies required to deal with the fundamental cause of the difficulties we face-


Sinclair McKnight Stevens: What does Coutts say?


John Leslie Evans: I think the Minister of Finance put it correctly and hon. members opposite who are howling over there, for whatever reason, and I am not being the slightest bit partisan-


Sinclair McKnight Stevens: What does Jimmy Coutts say?


John Leslie Evans: -I wish they would sit back and listen to what I have to say before they criticize it. The circus is at it again, Mr. Speaker.
The fundamental problem in our country-


Mr. Munro (Esquimalt-Saanich):: Is this government.


John Leslie Evans: The fundamental problem is inflation. A number of things flow from an inflationary environment. It increases the uncertainty facing investors and the uncertainty facing consumers. It puts a drag on long-term investment and a drag on economic growth. Time horizons tend to shorten when we are faced with an inflationary environment.


Sinclair McKnight Stevens: What about Coutts? What about Coutts?


John Leslie Evans: It increases required rates of return on investment and it puts a bias on investment decisions toward physical assets and not productive assets. It influences investors toward the purchase of gold and other assets such as land, and depresses-


Mr. Blais:: Mr. Speaker, a point of order.


Some hon. Members:: Oh, oh!


Mr. Deputy Speaker:: The Minister of Supply and Services (Mr. Blais) rises on a point of order.


Jean-Jacques Blais: Mr. Speaker, while your attention is being distracted by the hon. house leader of the NDP in the House, the

December 8, 1981
The Budget-Mr. Evans
hon. member for Hamilton Mountain (Mr. Deans), we are not being made aware of the constant interruptions from the gentlemen-


Mr. Deputy Speaker:: Order, please. The Parliamentary Secretary to the Minister of Finance (Mr. Evans) has the floor.


Arthur Jacob (Jake) Epp: J.-J. You blew it again. You are like a blind.


John Leslie Evans: Mr. Speaker, I should like to thank my friend, the Minister of Supply and Services (Mr. Blais), for trying to quell the screams on the other side.


Sinclair McKnight Stevens: Tell us about Jimmy Coutts.


John Leslie Evans: Inflation leads to corporate takeovers.


Sinclair McKnight Stevens: What did Jimmy Coutts say?


John Leslie Evans: In the last few years we have seen a rise in corporate takeovers rather than capital being directed toward new productive investment. This kind of activity reallocates wealth arbitrarily within the system. It penalizes those who save and it rewards those who borrow. In the past ten years the big losers to inflation-


Donald W. Munro: Are Canadians.


John Leslie Evans: -have been those who saved, those who invested, because the rate of return-


Sinclair McKnight Stevens: Who caused that? Who has been in power?


John Leslie Evans: -on these kinds of assets has been negative over that period.


Sinclair McKnight Stevens: Who caused inflation?


Arthur Jacob (Jake) Epp: That is the best part of your speech.


John Leslie Evans: It encourages speculative behaviour as opposed to investment. Inflation tends to depress productive investment.


Sinclair McKnight Stevens: Correct. Who caused it?


John Leslie Evans: It tends to depress productivity growth. It tends to depress employment growth, especially in stable, long-term jobs.


Arthur Jacob (Jake) Epp: You depress us.


John Leslie Evans: If we look at the latter half of the last 1970s, we see it as a period when inflation accelerated in all parts of the world.
I realize that the hon. members opposite are not interested in hearing someone try to analyse long-term problems which are facing this country and other countries.


Arthur Jacob (Jake) Epp: What are the solutions?


John Leslie Evans: Because it is exactly this kind of behaviour that makes the House of Commons a laughing stock to the Canadian people.


Sinclair McKnight Stevens: No, it is your type of speech!


John Leslie Evans: It is about time we started to have some rational debate and a serious analysis of the kinds of problems that are facing us. I would appreciate, if not attention, at least a bit of silence.


Arthur Jacob (Jake) Epp: Give us the solutions!


Sinclair McKnight Stevens: But talk sense!


John Leslie Evans: In the latter half of the seventies, we saw-


Sinclair McKnight Stevens: And who was in power?


John Leslie Evans: -inflation accelerate here and in the rest of the world. What did we see going along with that accelerating inflation? We saw slowing growth, we saw zero productivity growth-


Sinclair McKnight Stevens: Now you caught on!


John Leslie Evans: -we saw rising unemployment, we saw high interest rates, we saw no real income growth for Canadians. Essentially, this country, the United States, Britain, France and Germany, all went into a period of stagnation, which is the handmaiden of inflation. Partially due to inflation, during the period from 1967 to 1971, and not only here but also in other countries, there was an increasing burden being placed on the taxpayer caused by the inflationary movement of people rising into higher and higher tax brackets. This further reduced the incentive to work, to save and to invest. By the mid 1970s, all the western countries had recognized the problem and had responded.
However, the typical response of the western countries during the early seventies, mid seventies and late seventies was to try to offset the disincentives being caused by inflation, by an ever-increasing taxation burden, especially in the United States. That is a country which does not currently benefit from indexation of its tax system. These countries tried to respond by increasing the number of tax concessions, by increasing the number of tax credits, by increasing the number of deductions within their systems and, in some countries, such as Canada, by indexation of the tax systems.
However, the real problem was the high marginal tax rates, and those were not touched. The response by the individual countries meant that one could increase the rate of return on investment if one could find an investment vehicle which involved some form of tax concession. That led to greater demand for even more concessions. However, the incentive problem of high marginal tax rates remained, since each additional dollar earned, without an offsetting concession, was taxed at a relatively high rate. Investment for tax policy as opposed to economic reasons became the rule of the day.
December 8, 1981

Let me now summarize the matter. What are the causes of our current dilemma? Here and around the world, I think that the causes are common.


Mr. Fennell:: Socialist philosophy.


John Leslie Evans: I see certain facts. The first fact is that the fundamental, underlying cause of inflation-


Thomas Scott Fennell: Is the Liberal government.


John Leslie Evans: -is monetary expansion which grows at a greater rate than the growth of real output. I think that is agreed to-


Arthur Jacob (Jake) Epp: Economics 102.


John Leslie Evans: -around the world. Some people will say that it is a long-term problem, but not a problem which cannot be offset with other policy means. However, I think all would agree that, fundamentally, it is the rate of monetary expansion and the growth of purchasing power relative to that which causes inflation.
If we want to solve inflation, we can do it simply through monetary restraint. However, the problem is that when inflation is accelerating, the process of eliminating inflation from one's system through the use of monetary restraint will be long and painful. People will tell us that Japan has high deficits and low inflation. How can that be? It is because Japan's monetary expansion has been relatively low during the period of the last 10 to 15 years; and, in addition to that, it has been able to maintain-


Arthur Jacob (Jake) Epp: High productivity.


John Leslie Evans: -low inflation at the same time as high deficits. However, there has been a transfer from the private sector to the public sector-


Mr. Huntington:: Of a spirit of excellence.


John Leslie Evans: -as a result of those higher deficits. However, one can have high deficits and low inflation; that is not inconsistent. The problem we are facing in this country-


Arthur Ronald Huntington: Is both.


John Leslie Evans: -is trying to move from a period of high inflation to a period of low inflation at the same time as we are running large deficits. The process of moving from high inflation to low inflation can be faster-


Sinclair McKnight Stevens: Point of order, Mr. Speaker.


Mr. Deputy Speaker:: The hon. member for York Peel on a point of order.


Sinclair McKnight Stevens: Mr. Speaker, before the parliamentary secretary concludes, I was wondering if he could indicate whether he will be dealing with Jimmy Coutts' comments on the budget. After all, he was the-


Some hon. Members:: Hear, hear!
The Budget-Mr. Evans


Mr. Deputy Speaker:: The Parliamentary Secretary to the Minister of Finance (Mr. Evans) has the floor.


John Leslie Evans: No, Mr. Speaker, I have no intention of dealing with Mr. Coutts.


Some hon. Members:: Chicken!


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


John Leslie Evans: Mr. Speaker, the process could be made faster and less painful if fiscal policy is brought into line with monetary policy on the restraint side. Therefore, as I said, while deficits do not create inflation, they can make the job of the monetary authority more difficult. In other words, the process of moving from a highly inflationary state to a low inflation state without fiscal policy or fiscal restraint will be more painful in terms of higher real interest rates, more painful in high unemployment, and more painful in terms of a longer period of slow growth.
The second fact is that increasing tax burdens, in other words, high marginal tax rates, reduce the incentive to work, save and invest. In other words, they reduce the returns to productive economic activity. Again, I think that this fact is now recognized worldwide, because high marginal tax rates, if one takes the British example, have led to tax avoidance behaviour, have led to the growth of the underground economy and have led to the kinds of demands for more tax concessions. The same kinds of demands were being seen and felt here in Canada. First of all-


Arthur Ronald Huntington: Talk about productivity, John.


John Leslie Evans: -a proliferation of tax incentives tends to confuse the economic system and increases the complexity of the tax system. They tend to direct investment and savings into areas where they might not have gone otherwise. It narrows and erodes the tax base which, as I said earlier, necessitates the placing of a heavier tax burden on other Canadian taxpayers, and it reallocates the tax burden generally on to those who are less vocal and less well organized. It is very important, I think that where the term loophole has arisen in the past, it has led to a perception by individuals in our society of inequity and a demand for ever more concessions by individuals and groups.


Walter David Baker: Point of order, Mr. Speaker.


Mr. Deputy Speaker:: The hon. member for Nepean-Carleton on a point of order.


Some hon. Members:: Order!


Walter David Baker: Would the parliamentary secretary identify the public servant who wrote that speech for him?


Some hon. Members:: Oh, oh!


An hon. Member:: It is Jim Coutts.

December 8, 1981
The Budget-Mr. Evans


Mr. Deputy Speaker:: The Parliamentary Secretary to the Minister of Finance.


John Leslie Evans: Walter, no public servant would write this for me.


Walter David Baker: You're right!


Some hon. Members:: Oh, oh!


John Leslie Evans: Mr. Speaker, it focuses attention on the existence of concessions, the existence of the kind of system which we are faced with now and have been faced with before the budget. It focuses attention, again, on the tax policy reasons for activity as opposed to the long-term economic reasons.
As I said earlier, when concessions are granted, it means that other Canadians must carry a heavier tax burden. That was the kind of problem which was facing the minister and the government when this particular budget-


Some hon. Members:: Oh, oh!


John Leslie Evans: -was brought into place. These are the fundamental facts which are at the heart of our economic difficulties in this country, namely, inflation, and the rates of taxation and deficits.
What of the current policy implemented by the budget? The budget we have in place is one of monetary restraint. There has been a policy of gradualism to bring down the rate of growth and money supply over a good many years now. It is now at the level where we can expect to see some break in the rate of inflation. However, as the Governor of the Bank of Canada has said, some support on the fiscal side is required if we are not to go through a prolonged period of difficulty. Therefore, the government has introduced a policy of fiscal restraint. At the same time, it has tried to improve the over-all incentives, not the specific incentives, in our system of working, saving and investing.
Now, for obvious reasons in politics, the opposition will say that there is no fiscal restraint.


Arthur Jacob (Jake) Epp: A twelve billion dollar deficit!


John Leslie Evans: An honest and objective appraisal of the situation will show that to be false. I think it is fair to ask Canadians to consider the public accounts figures. During a period of transition from a highly inflationary period to a low inflationary period, when we can expect real interest rates to be higher than we expect them to be over the medium term, we can look at government discretionary expenditures, if you will, not expenditures as given in the public accounts without public debt charges. The figures in the public accounts for growth of net government expenditures without public debt charges show, and show clearly, that there has been and there continues to be a policy of restraint of discretionary government expenditures. The question is whether the transition costs- and that is the argument we will get into with regard to national account versus public accounts-those costs that are associated with the move from a highly inflationary situation,
a high unemployment situation, a slow growth situation toward lower inflation, lower unemployment and a faster growth situation, should be considered as part of the government's permanent expenditure pattern. That is where the argument arises. I say it is not fair and it is not honest to the Canadian people to include those transition costs on a permanent basis in the government's expenditures as part of the government expenditures.


An hon. Member:: Someone has to.


John Leslie Evans: Certainly they are not permanent costs. They are not discretionary costs. That is especially the case with regard to interest rates. When interest rates rose dramatically over the last year, the cost of servicing the public debt went up by some $2.5 billion. This was totally unanticipated. This was a transitional cost that one cannot say was an intentional result of government policy.
I would doubt whether the Opposition would give the government credit when interest rates come down, if the public debt charges come down and government expenditures fall as a result of those lower debt charges. People would say, "See, the government is now constraining its expenditures." Instead, the opposition will say "No, this happened because interest rates fell, not because of discretion". But I say it is fair on both sides.
I contend that we have put forward a policy of balanced restraint conducive to the fight against inflation. Given what is happening around the world and the domestic situation that we face now, the agreed need is for restraint. I do not think there is any argument on either side of the House that there is a need for restraint, that there is a need to support monetary policy, that there is a need to fight inflation. The question is, how do we achieve it? We can do this in one or two ways. We can cut expenditures. But where would we cut expenditures?


Gordon Edward Taylor: Throw out metric.


Erik Nielsen: We will start with you.


John Leslie Evans: The hon. member for York-Peel is an example of one who would cut government expenditures. The hon. member for Etobicoke Centre (Mr. Wilson) indicated in an interview the other day that over a period of five years the hon. member for York-Peel was able to eliminate $5 billion by cutting expenditures. Given his reputation, that does not seem like a very sizeable sum. But he had done his job, and I am sure, given his reputation, he had done that job very well. That indicates to me that if that is the best he could do, which is a sizeable sum-and I am not saying it is not-we are talking about $5 billion over 5 years, Mr. Speaker, and we are talking about a federal deficit today of about $10 billion. We are not talking about a major decrease from that kind of expenditure reduction.
From where would the expenditure reductions come? Would hon. members slash the social security of Canadians? Are those the programs they would slash?
December 8, 1981


Erik Nielsen: How about Mirabel?


Gordon Edward Taylor: How about metric?


Mr. Kempling:: What about Mirabel?


An hon. Member:: That costs $1 million a week.


John Leslie Evans: If the answer is not on the expenditure side, where else is it? It has to be on the revenue side. Ask yourselves that. Ask yourselves if you are going to have that, will you raise taxes? Where are those taxes to be levied if you raise revenues through taxation? Would you raise the burden on those who are already straining under the load? No, Mr. Speaker, there is a growing consensus that tax reductions are in order, not tax increases. But how can you have a reduced deficit when tax rates are reduced as well?


An hon. Member:: You tell us, John.


John Leslie Evans: Others have tried. Mr. Reagan has tried in the United States. He has decided that the way to go about reducing tax rates and reducing the deficit is to slash social programs at the same time. We have seen the folly of that approach politically. Mr. Reagan will not be able to do it. The deficit in the United States will probably be double what he projected it would be just six months ago because he cannot deliver on the expenditure cut side.
If you look at what Mrs. Thatcher is doing-


Mr. Hnatyshyn:: Who is doing it right, John?


Gordon Edward Taylor: At least she is trying.


John Leslie Evans: -she has decided that she would cut social expenditures and let the monetary policy carry the load over the long period. You have seen the unemployment effect of that. Our government has decided that the approach to take to improving incentive and reducing the deficit is to broaden the tax base, to shore up the foundations of the tax base, to ensure that the tax burden is carried by a greater number of Canadians in an equitable fashion. That will generate the revenues. That will allow us to preserve the valuable system of social programs that we have built up in this country over the years. That will allow us to cut the tax rate which will increase the incentives to work, save and invest.
That approach which is being implemented by this government, I contend, will prove to be successful. I suggest, Mr. Speaker, that it will prove to be successful and it will be copied by other governments in the western world as a way of coming to grips with these problems without placing the burden on those least able to carry that burden.
The budget attacks the root causes of our problems. It supports the monetary policy in the fight against inflation. It puts strong general incentives in place to work, save and invest by cutting marginal tax rates. An additional benefit, and a benefit that is not recognized as flowing from this budget, but should be, is that because of the reduced deficit and because of the higher and higher incentives, we will have lower rates of
The Budget-Mr. Evans
inflation leading to lower interest rates than would have been the case without deficit reduction. We are going to have a stable medium-term oriented policy and not a short-term counter-cyclical policy that responds in an ever-increasing way, in an ever-inflationary way. These are powerful incentives as well.


Erik Nielsen: Garbage.


John Leslie Evans: Certainly there will be transition problems. As I said earlier, the minister has indicated his concern and his intention to correct these problems within the context of the general thrust of his budget.
I sincerely believe that Canadians should applaud this budget. Certainly all those who are adversely affected would prefer the budget to take away from other Canadians and not themselves. I know of no way in which revenues can be raised in which no one has to lose anything.


Erik Nielsen: Rubbish.


John Leslie Evans: In the speeches I have heard from the Opposition, and especially the speech made by the hon. member for Rosedale (Mr. Crombie) today, the Opposition is behaving like an alcoholic who thinks that the solution to the problem is more of the same. It is not restraint. It is one more drink, one more subsidy, that will solve our problems.


Gordon Edward Taylor: You should know.


Arthur Jacob (Jake) Epp: You have been the bartender all these years.


John Leslie Evans: But it is clear that this is not the real solution. A longer perspective is required and more of the same is not the solution.


Some hon. Members:: Oh, oh!


An hon. Member:: Order.


John Leslie Evans: There are a number of points we can raise with regard to the reaction to policy. I hear the Opposition screaming that we do not care for home owners, for renters, for senior citizens, for the unemployed, for small business or farmers.


Philip Derek Lewis: That's Cosgrove saying that.


John Leslie Evans: I challenge hon. members to ask their constituents, as I have asked mine and some of their constituents as well, whether they would prefer more government programs or lower interest rates. Would they prefer lower inflation? Would they prefer a good future for our young people?
The minister has taken the challenge and he has put forward a budget. I commend him for it.


Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, my colleagues urged me at five minutes before the termination of this debate to go as a posse of one to catch this wild, runaway, stupid, totally inappropriate budget that has been put forward by this administration. There is no minister apart from the Minister of Finance (Mr. MacEachen), who has the slightest
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December 8, 1981
The Budget-Mr. Lambert
understanding of what was provided for in the budget. As a matter of fact, I defy members of the Department of Finance to say what are the implications of this budget as far as the Canadian public is concerned.
The Minister of Finance was proud to announce that this budget had three themes: restraint, equity and economic renewal. In relation to restraint, I call attention to the table at page 60 of "The Budget in More Detail". As my colleague, the hon. member for York-Peel (Mr. Stevens), and others have said, expenditures have increased by 22 per cent. That is restraint? Revenues by the Government of Canada increased by 19.6 per cent this year. We know that this increases tremendously through income taxes, and if the Canadian people think the minister is being easy in respect of personal income taxes, let me point out that this year he projects revenue through personal income tax to be $23,665 billion. In three years' time that is projected at $41,470 billion. That is restraint? Corporate income tax revenue almost doubles. Petroleum and gas revenue taxes go up almost five times. We find this all the way down the line. As a matter of fact, total budgetary revenues under this budget of restraint will go up from $54,310 billion to $64,960 billion next year. From that minor and modest sum, total budgetary revenues for 1985-86 are projected to be $91,745 billion. That is the projection in respect of budgetary revenues on the basis of tax rates and the national energy plan. The government has fashioned three more udders to the cow this year and has taken the teats from two udders to itself. Is that what is said to be restraint by government?
People like the Minister of National Health and Welfare (Miss Begin) and other ministers have nothing else in mind but spending programs, which they put forward before their docile colleagues and which they convince a part of the Canadian public to buy. Then they say they must have the money. They do not think first about getting the money and then bringing in the programs. No, they get the programs into place and then insist that they have the money. This is why we have this pulling and pushing with the provinces. The Government of Canada says it must have money and it says how it is going to get the money. That is restraint?
As far as equity is concerned, every discredited proposition contained in the Carter report and every discredited proposition in the white paper on taxation in 1969 has been brought forward by the tax policy section of the Department of Finance, where all the senior people have gone, and we are left with this miserable, mean group of proposals we find in this budget. We will see whether there is equity and we will see what this does to Canadians. Even our professional athletes are going to flee from us.


Some hon. Members:: Oh, oh!


Marcel Joseph Aimé Lambert: I ask those birds over in the peanut gallery to look at the provisions for revenue-averaging and see what
happens. Look at what their friends, the doctors, the accountants and the lawyers, will have to do.


Some hon. Members:: Oh, oh!


Marcel Joseph Aimé Lambert: Just look in any part of this country where there is any economic activity and see what is happening.


Mr. Deputy Speaker:: Order please. It being 9.45 o'clock p.m., it is my duty, pursuant to Section (8) of Standing Order 60, to interrupt the proceedings and put forthwith the question on the motion now before the House. The question is on the motion of the Minister of Finance (Mr. MacEachen). Is it the pleasure of the House to adopt the motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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


Some hon. Members:: Yea.


Mr. Deputy Speaker:: All those opposed will please say nay.


Some hon. Members:: Nay.


Mr. Deputy Speaker:: In my opinion the yeas have it.
And more than five members having risen:


Mr. Deputy Speaker:: Call in the members.


Madam Speaker:: I declare the motion carried.

It being past ten o'clock, the House stands adjourned until tomorrow at 2 p.m. pursuant to Standing Order 2(1).
At 10:16 p.m. the House adjourned, without question put, pursuant to Standing Order 2(1).

Wednesday, December 9, 1981