1981-06-26

ROUTINE PROCEEDINGS


Mr. G. M. Gurbin (Bruce-Grey):: Madam Speaker, I rise on a matter of pressing and considerable importance. In view of major energy, environmental and conservation gains through recycling of many products, including iron, copper, aluminium and paper, and in view of the recent comments by the Minister of Industry, Trade and Commerce (Mr. Gray) regarding his appreciation of the opportunities, 1 move, seconded by the hon. member for Halton (Mr. Jelinek):
That the government integrate the already considerable recycling industries into a development and industrial strategy for Canada, and provide direct and indirect encouragement to the Canadian Association of Recycling Industries.
I would also like to urge, Madam Speaker, that the government start by asking the Association to recycle the scrap art that adorns the Ottawa airport parkway.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL REVENUE
Mr. Dave Nickerson (Western Arctic):: Madam Speaker, whereas the Minister of National Revenue (Mr. Rompkey) in his crackdown against northern trappers has, through his officials in Edmonton, told trappers that they face a tax penalty of 25 per cent going back to 1977, and has refused to allow deductions for the upkeep of dog teams which have to be fed throughout the summer, as well as the trapping season, I move, seconded by the hon. member for Halton (Mr. Jelinek):
That the Minister of National Revenue cease his retroactive persecution of trappers, particularly those who are unable to read and write, and who live in remote villages hundreds of miles from the nearest accountant, and that he seek
a remission order to give trappers similar tax benefits to those he has already given to public servants and employees of large corporations.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


POLITICAL PARTIES
Hon. Ray Hnatyshyn (Saskatoon West):: Madam Speaker, in light of the Prime Minister's statement in France that the inclusion of four communists in the French government was no different than his attempt to include members of the NDP in his government, and whereas this is an insult to 32 members of this House who have been supportive, to a greater or lesser degree, of government policies, I move, seconded by the hon. member for Edmonton North (Mr. Paproski):
That this House direct the Prime Minister to make a statement on motions concerning the terms and conditions upon which the coalition between the Liberal party and the federal NDP could take place, whether security sensitive portfolios in cabinet will be offered to NDP adherents, and whether he makes any distinction between communism and democratic socialism.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


RAILWAYS
Mr. Douglas Fisher (Mississauga North):: Madam Speaker, whereas the CN train that crashed in Sundridge, Ontario, was the third such derailment in 18 months involving trains containing dangerous, explosive goods, and whereas the government during that same time has responded with all the necessary studies, with new legislation and with new regulations, but all of this is stalled while the CTC conducts yet more public hearings, I move, seconded by the hon. member for York South-Weston (Mrs. Appolloni):
That this House urges the Canadian Transport Commission to hurry up, to recognize that we are going to run out of miracles where nobody is killed, and to

June 26, 1981
get started on the last stage, the most important attack on this deadly threat by issuing new safety instructions to the railroads.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

[DOT] (mo)


FITNESS AND AMATEUR SPORT
Mr. Neil Young (Beaches):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity which I know will receive the unanimous consent of the House.
In view of the fact that a member of a Danish soccer team has been barred from playing in one of the world's largest youth soccer tournaments, the Canadian Robbie International, simply because she is a female, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House requests the Minister of Labour, who is also the minister responsible for sports, and the Minister of Employment and Immigration, who is also responsible for the status of women, to intervene immediately with the organizers of this tournament and advise them that public funds used to support this organization will be withdrawn until they bring an end to this practice of sexual discrimination.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Don Blenkarn (Mississauga South):: Madam Speaker, in view of the fact that commercial borrowers can borrow on commercial paper in the United States at 15 per cent, or borrow on bankers' acceptances for 90 days at 16.5 per cent, that international corporations can borrow on the Euro-dollar at approximately 17.5 per cent, that the American government can borrow its 90-day treasury bill money at 14.3 per cent, and in view of the fact that this government today paid 18.83 per cent to borrow its 90-day money, I move, seconded by the hon. member for Fundy-Royal (Mr. Corbett):
That the government immediately constitute a special committee of this House to inquire as to why the Government of Canada pays significantly more to borrow money than commercial corporations pay in the United States, than multinational corporations pay on the world market and the United States government pays on its treasury bills, and that this House does censor this government for deliberately maintaining a high interest rate policy in Canada.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AVIATION HALL OF FAME
Mr. Bill Yurko (Edmonton East):: Madam Speaker, the City of Edmonton has established the Canadian Aviation Hall of Fame to preserve and highlight the heroic flying deeds of some of the early bush pilots of the north. These pilots are national aviation heroes. Therefore I move, seconded by the hon. member for Yukon (Mr. Nielsen):
That the federal government generously support, by way of an annual monetary grant, this very worth-while endeavour that is in the national interest and, furthermore, that this House strongly recommend to the board of directors of the Canadian Aviation Hall of Fame that it give due recognition to the aviation exploits of Mrs. Don Bartsch, an outstanding northern Canadian bush pilot.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AIRPORTS
Mr. Lyle S. Kristiansen (Kootenay West):: Madam Speaker, I rise under the provisions of Standing Order 43 on an urgent matter of potential life and death. Earlier this spring the Ministry of Transport supplied Castlegar airport with a long awaited large foam truck to replace the smaller emergency vehicle previously available, but the ministry failed to act on the linked request for the larger fire hall and garage required by the change. Thus, the new foam truck will be left sitting useless outside during the coming winter with its tank drained to avoid freezing. I therefore move, seconded by the hon. member for New Westminster-Coquitlam (Miss Jewett):
That this House urge the Minister of Transport and the government to give immediate priority to this emergency request for. basic air safety and fire protection at Castlegar, and quite literally stop two-bitting West Kootenay air travellers to death.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
June 26, 1981


THE ECONOMY
Mr. Pat Nowlan (Annapolis Valley-Hants):: Madam Speaker, I too rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the Minister of Agriculture's recognition of the justified complaints of the hog producers of this land when he announced this week a complete change in the hog stabilization program for this year, I move, seconded by the hon. member for Prince Edward-Hastings (Mr. Ellis):
That this House congratulate the minister for changing his mind, providing an example which other ministers can follow on misguided policy, especially in the hope that the Minister of Agriculture can have some influence with the Minister of Finance to change the government's usurious and unconscionable interest rate policy which is punishing all primary producers and thereby adversely affecting all Canadians.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Gary Michael Gurbin: Madam Speaker, my question is directed to the Minister of Finance. The Minister of Finance has responded to questions in a way which implies that he understands the economic crisis which primary Canadian producers are facing now, small businessmen and farmers. He says he recognizes the crisis. He is also aware of the offer this side of the House has made for a one day's extended debate, or whatever is required, to allow expansion of the small business development bond to include operating capital and venture financing, and also to include unincorporated businesses.
I wonder if the Minister of Finance can tell the House and the Canadian people whether he intends to make the announcement he has discussed, or whether we are forced to go through the summer without knowing before the end of this session of Parliament whether or not this will be an opportunity to which small businessmen and farmers can look forward.


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, the hon. member has referred to the small business development bond which, in its present operation, is of very substantial benefit to small busi-
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ness. As I have indicated previously in the House, the Canadian banks have dedicated about $750 million for the use of the small business development bond already, and I am told by the Minister of State for Small Businesses and Tourism that when all the institutions together are added up, the total amount dedicated to the small business bond is about $2 billion. That is a very substantial source of funding at about half the market rates for small businesses intending to engage in expansion and modernization.
There is, in addition, a provision in the bond by which funds can be made available to small businesses in financial difficulty. As I have indicated in the House previously, we have had discussions with the chartered banks to make it possible that wider use be made of this particular aspect of the bond in order to help small businesses in refinancing difficulties. In the present circumstances the small business development bond is an extremely useful and effective instrument, and in that light it is not my intention, for example, to recommend its extension to unincorporated businesses because of almost impossible administrative problems which would be involved.


GOVERNMENT PLANS
Gary Michael Gurbin: Madam Speaker, I am familiar with some of the figures the minister has mentioned in terms of the financing of the bond and in terms of the amounts of money which have been dedicated by the institutions. The point I would really like to make in my supplementary question is the impact there is on primary producers because of the high interest rate policy and the fact that the small business development bond as it stands now does not address that, and that the primary producers cannot continue to produce with interest rates of 20 per cent to 23 per cent. They cannot continue to stay in business.
The minister is well aware of the number of bankruptcies. He is well aware of the impact on the total economy. There must be an extension of that program. There must be a provision for opening that up to relieve the financial pressure on agricultural producers and small businessmen of the country. Because of the impact there is now and the impact there will be on the total economy, people who were initially hurt are now becoming tremendously aggressive and angry.
The minister must look at some other measure. If he does not wish to use that measure, is there any other specific measure the minister has in mind which he will introduce before this session of Parliament ends so that these people have something to which they may look forward?


Allan Joseph MacEachen: Madam Speaker, the hon. member has asked a very general question, and I have answered already about my view of the small business development bond. I am also investigating the use which could be made by members of the agricultural community of the small business bond in particular instances. I had discussions on this subject last week with the treasurer of Ontario, Mr. Miller, to see in what way incorporated farms might be able to take advantage of the

June 26, 1981
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small business development bond. I acknowledge that there is a problem facing cattle and hog producers particularly, not only because of interest rates but because of market conditions and other costs which have added to their operating costs, such as the cost of fertilizers. It is not my intention to go beyond that at the present time.


NEEDS OF PRIMARY PRODUCERS
Gary Michael Gurbin: Madam Speaker, my final supplementary question is directed to the Minister of Finance. I asked a specific question which he did not answer, as to whether or not he was expecting to introduce any other specific measure before the end of this session of Parliament so that these people would have something to which they could look forward.
If the minister is saying that he will introduce a measure and expand it for the agricultural community, I accept it very gratefully. But my real question is that in the time period we have now, how can the government maintain its credibility in discussions with the OECD at the upcoming summit meeting if we do not address ourselves, as members of Parliament, to the economic needs of the primary producers of the country?


Allan Joseph MacEachen: Madam Speaker, it seems to me the best way for Canada and the government to maintain their credibility is to continue a strong anti-inflationary policy. As I have said very frequently in the House of Commons, any anti-inflationary policy will totally lose its credibility if at the same time the government attempts to insulate the whole community from the effects of the anti-inflationary policy. This seems to be the view of the official opposition. I have said that we will attempt in particular hardship cases to ensure, where it is humanly possible, to help either home owners, small businesses or farmers to live through what is undoubtedly a very difficult situation. This is the policy we are attempting to implement. I believe in the long run it will be successful.


FINANCE
Donald Alex Blenkarn: Madam Speaker, my supplementary questions are directed to the Minister of Finance. I point out to him that he must develop some credibility before he can start maintaining his credibility. He does not have any credibility on this side of the House, he does not have any credibility to the small business people and home owners who are paying 18 per cent and 19 per cent interest rates.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Donald Alex Blenkarn: The minister is not prepared to look after small business people and farmers. What will he do with respect to the cost of carrying Canada's debt?
He made certain proposals and suggestions at the time of his budget. At that time I pointed out to him that the treasury bill rate was about 12 per cent. It has been 16 per cent, 18 per cent, over 18 per cent, and nearly 19 per cent for the past 6.5 months. What is the increased cost of carrying the government debt to be borne by all people of Canada because of the high interest rate policy of the government at this time? What are the minister's estimates?


Allan Joseph MacEachen: Madam Speaker, it is obvious the increased interest rates which have occurred since the budget must be included in any estimate for the fiscal year 1981-1982 and that the outlays required to finance the debt will be substantially increased. I regret it very much. I argue very strongly that we ought to take every possible step to stay on track and to reduce the deficit in order to avoid the very substantial outlays which are required in order to finance the debt.


REQUEST FOR REORGANIZATION OF GOVERNMENT'S FINANCIAL AFFAIRS
Donald Alex Blenkarn: Madam Speaker, we have not seen much in the way of suggestions from the other side on how to decrease the deficit. I point out to the minister that the Americans borrow their treasury bill money at 4.5 per cent less than he has to pay.
I ask the minister, if this government is not prepared to do anything for farmers, small businessmen and the home owner, why does it not at least do something for itself? Why does it not reorganize its financial affairs so at least it does not have to borrow at 18.8 per cent where the cost of whatever you borrow doubles or triples in three and a half years? Why not do something for itself if it cannot do something for the people of Canada?


An hon. Member:: They don't care.


Allan Joseph MacEachen: Madam Speaker, of course I dispute totally the suggestion of the hon. member that we have not been doing anything for small business, home owners or the farmer. The facts are totally opposite to what the hon. member states.


An hon. Member:: You are doing it to them, Allan, not for them.


Allan Joseph MacEachen: He talks about the short-term interest rates in Canada and compares them with the United States. Yesterday there was a treasury bill auction in Ottawa with a very slight increase. Why? When the hon. member poses his questions in the House he might pose one or two to himself and ask why there was that slight increase yesterday? The
June 26, 1981

answer is that there is a very strong demand for money in this country, propelled by a very strong economy-


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: -and producing a lot of inflationary expectations. That is the answer.


Some hon. Members:: Elear, hear!
*	* 4c


POST OFFICE
Mr. Edward Broadbent (Oshawa):: Madam Speaker, 1 have a question for the President of the Treasury Board concerning the important negotiations going on with the postal service. Considering that the conciliation board chairman made important recommendations on health and safety, annual, statutory and maternity leave, and that the union has accepted these proposals with only a slight modification to one, could the minister tell the House why the government has not accepted these recommendations, and in fact why it is going back to its January position? Is this not a perfect illustration that the government is bargaining in bad faith and in fact is trying to provoke a strike?


Hon. Donald J. Johnston (President of the Treasury Board):: Madam Speaker, this is just utter rubbish.


Some hon. Members:: Oh, oh!


Donald James Johnston: And completely and fiscally irresponsible. The government is making every effort to reach a satisfactory conclusion with the postal workers. We are in negotiations, and they are not taking place on the floor of the House of Commons; they are taking place at the negotiating table where they should be.


Some hon. Members:: Hear, hear!


COST OF PROPOSED MATERNITY LEAVE BENEFITS
John Edward Broadbent: The minister should know a lot about rubbish; he specializes in it. It has been the union that said the government is not taking the negotiations seriously and that it is back to its January position.
On maternity leave specifically, since only 239 women among all the inside postal workers took advantage of maternity benefits under unemployment insurance last year, would the minister confirm that the cost of implementing that one item is minimal and, if so, why does the government not live up to its pledge last year in Copenhagen to all Canadian women by agreeing to this very reasonable proposal that its own impartially appointed conciliation board chairman recommended?
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Donald James Johnston: Madam Speaker, I am gratified at least by the interest the hon. member is taking in women's rights. I would like to point out that we, over a period of several years, have been moving forward on a variety of fronts, and I have had very few comments from the hon. member for Oshawa with respect to part-time employment policy-


John Edward Broadbent: Rubbish.


Donald James Johnston: -or with respect to a very generous maternity benefit package last year. I did not hear the hon. member for Oshawa stand up and tell us what a wonderful thing it was at that time, with respect to flexible time.
Incidentally, I would hope to make an announcement later in the day with respect to day care centres. With respect to our affirmative action programs, and with respect to equal opportunities for women's programs, I have only heard criticism from the opposition. These are other things that we have been doing. We are fully committed to the principle of maternity benefits, as we have demonstrated in the past.
Therefore I say to Your Honour that we are negotiating all items. I think we have been moving forward on all fronts for a period of years with respect to rights for women in the work force. It is about time the hon. member of Oshawa stood up and congratulated the government for some of the initiatives which it has already taken.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Madam Speaker, the minister knows that there is not a women's group in the country which would agree with what he has said on affirmative action programs or maternity leave benefits. This government has been a complete cop-out, and the minister knows it.


Some hon. Members:: Oh, oh!


John Edward Broadbent: Even the province of Quebec, the minister's home province, has a maternity leave benefit which is twice as good as what the government is even considering, for all its civil employees in the province of Quebec.


GOVERNMENT POLICY TOWARD PUBLIC SERVANTS
John Edward Broadbent: Since the secret document which the minister dismissed, a secret document which came out of the cabinet in January, which I released a few weeks ago, indicated that the government was going to single out, amongst others, postal workers and other civil servants as a kind of whipping boy for its anti-inflation program-


Some hon. Members:: Oh, oh!


John Edward Broadbent: Will the minister now admit that the position the government is taking in bargaining with the inside

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postal workers is a perfect illustration of its attempt to make a scapegoat of public servants-


Some hon. Members:: Oh, oh!


John Edward Broadbent: -as a substitute for a serious anti-inflation program?


Donald James Johnston: Madam Speaker, that is even more rubbish.


Some hon. Members:: Hear, hear!


Donald James Johnston: Earlier this year when the hon. member for Oshawa produced this secret document, it was then established that it was not a cabinet document. At that time I told the hon. member for Oshawa exactly what our posture was, and it has nothing to do with fighting inflation on the backs of public servants.


CORPORATE AFFAIRS
Mr. Bob Corbett (Fundy-Royal):: Madam Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. On Tuesday the minister flatly denied that he had any knowledge of an RCMP investigation into the Combines Investigation Branch of his portfolio. Yesterday, in reponse to my questions in the House, he again refused to acknowledge it, despite the confirmation of the RCMP, and of his colleague, the attorney general. Finally, he broke under questioning from the official Leader of the Opposition.


Some hon. Members:: Oh, oh!


Robert Alfred Corbett: I suggest that hon. members opposite take the time to read some of the transcripts of what takes place in this House. Perhaps he will now respond to my question as to whether he is prepared to call the former chief of the combines goup, Mr. Bertrand, the chief investigator, before a special parliamentary inquiry to testify not only about this very serious matter, but also about the uranium cartel and the oil and gas price rip-offs, regarding all of which Mr. Bertrand must have very in-depth knowledge. If the minister is not prepared to call Mr. Bertrand before a special parliamentary inquiry, will he inform this House why not? Just what is he afraid of?


Hon. Andre Ouellet (Minister of Consumer and Corporate Affairs and Postmaster General):: Madam Speaker, my answer is very simple. Mr. Bertrand did his job, completed it and published his report, and this file on the uranium cartel is now on the desk of the Minister of Justice. I do not see any point in asking Mr. Bertrand to come back and do all over again a job he has already completed. As to the first question of the hon.
member, who was smiling when he asked his question, I understand that he is somewhat embarrassed himself by the evolution of that case and of his questions, and that he fully appreciates the fact that it is best to let the RCMP perform its duties.


ACTION TO STOP LEAKS FROM DEPARTMENT
Robert Alfred Corbett: Madam Speaker, there is no embarrassment on my part. I can assure the minister that if there is any embarrassment it should be on the part of that very callous government which apparently knows no shame regarding any matters under consideration in this House. Let me tell the minister that he has a responsibility to this House-


Some hon. Members:: Question.


Robert Alfred Corbett: -and he also has a responsibility to the people of this nation.


Some hon. Members:: Order.


Robert Alfred Corbett: The combines investigation group is in his department. As the responsible minister for that department, has he satisfied himself of the source of the leak, and is he sure that there will be no further outbreaks of that nature, and no further leaks from within that department?


André Ouellet: Madam Speaker, the hon. member now knows that the RCMP is looking into this matter. I think that should satisfy him. Obviously, thousands of people work for the government and there is no way a minister can be expected to vouch for the conduct and the behaviour of all his employees who work not only in the federal capital but throughout the country as well. Asking the question amounts to giving the answer. No individual can possibly be absolutely sure that all the people who work under him are doing their work properly. What is the issue and what is important is that, if someone is guilty of an offence, steps must be taken immediately to correct the situation. That is being done and the hon. member ought to be satisfied with that.


ENERGY SECURITY-NEWFOUNDLAND AND QUEBEC SITUATION
Mrs. Eva Cote (Rimouski-Temiscouata):: Madam Speaker, my question is for the Minister of Energy, Mines and Resources and deals with the tabling of a draft bill on energy security as well as the statements made by the Quebec premier during a press conference yesterday. Could the hon. minister
June 26, 1981

tell the House whether the proposed amendments to the act on energy security would affect in any way the conditions that now exist between Quebec and Newfoundland and interfere with the contract signed by these two provinces?


Hon. Marc Lalonde (Minister of Energy, Mines and Resources):: Madam Speaker, as I was listening to Premier Levesque's press conference, I was saying to myself that insults are the ultimate weapon of those who do not have valid arguments. In fact I want to make it absolutely clear that the draft bill which was tabled will bear no impact on the contract signed by Hydro-Quebec and the Churchill Falls Corporation. This is a legal and valid contract which can be amended by either party. The draft bill that was tabled will not have any effect on that agreement. The bill will merely make applicable to interprovincial or international power lines the provisions which for years have applied to oil and gas pipelines.


FITNESS AND AMATEUR SPORT
Mr. Otto Jelinek (Halton):: Madam Speaker, my question is directed to the minister of fitness and amateur sport. When the original Olympic lottery was introduced in order to defray the costs of the Montreal Olympics, the Liberal government at that time gave Canadians and the House its assurances that no further lotteries or gambling operations would be initiated. That promise, as the minister knows, has already been broken. It has now come to my attention that the minister is well on his way to extending federal gambling programs to what is known as all-sports betting, in other words, reducing the government to the status of bookies for betting on hockey games, football games and so on. Without once again copping out by giving a stock answer blaming the previous government, can the minister confirm or deny whether his government is contemplating such action?


Hon. Gerald Regan (Minister of Labour):: Madam Speaker, I am very pleased that the hon. member has asked me this question because, in doing so, and in indicating that he has this information that we are well along our way toward planning a system whereby one can place a bet on any game or any sort of sport, he shows that his information is as accurate as it usually is in those benches. I would inform the hon. member that the government has no such plans.
As the hon. member was so badly misled by his usual poor informants or sources, le me say to him that when he talks about the question of gambling, life is a gamble in many ways. Certainly politics is. The gamble which the former government took with its budget did not work out. At the present time the provinces of Canada are raising approximately $350 million
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from lotteries in the country, and the federal government is not operating one.
I hope the hon. member shares my belief that some of the money realized from lotteries should be used for those responsibilities in culture and sport that are at the federal level, as well as having a very large amount of it go for provincial aspirations.


Otto John Jelinek: The minister does not have to tell me about the needs of amateur sport.


Mr. Rossi:: You don't know anything. You should listen to him.


CONSIDERATION BY OFFICIALS
Otto John Jelinek: Is the minister telling us that neither his department nor any other department of government has been considering sports betting? If not, can he explain why officials from at least four federal departments have confirmed that this proposal is under consideration? At the same time can he assure the House that all sports betting or any other new gambling operation will not be implemented, now or in the foreseeable future, by that government?


Gerald Augustine Regan: Madam Speaker, the hon. member has asked me to explain why officials of four departments told him that we are going into all sports betting. I do not believe they did that. If well-meaning public servants said anything in that regard, I think the hon. member has misinterpreted or misunderstood what they said. When he talks about us going into all sports betting, he is skating on very thin ice indeed. I assure him that it is important that we have funds for amateur sport, as he himself has indicated. I say to him that we are looking at other possible sources. We have said again and again that we would love to get back into the lottery business, which was given away unreasonably by our predecessors. We do not contemplate any such scheme as the hon. member has mentioned.


PIPELINES
Mr. Ian Waddell (Vancouver-Kingsway):: Madam Speaker, my question is to the Minister of Energy, Mines and Resources. The minister is aware that we meet in court on Monday in Vancouver over the prebuild of the Alaska pipeline.


Ramon John Hnatyshyn: Which one is the accused?


Ian Gardiner Waddell: In view of the fact that Mitchell Sharp, the pipeline commissioner-no, he won't be there but our lawyers will be there-the head of the pipeline company in the United States and the American bankers have said that the line cannot now be completed before 1985, and the government's order in council said, as hon. members will recall, that it would

June 26, 1981
Oral Questions
be completed by 1985, does the government have any plans to bring in legislation to amend the Northern Pipeline Act properly?


Marc Lalonde: Madam Speaker, I wish my hon. friend good luck in his court case. Usually court cases are fought before a tribunal and not in this House. I suggest that if my hon. friend wants arguments for his case, he will have to develop them himself. I am not going to fight his case for him.


Ian Gardiner Waddell: I am not asking about the rightness or wrongness of parliamentary procedure. I am asking the minister to deal with the issue of the whole pipeline.


FINANCING OF PROJECT
Ian Gardiner Waddell: The fact is that the pipeline cannot be financed right now. As the minister knows, we on this side of the House want the whole line to be built. When the minister was in opposition, the minister expressed the view that if we built this span alone, we would get more and more pressure to export Canadian gas rather than building the complete line. He said that when in opposition. Let's deal with the reality. First, is the minister prepared to encourage the Americans to finance the whole pipeline by encouraging the settlement of native land claims in Canada? Second, when the Prime Minister meets with President Reagan on July 10, will he be prepared to discuss the pipeline completion and the guaranteeing of adequate financing for the whole line?


Marc Lalonde: Madam Speaker, the hon. member suggests that the line cannot be financed. That has not been demonstrated at this time. Discussions are taking place between the utilities, the producers, and in financial circles in the United States. Steps are being taken to amend the presidential order to facilitate the financing of this project. This issue was discussed with President Reagan when he was here. He reiterated the full support of the Government of the United States for the construction of the whole pipeline. 1 am happy that the New Democratic Party is also in support of the construction of the complete Alaska pipeline.


Mr. Baker (Nepean-Carleton):: They are going to raise the money for it at their convention.


Marc Lalonde: Negotiations regarding the land claims with the native people of the Yukon are taking place at the present time. They are very active. The government is taking every step to ensure that this important project for Canada will be realized. I just ask my friend to have more confidence in the government.


EXTERNAL AFFAIRS
Mr. Jean-Guy Dubois (Lotbiniere):: Madam Speaker, my question is for the Solicitor General. Last week, both in this House and elsewhere, the situation of Canadians held or interrogated in Peru was discussed, and it appeared from the answers given by the minister that the RCMP had not been involved with Canadian citizens in Peru. However, on Monday, two Canadian women just returned from Peru stated that, far from doing nothing, the RCMP had played a negative role and used what has been described as torture in dealing with Canadians in that country. In view of this information, has the minister looked into the matter and can he tell the House whether the RCMP has been involved in some way with Canadians held in Peru?


Hon. Bob Kaplan (Solicitor General):: Madam Speaker, there is an important exchange of information policy between the RCMP and other police forces touching the international movement of drugs. In Peru we have an RCMP liaison officer who informs local authorities about movements of suspected drug dealers. We obtain similar benefits from foreign police services with regard to movements to Canada.
There was a particular incident in which a member of the RCMP acted as an interpreter during an interview which took place in Peru, but that was a simple translation function. I can categorically confirm what I said in the House last time, that the RCMP certainly did not participate and did not witness the types of incidents that were described by Miss Durand that I read about in the media when she came back to Canada. In fact when Miss Durand was arrested in Peru by Peruvian authorities, since the RCMP have no authority to act as policemen in foreign countries, 5.5 pounds of pure cocaine were found and an illegal drug factory was discovered. The decision not to proceed with prosecution of her was not made by Canadians but was made by duly constituted Peruvian authorities.


REGIONAL DEVELOPMENT
Mr. F. Oberle (Prince George-Peace River):: Madam Speaker, I have a question for the Minister of Regional Economic Expansion with regard to the possible involvement of his department in the development of coal mines in northeastern British Columbia. Has the minister examined his position to determine the need for a socioeconomic impact study and whether it would be advisable to convince the province of British Columbia and the companies to negotiate terms relating to socioeconomic conditions that will be
June 26, 1981

imposed on the area? I ask that with the particular view in mind of helping not only the new community but the existing community to cope with the massive influx of new population to assure that the additional costs that will be placed on the area will not be too onerous.


Hon. Pierre De Bane (Minister of Regional Economic Expansion):: As you know, Madam Speaker, the Department of Regional Economic Expansion did participate with the province of British Columbia on feasibility studies and socioeconomic impact. Further to the respresentation of the hon. member a few days ago about those studies, and there are over 100 of them covering several aspects of that major project, I have undertaken to have all those 100 studies placed in the Library of Parliament to be available to all members. As for future commitments of my department for the implementation of that project, that will, of course, be a decision of the whole government. As you know, negotiations are going on at this moment.


REQUEST FOR PUBLIC HEARINGS
Frank Oberle: Madam Speaker, as the minister knows, there has not been any type of public hearing; in other words, there has not been any input either from individuals or municipal leaders in the area with regard to the whole development. In fact these studies the minister has referred to have not been available to municipal leaders in the area, even though the project is already committed and the tenders have been called.
Will the minister undertake to discuss with his counterpart in British Columbia and with his cabinet colleagues here the advisability of holding a set of public hearings in the area to determine the socioeconomic impact, with input from the local area and, having done that, insist on the establishment of a set of socioeconomic terms and conditions under which the project should proceed henceforth, before he makes his decision to spend public money to help the project along?


Pierre De Bané: Madam Speaker, it is precisely in response to the representations of the hon. member, bringing to my attention that all those studies, co-financed by my department, were not made available to the community and to the local leaders of that region of British Columbia, that I undertook that they be made available in the library. I could not send copies of those 100 separate studies to every member of Parliament.
As for the question of scheduling public hearings so people can present their own views about that project, I think the paramount authority there is the provincial government, but I would certainly support the view of the hon. member that the community in that region should have an occasion to put forward its own point of view about the development and the impact of that major project.
Oral Questions EXCISE TAX


EFFECT ON PRICES IN CANADA
Mr. John Gamble (York North):: Madam Speaker, my question is directed to the Minister of Finance who will recall that earlier this week this House passed Bill C-57, an act to amend the Excise Tax Act, which contained a provision providing for an ad valorem tax on the items covered by that act. The provisions with regard to ad valorem have the effect of increasing the amount of tax that is generated in the event the price of the product increases, and reducing the amount of tax that is extracted from the public if the price of a product is reduced. There is no known Minister of Finance who would want to reduce the tax extracted from the public; accordingly that bill in itself must have as its object the increasing of tax. The minister just returned from an OECD meeting in Paris, France-


Some hon. Members:: Question.


John Albert Gamble: You will have the question. He suggested there that the main objective of the government was to "break inflationary expectations", and he has recited that purpose in the House a number of times. How does he equate that alleged objective, so announced in Paris and in this House, with a bill passed by this government which has the absolutely opposite effect, telegraphing as it does to the Canadian people that the government expects prices in Canada to increase?


Allan Joseph MacEachen: Madam Speaker, the bill does not telegraph any such message at all, in my opinion. It is not now the government's bill, it is the bill of the House of Commons as it was passed on third reading by a very strong vote and received the endorsation of the House.


CANADIAN POLICIES
John Albert Gamble: Madam Speaker, I can proudly say that on all those occasions I had an opportunity to vote against that horrendous legislation.
One of the high interest rate impelling reasons that has been given is the need to sustain the value of the Canadian dollar; in the event that our interest rates in Canada dropped and were not in fact tied in some way to those in the United States our dollar would suffer a genuine battering on the monetary markets. The minister will know that-


Some hon. Members:: Question.


John Albert Gamble: The minister will know that just recently the Conference Board of Canada has suggested-


Some hon. Members:: Question.


Madam Speaker:: Order, please. I can sometimes accept that a first preamble might be a bit long, but certainly not a second one. Would the hon. member put his question.

June 26, 1981
Oral Questions


John Albert Gamble: Madam Speaker, would the minister indicate to the House why, during an election campaign, we may have a made-in-Canada oil policy for pricing, but while his government is in office we cannot have a made-in-Canada interest rate policy for this country?


Allan Joseph MacEachen: Madam Speaker, I tried earlier to explain to the hon. member for York North that there is presently in the Canadian economy a very strong demand for loans. Yesterday when we had the auction for treasury bills the pressure on the treasury bill rate was established by Canadian bidders for funds. While I do acknowledge that there is obviously an impact on Canadian interest rates as a result of rates in the United States, and there is a balance between interest rates and the exchange rate, nevertheless I think there is at the present time in Canada a made-in-Canada inflation that is resulting in a made-in-Canada pressure upwards on interest rates.


THE ECONOMY
Mr. Bob Rae (Broadview-Greenwood):: Madam Speaker, in light of the last answer by the Minister of Finance, perhaps he could explain how it is that the dollar volume of personal and small business loans plunged by 60 per cent and 47 per cent respectively during the first quarter of 1981, according to Statistics Canada? This would seem to fly in the face of what he has just told the House.
My supplementary question to the minister has to do with this, Madam Speaker. We have had more figures released today that show that farm bankruptcies in Ontario have gone up 51 per cent and across Canada they have gone up 31 per cent. In light of what the minister has been saying about the need to have anti-inflationary policies, and we all agree on that but we want anti-inflationary policies that work, will he explain how farm bankruptcies, how cutting down on farm investment, and how cutting down on food production is conceivably anything other than a totally inflationary policy, because this cuts down on supply?


Allan Joseph MacEachen: Madam Speaker, the hon. member has used a percentage increase in the rate of farm bankruptcies which in itself might create anxiety, as any bankruptcy would, but the hon. member knows that, because of the very small number of farm bankruptcies, that percentage increase is not a very meaningful figure. The fact of the matter is that of the very large number of farms in Ontario the number of bankruptcies has been very, very small, and that testifies to the stability of agriculture in the province of Ontario. There have been some cases that are related to interest rates, but there have been some other important causes as well.
I do not think the hon. member ought to attribute all the developments in the agricultural industry to interest rates. There are such things as markets and crops and other costs which have added to the problem as well.


Bob Rae: Madam Speaker, with respect to the complacency of the government and the minister in light of what has gone on, I am reminded that yesterday the government appointed Gerald Bouey to the Order of Canada, with interest rates of 20 per cent. One can only conclude that, if interest rates go to 30 per cent, Mr. Bouey will be named Governor General of Canada.


IMPACT OF UNITED STATES INTEREST RATES
Bob Rae: Madam Speaker, I would like to ask a supplementary question of the minister. It has to do with the very, very mixed signals we are getting from the government. When the Prime Minister speaks to this House he tells us that it is the fault of the Americans. He tells us that when he conducts the Summit he is going to be joining with his European colleagues to tell the Americans that they have to get interest rates down, that that is the message the government is going to be taking to the Summit, and that that is one of the consequences or results the government hopes to get out of the Summit, yet when we listen to the minister we get an entirely different answer. He tells us that interest rates in Canada are a product of what is going on in Canada.
I would like to ask the minister a very simple question. What is the message the Government of Canada is going to be taking to that Summit with respect to interest rates? Is it that interest rates are too high because of what is going on in the United States, or is he going to be telling President Reagan to keep interest rates up in the United States, that we are going to keep them up here, and that this is the policy which is really going to work?


Allan Joseph MacEachen: Madam Speaker, the hon. member obviously was not listening to an answer I gave a few moments ago to another hon. member when I talked about the obvious impact that interest rates in the United States have on the Canadian economy. There is no doubt about it. There is an impact on the Canadian economy and on every European economy.
However, that is not the whole story. There is a very strong demand for loans and money in Canada at the present time which, the addition to the pressure from the United States, is adding to the upward drive on interest rates in Canada. It is not just one cost; it is several. The hon. member is a master of complexity, and I would like him to apply his talents to this particular field as well.
June 26, 1981


CROWN CORPORATIONS
Hon. Perrin Beatty (Wellington-Dufferin-Simcoe):: Madam Speaker, I have a question for the President of the Treasury Board. Has the President of the Treasury Board been able to settle his differences with the Minister of Finance over the omnibus Crown corporations bill? If so, when will the bill be tabled in the House of Commons?


Donald James Johnston: Madam Speaker, I am grateful that the hon. member brings to the attention of members of the House this very important piece of legislation which, when brought forward, will essentially govern Crown corporations which are responsible for billions of taxpayers' dollars. Hence it is obvious that it can only be done with the greatest care and consultation. The Minister of Finance and I have been consulting for some weeks on the matter, together with other members of the government, and I think great progress is being made to bring forward a bill which all members of the House will recognize as being a major step forward in the control and accountability of our Crown corporations.


Henry Perrin Beatty: Madam Speaker, I would have loved to have had the English translation of the minister's answer.


GOVERNMENT PRIORITIES
Henry Perrin Beatty: Madam Speaker, may I bring to the attention of the President of the Treasury Board the answer he gave to the House on May 14, 1980, as recorded at page 1093 of Hansard when he said, and I quote:
It is my intention to bring forward a Crown corporations bill incorporating such amendments to the proposed legislation as may be necessary to resolve some of the difficulties which have been raised. I hope to do that at an earlier date. I also regard that, as the hon. member does, as a priority item.
That was 13'A months ago. If that is the way the President of the Treasury Board feels about a priority item, how does he feel about matters of lower priority?


Donald James Johnston: Madam Speaker, not only is it a priority item but it is also a very important one. That is the point I made in my first answer. I do not think we should act precipitously in terms of legislation which is going to govern the control, accountability and direction of all our Crown corporations for many years to come.


CUSTOMS AND EXCISE
Walter David Baker: Madam Speaker, I have a question for the Minister of National Revenue. As the minister knows, there is great concern within the business
Oral Questions
community and the international community about introductions of changes to the customs procedures in Canada. I want to ask the minister a simple question. Is he intending to introduce a new Customs Act prior to this House rising or before this session ends?


Hon. William Rompkey (Minister of National Revenue):: Madam Speaker, there is a new Customs Act being prepared in consultation with my colleagues, but I do not anticipate that it would be introduced before the present session ends.


FINANCIAL INSTITUTIONS
Hon. Marcel Lambert (Edmonton West):: Madam Speaker, my question is directed to the minister of state for financial institutions. At the time of the consideration of the revisions to the Bank Act the minister used as a trade-off the pending introduction of a new trust companies act. During the past several weeks we have seen an unseemly disorder in attempts to take over major trust companies in Canada. Would the minister tell us when that legislation will come forward, and will it follow the principle of the Bank Act to limit the size of individual holdings in major financial institutions in this country?
[ Translation]


Hon. Pierre Bussieres (Minister of State (Finance)):: Madam Speaker, with regard to the first part of the question asked by the Don. member as to when we intend to introduce a bill to revise the legislation on trust and loan companies, I can say that I would like to do so as soon as possible. As concerns the policies on which this bill will be based, unfortunately, I cannot announce them until they are approved by cabinet.


MINISTER'S VIEWS
Marcel Joseph Aimé Lambert: Madam Speaker, will the minister agree with me that at the time of the discussions on the Bank Act he expressed serious views with regard to major holdings and attempts by major individuals in the country to take control of our senior trust companies?


Pierre Bussières: Madam Speaker, as I recall the discussions we had in this regard, they dealt mostly with the Bank Act and the Quebec Savings Bank Act. Both these acts contained provisions on the limitation of share ownership and I commented on the position of the government concerning the provisions of these two measures then before us.

June 26, 1981
Public Accounts



ROUTINE PROCEEDINGS


Robert Phillip Kaplan: Madam Speaker, following the questions put yesterday in the House by the hon. member for Nepean-Carleton (Mr. Baker), I would like to table, pursuant to Standing Order 41(2), a copy in both official languages of the policy of the Royal Canadian Mounted Police concerning legal fees for members and former members.


PETITIONS
Mr. Jesse P. Flis (Parkdale-High Park):: Madam Speaker, I have the honour to table petitions from the metropolitain Toronto Canada's Birthday Committee supporting the proposed Bill C-37 officially recognizing July 1 as Canada Day. I am pleased that all three parties have agreed to debate Bill C-37 in this House on Monday, June 29. The passage of this bill will emphasize our belief in a united country belonging to the people of Canada and will express our pride in our great land.



PUBLIC ACCOUNTS


Mr. Bill Clarke (Vancouver Quadra) moved: that the eighth report of the Standing Committee on Public Accounts, presented to the House on Tuesday, June 23, 1981, be concurred in.
He said: Madam Speaker, in moving concurrence in the eighth report of the Public Accounts Committee I just want to say a few words of explanation before asking the House for its concurrence.
It has been a short tradition-but, nevertheless, a tradition-for all chairmen of public accounts committees in Canada to meet once a year. This third meeting is to be held next month in St. Andrews, New Brunswick. I, as chairman, am unable to attend this year and the vice-chairman, the hon. member for Dollard (Mr. Desmarais), also cannot attend. Therefore, the hon. member for Capilano (Mr. Huntington), former chairman of the committee, will attend.
It was decided at our meetings last year in Winnipeg that it would be helpful if a member of the research staff of the Standing Committee on Public Accounts attended and, of course, his expenses will want to be covered.
This meeting is held at this time so as to correspond with the meeting of legislative auditors from across the country, and I am happy to say this year's order of business will include the so called Kelly report prepared by John Kelly for the Canadian Comprehensive Auditing Foundation dealing with Standing Committees on Public Accounts. It will be most helpful if the House will concur in meeting the expenses of the research officer and the member of the committee travelling there.


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


Mr. D. M. Collenette (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 63, 111, 2,304, 2,505, 2,558, 2,569, 2,570 and 2,585. '



METRIC CONVERSION

['Agreed.']
Mr. Ralph Ferguson (Parliamentary Secretary to Minister of State (Small Businesses and Tourism)):: In so far as Metric Commission Canada is concerned:
2.	The exact cost of scales conversion to merchants in the test cities of Peterborough, Kamloops and Sherbrooke is not known. However, the cost of converting scales varies with the type of scale involved as follows:
Modern Electronic Digital Scales-These have a built in conversion capability and are usually converted at no charge.
Early Models of Digital Scales-Conversion costs vary from $300 to $1,000.
Mechanical Scales in Good Condition-Costs vary from $100 to $400, depending on the type of conversion chosen.


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
June 26, 1981
[Stage Direction]
Automatic Labelling and Prepack Scales-These scales are only used in larger supermarkets and are convertible at $800 to $900.
It should also be noted that many merchants took the opportunity of metric conversion to upgrade or replace scales which had obsolete price ranges, e.g. scales which had a maximum price range below today's price requirements.
2.	The only scales with an average price of $5,000 or more are the sophisticated automatic labelling scales used by the larger supermarkets. Such scales are convertible and do not need to be replaced.
The average price for normal electronic digital scales is in the $2,000 range and for new cylinder scales around $1,000.
3.	The basis of estimates of $40 to $100 billion as the cost of conversion in the U.S. is not known and thus no comparison can be made with conversion costs in Canada. Experience has been that actual costs are normally much less than original estimates, for example, General Motors have found the cost to be less than 1 per cent of their original estimates.
Mr. Cossitt: 1.	Is the "calorie", under the changes to the metric system, a metric measurement and, if so, is it planned to drop the word and to substitute with "ergs, joules, kilojoules" and, if so, what is the purpose of dropping a word or measurement with which Canadians are familiar to be replaced by such difficult names?
2.	In what way does the government feel that this will benefit the Canadian economy?


Ralph Ferguson: In so far as Metric Commission Canada is concerned:
1.	The Weights and Measures Act of 1971 specifies the International System of Units (SI) as the latest evolution of the metric system to be legal in Canada. The calorie and the erg are obsolete metric units which, not being coherent, in the case of the calorie, nor a preferred sub-multiple, in the case of the erg, are not used with International System of Units (SI). (Source-CSA "Canada Metric Practice Guide" 1979 Edition). The joule and its preferred decimal multiples and submultiples will replace both the calorie and the erg. The kilojoule is equivalent to one thousand joules.
Most everyone is familiar with the SI unit of power, the watt, and the expenditure of energy at the rate of one joule per second produces a power of one watt. The energy consumed by a 100 W light bulb is 100 J/s (joules per second), and if one leaves a 100 W light bulb burning for one hour the energy consumption is 360,000 J or 360 KJ (kilojoules). Other ways of expressing this are obviously 100 W.h (watt hours) equals 360 KJ (kilojoules) or 1 W.h equals 3.6 KJ.
The use of the kilojoule was recommended for the human diet by the Intersectorial Committee on the Adoption of the Kilojoule in its 1975 report and again in its revised 1980 report. This is a committee of Metric Commission Canada under the Health and Welfare Sector. It is made up of
Order Paper Questions
volunteer members representing diverse groups such as: Canadian Medical Association, Canadian Dietetic Association, Canadian Grocery Products Manufacturers Association, Consumers' Association of Canada, and the Sports Federation of Canada.
2.	The benefits of adopting the joule parallel those of adopting the International System of Units, including rationalization of energy terms and simplification of energy calculations.
(a)	Rationalization
The use of the joule will promote consistency, rationalizing the many units now used for energy into a single unit. This one unit, the joule, will replace the several calorie terms such as large calorie, kilocalorie, thermo-chemical calorie, cal 15, IT calorie, in addition to replacing other energy terms such as British Thermal Unit and therm.
(b)	Simplification
Various types of energy are interconvertible. Because the joule will be the sole unit used to describe energy, time and money will be saved by reducing the number of calculations required in converting among energy units. Only one energy unit will need to be taught, thus saving time in the educational process. It is the internationally accepted SI unit for energy.
Potential benefits of this are: it will facilitate tracing of convertible energy in the ecological cycle; facilitate economic studies for the efficient convertibility of energy; simplify comparison of data among scientific disciplines; and facilitate cost-benefit analyses of energy required for crop production versus energy released by metabolization of crops produced.


Mr. Cossitt: With respect to the Taschereau Papers as dealt with in the House on March 25, 1981, did the CBC news program "The World at Six" on that date and the news program "The World at Eight" on the day following ignore this subject completely and, if so (a) what are all the reasons (b) is this policy based on the possibility that persons with former and present CBC connections might be named in the Taschereau Papers?


Mr. Peter Stollery (Parliamentary Secretary to Secretary of State and Minister of Communications):: I am informed by the Canadian Broadcasting Corporation as follows: the hon. member's question in the House on March 25 was not mentioned in "The World at Six" on that date or "The World at Eight" the following morning. However, the Taschereau Papers were mentioned in "The World at Six" on March 26 in a reported interview with the Hon. Allan Lawrence, PC, QC, MP.
(a)	It was an editorial judgment not to report on the question.
(b)	The editorial and journalistic considerations involved do not constitute a CBC policy. With
10990

June 26, 1981
Order Paper Questions
regard to the remainder of (b), see Beauchesne, fourth edition, Chapter 5, section 171 (i) re questions containing imputations.


Mr. Cossitt: 1.	Have departments become involved in providing information to employees concerning methods of obtaining personal insurance on automobiles, houses, etc. through the Personal Insurance Co. of Canada and, if so (a) which departments (b) under whose authority was the step taken in each department?
2.	In each case, were competitive proposals or bids obtained from any other insurance company and (a) if so, what are all the details (b) if not, for what reason?
3.	To the knowledge of the government (a) what are the names of all the directors, officials, etc. of the Personal Insurance Co. of Canada (b) what was the annual premium volume in each category of insurance written by the Company in each of the past five years?
4.	To the knowledge of the goverment (a) is the Royal Insurance Co. the largest insurance company in Canada (b) what was the annual premium volume in each category of insurance written by the Company in each of the past five years?
5.	Did the government investigate whether or not the selection of the Personal Insurance Co. of Canada was based on any form of patronage from the Liberal Party or from any government official and, if not, does it intend to do so?

Deputy General Manager, Finance-Brian F. Bennett
Assistant General Manager, Underwriting Operations-Olda Spilar
Assistant General Manager, Information Services- Paul Castellani
Assistant General Manager, Counsellor Services- May L. Kerr
Assistant General Manager, Quebec-Jean-Pierre Bastien
Assistant General Manager, Western Regions- Elsie Woods
Claims Manager, Canada-Michael Schimf
Marketing Manager, Canada-Chuck Lawrence
Controller-Mary Wynn Fini
(b) Net Premium Volume (SOOOs)-The Personal Insurance Company of Canada
.
ft? *'


David Michael Collenette: I am informed by Treasury Board and the Department of Insurance as follows:
1.	The Treasury Board is not aware of any department or agency coming under its purview being so involved.
(a)	not applicable;
(b)	not applicable.
2.	Not applicable (see 1 above).
3., (a) Directors of the Personal Insurance Company of Canada:
Jean-Marie Poitras Hans P. Johne Claude Castonguay Marcel Dumas Gaetan Drolet Jacques Douville Richard C. Meech George L. Bowie Michel Marchel
Officers of the Personal Insurance Company of Canada:
Chairman-Jean-Marie Poitras
Vice-Chairman-Claude Castonguay
President-Jean-Marie Poitras
Executive Vice-President and General Manager-
Hans P. Johne
Class
Property
Auto, Liability
Auto, Personal Accident
Auto, Other
Fidelity
Liability
Surety
Marine
1980	1979	19783,255	2,014	1,343906	5,264	4,7416,268	672	3,7344,503	
2 2
1977 1976	
755 704	[DOT] j;}: d
3,204 2,673	
366 225	
2,463 1,758	
(-5)	
(-4) 161	
II	
	
4.	(a) Royal Insurance Company of Canada is the largest property and casualty insurance company in Canada, both when measured by total asset size and by total net premium volume.
(b) Net Premium Volume (SOOOs)-Royal Insurance Company of Canada

Class	1980	1979	1978	1977	1976Property	83,820	86,530	87,815	58,090	42,529Accident & Sickness	1,152	1,164	1,147	1,006	781Aircraft	122	79	161	166	161Auto, Liability	81,814	86,304	84,031	60,995	46,862Auto, Personal Accident	7,133	6,354	5,889	3,503	2,510Auto, Other	67,113	68,849	63,081	38,538	28,833Boiler & Machinery	6,117	5,515	5,120	3,068	2,543Fidelity	1,210	1,269	1,294	883	702Liability	23,649	22,783	25,583	16,523	11,216Surety	623	601	508	332	272Marine	2,662	2,088	3,214	2,610	2,178
Deputy General Manager, Insurance Operations
and Corporate Secretary-J. Terrence Kelaher	5. Not applicable (see 1 above).

June 26, 1981


Mr. Gamble: Did any department provide financial support during the fiscal year 1980-81 to the Association canadienne des veterans du hockey and, if so, in what amount?


Gerald Augustine Regan: The Association canadienne des veterans du hockey received a contribution of $79,112 from Fitness and Amateur Sport during the fiscal year 1980-81.


Mr. Cossitt: In each of the past four fiscal years, what was the total amount of debts under $5,000 owing the government that were written off by the Treasury Board, including the number of debts involved and the dollar value by year?


Donald James Johnston: In each of the past four years the total amount of debts not exceeding $5,000 due to Her Majesty deleted by the Treasury Board and the number of debts involved is detailed in Public Accounts under the following references:
1977	Section 11	page 11.211978	Section 9	page 9.221979	120Section 12	page 12.271980	120Section 12	page 12.31


Mr. Cossitt: 1.	Over the past four fiscal years, were debts over $5,000 owing to the government reduced to one dollar to get around the fact that debts in this category could only be wiped out by statute and, if so, how many?
2.	(a) What was the total amount of the actual debts before such reduction in each year (b) what was the actual dollar value before reduction to one dollar in each year?
3.	What is a complete list of all such debts over the four-year period, including the full amount and the name of the person or corporate enterprise involved?


Donald James Johnston: 1.	No debts in excess of $5,000 were reduced to $1 to get around the fact that debts in this category could only be wiped out by statute. By section 18 of the Financial Administration Act, Parliament has reserved the right to delete debts exceeding $5,000. Traditionally, the authority for the deletion of debts has been included in supplementary estimates by means of a nominal $1 vote. The $1, which is not actually spent, is required for the item to be included in the related Appropriation Act and its passage legislates the deletion because of the vote wording.
2.	(a) Pursuant to the explanation provided in 1. above, the total dollar value of the actual debts deleted by vote through an Appropriation Act over the past four years is detailed in Public Accounts under the following references:
Order Paper Questions
1977	Section	30	page	30.71978	Section	30	page	30.71979	Section	31	page	31.71980	Section 31 page 31.7*
*The debts approved for deletion by the Treasury Board in this year were not deleted by parliament.
(b) See 2. (a).
3. The manpower and other resource costs required to list the name of the person or corporate enterprise and the full amount of each debt is prohibitive.


Mr. Howie: 1.	How many persons were employed by the Treasury Board in the temporary assignment pool as of April 1, 1981?
2.	What was the salary level and what were the duties of each position?


Donald James Johnston: 1.	Forty-three.
2.	The temporary assignment pool is a group of senior executives and officers who can undertake priority assignments of a temporary nature within departments at the request of the deputy minister.
As of April 1, 1981, the distribution of TAP positions, the salary ranges and duties were as follows:
Position: Senior Policy Advisor
Classification and Salary: SX 3 / $46,800 to $64,000
Total number: 9
Summary of duties:
Under terms of reference established at the deputy ministerial level, the senior policy advisor assumes responsibility for planning, program evaluation and policy analysis of major programs in the department to which he is assigned.
Examples of the responsibilities associated with such assignments would include the following: review and analysis of legislative and constitutional basis of departmental programs, and the development and presentation of proposals for amendments to enabling legislation for cabinet consideration; representing the department, in respect of assigned areas of responsibilities, before the Treasury Board and cabinet, Parliamentary and Senate committee.
Position: Policy Advisor
Classification and Salary: SX 2 / $41,900 to $57,100 Total number: 14 Summary of duties:
Plans, directs and co-ordinates projects associated with the analysis, evaluation, organization and/or

June 26, 1981
the government and the department to which he is assigned at the lowest cost in terms of other objectives. The policy analyst is responsible for providing recommendations on the concepts and methodology necessary for the development of the project proposals, and prepares project reports, summaries and advisory memoranda for senior officials of the department to which he is assigned.
Note: All TAP positions with the exception of the 2 ES positions are to be converted to the new management category. Salaries will be revised accordingly effective April 1, 1981.
[ English]
Order Paper Questions
development of departmental capabilities in respect of new or revised programs of major consequence to departmental operations.
Examples of the responsibilities associated with such assignments would include the following: Development and presentation of proposals for revisions to legislation for consideration by the deputy minister and/or minister; analysis of departmental programs, objectives and requirements in light of changing economic social or political requirements, and development of associated advice and recommendations to the deputy minister and minister.
Position: Policy Advisor
Classification and Salary: SX 1 / $36,800 to $50,600 Total number: 9 Summary of duties:
Plans, directs and carries out assignments relating to the appraisal, analysis and development of policies and programs on behalf of federal departments and agencies: review legislation, policies and precedents relating to assigned areas of responsibility, and developing and presenting proposals and recommendations on new or revised programs, changes to legislation and/or amendments to policies to senior management of the department; develop and present, for consideration by senior departmental management and/or the minister concerned, recommendations for improvement in the effectiveness and efficiency of departmental operations.
Position: TAP Officer
Classification and Salary: AS 8 / $33,600 to $41,500 Total number: 9 Summary of duties:
Under the general direction of a senior executive, conducts a program of study and evaluation of the department and more specifically of the areas of assigned responsibilities; evaluates the effectiveness and efficiency of existing programs in terms of departmental objectives and legislative responsibilities and analyses departmental requirements to meet these responsibilities; develops and presents recommendations for changes in policies and programs; provides consultative and advisory services for the implementation of changes in policies and programs; directs assigned staff resources.
Position: Policy Analyst
Classification and Salary: ES 7 / $43,922 to $47,859 Total number: 2 Summary of duties:
Under the general direction of a senior executive conducts major project evaluations of the effectiveness of actual or proposed departmental policies, programs or projects, in realizing the objectives of


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


Madam Speaker:: All those questions have been answered. Shall the remaining questions stand?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


Gary Michael Gurbin: That this House condemns the government for failing to bring before Parliament effective economic policies to deal with the present economic crisis and end the disastrous interest rate squeeze on the small business, industrial and agricultural sectors.
He said: Madam Speaker, this motion is put forward on our final opposition day of this session at a time when there has been criticism of this party in terms of the motions we have brought forward previously, and also at a time when there is a question in terms of government inaction in addressing the economic difficulties faced by Canada today.
1 would like to restate the motion we put forward because 1 think it is really at the heart of the difficulties in terms of the government's viewpoint and what needs to be done:
That this House condemns the government for failing to bring before Parliament effective economic policies to deal with the present economic crisis and end the disastrous interest rate squeeze on the small business, industrial and agricultural sectors.
That is a fairly strongly worded motion, Mr. Speaker. The word "condemn" is there, a word I think none of us likes to use in normal conversation, particularly when addressing the Government of Canada. However, it is an appropriate word because the inaction of the government in addressing what is truly an economic crisis threatens in the long term to put us in a position where economic recovery will be impossible. In the short term it addresses the issue of what will happen to the primary producers of this country.


BUSINESS OF SUPPLY
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June 26, 1981
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The Minister of Finance (Mr. MacEachen) has heard all this before. The difficulty is that he is not addressing the problem. He answered some questions today in a way that really slips through and slides around the issue and difficulties being faced by producers, small businessmen and the people of Canada who are facing the brunt of these economic policies.
Whatever the minister has said so far, the bottom line of the whole issue is that what he is doing is not working. If he argues that his high interest rate policy is to reduce consumer spending, he makes the case very well today that the pressure for loans on the banks is as high as ever. The fact is that we are facing continuously high interest rates which have not decreased in the face of government policy over the past six or nine months, ever since, in fact, the government took power. The situation is not improving; rather it is deteriorating.
One of the main problems faced by the government, and the Minister of Finance addressed this very directly in some of his comments today, is that the high interest rate policy by itself is not the single problem. There is no question about that. It indeed happens to be the biggest single problem faced by producers, by entrepreneurs who would like to start a business, or small businessmen who have an opportunity to expand but cannot because they cannot face the interest rate charges. He talked about fertilizer in the agriculture industry.
The Minister of Finance just spoke proudly of Bill C-57. He has to know that in that bill he imposes a 30-cent tax which affects the cost of fertilizer, the cost of home heating for numerous Canadians, that in fact affects our ability to export because exports of natural gas to the United States are down 25 per cent. Minimum quantities of gas are being taken because American consumers do not want to face that additional charge and they are now looking to their own supplies. So instead of taking the maximum amount which would return revenue to the government, they take minimum amounts, which again reduces government revenue. Farmers must face the higher fertilizer costs in combination with the other pressures they have. Home owners and people who must pay heating bills have to face these higher costs. So it is in fact a combination of effects as a result of the government's total economic policy which has led us to the crisis we are now facing.
I believe, Mr. Speaker, individual Canadians are proud people. They do not want to face financial losses such that they have to declare bankruptcy. They do not want to suffer what they consider to be the shame in their own minds, if not in others, of incurring the losses and failure identified by the statistics we call bankruptcies. That is why those statistics do not tell the story about Canadians who withdraw from or do not enter into business activities or farming. They do not tell about the people who quietly go their way without complaint because they have pride, a pride which we should try and foster.
It is a little like the farmer I talked to last night who has farmed for his entire life and has a son who would like to farm. He would like to help him but he is faced with a situation now, with interest rates being the single most significant economic
Economic Policies
factor, where he has sold his farm and will sell the rest of his property and withdraw completely from agriculture because he sees no future in it. That person is representative of the over 1,000 people in Ontario who withdraw from agriculture each year.
The Minister of Finance spoke about the strength of the agricultural community. Indeed, that is true. There are 700,000 people in Ontario alone who are either directly or indirectly affected by and depend on agriculture for their livelihood. That figure is vulnerable today because that community is vulnerable as a result of the combination of effects, with interest rates being the most important.
Last fall businessmen responded to a survey by the Canadian Federation of Independent Business. On questions regarding the effects of high interest rates on their particular businesses, 55 per cent of them responded by showing their profits were in fact reduced as a direct consequence of these rates. That is a sector of our economy, Mr. Speaker, which accounts for somewhere near 60 per cent of employment. Those people are vulnerable. They face the same kind of pressure. Indeed, they are the same kind of people who do not want to face bankruptcy and who will withdraw, if they can, quietly and proudly in order to avoid the shame of bankruptcy. The number of those people is the number which is really important, and the number of those people will be quadrupled by the fall of this year.
The question which must come up is wherein the responsibility lies for the present crisis. We know from the statistics of 1980 that consumer spending figures are fantastic. The amount of money Canadian consumers have spent on consumer goods is somewhere around $167 billion. In one way or another the people of Canada are entrapped in a situation which has left them as individual consumers at a point where they have a habit of spending perhaps more than they should and have a credit habit which has been fostered over years of affluence.
The government has been in power now for 16 years with the exception of nine months. The government itself must set an example. In looking at the example the government has set for them, these people must ask themselves these serious questions: Where is the government coming from; what is it saying; what is it doing? The government has campaigned and repeatedly indicated the effort it has made to reduce its deficits and the effort it must make to reduce its spending. The bottom line is what the government is actually doing in contrast to what it is saying or the example it would like to set for Canadians. We know that we are spending well over $60 billion this year and that the deficit has risen to $14 billion. This is the kind of example Canadians have come to look to; it is the kind of model they have to follow in their own personal lives. This is one of the critical reasons why there is great difficulty in looking at a resolution to this problem.
The other aspect is the banks. Are the banks the ones to blame? What is happening with the banks? If we look at some
[Stage Direction]
June 26, 1981
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of their statistics and quarterly figures, we will see some amazing results in terms of operating profits and revenues. In the case of one bank, in the first quarter of 1981 its operating profit was $211 million. In the second quarter of 1981 the profits rose by a factor of four to $1,140 million. Not all banks have followed the same dramatic increase; there have been some changes.
The minister was talking about the small business development bond this afternoon. He discussed the amount of money which was put into the small business development bond. In fact, it is somewhere around $700 million and it could be about $2 billion, if things keep going the same way, by the end of 1981. Those figures have not really influenced the profits of banks. In that case they will not influence the taxation aspect of the banking system. The banks have indeed done well. There is no question that it is costing them more money to borrow and there is a balance somewhere. The banks have been part of the scheme. Their rates have been usurious. They have been criticized. In fact they are the focal point of individuals faced with bearing the brunt of high interest rates. They are part of the system, and the bottom line of the system is the government which needs to provide leadership but has provided no example at all.
The government's example is so ingrained and so much a part of the system that there will have to be a dramatic reversal in a number of areas in order for there to be any improvement. The specialization which occurs in the different branches of government is one of the key issues. These are broad issues which will not provide us with the answers today, but they are worth mentioning because they are important.
Let us compare the people in the Department of Finance with those in the Department of Agriculture and in the Department of Energy, Mines and Resources. These people are focused in their own territory. They have become highly specialized in one area. They have no sense of the integration which is required or of the ripple effects of their actions and directions in a number of areas. These people are well qualified. They have come up through a system which has perpetuated very understandably their own self-interest. They have a position, they have a territory. Unfortunately the necessary overview for economic survival and enhancement of the whole system is not there. It is somewhat like a specialist in pediatrics who deals with infants. He is topnotch in his own area, but he wonders why the mother of his patient who is on welfare goes out and becomes pregnant again; perhaps he will treat another child with the same congenital disease.
The problem is that there is no one focusing and putting together the different aspects. There is no one who has a feeling for it. As capable and well-intentioned as is the Minister of Finance, he does not have a grasp of what is really happening in terms of the energy future, the agricultural aspects of the economy, or some important things which are necessary for economic recovery. The integration of all those matters is not there.
The Minister of Finance likes to discuss the international aspects or the impact of such things as interest rates in the
United States upon the Canadian scene. It has been mentioned many times before but it needs to be mentioned again that not only do we have a unique situation in Canada in terms of opportunities, distances, and a range of important elements but we have a system of government which has developed over a period of time.
Within that system we have developed a particular rationale for economic and monetary policies which does not take into account any of the other things happening in the United States at the present time, such as the bill before Congress to reduce taxation by $35 billion. The Americans brought in bills which deregulated the oil and gas industry to allow the private sector to thrive, to do the things which needed to be done in terms of exploration and development, and to do everything necessary for their energy future to be as secure as possible. Canada has not dealt with these matters in the same way. This is not good. It is really like trying to avoid the real issue by saying, "Yes, interest rates have an impact on our system and what we do in Canada with interest rates". But we cannot do this in isolation. If we look upon the Americans as an example of what to do, we should look at what they are doing in other areas as well to regenerate their economy. Perhaps we just hope to slide along with them in the event they are successful.
My final point concerns government priorities. A moment ago I mentioned the criticism that we on this side of the House have endured because we chose to use one allotted day to consider a moral issue. The day after, the government chose to introduce a bill on hijacking. The government has numerous opportunities, endless days, wherein it can introduce any legislation it wants. We on this side of the House would be more than pleased to co-operate and to deal with the serious economic issues with which the country is faced rather than the peripheral issues that are important in many ways but have no real effect upon the economic situation of Canada.
What are the results of this interest rate policy which we now have in this country? I think that the most succinct expression of this comes from a letter to the Prime Minister (Mr. Trudeau) from the Canadian Institute for Economic Policy, which I would like to read. I am sure that the Minister of Finance has read this letter. There are six points in it. These points state, in terms of what I consider to be a very credible body, the effects of the interest rate policy. I would simply like to describe them now. First:
They have slowed down the rate of growth in the economy with the result that we have higher levels of unemployment than should be permitted.
That unemployment level is now well over a million and may be 1.25 million.
The cost of unemployment, the under-utilization of our human resources, can be measured in economic terms. But the social cost represented by the frustration of those who cannot find jobs, and sometimes the broken homes that are the result, are no less real even though they cannot be measured statistically. Moreover, a sluggish economy means that government revenues are depressed and thus government deficits are considerably higher than they should be.
I am sure that the Minister of Finance has heard of the Lefler Curve, the disincentive in terms of taxation and the
June 26, 1981
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experiences which have been gained in other countries, and the disincentive for individuals, for entrepreneurs and for business to engage in business activities because of the taxation rate. I think that is the emphasis of the first point which this report has brought forward. Second:
Small and medium-sized businesses-most of which are Canadian owned- tend to borrow heavily from the banks for their capital requirements. As interest rates have gone up, more of these businesses have been driven into bankruptcy. The number of bankruptcies in March 1981 was 29 per cent higher than for the comparable month a year ago. With interest rates now payable by small businesses of 20 per cent or even higher, more bankruptcies can be expected.
The minister, in answer to questions earlier, responded by saying that the total number was not bad. While he is in the House, I would like to say that, in fact, the absolute numbers are not that great when one looks at Canada as a nation. However, when one talks about those numbers, one is really not talking about the impact that these interest rates are having because of the number of Canadians who voluntarily withdraw, first of all, from their businesses and their enterprises, whether it is farming, tourism or whatever. It really goes beyond that, because at some point in time some of those people who have been severely affected even tend to withdraw from our system and lose confidence in it.
Third:
High interest rates discourage all business enterprises, both large and small, from investing in new plant and equipment. The exact opposite is needed in the interests of improved productivity.
Fourth:
High interest rates have increased costs all through the economy and, therefore, are themselves inflationary.
This is another principle which the Minister of Finance continues to deny, will not accept and will not face:
In particular, they have added substantially to the cost of housing. This makes it very difficult, if not impossible, for young people starting life to purchase a home of their own, which is still the dream of most Canadians.
Fifth:
High mortgage rates are causing considerable difficulties for home owners and for some farmers. Some have lost their homes as a result.
Finally, sixth:
The Bank's continued efforts to encourage an inflow of capital, by keeping interest rates high, has resulted in a substantial increase in our foreign debt. And the carrying charges on this debt have added to the deficit on current account in our balance of payments.
Those are the six consequences of the high interest rate policy of the government. I think they are well stated. They give a broad picture of what is happening because of the government's policy.
One of the critical issues which comes as a consequence of decreased business activity is a dependency on government to seek revenues in other areas. This is part of the disastrous cycle in which we now find ourselves in Canada. It is part of the rationale and the motivation for many of the measures which have been brought forward in bills such as Bill C-57.
The effects caused because the government wants to increase its revenue have strained the fibre of our national unity to almost the breaking point in many regions of our
Economic Policies
country. The issues are really premised on two things. They are premised on a question of central federal control which in many ways I would support, and I think it is appropriate; but they are also premised on the basis of government needing revenue because its other policies demand it. It does not invest or manage the economic affairs of the nation in a proper way. Therefore, it requires these revenues which, in themselves, defeat the purpose by decreasing activity in a number of areas.
Mention was made of the inflationary aspect of an ad valorem tax. This is unfortunate type of tax. Any ad valorem tax is unfortunate. However, it is unfortunate in the sense that, in itself; it again adds to inflationary pressure. It gives an example to everyone of the kinds of things which the government is going to do to maintain a revenue base when, indeed, the government should be trying to develop a tax base from a healthy economy instead.
I think there is no question that the only way we can achieve any resolution here is through economic leadership which must be provided by government. The banks will not do it. Individuals are now caught in circumstances where most of them really do not have an opportunity. Some larger corporations which have a considerable amount of equity may find some ways. However, in many cases those people are using a tax system which certainly will not provide increased revenue to the government in the short term, but they are avoiding taxes by doing things which larger institutions and corporations can do. In the end result, there might be a final concentration of power into larger corporations, chain stores and the sectors which can survive and withstand the pressures of the government's policies, or the government itself might expand and continue to have to try to provide support and relief measures for those people who have been disadvantaged and, in fact, thrown out of work by the policies which the government itself has created. People demand from the government and, in fact, need from the government the welfare support which is the only answer for their own personal survival.
However, the only way we can get recovery is through leadership from the government on an economic policy which will face, in terms of the productive sector, the needs it has in terms of borrowing costs, other advantages, the taxation system and deregulation and decontrol of the many aspects which are frustrating the production of many materials, including agriculture. There was an estimation that by simply deregulating, by simply taking away the massive controls and regulations which impose themselves upon the agricultural sector, the agricultural community, the primary producer, would save $1 billion a year in Canada.
There were a number of questions on the small business development bond earlier in the day. While the minister is now here, I would like to spend a moment on the small business development bond. At this time, according to the available figures, we have a diversion of funds through bank profits and other institutional profits of somewhere in excess of $700 million and calculations which bring us to $2 billion by the end of this year. Those funds are directed into specific areas, to specific groups which are able to qualify for them if, in fact,
[Stage Direction]
June 26, 1981
Economic Policies
those institutions are prepared to provide that funding within their own economic situation.
The amount of money which will be diverted into that bonding mechanism by individual banks varies from bank to bank. There are some banks which have notably used that system well and have promoted and advanced it. There are many other banks, particularly as one goes away from the larger branches of those banks, which, first of all, do not have a clue about the terms of reference, which is partly their fault and, I suggest, partly the government's fault. However, one finds that at the small branch level individual managers are not familiar with all of the provisions of those bonds, and this has, in fact, been a major difficulty for local people in taking advantage of them. There is no question about this. It is a real fault in the system. If it is, in fact, going to function in a way which will help primary producers and small businessmen, those banks simply must be better informed. They must understand the issues and the opportunities better. They must be able to communicate clearly and succinctly in informing people whether their cases might be applicable to the bonds.
The minister also mentioned the question of being able to divert funds in certain cases to operating capital and to allow people to use these funds for other than new expansion in cases where there is economic difficulty. But the difficulty is with the limitation imposed. The bank is required not to lend that individual or incorporated business any further funds. That is a stranglehold and something which makes it impossible for any movement within a certain economic situation any individual farmer or small businessman might have.
The minister talked about the bureaucracy and the difficulties in administration. An application came to the department four months ago. The minister knows that these applications have to be considered on a case by case basis. As an example, four months ago an application was made on the part of a unit which was economically viable on the basis of being able to qualify for this bond. Today that unit is frustrated and is in more economic difficulty because of the interest rate charges. The company is now looking at selling out completely.
This sort of thing happens partly because of lack of familiarity and partly because of the hesitancy of the individual banks to use the mechanism. The banks feel vulnerable because of repercussions if the taxation department tells them the loan was not justifiable in the first place. The banks are concerned about their own situation a year or so down the road in the event that the taxation department comes back to tell them it was not the right thing to do. If we are going to use this mechanism, we should address it. It should be clearly stated and clearly identified and made to function in a way which would expedite the provisions so the people who could qualify would qualify. That is the very least the government can do right now. That requires an administrative change. It is something that is sitting waiting to be done right now, and it should be done quickly.
The other point which the minister made concerned the agricultural community. He said that the agricultural community might expect the minister would look to either unincorporated farms or incorporated farms. I was not clear just how he stated it.
Walter David Baker: It was unincorporated farms.


Gary Michael Gurbin: He mentioned that there might be a provision within the bond to allow a special opportunity outside of this failure situation. Perhaps he could clarify that point.


Walter David Baker: It was incorporated.


Gary Michael Gurbin: Incorporated would present a difficulty for many farmers, but it can be overcome.
In conclusion, the time-frame is critical and important because it will end with this session of Parliament. It is important because the banks in my area specifically have shown leniency and the farmers have withdrawn from any aggressive action. But if we do not have measures that are identified and will address the problems, the whole situation may flare up, so much so that they will benefit neither the farmers, nor the banks, nor in the long run the government.


Bob Rae: Mr. Speaker, it is a pleasure for me to follow the hon. member who has moved this motion. In moving the motion he has pointed out the seriousness of the situation, and in particular the very real difficulties which are being felt by farmers, small businessmen and Canadian industry as a result of the Canadian government's interest rate policy.
I must confess to a certain sense of frustration, having spent a great deal of time this session arguing that the government's policies do not make any sense and, that they are having a very harsh effect on Canadians. Also, convinced as I am, and as our party is, the harshness is essentially futile in that the government is lingering under certain illusions with respect to the consequences which this policy it is following will have on inflation.
We have heard from the minister, and we heard from him again in question period today, that this was the only policy the government can follow which will have an anti-inflationary effect. We have heard the same statements from the minister in different ways. I took some interest in reading the speech he made while he was in Paris attending the OECD meeting. The minister seemed to align himself with those, particularly in the United States and Britain, who have taken the view that the way to fight inflation, which is causing such problems not simply for the Canadian economy but for all western economies, is to carry on with the restrictive monetary policy, that this is the essential ingredient in the war on inflation.
I want to say to the minister that I do not think we can carry on very much longer with a sense of confidence that this policy is really having a great deal of effect. For example, he made much of the fact today that the demand for loans was still very high and was, in fact, inflationary.


Mr. McDermid:: Consumer loans.
June 26, 1981


Bob Rae: Yes, he mentioned consumer loans. He went through a range of areas where the demand for loans was causing this kind of inflation. I have mentioned to him, and 1 mentioned it again today during question period, that the evidence from Statistics Canada released just this week is that demand for consumer loans, personal loans, dropped very substantially in the past year by 60 per cent. The demand for small business loans dropped 47 per cent in the first quarter of 1981. That tells us something. It is a signal that the government must look at the situation, that we do not have interest rates which in a sense reflect the demand pull. We have interest rates which reflect the policy of the government with respect to the Canadian dollar. That is the hard fact of the matter.
The root of the interest rate policy of this government has, for some years, been a conviction that protection of the value of the dollar at a certain level was the sine qua non of its anti-inflation policy and that interest rates had to respond to events in the United States in order to protect the value of the dollar. Even if one accepts the premise about the dollar- though this is not the terms of the discussion today and I do not want to go into it at length-the consequence for the domestic economy is something that has to give rise to concern. The minister's answer to that has been to say that growth in the Canadian economy has been fantastic. We had fantastic growth in the last quarter of 1980 and we are experiencing it again in 1981.
I say to the minister that I suppose it depends from what point you see the growth. If you look at the basic rate of capacity utilization right across the economy, I do not think there is any great cause for optimism. I do not think the economy is working at full capacity or that it is the nature of domestic activity in the economy which is really driving our rate of inflation up. I do not think there is any evidence to suggest that is the case.
I am reminded of the debate we had a couple of weeks ago in the House when the chairman of the Economic Council of Canada was before the Standing Committee on Finance, Trade and Economic Affairs talking about productivity. The Minister has frequently talked about increased productivity as being the key to breaking this inflationary cycle in which we find ourselves. There is no question that increasing productivity of Canadian industry would do a great deal to reduce inflation. However, there was one thing which the chairman of the Economic Council of Canada made very clear, and he made it very clear in his report, and that is that, you cannot hope to increase productivity when the economy is being kept down at the level of capacity it is now.
This is the argument that should be going on in public with respect to the policies of the Bank of Canada. If we are serious about breaking the inflationary cycle, we are under a tremendous illusion if we think the way to do that in the current world context is to keep capacity down, working at far less than real potential. It will cause hardship in the economy.
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That is the inevitable, tremendously uneven effect of interest rates and inflation. This government is committed to an interest rate policy for reasons of exchange controls. The only kind of exchange control the government is prepared to contemplate is interest rate policy. That has been the case so far. Its interest policy is a form of exchange control. The government must face the task as to what other measures can be taken, fiscal, economic and planning, to deal with the consequences of high interest rates.
Let us look at the economy and the effects interest rates are having on patterns of home ownership and small businesses. There are problems of concentration in the economy. Real problems must be faced by the average businessman as a result of the fantastic cost of credit.
The farm industry was spoken of eloquently earlier. It is also affected. There is no sign of any letting up because the minister is convinced his policy is absolutely necessary. If we continue with this policy, it will have a devasting effect on the average Canadian businessman, home owner, potential home owner and farmer.
1 want to deal briefly with those three sectors. First, I want to reiterate the point I made earlier with respect to the farm industry. I honestly do not see how a policy which restricts supply can be described in a sensible way as anti-inflationary. The minister mentioned in particular the hog and cattle sector. Credit has become the largest cost to the farmer. The level of indebtedness of farmers is fantastically high. Farmers are being driven out of business.
We have had in this House personal, anecdotal and statistical evidence, evidence of all kinds. The minister says it is not relevant because the number of bankruptcies is not that high. Bankruptcy is the end of the road. A lot of things happen before somebody goes into bankruptcy. They cut down on supply, sell off parts of the operation, go into a joint venture with somebody else for part of the operation, attempt to refinance, or sell the farm to a larger corporate entity, such as is happening in many parts of Ontario and right across the country. These things happen well before a farmer goes into bankruptcy. That is why looking at the absolute number of bankruptcies as an indication of what is going on in the agricultural sector is not a realistic way of assessing the problem.
The statistics merely show that the problem is much more severe now than last year. We did not need statistical confirmation of something we already knew. The fact is that farmers are being driven off the land. We are encouraging the process of corporate concentration and agribusiness and destroying the family farm. That is what the government's policies are doing. That is the slow, steady, persistent impact of the government's policies right across the country with regard to agriculture.
We have a Minister of Agriculture (Mr. Whelan) who sometimes thinks he is the minister of finance. The other week he was in the town of Nukko Lake in north central British Columbia to speak at a farmers' convention. At that time he produced the Nukko Lake manifesto, the personal manifesto of the Minister of Agriculture. The Canadian Press report of

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June 20 reported the minister as saying that "some serious work is being done about changing the banking system in this country." He must be referring to the work of the NDP; I do not know what else he was talking about. He said the government will change the banking system if the chartered banks do not do something to help farmers.
The Nukko Lake manifesto was not the first manifesto of the Minister of Agriculture. We have had a number of them. They are amusing examples of an attempt to establish himself as a populist candidate in the one day, some day, forthcoming Liberal leadership race. It is a condemnation of our process when the Minister of Agriculture pretends that the government is serious about the effect interest rates are having on farmers. The minister pretends the government is doing something about the banking system and interest rates. The Nukko Lake manifesto, to put it bluntly, is an example of the big lie. Either the government is doing something about the banking system or it is not.
An aide to the Minister of Finance (Mr. MacEachen), the news report does not say who, stated "it is all new to me". In the House the next day the minister stated that he had no intention of reviewing the Bank Act. The government sent the Minister of Agriculture to deliver himself to various farmers groups. He was to tell them that the government was serious about doing something with respect to the banking system. However, we know it is not serious.
In conclusion, the government's policies do not make any sense to the average Canadian. It is becoming increasingly difficult for a home owner in a housing development who must renew his mortgage at 18, 18'A or 19 per cent while his next door neighbour with exactly the same accommodation is paying 12, 13 or 14 per cent because he bought at a different time. That is the roulette, arbitrary, random, and totally unfair effect that interest rates are having on Canadian consumers and businessmen. Eventually the government will have to recognize that it has a responsibility to minimize, even out and bring some rationality into an interest rate policy which affects people in ways that at the moment are totally arbitrary.
I see that the hon. member for Ottawa Centre (Mr. Evans) is shaking his head. When he gets up he will deliver himself of a Friedmanite defence of the government. We have the Fried-manites and Senator Lamontagne in the other place, and the minister somewhere in the middle telling us that he is not quite sure what the message is that he will take to the Summit; it will be on the one hand or the other hand. We have the Nukko Lake manifesto from the Minister of Agriculture.
We have the Minister of National Health and Welfare (Miss Begin) talking about the need for child tax credits. However, when it comes right down to it, the government is not doing anything with respect to the real effect that these policies are having on the Canadian people.


The Acting Speaker (Mr. Blaker):: It being one o'clock, I do now leave the chair until two o'clock, at which time I expect to
recognize the Parliamentary Secretary to the Minister of Finance (Mr. Evans).
At one o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
Mr. John Evans (Parliamentary Secretary to Deputy Prime Minister and Minister of Finance):: Mr. Speaker, it gives me a great deal of pleasure today to speak to this opposition motion which condemns the government for failure to bring in effective economic policies to deal with what the hon. member has termed "the present economic crisis", and in addition to that to end the squeeze that disastrous interest rates are placing on small businesses and others in our economy.
The interesting thing about that motion is that it says there is an economic crisis and, in addition to that, a squeeze caused by high interest rates. If I could, I would like to try to deal with the question of the economic crisis first and then move on to discuss the interest rate situation. What are the underlying causes of the current interest rate situation? What are the alternative policies open to the government? I want to try to explain once again to hon. members opposite precisely why it is that the government is pursuing the policy it is.
To my mind, the motion is rather nonsensical because by any standard there is no economic crisis in this country today. There are high interest rates, to be sure. We all admit there are high interest rates, and we know the impact high interest rates have on a large number of people. However, to talk about an economic crisis is to talk about masses of people being out of work. It is to talk about economic growth which is in recession proportions or depression proportions. "Crisis" has a very real meaning to the public, and to us as well, and certainly "crisis" does not describe the situation facing our economy today.


Marcel Joseph Aimé Lambert: Nonsense.


John Leslie Evans: I see the hon. member for Edmonton West (Mr. Lambert) is going right up his tree. That is not unusual.
Let us look at the economic indicators which are usually used to define "crisis" in an economic sense. Economic growth in the fourth quarter of 1980 was, at an annual rate, over 9 per cent. The long-term potential growth of the economy is generally accepted to be somewhere in the range of 3 per cent or 3.5 per cent, but we are talking about an annual rate of growth of over 9 per cent. That is phenomenal growth. What happened in the first quarter of 1981? Annual growth was over 4 per cent, still above the long-term average potential growth of the economy. There is no crisis in economic growth.
The unemployment rate now stands at 7.1 per cent, the lowest rate since 1976. Over 61 per cent of the Canadian
June 26, 1981

working age population is now working. That has been the case for the last two months, and that again is a historical record for Canada. In the last 12 months this economy has generated over 417,000 new jobs. There is certainly not a crisis in job creation. There is certainly not a crisis in unemployment. There is certainly not a crisis in economic growth.
The problem we face is the problem of inflation and the consequent high interest rates which follow from a high level of inflation. The policy of the government is designed to attack that inflationary problem and get it under control so that growth, employment, inflation and job creation will all be at levels we want to see.
The government brought forward its framework for economic policy in the budget on October 28. Hon. members have been saying that that economic policy was inappropriate in one way or another ever since the budget. The budget brought forward a balanced approach to economic policy. It did not go holus-bolus after the deficit in an attempt to reduce it at all costs. Nor did it go after inflation in that way. We did not say we would beat inflation regardless of the cost. The government took a balanced approach to try to ensure that minimal damage would be done to the economy, and in a great many areas, as indicated by the statistics I have just quoted, the government is succeeding quite well.
What was that policy? First, it was to hold the rate of expenditure growth within the trend growth of the gross national product over the next four years. We are working on that policy well. We are achieving those results.
The second aspect was to reduce the deficit and financial requirements over time. The figures given in the budget respecting deficit reduction and financial requirement reduction were in fact exceeded in 1980-81. Our deficit was $1.4 billion below what the budget forecast. Financial requirements were $1.8 billion below what the budget forecast. That part of the program is being attacked with success.
The third goal was to reorder priorities toward economic development, industrial adjustment and manpower retraining-in other words, to try to put in place those policies which would lead to a stimulation of economic growth and development in the country. We know there is work going on now on the final phases of an industrial strategy. The Minister of Industry, Trade and Commerce (Mr. Gray) has been working on that, discussing it in his speeches and so forth. The just announced textile policy will help that particular industry adjust to higher rates of competition and to the removal of trade barriers over the next five to six years. That is a policy of industrial adjustment which is extremely important, not just in this part of the country but across the country. There are textile workers in Vancouver and Winnipeg as well as in Quebec and Ontario. That is an extremely important policy.
The Minister of Employment and Immigration (Mr. Axworthy) has announced a number of manpower training programs and employment-generation programs, and he will be announcing further programs.


John Horton McDermid: Peanuts.
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John Leslie Evans: Regardless of the comments of hon. members opposite, these policies are working and they will continue to work.
The fourth part of the policy of the government as brought down in the budget was a monetary policy consistent with a reduction in inflation. The government is supporting the efforts of the Governor of the Bank of Canada to bring down the rate of growth of the money supply so it will be more in line with the real output of the economy.
That is a balanced economic policy which, as I said, has not only had, but will also continue to have, successes on a wide range of fronts. Not only is it a balanced policy, but it is also a consistent policy.


Marcel Joseph Aimé Lambert: Consistently bad.


John Leslie Evans: We have been saying for some time now that what the business sector is demanding is consistency, stability of policy and a certainty that it knows what the government is going to do in the area of economic policy. That is precisely what this government is attempting to provide. The government is attempting to provide a balanced economic policy. It is not a stop-go policy, it is a balanced policy. It has been well announced, it has been followed, and we intend to continue to follow that policy in order to provide that kind of stability and confidence in the business sector.
We have heard much from the other side about disagreement among economists and other observers as to economic policy. I would like to tell hon. members that that simply is not true. There is not disagreement on the fundamentals of the policy. There may be disagreement with regard to the extent to which certain levers are pushed or pulled, but there is no disagreement on the fundamentals of the policy. All economists, economic observers and analysts are indicating-and they agree with us-that there is a need for both monetary and fiscal restraint if we are to beat inflation. There is no question in the minds of any of those observers that inflation is the number one problem which has to be beaten if we are to get the economy back on a long-term path of growth and prosperity. That is precisely what the policy of the government is intended to do. Its goal is to get the economy on a long-term growth path in order to provide prosperity and growing wealth for Canadians, stable price levels and lower interest rates by far than those we have now.
What about the opposition? From what we have heard for the last many months I would say that the opposition parties are totally confused as to what is appropriate economic policy and what is not. Now, Mr. Speaker, what do we hear? We hear cries from the opposition that we should immediately take steps to reduce interest rates. On the other hand, they say we must get the rate of inflation down.


Marcel Joseph Aimé Lambert: Herb Gray said he would resign.


John Leslie Evans: I intend to show very shortly that those two objectives are mutually inconsistent. If we are to bring interest

June 26, 1981
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rates down immediately, the only result can be much higher inflation and consequently much higher interest rates in the very near future.
Another point, Mr. Speaker, is that we are being asked all the time-in fact, the hon. member for Bruce-Grey (Mr. j i Gurbin), who 1 respect as a conscientious and hard-working I member of this House, asked us again today-to expand expenditures; in this case, the small busines development bond, but in other cases it is mortgage interest and property tax credit, assistance for farmers, assistance for this or that group, assistance for consumer borrowers. Yet in the same breath the opposition says we have to reduce the deficit, get it under control.


John Horton McDermid: You are not doing either.


John Leslie Evans: Again, they are mutually exclusive objectives. You cannot increase your expenditures at the same time as you reduce your deficit, unless opposition members are saying we should have a major increase in personal or corporate taxes. That is one possibility. Or we should go through the government and slash literally billions from expenditures in other areas.


John Horton McDermid: You could do that.


John Leslie Evans: I would like to know exactly where they are. If in fact the opposition is saying we should increase what have to be considered social transfers, areas within the social policy envelope, then the only places left to cut would be, for example, defence, or we could slash economic development. However, is either one of those consistent with what the opposition would like to see, especially economic development? If we are to get the economy moving again and see long-term, sustained growth, we cannot reduce our expenditures in the area of economic development. So that is the inconsistency on the other side which comes through day after day. The opposition does not have an understanding of the needs of the economy.


Marcel Joseph Aimé Lambert: You have to be smiling when you say that.


John Leslie Evans: It does not have a consistent economic policy. I think any objective observer of this House day after day, listening to the admonitions of the opposition members, will agree with me 100 per cent.


John Horton McDermid: You are worse than when you were in the civil service.


John Leslie Evans: Let us look, Mr. Speaker, at one of their options. Hon. members opposite say we should reduce interest rates immediately. Let me try to indicate what that would mean. It is clear our goal of reducing inflation over time will lead to lower interest rates; there is no doubt about that. If the policy is adhered to, as inflation comes down so will interest rates. However, I think the opposition misunderstand the causes of the current high interest rate situation. As a result they do not understand which remedies are possible and which are not.
As I have said a number of times, there are three factors contributing to the high interest rate situation. The first is the rate of inflation. If you annualize the monthly rate over the last four or five months, we have rates of inflation in the 13 per cent range, perhaps more. There is no way in the world people saving for retirement, to buy a house or for other reasons can be expected to lend their money for less than 13 per cent. If they do, the money they get back next year is going to be worth less than it is today. So the rate of inflation is always the bottom level for interest rates. You have to add to that the right savers have to at least some real rate of return, perhaps one or two percentage points above inflation. If you do that, you already have about 14 or 15 per cent. Then if it goes through a financial intermediary who is paying 15 per cent for savings, they have to have enough to at least cover their costs, so let us add another one and a half points. Now we have 16 or 16.5 per cent. Somewhere in there is the bottom line on interest rates today given the inflation factor. That is the primary driving force behind our high interest rates.
Now, on the other hand we have, as the Minister of Finance (Mr. MacEachen) indicated this morning, a fantastic demand for credit from a number of sources. When you couple that with the fact that now and over the last two to three years the Bank of Canada has been gradually reducing the growth rate in the money supply, you have a reduction in the credit available through the financial system at the same time as you have a big demand for credit because of inflationary expectations or other reasons. Those supply-demand considerations tend to push up the real rates of return individual savers demand.
The third factor, Mr. Speaker, is one which has been raised and bandied about on both sides of the House; that is, the high rates of interest available to Canadian savers in the United States. Those pressures are very real, but as the minister indicated this morning, we have not said and are not saying now that the U.S. interest rate situation is the only factor causing our high interest rates. The underlying cause is the inflation factor exacerbated by this demand-supply divergence.
I think to a great extent inflationary expectations are caused by the fact that a great many people say the government is not going to bring inflation under control; they are not really serious, they are not going to stick to the policy. As a result, they say they had better borrow and buy today because inflation is going to be a lot worse tomorrow.
Those inflationary expectations have to be broken, and the only way to do that is if the public becomes convinced the government is in fact going to stick to its policy. If the government reversed itself on this policy, you can count on inflation going right through the roof along with the expectations of inflation, with interest rates going even higher.
So, Mr. Speaker, we hear from the opposition members that the way to solve our high interest rate situation, to bring interest rates down, is either by decree or by putting on exchange controls; that if we do that and stop money flowing to the United States, interest rates will immediately tumble to 12 per cent. Well, Mr. Speaker, it just is not so. The basic
June 26, 1981

underlying inflationary situation in this country would not allow that to happen. The credit supply and demand in this country would not allow that to happen.
The situation we have now is that the market is far stronger than the Bank of Canada. There is no way the Bank of Canada can stand out in the street and by decree say interest rates will be such and such. The bank simply does not have that kind of leverage or muscle to go against the dictates of the market. The market is setting those rates, the treasury bill rates. Hon. members are saying yes, but the Bank of Canada is in there back and forth, in and out. But the effect of that is of the second order of small; it is minimal. The bank cannot stand against the wind week after week. If the tide is coming in, it is coming in; if it is going out, it is going out. The bank can moderate fluctuations but it cannot stand against the tide. That is the truth of the matter, Mr. Speaker.
It is not a policy of the government to say interest rates will be such and such. We have an inflationary situation in this country that we have to deal with. We have demand-supply conditions which are necessary if we are going to get inflation under control. And, of course, the last factor is the U.S. interest rate situation.
Now, Mr. Speaker, to summarize, how do you reduce interest rates? You do it by bringing down the rate of inflation. That, as I said, cannot be done by decree. The bank could do two things perhaps to make a short-term dent in interest rates. It could give up control of the money supply. It could say we are going to flood the market with new money tomorrow.
There is no doubt, Mr. Speaker, that in the very short term that flood of new credit coming into the system would depress interest rates. But the effect over a period of six months to a year would be an acceleration in the rate of inflation and interest rates a year hence would be much higher. We have seen this happen in other countries where governments have decided the way to fight high interest rates was to flood the system with all the credit it can stand to put more pressure on interest rates in an attempt to bring them down; more money means that the price of money should be cheaper. The flaw in that logic is that more money in the system also creates excess demand, which creates inflation. Then we are faced with a situation where individual lenders say, "I will not lend at less than the rate of inflation or take a negative return on my savings". This means that interest rates go up as well. It is a fool's game. That option should not be followed.
I suppose hon. members of the NDP have put forward the other option, that the bank could simply say, "Let the dollar drop wherever it wants to go; by doing that, we will be completely independent of the United States, and its rates will not have any effect upon us". As I indicated earlier, there are two other factors which would tend to keep our interest rates up substantially within a very narrow band of where we are now.
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What would happen if we did that, if the dollar dropped substantially and interest rates came down? It would have an immediate inflationary impact. As soon as the dollar drops, everything we import from the United States or from any other country to which our currency is relatively depressed rises in price. Every product produced and sold in Canada, as well as being sold in export markets, rises in value in the export market. Therefore our producers are inclined either to send more of those goods into export, or they will raise the price here to match the price they can receive in export markets. Those two factors together mean an immediate burst of inflation in Canada and, once again, higher inflation leads to higher interest rates, not lower ones.
Another factor which should be considered is where it will stop. If we hold a differential between our rates and those of the United States, as was tried in Britain, the currency keeps flowing out. It is like turning on a tap. It does not only flow out for a short period of time, it keeps flowing out as long as the differential is maintained. Thus, how far down do we let the dollar go? Do we let it go down to 78, 75 or 72 cents? How far does it go down before interest rates are finally forced back up to stop it? It is a mug's game.
What effect will the decline in the value of the currency and its induced effect upon inflation have on wage settlements? Certainly when unions become involved in wage negotiations they ask, "What is the rate of inflation likely to be? We want at least to get that much as well as a real increase in our wages". If they see inflation accelerating the pressure will be to say, "No, we will not accept 12 per cent; we want 14, 15 or 16 per cent". But the pressure then builds upon wages. If such wage settlements are achieved we build in increased unit labour costs.
This is what happened in 1974. We were going through a period when suddenly there was an explosion of wage rates, with wage settlements at the 20 per cent range or more. This increased our unit labour costs and made them uncompetitive with those of the United States. Ultimately it led to a devaluation in currency to 83 cents, but it was largely responsible for the drop from $1 to 85 cents. There was a change in relative unit labour costs between the United States and Canada and the adjustment had to be made.
If we drop the value of our currency and it leads to inflation, which leads to higher wage rates here than in the United States or in other countries with which we trade, and our unit labour costs get out of line, it means the currency value will not recover. It is not a matter of dropping the currency value for a period of six months or a year, and then it will bounce back. It means we have ratcheted the currency down and it stays there.
The idea that we should go through a series of devaluations to solve our problem is a fool's game. It does not solve the problem. The problem is inflation; basically it is a monetary problem. It is one with which we have to come to grips and for which there is no easy solution. There is no painless solution to removing inflation from the system.

June 26, 1981
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We have heard comments about increased expenditures. To alleviate the difficulties caused by high interest rates, we are being encouraged to increase expenditures in a number of areas. Certainly they are laudable objectives, but where will those moneys come from? Should we cut defence spending? Some people would say yes. Should we cut economic policy spending to assist those who are being hit by high interest rates? Should we increase taxes or the deficit? Despite what members of the opposition say about their commitment to deficit reduction, if push came to shove they would say, "Let the deficit go up a little".
What does this mean? How much are we talking about? We hear that we are supposed to help home owners, farmers, fishermen, small business people and consumers. When we stop to think of it, we are talking about everybody. Everyone who borrows money is being adversely affected by high interest rates; there is no doubt about that.
What are we talking about in those four main areas-home owners, small business, farmers and others? I should like to deal with the small business development bond extension and the mortgage situation. The Conservative mortgage interest and property tax credit, if fully implemented, would have been a $3 billion per year program. The small business development bond program is already running in the $200 million range. If it was extended to finance inventories, which would mean that all small businesses could refinance their inventories under this program, we could be talking about half a billion, three quarters of a billion or a billion. The estimates are hard to come by, but certainly in those two areas we are talking about an increase in expenditures of between $3 billion and $4 billion per year. If we increased the deficit by that amount in that fashion, I guarantee we would have to tell the Bank of Canada to forget about controlling the money supply and to buy our bonds because they cannot be put on the market. If that is the case, it will be inflationary and will cause higher interest rates.
If we do not tell the Bank of Canada to monetize that debt and we go straight to the market to float another $4 billion worth of bonds, we will put upward pressure upon interest rates because we will be taking additional revenues or savings out of the system. Thus, in an attempt to protect people against high interest rates we create conditions which in fact lead to higher interest rates. Again I say it is a fool's game. Either we have to come to grips with the problem and deal with it or forget it.
There is no way societies can allow inflation and all of its debilitating societal effects to persist, to accelerate and to worsen. We must come to grips with the problem. I am convinced the government has come up with a program which will work. It is a program which will bring inflation under control. It will lead to greater economic growth in the future. It will lead to prosperity. It is a balanced program. It is not one which singles out any particular group in society to suffer as a result of the policy to bring down inflation. In a very real way, all of us will have to take some of that pressure, and in fact we are all taking some of it.
In conclusion I should like to say that the policy has a number of possible alternatives, all of which are worse. The good Senator Lamontagne from the other place indicated another possible alternative, effectively saying we could bring on some kind of an incomes policy and turn loose monetary policy. As I said before, that is like putting the kettle on the stove, sealing the top and turning up the heat. The only thing one gets out of that is an explosion. The only question is, when does one get it? Is it sooner or later? Therefore, that is a policy option which should certainly not be followed by this government, and I would certainly not recommend it.
With that in mind, I would like to conclude by saying that certainly and stability of policy are required in the system now. The public must be assured that the government is serious about the fight against inflation in order to beat inflationary expectations. Business must be assured that the government does not intend to follow a stop-go policy, if investment decisions are, in fact, going to reflect the long term policies of the government. In other words, what is needed in this country today is a balanced approach. That is what has been and what is the policy of this government.


William J. Yurko: Mr. Speaker, the Parliamentary Secretary to the Minister of Finance (Mr. Evans) gave us an elementary lecture in finance, but he did not tell us that a succession of Liberal governments got us into the mess in which we are today. Canada is today in a period of economic instability; there is no doubt about that at all. Its economic performance is much below its true potential and its capability. Repeatedly, Canadians today are worried about the changes to the Canada of the future brought about by the government's patriation package and its national energy policy, inflation and lack of or changing over-all industrial and social policy, and by increasing instability in the world at large.
I want to look backwards a bit, before I look forward, to see what has happened in Canada over the last three and one-half decades since the war, because it is a period in which successive Liberal governments have generally been in power. 1 want to list about eight areas of considerable importance in the growth of Canadian society, and then look at some of the problems that we have to solve as a Canadian society from here on in, in the eighties.
First of all, let me say that we have been very generous in allocating funding for education. We have educated ourselves, as a people, to one of the highest standards in the world. Our education has been broadly based, with a wide, non-constricting and non-dogmatic perspective. It was moderately permissive and generally directed toward material rather than spiritual ascension. It followed predominantly, though not totally, the American mould. However, we have built into our social and economic structure an enormous technological and productive potential which we are really not using to its full capacity at all.
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Second, we apply technology extensively. I speak as a person coming from the technological field. However, most of it was imported from the United States of America, through the media of the multinational corporations, though we have excelled in a few areas, but not very many, like nuclear energy. One of the most remarkable things is that an engineer or a technologist in Canada could simply pick up a phone and call someone in the United States for advice, for a solution or a piece of equipment. No other country in the world has the access to the technological might of the United States that we have in Canada. I have some concern that recently we have been acting as a government in moving toward cutting off this lifeline of Canadian progress, or throttling it to some degree.
We have extensively used the multinational corporations and their access to American developed technology. These corporations became dominant in owning our resources and our industrial wealth. As a nation, we became an intermediate manufacturing and exporting nation with declining competitiveness in world markets. Indeed, our competitiveness today is cause for considerable concern.
Third, economically and on an over-all basis, we have had phenomenal growth of our national economy, primarily based on the harvesting and selling of our vast resources by the multinational corporations. The Canadian economy grew by approximately four times in constant dollars during the last three and one-half decades. Our population only grew by about 75 per cent. Therefore, we became rich as a nation, though other nations surpassed us extensively in terms of productivity. We built in Canada a physical plant system of unprecedented inefficiency, and only now are we realizing it as world energy costs are skyrocketing. Our own economy is agonizing with high inflation and low productivity.
Fourth, economically and socially the nation experienced an intense preoccupation with security against almost every eventuality: sickness, unemployment, old age, catastrophe, business bankruptcy, etc., mostly backed or sponsored by government action. We built a humane society based on government redistribution of wealth. Our system adopted tenure as a right rather than a privilege tempered with responsibility. We provided undisputed tenure to our civil servants, professors, teachers, professions, and thereby generated an increasing demand for tenure without productivity requirements in all of organized labour.
With increasing tenure, productivity waned. We became lazy, and the pride of doing was replaced with the enjoyment of loafing. Elaborate procedures and refined specialization became a substitute for performance. We demanded more and more from our governments, and governments acquiesced to the public demand.
Fifth, we became preoccupied with enjoying all the material goods of life at an increasingly younger and younger age. Homes and suites and cars and goods of all sorts were demanded and extensively promoted for the young. In providing all these goods, we established a vast credit system to give us what we wanted now, and increasingly mortgaged our future because we bought most of it on debt. Mass advertising
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created the appetite. Credit provided the means. Mass production and technology and imports provided the goods and lowered prices. We spoiled ourselves, and obsolescence, redundancy, style, throw-away and fraud prevailed. Our appetite increased and our frugalness decreased, and we damned the future and lived for the present. We continued to demand more and more from governments.
Sixth, yes, we demanded more and more from our governments, and our governments grew dramatically and involved themselves in every facet of our lives. Governments at the three levels grew without attention to political ideology or rationality or prudence. Politically, we dashed madly toward de facto socialism, with the three levels of government this year expected to tax some 43 per cent to 45 per cent of the gross national product of Canada and redistribute it. Governments have engaged themselves massively in wealth redistribution at rates which exceed the nation's ability for wealth production. Our appetite as government is so voracious that massive debt formation has overwhelmed us. I expect that the deficit of the federal government alone will be in the order of $15 billion this year. In the past, as debt rose we printed more money and in doing so institutionalized inflation rates in double digit figures. Of course, we have high inflation. As governments we have caused it with uncontrolled spending and lack of productivity over these last several decades, but particularly over the last four or five years.
What is inflation, Mr. Speaker? It is a reminder of the reality that we are living beyond our means; that we are getting poorer and must increase our productivity and competitiveness as a nation. Instead, we borrow more, print more money and delay the final reconciliation with fiscal prudence. But we all know that we cannot escape. Finally the government has found some backbone and now says we cannot escape; we have high inflation and we have to live with it. That realization is amazing after all these years. The unfortunate thing is that in the period of readjustment it is the poor and the needy, the weak and the old who suffer most. The time for readjustment is here. It is the poor and the needy, the weak and the old and the small businessman who are going to suffer most.
Politically our nation has evolved peacefully. Partisan politics has become ideologically blurred with all parties moving significantly for greater socialization and greater government involvement in the economy. Provincial governments have grown and gained significantly in posture and prominence over the national government in the last several years.
For a while, the world around us grew in stability but it is now beginning to come apart at the seams. Political, social and economic instability is increasing. World-wide inflation is causing a severe form of economic dislocation. Economic issues, resulting primarily from nationalistic protectiveness and resource pricing policies, are now foremost in the minds of world leaders. The risk is that the operation of the international economy may spin out of control and present a more grave

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threat to world order today than even the nuclear arms race or the struggle between differing political ideologies. The high rate of inflation is testing democracy itself as it has not been tested for the last several decades.
That, in a nutshell, Mr. Speaker, is the situation, both internally and externally, that is facing Canada in the eighties! Have we built a strong financial and economic house? I think we have built a house upon shifting sand. We have many adjustments to make and many difficult problems to overcome in the eighties. I should like to set forth some of them.
First, can we revise our economy and re-establish private enterprise as our motivating force for accelerated wealth production or, at the very least, can we find a workable and productive partnership between the private and public sectors? It is going to be difficult. The former Progressive Conservative government, which was in power for only nine months, attempted a beginning in this area.
Second, can we contain the voracious appetites of governments and restrain their growth rates by re-establishing the community, the home and the family unit as the prime motivator, caretaker and babysitter of the social dislocations of our society, instead of turning over those problems increasingly for governments to solve? We must make a start in this direction at the earliest opportunity.
Third, can we in the organized workplace rediscipline ourselves to increase productivity and innovation and the deployment of new technology to improve our competitiveness in the national and international marketplace? We have an example of this today in the Post Office dispute and the impending strike. This was our intent and policy as a Progressive Conservative government during the nine months we were in power. What initiatives has the present government evolved? What direction is evident in its policies for dealing with labour-management relations and the resulting low productivity?
Fourth, can we control inflation and its ravaging effects upon the less fortunate? To a large degree I accept that the present administration is a victim of American dictation and follows the U.S. interest rate structure like a child. It has literally no other option. It has not built in any options within the last decade, although it could have. There is no nation that has the potential for building economic options that we in Canada have with our vast resource potential and our resources going out of the country as raw material. The capacity to upgrade our own resources is immeasurable and would increase wealth in the country, but we need definitive and honest and difficult federal policies put in place.
Fifth, can we meet the challenge of energy self-sufficiency in all forms of energy use, and in particular, will we be able to meet the world food crisis resulting from environmental, climatic and population growth patterns? The next five to ten years will be critical in regard to world instability, and perhaps the North-South conference in two weeks' time is an omen of the critical conditions developing in the world.
Sixth, will we be able able to cope with the inherent economic and social restratification needed to cope with an increasingly aging population? We must examine seriously our pensions systems and anchor them to a more solid financial foundation than that which exists today.
Seventh, will we be reaching for greater brotherhood rather than increasing isolation in our urban conglomerates as we move toward a new century of civilization? Will equalization serve us well in the future so that Canadians everywhere in this vast country can enjoy a standard of living second to none in the world? Because we have the capacity.
Eighth, can we meet the challenge of constitutional patria-tion and redefinition and renewal to truly represent all regions in a national institution in the eighties? I think we can, Mr. Speaker.
In particular, we must permit those areas of our nation which have enormous capacity for growth, like the west, to grow without undue throttling. We must immediately undertake incentive policies to upgrade our resources before they I enter international trade. What is needed is boldness, courage, openness, analysis and action. The parliamentary secretary mentioned balanced economic policy and the Minister of Finance (Mr. MacEachen) repeatedly referred to gradualism. If there ever was a time for boldness and courage and substance and analysis and action, it is now. Timidity, trying to help everyone at the same time, or gradualism is hardly a policy that will build a viable, progressive, dynamic economic and industrial sector in this nation in the next decade.
In conclusion, let me read the resolution we are discussing:
That this House condemns the Government for failing to bring before Parliament effective economic policies to deal with the present economic crisis and end the disastrous interest rate squeeze on the small business, industrial and agricultural sectors.
Of course we have a crisis in the nation. There are two kinds of crises. One might be likened to the idea of an egg falling off a ten-foot high fence and smashing to bits. The other crisis is a snowball rolling-


The Acting Speaker (Mr. Ethier):: Order, please. I am sorry to interrupt the hon. member, but his time has expired. However, he may continue with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


William J. Yurko: The second type of crisis is the one which can be likened to a snowball rolling downhill which gathers momentum and grows larger and larger with greater and greater force. I suggest that if we do not move fairly soon as governments in the nation in this area of strengthening the economy, we will have a second order crisis in our economy five or ten years from today.
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Hon. Paul J. Cosgrove (Minister of Public Works):: Mr. Speaker, the hon. member for Edmonton East (Mr. Yurko) in his closing remarks drew the attention of the House to the wording in a close reading of the motion before the House which gives me an opportunity to begin my contribution to the debate today. 1 draw the hon. member's recollection to this time last year when the first piece of legislation with which I had the honour to be associated in this House was an act to increase grants for assistance to municipalities. This legislation, hon. members will recall, increased the amount of money transferred by the federal government to municipalities in lieu of taxes.
It is an obligation of the federal government to pay for municipal services afforded to federal properties located in areas right across the country. It was a distinct pleasure, because of my past experience with municipalities, to be able to say that the federal government was providing $25 million extra which would be, I am sure, an advantage to those municipalities when it came time for them to look at the way they were carrying out their responsibilities and when it came time for them to strike their tax bills. In turn, that would have a direct impact on the ability of home owners, small businessmen and industrialists right across Canada to pay municipal taxes.
The hon. member has indicated he faults the government for taking action to assist in the economy of this country-I give that example to counter specifically those clauses of the resolution before the House this afternoon. It is not necessary, thank heaven, for the Government of Canada, in all of the things it does to address the economy, to come before the House with specific legislation, word, period, comma, semi-colon, in order to address the community at large. I say thank heaven for that. Quite frankly, as a new member of this House, again with my background in municipal politics, I was appalled that it took this House two months to debate an amendment to a constitutional resolution. This was an amendment put by the party opposite which now complains that this government has not brought legislation into this House for action to address the economy. How could we have done so when we were held up for a full two months on one resolution? You are aware, Mr. Speaker, of the acrimony that was introduced in this House. Yet, at the same time, the opposition complained about the government not taking action. The opposition can hardly complain that we are taking no action when in essence the opposition hijacked Parliament, which is a forum for addressing these problems.


Mr. Knowles:: What have you done since then?


Paul James Cosgrove: The hon. member for Winnipeg North Centre (Mr. Knowles) invites me to go to the next part of my speech. What have we done since then?
I was privileged to attend a meeting with the Minister of Finance (Mr. MacEachen), the Minister of State for Finance (Mr. Bussieres) with representatives of the Trust Companies Association of Canada yesterday afternoon. We took that step to meet with representatives of the private sector who have a
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large segment of their portfolio directed toward assisting home owners. We met with these people because of statements made by the Leader of the New Democratic Party (Mr. Broadbent) who alleged there existed a crisis and widespread foreclosures and defaults in home ownership.
I shall cite some facts and figures which were obtained yesterday from representatives of the national trust companies holding the major portfolios for mortgages in Canada. In the case of the Royal Trust, foreclosures have reduced, not increased, from .34 per cent to .27 per cent in the year since the legislation to which I referred was introduced in this House. In that year it shows that the figures are for conventional and high ratio loans and the trend is actually downward, while there has been an increase in the amount of mortgages taken out during that period of time.
Canada Permanent Trust reports the same thing. In recent months, the situation of arrears of three months or more has actually improved. Montreal Trust reports the same thing. Montreal Trust indicates that, for example, in May, 1981, compared to May, 1980, the default rate was .35 per cent compared to .41 per cent. National Trust repeats the same experience with the figures given. Victoria and Grey reported a picture similar to the other companies. In May, 1981, the percentage of legal action commenced on borrowers was .07 per cent.
Those are the facts in the area of foreclosures and defaults, and the hardship being experienced by people. There are fewer people experiencing these difficulties, and those figures illustrate the situation up to the first of this month. Yet we still hear members opposite saying crisis. I do not know where they get figures to illustrate a desperate situation in the home owner renewal problem. I say that because facts show we do not need legislation. It has not been necessary in the year for the government to come with specific legislation in that area.
It was not necessary for we to receive instructions from the party opposite to meet, as I did, with the President of the Royal Bank of Canada on Tuesday morning of this week to get the same figures from him advising me that the crisis allegations of the members opposite are not founded on fact.
It was a concern for people over the differences in the interest rate this year as compared to last year, for those home owners and small businesses refinancing, and it was my concern for the difficult time these people are having that prompted me to raise this matter in Washington last week. I met with the secretary for housing for the United States, the HUD, housing and urban development, and the undersecretary for housing for the United States. I brought to their attention the difficulties being experienced by Canadians, especially those facing the roll-over problem, not to mention industry, as a result of interest rate increases.
As the member who spoke before me indicated, we have followed the world situation in terms of interest rates in order to have capital funds available to assist us in the housing industry and small business. If we did not do that, where

June 26, 1981
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would the capital come from? I addressed this issue of high interest rates with the secretary responsible for housing.
I had an opportunity to speak to senators and the House of Representatives leader in Congress. I indicated to them the adverse effect the high interest rate policy of the United States is having in this country. I gave the example of the government moving to do something in order to illustrate our concern. I pointed out the impact this is having on our domestic institutions such as banks and trust companies. I encouraged them to be sensitive toward Canadians who must renew their mortgages, as well as small business faced with the same situation.
What else has the government done? That is a gratuitous question because of no interruption. We have not had to come to the House, for example, to extend the AHOP plan, a provision which provides a safety catch or safety value for those facing an increase in interest rates in order to protect those people whose shelter costs exceed 30 per cent of their earnings. Those subsidy programs have been renewed.
Just two weeks ago the government announced, with regard to the assisted rental program, the subsidy would be increased on a per unit basis from $120 to $180 per month to attempt to address the hardship of renters.
What was the reaction of the housing critic for the official opposition? He maintained that increasing that subsidy was a benefit for the landlord. That is not true. We were concerned about 120,000 families which would otherwise face the inconvenience and hardship of disclocation as a result of foreclosure. We addressed the problem by introducing a subsidy which in the long run will result in a saving to the taxpayer.
What did we get from the opposition? We got criticism for taking the very steps that the motion before us today says we have not taken. The opposition has to make up its mind. For example, the MURB provision, reintroduced by the Minister of Finance in the budget last year had been allowed to lapse by the former administration. That administration was lauded by the previous speaker for its attention to those people in need.
The one provision of our tax system which has been identified as a useful and effective way of generating housing activity in this country is the capital cost allowance for construction of multiple buildings. It lapsed under the previous government and was reintroduced by this government in the budget. That move contributed considerably to a surge in the housing industry in the first quarter of this year. The annual rate of housing starts of 125,000 in June last year bounced dramatically to a rate of over 242,000 in the first quarter of this year, a five-year high.
The action of this government in supporting the industry with that capital infusion which encouraged developers was part and parcel of the resurgence of the industry. The hon. member says that the government is not concerned about the needy when it allows interest rates to rise dramatically. It was this government which moved to increase allocations under the National Housing Act for social housing starts of 25,000 to
30,000	last year in order to assist those in the modest income levels to have access to housing. The government has an
annual account of some $300 million which goes toward carrying the costs of some 400,000 existing social units. We felt it necessary to address the tight market situation in social housing, which we did, and we believe it has been a stimulant to the industry.
I will conclude with one final observation. I will contrast what this government has done with what was done in the nine-month regime of the last administration. The Matthews report recommended a withdrawal of support for all types of housing programs by the federal government. I have contrasted that with the initiatives we have taken. We have taken iniatives to work with the private sector to assist those facing hardship at this time. That is a stark contrast, one that I cannot help but make after hearing some of the comments made earlier in the debate today.


Mr. Fred McCain (Carleton-Charlotte):: Mr. Speaker, the hon. member for Ottawa Centre (Mr. Evans) has consistently, and one might say with fervour and almost with passion, supported the economic policies which this government has put in place. He justified them each time as he mentioned the cost to government of the various steps which have been taken. His most recent endeavour in this regard relates to the plea by members on this side of the House and by economists in Canada in general to extend the SBDL principle on a wider basis. He has justified the narrow and constrictive pattern in which this is exercised by saying "it will cost". That is purely and simply the Keynesian economic position, one that has been practised by this government for years. It is the negative approach to the cost of an incentive. It is not the positive approach of what the incentive would actually produce in other sectors of income for government. That is significant.
I think it must be recognized that as tax rates in the United States have gone down, revenues have gone up because of the stimulus to the economy. The member can treat this with scorn, as he has, but it would do him some good, his constituents some good and his small businessmen some good if he would just take a look at the other side of the coin, as some of us on this side of the House have tried consistently to do.
Government revenues do not go down in a stimulated economy, they go up. As the net gain of a stimulated economy under an extension of the SBDL principle to farmers, more small businessmen and more sectors of this economy will make the revenue of Canada not costly but incremental. I would imagine that little bit of an increase in mortgages just mentioned by the last speaker was probably more necessary to buy bread and butter than to buy new houses.
The agricultural aspect of this motion is intended to bring to the attention of the public the very critical position in which this industry now finds itself. It is no longer adequate for the minister to say repeatedly that we have the best farmers in the world and the best government in the world. The representations made to him, to the committee on agriculture and to the Minister of Finance (Mr. MacEachen), coupled with the news of the performance of other governments around the world,
June 26, 1981

certainly negate the statement that we have the best government in the world as far as agriculture is concerned, and emphasizes the crass neglect by that government and that Minister of Agriculture (Mr. Whelan) who sits on your right, Mr. Speaker.
I certainly accept the statement that we have the best farmers in the world, but they probably receive the world's lowest recognition of their needs by means of this government's fiscal and monetary policy.
The European Economic Community, for instance, has established a fund which protects virtually every aspect of agricultural production of that area of the world against catastrophic losses which we are now experiencing. If there is no market at home, subsidies will be arranged for the disposition of surpluses somewhere in the world to the detriment of world markets and also to the detriment of those countries such as Canada which have been supplying the deficiencies of the world's food supply for years and are dependent upon its income. But no mercy is exhibited by that agricultural program.
In the United States there exists a multitude of laws of protection of agriculture against unnecessary hardship. We lack those laws. Imports can be controlled, bridge financing can be arranged and U.S. government purchases of surplus production has extended a stability to the economic structure of agriculture which we do not have the privilege of enjoying. Farmers today are borrowing money at a rate of simple interest as low as 12 per cent, and many of those farmers who are in beef feeding production are getting money for 16 per cent simple interest compared to the more than 20 per cent compounded on a monthly basis.
Former international trade negotiations have neglected to recognize the importance of this industry and its requirement for international markets. At the same time, to provide markets for other items for Canada in foreign markets, we have granted more favourable access to the Canadian market for agricultural products produced here. The combination of these two shortsighted policies has contributed in a major way to the economic difficulties we are presently experiencing.
Virtually every farm organization in Canada has made representations to this government pleading for reconsideration of both our international trade policies and our financial assistance programs which are so vitally needed at this moment in time.
Canadians as a whole recognize that certain industries need special considerations at special times and, as we in this House have done, have supported the policies of import quotas for the textile industry. Why then is it impossible for this government to recognize the need of such a vital industry as agriculture and to take prompt and immediate emergent steps to provide at least bridge financing for this industry?
Among the representations which have been made are those by the Canadian Horticultural Council pleading for recognition of the inflation factor as it applies to capital gains, and the recognition of the need of tax consideration for fuels and
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energy conservation materials used in the greenhouse industry. In these representations they have also asked for the small business loan limit to be increased to $200,000 and for the recognition of the accumulated requirement to consider the inflationary factor, along with an updating of the values established in the Advance Payments for Crops Act. These recommendations are made in what one may consider emergent economic circumstances and they need immediate and emergent response if these sectors of agriculture are to be helped. The Canadian Federation of Agriculture has made a representation to the Agriculture Committee, and I wish to read it into the record as follows:
Federal government failure to take immediate action to relieve the farm debt problem amounts to a scandalous lack of concern for the disruption of the lives and livelihood of growing numbers of family farmers.
An emergency farm credit program, through the federal farm Credit Corporation, is required to provide special refinancing for those farmers who are going under through no fault of their own.
Farmers hit hardest are hog and beef producers who are being destroyed by a combination of rising costs, low farm prices and stratospheric interest rates. Cash crop producers financing major inputs are also facing serious credit problems.
This is an emergency. The Canadian Federation of Agriculture is most concerned about the increasing number of actual farm bankruptcies and foreclosures. The evidence is that there is a rising flood of farmers in trouble, and current bank interest rates are the crushing blow that will put them under. If this is not so, a federal emergency program will get at the truth and no harm done.
Farmers in this position who now have nowhere to go for help must have some program which will give them a chance for survival. Failure by the federal government to act and act quickly on this matter would be quite simply, irresponsible.
The federal government has the capability of launching an emergency program nearly overnight, at very little cost to the taxpayer.
Please note I am not suggesting the expenditure of money, but rather bridge financing. The brief continues:
1.	It has a fully developed, trained administration in the Farm Credit Corporation for doing the job.
2.	It has the capability of providing funds at more moderate and/or deferred interest rates in cases of special need.
3.	Surely it can get the co-operation of the banks not to foreclose on loans until the Farm Credit Corporation has a chance to review each applicant farmer's position and take necessary action.
The action being requested by the CFA does not require large government expenditures and subsidy. Funds provided to the FCC for lending are not a government expenditure. They are an investment and a good one, that will be repaid. Government budgetary practice that calls them an expenditure is a misnomer, and it is important not to be misled by it.
The CFA is requesting a helping hand to farmers with fundamentally sound farm enterprises who are being ruined while the FCC sits by unable to do the lending job which it can do and was created to do, because of lack of funds to lend.
It is not valid to argue that the increasing bankruptcies are a result of bad management on the part of people who don't deserve help. Let's have a program that can help those that should be helped. There will be a lot of them. We challenge anyone to say it was bad management because a farmer in 1978 or 79 didn't foresee interest rates at 20%, when the banks willingly lent them the money that has now become such a disastrous burden.
If the federal government does not act and act quickly on this matter it will be a black mark on its record. The CFA asks for assurance at once that the Cabinet is urgently considering this request. We believe a serious and responsible review of the matter cannot result in any other decision than to accept the action which we are proposing.

June 26, 1981
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Let me quote from the Toronto Star of May 18. The article is so pertinent it merits reading in full, but time will not permit. It states in part:
Canada's farmers are among those who are the hardest hit victims by the Bank of Canada's deliberate policy of high interest rates to battle inflation and when farmers for whom interest rates spell disaster in today's capital intensive agriculture are pushed into bankruptcy and farm abandonment, the entire economy suffers.
That is from the Toronto Star. Let me quote again from the same article:
Hugh Moss, a cattle farmer, says, "The only way I can afford to pay 20 per cent interest is if I get over $1 per pound for beef'. Right now he only gets 80 cents a pound and plans to sell off part of his farm to get the money to pay his debt... Ralph Barry, of the Ontario Federation of Agriculture, estimates for every farmer who declares bankruptcy there are at least ten others who decide to sell their land and equipment and drop out of agriculture while they still have some measure of solvency. He says that this province loses about 1,000 farmers a year. It's got to stop.
Again from the Star, and I quote:
If Canada allows her agricultural community to be crippled by unmanageably high interest rates not only will we not be in a position to offset world shortages of food in years to come, we will also be at the mercy of the high cost of imported groceries.
Perhaps the most pertinent part of this article is the following:
Canada has traditionally recognized the particular and irreplaceable contributions that farmers and farming make to the economy by offering agricultural enterprise relatively low interest loans through the Farm Credit Corporation.
Please note that this did not come fron any farm magazine or farm organization. This is recognition by a non-farm paper of a crisis situation which exists. Let me quote again the traditional aspect of the last excerpt of this paper. It reads:
Not only has the traditional supply of money not been available through FCC, but traditional recognition of agricultural needs through price stabilization payments has been equally abandoned.
Two traditions are gone.
Antiquated cost of production figures, for instance, in the potato industry would indicate that if a price stabilization payment were to be made-
For this commodity.
-it would be made on the basis of something less than 60 per cent of the cost of production of this commodity.
Historically and traditionally the formula would have been on a stop-loss basis, not on a 60 per cent of cost basis.
Let me quote from The Financial Post of May 2 in respect of fruit and vegetable production in Canada as follows:
Fruit and vegetable cash receipts amounted to $770 million last year, with 31 per cent from fruits, 26 per cent from potatoes and 43 per cent from other vegetables. This is an industry with a big and growing trade deficit, more than one billion dollars last year.
I have gone out of my way to quote non-agricultural sources to substantiate the case for agriculture, and I believe that these quotes do that adequately. When The Financial Post says that we have a $1 billion trade deficit in the fruit and vegetable industry-and we can produce most of those fruits and vegetables-there is something wrong with the fiscal, monetary
and agricultural policy of this nation. 1 repeat that I have gone out of my way not to quote farm papers for this purpose.
On May 19 the Minister of Agriculture was interviewed on CBC. His principal theme was that the banks should do more. Apparently the banks have lent approximately $16 billion or maybe $18 billion to farmers, but the Government of Canada is not prepared to put even a part of a billion dollars at the disposal of the Farm Credit Corporation as an advance for bridge financing for agriculture.
The minister gave some economic history of his own and discussed the possibility of his making representations to the government for a better deal for agriculture, but as usual he could not be pinned down in this interview to an adamant statement of his own that he would in fact make demands of the government as the Minister of Agriculture. He just gave his usual evasive gobbledygook support to the government and was unwilling to take a positive stand on behalf of the industry he represents.
The time for ministerial reflections upon the great history of agriculture is now past. The time to consider what steps the government can and must take to extend financial assistance to this industry is now. Is it not as important as Chrysler and Ford? This does not imply criticism of aid to those companies. I merely wish to emphasize the neglect on the part of the Minister of Agriculture of the industry he so halfheartedly represents.
Representations have been made by every agricultural organization in Atlantic Canada pleading for a recognition of their plight. If the Minister of Finance and this government in general do not recognize disaster when they see it eyeball to eyeball, and if the Minister of Agriculture is not prepared to put his portfolio on the line, not only will the 76 per cent increase in farm bankruptcies grow larger but the total economy of Canada will also suffer.
If the government is not interested in farmers, it should be interested in the total economy of Canada and the impact on that economy of a declining agricultural industry.
Recently there has been criticism of the repetitive nature of speeches in the House of Commons. The previous speaker made a criticism regarding the time consumed in debate in this House. When we have a responsive government which recognizes ability across the floor as well as in its own hallowed and divine precincts and when there is compromise and joint planning, debates will not linger, they will not be extended, and we will be able to get on with the business of the House. But this House will not lie down in front of the introduction of regulatory legislation rather than legislative legislation. It will not lie down in front of the extension to the Minister of Finance, the Minister of Industry, Trade and Commerce (Mr. Gray) or the Minister of Consumer and Corporate Affairs (Mr. Ouellet) and extend to them the power to control by regulation the Minister of Agriculture and the policies which he should and must introduce. The Minister of Agriculture must have freedom to function in an independent and recommending way for his industry.
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I received today a letter in response to some questions I asked in the committee on April 2. It took the minister two months and three or four weeks to respond. I asked for reconsideration of the feed freight subsidy in Atlantic Canada. That has been put over for study by the Feed Board of Canada in the face of absolutely pertinent and proven documentation making a case for an increment to the feed freight subsidy presented by a host of organizations from Atlantic Canada and eastern Quebec. It is going to be studied.
Potato production in Atlantic Canada is in Prince Edward Island and New Brunswick. A storage program for potatoes will take place in Kentville, Nova Scotia. With all due respect to Nova Scotia,, which has a small potato industry, the climate is not quite the same. Results from that station will be good, but this work should be done in the potato-growing area. It should be done either at Charlottetown or Fredericton, but not Kentville.
There is a Meristem program for agriculture and the promotion of better seed potatoes in Canada. There will be a conference on that in Ste-Anne-de-la-Pocatiere. The Meristem program is supposed to promote a better seed industry in Canada, but the seed industry is not in Ste-Anne-de-la-Pocatiere. The export seed industry for which this is designed-as well as for improvement in quality-is in Atlantic Canada, but the conference will be in Ste-Anne-de-la-Pocatiere. If the west does not just raise hell, no doubt we will soon be looking after rapeseed in St. John's, Newfoundland. That would be as logical as the answers I received.
Let me go one step further. The minister closes his letter by saying, "The program is in place". Fie was referring to several, one of which is the storage subsidy program for perishable products. Yes, the program is in place, but it is just like the subsidy program for the fishing industry. No money was put into it. The minister exhorts farmers to use a program for which he does not see fit to get any money.


The Acting Speaker (Mr. Ethier):: Order, please. I am sorry to interrupt the hon. member, but his time has expired. However, he might continue if he had the unanimous consent.


Some hon. Members:: Yes.


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


Fred Alward McCain: Mr. Speaker, I will try to be very brief in my conclusion. I want to talk about the general economic climate which has been created by this government through its fiscal and monetary approach. I have here a list of 18 companies-I obviously do not have time to read it-which have been inspired to invest their money abroad. These are but 18 reported in the last ten days. The business of these companies ranges from real estate to oil and represents billions of dollars.
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I want to say to you that as we have had a single approach to the economy and the value of our dollar, we have neglected the international position of Fishing, farming, forestry and oil. The result is that the markets for these basic products of Canada except oil have declined in virtually every viable market except the United States. They have declined 24 per cent with respect to Britain because the pound is worth so much more; 21 per cent with respect to Germany; 10 per cent for Japan and some 21 per cent for Sweden.
Now, fishing, farming and forestry products from Atlantic Canada are dependant upon those markets and the U.S. market to survive. They are getting from 10 to 24 per cent less of those markets because we have not kept an eye on the currency of countries to which we export. As a result, Atlantic Canada's primary industries are suffering. The U.S. economy, of course, on which we have based ours does not offer the usual market because it is stymied, as is ours. Let us get away from the Keynesian approach. I appeal to the government to do that. Let us get back to a stimulative approach. It will not cost you, it will make you money.


John Leslie Evans: You are 180 degrees out of synch.


Fred Alward McCain: You, sir, are still in the Keynesian economic bible and you have no intention of getting away from it. Let us look at the reality of inflation today.


John Leslie Evans: You do not know what you are talking about.


Fred Alward McCain: Let us cut back expenditures and deficits. Let us realize what we can do to give incentive to industry for a better future. Let us not look to stagnation and regulating industry out of business as the Keynesian hon. member for Ottawa Centre (Mr. Evans) would do.


Walter David Baker: You have been uncovered at last.


Hon. Charles Lapointe (Minister of State (Small Businesses and Tourism)):: Mr. Speaker, thank you for recognizing me in this debate. Once again our friends opposite are talking about the disastrous interest rate squeeze on the small business and industrial sectors. The hon. member who had the floor just before me spoke of economic incentives and urged the government to go ahead with policies of exaggerated expenditures at a time when inflation is the most difficult problem to cope with. However, speaking more specifically of economic incentives to which the hon. member referred, in all likelihood he does not have time to read the newspapers or else he does not understand what he reads, Mr. Speaker. I read in the Financial Times of June 22, 1981 an article entitled "Government Aid to Business Now Tops $6 Billion a Year".
In that article the Financial Times lists a series of programs in the fields of financing, loan guarantees, labour training assistance, investment tax credits, research and development

June 26, 1981
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tax credits, as well as all the special programs we have implemented since we returned to office, Mr. Speaker, precisely to spur the economy and the industry.
Hon. Members of the opposition have such a limited understanding of the economy that every day they ask us: Where is your industrial strategy? Where is your economic development strategy? We would have to label each decision we take and say: You on the other side, wake up, because that is part of the industrial strategy. They keep forgetting certain achievements such as for instance the fact that as recently as last week we announced a strategy for the textile and clothing sector under which $250 million will be earmarked for the restructuration of businesses and for assistance to employees who might have to relocate as a result of our import policies. They also fail to mention that we have launched our $350 million industrial restructuring program which the Minister of Finance (Mr. MacEachen) had announced in his budget last October. They fail to mention our assistance program for the micro-electronic industry, another $50 million. As recently as this morning 1 was in Sherbrooke to announce that the local university would become one of the six leading electronic technology centres in Canada. A similar announcement was made in Vancouver, Edmonton, Winnipeg, Toronto and, as I just said, Sherbrooke, and within a few weeks we will be announcing another leading electronic centre in the Maritime provinces.
And then we have a bigger budget to promote productivity in defence materials. We also have the new policy in the field of exports where my colleague the Minister of State for Commerce (Mr. Lumley) has drastically increased the budget to boost export products and set up the mixed credits program. All this is part of an industrial strategy of major government investments. The Financial Times quotes a figure of $6 billion. 1 will not quote the government press release because my colleagues opposite will say that I am trying to mislead them, that is why I refer to a serious paper like the Financial Times, and I would suggest that hon. members read a little more economic publications in order to understand what goes on in that area.
Of course, some have again argued that high interest rates are the only cause of bankruptcies in the small business sector, and I would refer them once again to the Financial Times, because members across do not readily accept what we say. So I would refer them to an article published in the Financial Times of June 22, 1981, and I quote, Mr. Speaker: "Don't blame high rates for bankruptcies".

Dun & Bradstreet Canada Limited statistics of May 29, 1981, indicate that business failures are up 17 percent over 1980. We all agree with this figure, Mr. Speaker, but in the same publication Dun & Bradstreet reveals there is no concrete information to indicate specifically that high interest costs are causing small business to fail. The same study adds
that 97.6 per cent of the 1980 business failures were due to bad management.

So enough of this witch-hunt, of trying to prove that high interest rates are the cause of ever-increasing small business bankruptcies. These bankruptcies are tragic, of course, and it is harmful to the economy as a whole when companies are forced out of business, however we tend to forget that even though the bankruptcy rate was 17 per cent in 1980, the rate of increase or of creation of new small businesses was 20 per cent, Mr. Speaker. So we should take a closer look at what higher interest rates mean for small business.
Let us suppose, Mr. Speaker, that you are a small businessman and that your working capital or your line of credit at the bank is $100,000, and you know as well as I do that over 80 per cent of small businesses in Canada have working capitals and lines of credit under that amount. But let us take 100,000, it is an easy figure to work with, and let us say that last year or two years ago your working capital was costing you 12 per cent, now in 1981 it is costing you 22 per cent. Over a period of one year, that represents an additional charge of $10,000, but one has to consider the entire financial picture of a company before saying that interest rates are the one and only cause of bankruptcy. One has to remember that there have also been increases in the cost of electricity, oil, gas, telephone and rent, as well as in municipal and provincial taxes. So if one reviews these financial statements, Mr. Speaker, one realizes that the issue of increased interest rates is a relative one. There are several alternatives to deal with this additional charge of $10,000: cut the personal expenses of the owner, cut back on the inventory, review the hiring policy, and there are countless other ways that can be used in a fiscal year to allow a business to cut its costs by $10,000 in order to meet this increased charge.
We are being told that the government does not want to stimulate the economy. It is obvious, when we look at the figures, that the argument about the $6 billion per year injected in the Canadian economy is not valid. When they say that interest rates are the only reason why small businesses go bankrupt, I say that those people know nothing about small businesses or the balance sheet of a Canadian business. And when they say that the government has no strategy, no master plan, I say that those people are blind. As I said earlier, we will have to stick a label or ring a bell each time we take a decision and tell them "Wake up, this is part of the economic strategy of the government, we are putting forward programs to assist the Canadian economy".
I have commented some of them, but there are many others. A few weeks ago, my colleague, the Minister of Supply and Services (Mr. Blais), announced the Suppliers' Development Fund. With him, I helped organize throughout Canada the
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exhibitions called Contact 81 through which we tried to put the government's major customers in contact with the smallest suppliers in each region, whether Vancouver, Calgary, Winnipeg, Toronto, Halifax or Montreal, so that major Canadian companies can find an increasing number of sub-contractors among Canadian suppliers.
During these nation-wide exhibitions, Mr. Speaker, we were able to identify 2,500 additional sub-contractors who will be able to market new products which we now have to import and some of whom will be able to benefit from the Suppliers' Development Fund to develop in Canada new products to replace imports. But my colleague, the Minister of Supply and Services, went even further. Ten months ago, last August, Mr, Speaker, I had the honour to announce in co-operation with his department our sub-contract program. Under this program, we decided as a government to use our purchasing power to improve the small business sector, make it even more active and give it more opportunities.
Under this purchasing policy, we indicated in 1980 that 39 per cent of all purchases would be from small businesses, which represents about $900 million. With the approval of the government, my colleague and myself decided that our target would be 45 per cent of all government purchases, and we want to spend through our purchasing policy $1.4 billion a year, which will be directly injected into the Canadian economy to help small businesses.
We are told that we have done nothing concerning interest rates. I would like to speak about another program which has had even more success than expected, namely the small business development bond program. My colleague, the Minister of Finance, announced this program in his budget, and my colleague, the Minister of State (Finance) (Mr. Bussieres), accepted my amendment to provide an extension of these bonds.
We now expect that, thanks to this government policy and under this program, banks and financial institutions in Canada will provide loans to small businesses wanting to purchase new equipment, expand their business, purchase land or expand their premices at a rate of about 10 or 11 per cent, or 50 per cent of the current business rate, and in this way inject $2 billion in the economy. I am not making up this figure. It was the figure quoted by the President of the Canadian Banking Association, a figure which we get when we add all the amounts that chartered banks and financial institutions allocate to the small business development bond. Two billion dollars, Mr. Speaker! The members opposite might think this is insignificant!
For my part, I believe that it is an absolutely fantastic amount which will enable the small business sector in Canada to continue to grow, to create employment, to develop new technologies and to make the Canadian economy healthy, because as everyone knows, and the government best of all, the small business sector is the most dynamic in Canada and was
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responsible for 62 per cent of all new employment created in Canada in 1980 and is responsible annually for 40 per cent of all employment.
Yes, Mr. Speaker, we want to help this sector and this is why we have decided first of all to implement all these programs, such as the Suppliers' Development Fund and the Microelectronics Assistance Program, through which small businesses can obtain 100 per cent financing from the government for feasibility studies to determine whether electronics can be used in their business and can obtain subsidies of 75 per cent for the installation of electronic material and manpower training.
In addition to those programs and the obligation we have to promote the expansion of small businesses, the goal of our whole purchasing policy is to pour into the economy huge amounts of money to help, protect and develop this sector in which we believe.
Mr. Speaker, several indicators would lead us to believe that the policies we have initiated are working and helping small businesses. Before rising in the House, I was looking over that part of my annual report dealing with the Small Businesses Loans Act. In 1980, $400 million in loans were granted to small Canadian businesses involved in various activities, which is an increase of 72 per cent over 1979. And when we consider the figures for the first quarter of 1981, we realize that they represent an increase in value of 58.6 per cent over the corresponding period in 1980.
As far as the Federal Business Development Bank is concerned, over 40,000 small businesses in Canada are being assisted under various loans programs. In fact, over 40,000 businesses in this country are taking part in the Federal Business Development Bank's Counselling Assistance to Small Enterprises program; I could mention also the 50 per cent investment tax credit which was announced in his budget speech by my colleague the Minister of Finance, jointly with his colleague the Minister of Regional Economic Expansion (Mr. De Bane) for the benefit of the less-developed areas of our country. This 50 per cent provision means that if you decide overnight to go to the Gaspe area, the Maritimes, northern Quebec or northern Ontario and to invest $100,000 to set up a small business and create jobs, you will get $50,000 back from the government. That is the way to stimulate the economy and develop this very important sector.
The opposition is complaining that interest rates are suffocating small businesses. It is a fact that we are going through difficult times, Mr. Speaker, but we have put in action the necessary mechanisms to alleviate this problem and help this section develop. Everyone knows as well as I do that today is an opposition day-


Mr. Pinard:: What opposition?

June 26, 1981
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Charles Lapointe: -the Tory opposition who introduced a motion, according to them, of basic importance to the very future of this country. Too bad, Mr. Speaker, the television cameras cannot focus on their benches. Only one of my colleagues and friends is sitting there to represent my Progressive Conservative friends, Mr. Speaker. That just shows how interested they are in the Canadian economy. I approve the decisions and the directions taken in matters economic by the Minister of Finance when he tells us: I do not want to stifle the Canadian economy by making cutbacks that would hinder economic expansion. But, on the other hand, in view of the current inflation, I simply must cut spending to some extent. To my mind, the Minister of Finance advocates and follows, as well as the government, a policy of common sense through this inflation period. Let us not delude ourselves, Mr. Speaker, current interest rates are not a threat to our economic health, but inflation is. We must apply all our wits, all our tools and resources, all our economic levers to fight against the curse that afflicts not only the farmers, homeowners, individuals, small and big businesses, but absolutely everyone.
It is essential, in implementing the policy put forward by the Minister of Finance, that we pursue it in order to succeed in reducing interest rates and thus allow all sectors of our Canadian economy to thrive and all Canadians to enjoy an improved social and economic life. In my view, the motion put forward by the members of the Progressive Conservative party is practically meaningless and of no interest to those members, judging from the empty seats. And that motion disregards the facts as well as the major economic efforts of this government and our sensible policy.


John Albert Gamble: Mr. Speaker, I am delighted to have an opportunity to address this House on the important motion placed before it with respect to the condemnation which we should have of the government for its inability to deal with the economic policies described in the motion and, in particular, with its inability to deal with the high usurious interest rates prevailing in Canada today. We very clearly recognize, and even hon. members from the government side, do so that those rate are excessive in terms of what they ought to in Canada. They have been officially established by the Bank of Canada, encouraged, promoted and prompted by direct government intervention and action. We can recall the days when we did not have the fixing of these rates by a Thursday auction of government bills, and when the government itself took the responsibility. Now the government does it in an indirect manner by instructing the Governor of the Bank of Canada as to what he should do. On Thursday of every week, we wait with bated breath to determine the interest rate which Canadian home owners will ultimately be paying, Canadian businesses will be paying, and Canadian consumers will be paying for the money that they borrow. Today, we have
an effective rate, as established by the Bank of Canada, at 19.08 per cent. That rate translates into an effective rate of between 22 per cent and 23 per cent for consumers who are fortunate enough to borrow their funds from conventional sources, and a similar rate for small businesses in Canada, and an effective rate of between 18 per cent and 19 per cent for those who are renewing mortgages or acquiring new mortgages for their homes.
The Minister of State for Small Businesses and Tourism (Mr. Lapointe) has commenced upon the fact that insolvencies and bankruptcies which have occurred in the small business community have, in large measure, been due to a number of causes and ought not to be directly attributable to the high cost of money. His suggestions are very interesting. He suggests that if one is, indeed, in the position of a small businessman who finds that on a $100,000 loan, to which he makes reference, interest has increased over $10,000 in a period of a year, what one should do is to cut down one's staff. He suggests that we lay off some people. A moment later he gets into an explanation as to how, if one wants to establish a small business in Quebec, or Gaspe or northern Ontario-


Charles Lapointe: I did not say that at all.


John Albert Gamble: -that one can get a government loan to hire more people. I wish he would make up his mind. Does he want small businessmen to lay off employees, or does he want them to hire more? The fact of the matter is that in our country we rely, in large measure, for employment to be provided by the small business community in Canada.
[ Translation]


Charles Lapointe: On a point of order, Mr. Speaker.


The Acting Speaker (Mr. Ethier):: The Minister of State for Small Businesses and Tourism on a point of order.


Charles Lapointe: Mr. Speaker, 1 am sorry to interrupt the hon. member. I am not in the habit of doing so. Admittedly he listened patiently to my comments, but I would like to respectfully ask him not to try and mislead the House. At no time did I suggest that small businesses are laying off employees.


The Acting Speaker (Mr. Ethier):: Order, please. The hon. member for York North has the floor.


John Albert Gamble: It is regrettable that the minister cannot weigh his words appropriately so that they come out the same, both when he is talking about the cutting of employment and when he is talking about increasing employment. That is a common failing of the members of the government. I can well understand how he is led into that trap.
The simple fact of the matter is that this nation cannot survive on interest rates which are consistently and permanently in excess of 20 per cent. Rates of that nature will have the
June 26, 1981

direct effect of sucking the lifeblood out of the entire economy. It is the responsibility of the government to do something about it. Today in the House, the Minister of Finance (Mr. MacEachen), in answer to one of my questions, relied upon the fact that the major enemy of government is inflation and inflationary expectations. I know the government relies on that fact. The minister said, upon return from a meeting of the OECD in Paris, France, that the object of the government is to break inflationary expectations. Those comments with respect to inflation and the need to combat it have been referred to by the hon. Minister of State for Small Businesses and Tourism and the Parliamentary Secretary to the Minister of Finance (Mr. Evans).
However, the question is, has the government in fact taken the necessary steps to achieve its laudatory goal? The answer to that question is that very clearly it has not. This morning in the House I asked the Minister of Finance how he equated that objective with a bill which was passed by this House on Monday, Bill C-57, dealing with an amendment to the Excise Tax Act and the Excise Act which included a provision therein for the fixing of tax on an ad valorem basis. I pointed out that in fixing that tax in that fashion, it was obvious to anyone who is aware of that bill and the changes to be brought about as a result of its passage, that the government, ever mindful of its need to grab more and more taxes from Canadians, expected that the price of the commodities subject to that tax would increase. The government, by its own legislation, has told the public in Canada that it expects the price of certain commodities to go up. How does it therefore equate its objective to break inflationary expectations when its own actions have indicated to the public that it believes that price in Canada will increase? Accordingly, it has encouraged the public to believe the very thing that it suggests it wants them not to believe. Not only has the government done that, but it has also taken more funds from the public and will continue to do so under this piece of legislation. Therefore, it has fuelled inflation itself.
Doubtless people are motivated by a desire to place in their own pockets, for their own purposes, and in the pockets of their families for their families' purposes, additional revenue. For that reason, Canadians have generally adhered to a work ethic in Canada. They believe that if one works harder and works longer, one will make more and keep more. In the event that the government tells them that it will cost them more to live because the government is taking more of what they earn, they will, indeed, want to earn more. That is a logical conclusion which the government, had it any wit at all, would recognize.
The more the government takes, the more the public will demand for both the services and goods produced by the public. That is fuelling the inflationary expectations and fuelling inflation itself. Yet the government sits back, and the Minister of State for Small Businesses and Tourism suggests that it is appropriate to reduce one's staff or, indeed, maybe move one's plant to some other area in the country. The fact of the matter is that the public in Canada, small businessmen,
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farmers and fishermen, know best what to do with their funds. It is no answer for the government to invoke program after program directing the economy in a particular course. Businessmen in Canada know best what to do with their revenues. Businessmen will be better served if the government reduces taxes and establishes an economic climate in which they can flourish. Home owners are better served if their after tax revenues are higher so that they can look after their own needs. The public in Canada is not asking for a handout. They are asking for a hand off. And the hand off which they seek is the heavy hand of the Government of Canada.
These are the primary issues with which we should be concerned. Now I know that the Minister of Finance has indicated in this House that our real growth, after allowing for inflation, may well, on an annual basis, be in the neighbourhood of 4 per cent this year. He examines that annual growth and says that we do not have an economic crisis in this country. We can see that our unemployment rate is at a level which is lower than that to which we have become accustomed and that is recognized. Let us not dispute it. But that is today, Mr. Speaker. The wisdom of a government should surely be reflected in its determination to take steps which will affect the future of this country. I am not talking about the future in ten or 15 years, I am talking about the future around the corner, within six months when most people who have acquired homes at 18 per cent and 19 per cent interest, when those small businessmen who have expanded an operation and had to borrow money at 22 per cent or 23 per cent, recognize that after six months they cannot bear the interest charges. That is what is happening in this country. If the government does not realize it, I say it is shortsighted and should, in the words of this motion, be condemned.


Walter David Baker: Hear, hear!


John Albert Gamble: We have heard the statistics. The Minister of Public Works (Mr. Cosgrove) read off some statistics which had been provided to him by various lending institutions. Those statistics referred to foreclosures on personal residences. The Minister of Public Works, before he came to this House, practised law. If he were to consult with people who are his former partners, he might well ask them to give him the figures for judicial sales of property or writs of possession. If he would add them all up, he would find the real measure of hardship among Canadian home owners because there has been a recent development furthered by the actions of the lending institutions, not to foreclose but, rather, to have judicial sales of property, even have writs possessions so that the homes may be extracted from the owner and rented, until a more appropriate time for a subsequent judicial sale may occur.
Those figures in themselves are meaningless, Mr. Speaker. He might also like to confer with his colleague in the House who is complaining about the fact that there were not very many Conservatives in the House when he was speaking and who has now left. He suggested that the small business com-

June 26, 1981
Economic Policies
munity was not in as bad a position as it might be, and in fact some of their financial ills might have resulted from an increase in hydro charges and real property taxes or business taxes on their establishments. The fact of the matter is he might well consult with him and determine what number of those small businesses have not been put into bankruptcy, and of course there are a large number who have, but who have been forced into voluntary liquidation. Some small businesses recognize that it is better to sell out now at whatever price than to lose everything by holding on another few months. In other words, these are the very people who foresee the path set for them by present government policies. But there is nothing said of that and there is relatively little concern shown for them.
Government action today, Mr. Speaker, is destroying the foundation upon which this nation has been built. It has been built upon the concept of hard work and prudence which would result, after a reasonable length of time, in individuals acquiring their own homes. It has been built upon time, hard work and the enterprise of individuals who wish to transform small businesses into large businesses in Canada, thereby not only offering the employment that the Minister of State for Small Businesses and Tourism would like them to reduce, but at the same time building the nation. Policies which have been advocated by this government, that is to say, policies of shifting tax money, allocating funds to projects which the government thinks are important, have no regard for what the public thinks is important and what small businessmen and home owners think is important. Those are the issues which have prompted them to work and strive to achieve their goals.
This government has been the most know-nothing, say-nothing and do-nothing government this country has witnessed in a long time. Since it has taken office, inflation has spread and increased despite the fact that it has itself recognized that inflation is the chief enemy.
The government looks with some pride at the fact that perhaps the GNP may be increasing somewhat this year. But it does not pay heed to the hardship and the heartbreak that a lot of people must suffer. What action has the government taken since October 28 to curb the insatiable appetite for funding which it extracts from the public? It is true that inflation is indeed the core source for high interest rates in this country. But who is responsible for inflation? Is it the man who is working on the production line at General Motors? Is it the farmer who is selling his products and is obliged to sell at whatever he can obtain? Is it the fishermen, or the small businessmen?
The prime source of inflation, Mr. Speaker, is the government itself, and there are two ways in which this regrettable circumstance occurs. It is either as a result of the increase in the money supply or the extraction of more and more funds from individuals and businessmen in Canada, or both. In the first case, while this government and its predecessor Liberal administration were in office, we had circumstances where the increase in the money supply on an annual basis exceeded 14 per cent per year.
How can increases of that nature ever retard inflationary growth? The answer is that it cannot. Today, I give the government credit to some extent for the fact that through the Bank of Canada, it has reduced the increase in the money supply to something in the neighbourhood of 6 per cent. Mind you, that is still above even the projected growth in the GNP, but it is a marked improvement over the historical use of money supply by this government in the past to feed inflation in this country.
What about the second element of the true growth of inflation? I do not have the statistics for today, but the last ones I saw showed the federal government extracted 43 per cent of the total GNP. In the United States, the federal government there extracted 31 per cent over the same period of time.
I know the response of the Minister of Finance is, "Don't you understand that we take some of those funds and we distribute them among provincial governments?" If the federal government distributes them among provincial governments it is because of a national policy. It is no answer to say the money goes elsewhere. The money is, in fact, collected and then it is disbursed in a fashion which the federal government desires. It is its responsibility to account for its constant groping for tax dollars resulting from the hard work and efforts of Canadians.
Where has all this led us? It has led us from the time the Prime Minister (Mr. Trudeau) took office to a government spending program which has grown from some SI2 billion to some $66.6 billion. It has resulted in an interest element on the national debt of $12.26 billion, or almost equal to the entire budgetary estimates of the Prime Minister who is now in office, when he came to office-almost an equivalent amount is now spent paying interest on the national debt. But, Mr. Speaker, even these figures are wrong. We learned from the deputy minister of finance last week that the Canada pension fund is fully $102 billion unfunded. The plan would be insolvent if it were called upon to meet the obligations it has to Canadians who have looked upon the Canada Pension Plan as a contract between themselves and the Government of Canada.
Mr. Speaker, the $66.6 billion to which I have made reference does not include-


The Acting Speaker (Mr. Ethier):: Order, please. I regret to interrupt the hon. member but his allotted time has expired.


Hon. Bud Cullen (Sarnia-Lambton):: Mr. Speaker, it is always interesting to hear members opposite complaining about the amount of government expenditures. I have been here almost 13 years-I was not here during the 1979-1980 regime-and I have yet to hear a recommendation from members opposite about areas in which the government should be cutting its expenditures. This was very much in evidence when the official opposition formed the government. I did not see too many significant cuts but I saw significant increases in
June 26, 1981

expenditures. Fortunately this House saw fit to defeat that budget, otherwise we would have been in dire straits and possibly in the economic crisis which the opposition alleges is taking place today.
In my position as Chairman of the Standing Committee on Finance, Trade and Economic Affairs, I would be remiss if I did not publicly compliment the hon. member for Ottawa Centre (Mr. Evans), who is the Parliamentary Secretary to the Minister of Finance (Mr. MacEachen) and the Minister of State for Finance (Mr. Bussieres). In a short period we have had the Bank Act, which is a massive piece of legislation, and Bill C-57 before the finance committee. Whatever your views were on either one of those pieces of legislation, Mr. Speaker, they called for a great deal of homework, study and understanding. The parliamentary secretary made a point of briefing himself so that he could intelligently cope with the matter as a member of that committee, but he has been given the significant tribute today of handling this debate on behalf of the government in a motion raised by the opposition. I compliment him for the work he has performed.
We hear about an economic crisis. I do not think the people who raise that kind of issue have talked to the people at FIRA. The Foreign Investment Review Agency has never received more applications, or had more people from outside of this country endeavouring to invest in Canada because they realize it is an excellent place to invest. We can keep our interest rates below those of the United States because we are a country where people are not afraid to invest their money. As a matter of fact, every day people are seeking ways to buy, to invest or to start up new industries.


John Albert Gamble: Sell out the whole country.


Jack Sydney George (Bud) Cullen: The economy could not be in crisis if that were the situation. I hear hon. members opposite saying "tell that to the farmers" or "tell that to the small businessman". Anyone who talks about the economy being in crisis is really doing a disservice to the small businessman and to the farmer. It is as though we were going to hell in a hand basket, if you listen to members opposite.
The facts have been spelled out in statistics. Fortunately for the government and for Canada we have a very sophisticated group of Canadians who understand that all the faults and all the problems we have cannot be placed on the government's doorstep.
1 agree with the hon. member who preceded me in one area, that it is to the government's credit to have cut back the monetary supply. I agree with him that earlier we had expanded the money supply and risked some inflation in the interests of keeping jobs in the economy. It was a trade-off at that time. If we had cut back on the money supply instead of increasing it, we would have faced a much more serious problem of very high unemployment, in the late 1960s and the early 1970s. The government took the conscious decision. It is all well and good to say in hindsight that it was wrong to increase the money supply at that time, but they were not prepared to face the
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problems that Canada would have had with hundreds of thousands more unemployed. Therefore it was a conscious, legitimate, bona fide decision in the interests of saving jobs. Had we not had the quadrupling of the oil prices, I suggest with respect, that move would have been complimented and not criticized at the present time.
I hear members opposite saying that we could solve all the problems in Canada if we could just get the energy situation, the pricing and the distribution of the money settled. But I was surprised to hear a member from Alberta suggesting the other day that we could solve all our problems immediately by going to 75 per cent of world price. First, it is irresponsible to suggest that we should tie our prices to a world price when we have seen OPEC quadruple the price of oil overnight. Who is to say that OPEC will not double it overnight at some stage? Why should we tie our price to the world price? Second, by going overnight to 75 per cent of world price, can you imagine the impact on provinces like Quebec and the four Atlantic provinces, just to name those provinces that would have more difficulty coping with that particular sudden rise? I suggest that all of Canada would suffer if we moved in a precipitous way to that price.
We all know that the price of oil is too low at the present time. We all know that the price has to rise. But surely common sense dictates that we must find a procedure whereby we can augment this cost of oil and do it in a careful, appropriate and sensible way. We must not say that all our problems will go away if we yield to what the oil producers are saying, particularly the oil producing provinces, and go to 75 per cent of world price overnight. That will not resolve anything.
What I do welcome are those suggestions coming to me from my riding. As Chairman of the Standing Committee on Finance, Trade and Economic Affairs, I get other suggestions from across Canada. One suggestion came from a constituent who suggested that the government give consideration to tax exempt bonds. In this way an individual could earn a certain amount of interest, say 50 per cent of the going rate, and that money could then be loaned out to help small industries. This would be another source of revenue. That suggestion has been criticized because it would be beneficial only to those who have money and there are other avenues whereby they could get tax advantages. But, of course, if you are going to get money, you are going to get it from the people who have it, those who are prepared to buy these bonds knowing that they will be tax exempt. It would be of significant benefit to Canadians and to farmers if the money were used in that particular way.


John Albert Gamble: When are you going to bring in that provision?


Jack Sydney George (Bud) Cullen: I have made about four or five suggestions to the Minister of Finance.


Dave Nickerson: He hasn't taken any notice.


Jack Sydney George (Bud) Cullen: Whether he sees fit to adopt all or any of them, we will have to wait for the October budget. I think we do a disservice if we are afraid or do not stand up to be counted in

June 26, 1981
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areas where we think moves should be made by the Department of Finance. Political palliatives that we hear from members of the opposition will not do the trick. They are talking about mortgage protection. Members of the NDP are talking about a modified form of exchange controls, but they are very careful not to spell that out. They talk about freezing interest rates but not having to accept the responsibility of what would happen to the Canadian dollar. Senator Lamontagne said the other day that the value of the Canadian dollar in terms of the U.S. dollar might go down to 78 cents. He has no guarantee that will happen. 1 suggest, with respect, that he is way off base on that suggestion.
I understand I am allowed 20 minutes in this debate, but in the interests of allowing one of my friends opposite to participate, 1 will cut my remarks short. I had other things 1 wanted to say, but I will only mention one. I watched television last night and I was appalled that the banks have indicated to the Minister of Finance that they are prepared to "bend over backward" to help out industry or to help out the small businessman. A bank has decided to move in on a business run by three generations of one family in Bridgeport, Nova Scotia after having been told by the family that they needed two or three more weeks in order to succeed. When banks do not play their part in an area such as that, they are doing a disservice to their customers which they have been pleased and proud to have in the past. When businesses like that get into difficulty and the banks have to make a move, it should be a move in the right direction, which is to help their customers as every other business is required to do at the present. But if banks move in this way they are not, in my view, meeting their social obligations.
There are other areas on which I want to comment but I have agreed to give some of my time so that other members have the opportunity to speak.


Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, I want to thank the hon. member who has just concluded his remarks and allowed me to speak this afternoon. I am pleased to speak on the motion presented by the hon. member for Bruce-Grey (Mr. Gurbin) concerning the economic crisis in this country brought on by the government's handling of interest rates. We do not always look at the question of interest rates as widely as we might. I do not intend to spend a lot of time in my remarks dealing with the why of interest rates. However, I want to deal with the two basic answers we usually hear from the Minister of Finance (Mr. MacEachen) as to why we have high interest rates.
Sometimes he says it is to attract money to this country. That sounds reasonable. At the same time members of the official opposition say that too much money has been manufactured in this country. When we look at the assets of the banks in this country we see that in 1970 they had approximately $32 billion in assets to loan. In 1980 this had increased to $340 billion. The amount of money that is available beyond
the direct control of government has grown at a phenomenal rate.
We had the Bank Act before us within the last year. The amount of reserves that the banks are forced to keep were reduced. That results in the amount of money which they can loan for every dollar invested with them increasing that much quicker. Therefore, we have not done very much with regard to regulating the banks. We have virtually allowed the interest rate to be set by an auction every week. I am not certain it has had the desired result.
Our finance critic pointed out that Statistics Canada reports show that consumers and small businessmen have reduced their spending between 40 and 60 per cent. Therefore, they are not bidding up the price for goods and services. They are reducing their spending. However, interest rates keep going up, ostensibly to force us to reduce spending. I do not know where the vicious cycle will end. I know it is affecting farmers in particular, and it is my responsibility to speak for them in this House on behalf of our caucus.
I wish to spend a few minutes to make the House aware of some of the difficulties that have been created for farmers and small businesses. There are a number of cases I could deal with, but I will review two with the House. These are not beginning farmers, poor operators or poor managers. They have grown very rapidly in their first 10 or 20 years in the business and were at a level of production that is considered to be an economic unit, yet both are in trouble.
Case number one is a Saskatchewan farmer who added a half section of land to a section and a half that he was farming just three years ago. The half section which he added cost him $130,000, all of which he borrowed. That was and still is the only debt he has. However, he had a three year renegotiable mortgage and the three years are now up. His interest payments will double from $16,000 to $32,000 per year. The extra increase in interest payments that are due each year equal or exceed his net income for the previous year.
This man is 43 years old, is operating what is considered to be an economic unit, has a good turnover, fairly good grain prices and is considering selling out. That is because the increase in interest rates will virtually wipe out his net income. If he offers the land for sale, the amount of money he will have to reinvest at today's interest rates will easily give him a net income of $60,000 a year before taxes, and possibly more than that. For doing absolutely nothing, he will triple his income. Another relatively young farmer will be going out of business.
The other case involves a tobacco farmer in Ontario who is ten years younger, in his early thirties. He has had two difficult years. His tobacco crop was damaged by frost and disease during the last two years. It reduced his income by about 20 per cent in each of those two years. As a result, his debt load has been increasing.
This man sent me his financial statement for the two years. For the year ending April 30, 1980, his interest payments amounted to $26,934. For the year ended April 30, 1981, carrying very little more debt, they totalled $58,163. He has
June 26, 1981

attempted to reincorporate his farm to be eligible for a small business development bond. However, he may not be eligible. Going to SBDB would bring the interest load down $18,000 or $20,000, which would allow him and his wife some money to spend.
These are the kinds of situation that farmers are getting into. Many farmers have to re-mortgage their land because mortgage rates are usually slightly lower than operating loans. It is reminiscent of the old Woodie Guthrie song which went like this:
The mortgage worked the steadiest and the hardest of us all.
It worked all week and Sundays, it worked each holiday,
It settled down among us and never went away.
Indeed, mortgages on farm land are not going away. Debt on the farm is increasing much faster on an annual basis than almost any segment of our economy. The economic analysis being done by the finance minister perhaps identifies some of the problems in this country. When the finance minister was studying and indeed teaching economics, the country was considered to have three sectors to its economy. In the fifties, the primary production sector made up 30 per cent of the economy, the manufacturing sector 30 per cent and the service sector 40 per cent. To some extent, our monetary and fiscal policies still seem to run with those basic concepts of the economy.
Unfortunately, the situation has changed considerably. Our primary production now employs about 7.6 per cent of all those employed in this country, that is agriculture, forestry and fisheries. The manufacturing sector which processes the goods and manufactures the tools and equipment accounts for about 25 per cent of our employment. The service sector in today's economy accounts for well over two-thirds of our employment, or 67.4 per cent. When we look at the new situation, we see that the old solutions will not work. In the old days, with the old economics, the agricultural sector was considered to have too much labour. We are always told that we are underutilizing our labour, that we have far too much of it and all of the policies are aimed at getting people out of agriculture. I think nearly all agricultural economists have been of the opinion for the last five or ten years that, if anything, there is a shortage of real skilled labour in agriculture. When we see people like the young tobacco farmer or the grain farmer in Saskatchewan being forced out of agriculture, or coaxed out, by the kind of interest rate policies we have, we realize we are losing a very unique and important part of the economy of this country.
Seven or eight years ago there was a study done which indicated that in terms of the gross national product agriculture was responsible for producing or contributing something like 42 per cent. That may have changed a little in intervening years, but it is still a very sizeable amount. Even though it does not employ very many people, it is still responsible for providing goods that can be used in manufacture and for providing
Economic Policies
services to the point that a great number of people still rely on it in this economy.
Although the policy of high interest rates under old economics might not bother the government very much, the fact that we are losing some farmers is going to have a disastrous effect. I would cite some of the reactions that some of the farmers in my part of the country are indicating when talking of high interest rates. Many of them are mixed farmers producing hogs and beef.
There is a man in the Rosthern area, for instance, whose father and grandfather have produced registered hogs since the opening up of that part of the country. He is considering shutting down his farm, which will mean about 2,000 pigs per year out of production. Not only will this take hogs out of production, it will do away with a number of fairly important breed or genetic lines which have been introduced into the livestock business. He is doing this for a very simple and fundamental reason. By selling off his livestock, he will have a bit more money to reduce his debt load, thus reducing the amount of interest payable.
What happens one or two years down the road when he no longer has these 2,000 pigs from his farm coming into the economy? What impact will the consumers feel? We have seen an Economic Council report complaining about marketing boards and how they are costly to consumers, but what happens in this free market system when we put people out of production and we do not have that production for consumers to consume? How is that going to fail to be anything but costly to consumers?
We think there has to be a better way of handling the economy. We think interest rates to farmers should be reduced. We have offered in this House and to the minister in committee a number of proposals to increase the use of Farm Credit Corporation loans. We have outlined ways of increasing the amount of money available to the Farm Credit Corporation without having to come to Parliament and without having to increase government allocation. There are many people who are selling farms who would reinvest that money in corporation bonds if there was a tax provision allowing it. We think there are a number of things that can be done.
I see my time is up, Mr. Speaker, but I would again reiterate that high interest rates are killing the people on the farms, small businessmen and home owners, and something should be done about it.


The Acting Speaker (Mr. Ethier):: Order, please. It being 4.45 p.m. it is my duty, pursuant to Standing Order 58(10), to interrupt the proceedings and put forthwith every question necessary to dispose of the Main Estimates, Supplementary Estimates (A) and (B), and for the passage of all stages of the bill based thereon, subject to the order made Thursday, June 25, 1981.

June 26, 1981
Economic Policies


MOTION FOR CONCURRENCE IN VOTE 1, PARLIAMENT
Donald James Johnston: That Vote 1, in the amount of $12,692,000 under Parliament for the Senate- Program Expenditures, in the Main Estimates for the fiscal year ending March 31, 1982 (less the amount voted in Interim Supply), be concurred in.


Stanley Howard Knowles: Mr. Speaker, I rise on a point of order. I do not object to this matter being handled in this way, but I think it should be part of the record that the reason a vote on this item is being singled out is that under Standing Order 58(4)(a), on behalf of our party, I filed a notice of opposition. We intend to vote against this $12 million for the Senate.


The Acting Speaker (Mr. Ethier):: The hon. member has filed a written notice, but at this point I am putting the question to the House. All those in favour please say yea.


Some hon. Members:: Yea.


The Acting Speaker (Mr. Ethier):: All those opposed will please say nay.


Some hon. Members:: Nay.


The Acting Speaker (Mr. Ethier):: In my opinion the yeas have it.
And more than five members having risen:


The Acting Speaker (Mr. Ethier):: Pursuant to an order made Thursday, June 25, 1981, a recorded division on all further proceedings stands adjourned until three o'clock p.m. Tuesday, June 30, 1981.
Shall I call it five o'clock?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: It being five o'clock p.m., the House stands adjourned until Monday next at two o'clock p.m., pursuant to Standing Order 2(1).
At 4.47 p.m. the House adjourned, without question put, pursuant to Standing Order.

Monday, June 29, 1981