1981-12-15

OFFICIAL REPORT

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FIRST SESSION-THIRTY-SECOND PARLIAMENT 30-31 Elizabeth II

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Published under authority of the Speaker of the House of Commons by the Queen's Printer for Canada
Available from Canadian Government Publishing Centre, Supply and Services Canada, Hull, Quebec, Canada K1A 0S9.
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Tuesday, December 15, 1981


Mr. Walter McLean (Waterloo):: Madam Speaker, yesterday the Canadian Human Rights Commission ruled that the federal penitentiary system discriminates against women prisoners by offering them fewer training and rehabilitation programs and no chance of transferring to better facilities or prisons closer to their families and friends. The Commission also revealed that this country's female prison population is provided with only the most basic academic upgrading courses and a vocational training program which consists solely of instruction in hairdressing. Since this House placed the highest value on the equality of rights clause in the constitutional package, I therefore move, seconded by the hon. member for Simcoe North (Mr. Lewis):
That this House reaffirm its commitment to equality of sexes in Canada and direct the Solicitor General to initiate immediately an investigation of the retraining needs and receptivity of female prison inmates in order that appropriate programs can be put in place which will ensure them equal opportunity in the work force upon their release.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN VIOLATION OF INTERNATIONAL AGREEMENT-MOTION UNDER S.O. 43
Mr. Benno Friesen (Surrey-White Rock-North Delta):: Madam Speaker, the United Nations Human Rights Commission yesterday ruled that Canada violated an international agreement which limited Larry Pinkney's right to appeal his extortion conviction. Since Mr. Pinkney is due to be released from prison on January 11, 1982, I move, seconded by the hon. member for Bow River (Mr. Taylor):
That the Minister of Employment and Immigration permit him to stay in Canada long enough to take advantage of the full appeal process.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NUCLEAR ENERGY
Mr. Mark Rose (Mission-Port Moody):: Madam Speaker, 1 too have a motion under Standing Order 43. Whereas Canada is expected to sign a new nuclear sales agreement with the European Economic Community and Sweden in the near future which will not include provisions for case by case studies of the end use of Canadian uranium by foreign countries, and whereas provisions for case by case studies of the after sale end use of Canadian uranium has been a cornerstone of our nuclear safeguards policy for years, I move, seconded by the hon. member for Saskatoon East (Mr. Ogle):
That this House condemns this desperate and irresponsible attempt to prop up our failing nuclear industry at the expense of our own moral obligation to ensure personally that Canadian uranium is not used to make nuclear weapons and, further, that this House instructs the government to return to case by case scrutiny in all future nuclear sales contracts.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AGRICULTURE
Mr. Gordon Taylor (Bow River):: Madam Speaker, the November 12 budget was a tragedy for farmers. It increased the application of capital gains, did away with income averaging annuities, virtually stopped land sales to young farmers, prevented pioneers from retiring, and even cut the capital cost allowance on equipment that they must have to continue farming. Therefore I move, seconded by the hon. member for Peterborough (Mr. Domm):
That this House deplores these anti-producer tactics and urges that these policies be withdrawn.

December 15, 1981
5.0.	43
Our farmers are tired of being taken for granted, and their wrath is reaching the boiling point.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN ARMED FORCES
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5.0.	43
Mr. Bob Corbett (Fundy-Royal):: Madam Speaker, as the government is aware, of the 23 ships in the Canadian naval forces only four are presently operational. Our ships are between 17 and 25 years old, and are showing signs of old age as they are developing serious cracks and prove unseaworthy. In view of the fact that our navy is not operating at a satisfactory level and is uncertain to fulfil bur NATO obligations, or even defend our own shores in time of war, I move, seconded by the hon. member for Malpeque (Mr. Gass):
That the House of Commons instruct the Minister of National Defence to purchase those British frigates that are for sale to serve as a stopgap until the Canadian navy obtains the frigates planned for 1987.


Madam Speaker:: Is there unanimous consent for this motion?
Some bon. Members: Agreed.


Some hon. Members:: No.


CANADA POST
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5.0.	43
Mr. Bill Wright (Calgary North):: Madam Speaker, the Auditor General's 1981 report stated that the national evaluation of postal services, a system used by the Post Office to measure postal reliability, did not accurately report the performance and reliability of mail delivery. I move, seconded by the hon. member for Calgary West (Mr. Hawkes):
That a proper system to measure the reliability of mail delivery be implemented and that the Post Office should report publicly the mail performance of its major postal services at least annually.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


EXTERNAL AFFAIRS
Mr. Ian Watson (Chateauguay):: Madam Speaker, I rise under the provisions of Standing Order 43. Yesterday the government and Parliament of Israel unilaterally acted to incorporate the Golan Heights into the State of Israel in contradiction of the terms of Security Council resolution 242, thereby jeopardizing further the quest for peace in the Middle East. I move, seconded by the hon. member for Rosemont (Mr. Lachance):
That this House reaffirms its support of Security Council Resolution 242 and calls upon Israel to halt its actions towards the annexation of the Golan Heights.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


RAILWAYS
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Madam Speaker, I rise pursuant to Standing Order 43. In light of the fact that the Minister of Transport (Mr. Pepin) has given as his excuse for cutting train service, that people do not use the trains, and in view of the fact that there are many people who would like to use trains 7 and 8 to get to their camps at Winnitoba, Malachi, Ottermere, and other places between Winnipeg and Farlane, Ontario, but cannot use them because of the way the trains are scheduled, making weekend traffic difficult, if not impossible, I move, seconded by the hon. member for Churchill (Mr. Murphy):
That the minister use his authority constructively instead of destructively as he usually does, to have these trains re-scheduled so that people who want to use the trains and will use the trains, can use the trains.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


BANKRUPTCIES
Mr. Don Blenkarn (Mississauga South):: Madam Speaker, all members of this House are generally dissatisfied with Bill C-12 in that it fails to protect employees adequately on the
December 15, 1981

most common of insolvencies, namely, receiverships, but it is nonetheless high time that this country had a new bankruptcy act. I therefore move, seconded by the hon. member for Simcoe South (Mr. Stewart):
That this House does direct the Minister of Consumer and Corporate Affairs to cause a reference to the Standing Committee on Finance, Trade and Economic Affairs or to a subcommittee of that committee, or to a special all-party committee of this House to examine the subject matter of Bill C-12 and the subject matter of the government's task force report on wage protection on insolvency so that this House in its next session can deal expeditiously with questions involving bankruptcy and insolvency on the basis of an all-party report.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AGRICULTURE
Mr. Mel Gass (Malpeque):: Madam Speaker, I rise under the provisions of Standing Order 43. In view of the fact that tough economic times and high interest rates are destroying many farming operations, and in view of the fact that any lowering of the subsidization program for industrial milk and cream will only cause thousands of dairy farmers to go out of business, I move, seconded by the hon. member for Joliette (Mr. La Salle):
That this House instruct the Minister of Agriculture to please explain to his colleague, the Minister of Consumer and Corporate Affairs, that the consumers benefit most from milk being subsidized as it ensures that there are enough dairy farmers in business to continue supplying the customer with inexpensive milk and milk products.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PUBLIC SERVICE
Mr. Rod Murphy (Churchill):: Madam Speaker, in light of the recent collective agreements signed by the federal government which gave paid maternity leave rights to postal workers, translators, and clerical workers, I move, seconded by the hon. member for Vancouver East (Mrs. Mitchell):
That this House directs the government to introduce legislation which grants paid maternity leave to all public service employees, and also to ensure that similar benefits are available to employees in the private sector, including employees in small family-owned stores, and further be it resolved that this House immediately grant paid maternity leave to all employees of the House of Commons, the Senate and the Library of Parliament.
Oral Questions


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE ADMINISTRATION
Mr. Blaine A. Thacker (Lethbridge-Foothills):: Madam Speaker, I move, seconded by the hon. member for Bow River (Mr. Taylor):
That the government stand condemned for developing a Liberal Party economic neutron bomb with its radioactive interest rates and family destroying tax policies, which leaves houses intact but destroys the fathers, mothers and children inside.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Hon. John C. Crosbie (St. John's West):: Madam Speaker, my question is for the Prime Minister. It is in connection with the Polish situation which developed over the weekend. Will the Prime Minister advise whether his administration has informed the U.S.S.R. how seriously the Canadian government would view any interference in the internal affairs of Poland by the U.S.S.R.? Have we made any representations to them? If so, what representations? Have we made any official representations to the government of Poland deploring the actions taken by them on the weekend, or any representations at all? Will the Prime Minister or the Secretary of State for External Affairs make a statement on motions giving the House the details of what action the government has taken and how it views this very serious situation?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, as the hon. gentleman has suggested, it is indeed a serious question; but I do not believe that it would add anything to the situation at the present time to make a statement on motions. As of now, we have not made representations to the Soviet Union. Our view is well known to

December 15, 1981
Oral Questions
them in the statements which have been issued by us and with our NATO allies. We have made many representations to them on the same subject in the last year.
We have indeed communicated with the Polish government. We have met the Polish ambassador here, and I intend to see him again later today. We have asked the Polish government to exercise restraint. That is the message which I will be giving him again today when I see him.


Some hon. Members:: Hear, hear!


COMMUNICATION WITH CANADIAN EMBASSY
John Carnell Crosbie: Madam Speaker, I wonder if the Secretary of State for External Affairs could tell the House whether or not, in addition to urging restraint on the Polish government, we have indicated that we deplore the actions that were taken over the weekend, or whether we have indicated any view with regard to that matter at all? Will the Secretary of State for External Affairs advise us whether we now have full communication with our embassy in Poland? Is the government certain that all Canadian citizens in Poland are safe and in good hands? Or, if we do not have good communications with our embassy, how can the government tell whether they are or are not safe and in good hands?


Mark R. MacGuigan: Madam Speaker, we have had some communication through indirect means with our embassy in Poland since the crisis began, enough to learn that, as far as the embassy is concerned, all Canadians are safe. In fact the Polish government, in their demarches both in Warsaw and here, indicated that there would be no interference with foreigners except with respect to their travel within Poland. It is my intention today to express to the Polish ambassador our concerns and disapproval of these kinds of actions which have been taken.


COMMODITY CREDIT SALES
John Carnell Crosbie: Madam Speaker, in connection with Canadian citizens travelling in Poland, there are many concerned people who have relatives in Poland who are worried about the situation. The minister's answer does not seem to meet their concerns. As far as we are aware, we do not have good communication with the embassy. Will the minister tell the House what is being done to ensure that we do have full communication with our embassy in the shortest possible time so that one can be sure?
Will he tell the House whether the government has given any consideration to taking the same kind of action as the U.S. has? The minister will be aware that the United States has suspended all food aid to Poland until the situation is reassessed. Are we considering reassessing our present credit sales for grain, and our present arrangements with respect to the fishery, for example, or is that kind of action ruled out?


Mark R. MacGuigan: Madam Speaker, our communications have been cut,
we believe, by the Polish government. On both occasions we have made strong representations to the Polish government. I also intend to ask today for the restoration of communications, so that we will be able to get the answer to the kind of questions that my hon. friend poses.
With respect to the U.S. action on food aid, I should make it clear to the House that we do not have surplus supplies of food, such as some other countries, and that we do not have food aid, as such, to Poland. What we have are long-term grain contracts which we finance on concessional terms. We have not made any decision at the present time, given the absence of knowledge about the situation, to take any action with respect to those contracts. In any event there will be lots of time between now and the time of delivery of our grain to consider fully any steps that should be taken on our side.


AVIATION INDUSTRY
Hon. Allan B. McKinnon (Victoria):: Madam Speaker, my question is directed to the Minister of Industry, Trade and Commerce. On December 8 the minister approved a message to Washington, expressing concern about the U.S. Navy interruption of the Lockheed P-3 Orion program. The minister said that Canada was led to believe that the Orion program would continue through the 1980s and our offset share of the LRPA contract included Orion airframe and systems which would create employment for 2,000 people through the 1980s. Will the minister consider whether there has been a violation of this contract and, if so, what action does the government intend to take about it?


Hon. Herb Gray (Minister of Industry, Trade and Commerce):: Madam Speaker, my hon. friend is talking about a proposal within the United States administration to have a five-year hiatus on the P-3 Orion program. I understand the final decision has not yet been taken. That is why I immediately took action to bring our concerns to the attention of the U.S. Secretary of Defense about the possible implications for Canadian industry of the postponement of the program. As I said, a final decision by the U.S. authorities has not yet been taken. At the same time our agreement with respect of offsets is with the Lockheed corporation. I understand that Lockheed has already acknowledged to our officials its ongoing contractual obligation. Bearing in mind that the contract runs to 1995, obviously we expect Lockheed, in any event, to carry out these obligations.


Allan Bruce McKinnon: There are implications other than to industry; there is a defence implication.
December 15, 1981


NATIONAL DEFENCE
Allan Bruce McKinnon: Madam Speaker, my supplementary question is directed to the Minister of National Defence. In the telex sent by the Minister of Industry, Trade and Commerce the minister noted that cancellation of the program will cause an increase in the cost of spare parts for Canada's Aurora aircraft and, more significantly, will create delay in their availability, resulting in reduced capability of the Canadian fleet. The defence department has already experienced difficulties in spare parts supply. Will the minister tell the House what contingency plans he has to ensure that our 18 aircraft will be able to continue flying?


Hon. J. Gilles Lamontagne (Minister of National Defence):: Madam Speaker, I think I can reassure the hon. member for Victoria that our 18 Aurora aircraft will be able to fly and to meet their commitment to NATO and to the defence of Canada. We discussed the matter with the American Secretary of Defense, Mr. Weinberger, when we were in Brussels. Despite the fact that this is a Lockheed decision, the United States Secretary of Defense does, of course, have something to say about it. We asked him to look into it and to inform us so that we could discuss these matters. It is important that the supply of spare parts that we need to keep these aircraft available for operations will be fulfilled according to plan.


FOREIGN INVESTMENT REVIEW AGENCY
Mr. Edward Broadbent (Oshawa):: Madam Speaker, my question is directed to the Minister of Industry, Trade and Commerce. It pertains to the speech he made in Chicago in which he announced that the election promises of the Prime Minister in 1980 concerning the expansion of the mandate of FIRA were no longer government policy.


Some hon. Members:: Oh, oh!


John Edward Broadbent: Since the Prime Minister promised in that speech in the election campaign to expand the role of FIRA in order to have it carry out periodic reviews of the activities of large foreign companies in Canada, to publicize foreign takeovers of businesses, and to offer government assistance to Canadian companies seeking to buy foreign firms, has this commitment now been utterly abandoned by the Government of Canada?


Herbert Eser (Herb) Gray: Madam Speaker, I did not say what the hon. member suggests I said in my speech in Chicago. He is talking about an unfortunate misinterpretation of my remarks by the Canadian press.


Some hon. Members:: Oh, oh!
Oral Questions


Herbert Eser (Herb) Gray: I will be happy to send my hon. friend a copy of my remarks. He will see that I was talking about a review of the administrative procedures under the present act. Our position with respect to the promises made during the election and in the throne speech was set out in the economic development document. In that document we said that two of the pledges in question, the less important ones dealing with public notice of takeovers, and guarantees of loans for Canadian alternatives, would not be proceeded with for the time being.


Some hon. Members:: Oh, oh!


Herbert Eser (Herb) Gray: We did not say that they were being abandoned. With respect to performance review, the document made clear that we are expanding it to cover larger firms, whether Canadian controlled or foreign controlled. I look forward to the government being able to announce details of the way we are carrying out this commitment before too long.


Some hon. Members:: Hear, hear!


Mr. Baker (Nepean-Carleton):: Produce the tapes.
PRESS REPORT OF MINtSTEJCS SPEECH


John Edward Broadbent: Madam Speaker, the minister knows that the Prime Minister promised to expand the mandate of FIRA, that is to say, to change the legislation. The minister now says that he was misunderstood. I should like to ask him if he was quoted accurately in today's press when he is reported as saying, in his speech "But note that this is a review of the administration of the act, not the act itself'. He is quoted as saying that the government does not plan to change the act. In his election campaign the Prime Minister promised to change the act. Will the minister now tell us what is the truth?


Herbert Eser (Herb) Gray: Madam Speaker, in my speech yesterday I was simply talking about something that was stated in the economic development document, that we intended to review the existing administrative procedures of the Foreign Investment Review Act to see if they could be made more timely and efficient. We were talking about administrative procedures. In my speech I intended to say nothing beyond what we actually said in the economic development document. Nothing I said in my speech was intended to say, or in fact did say, that the government was ever ruling out any future amendments to the act by way of strengthening it.


QUERY RESPECTING AGENCY POLICY
John Edward Broadbent: Madam Speaker, the minister is certainly a worthy successor to Paul Martin.


Some hon. Members:: Hear, hear!


John Edward Broadbent: All his colleagues have the audacity to applaud.

December 15, 1981
Oral Questions
[ Translation]
The minister is probably aware of the lay-offs announced last month by General Motors in Sainte-Therese and Oshawa and by B.F. Goodrich in Shawinigan. My question is as follows. How can the minister justify abandoning the plan to expand the role of the Foreign Investment Review Agency, which would ensure that the presence of these foreign companies would be of substantial benefit to Canada, when those same companies are now laying off workers in this country for the benefit of their operations outside Canada?


Herbert Eser (Herb) Gray: Madam Speaker, I challenge my hon. colleague to show me where I said specifically that we had gone back on our promises on the FIRA issue. It was certainly not in my speech, which affirmed the government's support for the FIRA process and its objectives. The government confirmed in the economic development document that we were supporting this process. However, my hon. friend was barking up the wrong tree, as usual.

[English]	'


HAZARDOUS SUBSTANCES
Right Hon. Joe Clark (Leader of the Opposition):: Madam Speaker, I should simply like to set the record straight. Some of us think more of Paul Martin than that.
My question is directed to the Minister of Consumer and Corporate Affairs and concerns the some 100,000 Canadians who are affected now by urea formaldehyde foam insulation in their homes. The minister has announced that the Government of Canada, having accepted far too late its moral obligation, is prepared to make a grant available to some 10 per cent of the people affected by UFFI. But he will not tell us how much the grant will be, and he refuses to say when he will tell us how much that grant will be. This House has had the experience with the Minister of Transport of having major decisions that hurt Canadians, announced as soon as Members of Parliament had left this Hill. I want to know from the minister responsible for the UFFI crisis why he refuses to tell the House of Commons and interested Canadians exactly what will be available in terms of grants to Canadians affected by UFFI. If he is not prepared to give us that information before Christmas, will he give a Firm date by which Canadians will know how much they will receive or whether they will simply be left out in the cold by this government?
[ Translation]
Hon. Andre Ouellet (Minister of Consumer and Corporate
Affairs): Madam Speaker, if the Leader of the Opposition had been here yesterday, he would have had the answers to his
questions. If he would take the trouble to read Hansard, he would see my answer to the hon. member for St. John's East.


DETAILS OF PROPOSAL TO BE MADE TO PROVINCES
Charles Joseph Clark: Madam Speaker, yesterday the minister refused to answer questions concerning a problem that directly affects 100,000 Canadians from coast to coast, and he now has an obligation to answer the House. He told us that he wanted to pay a certain amount to a certain number of people, but he has refused to give us any specific information and, once again, he is blaming the provinces. I want to have this specific information, because 30 per cent of the home owners who are affected by UFFI are home owners in the minister's own province. I would like to know, first of all, why the minister is refusing to give us any details, and second, if it is a matter of negotiations with the provinces, whether the minister can inform the House today which concrete proposal the federal government wishes to make to the provinces?


Hon. Andre Ouellet (Minister of Consumer and Corporate Affairs):: Madam Speaker, if the Leader of the Opposition had done his homework, he would know that 80,000 homes, and not the 100,000 he keeps mentioning, are involved. I already pointed out to the member for St. John's East yesterday that the number was 80,000 and not 100,000. I fail to understand why the Leader of the Opposition insists on quoting the wrong figures. When the right hon. member was Prime Minister, though not for long, he was fond of saying that it was important to consult with the provinces. I wonder if his memory is failing him. Yesterday, I announced in the House that I wanted to consult the provinces and the private sector before announcing the details of the government's program. He could at least have the decency to let me consult with the provinces first.


ELIGIBILITY CRITERIA
Charles Joseph Clark: The
minister indicated yesterday that he will make a measly, inadequate grant available to a small group of Canadians who are affected by UFFI. He is so ashamed of the amount of the grant that he refuses to make it known here while Parliament can put questions to him. That is what he said yesterday, and that is his reason for refusing to tell affected Canadians and this Parliament the exact amount of the grant which will be made available to those people who have been suffering too long, who cannot sell their homes, and whose health is endangered. He will not tell us about the grants. He is trying to hide that from Parliament. Perhaps, because he has admitted that there is a health hazard for individuals other than those who will receive the grant, he will tell the House of Commons, breaking his practice of secrecy, what criteria his government intends to use in determining which Canadians will receive
December 15, 1981

some kind of help with regard to the danger to their health resulting from this program prepared and sponsored by the Government of Canada.


Some hon. Members:: Hear, hear!
[ Translation]


André Ouellet: Madam Speaker, the Leader of the Opposition is certainly indulging in a lot of political partisanship today, if he wants to tell us how to deal with a matter he could have dealt with himself when he was in the government. What did his government do during the ten months they were in power? Madam Speaker, the quality of this product was first questioned under a Conservative government. Nevertheless, the Conservatives did not ban the product while they were in power, so I do not think the Leader of the Opposition is in a very good position to tell me what to do. In any case, we shall announce our program as soon as we are able to do so, regardless of the petty politics indulged in by the Leader of the Opposition.


INFORMATION TO BE GIVEN TO HOME OWNERS
Mr. Geoff Scott (Hamilton-Wentworth):: Madam Speaker, this minister speaks about 80,000 homes. We know that there are 100,000 homes, and maybe more, which are affected-


An hon. Member:: Name them.


Geoffrey Douglas Scott: -and certainly a great number of apartment units. What are 20,000 home owners, to this Minister of Consumer and Corporate Affairs? This UFF1 problem simply cannot be blown away.


Some hon. Members:: Hear, hear!


Madam Speaker:: Order. We have heard a series of lengthy questions; but I expect that from now on hon. members will ask very short questions. The hon. member for Hamilton-Wentworth.


Geoffrey Douglas Scott: Madam Speaker, I ask the Minister of Consumer and Corporate Affairs how people with UFFI in their homes or apartment units will know whether they qualify for outright grants. Has the government decided to make nation-wide testing available and, if so, when?


Mr. Hnatyshyn:: Try another Ouelletism.


André Ouellet: Madam Speaker, within the next few days I intend to announce the government's full program, and the hon. member's question, which is indeed a valid one, will be answered at that time.
Oral Questions


PRESENCE IN GALLERY OF ARMED FORCES PERSONNEL WHO PARTICIPATED IN SEA RESCUES
Madam Speaker:: 1 would like to draw the attention of the House to the presence in our gallery of members of the Canadian Forces personnel who participated in the rescue, off Sable Island, of the crews of the ship Euro-Princess and the oil rig "Rowan Juneau", a total of 70 persons in all. I am sure the House will want to congratulate them.


Some hon. Members:: Hear, hear!


PIPELINES
Miss Coline Campbell (South West Nova):: Madam Speaker, my question is directed to the Minister of Energy, Mines and Resources and relates to the cabinet decision to go ahead with the construction of a Quebec-Maritime pipeline. Could the minister advise the House whether or not there has been any support for this decision by either the government of New Brunswick or the government of Nova Scotia?


Hon. Marc Lalonde (Minister of Energy, Mines and Resources):: Yes, Madam Speaker. During the last few months, I have been very happy to see that the government of Nova Scotia and the government of New Brunswick have been eager to see the approval of this very important project for the maritime provinces. It was with great pleasure that the cabinet took the decision to approve the recommendation of the National Energy Board to proceed with the extension of the gas pipeline across Canada, right through to Halifax. It is now a matter of ensuring that the necessary regulatory approvals take place in each of these provinces, including Quebec, New Brunswick and Nova Scotia, in order to see a speedy implementation of this project. As far as the Government of Canada is concerned, we are fully behind this project and we want to see it implemented as soon as possible.


HAZARDOUS SUBSTANCES
Mrs. Margaret Mitchell (Vancouver East):: Madam Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. It also concerns the really terrible plight of urea formaldehyde foam insulation victims. Will the minister explain how he can justify using .1 parts of formaldehyde as an arbitrary standard in providing assistance, which he announced yesterday, since we know that medical authorities agree that individuals greatly vary in their sensitivity to UFFI? Will he also explain whether there will be ongoing assistance

December 15, 1981
Oral Questions
which will be flexible in order to help people who have future problems, because we also know that the foam disintegrates over a period of time and there is a greater risk to health later on?


André Ouellet: Madam Speaker, the questions put by the hon. member will be addressed in the program we shall be announcing within the next few days. The hon. member is quite right in saying that setting an arbitrary standard may be harmful to some UFF1 victims. This will be a consideration when the program is announced.


DEPRECIATION OF PROPERTY VALUES
Margaret Anne Mitchell: Madam Speaker, UFFI victims are also very worried and angry because they know that the value of their homes has gone down, and real estate agencies will not even list their homes because they are not saleable. Will the minister therefore order a real estate assessment? He has already done one testing. Will he do another testing, a real estate assessment of the depreciation in property values which has occurred because of UFFI? Will he tell us what he intends to do about the economic disaster which is plaguing UFFI home owners who deserve compensation? They did not endorse UFFI through CHIP; it was the federal government that sponsored it.
Hon. Andre Ouellet (Minister of Consumer and Corporate
Affairs): Madam Speaker, as I said before, the product was not approved but was accepted along with a list of other products for insulation purposes, and the Government of Canada had not been promoting this particular product but the insulation of homes in general. Regarding the value of these homes, obviously we shall want to deal with this matter, because home owners have noted, and correctly so, that the resale value of their property has gone down. In our program of corrective action, we intend to address this matter and to make suggestions to the municipal authorities, in order to have these homes renovated and their resale value restored to normal levels.


TRANSPORT
Robert Alfred Corbett: Madam Speaker, my question is for the Minister of Transport. Despite the assurances by the minister that the world would evolve as usual after November 15, the fact is that for the good citizens of such communities as McAdam, Plaster Rock, Juniper, McGivney, Napodo-gan, Chipman and Minto, the world has not evolved as usual since November 15.
On October 26 the minister stated, "We have been very careful not to restrain or cut services to isolated areas. Buses will go where train service was traditional." On November 5 the minister said, "I shall have the opportunity in the very near future to report on the results I have achieved." Will the minister tell the House when the federal wagons will roll to those communities that were cut off by him on November 15 from the rest of the nation?


Hon. Jean-Luc Pepin (Minister of Transport):: Madam Speaker, I did say that, and what the hon. member said has taken place. In a number of instances VIA is trying to improve what was done by giving better service. Indeed, in a number of places buses are now ensuring transportation where they did not do so before. I could enumerate some of these cases, and I will if my hon. friend would like me to do so.


COMMUNITIES WITHOUT SERVICE
Robert Alfred Corbett: Madam Speaker, what the minister has just said is exactly what he said on November 5, that he would be making these issues clear later on. But the good citizens of the communities of Napodogan and Plaster Rock, Chipman and Minto have not seen any tangible efforts in this particular area. Therefore, will the minister confirm that these people will not be receiving any sort of bus service or transportation link to communities with which they have had transportation links in the past? Alternatively, will he deny that?


Jean-Luc Pepin: Madam Speaker, I will inquire further and report to my hon. friend.


CANADIAN WHEAT BOARD
Mr. Charles Mayer (Portage-Marquette):: Madam Speaker,
I have a question for the Minister of Transport about which I gave him prior notice. It has to do with his responsibilities to this chamber for the Canadian Wheat Board. Is the Canadian Wheat Board withdrawing from supplying feed grains to the domestic market at the formula price, the corn competitive price, as required under the national feed grains policy?


Jean-Luc Pepin: Madam Speaker, the Canadian Wheat Board announced they will do that by December 21. The present situation is a difficult one because we have a conflict of two policies. First, under the Canadian Wheat Board Act, it is the responsibility of the Canadian Wheat Board to sell grains at reasonable prices. Second is the feed grains policy whereby the Canadian Wheat Board acts as a residual supplier and must sell in eastern
December 15, 1981

Canada under the corn competitive formula. The Canadian Wheat Board has said there is now an adequate supply of feed grain in eastern Canada. Because of previous shipments, there are grains on location and there are large quantities at Thunder Bay. There is grain available from Ontario, and there is corn available from the United States. In these instances the board feels that it has fulfilled its responsibility to provide feed grain in adequate quantities and at equitable prices.


QUERY RESPECTING QUOTAS
Charles James Mayer: Madam Speaker, could the minister enlighten us on how that decision was reached? Was it reached unilaterally, or was it in consultation with the government and the Canadian Livestock Feed Board?
Second, would the minister consider asking the wheat board, in view of the fact that it is withdrawing from supplying the domestic market at the formula price, which is welcome news to us in western Canada, whether at the same time it will remove quotas on offboard grains and return to the 10 per cent and 20 per cent system of space allocations used prior to the implementation of quotas on offboard grain over two years ago?


Jean-Luc Pepin: Madam Speaker, I do not have anything to announce on quotas. However, I want to complete the answer that I have just given by saying that the Canadian Wheat Board made that decision in light of present circumstances. Should scarcities develop in eastern Canada, obviously the Wheat Board would be extremely willing to look at those new circumstances. Again, this is a very complex issue and the advisory committees of the Canadian Wheat Board and the Canadian Livestock Feed Board are looking at it again now.
The minister responsible for the Wheat Board has also asked the Canadian Federation of Agriculture to advise him further on the responsibility for adequacy of supply in Canada. It is a very difficult question, and my hon. friend is also very much aware of it. The present decision of the Canadian Wheat Board is one which has been taken in the context of the difficulty of reconciling the two policies that I have mentioned.


SMALL BUSINESS
Mr. Ron Stewart (Simcoe South):: Madam Speaker, my question is for the Minister of State for Small Businesses and Tourism. The minister knows that shifting the federal excise tax from the manufacturing level to the wholesale level will impose hardships on a great many Canadians. It will impose a complete new layer of paperwork on an already over burdened segment of the economy. It discriminates against the small business man and favours the larger corporations. It forces wholesalers to be tax collectors without remuneration. The new system will increase costs to independent retailers by an
Oral Questions
average of 1.25 per cent on applicable items, and hence will result in higher prices for consumers.
If this is a so-called equitable tax, why is tobacco excluded from the tax the wholesaler must collect? Consequently, four large tobacco manufacturers will have the use of taxes collected and will earn an estimated $5 million profit from the cash flow on this float-


Madam Speaker:: Order, please. The hon. member had a question, and I think it was sufficient.


Ronald Alexander Stewart: I have not finished it, Madam Speaker.


Some hon. Members:: Oh, oh!


Hon. Charles Lapointe (Minister of State (Small Businesses and Tourism)):: Madam Speaker, I wish to inform the House that I was quite able to grasp the substance of the long question put by the hon. member opposite. I should like to point out that the purpose of transferring this tax to wholesale distributors is quite simply to put products manufactured abroad on an equal footing with products manufactured in Canada.


EXTERNAL AFFAIRS
Ian Watson: Madam Speaker, I have a question for the Secretary of State for External Affairs. The unilateral Israeli action to incorporate the Golan Heights is of urgent concern to Canada and Canadians. Has the minister made, or does he intend to make, representations to the State of Israel voicing Canada's objections, and reaffirming Canada's commitment to Security Council Resolution No. 242?


Mr. Prud'homme:: Totally unacceptable.


Some hon. Members:: Oh, oh!


Mr. Nowlan:: The chairman has already answered.


Some hon. Members:: Oh, oh!


Madam Speaker:: Order, please.


Mark R. MacGuigan: Madam Speaker, Canada strongly opposes the extension of Israeli law to the occupied territory on the Golan Heights. This is a step toward complete annexation, and we believe that would be contrary to international law. Therefore we intend to make our feelings known to the government of Israel. We are, of course, prepared to state publicly what our position is.

December 15, 1981
Oral Questions


AUTOMOTIVE INDUSTRY
Mr. Bob Rae (Broadview-Greenwood):: Madam Speaker, on November 26 in this House the Minister of Finance, in answer to my leader, the hon. member for Oshawa, said that the government had absolutely no intention of taking off the federal sales tax on cars. On November 27 there was an item on the front page of the Windsor Star which said, "Gray hints sales tax on autos could end." The report went on to say that "Gray told reporters that removal of the sales tax on cars hasn't been ruled out." I would like to ask the Minister of Industry, Trade and Commerce who is speaking the truth to the Canadian people, the Minister of Finance or the Minister of Industry, Trade and Commerce?


Mr. Nielsen:: Flip a coin.


Herbert Eser (Herb) Gray: Madam Speaker, we both speak the truth. I wish there were the same element of truth to the hon. member's question. All that I had done was indicate to journalists earlier that it was one issue that I felt we could continue to discuss with the Minister of Finance. The position of the government has been stated by the Minister of Finance, but obviously tax measures can be reviewed by the government in light of changes in circumstances.


Bob Rae: Madam Speaker, the minister cannot have it both ways. He cannot be a member of a government which has rejected the sales tax proposal and, at the same time, tell his constituents and the people of Canada it is something the government is considering, when the Minister of Finance said it was something the government was not considering. It is just unacceptable.


Some hon. Members:: Hear, hear!


IMPORTATION OF JAPANESE MANUFACTURED CARS- CANADIAN CONTENT IN AMERICAN MANUFACTURED CARS
Bob Rae: My supplementary question is also for the Minister of Industry, Trade and Commerce. In light of the fact that 25 per cent of the membership of the United Auto Workers are now on permanent lay-off, and in light of the fact that there is an increasing rise in the sale of imported cars into Canada and a tremendous decline in the domestic industry, I would like to ask the minister specifically can he tell us whether the government is currently negotiating with the government of Japan with respect to limitations on imports for the years 1982 and 1983, and can he tell us whether there are any discussions taking place with the American government with respect to increasing the Canadian content in cars produced in North America.


Herbert Eser (Herb) Gray: Madam Speaker, we have been continuing our consultations, which we began under the context of the auto pact
with the preceding U.S. administration, with the current one, on a range of issues which are of concern to us.
We have been in touch with the government of Japan in order to get confirmation from them that they intend to maintain their forecast of exports to Canada for the period April, 1981, to April, 1982, of 174,000 vehicles. I anticipate we will be beginning discussions very soon with the Japanese on the question of continuing a restraint period by the Japanese for a second year.


REGIONAL ECONOMIC EXPANSION
Hon. J. Robert Howie (York-Sunbury):: Madam Speaker, my question is for the Minister of Regional Economic Expansion. Where the federal and provincial governments have invested extensively in the forest sector of the New Brunswick economy, and where half the lumber mills are now closed and the pulp markets are soft, what measures will the minister take, or is the minister contemplating to alleviate the situation?


Hon. Pierre De Bane (Minister of Regional Economic Expansion):: Madam Speaker, I would like to remind the hon. member that not less than three separate agreements with the government of New Brunswick relate to the forestry sector and the modernization of the pulp and paper industry. This is not counting the very major project in which several departments, foremost the Department of the Environment, are working for the ranger school and the forestry complex in Fredericton.


An hon. Member:: What kind of answer is that?


INCOME TAX
Walter Franklin McLean: Madam Speaker, my question is for the Minister of National Revenue. The minister will know that the budget has created great anxiety in the voluntary sector. Does the minister intend to penalize the Roman Catholic and Protestant churches of Canada by removing provisions in the Income Tax Act which have not traditionally taxed rental values of manses and rectories and, in the cases where priests or ministers are given subsidized loans to provide their own accommodation, does the minister intend to remove the exemptions covered in such an arrangement?


Hon. William Rompkey (Minister of National Revenue):: Madam Speaker, there have been many allegations as to how the budget will be applied by the Department of National Revenue.


An hon. Member:: Yes or no.
December 15, 1981


Bill Rompkey: Let me say, first of all, for the benefit of the members of the Armed Forces who are in the gallery, 1 repeat what was said in this House last week, that there will be no tax applied to the travel of Armed Forces personnel.


Some hon. Members:: Hear, hear!


An hon. Member:: What about their dependants?


Bill Rompkey: Madam Speaker, we have said that we are not going after the nickels, dimes and pennies. There are a lot of unpaid taxes which we should be collecting, but not from people who cannot afford to pay it.


An hon. Member:: Answer the question.


Bill Rompkey: The question of the hon. member was in that category. We will not be taxing parking lot benefits or applying tax to retail clerk discounts. There is a whole range of benefits all across the country, and I have not the time in question period to go into all of it.


An hon. Member:: Give us a list.


Bill Rompkey: These things will be clarified. The general guideline will be that we will not be going after nickels and dimes. We will be taxing those people who should bear a fairer share of the tax burden in this country.


Some hon. Members:: Hear, hear!


EXTERNAL AFFAIRS
Mr. Louis R. Desmarais (Dollard):: Madam Speaker, my question is for the Secretary of State for External Affairs. I understand that an official in External Affairs refuses to inquire into the well-being of Canadians presently visiting Poland. A constituent who was worried about his wife now visiting relatives in Poland was advised by this official that he felt it unnecessary to check the status of Canadians now in Poland through our embassy there. Will the minister give us the assurance that his department will make the necessary inquiries to ensure that all Canadians now in Poland will return to Canada safely?


Mark R. MacGuigan: Madam Speaker, I can assure the hon. member that we will be most happy to take the names of any Canadians in Poland from their relatives here and do our best to ascertain their whereabouts and safety. I am sure that the hon. member's constituent must have misunderstood what he was told. It was my understanding, as I stated in my answer to the hon. member for St. John's West, that we do not have the ability at the present time to make that kind of investigation since we have been denied communication with our embassy by the Polish government. We are asking to have communications
Oral Questions
restored and, as soon as they are, we will be prepared to undertake that task.


INCOME TAX
Charles Joseph Clark: Madam Speaker, I have a question supplementary to that of my hon. friend from Waterloo. The Minister of National Revenue has now indicated that the government has a detailed policy regarding who will be affected and who will not be affected by the tax on employee benefits which was announced by his colleague, the Minister of Finance. Since the minister has that detailed policy, surely he must accept that it is not appropriate to this House to have a minister announcing tax policies in bits and pieces on the floor of the House of Commons, as he chooses.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: If the minister has a detailed policy, as he has just stated he does, will he give us a commitment that he will table that policy today in the House and, if he will not do that, will he tell us why he is denying specific information about which individuals will be taxed under the provisions of the budget brought down by the Minister of Finance the other day? Will he explain that to the people and to the Parliament of Canada?


Bill Rompkey: Madam Speaker, what I was attempting to do was to indicate an approach and to use examples in line with the question which had been asked about what approach would be taken. The Department of National Revenue is an interpretive department which interprets the Income Tax Act. There is a range of hundreds, maybe thousands of benefits across the country, in various amounts and sizes. I do not think it is appropriate to deal with them during question period.


An hon. Member:: Table them.


Bill Rompkey: If hon. members want to they can put specific questions on the Order Paper, but what I am doing is indicating an approach. We are trying to assess how benefits are given all across the country and, indeed, how the law should be applied. I have tried to make it clear, to some degree, and we will be making further clarifications in the days ahead.


Charles Joseph Clark: Madam Speaker, this is incredible. This government has a responsibility to tell the people of Canada not about an approach to tax policy which can literally cripple hundreds of thousands of Canadians across the country. The minister is not here for an approach. He is here for a policy. The Minister of Finance, now absent, announced a policy-

December 15, 1981
Privilege


Madam Speaker:: Order, please. I am sure the right hon. member realizes that he must ask his question.


EFFECT OF UNCERTAINTY
Charles Joseph Clark: Madam Speaker, my question is directed to the Minister of National Revenue. Since he knows that clergymen will not be affected, that servicemen-although perhaps not their dependants-will not be affected, that other individuals will not be affected and that parking lots will not be affected, since he knows that amount of detail, he obviously has a policy and not an approach. Why is he hiding that from the people of Canada? If he has a policy, why will he not put it on paper, table it here in the House of Commons, and end the uncertainty that is causing agony to hundreds of thousands of Canadians?


Bill Rompkey: Madam Speaker, the right hon. gentleman was the Prime Minister of this country. He had some time to read the laws of Canada. If he had read them carefully, he would know that indeed clergymen are exempt under the law as it is written now.


Some hon. Members:: Hear, hear!


Bill Rompkey: My department will be attempting to interpret the law in the best way and the fairest way we can. I have indicated an approach. That is the approach we will be taking. It is an approach that will protect the little people of this country and try to get after the tax dollars which are out there and unpaid.


PRIVILEGE
Madam Speaker:: The hon. member for Yukon (Mr. Nielsen) raised a question of privilege last Friday to the effect that statements made in the House by the minister responsible for housing on one occasion contradicted statements made by him on one or other occasions and that therefore the House had been misled.
As hon. members know, the subject of statements both inside and outside the House concerning alleged budget leaks has been broached in one form or another by members in the recent past. As a result of this, the most recent question of privilege on the subject, the Chair will perhaps be able to dispose of it with some measure of finality.
On this occasion-that is, last Friday-the House was treated to a debate on the subject of contradictory or misleading statements and the relation they may have to privilege. I am indebted to all those hon. members who contributed to the debate.
What has been put before the Chair is a series of statements made in the House by the Minister responsible for housing, and the Chair is asked to find that these statements either constitute a contempt of the House or, alternatively, that a prima facie case of privilege exists.
The hon. member for Yukon refers to the different statements made in the House by the minister in reply to questions and says that the House clearly has been misled.
It is, of course, correct to say that to mislead the House deliberately constitutes a contempt of the House. Before the House is seized of such a matter so that it can take action, however, there must be an admission or a finding to that effect before the House.
Hon. members will appreciate, however, that the minister responsible for housing at no time admitted or said that he had misled the House, either deliberately or unintentionally, and the hon. member for Yukon does not allege this either. The United Kingdom precedent cited by the hon. member for Yukon was based on the admission by a member of that House that he had deliberately misled the House. There was no debate on that issue in the Profumo matter.
Alternatively, the hon. member for Yukon suggested that the precedent relating to the then hon. member for Northumb-erland-Durham-today it is the other way around; he is now the hon. member for Durham-Northumberland (Mr. Lawrence)-in 1978 is on point here. On that occasion there was before the House the admission of a former senior officer of the government, a retired commissioner of the RCMP, that during his tenure letters for the signature of the then Solicitor General were not always drafted "on precise statements of fact". This was "privilege" because on its face, or prima facie, the facts disclosed what amounted to a deliberate attempt to obstruct the hon. member in his parliamentary work.
In the case before us, however, while the hon. member for Yukon suggested to the Chair that the various statements of the minister responsible for housing amount to an admission that earlier statements were false, or that he was misled by his officials, causing him to mislead the House, the hon. member does not suggest that officials deliberately misled the minister or that the minister deliberately misled the House. For that matter, the hon. member could only make such an allegation in a charge.
It does not amount to contempt for a member to mislead the House inadvertently, and this does happen from time to time. Furthermore, it is not unparliamentary to suggest that an hon. member has misled the House. In such a case the member may feel obliged to apologize to the House and to its members where he may have unintentionally misled the House. This is an accepted procedure where a member has made a mistake and has had his attention directed to it by another member, or where his attention has not been drawn to a mistake but the member nevertheless felt that he should advise the House.
But if one member wants to bring the conduct of another member into discussion in the House and refer it to the committee, whether or not that conduct amounts to contempt
December 15, 1981

of the House, he must accuse the other member of a serious charge, and to say that a member misled the House does not constitute a serious charge.
On the other hand, if a member admits to the House that he lied to the House or otherwise deliberately misled the House, that could be made the subject of a motion for contempt or of a reference to the committee. But such is not the case here, and I therefore cannot find that a prima facie case exists.
[DOT] * *


PETITIONS
Madam Speaker:: I have the honour to inform the House that the Clerk of the House has laid upon the Table reports of the Clerk of Petitions stating that he has examined the petitions presented by hon. members on Monday, December 14, 1981, and finds that they meet the requirements of the Standing Orders as to form.



ROUTINE PROCEEDINGS


Marcel Prud'homme: Madam Speaker, I have the honour of presenting as the sixth report of the Standing Committee on External Affairs and National Defence, in both official languages, the interim report of the sub-committee on Canada's relations with Latin America and the Caribbean, which has been considered and approved by the Standing Committee on External Affairs and National Defence.
The chairman of the sub-committee, the hon. member for Labelle (Mr. Dupras), has completed his preliminary study, and the House has given us until April 30 of next year to present the final report.
[.Editor's Note: For text of above report see today's Votes and Proceedings.]


McDOUGALL ROYAL COMMISSION
Hon. Yvon Pinard (President of the Privy Council):: Madam Speaker, pursuant to Standing Order 41(2), I wish to table copies, in both official languages, of the report of the
Petitions
McDougall Royal Commission on Conditions of Foreign Service.


HAZARDOUS SUBSTANCES
André Ouellet: Madam Speaker, pursuant to Standing Order 41(2),
1 have the honour of tabling, in both official languages, the report on the national testing survey to the Board of Review by the UFFI Information and Co-ordination Centre.


PETITIONS
Mr. Bob Wenman (Fraser Valley West):: Madam Speaker, I have the duty and responsibility to present a petition on behalf of 114 citizens. The nature of this petition is to support my efforts in this House of Commons to protest the limitation on the right of a private member to present common grievances of his constituents by way of a public petition.
The purpose of this petition is to effect changes to current parliamentary procedure respecting petitions so that a Member of Parliament may read the content of a petition upon presentation to the House of Commons.
These petitioners hope that since this may constitute a matter of present personal grievance as delineated by Your Honour's ruling of November 9, 1981, Your Honour shall use the discretionary powers vested in your office to allow the matter of this petition to be read and either brought into immediate discussion or referred to a committee so that some remedy may be found for this complaint respecting direct access of constituents to the House of Commons and the Parliament of Canada.


Bob Rae: Madam Speaker, I would like to present to the House a petition signed by 1,083 women and men from across Canada with regard to the provision of a charter of fundamental human rights and freedoms. While the House has already spoken on this issue, I think it is an important principle that deserves to be on the record of the House. I would like to present this petition to the House at this time.

December 15, 1981
Motions


Mr. Jim Schroder (Guelph):: Madam Speaker, I have the honour and duty to present a petition on behalf of a number of my constituents. The purpose of this petition, signed by 260 citizens of the riding of Guelph, is to ask that the government give consideration to providing assistance to those in Guelph who have suffered because of urea formaldehyde foam insulation. Consequently, on behalf of these citizens I am pleased to lay upon the Table this petition. The petitioners hope, Madam Speaker, that in your examination of their petition you will find it in order and that an equitable solution will be found to their problem.


PRIVILEGE
Mr. Jack Shields (Athabasca):: Madam Speaker, I have a question of privilege I would like to present for your direction. During the time in question period when you introduced members of the Armed Forces to this House, all members stood. There was an action by one member of the House which I feel reflects very directly on all members of this House.


Madam Speaker:: Order. I am sorry, but that does not constitute a question of privilege.


TRANSPORT
Mr. David Smith (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, I have a motion which is an order of reference. I believe it is agreeable to all sides of the House. I move:
That the Standing Committee on Transport be empowered to study and report to the House no later than March 5, 1982 its recommendations with respect to the document entitled "Proposed Domestic Air Carrier Policy (Unit Toll Services), August 1981"; and
That during the consideration of the aforementioned study, the committee be empowered to retain such professional, clerical and stenographic help as may be required.


Erik Nielsen: Madam Speaker, I have had discussions with the spokeman for the opposition on that matter, the hon. member for Annapolis Valley-Hants (Mr. Nowlan), and consequently consent to the order.


Madam Speaker:: Does the House give its unanimous consent to this motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
David P. Smith: Madam Speaker, the following questions will be answered today: Nos. 2,289, 2,663, 3,312 and 3,313.


Mr. Wright: 1.	How many directors are on the board of Petro-Canada and, in each case, what is his/her name, occupation and remuneration?
2.	Are all director positions filled and, if not, how many are vacant?
3.	Are directors appointed on a regional basis and, if so, what regions are represented at present?
4.	Are all directors (a) residents of Canada (b) Canadian citizens?
5.	Were any directors elected to public office and, if so (a) what was his/her name (b) to which public office was he/she elected (c) which political party did he/she represent (d) which constituency did he/she represent (e) for how many years did he/she serve?
6.	Prior to the appointment to Petro-Canada, did any director hold a position in a department, Crown corporation or agency and, if so (a) what was his/her name (b) in which department, Crown corporation or agency?
7.	Do any act as directors on the boards of other public or private corporations and, if so (a) what is his/her name (b) for which corporations?


Marc Lalonde: Petro-Canada reports as follows:
1. Fifteen.	
Name	Occupation
Wilbert H. Hopper	Chairman and chief executive officer, Petro-Canada.
Andrew Janisch	President and chief operating officer, Petro-Canada.
James Thompson Black	President and chief executive officer. The Molson Companies Ltd.
Jean Claude Hebert	Deputy chairman, Petro-Canada.
lone Christensen	Business executive.
Marshall A. Cohen	Deputy minister. Department of Energy, Mines & Resources.
Jerahmiel Grafstein	Lawyer, Mindon, Grass, Grafstein and Greenstein, Barristers and Solicitors.
Gordon H. Lennard	President, G.H. Lennard Ltd.
David McD. Mann	Lawyer, Cox, Downie, Nunn & Goodfellow, Barristers and Solicitors.
Harrison McCain	Chairman of the Board, McCain Foods Limited.
Thomas K. Shoyama	Professor and Company Director.
lan A. Stewart	Deputy minister, Department of Finance.
December 15, 1981

Name
Occupation
Marshall A. Cohen
Paul Tellier
Richard Cashin
J. Robert Ouimet
Deputy minister.
Department of Indian and Northern Affairs.
President,	Thomas K. Shoyama
Newfoundland Fishermen,
Food and Allied Workers.
President and chief executive officer,
J. Rene Ouimet of Montreal.
Ian A. Stewart
Remuneration
Directors are paid according to Petro-Canada's bylaws, section 7, which states:
"7. Remuneration: Each director, other than a director who is employed in the Public Service or a director who is an officer of the corporation, shall receive the sum of $500 for each meeting of the board or any committee of the board attended by such director and for each eight hours spent travelling to and from such meeting. A director, when absent from his ordinary place of residence, shall be paid reasonable travelling and living expenses incurred by him while travelling to, attending or returning from any meeting of the board, a committee, any other meeting or other business activity in relation to the affairs of the corporation. The directors may by resolution, award special remuneration to any director of the corporation other than a director who is employed in the Public Service or a director who is a full-time officer of the corporation undertaking any work or service on behalf on the corporation beyond that ordinarily required of a director."
2.	Yes.
3.	All directors are appointed by the governor-in-council and a variety of factors are taken into consideration in the appointment of directors. The regional representation of the directors is as follows:
Paul Tellier
7. Yes.
(a)
Wilbert H. Hopper
Andrew Janish
James Thompson Black
Alberta	3	(including two officers of Petro-Canada)
British Columbia	1	
New Brunswick	1	
Newfoundland	1	
Nova Scotia	1	
Ontario	5	(including three deputy ministers)
Quebec	2	
Yukon	1	
Jean Claude Hebert
lone Christensen Marshall A. Cohen
Jerahmiel Grafstein
4.	(a) and (b) Yes.
5.	Yes. (a) Richard Cashin, (b) Member of Parliament, (c)
Liberal, (d) St. John's West, (e) 1962-68.
6.	Yes.
(a)
(b)
Gordon H. Lennard
Wilbert H. Hopper
National Energy Board Department of Energy, Mines and Resources
Order Paper Questions
Department of Finance Department of Energy, Mines and Resources Department of Industry, Trade and Commerce Central Mortgage and Housing Corporation Economic Council of Canada
Department of Finance Farm Credit Corporation Department of Energy, Mines and Resources
Bank of Canada Treasury Board Department of Energy, Mines and Resources Privy Council Office Department of Energy, Mines and Resources Privy Council Office Ministry of State for Urban Affairs Public Service Commission Department of Fisheries and Environment
(b)
Petro-Canada Panarctic Oils Ltd.
Westcoast Transmission Company Limited Syncrude
Canada China Trade Council Polar Gas Project Petro-Canada Panarctic Oils Ltd.
Westcoast Transmission
Company Limited
Viatec Resource Systems, Inc.
The Molson Companies Ltd. Mutual Life of Canada Canron
Petro-Canada Dominion Textiles Alliance Mutual Insurance Carine-Bankcorp-Inc.
Eastern Provincial Airways
Arctic Institute of
North America
Atomic Energy of
Canada Limited
Eldorado Nuclear Limited
Red Leaf Communications Ltd.
Calendar Magazine Ltd.
(and affiliated companies) Channel 79 Ltd.
(and affiliated companies)
CUC Limited (and affiliated companies) Multilingual Television (and affiliated companies)
G.H. Lennard Ltd.
Dominion Textile Inc.
The Resource Group Ltd.
Peter Bawden Drilling Ltd.
Gold Circle Insurance Company

December 15, 1981
Order Paper Questions
(a)	(b)
David McD. Mann	Impact Publishing Ltd. Andres Wine Atlantic Trust Co.
Harrison McCain	McCain Foods Limited Bank of Nova Scotia
Thomas K. Shoyama	Petro-Canada Hawker Siddeley Canada Inc. Bank of Tokyo Canada
Ian A. Stewart	Atomic Energy of Canada Limited Bank of Canada Canada Development Corporation Export Development Corporation
Paul Tellier	Northern Canada Power Commission
Richard Cashin	Newfoundland Fishermen, Food and Allied Workers North South Institute Canadian Saltfish Corporation Export Trade Development Board Institute of Public Affairs Institute for Research on Public Policy
J. Robert Ouimet	J. Rene Ouimet of Montreal Zellers National Bank of Canada Canadian Food Processors Association


Mr. Cossitt: 1.	With reference to the answer to question No. 2,305 which stated in part that whether or not Mr. Mark Starowicz of the CBC ever received security clearance was "not applicable", what are all the reasons that it is "not applicable"?
2.	Was Mr. Starowicz given any form of security clearance before or after his publicized association with a former Russian journalist in the Parliamentary Press Gallery and, if so, what are all the details?


Mr. Jack Masters (Parliamentary Secretary to Minister of Communications):: I am informed by the Canadian Broadcasting Corporation as follows: 1 and 2. The reply to part 1(c) of question No. 2,305 referred to the fact that the CBC has not conducted a security check on Mark Starowicz.


Mr. Cossitt: Did the Minister of Energy, Mines and Resources recently state "We have a little bit of a tendency in Canada just to run scared the moment some official says "Boo" in the United States" and, if so (a) has this happened and on what occasions (b) does the government plan to take steps to correct this situation and, if so, what are the steps?


Marc Lalonde: See Beauchesne's Rules and Forms of the House
of Commons of Canada, Citation 359-fifth edition, paragraph (10), and Citation 171-fourth edition, paragraphs (e) and (nn).


Mr. Cossitt: Did the Minister of Energy, Mines and Resources recently state "We should not take to the woods every time somebody coughs in Washington" and, if so (a) has this happened and on what occasions (b) does the government plan to take steps to correct this situation and, if so, what are the steps?


Marc Lalonde: See Beauchesne's Rules and Forms of the House of Commons of Canada, Citation 359-fifth edition, paragraph (10), and Citation 171-fourth edition, paragraphs (e) and (nn).


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


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


Charles Lapointe: that Bill C-84, an act to amend the Small Businesses Loans Act (No. 2), be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
He said: Madam Speaker, I have the honour of tabling in the House Bill C-48, an act to amend the Small Businesses Loans Act. I am sure that the House will consider this bill as a piece of routine legislation. It is merely a bill to amend an act that has received the general approval of parliament several times before. Mr. Speaker, the Small Businesses Loans Act, as hon. members will recall, was amended in June 1980. At that time, the amendments we proposed were aimed at achieving three things. First, when the amendments were approved in June 1980, we increased the maximum individual loan from $75,000 to $100,000. Second, we raised the maximum of all loans that may be guaranteed during that period to $850 million, and third, we extended the life of the Small Businesses Loans Act by two years, from July 1, 1980, to June 30, 1982.
December 15, 1981

The amendment I am proposing today as part of Bill C-84 merely raises the present ceiling of $850 million by $650 million, so that the new lending ceiling for the two-year period will be $1.5 billion. I am aware that it is not customary to amend the act twice in so short a time. However, the reason for this amendment should be sought in the enormous popularity of this program and increased demand on the part of small businesses. This situation has developed because the program has expanded far more rapidly than was expected at the time the last amendment was made in June, 1980.
To demonstrate the program's rapid expansion, I shall, if I may, quote a few statistics comparing the program's activities over consecutive one-year periods. Between July 1, 1979, and July 30, 1980, 12,717 loans were approved, representing a total of $308,364,372. The following year, from July 1, 1980, to June 30, 1981, 18,620 loans were granted, totalling $505,642,180. Mr. Speaker, these figures mean that in one year alone, the number of loans increased by 46.4 per cent, and the amount or value of these loans by 64 per cent. These increases, percentage-wise and over a single year, prove that the program is gaining increasing acceptance among Canada's businessmen and women and among financial institutions. However, this rate of growth has made it difficult to make accurate projections of loan demand.
As I said before, over $500 million were loaned during the first year of the present two-year period, which represents an increase of 64 per cent over the last year of the previous loan period. If this rate of growth is sustained, over $800 million will be loaned during the second year of the present two-year period, that is, between July 1, 1981, and June 30, 1982. For the entire two-year period, the total amount will then be $500 million plus $800 million, that is, $1.3 billion. At the present time, as I just said, the ceiling is set at $850 million. Consequently, if the present trend continues, the ceiling will be exceeded by about $450 million, and even if the present growth rate should stabilize, the initial ceiling of $850 million would not be adequate.
Therefore, Mr. Speaker, in the bill now before the House, I am proposing to raise by $650 million the ceiling on loans granted under the Small Businesses Loans Act, thereby raising the total ceiling to $1.5 billion. This will provide, if the present trend continues,, a safety margin of $200 million, should the loans granted under this act increase even faster than is now the case. The increase will make it possible to continue the program without interruption until its expiry date in June 1982, when the act will again be considered by Parliament for renewal or amending purposes. I must emphasize that an increase in the ceiling does not represent an increase of $1.5 billion in liabilities, but will simply allow the program to be maintained without interruption until June 30, 1982.
Mr. Speaker, in examining this bill, opposition members will note that, while increasing the maximum of guaranteed loans, it does not propose any amendment to the policy outlined in
Small Businesses Loans Act (No. 2) the Small Businesses Loans Act. Hon. members are aware that the government will shortly introduce policy proposals resulting from the comprehensive review of its financial assistance programs for small businesses, which review is now in its last stages. A great number of factors affecting the future of this program will be considered, and in the context of this consultation and this study, we intend to examine carefully all the suggestions made by small businesses, as well, of course, as by members of this House.
Opposition members know that as a result of the changes in the Small Business Development Bond program contained in the new budget only small business bonds experiencing financial difficulties will benefit from it. I would like to point out that, while there is no direct link between the Small Businesses Loans Act and the Small Business Development Bond program, the provisions of former can be used to guarantee the bonds issued under the Small Business Development Bond program as long as the terms meet the requirements of the act and both business and project are eligible. The act could therefore encourage lenders to grant bonds at a lower interest rate to help small businesses in financial difficulties, especially when sufficient loan guarantees are not available otherwise. Moreover, we should not forget that the flexibility and length of terms and the preferential interest rates available to businesses under this legislation already allow these businesses to have access to significant amounts which would not be available to them otherwise.
In the meantime, before we have to deal in the coming months with more comprehensive changes to the small business financing programs as a result of the various ongoing analyses and studies, I would ask hon. members to adopt this bill without undue delay. I am aware that the parliamentary leaders on both sides of the House have agreed to end this debate tomorrow at 6 p.m. at the latest. I want to thank them because the adoption of this bill will indeed enable us to continue the implementation of this guaranteed loans program for small businesses which has so far proven to be extremely popular as evidenced by its rate of growth over the last twelve months. I conclude my remarks by urging all my colleagues to do their utmost to ensure speedy passage of this amendment to the Small Businesses Loans Act.


Mr. Chris Speyer (Cambridge):: Let me state at the outset of my remarks, Mr. Speaker, that the Conservative Party supports the raising of the aggregate amount of loans guaranteed by the government to lending institutions during the two-year period, July 1, 1980, to June 30, 1982, from $850 million to $1.5 billion.
This change is required by the increased volume of lending under the provisions of the legislation. The Small Businesses Loans Act was first established almost 22 years ago by a Conservative government of the day. Its purpose was to assist

December 15, 1981
Small Businesses Loans Act (No. 2)
small enterprises in their financing of capital improvements. The legislation was aimed at furthering the efficiency and the competitive strength of small-business enterprises and, in doing so, to ensure that small businessmen and women would continue to share in Canada's economic progress.
Since its inception, the Small Businesses Loans Act has undergone a number of significant changes. For example, the categories of eligibility for potential borrowers has been broadened; another example is that the amount permitted by any borrower has been raised; and finally, the interest rate formula was amended permitting a lender to charge a maximum of bank prime, plus 1 per cent.
Today's amendment increasing the amount of government guarantee is important and necessary. It will not be opposed by the Conservative Party. However, lest the small business entrepreneur in Canada and all Canadians forget-and we on this side covenant not to allow the people of Canada to forget-the present government has demonstrated by its record that it is the mortal enemy of Canadian small business entrepreneurs.
The record of the government is one of callous neglect and unparalleled insensitivity to a sector of our economy which employs more than 60 per cent of our workers. There is nothing that reflects such insensitivity and naivete more than the proposals contained in the budget of the Minister of Finance (Mr. MacEachen) as it impacts on small business entrepreneurs. I will have considerably more to say in a few minutes with regard to this matter.
Before the budget was brought down on November 12, the economic hardship which tens of thousands of Canadians had to endure this year is difficult for words to exaggerate. Over the past six months, prime rates have reached the extortionary height of 22% per cent, and on budget night interest rates were perched at the lofty level of 17.25 per cent. Each one of us has witnessed from the focus of our local constituency office the tragedy of businesses buckling under the strain of the interest rates, of families renewing their mortgages at rates that they cannot afford and the whole toll of human tragedy that 20 per cent interest rates creates.
On budget night, inflation was running at 12.7 per cent, without the burden of new energy prices having been absorbed into our economy and in the wake of the warning by the Governor of the Bank of Canada in his speech in Calgary where he said that our inflation was a made-in-Canada inflation and that interest rates which savaged small-business men and women would continue unless inflation was brought under control.
We now know that during budget month 790 Canadian businesses went bankrupt, compared to 531 in the same month last year, a staggering increase of 50 per cent, while at the same time there was a 29.4 per cent increase in personal bankruptcies over the same period, primarily due to high interest rates. In the two months prior to the budget, unemployment had soared to 8.3 per cent in each month, dispelling the minister's forlorn hope that economic indications of unemployment were mere statistical aberrations.
It is against this backdrop, this era of recession, this season of concern and doubt, that all Canadians sincerely hoped that the budget of the Minister of Finance would be a blueprint of future economic stability, which we all so earnestly desired. It was on November 12 that the Minister of Finance delivered such a crippling blow to the small business community in Canada. The budget of the Minister of Finance made sweeping retroactive changes to many of Canada's basic tax provisions.
In 1969, when revolutionary tax changes were proposed, Canadians were given an opportunity by way of a white paper to discuss and to react. They were then weighed with respect to the changes that might have been implemented. But there was no white paper in this case; there was no discussion, criticism or input which allowed the business community and Canadians in general to assess the weight of the proposals.
What we have here is a document written by tax officials who are totally insulated from the Canadian business community. They have been misguided and they have made unconscionable changes. They have demonstrated a shocking lack of practical knowledge of the Canadian business community. I believe that the Minister of Finance is now recognizing the garden path that his department officials have led him down.
In the next few minutes, Mr. Speaker, I should like to examine a few of the tax changes and how they affect the small business community in Canada. For small-business men and women in this country, there is no equity in this budget. It is a recipe for pain and suffering.
In a budget replete with disincentives, gross misrepresentations and obstacles to the businessmen and women in Canada, there are few provisions which match, in terms of disappointment, the gutting of the Small Business Development Bond. When the bond concept was first introduced in the House in the Conservative budget of December 1979, its purpose was to give the small business community a real incentive to expand and develop their businesses. The vehicle by which this expansion and development was to be encouraged was a preference in the interest rate to be charged on moneys borrowed. Specifically, the rate could be determined by taking half the prime rate plus the bank's spread, which was normally between 1 per cent and 2 per cent. Thus, if the prime was 18 per cent, as it almost is today at 17.75 per cent, the cost of the bond would be 10 per cent or 11 per cent per year, depending upon the borrower's financial rating at his or her bank. The benefit to be derived from the bond in encouraging expansion and development was to create both cash flow and jobs in this vital sector of our economy. Additionally, it became urgent to save small businesses in a state of financial plight when interest rates soared to record highs, as we witnessed this year.
Was the bond under the old rule successful? It was enormously so. It saved hundreds of companies from bankruptcy by allowing those companies to take advantage of the preferred rate of interest. Equally, the bond was a vital vehicle of development and expansion in an economy where the record
December 15, 1981

setting interest rates of the past year would have otherwise prohibited prudent business planners from carrying out such undertakings. Indeed, the measure of the bond's success was that financial institutions authorized loans totalling $1.8 billion over the last few months of 1980 and the first three quarters of 1981.
Under the budget of the Minister of Finance, the bond has been gutted in two essential ways. First, the bond can only be given in cases of financial hardship and not for the purposes of development and expansion. Second, the interest cost of the bond has been effectively increased by 3 per cent, even to those hardship cases to which it now solely applies, thus stripping it in real terms of any substantial advantage.
Dealing with the second point first, I ask the minister why the government has increased the cost of the bond in circumstances where the lender must be on the brink of financial insolvency or financial disaster in order to qualify. Let me return to the example I gave earlier. With prime at 18 per cent, the new bond rate charged by the banks will be one half of prime, which is 9 per cent, plus 3 per cent, which is the new additional tax cost to the bank passed on to the lender, plus the bank's margin of probably 2 per cent with less secure loans. Thus, the borrower will be paying 14 per cent interest instead of 11 per cent. It is the government which raised the cost of the bond by 3 per cent in spite of the fact that the borrower must be certified to the satisfaction of his bank that he is about to go under.
Second, by eliminating from the criteria of eligibility for the bond the small business person who seeks to expand or develop his business, the Minister of Finance has snuffed out incentive for development in a current economy where the rate of bankruptcies has exploded, where jobs are being lost in the manufacturing and retail sector at a frightening rate, and where the cash flow of companies is being sucked away by the government's insatiable appetites for revenues. With barely two weeks left this year, both the banking community and many businessmen in Canada still have not been able to obtain answers from the Department of Finance on important and complex questions to which the bond proposal in the budget gives rise.
During the course of the past year many accountants and bankers have encouraged businessmen to finalize their business transactions by way of the SBDB in the month of December, after the year's total financial obligations have been incurred. This advice was given on the sound financial basis that there is only one bond available to an applicant and, accordingly, the total year's obligations can only be included in the bond when the year's expenditures have been incurred. With the definitional change in the small business bond from "development" to "bail-out", many of these businesses are no longer eligible for the bond. They have lost a financial instrument which formed the basis of their borrowing capabilities over the entire fiscal year. The rug has been pulled out from under them through no fault of their own.
What is the future of the bond, now that it has been stripped of its vitality? The government estimated in its budget papers
Small Businesses Loans Act (No. 2)
that the new program will cost $20 million per year in forgone tax revenues for each of the next five years. If the bond had not been reduced in definition, the forgone tax revenues would have totalled $150 million per year for the same five-year period. The government has saved $130 million per year through the emasculation of the program which was determined to restore incentive to the small business community. But what has it cost small businessmen? I have spoken to senior sources in the banking industry, and they have estimated that the chartered banks will authorize less than $100 million in small business bonds over fiscal 1982. That is a drop of 95 per cent, from $1.8 billion to $100 million. This program used to be an important financial instrument to small business. It has now been so restricted, as is evidenced in this comparison, that no amount of political doubletalk will return the bond to its previous value.
Another blow given the small business entrepreneur in the budget proposals pertains to the restriction in the deduction of interest expense on tax returns. Interest on money borrowed for investment purposes will be deductible only to the extent of the investment income reported. This restriction is so severe that one must truly wonder whether the Minister of Finance understood the grave implications of this proposal. Consider, for example, an individual who wishes to purchase a 50 per cent interest in a small manufacturing company. If the individual must rely on borrowed funds to purchase his share, he will be denied the current deduction for his interest expense except to the extent that he has declared a dividend in the year.
In this regard I quote from the Coopers & Lybrand report which sums up the effect of the proposal of the Minister of Finance:
He is proposing to disallow certain current expenses, such as interest, where the income from the investment is not immediately receivable or is less than the expenses claimed. Carried to its logical extreme, such a policy would deny a deduction for all business and investment expenses that did not immediately produce income. Investment for future growth and profit would be denied.
That is an incredible implication. There can be no doubt that this policy will discourage people from borrowing money to invest in shares of a small business where profits will be ploughed back into the business and not distributed as dividends. This provision will deter risk takers and have a serious deleterious effect on the economy in general. I certainly hope that the newspaper accounts of the willingness of the Minister of Finance to retreat from this proposal prove to be accurate.
In my view, the main focus of the budget is the massive revenue grab by the federal government increasing its revenues by some 22 per cent in the first year and 43 per cent in the second. Expenditures for 1981-82 are estimated to rise to $76.6 billion from $62.7 billion. Indirect taxes have been increased from $13.3 billion to $20.5 billion, a growth of 54.1 per cent in one year. In this massive revenue grab, small and medium-size businesses will be detrimentally affected by the provision limiting the capital cost allowance deduction in the year any asset is acquired to half the normal rate of write-off currently provided. It will have a huge dollar impact on the

December 15, 1981
Small Businesses Loans Act (No. 2) business sector. The government estimates that tax revenues will be increased over the next three fiscal years by $2 billion.
In his May, 1972 budget, as part of the development of a new industrial policy the then minister of finance, the Hon. John Turner, first created the speedy write-off provision which in the past nine years has greatly assisted the manufacturing and processing sector. This sector of the economy is largely comprised of small and medium-size businesses which employ one out of every five Canadians. The then minister of finance said:
1 propose that the cost of all machinery and equipment purchased after tonight by a taxpayer to be used for the purpose of manufacturing or processing goods for sale or lease in Canada may be written off in two years.
He went on to state that this measure was enacted for the purposes of creating cash flow in the manufacturing sector to create jobs, which at that time was a priority of the Liberal government, and finally to allow industry to retool and consequently avoid obsolescence in the decade ahead.
The MacEachen budget proposal as it affects capital cost allowance will suck out of the private sector an additional $1.1 billion in fiscal 1982-1983 and stunt the industry's ability to enhance cash flow and create jobs for expansion. This proposal is both retrogressive and counterproductive and should immediately be withdrawn.
Another major assault on the small business entrepreneur is the budget proposal ending the opportunity for individuals and corporations to defer tax on instalment sales where a portion of the proceeds is not paid until a future date. In spite of the fact that the proceeds from the sale have not been received by the vendor, the total sale price will attract tax. The change will affect all businesses that sell goods on a time payment plan, such as vendors of farm equipment, machinery, furniture and appliances. Moreover, small businessesmen who wish to sell shares of their corporation to employees with payment being made by instalments over a period of years will now have to look for cash buyers. They will not have the money to pay the tax which will be attracted all in one year. The fact is that purchasers will now have to go to banks to finance a purchase because vendors will not be able to afford to extend personal financing arrangements.
The legacy that our forefathers gave to us is a country with unparalleled opportunity, forged on the anvil of risk-taking, incentive, hardwork and imagination. The small business community, which is the backbone of our economy employing more than 60 per cent of all Canadian workers, can only survive and prosper in a climate where incentive and risk-taking are rewarded.
Regrettably, yesterday's economic incentive has become today's tax loophole. In Toronto, on October 28, the Prime Minister (Mr. Trudeau) set forth the essential standard which would be employed in the budget when he said, and I quote:
What we are against is the rich getting richer by taking from the poor. So we take something from the rich, and give it to the poor, and we try to prevent the strong from exploiting the weak.
Juxtaposing this alleged standard against the marginal tax rate applicable to the rich, we witness just one more example of Liberal hypocrisy. The accounting firm of Peat, Marwick has published, subsequent to the budget, the amount of tax savings of Canadians earning more than $40,000 and less than $150,000. For those earning $40,000, the new tax will be $13,446 as compared to $14,070 under the old rate. This is a saving of $624. For those earning $60,000 there is a saving of $1,215. For those earning $80,000 there is a saving of $1,808. At the $100,000 bracket, the saving becomes $2,989; and for those earning $150,000, a handsome wage indeed, taxes will be reduced by $7,670.
In real terms, for a deputy minister, category three, earning between $80,000 and $93,600, the tax load will be lessened by between $1,800 and $2,500. Supreme court and county court judges, assistant deputy ministers and senior bureaucrats are insulated from the effects of the budget because under normal circumstances, deriving their income from salary, their marginal rate of taxation is reduced.
On the other hand, the small business entrepreneur who employs so many Canadians, who is the risk-taker, who has no security of tenure, who has no pension plan save and except the provisions of retirement he himself undertakes, is gouged and discriminated against by the budget proposals. We witness the proposal that interest on money borrowed for investment purposes will be deductible only to the extent of the investment income reported. We witness that the interest on moneys borrowed by RRSP contributions to provide for one's retirement will not be deductible under any circumstances.
We witness firms wishing to utilize the Small Business Development Bond for reasons of expansion or development no longer meeting the criteria. We witness the budget elimination of the allowance for reserves in respect to instalment sales where a portion of the proceeds would not be paid until a future date. We witness the restriction on capital cost allowance whereby the government will reap an additional $2 billion from the private sector in the next three fiscal years. We witness professionals, whether they be lawyers, engineers or architects, paying tax on work in progress which is not ready for billing. We witness the elimination of income-averaging annuity contracts which will have a profound effect on sellers being less willing to finance the sale of a business or a farm through the use of a mortgage. Now it will be cash on demand.
The cumulative effect of all these provisions betrays any attempt by the Minister of State for Small Businesses and Tourism (Mr. Lapointe) or the Minister of Finance to say that they care about this most important sector of the economy. It further demonstrates what little influence the minister responsible for small business has over his colleague, the Minister of Finance.
I cannot refrain from pointing to an item in a very respectable tax journal, "The Canadian Taxpayer", which is edited by Arthur B. C. Drake, who is widely respected. It points out that, on the one hand, incentive is taken away from the small businessmen and, on the other hand, the mandarins are pros-
December 15, 1981

pering as a result of the budget. I suggest that the article takes a respectful and neutral position. It reads in part as follows:
We would be remiss if we didn't refer to Michael Pitfield, Clerk of the Privy Council office, the top mandarin and intimate of the Prime Minister. When Pitfield was fired by Joe Clark, he rolled more than $100,000 into an RRSP. When he was reinstated in his job, he refused to give the money back, even though there would have been no tax cost.
Pitfield got his protection. And then concurred in closing this loophole. If he had any sense of honour or decency, he would give back the money today. And if he says he doesn't know how, we'll explain how to do it without tax cost, and without charging him fees!
To that I say aye, aye!
So to conclude, Mr. Speaker, I support, as does my party, today's amendment to the Small Businesses Loans Act, Bill C-84. I can only add that any amendment that will assist Canadian small business will be supported by this party, especially in light of the reprehensible budget proposals that have been tabled in the House by the Minister of Finance.
It is ironic and somewhat indicative of the intellectual impoverishment of this present Liberal administration that we have all-party support for an amendment extending legislation born by a Conservative government while at the same time Canada faces a revolution in the business community caused by the proposals in the recent Liberal budget.


Some hon. Members:: Hear, hear!


Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, at the outset I should like to say the New Democratic Party supports Bill C-84, to amend the Small Businesses Loans Act, which would increase the maximum amount of all loans that may be guaranteed during the two-year period ending June 30, 1982, from $850 million to $1.5 billion.
It is unfortunate that the minister and his parliamentary secretary are unable to be in the House. Perhaps if this was the most that I had to say about small business I would also be hiding behind the curtain.


Some hon. Members:: Hear, hear!


Nelson Andrew Riis: I must say that it is not what is before the House that concerns us at this time as much as what is not before the House, those things that are omitted from the bill. The New Democratic Party has just held task force hearings across Canada in the past few weeks, and at the various stops small business organizations, chambers of commerce, boards of trade and individuals appeared to comment on the health of the economy in Canada in general, on the budget specifically and especially the provisions of the budget which directly relate to the small business community.
I can say without any exaggeration that their response was not an enthusiastic one and was not one of endorsement of the government's policies but, rather, was a response of unbelief, a virtual condemnation of the budget provisions which had an influence on the small business community, and certainly a universal condemnation of the high interest rates and monetarist policy being pursued by the government.
Small Businesses Loans Act (No. 2)
I believe that when one looks at the way in which the government,approaches the small business community and at the-kind of signals it sends out to the small business community which would indicate its support or lack of support, the message is very clear indeed. In all fairness, this might not be restricted only to Canada. At the recent eighth annual symposium of small business which was hosted by the Government of Canada, one noted that there were hundreds of representatives and delegates at the symposium; yet when one looked around at the number of small-business men who were represented by their own presence, what was notable, in fact, was their absence. Government officials, bureaucrats, financial representatives and leaders of various organizations were in attendance. However, the actual rank-and-file man in the trench, the small-business man, was not there, probably because he could not afford to travel that distance or to neglect his business affairs for two or three days in order to attend the conference. But for whatever reason, it seemed to me to be another indication that small business is not held in high esteem in this country, and perhaps in other countries, and that small business is not receiving a clear signal from the government that, indeed, "We are there to encourage, nurture and support you".
When one looks at the number of government programs which are in place to assist business per se, one notices that at best, out of 200 programs which can be identified to assist the small business community, only a handful are clearly directed at the small business community. Again, six or seven programs out of 200 provide a very clear signal to the members of the small business community as to how the Government of Canada feels about them.
However, I guess the lowest blow of all is the continuing support of Canada's monetarist policy of high interest rates. The Governor of the Bank of Canada, the Prime Minister (Mr. Trudeau) and the Minister of Finance (Mr. MacEachen) are on record, day after day, as saying, "This is the way to beat inflation." Recognizing that inflation is undoubtedly one of the major problems facing us, I think we must clearly state there are two ways of fighting inflation. Certainly, one way is to reduce the amount of money spent by government. We in this House recognize that hundreds of millions of dollars are frivolously spent by the government which could, in fact, be cut out of the budget, perhaps without anyone noticing it. However, the other way to combat inflation is to increase the productivity of this country, to lift the productivity up so that it balances out with the rate of spending. Perhaps we should approach it on both fronts. Federal government spending should be reduced, but the level of economic productivity in Canada should certainly be improved.
Is there anyone in this House who, for a moment, would begin to suggest that the present high interest rates are increasing the productivity in our country? It is very clear that we are into a very serious recession bordering on a depression. I feel very strongly that if there is one thing which is not occurring in our country today, it is an increasing level of productivity.

December 15, 1981
Small Businesses Loans Act (No. 2)
The one million people who find themselves among the ranks of the unemployed are certainly not assisting the small business community these days. Their spending powers, of course, are severely hampered when they find themselves among the ranks of the unemployed. Inflation, which we are fighting, erodes the purchasing power of virtually all Canadians, with a direct spin-off to the small business entrepreneur. However, as the hon. member for Cambridge (Mr. Speyer) so accurately stated, there exists in the country today, like perhaps never before, an atmosphere of uncertainty, of hopelessness, of doubt, of gloom and doom and of despair. There is certainly good reason for that atmosphere to be existing today.
On November 12, the business communities of Canada, both large and small, were awaiting some direction by the government, awaiting the opportunity to get on with the job and to start building and developing our country. Friday the thirteenth was indeed a black day. On November 13, businessmen across the country gathered in groups, in hordes, to listen to what the budget provided for them. Today we keep hearing the same representations by delegations from various groups, by individual Members of Parliament, and by newspaper ads very clearly spelling out irrefutable evidence that the provisions being introduced in this budget will have a very detrimental effect on the business community of this country. If there was one thing the small business community did not need on November 12, it was a further hammering; but that is what it received on November 13, compliments of the Government of Canada. Therefore, if uncertainty, doubt and hopelessness existed on and before November 12, one can bet that it is certainly accelerating today.
We read that during the month of the budget, the number of bankruptcies in our country was significantly higher. While opposition members often raise the spectre of bankruptcies and quote all kinds of statistics, the most recent one with regard to bankruptcies for the month of November is certainly worth repeating. Bankruptcies for that month were up 48.7 per cent over November of 1980. Bankruptcies in November of 1980 were a serious problem, but I think it is a clear reflection of the difficult times we face that they are now up by 48.7 per cent. That is, of course, only the tip of the iceberg when one considers that those going into receivership without declaring bankruptcy are not reflected in those figures, and that, almost by definition, they comprise a significantly larger number than the 48.7 per cent involved in bankruptcy proceedings.
We can rest assured that the health of the small business community is indeed very poor today. We can also say that this is simply the tip of the iceberg because those people who are simply closing up their shops or small manufacturing plants and walking away because they can no longer make a profit are not reflected, either.
Again, it is very clear that a vital and crucial sector of our economy is under extreme pressure these days. While one could make the same claim for large business, for the international business firms, surely the pressure is more on the small entrepreneur. The large companies can weather out the storm for a much longer period of time. Can hon. members not see,
looking into the future, that a larger corporation can be maintained during these very difficult times while a small business cannot?
Six months from now, as the Canadian Federation of Independent Business indicates, the viability of the small business community will be severely challenged. While we can hang on for a number of months, since we now see that bankruptcy rates are up 48 per cent for the month of November, we can certainly expect that figure to rise during December, January and February when we get into traditionally troubled periods of the year.


Mr. Epp:: Well, you have your legacy.


Nelson Andrew Riis: As the hon. member for Cambridge articulated in some detail, the Small Business Development Bond was one of the few pieces of legislation-and I emphasize "few"-that the federal government held up to the small business community and said, "Here, we are helping you expand; we are helping you become more productive." We on this side admit that such was the case and that the Small Business Development Bond was structured in such a way as to encourage people to expand their operations, to build new plants, to provide opportunities for Canadian manufacturers, to provide new equipment; but the essence of that legislation was expansionary, was growth and development. We would agree that that is the kind of thing we need today in order to become a more competitive country on international markets and to increase our level of productivity.
Therefore, what does the government do during this very crucial period? Do they expand the Small Business Development Bond as all members of the House have been requesting for months? Virtually, the answer is no. They gut the Small Business Development Bond. I know the minister will argue the point that the government did expand the Small Business Development Bond to include unincorporated businesses and farmers. But the government changed the terms of reference so that no longer was it an expansionary bill. No longer was it legislation to encourage expansion, development and productivity. The legislation was in place to help those businesses and farmers who were going down the drain survive. While we support legislation which will help businesses during these difficult times, we are immensely disappointed that the legislation was gutted and that it took away the encouragement and support of those entrepreneurs wishing to expand and create jobs during these very difficult times.
However, we await new legislation in the future. We remain optimistic that the government will gather its wits and realize its errors. We hope that the government will realize that by supporting the small business community, progressive expansionary legislation must be brought in.
Some time ago the minister commented on the small business financing review. I remember vividly 19 months ago when the minister stood up in the House and said that the government was interested in the small business community and in
December 15, 1981

the financial problems it has. He said the government was going to do something about it and would do it quickly. He said that the government would review the problems faced by the small entrepreneur in this country and that it was beginning then with a new active and vigorous policy. He said that the lending institutions, the universities, the public and the private sector would be included. He said that the government would carry out a review and bring in some recommendations.
We supported that move. Both the New Democratic Party and the Conservatives supported that position. However, that was 19 months ago. We are patient folks on this side of the House but recent inquiries indicate that it is likely a number of months off yet before the review will see the light of day, let alone the legislation that will see some of its recommendations put into place, and what we are having to tell the small business community is that it must be patient. Perhaps next spring, next summer or next fall the review will be brought forward with recommendations, and perhaps by next Christmas or shortly thereafter we will have legislation in place to assist financially. That is what we are going to have to tell the small business community. But I can tell you, Mr. Speaker, that the small business community in this country cannot wait that long.


An hon. Member:: Why can we not have it this Christmas?


Nelson Andrew Riis: It is all right for us to be patient, but when you are out there having to meet a payroll, trying to keep your stock at a suitable size in order to provide adequate service to customers, you cannot wait another six months, nine months or another year. I say that 19 months and still holding is too long.
The kind of problem that was advanced by small business groups from across the country was straightforward. Our task force heard that they would not be assisted greatly by the Small Businesses Loans Act. Although this act has been successful, being particularly successful in British Columbia because that province has taken most advantage of this legislation on a per capita basis, it will not help many of the small businesses that are experiencing difficulty today because loans are not available for working capital. Nor is there anything available in it to keep inventories at levels which can satisfactorily serve customers. If small businesses cannot keep up inventories, their level of service begins to decline. People will go shopping in small stores only to find that the goods are no longer there, that they are on order. The small store then has to get in touch with the manufacturing plant, and the orders have to be processed. Goods that would normally be picked up off the shelves might be weeks or months away. What do customers do in those circumstances? Do they remain patient and support the small entrepreneur? Or do they go next door to a large chain or a multinational which is able to offer the same goods because its financing arrangements enable it to maintain inventories at a much higher level than the small entrepreneur can? This state of affairs is not puzzling. People will obviously go where they can obtain service. Once again we are sounding the death knell loud and clear for the small business community.
Small Businesses Loans Act (No. 2)
I want to say in closing that the hon. member for Cambridge outlined in detail the specific problems which the small business community faces because of the budget. I think most Members of Parliament have been made aware by many groups and individuals what those difficulties are, and I do not feel that I would contribute much this afternoon by articulating them once again. However, I want to say that while we are pleased to support this piece of legislation, it is a hollow piece of legislation. It is one small step toward supporting the small business community at a time when a race is required. While we enthusiastically support the various motions that have come up today regarding this particular bill, we hope the minister has heard our concerns and will do what he can to take action quickly so that we do not have to wait another 19 months before we have to stand up in the House again and ask when we will see some action.


Mr. Ralph Ferguson (Parliamentary Secretary to Minister of State (Small Businesses and Tourism)):: Mr. Speaker, I wish to express my appreciation to the previous speakers for their support of this piece of legislation which will give us the authority to increase the total amount of loan guarantees available under the Small Businesses Loans Act.
The minister has just outlined the very straightforward nature of the bill. For my part I simply want to draw the attention of hon. members to the purposes of the Small Businesses Loans Act and to its importance and widespread acceptance in the business community. This fact is verified by the need for this amendment before the House today.
The Small Businesses Loans Act is one of several measures implemented by this government in support of the Canadian small business sector. This sector plays an important part of the life of our country's economy. A recent publication of the Federal Business Development Bank had in it the following words:
More than 90 per cent of Canadian businesses are considered small businesses. They employ 2.5 million people or about 42 per cent of the commercial labour force. Collectively, these businesses account for 25 per cent of all business sales and for a quarter of the Gross National Product.
Yes, Mr. Speaker, even though the General Motors, the IBMs and the Imperial Oils of the world grab most of the attention, it is the little guys and the small businesses that keep the economy on its financial feet.
The Small Businesses Loans Act originally came into force on January 19, 1961. It was designed to make it easier for small business in Canada to obtain current financing. It encourages lenders in the private sector to make term loans available to small businesses by guaranteeing the lender against loss. This legislation is almost identical to the Farm Improvement Loans Act which is available to farmers in this country. The combined totals of those guarantees at the present time are something over $1 billion.
Any small business in Canada operating for gain or profit in the areas of manufacturing, wholesale trade, retail trade, service, communications, construction or transportation, is eligible to borrow, provided that the gross revenue of the applicant is less than $1.5 million in the year of the application.

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Small Businesses Loans Act (No. 2)
Loans are made directly between the borrower and the lender without any approval of the government. Loans must be secured and may be payable over a period of up to 10 years. The maximum of all loans outstanding to any one borrower at any one time cannot exceed $100,000. The maximum interest charged on these loans is the bank prime rate, plus 1 per cent.
It is of little surprise, then, that the Small Business Loans Act has been met with approval and success. Between January, 1961 and June, 1981, more than 91,000 applications totalling $1.7 billion have been made. These are loans which have been guaranteed by the Canadian government and which have been used to purchase fixed and movable equipment, new premises, to modernize existing facilities or purchase land for the operation of a business. Without the Small Businesses Loans Act, many of these ventures would not have existed. Either the small businesses involved would not have been able to secure loan financing, or they would have been discouraged from entering into such ventures.
The bill which the Secretary of State for Small Businesses and Tourism (Mr. Lapointe) has just introduced into the House simply allows the total amount of small business loan guarantees to be increased from $850 million to $1.5 billion. This enables the benefits which small business ventures bring to the Canadian economy to be promoted and enhanced.
In the first six months of this year, January, 1981 to June, 1981, 8,894 loans totalling $253 million were registered under the Small Businesses Loans Act. This compares to 7,215 loans, totalling $170 million, during the same period in 1980. This increase of 23.3 per cent in numbers and 48.6 per cent in dollars shows the increased demand of Canadian small businesses to borrow money under the Small Businesses Loans Act. This is a very important program for small businesses which has gained widespread support from both small businesses and financial institutions.
As my hon. friend the Minister of State for Small Businesses and Tourism has pointed out, the demand for increased lending proves the importance of this program and the necessity for the introduction of this bill. The legislation simply raises the lending ceiling under the act so it can meet the demand of small business borrowers. I join with the minister in urging speedy passage of the bill and I will therefore keep my remarks brief. The number of speakers on this side of the House will be limited and we would like the co-operation of the House in passing this measure.


Mr. Bill Kempling (Burlington):: Mr. Speaker, as the hon. member for Cambridge (Mr. Speyer) has said, we support Bill C-84 and its passage through all stages. I would like to congratulate the hon. member for a very excellent analysis of the problems facing the small business community today. His speech was both timely and very much to the point.
Having said that, Mr. Speaker, I must comment on why it is necessary to bring this bill forward. What has happened to the private sector money sources that were the traditional wells of
seed money for the small business sector? Why must we again go the route of guaranteeing loans to chartered banks? One would think that with their massive profits and increases in profits since the dramatic rise in interest rates in the past 18 months, the chartered banks themselves would be more venturesome than they are. However, the real question is, where has the venture capital gone? Some has gone to other countries which are perceived to be more stable or favourable to financial ventures or which have less red tape and regulation. Some of that venture capital found its way into Canada Savings Bonds when the government offered them at 19.75 per cent interest. A large source of venture capital dried up when capital gains tax was introduced. We have reached the sad and sorry position of having the government again act as the guarantor of loans put forward by the chartered banks because those persons desiring loans are not considered credit-worthy to the extent that they can have the loans on their own signature.
Under the terms of the loans, these people must first satisfy the chartered bank that the business in which they will invest the money is viable and has a chance of survival. Only then will the bank proceed and become party to the application for a guaranteed loan backed by the government. It is a form of double insurance which is guaranteed by the taxpayers of Canada through their government.
The government has forced the small-business man, farmer and fisherman into this position because its tax laws, attitude and short-sighted policy over a period of years have eroded sources of venture capital and inhibited the ability of the average person to accumulate wealth. The all-powerful government has the small business community in a position to squeeze it dry and bring it to its knees.
The budget of November 12 is a good example. The provision in that budget of non-deductibility of interest from tax payable for money borrowed to loan or invest in a small business was a cruel and senseless move. Many small businesses faced with bank rates reaching 25 per cent sought additional investment in their company in order to reduce their bank loans. In some instances, the original investors borrowed money to achieve this end or they may have invited employees to buy into the company and counselled them to borrow the funds to do so on the understanding that the interest expense would be a deductible expense from their income tax. They then heard the sad news when the budget was brought in.
I wonder how many people in the Department of Finance really know how a business operates. I do not mean how it operates academically, because I know that the bureaucratic mind sees everything in case studies. However, do they have any concept of the amount of creative thought, the hours of work which goes into planning, the sacrifices which must be made and the risks which must be taken to get a small business operating, and operating profitably? I can assure hon. members that it is as creative as any work of art, any novel, play, painting or sculpture. The venture is undertaken with all the intensity of the most eccentric artist. You will find most
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small-business men work double the hours of the average employee, perhaps 80 or 90 hours per week, and this is normal.
One may ask, why do they work these hours and struggle and fight to survive against their larger economic competitors? Aside from the personal satisfaction of seeing your ideas translated into dollars, which gives you a measure of economic independence, you are utilizing a variety of talents. Small-business men must be managers, financiers, salesmen, planners, export managers, designers, inventors, production planners and so on. In short, they must be all things to all people. They seek advice from a variety of sources and apply it directly in their operations where results become evident in a short period of time.
Now, if you have been weaned and raised on government grants and handouts, you might think there is nothing wrong with your loan being guaranteed by the government. But there are still people who are active in our economy who believe fervently in what is loosely called the free enterprise system. They have sold assets for cash to get started in business so that they can subsequently convert it into something they can sell at a profit. You cash your insurance, mortgage your house, cash bonds, borrow from the bank, work without a salary so you can pay your accounts and employees, all in the hope that you will turn a profit out of which you can pay yourself a salary and make a return on your investment. I have experienced this myself.
There was a time before capital gains taxes and massive personal and business taxes when a person could accumulate assets that would yield a reasonable return which would be reinvested to feed economic growth. However, oppressive regulations and controls have dulled the spirit of those who would venture, to the point that many are seeking havens in other jurisdictions or have placed their liquid assets in other nonproductive accounts to wait until conditions change. If there is no change, many of those persons normally active in our economy will move their assets to another jurisdiction and, believe me, Canada will be the loser.
We have as a background the sorry history of the record of the government in small business. The government finally yielded and put in place a minister of state for small business. When we look behind the title, we see that this government set up the small business ministry in 1976 to placate an increasing number of critics who realized that the small business community played a major role in the economy and needed a spokesman at the cabinet table. I have studied the ministry quite closely, and I firmly believe-and I do not want this to be taken as a partisan comment-that it was not until 1979 when my colleague, the hon. member for Capilano (Mr. Huntington), was appointed minister of state that the ministry gathered any momentum or muscle. When he occupied that portfolio, he found that previous ministers operated from a shell. That shell consisted of a minister, an executive assistant, a speech writer and a few secretaries. There was no departmental staff and no clear direction. In fact, the minister's main
Small Businesses Loans Act (No. 2)
duties seemed to be to make speeches, to react to small business organizations and to represent the Minister of Industry, Trade and Commerce at functions he could not attend. Not until 1979 did we begin to see anything like the strong voice needed and the plans and direction which would encourage this vital sector of our economy.
While we support Bill C-84 which will increase the amount that may be guaranteed by the government for the two-year period ending June, 1982, from $850 million to $1.5 billion, what we should be doing is placing before the House a series of measures which would encourage increased venture investment into the small business sector. We must tap that huge source of capital that could regenerate our economy. In the last ten years, 98 per cent of non-government jobs have been created by small business. About 50 per cent of the most significant new industrial products created since World War II were brought to the marketplace by the small business sector.
I have an abiding faith in people. I believe we can regenerate our economy, with the proper atmosphere. What is happening to our economy is that the tremendous engine of the small business community is losing hope. We all know that the whole world lives on hope. We hope for better times. We hope for peace. We hope for freedom from fear and hunger. We hope for our place in the economic sun so that we can realize our dream of economic stability which would allow us to buy homes and raise our families in our style. When we turn off hope, we invite all manner of actions and problems. People fear losing what they have and will fight to preserve it. The government then becomes their adversary.
The present budget is a good example. It has unified the people of Canada in a way the Constitution could not unify them. It has brought them together. It has brought together the people of Canada against the Government of Canada. Today, unless we are a Crown corporation sucking dry the public trough, we have reached the point where we must now apologize for any success in business, as if it were a violation of a moral law. Today it is almost criminal to prosper. Indeed, in today's society a criminal will recieve more protection, and if you are successful in business you are accused of utilizing loopholes to achieve that success. I think that is pretty sick.
The government seems to operate on the "give them a bone" theory. When a particular section of our economy becomes restless, the government tosses it a tax bone, a tariff bone or a series of grants as a bone to keep it quiet for a while. The minister seems to have fallen prey to the socialist view that all revenue produced by the economy belongs to the government and that the government lets you keep that portion it deems necessary for you to survive. The government tosses you bones if you become restless. It forces on you unnecessary regulations which in themselves become inflationary.
For instance, did you know, Mr. Speaker, that General Motors in its North American operations employs more than
20,000	people just to comply with government regulations? I mention this because in Canada we seem to follow this pattern very closely. We tend to move in the regulatory field in lock step with our largest trading partner, but we do not reduce or

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Small Businesses Loans Act (No. 2)
drop regulations as the Americans do, so that in many of our industries there are disincentives which work to the disadvantage of the economy as a whole. Furthermore, if our neighbor to the south adopts a bad regulation, there is a rush to duplicate it here in some areas of our economy. It seems to me that there is always a rush to control and to regulate. After they regulate by placing rules in the Canada Gazette, the bureaucrats then interpret those regulations and, in many cases, they confuse the issue further.
Let me illustrate briefly with one typical example. We have heard it said in this house time and time again that we need more manufacturing in Canada to create more jobs, to reduce our balance of payments, to reduce our reliance on imports, to create export possibilities and so forth. The bureaucracy has developed a whole series of regulations regarding manufacturing. The Department of National Revenue will give you a sales tax licence as a manufacturer of a product. The Department of Industry, Trade and Commerce will give you a remission order to import machinery for the production of goods. The Department of Finance and Statistics Canada will classify you. The Department of Employment and Immigration will develop a training program for employees in your manufacturing program.
But all this can be brought to a halt because the term "manufacturing" cannot or will not be defined by the bureaucracy of government. They, the bureaucracy, can decide on their own, for their own purposes or for political purposes, whether or not you should survive. They can deem that you are not a manufacturer by adding a percentage of Canadian content that you must achieve or by deciding what may or may not be included as Canadian content. They can put you in a position where the rise or fall of the Canadian dollar will cause your Canadian content to fluctuate so that at the lower scale of the dollar you attract a penalty and at the upper scale you are okay; but the reality is that you have no control over the movement of the Canadian dollar.
It is with this sort of nonsense that we are regulating Canadian business, and particularly small business, beyond the statutes and beyond the regulations. Small business is being regulated by unwritten regulations enforced by nameless, faceless people who hold the success or the failure of a business in their hands. The business community is powerless to act against such power. You either comply or they squeeze you dry. You have no appeal except to those who make the regulations, and they do not want to listen.
While I support Bill C-84, 1 do so with these reservations. We should open up the market so that private capital can become involved in the venture capital field, and we should have an economic ombudsman with the power to override bureaucratic decisions and hold the bureaucracy responsible for the economic failures caused by its actions.


Mr. Joe Reid (St. Catharines):: Mr. Speaker, anyone who listened to the words of the Minister of State for Small Businesses and Tourism (Mr. Lapointe) would have been left to wonder why all the fuss out there in the business world and particularly the small business world. Can it be true that our
economy is in recession, and can small businesses really be going bankrupt in the record numbers reported? Could over
140,000	people really be laid off within the last 90 days?
The minister and his parliamentary secretary cite Bill C-84 in conjunction with the November 12 budget as the answer of the government to the problems facing the business world; that leaves us wondering whether we are wrong and they are right. However, the fact is that Bill C-84 is woefully inadequate, and the minister's remarks are an insult to the business community. That community is in serious trouble. The minister's speech carried no comfort for the small businessman who is being driven to the wall by high inventory costs and slumping sales. In conjunction with that, the merchant, who is the largest user of small business loans, can no longer stock his inventory shelves.
What is at issue, and it rather infuriates me, is that in the face of this deepening recession the only answer the government has to offer to the best job-creating segment of our community is this bill. The minister has the gall to say the government cares for small business. Presumably it will still be caring after there are no small businesses left to care about.
No one can argue that the Small Businesses Loans Act has benefited that part of our business community that it was meant to serve over the years since 1961. The act has been amended from time to time and has reasonably kept pace with the inflation and economic circumstances of those times.
My complaint today is that Bill C-84 can easily be demonstrated by a look at the Small Businesses Loans Act itself. The minister talked in terms of its being a very popular act. Let me put it this way. Since its enactment by the Diefenbaker government, over 82,000 loans have been made for a total of $1,250 million. Almost half that total was in the period 1977 to 1980. Indeed, comparing 1979 with the 1980 figures, it will be seen in that year alone that there was an increase of over 52 per cent in the number of loans made and a 53 per cent increase in the number of dollars loaned.
This means that significant pressures are being placed on this program, pressures that are a direct result of the downturn in our economy and the mismanagement of government enterprise. At the same time, it comes as no surprise that the heaviest users of the program are those in the retail and services areas, accounting for almost 65 per cent of all moneys borrowed.
Despite this heavy use and despite our failing economy, it is a credit to the business community that defaults, that is to say, the number of times the government has had to honour the guarantee provisions under those loans, have consistently been low. For example, in 1980 such defaults were less than 1 per cent of the total amount loaned out that year. As a result, the risk factor to government has been slight.
The figures clearly show a trend as an increasing number of businesses are turning to programs such as the Small Businesses Loans Act to obtain loans. Bill C-84 is an acknowledgement of that fact. However, neither Bill C-84 nor the budget
December 15, 1981

respond to the factors that have led up to the pressures we now find building up in the Small Businesses Loans Act.
It is my contention that regardless of Bill C-84, the Small Businesses Loans Act will not be able to meet the demands that will be placed on it beyond the next six months. Small business people applying to that fund for loans will be told that they are out of funds, as is the case with so many assistance programs such as the Farm Improvement Loans Act. I say this as a result of the November 12 budget and in particular its emasculation of the Small Business Development Bond.
Despite the delays and the hesitancy of the banks, that bond over the short period of two years it was in operation removed a great deal of the pressure that would otherwise have fallen on the Small Businesses Loans Act. About 10,000 businesses borrowed over $2 billion, primarily for business development purposes. By all accounts, save for firms already in financial difficulty, the Small Business Development Bond proved to be a success.
It is estimated that only 5 per cent of the borrowers assisted under that program were persons in financial difficulty. The 95 per cent of the borrowers represented persons expanding and hiring more people. One is left to wonder with this kind of history, a history of record, how that program will be converted to a means of helping firms and businesses in financial difficulty.
In one fell swoop the budget cut out the development aspect of the bond and by a grand stroke of bureaucratic doubletalk was able to render the bond all but meaningless. 1 am joined in this assessment by the Canadian Manufacturers' Association, which described the small business bond as virtually useless. In its first rate analysis of the budget, the Canadian Manufacturers' Association found that the 6 per cent threshold being applied to the small business bond seemed to imply that in order to qualify a firm must be bankrupt, in receivership or in default and at the same time making a profit. Perhaps that explains why the chartered banks are so hesitant in participating and making available this bond to the average businessman.
A greenhouse operator in my community has the capital investment, but he is caught in the high interest squeeze and has a cash flow problem. His greenhouse is heated by natural gas. He is not more than six weeks in arrears but has been threatened with having the heat for his greenhouse cut off. In his attempt to find interim financing, he is rejected by the bank. The Small Business Development Bond is not available to him because he has been told it is placed on hold. He cannot get assistance under the Farm Credit Act because he has not been rejected by the Small Business Development Bond program. What answer can be given to that businessman, or is he to be just one more going out of business?
A month has gone by since November 12 and to my knowledge no small business in Canada has been able to obtain a small business bond. I am told that farmers have fared slightly better; a grand total of three farmers have had success on their applications. These are hardly figures a government can be proud of, and I am appalled that the minister would
Small Businesses Loans Act (No. 2)
come before us and say that the small business bond is a positive means of assisting the businessman.
The fact is that the bond is a bust and has been closed off entirely for development and expansion purposes. Where are the 10,000 firms which used that bond now going to turn? One answer is the Small Businesses Loans Act and the resources of that program. Bill C-84 notwithstanding, it is not going to be adequate. In just two years of operation, the Small Business Development Bond made available more development funds than the whole of the Small Businesses Loans Act in its 19 years of operation.
In short, this government has to face the fact that small business is in trouble and at the same time it has to recognize that small business is worth saving. By the government's own reckoning, there are some one million small businesses in Canada and those small businesses, firms and organizations, represent 97 per cent of all business in Canada. At a time when unemployment is high, 8.2 per cent in the month of November, small business accounts for 42 per cent of private sector employment.
In my riding of St. Catharines, which I am proud to represent, unemployment is becoming a chronic problem and higher than average, now 9.1 per cent. The contribution of small business to that city's economic life cannot be underestimated. Out of a population of some 125,000 people, small business employs 42,473 people on a full-time basis and 9,200 on a part-time basis for a total of almost 52,000. I might add that the 2,700 stores and offices in that city occupy almost 8 million square feet of accommodation, a significant contribution to the construction and real estate industries.
Unfortunately, many of these businesses are now caught in a sales slump combined with the problems of a low economic community, high unemployment, inventory and loan costs. Many of those businesses will not be able to meet the costs they are faced with today.
Where will those persons now turn for affordable financing? The Small Business Development Bond is a cruel hoax. The banks are too busy looking at their profit picture to assist. The Small Businesses Loans Act is not available for refinancing or working capital purposes. Of course, the answer is that there is now nowhere to turn. That is what happened to my greenhouse operator.
We have seen in the November bankruptcy statistics that even as the Christmas buying season approaches, a season that traditionally accounts for 25 per cent of annual sales, 790 firms called it quits and filed for bankruptcy. We have no way of knowing, as has already been pointed out, the great number of others who have simply closed their doors or walked away. The minister's remarks today will be little appreciated by those people who have lost everything, while he extols the virtues of the government's small business loan programs. For the over
6,000	businesses that went bankrupt in 1981, it is little comfort to be told by the minister that Canada has the best

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Small Businesses Loans Act (No. 2) environment for small business and tourism of any western industrialized nation.
As I stated earlier, from a national picture and from the St. Catharines statistics, small business is vital to our economic wellbeing. The road to economic recovery in this country is through a revitalized small business community, a community that has one of the best job-creation records of any sector. Bill C-84 cannot begin to provide this necessary revitalization, this necessary renewal, and, indeed, will not be able to undo the damage done by the November 12 budget.
Earlier, Mr. Speaker, I asked where the hardpressed businesses could look for affordable loans. One source often overlooked is individuals, individuals who, like the owner of the business, had some faith in the system and in the eventual success of the enterprise. The individual would be prepared to support that. Prior to this budget, there was an incentive for those individuals as they were able to deduct the interest expense incurred in the making of those investments. No longer is that permitted to the same extent. As pointed out by the Canadian Federation of Independent Business, that source of investment capital, risk capital, Mr. Speaker, is no longer available to enable our country to grow and prosper.
A second blow to small business was the announcement that businesses must now pay the full tax on a sale, regardless of the payment terms with respect to that sale. For businesses dealing in expensive items, and in particular those dependent on time or term sales, this is a heavy tax burden indeed.
Finally, Mr. Speaker, the budget attacks the usefulness of one of the main provisions of the Small Businesses Loans Act, that of assisting firms to acquire capital assets. The capital cost allowance, which this government once boasted, was the best in the world, has now been reduced by one half. Thus, on one hand the Small Businesses Loans Act will enable a businessman to purchase a capital asset and, on the other hand, the budget will sharply reduce any incentive to do so. This is not just contradictory but madness. At a time such as this, as the hon. member to the left of me said, it is madness when we need to instil confidence in our business community?
So let us be honest with ourselves. What small business needs today, most of all, is relief from the high interest rates. I have already stated that thanks to the recent budget there is nowhere for small business to turn, save into bankruptcy, receivership or default. May I suggest to the Minister of State for Small Businesses and Tourism that he takes a hard look at the provisions of the Small Businesses Loans Act as these affect interest rates. He will find that the rate to be charged within that act is 1 per cent over prime. At today's rates, prime of 17 or 18 per cent can hardly be considered affordable financing.
Might I also suggest to the minister that if he and his government are serious about helping small business, then Bill C-84 should have been expanded to include the interest rate formula applied to the now defunct Small Business Development Bond. That bond did provide affordable financing for small business. The Small Businesses Loans Act does not include that aspect and Bill C-84 is no answer to it either.
The conclusion is clear. Bill C-84, as we have agreed to support it, is a stop-gap measure designed to carry a beseiged program through a simple short time period of six more months. I have suggested that, due to the pressures that will be placed on it by virtue of the destruction of the Small Business Development Bond, the Small Businesses Loans Act will not be able to cope with the increased demand. Again, as a result of the disastrous budget of November 12, a budget condemned by some 20 national organizations and groups, small business will be subject to the continuing pressure of high interest rates on one hand and the harsh, unfair, counterproductive taxes of the budget on the other hand. It brings to a halt the growth and development of a country that was built on the dreams of so many people. What is left for the entrepreneur, the adventuresome, the investor or the dreamer?
In short, and I shall conclude on this point, this government has displayed its total lack of appreciation and understanding of the business and commercial world. It completely lacks an employment philosophy. That is entirely consistent with a budget philosophy that refuses to put people first.



PROCEEDING ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Blaker):: I am sorry to interrupt the hon. member, but there is a procedure that I must now dispose of. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: The hon. member for Medicine Hat (Mr. Hargrave)-Agriculture; the hon. member for Surrey-White Rock-North Delta (Mr. Friesen)-Foreign Investment Review Agency; the hon. member for Central Nova (Mr. MacKay)-Public Works.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Lapointe that Bill C-84, to amend the Small Businesses Loans Act (No. 2), be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
Mr. Bill McKnight (Kindersley-Lloydminster):: Mr. Speaker, we on this side of the House in the Progressive Conservative Party, by taking part in this debate and in saying that we
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wish to pass Bill C-84 quickly, do so because we do not have any other alternative. Bill C-84 that we are speaking to almost doubles the amount of money available for small business loans in this country. We are talking of approximately $700 million. On November 12, there was a budget introduced by the Minister of Finance (Mr. MacEachen) that will take one hundredfold out of the business community over the next year. I am not referring to the large business community, I am referring to the backbone of the Canadian business community, the small businesses that enable this country to prosper, that employ 45 per cent of the people who are employed in business in this country and who have assisted in building this country.
I do not feel proud as a member of the House of Commons to speak in support of a bill which will make far less money available, perhaps 100 times less, to the business community of the country. I do not feel proud about what the government opposite will take away with the proposals in the budget presented on November 12. I cannot understand why we were presented with this bill. At the same time we see provisions in the budget which will take incentive out of the country. These proposals will make small businesses suffer, cry out and disappear in many areas of the country.
The inequities in the income tax legislation have been around for a long time. I recall the election which took place in February, 1980. I should like to refer to a statement of the Minister of Agriculture (Mr. Whelan), as reported in the London Free Press on January 31, 1980:
Inequities in income tax legislation regarding farmer capital gains taxes will be removed, Whelan said, by using as the base date for computing the capital gain December 31, 1971, or December 31, 1974, whichever is greater. He said 1974 values in most cases are more realistic than the 1971 base now used. His party would also give farmers a once in a lifetime capital gains exemption. Whelan said Liberals will prevent "privatization" of the Crown Farm Credit Corporation which provides farmers with low interest capital loans and would expand preferred loan rate availability to the agri-business sector and consumers.
This statement was made during the election campaign. Many people say that if the statement was made during an election campaign, the Minister of Agriculture should not be held to anything he said. But those of us who have watched the performance of the government have noticed that it has not been held to anything, that it has not honoured any of its commitments during election campaigns, either the last one or preceding ones.
I should like to review the statement of the Minister of Agriculture by referring to one segment of small business, that is the farm community. I should like to review the results. So far we have not had presented any change in valuation day. There has ffot been one statement. The minister was asked several times in the House when he would implement the promise of his government, made by himself personally. So far he has not answered. We have seen no selective adjustments in the tax system to ensure that incentives for economic development are maintained. As a matter of fact we have seen just the opposite. Under this government, especially since November 12, we have seen removed the incentive of someone with the
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ability to take a risk, someone who desires to expand, grow or contribute to Canada.
I certainly hope that the budget does not become law; 1 hope some of the provisions will be thrown out. In the past I have had some respect for the Minister of Finance, thinking he was a man who came from a region of Canada wherein people worked hard. The people in his part of the country work hard and save hard so that they have something, so that they contribute and are not a burden upon society. I hope some of his constituents will be able to communicate their feelings to him, in not too harsh a form but in a form he will be able to understand.
Young men and women who wish to start home businesses are drawing salaries from other jobs because it takes four or five years to establish their businesses and to gain livelihoods strictly from their businesses. If they borrow $100,000 to start these home businesses at 18 per cent or 20 per cent, it amounts to $20,000 per year, but their cash flow is only about five or six. Their profitability as they build and expand their businesses is less than their interest costs, but they cannot deduct those costs as an expense. Their cash flow must be greater than or as great as their interest. If that law had been in existence when many small businesses in the country were first established, they would never have expanded or got off the ground. I certainly hope that the Minister of Finance and the Minister of State for Small Businesses and Tourism (Mr. Lapointe) do not feel that this paltry addition of money to small business loans will solve the problems of Canadian small-business men.
The budget has done many things, but one of its most damaging effects on people involved in business is the change in the Small Business Development Bond. The bond was established under the budget of the hon. member for St. John's West (Mr. Crosbie). It was carried on by the Liberal government. Up to November 12, with the exception that one had to be incorporated, it served the small business community well. It served the farming community, small-business men involved in farming, and small-business men in communities around the country. What happened on November 12? From November 12 to the end of this year, strong and viable businesses which can open up their books and say, "Here is my picture; here is where I am going; here is what I have done over the years" will not be eligible for Small Business Development Bonds. I just cannot understand the stupidity of this. Any government, person or individual who is involved in the real world-those who have ever picked up bank books, filled out invoices and attempted to build and expand operations-cannot understand the Liberal government saying that the only people who will be helped are those in financial difficulty. If a company is breaking even or advancing a little, it is told, "Hey, Charlie, you do not get it." What is the problem? 1 cannot understand it.
I know there are hon. members in the party across the way who have spent a lot of time in the business community. Many of them were farmers, small-business men and contractors who spenf time figuring tenders or bids in an attempt to make them work properly. If a viable company needs an extra $100,000 or
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$200,000 to expand, after December 31, 1981, it will not be able to obtain it. Hopefully the changes which will be brought forward by the Minister of Finance will remove the stigma of being required to come from the town of "Dire Straits" before being eligible for a Small Business Development Bond.


Chris Speyer: That is in my riding.


William Hunter (Bill) McKnight: The hon. member for Cambridge (Mr. Speyer) says that it is in his riding. I know his riding really represents small business. Perhaps there are 50 or 60 employees in some plants and more in others; but because there happens to be 100 employees in a plant does not mean it is big business. Because there are 30, 40 or 200 employees does not mean it is big business. It is small business. Those businesses hire and provide jobs, probably 90 per cent of the jobs in the country. 1 am not talking about Massey-Ferguson or Chrysler. I am talking about a business where someone had a dream or an idea and succeeded because of hard work, perseverance and some luck. Everyone who starts a business knows that he or she is taking a risk. If not, they are in businesses about which 1 know nothing or they are silly. They know they are taking risks. They are enterprisers and builders. What will happen now when they take risks and get ahead a little? They are no longer eligible for assistance from the government.
The other thing that was changed in the Small Business Development Bond was that not only after the beginning of the year will it not be available to unincorporated companies that need it and could use it, but it will be available only to incorporated or unincorporated companies that show they are in financial difficulty.
I have heard the Minister of Finance and the Minister of Agriculture say that the banks are not bleeding enough, that they are making too much money. That may very well be true, but what makes the Minister of Finance think that writing it down in a budget is going to force the banks or the financial institutions to lend money to people who are financially unstable? How does he think that the banking community will react when someone says, "You have to give me that money and it will cost you more to process my loan because I will have to pay 3 per cent more than I would have before November 12, but you have to give it to me because I am in financial difficulty and the Minister of Finance said so in the budget." That is ridiculous. I notice that the government has not had too much luck in its attempts to direct the financial institutions. The only direction they take is from the Governor of the Bank of Canada. Whether the Prime Minister (Mr. Trudeau) believes that the government has a high interest rate policy or not, everyone else in the country knows that it has. And that is going to continue. We do not see any likelihood of a change.
We cannot deny that $700 million-odd is a fair amount of money. That is a lot of change, Mr. Speaker. In the district of Kindersley-Lloydminster which I represent, land is valued anywhere from $500 to $1,000 per acre and the average farm
is over 800 acres. That is just one federal constituency where small businesses have assets which are ten times the amount provided in the bill.
A lot of people feel that farming is not a business but usually they are not involved in it. The farming business has every problem and every disadvantage that any other industry in the country has.
I am sorry that the Parliamentary Secretary to the Minister of Finance (Mr. Evans) is not in the House, Mr. Speaker. On November 2 he was reported in Hansard as saying that farmers have the lowest tax rate of anyone in Canada. 1 see an hon. member on that side smile; he happens to be involved in the farming industry. 1 wish he would do more than smile and take the Parliamentary Secretary to the Minister of Finance out behind the barn and give him a lesson!


Arthur Jacob (Jake) Epp: He has never been there before, and he would get dirty shoes.


William Hunter (Bill) McKnight: That is sheer stupidity, Mr. Speaker. It hurts this country and the business that I am involved in when someone from the "heavily farmed area of Ottawa Centre" says that farmers have the lowest tax rate in the country. The parliamentary secretary is supposed to assist the Minister of Finance and perhaps that is why we ended up with this budget. I hope there are other hon. members on the government side who could give a little better assistance. I see that the hon. member for Timiskaming (Mr. Lonsdale) is in the House and I know that he could advise the minister better than that about the small business and farming community.
During this debate we have heard something about the ability of the small business sector to perform. Two or three years ago when Chrysler was in trouble, when Massey-Ferguson started to have trouble and when International Harvester started to have trouble, when all the large manufacturers started to get into trouble, nothing was heard about the small businessman who had eight or ten gravel trucks and a crusher. He was getting along; he was hustling and he did so with pride, initiative and hard work. Now the government's policies have gone so far that it is not only the large corporations that do not have "hands on" management, but the small business owned by a man or woman who is trying to manage it, control the inventory, look after stock-the business that has "hands on" management-has had to cut back in many cases. They have had to lay off employees. Not only do they have to manage the business now, but they have to be clerk, mechanic, salesperson or assembly worker. Sometimes other members of the family become involved as well.
Since this government resumed office in February, 1980, it has done nothing to help small business except offer Bill C-84. I can understand that. When something is not very dramatic, when it is not like taking away 25 per cent of the lands of northern Canada, when it is not like fighting with the producing provinces, when it is not like saving Chrysler-maybe it did save Chrysler but I have my doubts-when it is not making large pronouncements, then the government only offers to double the amount available to small business. When
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something is inadequate in the first place, it is still inadequate when it is doubled.
I do not know whether the Minister of Finance has had time to look at the list of bankruptcies that occurred recently. The latest figures for January to October, 1981 show 230 bankruptcies in agri-business in Canada. Saskatchewan has the third highest number, Ontario lists 126 and Quebec 45. In the House recently the hon. member for Hamilton Mountain (Mr. Deans) spoke about his concern for the businesses in his constituency and the farm manufacturing plants there. I can understand his concern. People are being laid off in Ontario and Quebec because the small farm businesses in western Canada and the Atlantic provinces cannot afford to make a commitment for a $100,000 piece of machinery and to pay high interest rates especially when since November 12, the capital cost allowance had been cut in half for the first year. There are areas in central Canada and Ontario, the manufacturing heartland of the country, where employees are being laid off because machinery is not selling.
The government's response is to cut the capital cost allowance for the first year in half. That does not make any sense. It does not make farm sense, it does not make horse sense, and it does not make financial sense. But what really puzzles me is that the government does not see that it hurts people in Canada. Everything we have spoken about relates to people. They are not businesses; they are people in businesses. They are not employees; they are people working in businesses. That is what this government has forgotten. That is what the Minister of Finance has forgotten. Definitely the Minister of State for Small Businesses and Tourism has forgotten this. He should be more aware and I hope he will be more aware after today and tomorrow.
Canada will probably end the year with imports of $110 billion and exports of $100 billion, approximately. What Canada needs the most is to be brought into the twentieth century. There are manufacturing industries in this country which need huge investments in technology, in upgrading and in new plants. This is true of almost every industry in Canada, particularly the first one which we saw in trouble, the textile industry, and then the automotive industry. The fact is not that the Japanese have all the technology but that they have our technology. They have gone ahead and built new modern plants to build their cars. Canada needs investment, machines and plants if we are to take our place among the manufacturing industries of the world. What has happened? The government has cut the capital cost allowance by 15 per cent in the first year.


Chris Speyer: Federal cash flow.


William Hunter (Bill) McKnight: My friend and colleague the hon. member for Cambridge (Mr. Speyer) mentions cash flow. One could borrow a lot of money from the financial institutions in this country, and one could have a great cash flow; but there comes a time when such a cash flow must turn around and flow back
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the other way. The government has now said, "Whoa! Before you turn around and send it back upstream, we will tax you. You will have to pay tax on the money you are sending back." Every small-business man survives. As a matter of fact, I know many who earn their daily living from cash flow. It is not that their businesses are developing or that they are increasing their monthly draws to provide their earnings. They stay ahead of inflation through increasing cash flow.
I have considered the bill before us and I will vote in favour of it because it is all this government has offered small business. It has provided $700 million. I guess I should say that we are really lucky because the government has finally done something. However, when one compares $700 million to the billions of dollars the government is taking out of small business through the budget of November 12, one really wonders if there is a future in this country for the enterpriser, for the small-business man or woman, and for the people who have built this country.
I cannot understand how such a budget could come from a party with the historic concern-though not in the last 12 or 13 years-which the Liberal Party has expressed for the small-business man or woman in this country and for the growth and development of this country. I simply cannot understand what has happened to the party opposite, to the Liberal Party of Canada, which would cause it to bring in a budget which will take the very heart and the creative core right out of Canada. It will not only do this, but it will also cause a situation where, in any future slowdown in our country, we will not have sufficient businesses upon which to draw encouragement or strength to pull ourselves up by our own bootstraps.
1 will be voting in favour of this bill because, as far as I can see, it is the only thing which the Liberal government opposite has done for small businessmen in Canada since it came into office in February, 1980.


Mr. G. M. Gurbin (Bruce-Grey):: Mr. Speaker, I join in this discussion of the bill following the hon. member for Kinders-ley-Lloydminster (Mr. McKnight). As I sat listening to him, I was actually depressed. I think that is partly a reflection on his ability to strike at the very core of the issues with which we are faced here, and it also reflects his very sympathetic understanding of the plight of small business in the country. It is a little bit difficult to be enthusiastic about speaking on the bill, after hearing about all the difficulties which the country is facing at large; but I think it is an important message, and I congratulate him for having well delivered it.
Bill C-84 is a bill which none of us is about to oppose, as many hon. members have previously said. It is a bill which really changes the original bill of 1961, which first came through as S-10, one which increases the amount of money the government will guarantee to the conventional lenders in the country on behalf of small business. In general, it is a measure which everyone can support. I believe hon. members who have spoken previously today have referred to the issues which surround the bill, and have considered the necessity of the bill with regard to small business.

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The bill has been modified and amended many times before now. This bill originally started out through the Department of Finance, and then it went through Industry, Trade and Commerce. There have been several other changes. Additional types of businesses were included so that the bill would provide for increasing amounts of loans to individual businesses and so on. Since its original inception, the bill has been responsible for approximately 82,500 loans which, in fact, amounted to approximately $1.5 billion in total. Therefore, with this bill the yearly amount shows an increase from $800 million to approximately $1.5 billion in one year.
Everyone knows the importance of small business. The Minister of State for Small Businesses and Tourism (Mr. Lapointe), who has now left the chamber and has been replaced, I suppose, by the Parliamentary Secretary to the Minister of Finance (Mr. Evans), is very aware of the importance of small business to Canada. The minister, in his speeches, has referred to the one million small businesses in Canada which account for 97 per cent of all businesses in Canada. In total, they account for approximately 45 per cent of all employment and for about 30 per cent of the gross national product of business in the country. Therefore, it is an important factor which must be understood and to which response must be given.
The Minister of State for Small Businesses and Tourism seemed to understand the importance of small business, particularly as he stood in the House and voted in favour of the recent budget and measures contained therein, along with all hon. members opposite, and showed his support of the Minister of Finance. However, in reality, he expressed either a lack of understanding of what the Minister of Finance was saying, or at least a disregard for the impact that the budget would have on small business. In this case, he seems to be more or less standing on both sides of the cash register, standing in front of the counter and representing himself to be a saviour and proponent of small business, while standing behind the counter and taking away much of the ability of small business to survive and to function.
In the time I have left to speak, I must attempt to make the Minister of State for Small Businesses and Tourism understand what he and the Liberal government are really doing to small business through the budgetary measures they brought in.
Many specific points have been described and discussed by hon. members who have previously spoken. There are some very good spokesmen within the small business community, whether from the Canadian Federation of Independent Business, from the insurance companies, or from car dealers' associations. There have been numerous messages delivered with such strength of feeling that a sensitive note should have been struck in the hearts of all Members of Parliament, but particularly those of hon. members in the Liberal caucus who have the greatest influence on the Minister of Finance.
I think that the budget is seen to be a direct affront, a direct attack and a direct threat to small business. It affects small business in many ways. It affects the ability of people to invest
in small business, it affects the capital formation for small business, and it affects the ability of small business to be transferred from one individual to the other. It affects a number of interbusiness transactions. It also affects significantly the future security of the small-business man as he retires or plans for his retirement.
The question arises whether this budget is a misfire or whether it has specific direction. If it has direction, what is it? The argument has been made that it was a misfire, particularly if one takes into account the current economic climate. When the Minister of Finance was preparing this budget last summer, he misread or misunderstood what was needed and produced this restrictive document. This is a document which has a terrific impact on the entire economic climate of the country. Therefore, the Minister of Finance must have made a mistake. That question bears some argument.
We need to look more deeply into some of the measures in the budget to see their impact and decide for ourselves whether this was indeed a misfire or a specific direction which the Minister of Finance and the senior civil servants wished to take.
The background of this document is well known and has been described with considerable feeling by the previous speaker. We are all aware that we are in a recession and that we are facing inflation rates of 12.75 per cent. We know that we are continuing to face interest rates that are unbearable, intolerable and deadly to small businesses across the country, interest rates which are being supported by the government through the Bank of Canada and held higher by 4 per cent or 5 per cent than comparable American interest rates. All of these were part of the economic background when this budget was introduced.
Our unemployment rate is important too. The budget impacts heavily on small business. Small business creates jobs. Reference has been made to figures and to the fact that there were 140,000 more people unemployed last month. One group which forms the national association for plumbing equipment, talked about its 24,000 employees and the fact that one quarter of them are now unemployed. That sort of thing has a ripple effect throughout the construction industry. Also, this demonstrates the slowdown occurring in the major sector of our economy.
The aim of this budget is directed toward several areas- fairness, equity, restraint and economic renewal. In looking at whether or not this budget is producing more equity and is fair, I think individuals whether self-employed or otherwise, need to look at the sleight-of-hand that has been exhibited by the Minister of Finance. While he has shown a direct decrease in federal tax for a large number of Canadians-the figure of $8 million is quoted-the real amount of tax that has been decreased is almost insignificant. It is almost so insignificant that it should not be mentioned when one compares revenues being taken in through indirect taxation measures in the budget. We hear that people with an income of $15,000 a year
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will have a total tax saving of about $25 a year and those earning $17,000 a year will save $45 in direct taxes a year.
That sort of thing has to be balanced against the increased revenue coming from indirect taxation. I am not speaking about energy price increases. We all know that energy prices have doubled. We know that gasoline and heating oil will go up by about 50 cents a gallon in the near future. We have to remember those taxes that will be imposed through the change in the federal sales tax in a number of other areas in our economy. These taxes are not readily identified, they are not seen, but they will outweigh the gesture of a tax reduction which the Minister of Finance talks about in the name of equity.
Second, the budget is to deal with restraint. By anyone else's definition, restraint is not what this budget is all about. The bottom line of restraint is the question of what government revenues and expenditures are. The increased taxation which this government will achieve through the recent budget is in the neighbourhood of 31 per cent in one year and 43 per cent in two years. This increased taxation will account for increased government expenditures of 22 per cent. This is at a time when the government says it should slow its own growth by a factor less than inflation. That dedication has been described on paper by both the Minister of Finance and this government for some time. It is something the government says it is trying to achieve. The government tells us that it is practising restraint. But the government is increasing expenditures and taxation mightily.
Third, the budget is to deal with economic renewal. Quite simply, there is no hope for renewal not only because of the other taxation measures introduced in this budget but basically because there are no plans. Probably there is no idea about how to plan for economic renewal in this country. If there had been an idea there would have been one long before this. We have not had anything in the last 13 years or even before that, perhaps even since wartime. We should have had a major economic plan for development with proper direction and orientation toward research through all the mechanisms available to government, through regulations, incentives and so on. These things would have stimulated our economy and we could have paralleled the opportunities we have with our resources and skills that have not been developed.
This budget does two things which have been confirmed and reconfirmed by a number of individuals and groups who have had the opportunity to go into some of the budget measures in detail. This budget raises revenues and at the same time changes the taxation system.
There are many things to discuss about the way in which we are changing the taxation system, especially at a time when we face economic recession. What is important is that even in 1977 when this question of tax reform was considered, it was clearly stated, and it has been clearly supported by members of the Liberal Party and by the government, that we should have a white paper for discussion. This would give the public an opportunity to understand and to comment on any taxation changes, something which the business community has identi-
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fied and has reacted to very strongly, justifiably so, in my opinion. This is important because a change in the taxation system will have repercussions on the economy.
I will not talk about raising revenues any more because I do not think I have enough time to do that. However, it is well known that the government is trying through the closure of so-called loopholes-maybe loopholes in some cases which have been described previously as incentives-to grab $47 billion. This is the amount the government has identified as escaping its net. 1 suggest that if that money were available, it would have been better placed in the hands of individuals than in the hands of the government. With the track record it has, $47 billion would have been gone with very little to show for it.
I would like to turn now to the specific measures within the budget that will affect small business. One of these measures is the capital cost allowance which has been changed dramatically. Capital cost allowance is a mechanism which was well known and well used by Canadian businessmen to start or expand businesses and provide new opportunities for employment. One businessman stated that the change in the capital cost allowance would have been enough to stop the erection of the Stelco plant in Nanticoke. The change in the capital cost allowance will have a significant influence on business development in Canada and should be reconsidered before it is passed in its present form because it is a substantial business opportunity which may be denied Canadians.
Another measure which has been changed is the federal tax from the manufacturers' level to the wholesalers' level. Within this adjustment there will be a number of effects, among which is the raising of revenues for the federal government by up to 50 per cent. Fifty per cent of the $5 billion which has already been collected from that tax measure is a considerable sum to be taken out of the economy. Another result of this particular change is that the wholesaler must now be involved as a tax collector for the government and this in itself involves extra paperwork. It is an additional measure which will have a detrimental impact, not only on inflation but on the actual difficulties faced by small-business men throughout the country.
The capital gains tax measures have been discussed by many hon. members, and it is our hope that they will be changed. These measures are affecting the ability of small business to be transferred. It is unfair that this provision requires a small-business man or farmer to pay the total tax on a sale in spite of the fact that the only way he might be able to sell or transfer his business is by partially financing the transaction through a mortgage held by himself. It will be very difficult for small businesses to be transferred under these conditions and this must be changed.
Investment interest is another issue which should be discussed. I would like to quote from the comments made by the Board of Trade in Metropolitan Toronto which perhaps described the effects of this measure most aptly. Before doing so I would point out that one of the hallmarks of the entire

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budget has been that these measures have been changed in midstream. Many people who have planned for the future have been trapped, after having made financial decisions ten years ago. They are now caught in a fixed situation, whether it be in the form of an insurance policy or any other investment plan. They are caught by changes which were made retroactively. There is an obligation on the part of the government, if not legally then at least morally, to reconsider that aspect of the budget.
To return to the comments made by the Board of Trade in a brief submitted to the Minister of Finance dated December 11, 1981, it said:
Apart from the retrospective effect of this proposal, we disagree with it on policy grounds. Our economy depends on investment and risk-taking, and this is even more important in these difficult times. The proposed disallowance of interest favours the person who already has a substantial level of salary or investment income and who does not need to borrow. Canadians have traditionally been very conservative and careful investors.
I should point out that that is not in terms of government but in terms of attitude.
But imaginative investments with great potential for the investor and for future development of the country do not usually bring a large return in the early years. The proposed changes makes it virtually impossible for individuals to undertake such investments.
I repeat that this measure needs to be re-examined, understood and changed.
1 can give some examples of what this budget has done to various business. One example is insurance companies. Canadians will not be able to afford the usual level of policy premium they once had. This means that people who are planning for their financial security through an insurance plan will be affected. In addition, young people who are planning their financial future will not be able to invest in insurance policies when they become older because the premiums will increase with age and by the ninth year of a policy they will be paying more income tax than they would be for the premium itself. Consequently, if people are not able to afford insurance, the capital received by insurance companies will not be as great. A large pool of capital will be denied the business community because the insurance companies will suffer a decrease in policyholders. There will be less capital available for reinvestment which could have helped to regenerate the economy.
Another adverse impact on the insurance companies will be the decline in the number of insurance agents and their service activities. This is a definite threat and one about which people are not over-reacting.
Another industry which is adversely affected is the automobile industry. The automotive dealers across Canada have been subject to major impact because capital cost allowances have been changed. Because some of the employee benefits have also changed, and at a time when automobile dealerships are being threatened with extinction because of foreign car competition and the state of the economy, companies are no longer providing fleets for their employees, and these people are going out to buy secondhand cars of their own.
Car dealerships, of which there are already 50 per cent less than there were two years ago, will now diminish in number even further. Some of the dealers who are just hanging on now will go the way of the dinosaur. There must be changes made by the government to correct this situation.
Another area which is affected is the farming industry. Certainly my constituency is concerned about this. The effect of the budget on the farm industry has been disastrous. The budget was to have aided the Farm Credit Corporation and the Small Business Development Bond. When those provisions are studied closely, they reveal another example of sleight of hand by the government and the somewhat deceitful-a word which may be strong but which is very close to being accurate-actions of the Minister of Agriculture (Mr. Whelan) and the Minister of Finance. What they have worked out is a program in which the total contribution of the federal government to the agricultural industry is $5 million. They have done this by providing a repayable loan of $45 million to the Farm Credit Corporation and $5 million to subsidize an interest rate, which was already at 16.75 per cent, through the Farm Credit Corporation. The rest of that $45 million after one or two years, depending on the individual circumstances, will then go up to 17.65 per cent. If neither the Minister of Agriculture, nor his parliamentary secretary nor anybody else on the opposite side knows by now that agriculture cannot survive with those interest rates, I suppose it is too late for agriculture. The government needs to understand that agriculture cannot endure interest rates in excess of about 12 per cent. The unfortunate thing is that only $5 million is the total federal contribution to agriculture in this budget.
Many others have discussed the Small Business Development Bond. The tragedy is that its application is restricted to farmers or businesses in distress. New capital expansion cannot occur. Again we have changed the rules in the middle of the game. We passed a bill a year ago and are now changing the rules. Interest rates are probably 3 per cent higher, if not more, than they would have been for anyone who wanted to try to get in with new capital expansion up until December 31, and then after that this assistance is only available to those in so-called distress situations. That again leaves farmers with interest rates of 13 per cent and 14 per cent. This is of minimal, if any, benefit to them in the long term.
We face two or three impacts. One relates to capital, and I have discussed that in some detail previously. There is an impact on people and their ability to start small businesses. There will be an impact on their desire to become involved in an entrepreneurial way in providing jobs and in business activities. There is an impact on the ordinary Canadian when he is looking to his future and looking at investment to provide secure income as he approaches retirement. All these things have a direct impact on people and should be carefully considered.
Following the question of capital and the question of people is the question of transferring property. There is a very real
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and significant threat to the ability of people to buy and sell property, if the budgetary measures of the government we are considering now are carried through. Perhaps for government members this is a philosophical question, but it is a very serious concern to people who want to transfer their property, whether it be businesses or farms. The property of individuals is now very seriously in jeopardy.
We see also that research and development and venture capital will be markedly restricted.
I see my time is rapidly drawing to a close. I suggest the question of the entire free enterprise system needs to be considered very carefully. If hon. members opposite feel that the budget, for which they voted, supports free enterprise, they either have a perceptual problem-which is possible-or an honest, philosophical bent, with which we disagree. If they really believe in free enterprise and if their party wants to support free enterprise, I think they have an obligation-and it will be identified for them by individual Canadians and groups of Canadians represented by organizations-to respond now and to give the Minister of Finance direction so that many of the budgetary measures which seriously affect the future of free enterprise in Canada can be changed.


Mr. F. Oberle (Prince George-Peace River):: Mr. Speaker, if this bill had been brought before the House by the government prior to the budget, we would probably have looked at it as a housekeeping measure and as something necessary to increase spending under the Small Businesses Loans Act from $850 million to the level indicated, namely, $1.5 billion. However, we are now in the post budget period, and this is the first measure affecting small business after the death blow delivered to small business by the budget. It is almost an insult to think that the Minister of Finance (Mr. MacEachen) could be, first, so incredibly ruthless with the small business sector and then could bring in a measure like this under the guise of helping small business.
I called a banker the other day on behalf of one of my constituents. My constituent had difficulty obtaining an interpretation from his banker or a commitment from him as to whether my constituent would or would not be eligible for a small business bond. I asked the bank manager if he had not heard what the Minister of Finance had said. The Minister of Finance had said he received the assurance from the banks that they would respond and make money available. That was the agreement, and that was in the budget. I told the bank manager that the minister appeared confident that the banks would be responding positively. I know this banker; he is a good bank manager with one of the major banks. He said, "Frank, if I had the Minister of Finance as my client, I would have pulled the rug from under him long before this". He said, "What are you guys doing? This man should not get a loan. His business was not solvent before interest rates went up, and it is not solvent now". The banker said he would not take any direction from a minister of finance who has to borrow money this year to pay interest on loans he did not retire last year. That is the reaction we get from banks.
What is the Small Businesses Loans Act? It is one of the tools, instruments or measures the government has to bring in
Small Businesses Loans Act (No. 2) from time to time to apply a band-aid here and a band-aid there to correct some of the negative effects on small business of other government measures and interventions in the marketplace. The Small Businesses Loans Act, the Small Business Development Bank, the Farm Credit Corporation and the Federal Business Development Bank were all put in place as instruments to react to certain situations in the marketplace not regulated by the invincible hand of Adam Smith. The government knows full well it cannot intervene in the economy just a little because whenever it does intervene, it creates certain imbalances in other areas. For that reason the federal government needs these instruments to regulate from time to time sectors which are negatively affected by government intervention.
Why do we need these measures? I have already stated that we need them because the government intends to take-and has taken in the last 12 years particularly-a very active part in the economy. The public sector does not play by the same rules as the private sector, so the private sector must be controlled. Somebody once said that the private sector is controlled by the government and the public sector is controlled by no one. The government tells us to restrain our demands on the economy, yet it increases its own budgetary expectations and spends money as if there were no tomorrow. That is the reason, when from time to time certain sectors of the economy go under, are in default or become insolvent, the government has to intervene and help them keep their heads above water.
What the small-business man really needs is less government intervention and less competition from government because he can no longer compete with Big Brother in a number of important areas. The federal government itself competes with the small-business man in the marketplace. It is now an active player in the energy sector, and certain small-business men have to compete with the neighborhood service station which is government owned and controlled. The government competes very effectively and rigorously in the labour market, which causes the small-business man a great deal of concern. For instance, what skilled person in his right mind would work for a small-business man today, particularly in the service industry, when he can work for the federal government or any of the provincial governments under the umbrella or the protection of what I call the social hammock where there are all the social benefits anyone could dream of? There are indexed pensions, tenure, 17 weeks' maternity leave and so on. The small-business man cannot afford this. A small-business man may have five or 15 employees, one-third of them women, all performing an important function. If a businessman has only five or six employees and were to grant maternity leave benefits for example, he could have one third of his work force off for 17 weeks. Obviously he would have to hire someone to take over and reserve their place for when they return. The small-business man cannot afford to compete with governments and the large corporate sector in some of these areas.

December 15, 1981
Small Businesses Loans Act (No. 2)
In answer to my friends in the NDP who like to gaggle and yak when I raise these matters, I have always said that social benefits of that kind should not be selectively dispensed. It is fair and just for a woman to receive 17 weeks maternity leave. I think that is fair. It is an important aspect for the maintenance of the family and survival of our society. If the economy can afford that kind of benefit, it should be available to all workers, not just those who use the NDP as their spokesman in the House, the public sector and corporate sector unions. They are the ones this group speaks for. I speak for all Canadians. I speak for the two thirds of the work force that does not sleep in the social hammock and have the protection of the large powerful unions.
If it is fair for the family of a steel worker to have a dental plan, it should be fair for every worker in our society. However, these social services are dispensed selectively. The small-business man cannot compete. Therefore, he has a difficult time attracting workers to his plant.
The large unions should certainly set themselves social goals and discuss, as they have in other modern industrial societies, with the government and employers the virtues of such benefits. Once having decided and agreed that the general economy, the GNP, can afford such benefits, they should be equally, equitably and fairly dispensed to all workers, not just a select few.
Here is where the government is at fault. It is beginning a very dangerous trend. It is leading instead of following the marketplace. It is creating serious tensions in the marketplace and difficulties for small-business men. In most cases, a small-business man would be better off with some kind of public service job rather than, as my friend, the hon. member for Burlington (Mr. Kempling) said earlier, working 18 hours a day in the hope that some day he will make a profit from his business.
I have started four businesses. They are all still going. Two remain small businesses, one got larger. I know precisely what the hon. member for Burlington was talking about. I worked hard seven days a week. There is no Sunday or holiday when you are in small business, particularly the service sector. You are there seven days a week. If you only have five or ten employees and one does not show up for some reason or another, it is you who must replace that individual.
These are some of the problems the small-business man faces and some of the encumbrances the government, particularly the public sector, places on small business enterprise. The federal government competes in other areas as well, and this is more to the point. It competes in the capital market.
The question was asked where venture capital goes and why the banks are not investing in small businesses. One reason is that the risks are higher. Small business loans are much harder to service and control. If you start a small business away from the metropolitan areas, in the north or in a rural area, the banks are almost completely useless. They like to invest where they can see their investment and control it. I do not begrudge
them for that. They are in the business of making money and have to show a profit to their shareholders.
The cost of servicing small business loans is much higher than that of servicing a large loan to the Power Corporation or any of the large conglomerates. It takes one person no longer to administer the large loan than to administer a $60,000 loan to a small-business man.
The government has been very active in the marketplace, particularly in the last couple of years, competing for money. It would be silly for an individual to put money into a small business when he can buy a Canada Savings Bond at 19!/$ per cent interest. Why put your money into a business when you can get that much interest by lending it to the government and having it fully guaranteed and flexible?
Between now and 1990 the government will have to raise between $400 billion and $600 billion in the marketplace for the energy sector. As a result of Bill C-48, we have what is known in the business world as a contingent liability. We will end up owning 50 per cent of the energy sector. It will take about $600 billion to become energy self-sufficient by 1990. That is the goal of the government and I applaud them for it. However, it will place an incredible demand on the financial market, virtually ruling out any opportunity for the private sector to compete. As a result, there will be no money available from the banks for the small business sector.
As I said, the government competes in the marketplace. May I say also that it competes unfairly. That is one of the main problems the small-business man faces today.
Survival in the small-business world today requires exceptional skills. My friend, the hon. member for Burlington compared the small-business man to an eccentric artist. That is stretching it a bit. I do not consider myself an eccentric. However, I have often said that my dealings with the bankers in my business and professional careers over the past 20 years have developed my political skills. I had to convince them that 1 had a much better mousetrap and that even though I would lose money for a year, eventually I would make a profit, create employment and serve my country in the best way I knew how. I pointed out that I would help the bank's position. When a banker told me he might or might not be able to help me, I always reminded him that I wanted to help him and would be doing so since I always retired my loans and paid my interest. I want to expound on this a little further, but I see that it is now six o'clock and I know it is Your Honour's duty to interrupt the proceedings. May I call it six o'clock, Mr. Speaker?


The Acting Speaker (Mr. Blaker):: I will interrupt the proceedings at this point. I do now leave the Chair until eight o'clock this evening.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
December 15, 1981
The Acting Speaker (Mr. Blaker):: When the House rose at six o'clock, the hon. member for Prince George-Peace River (Mr. Oberle) had the floor.


Frank Oberle: Mr. Speaker, thank you for recognizing me once again and pronouncing my riding the proper way.
Before the House recessed for the supper hour I was discussing the Small Businesses Loans Act in the context of why it is necessary from time to time for the government to take these measures so as to protect or help certain sectors in the economy. Of course, the reason is that the marketplace can no longer function as it has previously. In other words, there is no longer a free market economy. In my contribution to the budget debate, I demonstrated why it is that the conventional and traditional tools and instruments that governments, monitors and fiscal planners were using were no longer effective. Of course, the reason is that there is no longer a free market economy in our country in the traditional sense. In the small business sector there is free enterprise and competition, but the small business sector or, indeed, the private sector as a whole, is no longer the dominant force in the economy. In fact, it is the government which is now the biggest employer-and I suppose it always has been-the biggest investor and the biggest corporate entity in the country, not only in the public service sector but in several major sectors of the economy, the most important being the energy sector, but also in transportation, communications and so on.
The government, which occupies such a dominant position in the economy, does not play by the same rules as does the private sector. That is the reason that the conventional tinkering, the conventional exercise of government regulations can no longer function. It does not really matter how much the private sector restrains itself in spending and in expanding the economy, as long as the government continues to spend as if there were no tomorrow. Then it really would not matter what we were doing. That is the main reason we have these distorted problems in our economy today. Because the government attempts to regulate a free market economy, there is no longer a free market economy operating in our country.
The Minister of Finance and the government spokesmen are ready always to blame others for the problems that the small business sector and the economy confront. It is either the American high inflation rate policy or, in the last few weeks, it has been the banks. The Minister of Finance and some of his colleagues actually stand in the House and blame the banks for the problems facing the small business community as if it were the banks that set the interest rates. It is the Governor of the Bank of Canada, on the advice of the minister, who sets the interest rates. We all lament the fact, and the NDP is in the forefront, that the banks are making excess profits.


Mr. Deans:: Right, right!


Frank Oberle: But if we are intervening and telling the banks what interest to charge, they cannot be blamed for making profits. We cannot blame the oil companies for making profits
Small Businesses Loans Act (No. 2) on selling oil when we set the oil price, without controlling it completely and without taxing away any of the profits. I am not advocating that we should have an excess profits tax but, as I said in the budget debate, one cannot be just a little pregnant. Once one starts intervening, one either goes all the way or else one gets out. It is not the fault of the banks that they have made excess profits. It is the fault of the government and of the Governor of the Bank of Canada, as it is their fault that the oil companies are making excess profits.
There are ways to get around the banks. As I said earlier, I have never been a great friend of the banks. I have always operated three years ahead of them. Small-business men are always a nuisance to the banks because their loans are as difficult to administer and service as the loans of large corporations such as Massey-Ferguson and Chrysler. The banks would much prefer to operate in the large corporate sphere of activity without having to worry about small-business men. From time to time the government has to intervene to encourage or provide competition for the banks, as was done with the Federal Business Development Bank and the Farm Credit Corporation. These institutions were actually put in place to give some competition to the banks and to keep them honest.
If we were really serious about helping small-business men, we could do it. Because we are always accused of not advancing any positive ideas, I should like to advance one. The Small Business Development Bond program was brought in in the budget of the hon. member for St. John's West (Mr. Crosbie). Perhaps my speech is too penetrating or too cutting; it must have melted the wire inside my microphone as apparently I cannot be heard. In any event, if we were really serious about helping the small business sector and about keeping banks honest, I know what we could do. I raised the question with the Minister of Finance the other day during question period. I asked him whether he had given thought to the idea of allowing private investors, through the mortgage exchange corporation, which is already on the books of the House but not yet proclaimed, to put more money into the mortgage field. This would make money available at acceptable and manageable interest rates. All we would have to do is to give the same concessions which the banks already enjoy to private investors. We could get them to cash in their term deposits and to buy private mortgages through the mortgage exchange corporation. If we gave the same concession to private investors, the interest earned on such investment would be free of income tax. For example, if one has money in a term deposit today, probably one would enjoy a 15 per cent or 16 per cent interest rate. I am only speculating because I have not checked recently. If one purchased a mortgage exchange corporation bond at 11 per cent and did not have to pay income tax on the 11 per cent, one would probably be further ahead. Not only would it be a better investment guaranteed by the Government of Canada, but one would be further ahead. Usually the people with term deposits in the bank are income earners who have a few dollars left at the end of the month. They should be putting that money into the economy.

December 15, 1981
Small Businesses Loans Act (No. 2)
There are two things which we could be doing. Of course 1 am leading up to the fact that we would not necessarily have to use the mortgage bond to stimulate housing construction and address the crisis in the housing market. We could also sell Small Business Development Bonds to private investors with the same concessions that are being offered to banks. First, if private investors could buy Small Business Development Bonds, government guaranteed and taxfree interest earnings at 11 per cent-and of course the government would require insurance on the bonds and would probably want to add one percentage point-effectively 12 per cent money would be available for venture capital. Also there would be 11 per cent or 12 per cent money available in housing areas. This is not a new, revolutionary idea. This is exactly what is being done in the United States and in other industrialized countries where they have considered something which 1 suppose we have forgotten, namely the fact that the ownership of a house and the affordability of decent accommodation for one's family is a social right, not a privilege conferred upon us by government. There are various techniques which could be used. Furthermore, it would give the banks some competition for much needed deposits. The banks are always competing for deposits, particularly when the government solicits money by offering savings bonds at 19.5 per cent, which took a lot of money out of the banks. The government is paying 4 per cent to 5 per cent more on its Canada Savings Bonds than the banks are paying on term deposits. Naturally everyone who could afford it bought as many Canada Savings Bonds as they could. It took a lot of money out of the banks, money which could have been invested and loaned to small businesses. If we offered these same concessions to private investors, we would give the banks some competition because they would have to compete for deposits. Also it would put more low interest money into the small business sector, into the venture market.
I have some positive suggestions which I hope the government and the Minister of Finance will some day consider. Certainly there could not have been any consideration of the true needs of the small business sector when the budget was written. The measure we are debating tonight, authority for the government to spend another $700 million or $800 million through the Small Businesses Foans Act, will not even go half way toward correcting some of the measures contained in the budget which, in practical terms, rendered the small business sector vulnerable. Literally thousands of small businessmen and farmers are walking away from enterprises in which they have worked and invested all their lives. Small business bankruptcies are up by 48 per cent. This does not even take into account the businesses which were abandoned by people who have given up and can no longer be bothered filling out government forms, having bureaucrats looking over their shoulders, watching every move, and getting it in the neck every time they turn around. They are tired of their profits being regulated and of being told that they should compete in the marketplace, while every other sector of the economy, particularly the government, is behaving as if our economy were controlled and structured similarly to the one which is operating behind the Iron Curtain.
Many people overlook the fact that as interest rates rise, as energy costs rise, and as input costs from all sources go out of sight, small-business men cannot do what the government simply does- pass them on to consumers. The government never has any problem. It can just raise taxes, and in Crown corporations it can convert loans to equity. It just makes another $800 million available here and there. The Minister of Energy, Mines and Resources (Mr. Lalonde) told us yesterday that they just finished budget discussions with PetroCan, the newest child in the government corporate arsenal. He said that the outlook for the next season is glowing. This means that we are probably in for another takeover of a private company, probably again for $1.5 billion, $2 billion or $3 billion. No one ever asks where this money comes from. The government raises it on the private market in competition with private enterprise. The cost of operating these businesses as Crown corporations with all their inherent inefficiencies, is passed on to the taxpayer. The small-business man competes with the large corporate sector which can pass on any labour costs, any energy costs and high interest rates to the consumer. Many of the large integrated corporations and marketing groups no longer operate in a truly free market environment where they compete with marketing groups such as the OPEC countries or European marketing groups; they have to be totally integrated and compete in an environment that is not ideal for free enterprise. As a result, it is the small-business man alone who is supposed to operate in a free market economy. He cannot pass his costs on to the customer, however, because the customer just cannot pay, so he is forced to reduce his profit to the point that the business becomes insolvent. He then must close down and lay off his employees.
I think that the government believes that when a small business closes down, some magic employer will take over the people who are laid off. The government does not come to the rescue of those employees and they are just as unemployed as the people who worked for Massey-Ferguson, Chrysler or any other corporation that the government keeps afloat although it is no longer competitive in the marketplace.
If the small-business man closes his establishment the government seems to feel that it is obviously because he could not manage his business. That is not necessarily the case. He just cannot cope with the burden of regulation and control and, if the latest budget is any example, with the ignorance displayed by the government.
Some of my colleagues have said that when we speak of the small business sector we speak of the heart of the economy- the engine that drives the economy. Up to 60 per cent of all workers in this country are employed in the small business arena. They are that two thirds of the work force that is not unionized. All we ever hear about are the social benefits that unions want to achieve, and it seems to be taken for granted that by some magic those concessions will automatically flow to the two thirds of the work force that is not organized. That is not so. Small-business men employ the 60 per cent of our work force which is not unionized and which sometimes works
December 15, 1981

for the minimum wage just because the employer cannot afford to pay more. The social benefits are often less than adequate when compared to those enjoyed by employees of the federal government, provincial governments and the large corporate sector which passes the cost on to the consumer. That consumer is often the small businessman who has to buy his raw materials and products from the corporate sector.
The small business sector is almost totally Canadian-owned. There is no problem with foreign control there. And the small-business man always invests all his profits in the business. I said earlier that I personally had started four businesses, all of them successful and still operating. In no instance did 1 take any profit out of a business, apart from a monthly wage for myself and my wife, who was always active in them with me. For 20 years everything was plowed back into the business. The only time I ever made a profit was when I turned one business over to the employees who worked for me, when I decided to seek election or when we sold out and a profit was realized. If I were to turn the clock back and the budget we now have was in place, I would think twice about selling a business or building for the future as I have done for 20 years because the minister would be there next day confiscating 50 per cent of the profits that I had stored up.
Will these measures entice people to leave the comfort of a government or a corporate job and test their skills in the free marketplace? I do not think so. In good conscience I could not even advise my own children to start a business and test their ingenuity in a competitive manner.
I do not think a small-business man starting out in the climate that this government has created would be rewarded for the effort of building a new enterprise, of being innovative and inventing new products as was done in the businesses I started, and the effort of creating employment which will help stimulate the economy and improve conditions in general.
We are tearing the heart out of our total economy. Over 50 per cent of the gross national product is created by the small business sector. That is the sector which is efficient, productive and innovative. Unless we realize what we are doing before it is too late, we will destroy not only our small business sector but the total economy.
I do not want to appear philosophical about it but no matter how many times we change the Constitution or entrench rights, there is no personal freedom or individual right in a country that does not have economic freedom. One only has to read history and look around the world to realize that. If we destroy our free market economy, as the latest budget would, we destroy our personal liberty and freedom.


Some hon. Members:: Hear, hear!


Mr. Cyril Keeper (Winnipeg-St. James):: Mr. Speaker, I want to take this opportunity to put my feelings regarding Bill C-84 on the record, not because I am an economist or small-business man but because I think it illustrates the way in which the government has approached economic matters. My views on the bill are probably representative of those of many Canadians.
Small Businesses Loans Act (No. 2)
The bill is pretty flimsy-just two pages. That is not just a cheap trick that I am trying to use, but what that demonstrates is the nature of the legislation which offers loans to small-business men at prime rate plus one per cent which, as my colleague indicates, is nearly 20 per cent. I do not know what small business could operate in today's economy while paying 20 per cent interest.
The bill also gives a small token increase in the amount of money that can be borrowed, and clearly that is just a catch up for inflation. The bill is just a token response to tough problems. I say "token" because it is not going to do anything fundamental to create a climate in which small business can prosper or in which the employees of a small enterprise can make a good living and enjoy the good life.
Why do we have this token response, this flimsy legislation? It is because of the approach of the government toward economic matters in general. It has locked itself into an approach concerning the economy which completely abandons any attempt to manage the economy. Today it has adopted what is popularly called a monetarist approach to the economy. This approach has been recently rejected in Manitoba, for example, where the Conservative government, which followed this monetarist approach to the letter, was thrown out by the people.


Mr. Fulton:: Turfed out on their ear.


Cyril Keeper: The Conservative government was turfed out because people will simply not put up with abandonment of economic responsibility by government. While it is the Liberal government in office today which continues that kind of Tory attitude toward the economy, it is clear from the record-


Some hon. Members:: Oh, oh!


Mr. McDermid:: Talk about cheap tricks.


Cyril Keeper: -that the short lived Progressive Conservative government followed the same kind of monetarist policy, as is well illustrated by the fact that interest rates rose at least four times during its administration. Therefore, it followed the same monetarist route. We know the Tories to be monetarists, the people know them to be monetarists, and that is why they threw Lyon out of office. That is why Margaret Thatcher, another Conservative in Britain, suffers the lowest esteem of any government leader in memory. That is why Ronald Reagan, who is also a Conservative monetarist, is likely to be a one-term President. People will simply not put up with this Conservative approach to economics.


John Horton McDermid: How is Foot doing these days?


Cyril Keeper: There is no forgiveness for the fact that a Liberal government follows these Tory approaches to economic matters.

December 15, 1981
Small Businesses Loans Act (No. 2)


An hon. Member:: How long did the Commies last in B.C.?


Cyril Keeper: The budget of November 12, which has put small businesses into such dire straits, and small business people into such difficulties, was based on the assumption that the greatest problem we face today is inflation and the way to beat it is by tight monetary controls and by restraint in public expenditures.
The economic record of the last decade clearly demonstrates that these policies which have been carried on by successive governments just will not work in combating inflation. However, they certainly work when it comes to creating recession, when it comes to knocking people out of work and when it comes to making it impossible for small-business men to prosper. This, of course, would not be anything to decry if it were inevitable and there were no other ways by which to approach the economy. However, there is now clearly a good history of acceptance by governments of intervention in the economy and of intelligent approaches to economic planning. The Japanese and the Germans have done this, and we have done this at times, although not as well as we should have done it. However, it is clear that if we are to help small-business men, we need to take an intelligent approach to the economy. We must now stimulate the economy so that we can create employment and a market in which small business people can sell their goods and in which their enterprises can prosper.


Some hon. Members:: Hear, hear!


Cyril Keeper: We must once again make a commitment to economic planning and to adding some intelligence and compassion to the economic system.


Some hon. Members:: Hear, hear!


Mr. Gerald Laniel (Parliamentary Secretary to Minister of Industry, Trade and Commerce):: Mr. Speaker, I shall try to make this contribution to the debate as brief as possible, but I should nevertheless like to take advantage of this opportunity to show my colleagues in the House and the general public what we are accomplishing today by proposing another amendment to the Small Businesses Loans Act. Like most or perhaps all of the members of this House, 1 unreservedly support this bill to amend an act that has assisted small businesses to a very considerable extent, as was explained this afternoon by the Minister of State for Small Businesses and Tourism (Mr. Lapointe) when he opened the debate.
Mr. Speaker, it is easy for the opposition parties to criticize the government and government policy and to attack the budget. I feel that from time to time, the opposition should, in addition to the constructive criticism it occasionally produces, act sensibly and responsibly. The previous speaker on the Conservative side said earlier that small businesses are practically all that is left of the private sector in Canada.
So the federal government and other levels of government are accused of interfering in business and industry, while at the same time the government is asked to do something to save businesses. These people should be a little more responsible in what they say. They are asking us to reduce the deficit, and at the same time they want us to establish new programs. I was listening to the previous speaker for the New Democratic Party who seemed to disagree with the rate charged under this act, namely prime plus 1 per cent.
If we look at the statistics, we see that since the rate was changed, though remaining attractive for the private sector- after all, banks are also private businesses-small business loans have become accessible and the program has become very popular. On one side, they say loans cost too much and the government should subsidize, and on the other side, they complain that the government is interfering too much with private business and the Canadian economy, and should just pass legislation and let the situation evolve according to the natural laws of free enterprise. At the same time, they want the government to reduce interest rates on small business loans and I suppose also at the Lederal Business Development Bank, and they are asking the same favour for home owners' mortgages and other loans granted through institutions governed by federal legislation-obviously-and at the same time they are asking us to fight inflation. They want people to spend more, they want the government to spend more, they want to give the economy an artificial boost by making people spend, without making them responsible, and at the same time they want the government to get rid of its deficit.
Mr. Speaker, this Small Businesses Loans Act is not brand new. It goes back to the time when I arrived in this House! It was passed in January, 1961, a little over a year before I entered Parliament, and on a number of occasions, I was in the House when certain amendments were considered. The act was passed to help the lender make sums of money available at competitive rates, to secure such loans against any losses and to enable small businesses that lacked the collateral to obtain such loans, to go to a banking institution and, with the government's guarantee, obtain its financial services for a maximum of ten years for the purpose of improving his business. In 1961, when the act was first passed, the maximum loan was $25,000. Subsequently, this amount was raised in 1974 to $50,000 per business and was available to businesses whose gross revenue did not exceed $1 million. As Canadian small businesses expanded, the government had to increase these amounts. Today, under the provisions of this act which run parallel to the provisions of the Lederal Business Development Bank, a business may borrow up to $100,000 provided its gross total revenue does not exceed $1,500,000.
I participated in the previous debate in the House in 1980 concerning the last amendment which increased the lending
December 15, 1981

ceiling for the present two-year period. During the same debate, if 1 remember correctly, we increased maximum individual loans to $100,000. Today, a business which grosses up to $1.5 million per year may borrow up to $100,000, and can do so through the banks. In recent years, I believe in 1970, credit unions have become authorized lenders, and this also applies to trust companies and other financial institutions recognized and approved by the minister. Formerly, the Act was administered by the Minister of Finance who was the minister responsible to the House. This task has now been given to the Minister of Industry, Trade and Commerce. Mr. Speaker, who, in fact, takes advantage of these loans? Often, businessmen meet members in their offices and discuss their financial problems. They already have substantial mortgages on a building and liens on machinery and automotive vehicles, they have no idea where to go, and they are reluctant to see the director of a chartered bank or a credit union in order to have their application processed and obtain the tools they need to make their business grow.
As I said before, any business whose total gross revenue does not exceed 1.5 million and which is engaged in manufacturing, wholesale or retail trade, services, communications, construction or transport, is eligible for this program. There are many small businesses that could take advantage of this legislation, and 1 would encourage them to do so. The specific aim of the act is to make money available for the purchase and improvement of buildings or the renovation of facilities, for the purchase or construction of such facilities and for the purchase of property and machinery, but it does not provide for inventory financing. The government has decided, and this applies both to the Federal Business Development Bank and to the Small Businesses Loans Act, that it was up to the chartered banks and businessmen themselves to negotiate loan guarantees and credit margins on inventories.
Well, Mr. Speaker, the House is considering an act which, as I said when I started my speech, has been extremely helpful to small businesses in this country, especially, as my Progressive Conservative colleague mentioned earlier, since small businesses employ about 60 per cent of the Canadian labour force. This is a substantial figure. My hon. colleague said that these people were not unionized. That is perhaps the unfortunate part. Maybe some day they will be better protected, somehow, some way, and it will be up to the employees themselves and to the appropriate authorities to provide for that aspect. The fact remains that small businesses represent a considerable economic force in the development of the Canadian economy and of our country. Mr. Speaker, in the year ending on December 31, 1980, 16,417 small business loans, totalling $408 million, were granted, and I may point out that, although it is often said that Quebec is not an active participant in the economy, Quebec is still one of the most active borrowers. However, borrowing is not just owing money, bor-
Small Businesses Loans Act (No. 2)
rowing means doing something with that money. I am looking for a table, Mr. Speaker, which I had just now.
The figures for each province show that between January 1, 1981, and the end of October 1981, 4,363 Quebec businesses had borrowed $116,408,674 under this legislation for an average loan of $26,681, compared with only 2,451 small businesses in the neighbouring province for total borrowings of $74,188,468, which represents $31,000 per loan. It is only with this last figure that Ontario beats Quebec. It still remains that these two provinces obtained 50 per cent of all loans granted under this legislation by banking institutions. We should be pleased that small Canadian businessmen take advantage of this legislation. It is surprising to find, when all the figures are added up to the end of October of this year, that during the whole twenty-year period 96,158 loans for a total of $1,841,738,178 were put at the disposal of small-business men throughout Canada.
Members opposite might try to attempt to scare people by saying that a 20 per cent interest rate is prohibitive, but a businessman who is a good manager has commitments to meet; these commitments are often proportionate to his receipts, and that is why he can afford this rate of 1 per cent above the prime rate, which seems to be acceptable because these loans cost nearly nothing to the government. I could go on at length and quote figures showing that this legislation costs the government between $8 million and $10 million a year to administer because of loans which are not repaid and insurance costs.
In any case, Mr. Speaker, I hope that all members will readily comply with the request of the Minister of State who expressed the wish this afternoon that this bill be passed quickly so that it may benefit small businesses during the entire period, because if we do not act quickly, as we have spent about $500 million, I believe, of the $850 million maximum available, we shall not be able to meet the demand. It is only by increasing the maximum from $850 million to $1.5 billion that we can do so. In the present circumstances, when businesses must limit their expectations, be competitive and perhaps make more long-term or medium-term commitments than usual, during this period of high interest rates which are partly due to conditions in other countries, at this time of economic slowdown, small businesses are more hardly hit, and if we want to help them right up to end, right up to 1982, when this act will be reviewed and hopefully improved, we should give speedy passage to this bill.


Mr. Doug Lewis (Simcoe North);: Mr. Speaker, before I commence I would like to make a few comments about some of the remarks I have heard tonight. The hon. member for Beauharnois-Salaberry (Mr. Laniel) made reference to attacks on the government's budget. I would like to say to the hon. member that it is difficult to attack the government's budget because we have to find a place in line among the many

December 15, 1981
Small Businesses Loans Act (No. 2) thousands of business organizations, farmers and home owners who want to attack the government's budget. It is not easy to get any media space or attention when there are so many who want to attack the budget. We on this side can rest assured that when the hon. member returns to his constituency for the holidays he will have to contend with his constituents. I think that he will be relieved to return to Ottawa once he has had his full share of his constituents' comments.
The hon. member also referred to the consistency of our comments about the budget, and I will refer to this later in my speech by making reference to the complete lack of consistency on the part of the government with respect to the Small Business Development Bond.
The hon. member in the NDP commenced his speech by saying that he was not an economist, and then went on to prove it, sentence by sentence. When the hon. member for Winnipeg-St. James (Mr. Keeper) talked about the political situation in England, he occasionally mentioned the Tory party. However, 1 would suggest to the Chair that those knowledgeable about the political situation in England would have recognized that the hon. member consistently put his "Foot" in his mouth. I would say that his speech was as short in content as it was in length.


An hon. Member:: Yours is real swift.


Douglas Grinslade Lewis: It is a pleasure for me to speak on the Small Businesses Loans Act and its amendment. The amendment increases the maximum of all loans which may be guaranteed during the two-year period ending June 30, 1982, from $850 million to $1.5 billion. We on this side endorse the thrust of the amendment because of the problems facing small businesses in the economy of Canada today. There is a desperate need by Canadian business to have the financing which this government is not providing in any other way. Bankruptcies are increasing continually in this country and there is little or no action by the federal government.
The purpose of the act is commendable in that it is designed to encourage lenders in the private sector to make loans available to small businesses. These loans must meet certain criteria in order to be guaranteed, and this is specified in the legislation.
The hon. member opposite referred to some of those specifications earlier, and I would like to expand on that. Eligible borrowers must have a gross revenue of less than $1.5 million in the year of the application. Anyone knowledgeable about the wholesale trade knows that it is not very difficult to obtain a gross revenue of $1.5 million in any one year. This is a provision which is not amended by this act and should be reviewed in detail. Loans may be granted for the purchase of fixed or movable equipment, improvement for modernization of plants, purchase of or construction of premises and purchase of land. However, that does not include inventory financing or working capital requirements or the refinancing of existing debts, and these are the areas in which small businesses are hurting today. Small business traditionally financed its inventory by using bank financing. Today, that bank financing is
costing small businessmen a startling amount every month. Working capital requirements and refinancing of existing debts are being financed at horrendous rates which could have been greatly improved by the Small Business Development Bond. That bond would have helped small business, a subject about which I will say more later.
My experience with this legislation was gained in the field. It has not been all that good. 1 am not impressed by what the Canadian chartered banks do in Canada, despite the figures shown in the 1981 Small Businesses Loans Act annual report. I am not impressed when I see that the National Bank of Canada can lend $41 million under this legislation in Quebec and the other banks can not come close to that figure. As a resident of Ontario, I wonder why the Bank of Montreal lends more money in British Columbia than in Ontario and Quebec together. I wonder what the government is doing to ensure that all small businesses receive just treatment from all banks under this legislation.
I would like to discuss the responsibilities of the banks. It is about time, Mr. Speaker, that banks started to demonstrate some responsibility in this country. What we did as parliamentarians is to set up a bank system in Canada which would ensure successful banks. Where are the banks in this time of need? What are they doing for us? I suggest that they are spectators and not as heavily involved as they could be in helping to solve Canada's problems. I suggest that they have failed the Canadian people by not using all the personnel and financial resources which are at their disposal to come to our aid. The chartered banks in Canada, with the exception of a few branches, did not act very favourably toward the Small Business Development Bond program. 1 suggest to you that they use the switch and bake technique and provide people with conventional loans.
I know for a fact that when dealing with the Small Businesses Loans Act, the banker who was asked about a small business loan would reach under his desk and produce a book about as thick as the stack of Hansards which I have on my desk here and flip halfway through it and say, "You do not want this kind of loan anyway." They use the switch and bake technique to their advantage when dealing with the Small Businesses Loans Act.
I am concerned about why the average spread between what the banks pay out on savings deposits as opposed to the prime rate which they charge has increased. It concerns me that commercial mortgages are almost impossible to get. Why have the banks received direction from their head offices to demand appraisals on fixed assets involved in loans to businesses connected with farming? Why have bank profits increased so dramatically? Why are bank branches closing down in small towns and villages in Simcoe North? When are we going to see some initiative and innovation from Canadian banks? Although a Canadian bank has not failed since the Home Bank during the 1920s, they are failing Canadians morally every day.
1 would now like to deal with the legislation which was passed in Saskatchewan recently. I suggest that it is an
December 15, 1981

indication of the problems facing the banks today. As I understand the legislation, it has created a moratorium on foreclosures in Saskatchewan for one year. Home owners in that province can continue their mortgage at the same interest rate. 1 suggest that should scare the banks of Canada. Let me give an example of how the banks get money to lend. An elderly person sells his home and realizes $50,000 on the sale. Let us say he did that in 1978. He went to a bank and obtained a three year deposit certificate at, let us say, 10.5 per cent. If he had gone to a trust company, he might have obtained a guaranteed investment certificate. In any event, the bank holds this deposit certificate for three years until January 1, 1982, when this legislation comes into effect.He goes to his bank in Saskatchewan and says he would like his $50,000 back because he wants to put it into Canada Savings Bonds at 18.5 per cent. The bank in Saskatchewan would have to say, "We do not have the money; we will continue to lend it to you at 10.5 per cent". That is what will happen to the banking system. There will be unhappy depositors and a breakdown in the system if that kind of legislation is in effect right across the land. That is what the banks fail to realize, and that is why our party called upon the government to do as we did, that is to have the Standing Committee on Finance, Trade and Economic Affairs review bank profits and interest rates. We have asked for it but have been turned down by the government.
This amendment is really necessary because the small business sector of Canada is in serious trouble. The Progressive Conservative Party introduced the Small Business Development Bond. Our original concept was exciting and innovative. We brought it in in the December 1979 budget. We gave small business a way to translate long-term capital requirements into long-term financing at a preferred interest rate. Small business, the backbone of Canadian industry, which was in difficulty at that time, would have had a chance. All right, we lost, but in April, 1980, the Liberal government adopted the idea of the Small Business Development Bond. It adopted the wording but not the philosophy. New ventures were eligible but not ongoing ones. We were pleased nonetheless because at least new ventures could be financed. A brochure put out by the Minister of State for Small Businesses and Tourism (Mr. Lapointe) says that the Small Business Development Bond measure:
-is a tax initiative designed to reduce the interest costs of qualifying small business corporations ... in recognition of the important contribution small businesses make to Canada's economy and in support of their continued growth and development.
What could it be used for? It could be used for acquiring land, for financing Canadian scientific research and development expenditures, for refinancing a loan to the extent that a qualified expenditure had been made or for assisting a small business in financial difficulty. That was what the government designed it to do.
What did the Canadian Federation of Independent Business say about what it would have done? The federation says that even in its semi-emasculated state, the Small Business De-
Small Businesses Loans Act (No. 2)
velopment Bond would have given help to between 5,000 and
10.000	small corporations; it would have provided about
36.000	direct jobs; the gross tax expenditure during 1980-84 per job created would have been $5,000 in 1980; and there would have been no net costs to the federal treasury and an actual gain of $77 million in the First year of the program. That is what it would have done. Now there are problems with it. I do not want to dwell at length on the problems, but let us look at what the government did with the Small Business Development Bond. In that "equitable" budget of November 12, 1981, the bond was extended for firms in Financial difficulty.


An hon. Member:: Ian Deans is in the chair now.


Douglas Grinslade Lewis: Mr. Speaker, I can only comment at this point that you have aged considerably. However, you do have more hair for the job than the last Speaker.


An hon. Member:: Be serious now.


Douglas Grinslade Lewis: Those are not my instructions.
I suggest that what I am about to say will really curl your hair, Mr. Speaker. I am sorry. 1 am trying to give you all the dignity I feel you deserve, Sir.
What we are really doing to the Small Business Development Bond in this budget is saying to small business-


Nelson Andrew Riis: We are gutting it.


Douglas Grinslade Lewis: My colleague from the NDP is correct. I note a shift in emphasis on the part of the NDP. My colleague is absolutely correct that the government has absolutely gutted the Small Business Development Bond and emasculated it completely. In order to get a Small Business Development Bond now a business has to be going broke. Is that not a great advertisement? The next brochure from the Minister of State for Small Businesses and Tourism will say: "TerriFic! You can get yourself a Small Business Development Bond as long as you are broke". That is a lot a nonsense. It is absolutely no way to treat small business to say that in order to get help from the government and in order to get a guarantee from the government a business has to be going broke or be in financial difficulty. Is that something for the Liberal government to be proud of? "Yes sirree, if you are going broke, we are there," and the reason businesses are going broke is that the government put them there. I suggest that the banks saw through these Small Business Development Bonds immediately. There is absolutely no way any branch manager of a bank in Canada will telephone his head office and say: "Guess what, Mr. Vice-President? A customer just walked across the street from one of our competitors, and he looks really good because he is going broke". No bank will steal that customer from the bank across the way if he is going broke, but that is the criterion of the Liberal government's Small Business Development Bond program. No branch manager in the world would lend money to a customer because he is going broke; he could not be bothered with the paperwork.

December 15, 1981
Small Businesses Loans Act (No. 2)
I would like to read from a memorandum sent out by one of the major banks in Canada respecting the Small Business Development Bond. It is dated December 9, so it is current. It was written about one month after the tragedy called the MacEachen budget. It says this:
This new formula is being developed and . . . branches will be advised shortly of the formula. Until that time it is not possible to enter into any new SBDB agreements ... the SBDB program cannot be offered by banks until the government defines more precisely the eligible borrowers.
Presumably the government is going to great lengths to define financial difficulty, and by the time it gets financial difficulty defined, anyone who was not in financial difficulty when the government started defining it will certainly be in financial difficulty once the government has defined it. The criterion is not there and when it is, it is going to be disasterville!
I would like to refer to a recording of a telephone conversation my research assistant had with a bank manager in my riding on November 9, 1981. The bank manager said:
The new program stinks! They just received their instructions from head office today. They are cancelling their files as far as SBDB are concerned ... The only way they feel that they could consider an SBDB would be if the person had a marginal account with them already and that an SBDB would release the pressure. Even at that they would have to add 3 per cent to the rate to make up for the imposed 6 per cent dividend.
I want to read to the House a letter from one of my constituents addressed to the Minister of Finance (Mr. MacEachen). It reads!
We had been gearing up all year to build a new energy efficient building material showroom at our location in ...
Simcoe North.
Financing was tentatively approved at-
A bank.
-through the Small Business Development Bond program.
We wrote you September 8, requesting an extension to this program since we were having problems obtaining completed blueprints with approvals. When we received your letter of November 6, no definite answer was obtained only to look for an extension or change in the budget November 12.
It appears from the budget that we cannot now use this form of financing to complete our plans.
This business is not going broke. It is not in financial difficulty. To return to the letter, this is what is facing Canadian small business across this country. It says:
It just does not make sense to start to build considering the present economic conditions, interest rates at over 18 per cent, inflation running at 13 per cent and the number of business failures in our industry. Looking over past years profits and projecting (or predicting) the future is so uncertain that to contemplate building at this time would be out of the question without this type of financing available to small business. At a time when many companies are closing, laying off, etc. this incentive for Financing new buildings, equipment, etc. was really needed to help small business to expand and improve the economy.
Please reconsider your position on the budget for the Small Business Development Bonds.
There is no question but that we should support this bill. We do it with sadness, sadness because there was the mechanism available to this government to do something for small business in Canada. There was no need to gut the Small Business
Development Bond, but this government gutted it. Effectively, it is now the small business disaster bond. That is no reflection on you being in the Chair when I say so, Mr. Speaker. You have done a good job. It is now the small business disaster bond.
We can blame the government for this all we like, but the people who do not understand what the Small Business Development Bond was supposed to do for Canadian economy are the same bureaucrats living in this cocoon called Ottawa who fail to realize what the entire budget will do for the economy of Canada.
If ever these people get out of this place and visit small businesses in constituents like Simcoe North, we will show them the reality of making a living in these times. We will show them that if bureaucrats get out in the Field, they can see what is going on.
In closing I should like to say that I intend to support the bill and I thank you for your time, Mr. Speaker.


Blaine Allen Thacker: Mr. Speaker, we have a new face in the Chair. I must say this evening we have a very handsome face in the Chair.


Some hon. Members:: Oh, oh!


The Acting Speaker (Mr. Deans):: I think the hon. member is out of order.


Blaine Allen Thacker: I apologize for being out of order. I would never challenge the Chair. Presumably that says something about my comments.
This evening I want to say a few words on Bill C-84, the Small Businesses Loans Act. Because this is second reading of the bill I can discuss the principle, which is that there will be more government involvement in the lives of our citizens, particularly small-business men.
This amendment increases the amount the government guarantees to the banks to $1.5 billion. I am sure Your Honour is aware this is the eighth time the amount has been increased. When the bill first came in, it was $300 million, it is now $1.5 billion.
This bill increases the welfare of our banking system. We certainly would not want to have any banks fail. The bill says to the banks that if they will make loans to small business of up to $1.5 billion, the government will guarantee they will not lose it. This is an incredible bill and an incredible role for government.
The contingent liabilities of this government are now truly enormous when you add up all of the various contingent liabilities such as small business, farm improvement loans, Petro-Canada and the loans to our Crown corporations.
I suppose it is a proper question to ask why the amount has increased. I am sure government members will say it is because small business is important. There is no doubt about that. Over 90 per cent of all Canadians business is small business. There are 2.5 million people employed directly, and
December 15, 1981

25 per cent of our gross national product comes from the people who are statutorily defined as being in small business. If you add to that our farm community of some 330,000 farmers, you can clearly see the enormous impact of small business on our country.
Given the importance of small business, it is a very good question as to why this government has hurt them in so many ways. Small business is being given this little bit, a guarantee to the banks of $1.5 billion. That is just a drop in the bucket when contrasted with the many ways small business has been hurt.
The prime way in which the small business community has been hurt is as a result of the massive government deficit of $83 billion. As a result of that deficit, the government recently had to go into the marketplace and pull out $12.7 billion. That pool of capital should have been available for small business and other industries. The government has taken that pool of capital at a rate of interest that small business cannot compete with. No small business can pay 19.5 per cent and still make money.
What is happening is that those in this country with wealth are not using it to set up small businesses which would employ men and women, thereby increasing our communities and requiring more doctors, dentists and so on to serve the people. These people would rather lend it to the government at 19.5 per cent, and why not? It is guaranteed. That is a prime example of how the government is hurting small industry.
Politicians in general and cabinet ministers in particular have learned by being in government that they can deceive the people. They perform very well. The Liberal government is an absolute master. It proposes tremendous programs, all sorts of social programs, but there is a small capitalistic tax attached to it. The government says it will give the people this or that program without increasing their taxes. The trick performed by the great magicians is to borrow the difference. At first it is great. The people get the programs with no corresponding tax increase. Everything seems to be hunky-dory. At first only 5 per cent of government revenues went to service the debt. Suddenly it went to 10 per cent, 15 per cent, 20 per cent, and we are now in the situation where 25 per cent of the revenue collected from working men and women in this country goes to service the debt.
This money is not distributed equally in servicing that debt. Those with wealth receive 19.5 per cent from their government. That is a very real concentration of wealth. Within ten years we will have a nation of very, very rich and very, very poor. As a result of government deficits and a concentration of government wealth in the hands of a few, we are in the process of wiping out our middle class. A huge deficit prevents the government from having flexibility and the ability to help those who genuinely need help. Keynesian economics will work in the sense that during bad times governments should be able to borrow money on the collective strength of the nation, put it into an automotive industry or wherever it will create jobs. But during the good years, it is incumbent upon the government to pay the money back. That is where we have fallen down in
Small Businesses Loans Act (No. 2)
Canada. During our good years, in the 1950s, 1960s and the 1970s when we were really economically strong and we should not have been having deficits, indeed, we should have been lowering taxes and building up surpluses if we had to, instead we were increasing the deficit. Therefore, when we need to have government involvement, we cannot because 25 per cent of our revenue goes to service the debt. That debt concentrates wealth among the very rich. It is the small business people who hurt the worst.
There is no doubt that the major curse upon the nation at the moment is the Liberal government, a government that spends $100 million in advertising to tell people what a great government it is and what a great Constitution it now has with all of the entrenched rights. The Chair, as well as I, knows that all of the so-called entrenched rights were rights that we had because some of us believed that individually we all had the rights. Government gives us absolutely nothing. Government takes away rights. Government does not give me rights.
What are some of the most important rights one should set forth and entrench? Clearly one would be property. The reason our ancestors emigrated to Canada was to get away from countries where they had governments that did to them exactly what this Liberal government is trying to do to our people today. People emigrated to Canada because they had an opportunity to get land. Do we have that entrenched in our national Constitution? No, because the government deliberately took it out. That is something that Canadians need to understand. On a Friday during the constitutional committee meetings, the government agreed with the Conservative Party proposal to include it, but on Saturday morning the Leader of the NDP party stood up and said to the Prime Minister (Mr. Trudeau), "If you put that in, we will withdraw our support". On the following Monday, the Liberal government returned to the committee and withdrew that amendment granting individuals the right to ownership of property.
Did they accept any of our suggestions and proposals that we have economic rights in the Constitution? It could be stated in our national Constitution that governments cannot have deficits unless they (a) have a referendum or (b) there is a war or a depression, some major overriding concern. If it were included in our Constitution that there had to be balanced budgets, except for those few exceptions, we would not get into the situation where the deficit is so crushing to small business and to individuals.
The next way government has hurt small business in this country is through the curse of inflation. There is absolutely no doubt that inflation is primarily caused by government. Right now in this country government is taking over 50 per cent of our incomes. It takes it municipally with municipal taxes and licences, it takes it provincially with all of the sales taxes and provincial taxes, and it takes it federally. I agree with the hon. member for York-Peel (Mr. Stevens) where he describes a slave as simply someone who is taxed 100 per cent. That being so, Canadians are at least half slaves, and the person who puts

December 15, 1981
Small Businesses Loans Act (No. 2) them there is the government. All that means is that 50 per cent of our income goes to other people who make the decisions with regard to how that money is spent. That is what 1 do not like about it. The philosophy of the Conservative Party is to leave the money with the people and that millions of individual decisions will come to a far wiser result, rather than to leave it up to the federal cabinet consisting of some 30 people and the civil service bureaucracy which is not answerable to anyone. I do not like that, Mr. Speaker. 1 do not agree that over 50 per cent of my income should be spent at the whim and wish of other people. Leave it with me, Mr. Speaker, and I shall make those decisions. If all hon. members were to do that collectively, the system would work much better.


Gordon Edward Taylor: Hear, hear! That is democracy.


Nelson Andrew Riis: I rise on a point of order. Mr. Speaker, would the hon. member from Lethbridge-Foothills (Mr. Thacker) entertain a question at this point?


The Acting Speaker (Mr. Deans):: I wonder if the hon. member will entertain a question from the hon. member for Kamloops-Shuswap (Mr. Riis)?


Blaine Allen Thacker: Mr. Speaker, there are so many bad things about this government that I would be delighted to entertain a question at the end of my speech if, in fact, there is time left at the end of my 40 minutes, which is doubtful because I could really continue for four or five days.
It is absolutely clear that the Canadian people have a clear, philosophical choice. If the Canadian people were to vote for the NDP party, there would be an enormous concentration of wealth and decision-making power in the hands of government.


Margaret Anne Mitchell: A point of order, Mr. Speaker.


Blaine Allen Thacker: And if citizens want to have government-


The Acting Speaker (Mr. Deans):: Does the hon. member for Vancouver East (Mrs. Mitchell) have a question?


Margaret Anne Mitchell: Mr. Speaker, I should like to point out to the hon. gentleman-


Some hon. Members:: No, no.


Margaret Anne Mitchell: My point of order-


An hon. Member:: That is not a point of order.


The Acting Speaker (Mr. Deans):: I should like to suggest to the hon. member that it is quite appropriate for the hon. member to raise a point of order as a question, but that she might do it as a point of view rather than a point of order.


Some hon. Members:: Hear, hear!


Margaret Anne Mitchell: I rise on a point of order, Mr. Speaker. My point of order is that the hon. member who represents the Conservative Party in its traditional terminology continually repeats NDP party. Would the Chair please correct the member
and explain to him that it is the New Democratic Party and not the New Democratic Party Party.


The Acting Speaker (Mr. Deans):: 1 recognize the aggravation it causes the House. It has been raised a number of times. I bring to the attention of all hon. members the fact that the proper terminology is NDP. Of course, the "P" means party.


Blaine Allen Thacker: Mr. Speaker, 1 am pleased to have the floor once again. One becomes accustomed to these interjections from the NDP.


Some hon. Members:: Hear, hear!


Blaine Allen Thacker: There are different definitions of "P". I suppose we all have our own with regard to the NDP.
As I was saying before I was interrupted, clearly a vote for the NDP in this country means a vote whereby ordinary Canadians will have to give up more of their tax dollars. The decisions about how those tax dollars will be spent would be by a cabinet and a bureaucracy. The Liberal Party always picks up the themes of the NDP. There is no doubt that a vote for the Liberal government will have the same results.
Only a vote for the Conservative Party-and small business and individuals are beginning to realize that-will result in a real choice and people will be returning to our party en masse.


Gordon Edward Taylor: PET socialism is the same thing, instead of NDP.


Blaine Allen Thacker: Under the government's economic philosophy and the NDP philosophy, all roads will clearly lead to Ottawa. It is the same in the oil industry and under the National Energy Program where we have seen the flowering of that policy, where, previous to the NEP, individuals who formed their own companies could go out and drill a well if the seismic results showed that it should be drilled. They were entitled to deduct the cost of that well against any income that might accrue. That was a decision that was made as a function of management. Then we come along to the NEP policy which states that no longer will that be the case. The oil companies now have to come, first of all, to the bureaucracy in Ottawa for approval of the lease and where they can drill the well. If the seismic data says that it should be drilled in spot A, but the bureaucracy decides it will be in spot B, it will be in spot B. The bureaucrats will also decide whether or not one receives a grant based on a number of factors, one of which will be one's Canadian rating. People must first come to Ottawa for approval. As part of this philosophy, industry must operate that way now. If an industry wants to receive a DREE grant, it must obtain approval from Ottawa. It is a decision-making process which is now occurring in the centre, rather than being based on good economic business principles. I do not believe that is how the country should operate.
Previously, under the Federal-Provincial Fiscal Arrangements Act universities and provinces have been able to make decisions as to how dollars would be spent. Basically they have
December 15, 1981

been university decisions because they are autonomous institutions which prepare their own budgets, submit them to provincial governments for approval, and very seldom are they approved in total; they will often be cut back. Under the new proposals of the government pursuant to the philosophy that all roads lead to Ottawa, the universities and colleges will soon have to come to Ottawa to have their programs of instruction approved before money will paid out to them. Students will have the same philosophy applied to them. One program which is being discussed actively by the government is the voucher system. This will mean that students will come to the national government to receive vouchers with which they can go to universities of their choice. One might think that is great, that it is free choice for people, but we know it has some very severe ramifications.
First, large institutions will be able to destroy the small ones because they have the existing infrastructure, power and programs to offer more attractive packages to students. This will mean the closing of universities in various small towns and cities across the country where universities have added immeasurably to the cultural, intellectual and social life of communities.
Second, with respect to students individually, the voucher system will initially apply to all disciplines. For example, if one wanted to be a philosopher, one would probably be able to obtain a voucher. But it will not take very long before the bureaucracy starts to say, "We need more engineers in the next four or five years. Therefore, if you want to study philosophy, there is no national money for you; but if you want to study engineering or something else, here is your voucher". This will totally disrupt and distort what has heretofore been free choice on the part of students to decide what they want to study in response to their own interests. It goes back to the increasing philosophy of the government that all roads lead to Ottawa.
The next major kick at small business surely must be the budget. We know that the budget tax take is truly enormous. Since the government came back into power in 1980, it presented the budget of April, 1980, the tax increases in the budget of October, 1980, the energy taxes which were placed on the backs of ordinary citizens, and now the enormous tax take of the November, 1981, budget. If we add these together, we realize the tremendous pressure which is being felt by ordinary Canadians. It is very understandable why all hon. members are receiving dozens and dozens of letters from organized groups indicating that every aspect of the budget is wrong. At a time when ordinary Canadians, the men and women who really add something new to the country, are taking home less net pay, government revenues are up 30 per cent and government expenditures are up 22 per cent.
Just to get an idea of the extent of the unhappiness, perhaps I could refer hon. members to the article which appeared in The Globe and Mail indicating that some 18 accountants from the city of London, Ontario, sent a letter to the Minister of Finance (Mr. MacEachen) pointing out how absolutely devastating are the budget provisions. Those 18 accountants repre-
Small Businesses Loans Act (No. 2)
sent between 85 per cent and 90 per cent of the small business community in London. London, Ontario, is a very significant city, it is a major city in the country. Through their accountants, 90 per cent of the businesses are writing to the Minister of Finance to say, "Look, it is absolutely crushing us and it will not wash". Perhaps Canadians, small-business men and women are waking up to the real danger in the country.


Cyril Keeper: Mr. Speaker, I rise on a point of order. I think the hon. member has been using what I would describe as unparliamentary language. Given that increasing percentages of people these days who are entrepreneurs are of the female sex, why does the hon. member continue to refer in an old-fashioned way to businessmen?


Some hon. Members:: Oh, oh!


The Acting Speaker (Mr. Deans):: That is an interesting point of view, but it is hardly a point of order.


Gordon Edward Taylor: Is that not a wonderful contribution? It is an NDP contribution.


Blaine Allen Thacker: Mr. Speaker, the hon. member shows his true level of mentality because in fact I heard his speech and he used the word "businessmen" too.


Cyril Keeper: Mr. Speaker, I rise on another point of order. The hon. member is correct that in the first instance I used the term "businessmen", but with the interjection of my learned colleague 1 learned from my experience and talked of business people.


Blaine Allen Thacker: Speaking of learning, it has never ceased to amaze me how hon. members of the ND Party have never been able to learn lessons from history. Their solution to the economic problems of Canada is for more government. Let me look at what happened in other countries where that occurred. Since the Second World War in the United Kingdom there has been a total nationalization of the coal, harbours, electrical and automobile industries. Every aspect of the life of citizens of the United Kingdom has been nationalized. Are they better off with the nationalization of every major industry in Britain? Of course they are not, and they are trying to get out of Britain by the hundreds of thousands. The reason they are trying to get out by the millions is that, as we can tell and chart statistically, for every year the country has a socialist government it will have a year of real pain and anguish. The people of Britain are going through the agony of hell because they have had so many socialist governments which have nationalized all their industries.
Let me refer to another example, that of Poland. Poland has an incredible history in which it was several times a major world power. Also it has a fabulous culture, social life and respect for the family unit, which are hard to beat. It is a very religious country. As a result of government, we find in Poland that all means of distributing food and all industries have been nationalized. Again it is governed by a cabinet of some 30-odd people, with the bureaucracy making decisions as to how

December 15, 1981
Small Businesses Loans Act (No. 2) money should be spent. They simply cannot do it, and history teaches us this. Rather than Poland being a food exporter today, as it was, its people are now standing in line waiting for food.
This is where small business people come in. Small business people are really the buttress, the group which can make quick decisions. When the economy is going sour, they can make the necessary adjustments to get back on stream, which is impossible for the government. We have found that to be the case with PetroCan. We have $1.5 billion in it. We must remember that it started out with the $300 million or $400 million which we put in. It took over one company. It was not working, so we gave it more money. Every year we give it hundreds of millions of dollars. It still was not a success, so we gave it access to 25 per cent of all northern lands from which to choose. That still was not working, and now we have the flowering of the policy to expropriate wealth from the people who have found oil and give it to Petro-Canada. The reason for this is clear. That company cannot fail because if it did, the political image of the government would be tarnished. It does not matter how much money it will take; Petro-Canada will succeed if they have to take over every oil company in this country so there are no competitors.


Gordon Edward Taylor: It is straight communism.


Some hon. Members:: Oh, oh!


Gordon Edward Taylor: Behind the scenes communism, and you are hiding it but the people are waking up.


The Acting Speaker (Mr. Deans):: Order, please. The hon. member for Temiscamingue (Mr. Tousignant) on a point of order.


Mr. Tousignant:: Mr. Speaker, 1 have listened to the hon. member since he began speaking. It seems to me that he thinks he lives in the year 1881. I should like to remind him that we are living in 1981.


The Acting Speaker (Mr. Deans):: That is an interesting reminder.


Blaine Allen Thacker: Mr. Speaker, it is interesting how hon. members get exercised when they are given a clear enunciation of principles and a clear explanation is given to the people of Canada of what it means to vote Liberal, what it means to vote NDP as compared to voting for this party. This party believes that government should basically restrict itself to regulation- I do not care how strict the regulations are-so that there cannot be an exploitation like that of the 1880s. The hon. member for Temiscamingue (Mr. Tousignant) should remember that it was the people of France in 1790 who had to have a revolution in order to get government off their backs and that it was the people of the United States who had to have a revolution in order to get government off their backs.
The Canadian people are going to be faced with exactly the same choice, although perhaps not in my generation because I
will survive and not in the generation of my son or daughter because they will survive. We will teach them the system and they will be able to manipulate within it. One day the ordinary citizen of Canada will have to fight the French and the American revolutions again in order to get government off his back because the problem is government per se.
There is another attack on the 330,000 farmers in this country who are small-business men as well as the 2.5 million people who work for small business in Canada. That attack in the budget was clearly related to capital gains. It has effectively blocked small business people who have worked their whole life, taking perhaps only a meagre salary, and who would use the proceeds of the sale of the business for their pension when they retired. Until the last budget was introduced, such people used to sell the business to their children under an agreement for sale whereby the payments would be spread over ten or 15 years and the capital gain realized on the sale spread over the same period. In each year they received a payment from their child, they would pay a portion of the capital gains tax and keep the rest of the money for their pension.
Sometimes, in the case of farmers, the children could get a loan from the Farm Credit Corporation or, in the case of a small business, from the Small Business Development Bank. They could get the cash and then give that to the parent who would buy an income-averaging annuity and spread the capital gain over 10 or 15 years, and thus have a good pension. That scheme has been wiped out by the budget. The government insists that the forward-averaging provision will be equally generous but it has not been able to demonstrate this is the case I am convinced that forward-averaging is not going to be as generous to a man or a woman of retiring age-perhaps because it often happens that they do not live long enough to enjoy the benefit of it.
I think figures will show that if a farmer sells his property and then dies within the next year, the government will take the bulk of the estate, even though the spouse might be involved.
I could go on talking about the other budget attacks such as energy costs and employee benefits that have been taxed, higher housing costs, higher food costs, unemployment-I could wax eloquent about how the solution is more small business entrepreneurship, with the government acting as regulator and setting regulations to protect people so that those with initiative and drive would be able to compete in the marketplace. That would mean a continuous process of the weak and inefficient dropping out of the system. But when government becomes involved, anything it touches never has to apologize thereafter, even if it is inefficient. The system is just perpetuated.
A classic example of this, one in which I am sure you will be interested, Mr. Speaker, as you come from an Ontario riding, concerns the automobile industry. Very few Canadians realize that lay-offs today in the automobile industry are the result of government decisions taken in 1973-1974 to keep the price of Canadian oil depressed. That decision sent signals to ordinary Canadians that the price of gas would remain low and so they
December 15, 1981

could continue to buy big cars. It sent signals to the car manufacturers to continue building big cars. Meanwhile, Japan and Germany, not having the resource cushion that we have and having governments that are more direct and honest in matters of economics, immediately put their oil to world price and the best brains in their country to designing efficient engines and cars. Now, eight years later, they are whipping our industry because they made hard decisions.
I am sure it is difficult for the man in the street today to appreciate that he has lost his job in the automobile industry because ten years ago a Liberal government made a decision about the price of oil. Any Canadian who fails to appreciate the relationship between government decisions and subsequent injury, makes a fatal mistake.
Generally speaking, Canadians do not spend enough time on their politics. Perhaps that is because the country is so big. Other countries such as Greece and Great Britain take their politics seriously. I wish it were so in Canada. I believe that if ordinary Canadians understood more about the relationship between government decisions and the subsequent economic effects on them individually, they would pay more attention to all of us as politicians. It gets down to the fact of politicians being able to fool Canadians almost always!


Some hon. Members:: Hear, hear!


Benno Friesen: Mr. Speaker, I take pleasure in being able to spend the remaining 11 minutes speaking to Bill C-84 which extends the limits of borrowing under the Small Businesses Loans Act.
I was somewhat amused by the puerile interjections made during the speech of my hon. friend, the hon. member for Lethbridge-Foothills (Mr. Thacker), by the hon. member for Vancouver East (Mrs. Mitchell) and the hon. member for Winnipeg-St. James (Mr. Keeper). Their remarks reminded me of Alexander Pope's perceptive comment-"A little learning is a dangerous thing".
Again we have seen why the New Democratic Party is so dangerous. While we are extending the borrowing limits of this bill or, rather, the security to a lender to $1.5 billion, we really are not addressing the problems that are faced by the business community.
First of all, we need to address the greatest need of the business community, which is an atmosphere of stable planning for itself. No business can thrive, prosper or plan for the future if the future is filled with insecurity. The kind of insecurity which has been built into the economy by this government is destroying the planning and building capacity of our business community, particularly the small business community.
I would like to refer to a couple of previous Liberal budgets which were designed to send signals to reach the business community to plan for the future. First of all, I would like to refer to the budget presented on November 18, 1974, by the
Small Businesses Loans Act (No. 2)
then minister, Mr. John Turner. On pages 1426 to 1427 of Hansard, in relation to MURBs he stated:
I am confident that this measure will attract a significant amount of private equity capital into the construction of new rental housing.
. . . will provide the impetus necessary to increase the housing stock in this country at a healthy pace and fulfil our commitment to place decent accommodation within the reach of every Canadian.
In 1974 that was called an incentive, an initiative; but in 1981, under this present budget, it is called a loophole. I refer to the same budget where the then minister was speaking of depreciation write-offs. On page 1427 of Hansard of November 18, 1974, Mr. Turner stated:
... in the area of business investment, I wish to announce the extension of a measure which has made a major contribution to the strong investment performance, which is improving our productivity, enhancing supply, creating new jobs and helping to sustain the Canadian economy . . .
This measure is the two-year write-off of expenditures on new machinery and equipment for manufacturing and processing in Canada-
In 1974, that was called a business investment incentive; but in 1981, that is called a loophole, and it is called unfair.
In 1976, the then minister of finance, referring to capital cost allowances, said, "After making an extensive review of the Canadian system of capital cost allowances, the main conclusion reached is that it is basically sound. It is not out of line with systems in other industrialized countries." That was an incentive in 1976; but today that is a loophole. The point I am trying to make is that business people have come to all of us, expressing their desire to invest, wanting to look into the future in order to do their planning, and asking, almost in anguish, "What are the intentions of government in this area?" I think that builders have come to all of us and have asked, "What is the future of MURBS? Will the government extend the program to December 31 of this year?" I suggest that it is the atmosphere of instability and insecurity which is killing the incentive, the drive and the zeal of the small-business man today.
Second, what we need and what business needs is a redirection of government goals! I would like to underscore what has already been stated to us tonight by the hon. member for Lethbridge-Foothills. He said that the government formerly acted as a policeman, as a regulator, to ensure that the economic actors in our economy were functioning well. At one time the government was the policeman. Today it is a principal actor in the community. 1 point out that at one time the government did most of its borrowing out of the country and dabbled with borrowing within Canada. However, the last Canada Savings Bonds changed all that. On the first day of the sale of those bonds in my community, one vendor alone sold $1.5 million worth. That should be considered, let alone considering all of the other vendors who sold bonds to a total of $12 billion across Canada. That has robbed the business community of a potential $12 billion borrowing pool which ought to have belonged to it by right. Therefore, the small-business man can no longer go to the private investor and borrow $50,000 or $100,000 because that money has now been lent out to the government. I might add that when the

December 15, 1981
Small Businesses Loans Act (No. 2)
government borrowed that money, it invested in non-productive investments.
Finally, since I have only a few minutes left to speak, I would like to address myself to the Small Business Development Bond and what the government has done to it through this particular budget. In doing so, I would like to read into the record a letter I received from an accountant in my constituency. In the letter, he is pleading with the tax policy and legislation branch of the department of finance on behalf of his clients. He writes:
My client is a company involved in poultry processing in the interior of B.C. As you are probably aware, poultry processing is a very high risk business as evidenced by the present proposed closure of the Panco Poultry plant-
The Panco Poultry plant is in Surrey, British Columbia. The letter states further:
-and by the previous closure of Maplewood Poultry. The Honourable Eugene Whelan has been indirectly involved in assisting the Maplewood Poultry Plant and, I am sure would provide you with any required details about the high risks involved.
Three years ago my client started a very small plant from 'scratch' and has recently been involved in large capital expenditures to increase capacity and employment. A publicly stated goal of the federal government has been to encourage investment in secondary industry (and of course increase employment as a result) in the lesser developed areas of the country. My client's investment expenditures have been until November 12, 1981, a specific example of physically putting into practice the government's highly acclaimed self-laudatory goal.
The client had a large amount of plant expenditures eligible for the SBDB, and, until November 12, 1981, arrangements had been 'substantially concluded' (as had Dome Petroleum) to refinance existing loans originally made for plant expansion so that the burden of record interest rates could be alleviated somewhat by the SBDB.
The only outstanding issue at November 12, 1981, was that the client had not yet decided what total expenditures were still to be incurred before December 31, 1981. Prior to November 12, 1981, because of the nature of the SBDB, it had been decided to wait until the last possible moment before December 31, 1981, to issue a SBDB, so that the precise and maximum amount could be financed under a SBDB. This would result in the maximum relief possible from the interest expense burden.
However, the client's diligent plans have been put to waste by the November 12, 1981, budget. As you can see from the enclosed photocopies the bank has advised that the formula regarding interest expense on the SBDB had changed. Now the client has been advised that the interest expense on SBDB, issued after November 12, 1981, will be 3 per cent higher than for those that had been issued before November 12, 1981. For all practical purposes that reduction 3 per cent spread now makes it no longer attractive for the client to issue SBDB. The net result of the client's diligent planning based on the previously set rules and deadline of December 31, 1981, is that they are penalized by the budget by losing out on an interest expense reduction of an estimated $5,000.00 per year (3 per cent of $169,500.00).
I would respectfully request that the SBDB budget prepared be amended so that it results in no difference in the interest formula charged by banks. Then my client (and other similarly affected Companies) can be treated in the same fashion as those companies who had issued SBDB before November 12, 1981.
The accountant went on to write to the Royal Bank, who was the lender of that bond. He stated:
I am writing to confirm our telephone conversations of November 17 and December 1, 1981. On November 17th you advised that the Company's SBDB application progress was still acceptable as the application was substantially complete before November 17th. On December 1st you advised that the bank's formula had changed because of the federal budget and the result is an effective rate increase of 3 per cent per annum-
As a result of the dramatic change in the cost to the Company, it has been decided to temporarily shelve its plans to obtain a Small Business Development Bond pending any change in government proposals.
That is what the government is doing by providing an insecure and a hostile climate where the government is the major competitor in the lending industry of our country.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Bert Hargrave (Medicine Hat):: Mr. Speaker, this adjournment debate is a follow-up to my question addressed to the Minister of Agriculture (Mr. Whelan) on November 19 which can be found in Hansard at page 12920. My question was a specific request for a progress report on a national harmonized beef cattle stabilization program for the calendar year 1981.
The minister knows my views and concerns about Canada's beef cattle industry, which is now in such a serious crisis throughout all of Canada. We have talked about it privately and in committee on various occasions. I advised the minister of the exact subject of my question in advance. It concerned stabilization, but he ignored my question.
He said:
Madam Speaker, the hon. member asks about what kind of plan I was proposing.
The minister went on to brag about his 1977 proposed stabilization program for several agricultural products. The situation four years ago was entirely different from today's cattle crisis. In 1977, our Canadian markets were trying to recover from political manoeuvring, mostly by the American government following that country's price and wage controls and its infamous "Nixon freeze". That was the occasion when United States over-fat steers, some of them weighing as much as 1,800 pounds, were able to be brought into Canada for slaughter and then be re-exported as beef to avoid the Nixon freeze. That was also the period of massive offshore imports from Australia and New Zealand that had unrestricted access to our Canadian markets at give away prices.
When the minister recites this story of his 1977 stabilization plan, which incidentally never came into being for our cattle industry, he should tell the whole story and why that plan could not work then. Now, of course, we have an entirely different and much more critical situation. The biggest difference is that our cattle numbers and supply cycles are at their low points and have been for over four years. Our industry is
December 15, 1981

fast becoming a complex total of balkanized regions as one province after another competes through its own treasury board with each other with various provincial subsidies and top loaded stabilization plans. Surely this is the wrong approach to take.
My original question was on national stabilization. The minister answered by discussing his personal cattle questionnaire. It seems that 140,000 copies of this questionnaire had gone out over his signature, including 53,000 to dairy producers. That sounds like a large number, but the minister and his staff must now know that many beef producers and feeders had never received a copy of this questionnaire.
Our beef cattle associations in Alberta and in Ontario through a recent follow-up survey have found that only one third of Alberta cattlemen and 40 per cent of Ontario cattlemen have received the questionnaire. These are beef cattlemen and not dairy producers. If the minister cannot do a better job than that, he would be well advised to abandon the questionnaire. It is no accident that the' wording of the questionnaire was deliberately slanted to answers that favour marketing boards and supply management. Does the minister realize that Alberta's three largest feed lots turn out more fat cattle in one year than all of Quebec, including Quebec's dairy cattle population?
In the meantime, our Canadian-fed cattle market prices have dropped $6 to $7 a hundredweight over the last ten days. The crisis is here now. It is demanding attention now.
The least disruptive approach is to use the federal stabilization legislation with cost sharing by the cattle provinces and cattle producers and feeders themselves. I suggest that it is most unfortunate that the minister has made it rather obvious that he does not intend to act until after the three current cattle investigations have been reported. These three investigations are, first, the Senate Agricultural Committee studies on Alternatives to Beef Marketing; second, the questionnaire I have just mentioned which the minister has sent out and, third, the two-man investigative committee which has finished making its private investigation, throughout western Canada especially, and who are presently writing their report.
I sincerely hope that the minister will realize the situation which Canada's cow-calf, yearling and feeders sectors in the cattle industry are faced with today and does indeed meet with cattle producers, through their associations, to get the cattle stabilization program under way.


Ralph Ferguson: Mr. Speaker, in response to the hon. member for Medicine Hat (Mr. Hargrave), who is not only a fellow member in the House but is also a fellow beef producer, let me say that I can understand his concern in this regard. I fully realize that since 1977 the cowherd in the United States has increased by approximately 6 per cent and the number of replacement heifers are up accordingly, while these numbers have remained quite con-
Adjournment Debate
sistent in Canada since 1977. Therefore, we must move to ensure that the proper programs are implemented to continue the existence of a beef industry in Canada.
One of the reasons that the minister had sent out the
140,000	questionnaires to the beef producers in Canada, which of course included some dairy farmers, was to get background information and the opinion of the producers at the local levels since there was a difference of opinion between various cattle producers' organizations. I am well aware of the fact that not all of the beef producers received these questionnaires. I have received similar complaints in my own constituency, but I did contact the Cattlemen's Association in those two counties and asked them to submit lists of their membership so they would all receive a questionnaire.
In regard to the proposal for stabilization, if we could have a system of nationalized stabilization which was in harmony with each province, I could agree that this may be a proper direction to follow. However, when there are incidents of top loading, as referred to by the hon. member for Medicine Hat, which existed in the hog industry last spring, that proposal is clearly unacceptable and unfair to the individual provinces and producers in those provinces across Canada. Until there is a move in the direction of harmony between the provinces toward stabilization programs, which the minister has attempted in many commodities since 1975, I think perhaps we must look at all the alternatives. It is in this context that we want to make sure that all alternatives are examined, not only that of the Senate committee but that of the two-man committee from which the minister will receive information, and also from the questionnaire.
I should perhaps advise the hon. member that the minister has said that it is not desirable to make the preliminary findings public but only the final tabulation.
With respect to an estimate of the number of questionnaires returned, I think it would be pure guesswork at this point to make any estimates in that regard. I hope the hon. member will bear with us until all alternatives are examined respecting the critical situation we are facing at the present time.


FOREIGN INVESTMENT REVIEW AGENCY-APPROVAL OF SALE OF TORONTO HOTEL TO HONG KONG INTERESTS. (B) TIME TAKEN TO ISSUE AGENCY APPROVAL
Benno Friesen: Mr. Speaker, on November 24 I rose in the House to ask the Minister of Industry, Trade and Commerce, (Mr. Gray) about the approval of the sale of the Harbour Castle Hotel, a Campeau property, to a wealthy Hong Kong interest controlled by Mr. Canning Fok. At the same time I asked the minister what the average time to gain approval through F1RA is. He indicated, "At least 50 per cent of the applications are dealt with in three weeks or less." What he neglected to say was how long it takes the other 50 per cent.

December 15, 1981
Adjournment Debate
According to testimony in committee on May 14, 1981 Mr. Gorse Howarth, commissioner of FIRA, stated that for the rest the record is not so good. He said that the median for the remainder-that is, the average-is at present running at about 150 days. If we consider that to be the average, we can imagine what the lowest possible one is compared with the highest.
I have before me a chart from the latest FIRA annual report. It shows that in 1980-81 there were 62 applications pending on small business cases on which more information was requested by the minister, 166 unresolved applications carried forward from the previous year and 311 applications under assessment at year end. This incredible backlog is familiar to the business community and to the lawyers who are faced with the frustration of shepherding the applications through that national boondoggle. That is why I was concerned about the background of expedient treatment and special consideration given to Mr. Robert Campeau and his organization.
The particular concern on which I focussed on November 24 refers to the swift sale of the Harbour Castle Hotel to Hong Kong interests. It is not an exaggeration to say that eyebrows went up all over this country about the way it was worked through, and it would be interesting to know what significant benefits to Canada were received in the process. I was also concerned about the answer the minister gave on November 24 when he said:
I can assure my hon. friend that the full process was followed and the decision that was announced about the transaction involved significant benefit for Canada, as stated in the relevant press release.
My immediate question has to do with the minister's statement that the full process was followed. Commissioner Howarth says that sometimes the cabinet is responsible for delays, but it seems clear that there was absolutely no cabinet indecision with regard to Mr. Campeau's hotel deal. It is reported that a couple of strategic telephone-calls were made, which greatly facilitated its passage within a comparatively short period of time. It was done within a few days and no more than 10.
Second, the minister referred me to the press release and suggested there was a significant benefit for Canada. "Significant benefit", of course, are bywords or catch words to justify approval by FIRA-particularly in this case, I would say.
I noticed that the press release in which the minister announced this decision also announced another one to establish a new business at Tillsonburg, Ontario. The press release lists all the significant benefits to Canada on this second decision but not one whit of information regarding the sale of this hotel or any of the supposed benefits which are to accrue to Canada. I might revise that just a little bit, look at the chart appended to that press release and refer to two significant benefits to Canada dealt with thereon. There is "new investment" and "increased resource processing or use of Canadian parts and services". I wonder what incredible increase in use of parts and services there will be as a result of the purchase of that hotel by Mr. Fok.
The question with which we must come to grips is how much longer this kind of obvious favouritism, based on what can only be assumed to be political sympathy, large campaign contributions and other factors, is going to continue? Mr. Campeau is not the only one who benefits from this largesse of the Liberal party establishment, but he has to be one of the most obvious and distressing examples.


Gérald Laniel: Mr. Speaker, I am pleased to try to answer the hon. member. As the parliamentary secretary, I have been closely associated, maybe more so than other members, with the personnel of FIRA. I appreciate the way they have tried to be efficient and at the same time just.

Mr. Speaker, the government is often accused of taking too long to process investment proposals submitted for consideration under the Foreign Investment Review Act. The governe-ment is obviously very sensitive to such criticism and it has throughout the years developed ways of making the process faster and more efficient. I am happy to say that these methods have been improved, but the question asked by the hon. member is not concerned with this aspect. Apparently, the hon. member is accusing the government of processing certain cases too quickly, which I feel is a compliment to the Foreign Investment Review Agency, and I wish to thank him for giving me an opportunity to discuss the agency in this House. Mr. Speaker, the Canadian government has always tried to deal with the problem of delays in processing. In 1977, it introduced a procedure for small businesses, which made it possible for foreign investors to submit a less detailed application when a proposal concerned assets of less than $2 million and a business with fewer than 100 employees. Since this change was made, about 60 per cent-not 50 per cent as my colleague said-of investments considered under the act were in this category. The processing time for an investment proposal in the case of a small business is about three weeks. It is clear that other cases which may be more substantial and more complex and may have a considerable impact on the Canadian economy will take longer. But even in such cases, the government has tried to reduce processing time by encouraging investors to discuss their plans informally with the responsible officers, in order to save time and prevent delay.
Mr. Speaker, I would also refer the hon. member to the information document "Economic Development for Canada in the 1980's" which was published at the same time as the budget. In this document, the government again states that it wants the administration of the act to be timely and efficient. The document also mentions that a review of the administrative procedures is under way to establish what changes in these procedures are warranted and should be made on the basis of the experience of the last seven years. Mr. Speaker, the transaction to which the hon. member is referring was made in
December 15, 1981

the best interests of Canada. The agency was informed of the plans before an official application was made and was able to act quickly. The transaction has resulted in a number of important benefits to the Canadian economy.

As the hon. member stated in his remarks, FIRA has found that this transaction can be judged as one that brings significant benefit to Canadians. Of course, it is impossible to unveil all the information that was made available to FIRA during those negotiations. But the hon. member must understand that the records of FIRA prove that it is a dependable organization and that that decision, as many others, will be for the benefit of all.


An hon. Member:: It is only because it is illegal to tap phones.


PUBLIC WORKS-CONTRACT FOR USE OF CENTENNIAL TOWERS OFFICE BUILDING IN OTTAWA. (B) REASONS FOR GOVERNMENT PROPOSAL
Hon. Elmer M. MacKay (Central Nova):: Mr. Speaker, like my colleague who spoke before me, I am rather outraged at the special status that Mr. Campeau and his organization appear to enjoy in this country. I am amused to think that this expedient treatment, as described by my hon. friend opposite, is somehow a dramatic improvement in the procedures of FIRA. Actually, it is a remarkable departure. We will see if this kind of treatment is extended to anyone else in the future.
In raising the issue that I brought up on the same day as my colleague as to whether or not Public Works should be dealing with Robert Campeau and his organization yet again with regard to a building owned by that company here in Ottawa, I think it is appropriate to keep in mind that the Department of Public Works inventory of vacant space in Crown-owned buildings as of November 1, 1981, indicates approximately one million square feet of surplus space in the national capital area, and there is a note on the data that indicates there is yet another 1,735 square meters, if we must pay tribute to metric these days, of vacant space in 17 other Crown-owned buildings.
Of course, this is the official Department of Public Works version. Mr. Speaker, we both know that there is likely at least as much vacant space camouflaged by unused desks and empty filing cabinets in many departments such as Statistics Canada, for example. Some of us who are used to that-even hardened political observers of wastes and profligate spending by this government, keeping in mind well-known incidents such as Mirabel, the Consolidated Computer debacle that cost $100 million, and most recently the Bank of Canada over expenditure and the CNR overpayment of $50 million-somehow Find it offensive to see what has been happening over the years with Mr. Campeau. He is in a special category. He is in a recurring category. I guess it should not come as a surprise to everyone that Mr. Campeau is getting another sweetheart deal since he has made political influence and back-stage manoeuvring an
Adjournment Debate
art form. Mr. Campeau's latest attempt to deal through the Liberal Party establishment and around the public service, at the taxpayers' expense, is typical. Whether it is making a mockery of the procedures of FIRA, as just pointed out by the hon. member, with some high level assistance from his friends in order to expedite the sale of his organizations, hotel, or buying back Campeau stock from the public at less than fair value, after receiving benefits once again to inflate it, from the taxpayer, this leech-or perhaps it would be better to say political proctologist of the Liberal Party-has certainly been consistent in his methods for many years. His latest proposal regarding Centennial Towers is yet another manifestation of his penchant for putting his snout into the trough. The fact that this building, like many others he has built, is in poor condition is one factor for concern. Leaving that aside for the moment, I want to ask the government why the long suffering taxpayers, at a time of so-called financial restraint, have to have yet another umpteen thousand square feet for this swollen and bloated bureaucracy and why it must come from Mr. Campeau. Of course, I guess that figures.
A very comprehensive and estimable research project has been carried out by two Ottawa ladies, Helen Deachman and Joy Woolfrey. The article is entitled "Les Terrasses de la Chaudiere: How the Liberal, federal government did business for us with the Campeau Corporation". This is an excellent article. It should be required reading for a lot of people in this country. I will certainly do whatever I can to see that it is widely circulated. I only wish that it were possible for me to table it. However, I understand that is not possible. I will certainly send it to a lot of people, including our friends in the United States, where Mr. Campeau's organization is now attempting to establish some in-roads. I believe it will save a lot of grief to a lot of people. We owe that to the Americans. We owe that to them, in a small way, to make up for some of the things that have been going on between the two countries.
This research project took more than a year to complete. It clearly outlines the methods and personalities that were involved and the tremendous rip-off of the Canadian taxpayer. The Department of Public Works, the National Capital Commission, past ministers of public works and several cabinet ministers, past and present, are all indicted. Of course, Mr. Campeau is accurately portrayed, I believe, as having nothing but contempt for any and all of those he is able to manage. I believe it may be said with accuracy that while Mr. Campeau, with the help of his friends, has achieved a considerable amount of financial success, no one could ever seriously maintain that he has achieved any financial respectability.
Instead of dealing with Mr. Campeau in a further shameful way, the federal government ought to initiate a public inquiry into the past wheeling and dealing of this man and his organization, especially with regard to the artful and cynical manoeuvres involved in the project in Hull, the infamous Les Terrasses de la Chaudiere, and forget about acquiring any

December 15, 1981
Adjournment Debate
particular space from him or anyone else at a time of alleged budgetary restraint.


Gérald Laniel: Mr. Speaker, I am not here to try and defend Mr. Campeau and his business but to answer questions on behalf of the Minister of Public Works.

I should like to respond further to the question raised by the hon. member on November 23 by giving the facts as they are. Public Works Canada and the Department of National Defence have been seeking suitable accommodation for long term consolidation of space requirements for the Department of National Defence and to replace outdated premises which it now occupies in Rockcliffe and in various leased premises scattered throughout the city of Ottawa. In Rockcliffe, National Defence will vacate wartime temporary buildings which are scheduled for demolition. The premises currently rented in the city are of low quality and the leases are expiring.
National Defence asked Public Works Canada to seek space which would allow it to consolidate its services in one building, thereby saving administrative and security costs. The Centennial Towers, a building which has remained vacant since its lease with the federal government expired, fit the space requirements of DND. It is in downtown Ottawa, near other DND buildings, and it is large enough to permit consolidation of various DND branches in one building. Thus, the Department of Public Works entered into lease negotiations with the owner, Campeau Corporation.
Hon. members may recall that the Department of Public Works undertook a few years ago under two successive governments to ease the burden of excess vacant office space in the private sector whenever possible, rather than building itself. We are now in a position to do just that. In lease discussions with Campeau, the Department of Public Works obtained two independent appraisal reports on the value of the property as it now exists. The appraisals were $13.9 million and $16.2 million.
In order that this building can meet current occupancy standards, the owner would have to undertake major renovations to the building fabric, structures and services to raise it to class A office building standards. This would no doubt be a significant expenditure. Apparently Campeau Corporation estimates that after completion of this type of renovations, the building would have a market value of approximately $44 million. Hon. members may be assured that at the moment the lease-purchase of this building is only a proposal. Should this proposal prove to be competitive on the market today, it will be submitted to Treasury Board for approval.
The vacant space at Place du Portage in Hull to which the hon. member referred in his question was in fact assigned some time ago to the Public Archives with Treasury Board approval, and Public Archives officials are now working on detailed requirements for fitting-up this space for occupancy. In conclusion, let me say that again the hon. member is seeking a scandal which does not exist.


The Acting Speaker (Mr. Blaker):: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 2 p.m.
At 10.29 p.m. the House adjourned, without question put, pursuant to Standing Order.

Wednesday, December 16, 1981
14! 15