1981-01-19

ROUTINE PROCEEDINGS


Right Hon. Joe Clark (Leader of the Opposition):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In light of the news that the United States and Iranian governments have reached agreement on the release of the American hostages in Iran, I move, seconded by the hon. member for Kingston and the Islands (Miss MacDonald):
That this House, on behalf of the people of Canada, extends its congratulations to President Carter and the government of the United States for the successful conclusion of negotiations for the release of the hostages; and wishes that the Americans be reunited with family and friends in the very near future. And that this House also extends its congratulations and appreciation to the Algerian government for the key role it played in the resolution of this difficult international crisis.


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


Some hon. Members:: Agreed.


Madam Speaker:: Does the House agree to the motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[Stage Direction]
McDonnell douglas-allocation of work under cf-isa

Mr. Don Blenkarn (Mississauga South):: Madam Speaker, I rise under the provisions of Standing Order 43. The most efficient plant for the production of wing and tail assemblies for aircraft in perhaps all of North America and, indeed, the world, is the McDonnell Douglas plant in Mississauga. Evidence of that is the fact that it is virtually the exclusive supplier of this equipment to McDonnell Douglas for the production of DC-9 and DC-10 aircraft. But something has
happened and the work for the F-18 Hornet will not go to that plant but to some other plant which may not be as efficient. Therefore I move, seconded by the hon. member for Fraser Valley West (Mr. Wenman):
That this House direct the minister responsible for the allocation of work under the F-18 contract to have the work done at the most efficient plant and, with respect to wing and tail assembly, at the McDonnell Douglas plant in Mississauga, Ontario.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIVE RIGHTS
Mr. Jim Manly (Cowichan-Malahat-The Islands):: Madam Speaker, in view of the Prime Minister's commendable statement that there must be a "revolution in international morality" and that we must create "the feeling that we have an obligation" to the Third World, I move, seconded by the hon. member for Skeena (Mr. Fulton):
That the Prime Minister lead a revolution in Canadian political morality and indicate his willingness to recognize Canada's historic obligation to our aboriginal peoples and to include a positive recognition of their rights in Canada's new constitution.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


INDUSTRY
Mr. Douglas Fisher (Mississauga North):: Madam Speaker, I rise on a point of urgent and pressing necessity under the provisions of Standing Order 43. Whereas McDonnell Douglas Corporation last Friday laid off several hundred workers in Malton, bringing their total laid off to over 600 since last summer, and whereas contracts for parts for the CF-18 air-

January 19, 1981
5.0. 43
craft are now being allocated, I move, seconded by the hon. member for London-Middlesex (Mr. Bloomfield):
That the government give full and fair consideration to bids from Malton, Rcxdale and Brampton aerospace companies in order to reinforce full employment and economic strength in this productive industry.


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


Some hon. Members:: Agreed.


Madam Speaker:: Does the House agree to the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. Thomas Siddon (Richmond-South Delta):: Madam Speaker, I rise under the provisions of Standing Order 43 to move a motion on behalf of those whose voices cannot be heard. Given the appalling figures released the week before Christmas by Stats-Canada which show a further alarming increase in the use of abortion as a means of population control, and specifically noting that 18 innocent children were sacrificed by abortion last year for every 100 live births, with 34 abortions for every 100 live births in my province of British Columbia alone, 1 move, seconded by the hon. member for Edmonton-Strathcona (Mr. Kilgour) and endorsed by many members of this House with whom I have spoken:
That this House stand in silence for two minutes, in memory of the 65,135 innocent Canadian human infants whose lives were taken away by abortion during the past year; and furthermore this House admits, to its shame, that these acts have been taken with the consent of the Government of Canada.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NORTHERN PIPELINES
Mr. Dave Nickerson (Western Arctic):: Madam Speaker, I rise to propose a motion under the provisions of Standing Order 43. In view of the unconscionable delays occasioned by Liberal footdragging on the granting of permission to construct the proposed Norman Wells-Zama Lake pipeline which have caused serious economic hardships and uncertainty in the Mackenzie district, as well as setting back Canada's goals of
energy self-sufficiency and job creation, I move, seconded by the hon. member for Moose Jaw (Mr. Neil):
That permission to expand the Norman Wells oilfield and construct the Norman Wells-Zama Lake pipeline be granted as expeditiously as possible.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


GOVERNMENT ADVERTISING
Mr. Lome Nystrom (Yorkton-Melville):: Madam Speaker, I rise to present a motion under the provisions of Standing Order 43. Last week the Minister of Justice (Mr. Chretien) confirmed that the government has another constitutional advertising campaign ready to go in the media of this country. In the name of national unity and common sense I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House instruct the government not to proceed with advertising relating to the constitution while the proposed resolution dealing with the constitution is being considered by the Parliament of Canada.


Madam Speaker:: Presentation of such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


CONGRATULATIONS TO NATIONAL SKI TEAM-MOTION UNDER S.O. 43
Mr. Peter Lang (Kitchener):: Madam Speaker, I rise under the provisions of Standing Order 43. In view of the fact that a Canadian skier, Steve Podborski, won his third consecutive downhill ski race in Austria last weekend, and in view of the fact that no North American athlete since Nancy Green has been able to duplicate this feat, I move, seconded by the hon. member for York East (Mr. Collenette):
That this House, on behalf of the people of Canada, acknowledge the importance of the contribution made by Mr. Podborski and the Canadian ski team to Canada's international sports reputation, and domestically to our national pride and self-esteem.


Madam Speaker:: Order, please. This is a congratulatory motion. I see that the feelings of the House toward this great skier are tremendous, but I feel we should not have congratulatory motions under Standing Order 43.
January 19, 1981


EMPLOYMENT
Mr. John Bosley (Don Valley West):: Madam Speaker, I rise to move a motion, under Standing Order 43, of national, urgent and pressing economic necessity. Whereas the chief effect of this government's economic policies to date has been a net reduction in private sector real job creation of 75 per cent in one year, and whereas this morning's announcement of support for those communities hardest hit by industrial layoffs, while welcome, will solve only a very small part of the problem, I move, seconded by the hon. member for Calgary West (Mr. Hawkes):
That this House instruct the government to convene immediately a national conference of representatives of business, labour and government to develop job-creation strategies never more urgently needed for Canada than now.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


EXCISE TAX ACT
Mr. Blaine A. Thacker (Lethbridge-Foothills):: Madam Speaker, 1 rise to move a motion under the provisions of Standing Order 43. Whereas there are 29 health units in Alberta, and whereas there are a considerable number of first-aid stations and nursing units throughout Canada, all of which provide essential services including preventative health services, emergency first-aid services and ongoing medical assistance; and whereas under section 45 of the Excise Tax Act the units do not qualify for exemption from federal sales tax as bona fide public institutions, therefore, 1 move, seconded by the hon. member for Bow River (Mr. Taylor):
That this House give consideration to changing the eligibility criteria under section 45 of the Excise Tax Act in order to allow exemption of these units as soon as possible.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
Oral Questions



ORAL QUESTION PERIOD


Charles Joseph Clark: Madam Speaker, my question is for the Prime Minister. It concerns the imminent release of the American hostages in Iran. Could the Prime Minister indicate to this House when and under what conditions he is prepared to lift the economic sanctions imposed by Canadian governments against the Islamic Republic of Iran?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, we now have an agreement between the government of Iran and the government of the United States. To the best of our information, the hostages have not as yet taken off from Tehran airport. Since we said the sanctions would be imposed during the period of flouting of international law, 1 will certainly be recommending to my colleagues that we remove the sanctions relatively quickly. In Canada, unlike some other countries, it requires legislative action because it took legislative action to impose the sanctions. Therefore, I believe we will have to have legislation in the House to do that.


Charles Joseph Clark: Madam Speaker, the Secretary of State for External Affairs will want to check all aspects of that answer to be sure that he was not inadvertently in error in part of it.


IRAN -INQUIRY RESPECTING POSSIBLE RESUMPTION OF FULL DIPLOMATIC RELATIONS
Charles Joseph Clark: Madam Speaker, let me, therefore, direct a policy question to the Prime Minister. Could the Prime Minister indicate when and under what conditions he would, as the head of the government, intend to resume normal and full diplomatic relations with Iran?


Some hon. Members:: Hear, hear!


Right Hon. P. E. Trudeau (Prime Minister):: Madam Speaker, I really cannot add anything to what the Secretary of State for External Affairs has already said. The policy we adopted at the time of the hostage taking, first by the right hon. gentleman's government and then by mine, was in the context of putting pressure on Iran to release the hostages. It would be my thinking, and it is also the thinking of the Secretary of State for External Affairs judging by his answer, that when the hostages have been evacuated from Iran, which, incidentally, they have not yet been, we should then move toward a normalization of relations with Iran as soon as possible.

January 19, 1981
Oral Questions


IRAN-INQUIRY RESPECTING REPAYMENT OF DEBTS TO EXPORT DEVELOPMENT CORPORATION
Charles Joseph Clark: Madam Speaker, I direct my supplementary question either to the Prime Minister or to the Secretary of State for External Affairs. I would ask whether one or the other minister of the Government of Canada could tell us whether the debts owed by the government of Iran to the Canadian Export Development Corporation are being repaid on schedule and whether the matter of compensation to that corporation and to Canadian firms who abandoned or who had projects cancelled in Iran prior to the downfall of the regime of the Shah will be settled prior to the resumption of normal and full diplomatic and commercial relations with Iran.


Mark R. MacGuigan: Madam Speaker, I will have to take that question as notice. However, I would think that if there are outstanding problems relating to our economic relations with Iran we would want to take them into consideration before deciding to repeal the special act that we passed.


UNITED STATES-INQUIRY WHETHER MEETING WITH PRESIDENT-ELECT PLANNED-RENEGOTIATION OF EAST COAST FISHERIES TREATY
Hon. Flora MacDonald (Kingston and the Islands):: Madam Speaker, my question is addressed to the Prime Minister who on his recent trip was able to visit certain countries but, as we all know, was unable to visit certain others. Among these hits and misses was one opportunity which the Prime Minister missed, and that was in not accepting the offer of the President-elect of the United States to visit Ottawa in January. Because of the tremendous importance of our bilateral relations with the United States, can the Prime Minister now tell us what plans he has that are under way to meet with President-elect Reagan?


S 0 420)
Pierre Elliott Trudeau: Madam Speaker, when the office of the President-elect suggested a meeting, it would have fallen in the time when I was toward the end of my Nigerian visit and at the beginning of the Senegalese one. I did not feel it was proper to ask these governments to set aside their meetings because the office of the President-elect suggested that there could be a meeting soon in his term of office. I believe discussions are ongoing between our ambassador, Mr. Towe, and the people in the entourage of President-elect Reagan; dates are being looked at but none has been suggested to me yet.


Flora Isabel MacDonald: Madam Speaker, I hope we will have an early announcement of those dates, because I think all Canadians would like to see our relations with the United States become much firmer than they have been recently. On that basis I should like to direct a supplementary question to either the Prime Minister or the Secretary of State for External Affairs. It concerns the remarks of the incoming secretary of
state, Alexander Haig, the other day with regard to the east coast fisheries agreement when he said that the treaty would have to be renegotiated. This was further followed up by Senator Percy, who indicated that there would have to be concessions on both sides. Has the government indicated to the incoming administration that there is no interest in this country or in this Parliament, as we have served notice on three different occasions, of renegotiating that treaty, certainly not from a Canadian point of view since we feel it is basically a fair treaty to both sides the way it stands now?


Pierre Elliott Trudeau: Madam Speaker, I think the hon. lady will realize the difficulty of doing both things suggested by her question at the same time. In the first part she suggested that relations with the United States should be improved, that they should be progressing, and even before the President-elect takes office she makes representations to the government that we should not budge an inch on the negotiations of the previous government. I am rather inclined to support the second part of the hon. lady's suggestion, but she must realize that in such matters, if we want to stand up for Canadian interests, we cannot assume it will always please the United States.


Charles Joseph Clark: What a fraud!


Flora Isabel MacDonald: Madam Speaker, my final supplementary question is directed to the Prime Minister. Perhaps he will remember-I will recall it to his memory-that on three different occasions the House passed unanimous motions that the east coast fisheries treaty should be accepted as it stands and should not be amended by arrangements with the United States Senate, such as Senator Percy seems to be working out with our Canadian ambassador in Washington. That is the kind of arrangement I would want the Prime Minister to signify that he is backing up from Canada's point of view- that there will be no concessions on the east coast fisheries treaty, that we will not give in either to pressure from the United States Senate or any other body, and I think the Prime Minister will find if he conveys that sentiment-


Some hon. Members:: Order, order.


Madam Speaker:: Order, please.


Charles Joseph Clark: Oh, Madam Speaker.


Madam Speaker:: I should like the hon. member, especially since I gave her an opportunity to ask an extra question, to proceed with her question immediately.


Pierre Elliott Trudeau: Madam Speaker, if the hon. lady looks at my previous answer she will say that I agreed with her.


Flora Isabel MacDonald: There will be no concessions.


Pierre Elliott Trudeau: I was just pointing out that to take a very rigid stand in advance is not conducive to starting out, in the way she suggests, to improve relations with the United States.


Flora Isabel MacDonald: Of course it is.
January 19, 1981


Pierre Elliott Trudeau: That is all I pointed out. I remind the hon. lady that the fisheries treaty was negotiated under our government essentially by the minister of fisheries, the then secretary of state for external affairs, Mr. Jamieson, and with considerable help from the present Minister of Finance. It was something which was put together by our government and the administration of President Carter. Indeed the House supported it, and we are grateful for the support we have had from the opposition in this matter.


Flora Isabel MacDonald: Stick with it.


Pierre Elliott Trudeau: The hon. lady urges me to "stick with it". 1 will bring the message and report it to President-elect Reagan the moment 1 see him.


Flora Isabel MacDonald: It may be six months away.


NORTH-SOUTH RELATIONS COMMITMENTS TO THIRD WORLD COUNTRIES
Mr. Edward Broadbent (Oshawa):: Madam Speaker, my question refers to the Prime Minister's recent trip and his recently expressed concern about the problems of the Third World. Would he explain briefly to the House why the Government of Canada has during the past decade failed almost completely to live up to its own commitment to the Third World and, given that failure, why does the Prime Minister expect the position of the Government of Canada now on the Third World to be at all taken seriously?


Pierre Elliott Trudeau: Madam Speaker, I do not think much that the government has done is taken seriously by the hon. gentleman's party, but I can assure him that the leaders of government and of state I have met on this recent trip do take the Government of Canada seriously. They do realize that we have not in the north-and Canada is one of the northern countries-progressed as much as they would like, but they recognize Canada's sincerity and our efforts in bringing the world closer to these solutions.


John Edward Broadbent: Madam Speaker, the Prime Minister knows full well that we are well behind virtually every Scandinavian country in this regard; we are behind The Netherlands and we are behind many, many other industrialized countries. Specifically, since it was his government which promised in 1975 the target of assistance to the Third World would be some .7 per cent of our GNP and that in each year since our contribution has fallen away from that target instead of toward it, to the extent that last year we gave about half what the government committed to give in the way of assistance to the Third World, will he tell the House whether the Government of Canada still stands by its commitment and, if so, when does it plan to live up to it?
Oral Questions


Pierre Elliott Trudeau: Madam Speaker, the answer was given by the Secretary of State for External Affairs in a commitment he made publicly, I believe it was last month, that we would reach the figure of .5 per cent in 1985 and we planned to reach the .7 per cent figure by 1990. The hon. gentleman says that from 1975 on we have not progressed in proportional terms toward the goal 1 had set, and he is right. But he will recognize that from 1968 until, 1 believe, 1975 there was a considerable increase in absolute dollar terms and, of course, in proportion by the Canadian government and the Canadian people in contributing to the solution of the North-South dialogue through its CIDA program and others. So there has been progress.
I must remind the hon. member that around 1975 there was a particular series of economic difficulties which beset Canada and other of the developed countries and we fell victim to those. I can only express regret that we did not find more room in the budget to continue supporting the thrust of external aid in those years, but I would hope that, with the hon. gentleman's support, we will be able to do better in the future.


John Edward Broadbent: Madam Speaker, the Prime Minister knows that in spite of the international financial difficulties to which he referred, since 1975 a number of other countries not only measured up to but in some cases exceeded their commitments. The Prime Minister has just said it is going to take until 1990, some 15 years, for the government to live up to its commitment made in 1975 to reach .7 per cent of GNP. That is almost as long as it is going to take the Government of Canada, if the Prime Minister's party remains in power, to get control of our own energy sector.
Since in the present year it is estimated some 450 million people throughout the world have a totally inadequate diet in terms of food, and since one of the things this country does very well is produce food, will the Prime Minister increase this year's budget for the world food program beyond what it now is and which in real dollars for 1981 is less than it was for last year? In other words, will the Government of Canada put up now and live up to some of its promises to the people throughout the world who badly need assistance?


Pierre Elliott Trudeau: Madam Speaker, in the direction suggested by the hon. member I point out to him that just a few days ago in Senegal this government committed itself to an increase in its aid merely in the area of food to that country of some $5 million just to help them meet the present emergency. I of course agree that much more should be done in the field of agricultural aid. I discussed this problem, notably in Senegal and in Brazil. I must remind the hon. gentleman that food aid in this sense can be counterproductive, and this was well recognized in the report to which members of the hon. member's party subscribed, the recent report of the parliamentary committee on North-South relations. It was recognized that one must also assist agriculture in those countries and not just give food because that would tend to prevent them from solving their problem in the long run. The government is trying

Oral Questions
both to assist by food aid and also help through the transfer of agriculture and other technologies.
With respect to the hon. gentleman's preface, it is true that Canada is not among the leading nations in terms of its generosity in helping the Third World, but we are far from the worst. I think we are somewhat above the average of the OECD countries. I would accept support from the hon. member's party if he wants this government to reach the aim of .7 much sooner.


John Edward Broadbent: Yes.


Pierre Elliott Trudeau: The hon. member says "yes". Of course, he never has had and probably never will have the responsibility of governing-


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: -but I am prepared to sit down with the Leader of the New Democratic Party or with his financial critic and find areas where we could cut expenditures in Canada in order to redivert funds to the Third World. I would be very happy to come up with a bilateral and hopefully even a trilateral agreement.


Mr. Lawrence:: What about advertising for the constitution?


John Edward Broadbent: Okay, we will take you up on that.


Charles Joseph Clark: Madam Speaker, do rules of order apply to the Prime Minister or just to this side of the House?


Madam Speaker:: 1 think the Right Hon. Prime Minister is waiting for the heckling to stop in order that he can continue to give his answer.


RECYCLING OF OPEC SURPLUSES-GOVERNMENT POSITION
Mr. Douglas Roche (Edmonton South):: Madam Speaker, my question is also directed to the Prime Minister. Given that international trips to influence other leaders on North-South issues must be supported by strong policies at home, and given the latest report of the independent North-South Institute which said last week that Canada and the Canadian government had failed on 13 of the policies in the five-year-old international development strategy, can the Prime Minister now tell the House what priorities he will propose for his government to strengthen Canadian policies so that we will have some credibility in international negotiations?
Specifically, is the Prime Minister now ready to move on this single, most important problem in North-South relations, which is the debt trap of the oil-importing, least developed nations? Is the Prime Minister prepared to support international negotiations which will lead to a recycling of OPEC's huge surpluses and to expedite that by having the voting strength of OPEC in international financial institutions increased?


Pierre Elliott Trudeau: Madam Speaker, 1 find the hon. member's question extremely welcome and his suggestion very appropriate. Just as an aside, 1 suggest that his leader would benefit from rereading the question and the assertion that travel by leaders of this government can be conducive to helping the North-South dialogue.


An hon. Member:: Oh, oh!


Pierre Elliott Trudeau: The guffaws come from someone who wants his leader's job, but I can tell him that he does not have a chance. His leader is much better than he is.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Madam Speaker, the point made by the hon. member for Edmonton South is exactly the point I made repeatedly in each of the countries I visited, and it is a point 1 raised with Saudi Arabia when I visited the country in November. That is one of the reasons we have been trying to influence these various countries into accepting the energy affiliate of the World Bank, which would be precisely designed to do the three things the hon. member suggests: help recycle OPEC dollars, permit the transfer of technology for the finding of more energy resources in the less developed countries, and give a greater voting strength to OPEC.
I point out that I think the idea is making progress. There was a meeting in December at which representatives of some of the countries with which 1 talked were in attendance, but as far as the Canadian government is concerned the hon. member will note that in the budget we undertook to set aside, I believe, $250 million for an international affiliate of Petro-Canada so that we could do this job at least bilaterally if by some chance it were not done by the affiliate of the World Bank.


Douglas Roche: Madam Speaker, if the Prime Minister's 12-year-old government had performed as well on North-South issues as did the Leader of the Opposition in his brief tenure as prime minister, the credibility of the Government of Canada would be much better with respect to North-South issues today.


Some hon. Members:: Hear, hear!


Douglas Roche: I want to ask the Prime Minister if he intends to implement the North-South task force report, which was supported by all parties in the House. Several months ago in its interim report the task force said that Canada should support the four emergency measures to break the North-South deadlock recommended in the internationally acclaimed Brandt report: first, an extra $4 billion annually in aid; second, an international energy strategy; third, a global food program; and fourth, a start on reforming the international economic system. Is the Prime Minister prepared to put his leadership behind those emergency provisions now to break the North-South deadlock ?


Pierre Elliott Trudeau: Madam Speaker, I am prepared to agree with the hon. member that, if his party and leader had stayed in
January 19, 1981

office, they might have done very well in the field of foreign aid. I was just pointing out to the hon. member that just a few days ago his leader complained that I was too preoccupied with North-South questions and that I was not dealing enough with economic questions in Canada. That is all I wanted to point out. 1 am in agreement with the hon. member that we should do more, and 1 hope his point of view prevails over that of his leader when we come to deal with these questions.


Some hon. Members:: Hear, hear!


INDUSTRY
Mr. Jim Hawkes (Calgary West):: Madam Speaker, my question is for the Minister of Employment and Immigration. Earlier today he ignored the House of Commons and held a press conference to announce a special program rather than announcing it in the House. During that press conference the Minister of Labour indicated that none of the ministers could tell how the $350 million involved would be allocated as between equipment, high-priced consultants and help to individuals. In the October 28 budget the Minister of Finance announced that half of that $350 million would be spent in the social policy envelope. Could the minister assure the House that half of that $350 million, $175 million, will remain in the social policy envelope and provide help to individuals, or does he agree with the Minister of Labour that it could go for equipment and high-priced consultants?


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, the hon. member for Calgary West, who obviously was in attendance at the conference at which the Minister of Labour, the Minister of Industry, Trade and Commerce and I elaborated on the details of the program, was not listening to the description of the program if he thinks it is for high-priced consultants and so forth. The portion of the program which goes under economic development will be assigned as grants to companies to start new jobs in those communities in which there have been economic turndowns, lay-offs or plant closings. We think it is absolutely essential that we not simply maintain communities but that we help them grow and provide assistance so that they can develop and attract new industry. That is the purpose of half the program.
The purpose of the other half is to provide major assistance so that workers can develop new skills and new job opportunities can be developed.
That is the rough division of the program. The money will be allocated according to the discussions we have in those communities with organizations and committees which are established to inform us of the priorities those communities have for themselves in terms of their own assistance and their own labour.
Oral Questions


Frederick James (Jim) Hawkes: Madam Speaker, I take from that answer that we cannot have that assurance, that in fact we are going to turn over expenditures to appointed groups.
I should like to move on to another issue. Two of the programs announced this morning were, first, a portable wage subsidy program for people 45 years of age and over and, second, an early retirement program for people 54 years of age and over. May I ask the minister whether he can give an absolute assurance to the House that, when and if the constitution act of 1980 is passed, those two programs will not be declared illegal? Can he assure the House that there is nothing in those programs that will run counter to the constitution act of 1980?


Lloyd Axworthy: There is absolutely nothing in those programs that will be illegal. When the constitution is passed, we will have the right of full mobility for all Canadians.


PRESENCE IN GALLERY OF MINISTER OF HOME AFFAIRS FOR BERMUDA
Madam Speaker:: At this point I should like to draw the attention of the House to the presence in our gallery of the honourable John Swan, Minister of Home Affairs for Bermuda.


Some hon. Members:: Hear, hear!


INDUSTRY
Mr. Ian Deans (Hamilton Mountain):: Madam Speaker, 1 have a question which 1 should like to put to the Prime Minister. This morning, together with the Minister of Labour and the Minister of Employment and Immigration, the Minister of Industry, Trade and Commerce announced a $44 million or $45 million expenditure over the course of the next three years for the creation of employment. Given the fact that we desperately need employment opportunities in Canada at the moment, and that is recognized by everyone, I wonder whether the Prime Minister might consider calling in McDonnell Douglas and informing them that since this government is spending $4 billion of taxpayers' money, that company has an obligation to create in Canada jobs to employ not only the 1,000 workers who are going to be laid off now, but also jobs that will employ additional Canadian workers who could be and should be working as a result of this extensive expenditure.


Hon.   J.-J. Blais@Minister of Supply and Services: Madam Speaker, the hon. gentleman's representations are, of course, taken very seriously by the government. It might be pointed out to the hon. gentleman that the offsets which were negotiated by the government in the purchase of the F-18 will total more than $3.2 million by 1995. Of course, the government is

January 19, 1981
Oral Questions
very interested in overviewing the regional distribution of the total offsets in order to ensure that within Canada there is total employment created as a result of the investments which are to be made primarily in the aeronautics industry, which is of interest to the hon. gentleman and will compromise about 60 per cent of the value of those offsets.


Ian Deans: Madam Speaker, I have a supplementary question which 1 should like to ask and I do not know quite who will answer, but I will ask it in the hope that someone knows the answer. The figure for 1995 is no good for us. There are tens of thousands of people unemployed today, and right now there are 1,000 people who have been laid off by McDonnell Douglas. We are spending $4 billion. I ask, why is it that it is impossible to require of that company that they create here in Canada jobs for the people who are unemployed today and who will perhaps not need jobs in 1995?


Mr. Blais:: Madam Speaker, under the terms of the agreement which was signed with McDonnell Douglas there was a recognition that that company would request from the marketplace, including Canada, bids in terms of the subcontracts that were to be let. I know the hon. gentleman is thinking about the structural package which involves four components which are to be included within the F-18. As the Minister of State for Small Businesses indicated to the hon. gentleman last week, the bids have now been received, they are being reviewed and a statement is to be made jointly by McDonnell Douglas and the government within the near future.


REQUEST FOR PROGRESS REPORT ON PREPARATIONS FOR JUNE 1981 NORTH-SOUTH CONFERENCE
Mr. Herb Breau (Gloucester):: Madam Speaker, could the Prime Minister tell the House whether the exchanges he had with the heads of state he met during his recent trip, especially the president of Mexico, have assured him that the preparations for next June's conference on the North-South dialogue are progressing? And in light of his talks with several heads of state does he feel that the June conference will lead to significant conclusions, particularly on issues such as the reform of the monetary system, of the International Monetary Fund, of trade and commerce and of recycling petro-dollars?


Pierre Elliott Trudeau: Madam Speaker, 1 would answer the hon. member for Gloucester by expressing my thoughts and saying frankly that 1 feel moderately optimistic. I spoke with President Portillo and Chancellor Kreisky, the two co-chairmen responsible for organizing the proposed June summits. I assured them of our government's full support, both as a participant and as an adviser should they need further consultations with us. But 1 am unable to say whether the preparations are going well or not. 1 think I am
confident that the conference will be held but there are indications that other countries have expressed some doubts.
Among others we do not know whether the United States will want to take part or not. I think that many of the invited countries will wait for the decision of the President of the United States before announcing their position. That is not our case. I can assure the hon. member our intention would be to participate in any event if the conference is held.
1 would simply remind the hon. member that the main objective of my trip was not to prepare the North-South June conference, which is the responsibility of the two co-chairmen, but rather to make sure that the stage will be properly set for the conference which is scheduled for Ottawa in July and whose central topic will be the North-South dialogue. That was the first priority of my tour.


ADMINISTRATION OF JUSTICE
Allan Frederick Lawrence: Madam Speaker, my question is for the Solicitor General. Now that the last court hearing has been held in the case of the sixth man in the James Cross kidnapping case, one Nigel Barry Hamer, who pleaded guilty to four serious charges of being involved in the kidnapping during the FLQ crisis of October, 1970, in view of the fact that most of those arrests have taken place under the supervision of the RCMP, that Mr. Hamer was identified as being an accomplice very shortly after the actual kidnapping took place, that there has been constant police surveillance since then, and that there have been authorized telephone tappings of Mr. Hamer's telephone since then-


Some hon. Members:: Question.


Allan Frederick Lawrence: -my question to the Solicitor General is simply this: Why has it taken ten years to arrest somebody who is obviously guilty?


Hon. Bob Kaplan (Solicitor General):: Madam Speaker, this investigation was conducted by the Quebec Provincial Police, although the RCMP co-operated fully over the years and provided information to that police force. 1 think the question which the hon. member has asked should be directed to the attorney general of that province.


Allan Frederick Lawrence: The object of my question is, obviously, to try to find out if there has been any negligence, bungling, lack of co-operation or complicity to hide someone from public scrutiny in a very serious matter. Obviously the RCMP has been involved and the Solicitor General is in charge of the RCMP. Has he asked the Minister of Justice of the province of Quebec this question? Has it occurred to him to ask it?


An hon. Member:: Did you?
January 19, 1981


Allan Frederick Lawrence: Obviously 1 could not until the individual pleaded guilty because the court case was in progress-


Some hon. Members:: Oh, oh!


Allan Frederick Lawrence: -but the Solicitor General can do so now. Has he asked these questions?


Robert Phillip Kaplan: I have asked for a briefing from the RCMP on their responsibilities in this matter and 1 am satisfied, on all the questions that the hon. member asked with respect to the RCMP, that their behaviour has been satisfactory.


AIRPORTS
Mr. J. R. Ellis (Prince Edward-Hastings):: Madam Speaker, I should like to put a question to the Minister of Transport. Does he have any plans to remove those airports in Canada north of the 60th parallel from the ownership, control or otherwise of the Department of Transport?


Hon. Jean-Luc Pepin (Minister of Transport):: Madam Speaker, it is part of the policy that there can be the possibility of transfer of airports from the administrative jurisdiction of my department to the jurisdiction of the local territories. But if for practical purposes this should occur, my department would maintain its responsibility for the funding of these airports.


John Raymond Ellis: My supplementary question is for the same minister. I must ask him if he feels that this will, in fact, improve or in any way better the safety of these airports.


Jean-Luc Pepin: Madam Speaker, the transfer will not take place if the safety is impaired.


REGULATORY REFORM
Mr. Chuck Cook (North Vancouver-Burnaby):: Madam Speaker, my question is for the President of the Treasury Board. After months of hard work, hearing from the private and public sector and from many government bureaucrats, the special task force on regulatory reform provided this House with its recommendations for regulatory reform on December 19. 1 would like to know from the President of the Treasury Board whether the government has taken any action with respect to the recommendations or whether it intends to take any action with respect to them. If not, why not? If it has done something, what has it done? And could we please have an answer to the question?


Hon. Donald J. Johnston (President of the Treasury Board):: Madam Speaker, I thank the hon. member for his question. I would like to take this opportunity to congratulate
Oral Questions
him and the other members of the committee who delivered to us an excellent report. There were 29 recommendations contained therein which 1 had the opportunity to review over the Christmas break.
I can assure this House, Madam Speaker, that the government's commitment to regulatory reform is very solid. It is moving forward, and moved forward even during the time in which the report was being prepared. We are confirmed in our efforts by the tone of the report. In areas such as process, to which the report directs its attention, we are looking very seriously at each and every one of the recommendations. We have already developed a work plan in that particular area, as well as in the area of cleaning up the regulations. We must ensure that those regulations which are duplicative and outmoded can be eliminated. This would also involve statutes. Hopefully I will be able to bring forward a bill in the relatively near future to try to clean up some of the statutory duplications in other areas where these provisions are outmoded.
In addition, we are looking at the area of process, with which the report deals extensively. We are also looking carefully at such things as, perhaps, a regulatory agenda and other matters of that nature. I have already written to my colleagues in the cabinet, and I have sent to those whose departments are concerned with regulations a proposed work plan. I wish to assure the hon. gentleman and members of this house that not only is the report not gathering dust, but it is moving forward at an accelerated pace. Again I want to thank the committee for the efforts it made during such a brief period of time.


EXTERNAL AFFAIRS
Miss Pauline Jewett (New Westminster-Coquitlam):: Madam Speaker, my question is for the Prime Minister. With the United States having now decided to supply lethal military aid to the increasingly repressive junta in El Salvador, in direct violation of last year's United Nations resolution which Canada supported, will the Prime Minister express now in the clearest possible terms this country's opposition to American military support of the junta? Will he, in his anticipated meeting with President-elect Reagan, a meeting which he alluded to earlier in the question period as being a real possibility, voice our grave concern with respect to American military intervention in El Salvador?


Pierre Elliott Trudeau: Madam Speaker, 1 certainly hope that the agenda would permit President-elect Reagan and myself to discuss such areas of regional concern to both of us.
I had occasion to talk about this matter very recently in Mexico. My understanding is that the United States is not at this time supplying military hardware to the junta and that it is re-establishing some of the bilateral aid programs which had been interrupted. If I am misinformed on the United States

January 19, 1981
Oral Questions
policy 1 stand to be corrected, but I would have to examine that policy.
I could say that it is not a policy that we would share or follow. As the hon. lady knows, this government has always refused to ship arms or any form of military hardware to countries which were trouble spots, such as this.


Pauline Jewett: Madam Speaker, I would like to preface my supplementary question to the Prime Minister by saying as the Secretary of State for External Affairs is now informing him, that there is an additional $5 million which is going into lethal military aid-guns, ammunition and combat helicopters-over and above the other $5 million in what is called "non-lethal" military aid.
The Prime Minister mentioned speaking about this when he was recently in Mexico City. 1 wonder if he was able to meet the executive members of the democratic revolutionary front from El Salvador who wished to meet with him in Mexico City. If he was not able to do so, and since executive members of the front will be in Ottawa this week, will he meet with them this week in Ottawa?


Pierre Elliott Trudeau: Madam Speaker, I remind the hon. lady that 1 arrived in Mexico merely in time for dinner with the president. 1 left the next morning. It would have been impossible for me to meet with such a group.
I accept the hon. lady's earlier point about the military aid. The Secretary of State for External Affairs informs me that she is, of course, correct. 1 was not aware of this.
In so far as meeting with the group, which she suggests, the Secretary of State for External Affairs tells me that he will be meeting with them.


FISHERIES
Mr. LeBlanc:: If hon. members opposite wish to listen they may learn a couple of things.
Madam Speaker, there were a number of appeals put forward by fishermen and they are being heard. Where there are simple mistakes which can be corrected by departmental personnel, this is being done-and there were some because we are dealing with a very large number of people. But no one whose status is uncertain will be deprived. There will be temporary permits issued for the coming season. This is particularly applicable to the herring fishery.


BANK ACT
Hon. Marcel Lambert (Edmonton West):: Madam Speaker, in view of the absence of the Minister of State for Finance, may 1 direct my question to the Parliamentary Secretary to the Deputy Prime Minister and Minister of Finance. In view of the fact that the Bank Act was passed by this Parliament prior to November 30-almost six weeks has elapsed since then-and that under several of the provisions of the act regulations must be published and remain published for 60 days before they become operative, would the parliamentary secretary advise us when we can expect those regulations as a total package, so that the Bank Act will not be standing still for four or five months, or more, before it will be fully operative?


Mr. John Evans (Parliamentary Secretary to Deputy Prime Minister and Minister of Finance):: Madam Speaker, 1 can assure the hon. gentleman that the regulations are moving along at a very rapid rate. I cannot give him an exact date as to when all the regulations will be promulgated. I can assure him they will be brought down very shortly and I will undertake to get an exact date for him, if 1 can.


DESIGNATION OF PART-TIME FISHERMEN
Mr. Brian Tobin (Humber-Port au Port-St. Barbe):: Madam Speaker, my question is for the Minister of Fisheries and Oceans. As the minister knows, a new licensing regime is under way in Atlantic Canada to determine who are part-time and who are full-time fishermen. Can the minister assure this House that no fisherman who has been designated part-time to this point in time will be denied the right to participate in the fishery this year to the same extent to which he participated last year, until such time as he has had an opportunity to test his part-time designation before an appeal committee? The minister may know that many of us are concerned that these appeal committees may not have time to hear all the appeals which are forthcoming. Can he give us some assurance with respect to this matter?


Roméo LeBlanc: Madam Speaker, 1 certainly can give the hon. member some assurance.


Some hon. Members:: Hear, hear!
*
* *


PRIVILEGE
[Stage Direction]
MISS MacDONALD-STATEMENTS MADE BY MR. AXWORTHY
Flora Isabel MacDonald: Madam Speaker, you will recall that last week I raised the question of the pressure that was being brought to bear on the president of the Canadian Advisory Council on the Status of Women and, indeed, on other members, by the Minister of Employment and Immigration (Mr. Axworthy) who is responsible for the status of women. This matter took the form of both questions in the House and a question of privilege. In the minister's response during the discussion on the question of privilege, he quoted and, in fact, based his remarks and defence to a large extent on a statement from a press release, which appears at page 6140 of Hansard, and which reads:
The executive committee in December expressed concern about the timing of the constitutional conference.
January 19, 1981

That is the constitutional conference sponsored by the Advisory Council on the Status of Women to be held in mid-February. The press release on which the minister based his remarks was authored, I understand, by a member of the executive committee of the advisory council. Win Gardner. By the way, Win Gardner happens to be a constituent of the minister's, but I dare say that the statement itself was dictated in the office of the minister. The point is that the minister claims now that the concern about the timing of the constitutional conference was expressed last December. Since he made that claim last Tuesday, his remarks have been challenged by the president of the advisory council, Doris Anderson, who, in an interview on "Canada AM" last Wednesday morning, made this statement:
There is nothing in the December minutes of the council that could substantiate that statement.
In other words, she was expressing a view which is quite contrary not only to what the minister claimed but to what was claimed by Win Gardner, a person who just the previous week had sent out a notice to some 3,000 women in Manitoba stating that the conference was still on in February. Her statement, which appeared in the Manitoba ACSW newsletter of January, made this comment:
The conference on women and the constitution, sponsored by the Canadian Advisory Council on the Status of Women, will take place in Ottawa on February 1 3 and 14.
My question of privilege is that since my original question was raised last Tuesday, with which you dealt, Madam Speaker, the minister's statements have been questioned even more, and even directly refuted. The minister claims, and of course the House is asked to accept his claim, that the question about the timing of the constitutional conference which was scheduled for February was raised last December, that it came to his attention and to the attention of the council last December. But that is not reported in the minutes of the meeting of last December. A leading public servant, the president of the Canadian Advisory Council on the Status of Women, who is responsible to the minister and to this House, says that there is no truth to the minister's statement and nothing which would substantiate his claim that the conference was called into question last December, that the plans of last December were that the conference was to go ahead.
In fact, the plan, as recently as early this month, was to go ahead with the conference. Surely it is up to the minister to provide such proof, if indeed he can do so, that the conference was called into question last December. As members of Parliament we are entitled to that proof, if the minister can produce it, which I very much doubt.
Both the minister and the president of the advisory council must answer to Parliament. We are being asked to look at a question on which two points of view are being put forward and in which the positions which have been taken are increasingly divergent. That divergence of difference of view is being further developed and exploited by one of the members of the advisory committee to the council, a Miss Hellie Wilson. 1 will refer to her in the same manner as the member from New Westminster did because she has been acting, unofficially, as
Privilege-Miss MacDonald
liaison between the minister and the Advisory Council on the Status of Women.
1 learned within the last few days that Miss Wilson has taken upon herself, perhaps at the urging of the minister, to phone members of the advisory council and to tell them before their meeting later this week that, in the words of one of the members of the advisory council who had been told by Miss Wilson, "Doris Anderson must go." That is the kind of comment which this woman, who is acting as unofficial liaison between the minister's office and the Advisory Council on the Status of Women, is making.
What is really at stake, in a matter of growing importance to a great many women across this country, is the credibility, integrity and independence of the Advisory Council on the Status of Women. If the minister continues to attack the council and its president irresponsibly, as he has been doing, then he runs the risk, unfortunately, of bringing about the resignation of a valued public servant, and the risk of undermining, for all time, the credibility of the Advisory Council on the Status of Women as an independent body.
Therefore 1 would ask that this question of privilege, because of this new conflict which has arisen since Madam Speaker's ruling, between the minister and the president of the Canadian Advisory Council on the Status of Women, be considered in the light of the president's probable resignation if this kind of attack continues, in the light that we do not have full information as to the arguments on both sides of this case, in the light that we as members of Parliament are becoming increasingly involved in this spectacle which this minister is creating, and that, therefore, the whole matter be referred to the Standing Committee on Privileges and Elections.


Lloyd Axworthy: Madam Speaker, the question of privilege raised by the hon. member does not deserve a very lengthy reply as there is one basic flaw in her argument. The question of privilege seems to be based upon a statement which I made in the House with regard to a meeting in December. I was quoting from a statement which was issued by the entire executive committee of the advisory council. It is not my assertion, but an assertion which was written in the statement which was released publicly, not by one person but by the entire executive committee.
I was simply repeating that statement in the House. 1 was very careful to make sure that the statement was put in quotation marks so that hon. members would understand clearly that I was simply substantiating my remarks to this House. If there is a question of validity about the accuracy of that statement, I would simply reiterate what I said before, that it is a matter which should be resolved between the president of the advisory council and the executive committee. It is the executive committee which decided against the proposal and which took its decision, and it is the president of the advisory council who raised an objection to that decision and who made the charges, not me.

January 19, 1981
Privilege-Miss MacDonald
The president of the advisory council has threatened to resign. I have not asked for her resignation. She is the one who has been carrying the public offensive. I am simply trying to keep the facts clear. I would suggest to members of the House that the best way to ensure the integrity and independence of the council is to allow it the right to decide on its own issues, not bring them into this House, as the hon. member has done.
If we have any concern, it is to make sure that the autonomy of that council is protected. That autonomy will not be protected by constant interference or intervention, or trying to find an issue that would bring it into another forum. The best way to protect the independence of the council is to show that we trust it to make its own decision.
In reply to the assertion of the hon. member for Kingston and the Islands (Miss MacDonald) 1 would simply say that 1 was reading from and reporting a statement. If there is an inaccuracy in that statement or if there is a difference of opinion between Mrs. Anderson and the executive committee, it should be resolved between them. 1 was not party to those meetings nor, as 1 have said, was I party to any of the discussions concerning the time of the conference until the executive committee requested a meeting with me to ask my opinion, which 1 gave. That is the only time I discussed the matter with any member of the executive committee in a direct fashion. That was the only time in which I raised-had the issue raised with me. I gave them my opinion and judgment and left it at that, saying it was up to the council to make a decision.
I would simply say, Madam Speaker, that there is no question of privilege. There is obviously a difference of opinion, but the best place for that to be resolved is in the council itself. That is the best way that both the interests of the hon. member and of myself can be maintained while protecting the council's independence.


Pauline Jewett: Madam Speaker, 1 should just like to say that the advisory council meets tomorrow. I am confident, as I am sure I have every reason to be, that it will fully support Mrs. Anderson in her valiant attempt to ensure that the independence of the advisory council is maintained. I am sure we will discover that that will have been accomplished, tomorrow.


Madam Speaker:: Order, please. I am afraid that the hon. member for Kingston and the Islands (Miss MacDonald) has not argued that her question of privilege is founded in a way that has satisfied me. The fact that an alleged or real conflict which might have occurred-


Flora Isabel MacDonald: A real conflict.


Madam Speaker:: -between the minister and the president of the Advisory Council on the Status of Women has accelerated or has been accentuated, does not in itself constitute a question of privilege. It might be a serious matter and a matter which might have very serious consequences as well-


Flora Isabel MacDonald: It sure will.


Madam Speaker:: -but it is not within my purview to rule upon that kind of question. This is merely a matter of a difference of opinion, a difference of interpretation, between two members of this House, and therefore I must rule that there is no question of privilege.



ROUTINE PROCEEDINGS


Jean-Luc Pepin: Madam Speaker, pursuant to the provisions of Standing Order 41(2), I wish to table documents which have to do with questions falling under the administrative responsibility of the government. 1 therefore take this opportunity to make public in the House the report of the inquiry into the Mississauga railway accident whose author, as hon. members know, is Mr. Justice Samuel Grange.
[ English j
i might add, Madam Speaker, that Justice Grange is honouring us with his presence in the gallery of the House this afternoon, with some of his dedicated staff.

[ Translation]


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. D. M. Collenette (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 254, 739, 1,599, 1,763, 1,822, 1,825, 1,831 and 1,837.


Mr. Herbert: 1.	What percentage of the new automobile sales in Canada in (a) 1977 (b) 1978 were (i) fully manufactured in Canada (ii) partly manufactured in Canada (iii) imported?
2.	What are the estimated percentages for 1979?
3.	What was the percentage of Canadian content of the cars partly manufactured in Canada in 1977 and 1978 and what is the estimated percentage for 1979?


Hon.   J.-J. Blais@Minister of Supply and Services: Statistics Canada reports: there are no automobiles sold in Canada which are fully manufactured in Canada, in the sense that all
January 19, 1981

of the workmanship, all of the parts and all of the materials originate in Canada. The nature of the industry is such that new parts destined for the assembly of new motor vehicles can flow freely between Canada and United States and vice versa-as long as a given percentage of new cars sold in Canada are actually cars assembled in Canada regardless of origins of components. Cars are imported into Canada and are also assembled in Canada with more or less imported parts. On a
Order Paper Questions
number of units sold in Canada basis, Statistics Canada estimates show that in 1979 domestic production (units assembled on Canadian assembly lines) accounted for about 34 per cent of total sales. In 1978 the figure was 27 per cent, and in 1977 24 per cent. On a value basis the percentages may be quite different depending on the mix of automobile by size and model. Input-output data suggest that in 1976 about 35-40 per cent of the value of total intermediate use (excluding parts for final sale) in motor vehicle manufacturing was Canadian.
Produced in Canada for Domestic
Year	Produced in Canada	Exports	Consumption	Imports	Sales in Canada(000's units)	(000's units)	(000's units) (Per cent of final sales)	(000's units)	(Per cent of final sales)	(000's units)(1)	(2)	(3)	(4)	(5)1977	1,162.4	921.4	241.0 24.3	754.5	76.1	991.41978	1,143.4	873.7	269.7 27.3	743.0	75.1	988.91979	987.7	650.1	337.6 33.7	707.1	70.5	1,003.0
Sources:
(1)	Canadian Motor Vehicle Manufacturer's Association
(2)	Statistics Canada publication 65-203
(3)	Column I-Column 2
(4)	Statistics Canada publication 65-202
(5)	Statistics Canada publication 63-208 and 63-207


Mr. Cossitt: 1.	With reference to the answer to question No. 77 which states in part, that Air Canada's practice "is similar to other Canadian carriers" in regard to the issuing of passes to those persons who have no government connection, what is a full description of "similar to other Canadian carriers"?
2.	With further reference to the answer which states in part, that "the airline regards details of its promotional pass issuance as proprietary" (a) is Air Canada a Crown corporation owned by the people of Canada (b) does Air Canada report to Parliament through a Minister of the Crown (c) under what authority does Air Canada have the right to deny information to the elected representatives of the people (d) has the government lost control of Air Canada and its operations (e) is Air Canada immune to requests for information from members of Parliament or from the Minister of Transport and, if so, what steps will the government take to rectify the situation and does this come under the government's policy to permit more freedom of information to the Canadian people?
3.	Is it the policy of the government to allow a Crown corporation to refuse information to members of Parliament and, if not, will this situation be corrected and, if so, on what date?
4.	What is the name of the person or persons who made the decision that "the airline regards details of its promotional pass issuance as proprietary"?


David Michael Collenette: I am informed by the management of Air Canada and the Prime Minister's and Privy Council offices as follows: 1. "similar to other Canadian carriers" means that Air Canada conforms to the same rules of the Canadian Transport Commission and its practices, in the application of those rules, are the same as other Canadian carriers.
2.	(a) Yes.
(b)	Yes.
(c)	Air Canada withholds only that information which it regards as proprietary.
(d)	No.
(e)	Within a general framework of financial accountability and policy direction, Air Canada is not
immune to requests for information from cabinet or Parliament. However, successive Canadian governments have allowed Crown Corporations operating in a commercial and competitive environment not to reveal publicly confidential commercial information, the disclosure of which would be injurious to their competitive position. This approach is in line with the policy reflected in the access to information bill.
3.	See answer to 2. (e).
4.	It is a corporate decision.


Mr. McKenzie: 1.	What was the initial cost to the government of the "Discovery Train"?
2.	What is the annual cost to the government for maintaining the train?


Mr. Peter Stollery (Parliamentary Secretary to Secretary of State and Minister of Communications):: I am informed by the National Museums of Canada that the reply to the above question is as follows: 1. The purchase price of the Discovery Train was $629,482 ($575,000 U.S.). Of this amount, $541,540 was donated from provincial governments and private sources, leaving $87,942 as the initial cost to the federal government of the Discovery Train. Following receipt of the rolling stock, made as a gift to the Crown, fabrication and start-up costs totalled $4,946,971.
2. The annual cost to maintain and operate the train are as follows:
1978-	79	$2,329,2661979-	80	$3,291,2191980-	81	$3,016,759Total:	$8,875,410
Included in these figures are salaries, travel costs, repair and upkeep, equipment, and communications.

January 19, 1981
Order Paper Questions ADVERTISING EXPENDITURES


Mr. Stevens: For the current fiscal year, what are the estimated expenditures of the Department of Supply and Services for (a) advertising (b) free or subsidized publications (c) other information conveyed to the public?


Hon.   J.-J. Blais@Minister of Supply and Services: (a)
$71,000 (paid announcements); (b) $2,865,180; (c) $90,050.


Mr. McKinnon: Did the Department of National Defence place a $23,400 contract, file number TOX80-1695/2 with J.l. DeNure (Chatham) Ltd., for school bus rentals and, if so (a) how many buses are involved (b) for what purpose?


Hon.   J.-J. Blais@Minister of Supply and Services: Contract TOX80-1695/2 was awarded by the Department of Supply and Services on behalf of the Department of National Defence to J.l. DeNure (Chatham) Ltd. for the rental of school buses. The contract was awarded on June 13, 1980, and was valued at $23,400.
(a)	A total of ten buses were involved; five buses for the period June 16 to August 22, 1980, and five for the period July 2 to August 22, 1980;
(b)	The buses were used to transport approximately 1,800 cadets attending the Ipperwash summer camp in June, July and August, 1980.


Mr. McKinnon: Did the Department of National Defence place a $12,000 contract with Location d'aulos el camions. Budget de Chicoutimi, file number QUE80-1938/1 for car rentals and, if so (a) how many cars are involved (b) for what purpose?


Hon.   J.-J. Blais@Minister of Supply and Services: Contract QUE80-1938/1 was awarded by the Department of Supply and Services on behalf of the Department of National Defence to Location d'autos et camions, Budget de Chicoutimi for the rental of cars and mini-buses. The contract was awarded on June 13, 1980, and was valued at $12,000.
(a)	Seven cars and three mini-buses;
(b)	The vehicles, in (a) above, were used to transport approximately 1,800 cadets to summer camps in Bagotville, Jonquiere and St. Honore, Quebec during the months of June, July and August, 1980.


Mr. Herbert: Does the Department of Agriculture maintain staff in embassies or consular offices and, if so (a) in which ones (b) in each case, how many public servants are retained?


Hon. E. F. Whelan (Minister of Agriculture):: Yes. (a) France, New Delhi, Brussels and Washington, (b) One.


Mr. Herbert: In each of the past five years, what was the cost to maintain the Animal Pathology Laboratory in (a) Quebec (b) Ontario (c) Saskatchewan and, in each case, what was the personnel strength on March 31, 1980?


Eugene Whelan: Costs to Maintain Animal Pathology Laboratories (Including Personnel)
($000)
1980-81* 1979-80	1978-79	1977-78	1976-77(a) Quebec	$487.0 $329.1	$354.8	$334.1	$344.8(b) Ontario	$6,992.7 $7,006.9	$6,742.7	$5,835.8	$5,050.6(c) Saskatchewan	$503.6 $484.9	$512.0	$413.1	$307.2Strength on March 31, 1980 Quebec	8	Ontario	248	Saskatchewan	15	
Estimated


David Michael Collenette: Madam Speaker, would you be so kind as to call starred question No. 1,349?


Mr. Blenkarn: Is the government contemplating extending the quota arrangements for the import of shoes into Canada?


Mr. Ralph Ferguson (Parliamentary Secretary to the Minister of State (Small Businesses)):: In so far as the Department of Industry, Trade and Commerce is concerned: on December 1, 1977, the government imposed quotas on imports of footwear for three years. This decision followed a report by the Anti-Dumping Tribunal, which concluded that imports were causing or threatening to cause serious injury to Canadian production and employment. The quota regime was in conformity with the provisions of GATT Article XIX. The import quotas cover all sources and all types of footwear, except footwear made of waterproof plastic, rubber or canvas, and downhill ski boots. Imports have been limited to approximately 32.5 million pairs annually, about 80 per cent of annual footwear imports between 1974 and 1976. In July, 1980, the Anti-Dumping Tribunal was asked to undertake an inquiry into whether imports of non-rubber footwear would continue to cause or threaten to cause injury to Canadian production of like or competitive goods in the absence of special measures of protection. To provide adequate time for the tribunal to carry out its investigation, the government announced that the global quota on footwear would be extended for an interim period of up to one year beyond the current expiry date of November 30, 1980. The results of the inquiry are expected in February. At
January 19, 1981

that time the government will be in a position to adopt an appropriate import and industry sector policy. In the meantime, a number of specific footwear items aggregating about 500,000 pairs have been identified which no longer appear to pose a serious threat to the Canadian industry and accordingly will be released from the global quota's coverage on December 1, 1980.
[ Translation]


David Michael Collenette: Madam Speaker, 1 ask that the remaining questions be allowed to stand.


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Friday, January 16, consideration of the motion of Mr. MacEachen that Bill C-54, to amend the statute law relating to income tax and to provide other authority for the raising of funds, be read the second time and referred to the Committee of the Whole.
Madam Speaker:: On Friday last the hon. member for Calgary Centre (Mr. Andre) raised an important point of order in which he argued that Bill C-54, an act to amend the statute law relating to income tax and to provide other authority for the raising of funds, differed from the ways and means motions upon which it was based in so far as the bill provided a borrowing authority in Part I which had not been included in the ways and means motions. A number of hon. members took part in the debate, and I thank them all for their assistance to the Chair in this matter, and especially for the manner in which they gave it.
No argument was offered to suggest that the taxation provisions of the bill were not based on the ways and means motions. The arguments related solely to the inclusion of the borrowing authority in the bill, a provision which was not in the ways and means motions upon which that bill is based.
Hon. members also pointed out that prior to 1975 it was our practice to include a borrowing authority in the supply bill, but this practice was discontinued after a ruling by my predecessor on December 9, 1975, at page 924 of the Journals, partially on the grounds that under our supply procedures there would be no opportunity to debate the borrowing provisions.
Income Tax Act
Subsequently, borrowing authority has been granted by means of separate legislation, as in 1979 and in 1980, and also through provisions included in the income tax bill in 1977.
The argument was made on Friday that while the ways and means motions constituted effective notice of taxation provisions in the bill before us, there had been no notice of the provision of borrowing authority.
Members will appreciate that one of the basic principles governing our proceedings is that notice must be given of matters of substance to be debated in the House. This principle is reflected in our Standing Order 42(1) which reads as follows:
Forty-eight hours' notice shall be given of a motion for leave to present a bill, resolution or address, for the appointment of any committee, or for placing a question on the order paper-
No one will disagree that the authority to borrow is a matter of substance. Indeed, the borrowing authority aspect of the bill constitutes a separate bill as cited in clause 1, namely, "This part may be cited as the borrowing authority act, 1981-82."
[DOT]* (1520)
i am, therefore, of the opinion that lacking specific notice for the borrowing provisions, these provisions, as contained in part I, should be struck from the bill, and I so order.


Some hon. Members:: Hear, hear!


Madam Speaker:: I should make clear to members that I have no quarrel with the practice of combining in the same bill taxation matters based on ways and means motions with other matters, provided that the provisions of Standing Order 42(1) are fulfilled and notice properly given. Precedents to that effect can be found at page 42 of the Journals for October 20, 1978, relating to Bill C-10, and page 114 of the Journals for 1976 relating to Bill C-22.
I, therefore, order that the bill be reprinted with the necessary changes.


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


Hon. Monique Begin (Minister of National Health and Welfare):: Madam Speaker, before proceeding with the remarks I wanted to make on Bill C-54, I would seek your advice and ask whether I may still comment on the changes which this bill will make to the Canada Pension Plan and so on, or whether that is the point you have just made?


Madam Speaker:: It seems to me that the hon. minister may make the comments she wants to make before the House in the course of the debate. Should the occupant of the Chair feel that the comments are not relevant to the order paper of the House she will simply be called to order.


Monique Bégin: Thank you very much, Madam Speaker. I am very pleased today to take a few minutes of the time of the House to voice my support for Bill C-54.
6320

January 19, 1981
Income Tax Act

It was about ten years ago, in December, 1970, when the report of the Royal Commission on the Status of Women in Canada was tabled in this House, condemning discrimination in the Income Tax Act against spouses, more accurately against wives, who work in family businesses such as farms and neighbourhood stores. During these past ten years women's groups across the country have repeatedly requested an amendment to the Income Tax Act in order to permit the deduction of salary paid by husbands to wives as a legitimate expense for what is called unincorporated small business.

If I may, Mr. Speaker, I would particularly like to recall the very strong representations made by the association feminine d'education et d'action sociale, formerly Quebec's Catholic union of rural women, which under the dynamic guidance of Mrs. Dominique Goudreault of Nicolet had then changed its name and set for itself a vocation of feminism in support of women who had spent years looking after others. So in recent years the association established a work committee specifically for its 35,000 members, those who are in partnership with their husband in a small family business. I think it is accurate to say that roughly one third of those women are in agricultural undertakings, one third work in businesses of every description, and one third in what is known as small businesses such as corner stores, tobacco stores, grocery stores.
Nearly four years ago-I believe it was in the spring of 1977 when I was holding the national revenue portfolio-representatives of the association came to see me to explain in detail the injustice they suffer under our income tax laws because they could not deduct from operating expenses the salary that their husbands would pay them or their contributions to such social programs as unemployment insurance, the Canada Pension Plan, the Quebec Pension Plan and so on. They were right, and since social changes do not occur overnight by any means, we had to wait until today to see at last the results of that feminine movement which has gained support from so many others throughout the country.

Bill C-54, therefore, answers this call for more justice for women who work for their husbands in small family businesses. It acknowledges in concrete dollar terms the contribution of wives who work in these small enterprises, such as family farms, or family stores in cities. It is another example of this government's commitment to improve the status of women in Canada.
One aspect in the bill gives me particular pleasure, both because of my present position as Minister of National Health and Welfare and because of my past association with the royal commission. Wives will now be able to participate for the first time in the Canada Pension Plan, which comes about as a result of a consequential amendment to the Canada Pension Plan contained in this bill. In effect, the adoption of the proposed changes will make the salaries paid to wives for
employment in unincorporated family businesses pensionable earnings for the purposes of the Canada Pension Plan.
In other words, wives will now be able to participate in their own right in the Canada Pension Plan, just like all other salaried workers in Canada. They will be guaranteed a full pension on retirement and they can protect their families against dangers of disability or death.

It is important to note, Mr. Speaker, that I am referring here to compulsory and not to voluntary participation. Whenever the owner of a non-incorporated business declares in his operating costs the salary paid to a spouse, for income tax purposes, he must automatically deduct from that salary contributions to the Canada Pension Plan. As in the case of any other payment made to the Canada Pension Plan, the employer, that is the husband, must also pay to the plan a further contribution equivalent to that of his employee.
According to the estimates drawn by the department, such an amendment, which is an improvement and a mere act of justice, would affect approximately 375,000 Canadian women who from now on will be contributing to the Canada Pension Plan. The parallel amendment announced by the Quebec government for the Quebec pension board would add approximately 125,000 contributors for a grand total of half a million Canadian women who will henceforth be in a position to contribute through their employers, that is their husbands, to public pension plans, something which they could not do previously. I am sure that all members from all sides of the House have some of them in their constituencies, because these women are employed in corner stores, and convenience stores in larger cities and in tobacco shops and grocery stores in towns and villages, or on family farms. This may also affect the wives of fishermen who have set up small businesses. Truly unfair conditions will thus be corrected.
I remember that when I was minister of national revenue, my officials, faced with this feminist activism from usually very placid quarters, had said to me, "The only way we can deal with this unfair situation is for these small family businesses to incorporate." To this suggestion, women would retort, I think, most appropriately, "This is a way of life which we are eager to protect, a way of working for a couple of children who could not support an army of accountants, managers, administrators, and so forth. We want to protect a way of life with a minimum of paperwork and bureaucratic interference. That is the reason we cannot and will not incorporate. We want to maintain a family flavour to our businesses. I am very glad to see that our so-called system has adapted to these people instead of the other way around. I might add that-


Marcel Joseph Aimé Lambert: It is ten years behind the time.
January 19, 1981


Monique Bégin: It is not ten years behind the time as the hon. member for Edmonton West suggests. If the member had any knowledge of the slow pace of social change, he would find that rather fast. Nothing is slower to change in any country than matters concerning income tax, for one very simple reason. The specialists-I remember the hon. member was a specialist as the parliamentary secretary to-


Marcel Joseph Aimé Lambert: Mr. Speaker, I should like to ask a question. Would the minister please wait for the first five minutes of my speech, and 1 will tell her what happened in 1971 when her administration-


Mr. Deputy Speaker:: The member is not asking a question, he will have an opportunity to make a speech later.


Monique Bégin: I have learned in the last ten years concerning the development of more simple justice and better opportunities for women in the country, that any social change, be it more tolerance between Canadians of different ethnic origin, religion, or language, or in the development of better justice for women vis-a-vis the men in the country, occurs at a slow pace. I will always be impatient in front of the House because of the slowness of that pace. On the other hand, I realize that this is so because changes in mentality, behaviour and attitude cannot be legislated. They must be slowly pushed into evolution by public discussion, information, more education and so forth.
Those who established the tax industry-and of course 1 am talking about more people than simply those on the government side-considered or used to say a few years ago that such a change would open the door to "abuses". Any minister of national revenue is afraid of that word because we do not know for sure the exact calculated risk one must take in the face of a major change which will permit the use of an income tax provision in favour of many more people.
It is estimated that approximately half a million new Canadian taxpayers will benefit from this income tax provision, namely, women who work for their husbands. It will mean that one woman out of six will benefit. A significant additional number of Canadians will finally receive through the system the benefits they rightly requested, by removing an injustice in the Income Tax Act.

Anyway, Mr. Speaker, what really matters is that Canadian women who can avail themselves of this correction or amendment to the Income Tax Act be made aware that this amendment has been or rather, I presume, will be adopted by this Parliament.
At this stage, I should like to thank particularly the Minister of National Revenue (Mr. Rompkey) who, jointly with the Minister of Finance (Mr. MacEachen), made every effort in early December to inform the employees of the Department of National Revenue so that they may answer inquiries properly with regard to the implementation retroactive to January 1,
Income Tax Act
1980, of this income tax provision. If I may be permitted, I would ask every member of the House-

1 think a provision such as this one applies to people everywhere in the country. I would like to ask colleagues on both sides of the House to include a little note in their householders, or to use their mailing lists, to reach as many small unincorporated businesses as possible in their ridings in order to let them know the deadlines are quite close. I think they are at the end of the month for family businesses to take advantage of this change in the Income Tax Act.
The enactment of this amendment to the Canada Pension Plan will represent an important step in the participation of women in the plan. It adds to other CPP provisions which were specifically designed to benefit women. For example, I can cite the section which permits the splitting between spouses, in the event of divorce, of Canada Pension Plan credits earned by either spouse during the marriage. Unfortunately very few people have taken advantage of the credit splitting provision. Between January, 1978, when the provision came into effect, and March, 1980, there were only 970 applications for credit splitting. In contrast, between 1978 and 1979, 86,000 divorces were granted in Canada outside the province of Quebec.
Numerous efforts have been made to inform women of their new right, efforts which have included periodic inserts in family allowances or pension cheques. Also advertisements were placed in newspapers, and letters were sent to provincial and territorial law societies. I am concerned that women are not using the program because they do not know of it. It is the old problem in most governments of getting the information to the people for whom the bills were passed.
As hon. members may recall from the material I sent in July of last year, 1 made another attempt at informing people by sending letters to approximately 32,000 lawyers across Canada advising them of the details of this provision and of its low rate of use. Personally I met with a few lawyers in past months who told me that the letter was their first opportunity to learn about the provision. So, we have increased the awareness of people who deal with matters of separation and divorce. They will ensure that more women benefit from the provision.
In speaking about provisions in the Canada Pension Plan which favour women, I should also mention what we call the dropping-out provision. This provision allows a parent who remains home to look after young children to drop those years of low or no earnings in the calculation of lifetime pensionable earnings on which Canada Pension Plan retirement pensions are based. The child rearing drop-out amendment was approved by Parliament before I assumed my portfolio approximately four years ago. By the way, it had the support of all parties in the House. It has not come into force yet because the provinces of British Columbia and Ontario very unfortunately refused to give their consent. The day they give their consent-very precisely, the day Ontario gives its consent-the provisions will be immediately in force and will greatly benefit women who recognize raising children to be one of their prime responsibilities.

January 19, 1981
Income Tax Act
We have calculated that the average net benefits to women with children will be increased by 22 per cent. If I may, I ask my colleagues to bring every pressure to bear on the government of Ontario, in particular, to drop its ban on a provision which will improve the lot of Canadian women vis-a-vis pensions in their own names.
[ Translation]
Of course, these provisions are far from being perfect and they will not solve all the problems of women who have reached the age of retirement, but they will help to give them a reasonable pension. Some problems remain to be solved, namely, that of public pensions, which is readily identifiable, in particular the old age security income supplement for single people who have to apply for all or part of the supplement. About 75 per cent of these pensioners are women. Unfortunately, they are still below the poverty line in spite of the $35 a month increase which has been granted since the cheque of last July, at the cost of something over $500 million. I am of course talking about the old age security supplement for needy pensioners who are still below the poverty line. I simply want to emphasize that this aspect of the problems concerning pensions and women ought to be recognized. The cost of bringing all single pensioners above the poverty line, once and for all, if we could take this additional step today, would amount to approximately $700 million. I cannot tell when we shall be able to do so, but it will certainly not be this year or in the immediate future, because of the economic conditions, but it will certainly be for us a priority as soon as our economy shows signs of recovery.
I simply wish to identify the problems thereby indicating that because of a lack of funds we are unable to consider immediate solutions. Another problem has to do with women between 60 and 65 who, because they are widowed or separated, do not benefit from the spouse's allowance, the special program for the spouses of pensioners, and who, because of a very legitimate pride, do not want to apply for provincial welfare assistance to which they are entitled. In my opinion, this problem can be solved only by implementing a guaranteed annual income or a pension for people in need, not only for women, but for all people between 60 and 65 who are in need. To implement such a program or to bring about another definition of poverty would mean nearly $1 billion in additional expenses. This is why I would consider it dishonest on my part to give any hope of such a program being implemented in the near future. We want first of all to bring above the poverty line those over 65, and then we can determine how best to attack the problems of needy men and women under 65 who are not yet entitled to official retirement benefits. In any case, the hon. members are aware that the problem of pensions will be at the heart of the debate on social policies and their improvement in the eighties.
Last week, or ten days ago, we announced that a national conference on pensions will be held at the end of March, to which will be invited the main parties concerned in private pension plans in Canada, that is, representatives of employers in the small business sector, of provincial, municipal and federal governments in their capacity as employers and legislators, and other interested parties, not only management but also the workers, the unions and women's groups as well as groups of retired people. They are the only ones who have a first-hand knowledge of the weaknesses in our pension system because they suffer from them in their daily lives. I would also add that the situation of women who work without pay, that is housekeepers, is just as deplorable. Much can be said about improving their lot. This bill only tackles one aspect of their problem, but no more can be done for the time being. Generally speaking, despite the passage of time and the will to solve that old problem, working women are still locked in the lowest-paid jobs and their presence in the work force tends to be sporadic, at least during child-bearing and child-rearing years before their children start attending daycare centres and school regularly.

Before I conclude, Mr. Speaker, let me mention two other provisions of this bill which relate directly to my portfolio of National Health and Welfare. Before doing that, it has just come to my mind what the hon. member for Edmonton West may have been referring to. He and other members of this House have requested the improvement which is taking place today. I mentioned one group of women in particular because I think we owe them credit for the constant work and pressure and the presentation of briefs they have made toward this improvement, and that is the work of AFEAS. The hon. member for York South-Weston (Mrs. Appolloni) as well as, I suppose, the hon. member for Edmonton West who, for the short time his party was in power, expressed the same intent.


An hon. Member:: We were defeated.


Monique Bégin: You could have done it before that but you did not. Hon. members had expressed the same recognition of this injustice in the Income Tax Act. This will be settled with Bill C-54, and all of us are very pleased about that.
There are two other measures in Bill C-54 that relate in part to my ministerial responsibility. One measure has to do with an amendment to the child tax credit provisions which will ensure that the credit received in a given year will go in as many cases as possible to the person currently looking after the child.
In the first two years of its existence the child tax credit has proved, and I think I have the concurrence of everybody on that, to be extremely successful in delivering a measure of financial assistance to low and middle-income families raising children. Millions of mothers are in the process right now of filing their 1980 tax returns to claim a non-taxable benefit, and I insist this time on a non-taxable benefit of up to $238
January 19, 1981

per child subject to a reduction, of course, if a family earns a joint income of over $21,380.
This current amendment is intended to resolve a problem which arose in a relatively limited number of cases, but I am sure hon. members will agree that the result will be important to the families concerned. The problem relates to children who undergo a change of custody in the month of December; for example, a child who is adopted in that month or who returns from the custody of an institution, or a child who goes from the care of one separated parent to the other parent.
The previous provision which based eligibility on entitlement to the December family allowance meant that the child tax credit would not reflect such a change in custody even though it occurred before the end of the taxation year. Instead of going to the parent who was currently looking after the child in the year the credit was paid, the credit would be payable to the parent who was no longer caring for the child or, in the case of institutionalized children, no credit at all would be payable.
The refinement-because it is a refinement only-contained in this provision is expected to benefit approximately 8,500 children who will move from the custody of one parent to that of the other in the month of December, or move from the custody of an institution to a parent in that month of the year. There will not be any impact on the total cost. It is simply a change in who gets the cheque, but in terms of hardship this surely is a very welcome measure.
I may dream-because I am not a specialist in the Income Tax Act; I am obviously not the Minister of Finance-that another change would be brought forward at a later date which would grant a tax credit pro rata per month according to the number of months in a given year since a child has been born or is still below the maximum age to qualify for the child tax credit, instead of according to the status of that child as of December 31. However, that is for the future. The present provisions are surely practical and welcome.
The last provision in Bill C-54 which interests me is an amendment to the Old Age Security Act which will ensure that any energy conservation grants received by pensioners after 1980 will not count as income for purposes of defining entitlement under the guaranteed income supplement program. This means that pensioners will be able to apply for and receive this grant without worrying that that will affect their pension situation.


Marcel Joseph Aimé Lambert: Why discrimination against the others?


Monique Bégin: Does the hon. member want to ask a question?


Mr. Deputy Speaker:: Order, please. Does the hon. member for Edmonton West (Mr. Lambert) seek to ask a question?


Marcel Joseph Aimé Lambert: I will do it formally so it appears on the record. If that credit will not be taxable in the hands of those
Income Tax Act
over 65, why the discrimination? Those under 65 will have it taxed in their hands as though it were income.


Monique Bégin: Mr. Speaker, I will have to look into the specifics of that question or, I suppose, one of my colleagues will have a chance. 1 am the minister responsible for pensioners. We establish public pensions to be paid at age 65 for practical reasons. Officially a person is considered to be a pensioner at that age for the purposes of our payments. I am obviously talking about a program for which I have direct responsibility, the guaranteed income supplement, which measures the poverty of seniors. We have decided that a grant under the energy conservation program will not penalize seniors who are officially seniors, if I may put it that way, with respect to public pensions. There may be other dimensions to not granting that to people below age 65, and I will ask one of my colleagues to answer that question.
That being said, I think this measure should not have any difficulty getting the approval of all members of Parliament. I remind my colleagues in the House this afternoon that exactly the same thing has already been done for pensioners who receive insulation grants, which have proved so beneficial in helping Canadians upgrade their home insulation and cut their heating bills.
In concluding let me state again my support for the bill which is before us. It may look like a long list of all sorts of improvements, but let us analyse how many people it touches and how many women it reaches. It not only grants them decent salaries but also provides them with pensions. There is the provision for pensions and other related benefits in their old age. I will conclude simply by saying that I urge the speedy approval of this bill.


Mr. Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, with respect to the child tax credit provision, I wonder if the minister could tell us when we can get justice for orphans so that they are not discriminated against?


Monique Bégin: I wish I had been given notice of that question to be able to answer it properly.
[English}
The fact is that for a long time the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton) has been pressing the government to correct the Family Allowances Act with respect to family allowances and orphans. Unfortunately, I am not in a position today to give him any good news, but I can assure him that I fully support future improvements to the system, which I am sure will come.


Mr. Knowles:: Mr. Speaker, I rise on a point of order. I think it would be recognized as an understatement for me to say that when the minister was discussing clause 123 of the bill she took in quite a bit of territory in her discussion of the position of women in relation to pensions and so forth. I had no objection, 1 welcomed her statement, but 1 hope the same latitude will be granted to the rest of us.

Income Tax Act


Mr. Deputy Speaker:: The Chair was listening very carefully during the minister's speech, and it appeared that her remarks were relevant to provisions of the bill.


Marcel Joseph Aimé Lambert: Mr. Speaker, first may I say that as a result of Madam Speaker's ruling the House is proceeding under Part II of the bill, that we will expect to see printed a new bill from which Part 1 will have been expunged, and that we are deemed and recognized at this time to be proceeding under Part II only. I think this is quite well understood.
The debate has changed dramatically since that time because 1 can say that 60 per cent of my speeches had to be set aside for some other date because, as we remember, last year when there was a borrowing authority bill here, it was debated possibly ten or 12 days, and everything under the sun, including the kitchen sink, was discussed ad nauseam prior to the byelection of November 16 or 18 or thereabouts. The bill was used purely as an electoral platform in the ridings involved, and the televising of the debates in this House was used in that connection.
However, we can now return to a much more relevant debate. 1 personally have found it very difficult to understand how the government was putting both its feet into its mouth by including Part I in this particular bill, which could have taken 20 days to pass, bearing in mind that it incorporated the economy as a whole under the government's own definition last year. The government would be hard put to say otherwise this year. Second, this bill invites extensive discussion of the energy policy brought about by certain changes in the Income Tax Act to implement certain parts of that energy policy.
I promised this busy minister that I would talk about consideration of the incomes of spouses and their taxability, and the consideration of spouses working in family businesses to be separate taxpayers. I invite the minister to read the debates on the tax reform which came into force in 1972 just before the hon. lady came into this House, because she will see that on many occasions when I was spokesman for the opposition with respect to income tax bills and these particular provisions, I insisted that we either consider, as they do in California, at the option of the taxpayer, the filing of joint returns, or that wives who are bookkeepers, telephone secretaries or what have you for two-man plastering firms or trucking firms, should be paid salaries like any other people.
I do not want to offend the hon. lady because I offended her once before by using a phrase that was somewhat on the crude side. Under the Income Tax Act it was cheaper to hire one's mistress than to hire one's wife. There were many areas of discrimination. To make my point I can use the example of the little Chinese corner store which is in my constituency, the little restaurant. We had the silly situation of the spouse of the proprietor of restaurant A working for the proprietor of restaurant B, while Mrs. B was working for Mr. A.

What utter nonsense!

But if the minister will go to her former colleague, who is now president of the Canadian Transport Commission and who was then minister of finance, and to the then minister of state for finance, who is now a member of the Federal Court, she will find out about the arguments that were used against me, both in Finance and in National Revenue. The tame majority on her side of the House obediently voted me and my colleagues down. We had no chance. What she is acknowledging today was honestly put forward ten years ago.


Donald Alex Blenkarn: Finally, they are accepting our wisdom. Finally they understand.


Mr. Deputy Speaker:: Order, please. The hon. member for Edmonton West (Mr. Lambert) has the floor.


Marcel Joseph Aimé Lambert: Thank you, Mr. Speaker. I do not know, but it seems to me that perhaps I preceded the commission in my submissions. I do not know that the commission reported before 1970. In any event, this has always struck me as something that was rather strange having had contact with my many Chinese friends in Edmonton who are in these little businesses, as well as with my Lebanese friends. I am referring to the "Ma and Pa" stores. But then I look beyond that, at the little country firm, the plastering company, the plumber's company, the country lawyer, doctor or dentist, those whose wives may be nurse-receptionists but whom it is immaterial to pay, except that it is a gratuity which the husband would be giving her. There would be no advantage to paying her.
Of course we must realize that there will be formalities. There will have to be a regular salary which will be agreed to; there will have to be deductions by the husband, and remissions to the Minister of National Revenue for monthly instalments of income tax deductions at source, for Canada Pension Plan and for unemployment insurance. The amount of paper work will appal these families, particularly if, in addition to that, they would have to hire a babysitter and then claim expenditure for child care. The paper work makes one wonder whether it is worth the candle.
However, I should like to point out one case to the minister.
I have found in my practice as lawyer and as member of Parliament that former spouses have come to me and said,, "What kind of damn fool arrangement am I in now? I was married, I have two children, my former husband lives in X. By reason of the court order, he pays me $500 a month, that is so much for support of the children and so much in monthly payments on the house which we own jointly as long as I live there. We have a joint tenancy. He is able, by reason of the fact that it is a court order, either under a judicial separation or under a divorce, to get that payment to me deducted from his gross income. It is entirely charged to me because I have the care of the children, but I am paying also"-and here is, frankly, where her lawyer is a mug-"income tax on the principal, interest and taxes on the house". The husband, who
January 19, 1981

is a joint tenant, has the right of total inheritance. May I have the minister's attention, please?


Mr. Deputy Speaker:: Order, please. Will the hon. member please address his remarks to the Chair?


Marcel Joseph Aimé Lambert: Excuse me, Mr. Speaker. To continue the point, the husband being the joint tenant will be entitled to half of the proceeds, either on disposition by sale or entirely if his former wife should die. The spouse in this case, the mother looking after the children and the former home, is saddled with paying the income tax on the part of the payment she makes on behalf of her former husband, but he gains the entire benefit.
If the minister will reflect on that she will see that these women, who have not carefully thought out their settlements and whose lawyers have not done so either, have saddled themselves with an unjust proposition. Some of them ask why they should have to pay tax on the allowance for their children. They are allowed the children's allowance under the Income Tax Act, that is for dependent children, and therefore one counterbalances the other. I will say, however, that I think it is high time we looked at it again. We should look again at the children's exemption for those who are in receipt of family benefits, because that matter has not been touched for a considerable time and it is subject to review. That is not the only place where we could amend the Income Tax Act.
Now let us look at the Income Tax Act. I do not wish to speak directly to the minister, but I do not think that any of my remarks now reflect directly on any of her duties. So if she has other more pressing matters, I will understand.
When one looks at this bill, one sees the provisions of the budget of December 11, 1979, with some serious exceptions to which I will refer. There are some provisions in the December 11, 1979, budget which were a carry-over from the preceding budget of the now Minister of Justice (Mr. Chretien), which had not been incorporated into law. I have found some instances in the bill which go back to 1977. There is a thread which runs from 1977 through 1978 to 1979. There are areas in Bill C-54 which do not tie in with the budget of November, 1979. There has been a conspicuous elimination of relief for farmers under capital gains of permitting them transfers into registered retirement savings plans. This was to give them an additional one-shot relief from capital gains; but, no, that has been eliminated from this particular bill. Then there is the liquidation dividends paid to non-residents. Any reference to those in Bill C-54 has been eliminated. The definition of a Canadian corporation has been eliminated from this act. Worse still is the elimination of any energy tax credit.
I find rather touching the words of the minister on Friday afternoon when he said, as reported at page 6283 of Hansard:
The slowdown in spending growth will be achieved in significant part by removing the burden of financing petroleum compensation payments from the general government revenues and putting it where it belongs. While this burden will be shared by consumers they will still pay less for energy than if we had moved more rapidly to international levels.
Income Tax Act
The point is that there is nothing but irrelevancy after irrelevancy, and total falsehood. I would not say the minister was deliberately misinterpreting the energy tax credit and the related features in the budget of December.il, 1979. But the energy package at that time-the 18 cents, first of all, was destined to cover the additional premiums due to be paid to eastern refiners to keep down the additional cost of fuel which would be purchased in the year to come. In other words, there was to be a reduction of that damned fool subsidy.
It is the most idiotic piece of hocus-pocus that has ever been perpetrated on the Canadian people-to subsidize the consumption of a decreasing natural resource while refusing to pay to Canadian producers anything approaching the market price of that commodity. It is brainless. The French pay nearly $4 a gallon for gasoline. It is the same thing with the Germans, the Japanese, and the British. The Americans are paying considerably more than we are. In fact, in many states Americans are paying over $2 a gallon. Here the Canadian public is being told, "You poor darlings, you cannot pay more than $1.25. We will pay Alberta and Saskatchewan oil producers 40 per cent of the world market price." Under the agreement between the Clark administration and the Alberta administration the level was to be 75 per cent of the Chicago price, or the world price, whichever was lower. That is a vast difference. The people of Canada were deliberately bamboozled by people who knew, or should have known, what they were talking about. They kept telling the people of Canada, "You shall have candy. The other people will take your candy away from you."
In that statement by the minister on Friday he said "The slowdown in spending growth will be achieved"-Ha! In other words, the rate of spending will not increase quite so fast, even though it is increasing beyond our control, because we have no control over the price we will pay offshore. If Venezuela, Kuwait, Saudi Arabia or Iraq decide to increase their petroleum $10 a barrel tomorrow, that is precisely what Canada must pay. Of course, the federal purse will take it in the neck. Everybody else adjusts to it and others out-compete us.
The song we have heard about Canadians being able to compete is downright foolishness. They cannot even compete now when they have a three to one advantage. There is something wrong somewhere. Either the cost of production through mismanagement, or the unit cost of production through our manpower is too high, or simply our unit cost of production is too high on a restricted market. Whatever the reason may be, it is not the cost of fuel-it would never be the cost of fuel.
Those people using natural gas are receiving a real break. And what advantage do they make of it? Nothing. All we hear are gripes that we are being out-competed from abroad and "we want this protection, this quota imposed." They want this and they want that. Canadians have become a "we want" society. It is high time Canadian society learned the facts, particularly people in central Canada. Yet the minister says "The slowdown in spending growth will be achieved in signifi-

January 19, 1981
Income Tax Act
cant part by removing the financing ol petroleum compensation payments from general government revenues and putting it where it belongs." It always belonged with the consumer, like every other thing.
It is only one particular group or class of producer in one area of the country, in one industry, which is getting it in the neck. All I say is that if oil were a commodity produced in Ontario or Quebec, we would not have the situation we have today. The government would not dare to annoy that group of taxpayers. But for Alberta and Saskatchewan-it says, "Give them the boots", and that is all it has been doing, but with an increasing danger. Once again, there will be a decline in revenue from income tax for the year 1980. There will be a decline in corporate income tax, both from foreign oil and oil supply firms and those hundreds of Canadian oil and oil supply firms, the activities of which will be considerably curtailed during this next year or two years even if the government's energy policy were to get back on the rails. It will be a repetition of what happened in 1971 and 1972.
The hon. member for Bow River (Mr. Taylor) will remember when he was a minister in the Alberta government how revenues for that province dipped very seriously as the result of the-

-manipulations-

-is what I would call it-

-mere manipulations-

-of so-called bright people dealing with a subject about which they knew nothing. At the time the director of research for the Royal Commission on Taxation admitted that they had not gone into the consequences of their proposals with regard to natural resources. 1 heard him admit that in the amphitheatre in the Banff School of Fine Arts at a public conference or seminar involving the oil industry. That man barely got away that day with his skin, and he certainly did not get away with that action in the literal sense.
In the same way we have so-called smart individuals in the Department of Energy who are playing around in a theatrical way and devising an energy policy which is doomed to failure from start to finish. The industry and the outside commentators are against the policy, and we see it everywhere, but there is no critical assessment being made by the government. The provinces involved-British Columbia, Alberta and Saskatchewan-are absolutely flabbergasted. I predict that there will be a drop in corporate and personal income tax revenues for this year as the result of the energy policy by over 5 per cent in total. There will be a loss of 30,000 jobs in 1981 in those three provinces as a result of this policy. We are not talking about crossing sweeper wages. We are talking about people who are earning good solid wages and salaries the year round. We are
talking about Canadian companies which are successful and which are a credit to the ingenuity and get-up-and-go of our Canadian businessmen.
We are in this situation because those people who are fussing around with the energy policy, from the minister down, do not know the difference between twelve o'clock noon and twelve o'clock midnight when it comes to the operation of the oil industry. Fools let abroad is what it amounts to. That policy will have nefarious results in so far as income tax is concerned. For example, I can refer to the most recent sale of leases which took place about ten days ago. This sale involved a mere $8 million when it should have been $80 million, but nobody is investing. Forty drilling rigs have gone, there are 100 more lying idle, and there will soon be another 100 more lying idle as the programs wind down and no new programs replace the old ones.
When one looks at this matter one feels like weeping. I will have many other opportunities to come back to this topic. The government ministers who are responsible, the Prime Minister (Mr. Trudeau), the Minister of Finance (Mr. MacEachen), and the Minister of Energy, Mines and Resources (Mr. Lalonde), will have their noses rubbed into it very hard.
I have one other point I would like to make with regard to those three ministers. It concerns the government's policy with regard to the values of Canadian equities on the stock market. The day after the Minister of Energy announced his policy, he boasted that the market had opened strong and that there had been no deleterious effect as the result of his statement. By nightfall, it was readily calculated that over $600 million had been lost on face value by Canadian companies in the oil industry. That loss has continued and has not been recovered.
The policy is to Canadianize the industry. It would seem that the Canadianization is to take place through depressed stock values. If these men were financiers or operators in the stock market, they would be charged with deliberately manipulating the market in order to acquire stocks at depressed values as the result of the stories they spread around. These ministers deliberately acted to rig the market. But we are watching that darling of the government, Petro-Canada, which will use the dollars of Canadian consumers, raised through the imposition of a tax on a barrel of oil, to raise a fund in order to acquire interests in oil companies. It is there. However, that goes somewhat beyond this bill, and for that, Mr. Speaker, I excuse myself-but it is there.
One of the characteristics of this bill which bothers me is the absence of any real relief from capital gains tax. I oppose capital gains tax except when it is levied in a certain, limited way, only if it could not be levied in a different way. I do not like the concept of capital gains tax at any time. Capital gains tax was introduced in response to so-called land profiteering. Under the income tax law at the time, anyone who sold land as a matter of a business venture, and that involved more than just selling one lot, whatever profit he or she made was deemed to be income because it was a venture and, accordingly, it was taxed. The royal commission sat for a long time and brought forward a report with a loud voice. The government pondered,
January 19, 1981

and then brought in a capital gains tax of 30 per cent. This meant that 50 per cent of the increase, rather than 100 per cent, was brought into income. The only exception was that the family home, whether rural or urban, was exempted.
We tried to get the family farm, in fact all agricultural property which was going to continue to be used for agricultural purposes, exempted from capital gains tax. Amendments were offered but the then Liberal majority voted against them. Whether a sale from a father to a son or daughter was involved, or a sale to his brothers and sisters, all within close family, and whether by life transfer or testamentary gift did not matter; those properties were subject to capital gains tax.
When the Elon. John Turner was minister of finance he exempted farm property that passed within a family once in a lifetime. That did not include the incorporated farm, however. For those people from western Canada where incorporated farms are very common, there was no relief whatsoever.
I know that the income tax department worked hard on this matter. If a father sold his farm to his son, and the father had used it as a general purpose farm but the son turned it into a livestock feeding operation, that was not deemed the same category of farming and so the sale was liable to capital gains tax. If a dairy farm in Ontario was converted into a sheep farm, or the reverse, that too attracted capital gains tax. After some awkward shuffling, however, that was changed as well.
I say to you, Mr. Speaker, that this House should not be satisfied until all capital gains tax is removed from all agricultural land that is to continue to be used for agricultural purposes.


Some hon. Members:: Hear, hear!


Marcel Joseph Aimé Lambert: There has been talk about North-South relations, Mr. Speaker. Yesterday I saw some advertising in which Cardinal Leger, formerly of Montreal, spoke about the necessity for the North to feed the South or else in ten to 20 years it might not exist. The capital gains tax in this country discourages and certainly inflates the cost of raising food not only for ourselves but in order to meet the obligations that the Prime Minister hopes we will undertake.
The situation is compounded by the fact that in 1971, when this House was considering the Income Tax Act, $1 purchased $ 1 worth of goods, but today it purchases only 45 cents worth of goods. An acre of land worth $1,000 at that time is now worth about $1,100 on the average when the index is applied. A young farmer who is asked to buy land at that price and finance it at today's interest rates will respond not only with a loua raspberry out with some rather shocking language which would be deserved.
Since the year the act was passed I would say that capital gains tax, on the basis of inflation, has increased the value of farm land by at least one-third, because the vendor always says that the purchaser shall pay and holds himself out to be exempt from the tax as much as possible.
Income Tax Act
The government is the chief beneficiary of inflation under the Income Tax Act, with the exception of the control that was put on personal income tax by the indexation provisions. Corporate income tax just goes up; it feeds; it is a cancer. On capital gains it is nothing much more than that.
I see that I have exhausted my time, Mr. Speaker, but 1 shall come back to this. I have enjoyed speaking to a House that I think has listened, and I hope I shall be able to deal with this in detail at another time. I wish to attempt to convince my hon. friends in this House and people in the country that one of the chief difficulties we have in Canada today is an income tax act which penalizes progress and rewards government as a result of inflation.


Some hon. Members:: Hear, hear!


John Leslie Evans: Mr. Speaker, today I should like to undertake to discuss a number of issues in the time allotted to me. In the speech that I am about to give, I should like to try to describe the economic realities facing Canada and the western world which have provided the underpinnings of Bill C-54. I should like to try to evaluate the current economic policy of the government in this light and to provide the rationale for the measures included in Bill C-54.
Finally, Mr. Speaker, I should like to comment on the criticisms put forward during this debate and prior debates regarding those particular policies and the inclusion, or lack thereof, of certain tax measures such as those mentioned by the hon. member for Edmonton West (Mr. Lambert).
The most serious and pressing problem facing Canada today is the problem of inflation in its current manifestation, which we call stagflation. According to Dr. Haberler, a noted world economist, we can define stagflation as follows:
Coexistence of sharply rising prices and wages and large unemployment and excess capacity both in the aggregate and in particular industries.
I think this describes the situation that we face in Canada today relatively well. That is our problem.
Before a solution can be found, I believe there must be a clear understanding of the cause of the problem. To understand the cause, it seems to me that one has to accept a very simple and irrefutable fact. Again I quote Dr. Haberler who said:
Every inflation, including stagflation, is a monetary phenomenon in the sense that there has never been a significant inflation that has not been caused or accommodated by excessive monetary growth-and no inflation or stagflation can be stopped without monetary restraint.. . The longer inflation lasts the more intractable it becomes because money illusion-
Money illusion is, effectively, inflationary expectations or the basing of decisions on nominal variables rather than real after-inflation variables.
-is eroded and inflationary expectations are sensitized.
Without money illusion, decision making on the basis of nominal rather than real variables, Keynesian economics does
6328

January 19, 1981
Income Tax Act
not work. Theretore, in today's society where the public has entrenched well established inflationary expectations, the current prescription of the New Democratic Party is futile and counterproductive. They say, for example, that to overcome our malaise we should have monetary expansion in excess of our ability to produce goods and services. In other words, we should have an expansionary fiscal policy as the tool. But to control the inflationary factors which would indeed result, we should have some form of an incomes policy, whether it be in the form of a prices review commission or in the form of generalized wage and price controls. I know some members have put this suggestion forward in the past.
The belief is that expansionary monetary policy would reduce interest rates, stimulate demand and investment and, therefore, employment and growth, and the incomes policy would control inflationary pressures. 1 am sincerely convinced the promoters of this policy, Mr. Speaker, are living in a fool's paradise. Without the existence of money illusion, that is again the lack of entrenched inflationary expectations in our society, expanding the purchasing power faster than output, we will do nothing more than generate increased inflationary pressure.


Donald Alex Blenkarn: That was your policy from 1975 to 1978.


John Leslie Evans: This part of the prescription is precisely responsible for the persistent upward acceleration of inflation in western countries for the past decade and a half.
In the second half of the prescription, an incomes policy, or what I would refer to tongue in cheek, as the chicken version proposed by the Leader of the New Democratic Party (Mr. Broadbent), a half of an incomes policy, is a fair prices commission with roll-back powers, a necessary part of the over-all policy which has been put forward by the NDP because even they recognize the inflationary consequences of the expansionary monetary and fiscal policy of which 1 speak. They know that expansionary fiscal policy, accommodated by monetary growth, will result in exactly what 1 have described, so they propose Part II, which is the controls policy.
Controls have never provided a solution to inflation, and they never will because they do not address the problem, only the symptom. Rising prices are not the cause of inflation, just as a fever is not the cause of an illness. Therefore, while controls may allow a respite, as they were designed to do in 1976, during which the real cure-restraint-can be affected, they are totally inappropriate for the long term especially when the fundamental cause of inflation is being exacerbated rather than reduced.
I would like to draw an analogy for hon. members which, however, may be too simple. Let us suppose we have a kettle on the stove, boiling away. Let us suppose we do not like the steam coming from the kettle. There are a number of policy options you could choose. First, the heat could be turned down which would be the appropriate policy. Second, the kettle could be capped and the heat turned down and you get rid of the steam immediately. But that is a dangerous policy. It was proposed by Walter Gordon and his associates-controls and turning down the heat at the same time. The third option is to
cap the kettle and turn up the heat. That is the NDP policy, which is not only dangerous but stupid. The way to stop the kettle from boiling is to reduce the heat. The way to stop inflation is to reduce the growth, and purchasing power, more in line with the average growth in output of goods and services.


Ian Deans: You wouldn't know how to make tea with hot water, for goodness sake!


John Leslie Evans: The NDP approach is equivalent to saying that the kettle is not boiling because we can no longer see the steam. But in both the physical and economic worlds the end result is clear and obvious-there will be an explosion.
Hon. members may now say yes, but inflation is one thing, stagnation is quite another. Stagnation of growth and employment certainly cannot be related to inflation. Certainly they are not caused by the same phenomenon. 1 suggest they are inextricably related. Further, if we do not come to grips with the problem of inflation, then the problem of stagnation will certainly worsen. This is so because of the effects which rising inflation has on consumers and on the business community. It creates great uncertainty about the future. It encourages current consumption. It discourages saving. It discourages investment, Mr. Speaker. It creates an attitude of living for today. It destroys faith in the future. Prosperity and rising standards of living are not consistent with such a scenario, and that scenario is coming to pass in the western world.
We have all seen the rise of the "me generation". We have all seen the growing pressure to enhance the well-being of this or that special interest group, not only to make them better off absolutely but to make them better off relative to other groups in our society. We have begun to devote our energies not to making Canada and Canadians wealthier, more fulfilled, but rather to bickering over our relative share of existing wealth. This is a sure prescription for social disaster. I contend that this social malaise has its roots in the economic malaise.


Flora Isabel MacDonald: It is in the Liberal party.


Ian Deans: And it is caused by Liberal governments over the years.


John Leslie Evans: When there is uncertainty and fear for the future, the reaction is to take what you can for today. This situation was well described by the late Professor Fred Hirsch in his book "Social Limits to Growth."
Stagnation is the result of the process I have described, and the signs are everywhere. We see a decline in research and development not only in Canada but in the United States and in other western nations as well. It follows, when inflation has created growing uncertainty about future rates of return on investment, when inflation has driven interest rates to high levels, by necessity investment time horizons shorten and quick payback is required on investments.
Research and development, which have long-term payoffs-


Donald Alex Blenkarn: Mr. Speaker, I rise on a point of order. The bill was altered earlier by Madam Speaker's ruling that the
January 19, 1981

borrowing authority portion of the bill which deals with the economic condition of the country be taken out and stricken from the bill. This afternoon we are considering only income tax amendments.
My friend has spoken eloquently with respect to inflation, the monetary causes of inflation and that type of thing, but at no time has he referred to the bill or to the Income Tax Act. I suggest, sir, that he is out of order and I ask you to correct him, please.


The Acting Speaker (Mr. Ethier):: Order, please. Hon. members will have noted that I just arrived to replace the hon. member who was in the chair before me. If the speaker who had the floor had not confined his remarks to the bill, he would have been reminded.


John Leslie Evans: Mr. Speaker, it is important that I try to point out the exact relevance of the remarks I am making. If you have designed an Income Tax Act and amendments thereto which will raise revenues, whether there be enough revenue for certain members or too much for others, it is important to understand the general economic context within which those revenue-generating measures are put forward. It is also important to understand the general economic context which relates to the necessity for certain tax measures to be placed within that tax bill and the necessity for not putting in others. That was the intent of my speech, and I suggest to you, with all deference, that that is a totally relevant subject to be discussing when we are talking about an income tax measure such as the one we are discussing today.


Ian Deans: I don't know where.


John Leslie Evans: I was talking about research and development. Tax measures are required to enhance research and development.


Donald Alex Blenkarn: Where are they in the bill?


John Leslie Evans: Without growth in ideas, products and processes in Canada, Canada is sure to fall behind in the industrial world. In other words, stagnation is sure to worsen. Not only is investment in R and D stifled by rising inflation, so too are other investments in new capital equipment necessary to modernize and adapt our industry to changing circumstances.
One measure in the bill is the small business development bond which will certainly help small businesses to modernize their plant and equipment to make them more competitive in the world. Such investment requires stability and the prospect of fair rewards. But in an environment where we increasingly fight among ourselves over the spoils, is it logical that those who would invest can expect society to permit those rewards to be paid? I say probably not, and we see examples of that right in the House of Commons-unsubstantiated, though deeply-felt claims of corporate rip-offs and condemnation of individuals who take advantage of tax policies specifically designed to promote such investment. It is a "Catch-22" situation.
Income Tax Act
We want people to invest in small businesses or in rental housing, so we create in the bill before us tax incentives such as the small business development bonds and MURBs. But when an individual in our society invests so as to take advantage of these provisions, and as a result his taxes are reduced- and this was the intent, to reduce taxes, to increase incentive and to direct investment in a direction which is felt to be socially desirable-then we hear from certain corners of the House a great rail at those individuals, that they are ripping off the system. No wonder we face an investment problem. It is because there is a political schizophrenia. We encourage people to do it, and then we beat them over the head when they take advantage of exactly what we have asked them to do.
Similarly, we hear cries that rates of return on investment are too high, that business is taking too much, that we should increase taxes on the business community-that this bill should increase the taxes on that community-but we fail to look behind the scene to realize that reported profits have been greatly exaggerated by inflation, not only by rising prices per se, but more important by the gross underevaluation of plant and equipment used in their production. Current accounting practice requires that depreciation be charged on original cost and not replacement cost. During rapid inflation this creates a gross overstatement of net revenues and thus profits. But worse, it means that capital cost allowance, depreciation, does not come close to providing the funds necessary for reinvestment and modernization. As a result the quality of our capital stock deteriorates over time, productivity and competitiveness decline, and jobs are lost. These are the jobs we hear from the NDP are absolutely required, the jobs we agree are absolutely required. But the policies they believe should be included in this income tax bill would lead to less jobs being created in the future. Politically inspired rhetoric may be satisfying to some in the short term, but it is seriously wrong for the longer term.
We see the same myopic view in the media. On a recent airing of the program "Question Period", Don McGillivray, the national economics editor of Southam Press, asked in all seriousness why savers should expect a real rate of return when real wages have not been rising. If that is an indication of the depth of understanding of the savings and investment process of the national economics editor of our national newspaper, then it is no wonder the public is so confused. What is wonse, the guest on the show, an economics critic of the opposition, who shall go unnamed in the spirit of non-partisanship, could not answer the question.
We must begin to realize that the money illusion is dead, that savers demand a real rate of return if thev are to forgo current consumption in favour of future consumption. Why should we ask our citizens who wish to save for retirement, for the education of their children, or whatever, to subsidize through interest rates less than inflation those who wish to consume more than they earn today? Why is it that borrowers seem to be favoured in some parts of this House? Is it more noble to borrow than to save? 1 say absolutely not, and that brings me to my point. We must take steps now to alter this

January 19, 1981
Income Tax Act
attitude, to reward savings since, without savings, there can be no investment and, 1 contend, no new jobs for the future.
1 agree, though not often, with Professor Lawrence Klein, a Keynesian economist, at the University of Pennsylvania, who wrote the following:
We must go from being a high-consumption economy to being a high-saving economy if we are to re-industrialize and improve our standard of living.


Donald Alex Blenkarn: Mr. Speaker, I rise on a point of order. In this review of tax policy, could the parliamentary secretary tell us where there is any inducement in the bill to increasing savings, as he mentioned? Can he at least give us the clause?


John Leslie Evans: Absolutely, Mr. Speaker. The rates of return offered by such measures as the small business development bond and the MURBs will be an inducement to saving. It will help individuals to put away money which they might otherwise have consumed in the current period, and to invest it for the development of small businesses and rental accommodations for the future. It is intuitively obvious that general and specific provisions are included in that particular piece of legislation.


Donald Alex Blenkarn: Mr. Speaker, I rise on another point of order. Perhaps the parliamentary secretary could explain how the massive reductions in the depletion allowance and depreciation help savings?


The Acting Speaker (Mr. Ethier):: Order, please. I should like to remind the hon. member that oral question period is usually between two and three o'clock.


John Leslie Evans: Thank you, Mr. Speaker. I am sure in future discussions the hon. member for Mississauga South (Mr. Blenkarn) and myself can resolve the problem he seems to have raised.


Flora Isabel MacDonald: Just talk to the Minister of Finance (Mr. MacEachen) about it.


John Leslie Evans: We must promote policies which reward saving. I cannot believe the vast majority of members opposite, as well as members on this side, would disagree with that particular policy. I hope we will work together to develop policies which will reward saving, and allow a fair rate of return on investment, if we are to improve our deteriorating growth of productivity, if we are to create the industries and secure jobs of the future which I know all members are extremely anxious to provide. We must be willing to sacrifice some current consumption for a much better future. As the Prime Minister (Mr. Trudeau) so aptly put it in his much-maligned and misunderstood statement, we must reorder our priorities. I think that is an intuitively and eminently sensible thing to be said at this point in our history.
It must be emphasized that the changes to which I refer are not a matter of choice; they are a matter of necessity. The world is changing rapidly. We must change, adapt, or we will surely be left behind. Our industries must be encouraged to modernize, to engage in research and development, to develop
new products and processes, to become more efficient and competitive. In the future Canada will face stiff competition from abroad. The GATT will force us to respond; the less developed countries will force us to respond. We must begin to reduce institutional rigidities in our labour and capital markets. We must begin to enhance, not restrict, the free flow of labour, capital, goods, services and ideas across the country. We will not have the luxury of choice in this matter; we will do it now or it will be forced upon us later.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Ethier):: Order, please. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Fraser Valley West (Mr. Wenman)-External Aid-Consideration of tripartite aid to Third World countries; the hon. member for Algoma (Mr. Foster)-Municipal Affairs-Request for extension of community services contribution program; the hon. member for Prince Albert (Mr. Hovdebo)-Grain-Reimbursement of producers for loss of income from depressed prices.
It being five o'clock the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions.


PRIVATE MEMBERS' NOTICES OF MOTIONS
The Acting Speaker (Mr. Ethier):: Item No. 14, the hon. member for Levis (Mr. Guay). Shall the item stand?


Some hon. Members:: Agreed.


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


David Michael Collenette: Mr. Speaker, I rise on a point of order. I made reference to this matter the other day. Motion No. 14 is in the name of the hon. member for Levis who resigned this House some time ago. I draw that to Your Honour's attention. Perhaps we could decide whether or not that item should be stood. It seems somewhat silly to stand a motion if the member is not now in the House.
January 19, 1981


EXCISE TAX
Mr. Bruce Halliday (Oxford) moved:: That, in the opinion of this House, the government should consider the advisability of remitting the excise tax levied on building materials used in the course of repairing and/or replacing building and other losses as a result of major natural disasters so deemed by provincial authorities.
He said: Mr. Speaker, I rise today to present this motion which the House has just heard read. It arises from a disaster which struck southwestern Ontario on August 7, 1979. It involved two tornadoes that struck a number of counties in southwestern Ontario. I have boiled down what I wanted to discuss today, in essence, to a proposal that the government should consider rebating the federal sales tax it receives for building materials sold to rebuild after natural disasters. I would suggest to the government that this is a form of undesirable tax inasmuch as it levies a tax on those people who have suffered a real loss as a result of something over which they had no control. In the words of many it could be considered an unjust or inhumane tax.
I should like to speak to this in the total context of the suggestion that this is a small part of the total disaster assistance matter which is of concern to the federal and provincial governments in Canada.
To put the matter into the narrow focus I want to emphasize today, it is my understanding there will be a response from the government, probably from the Parliamentary Secretary to the Minister of Finance (Mr. Evans) who, I hope, when he addresses this question will not only tell us about what the federal government does by way of disaster plans, because that is very well laid out and is quite familiar to any of us who have experienced a disaster in our constituencies, but will also address himself to the question, either on his own behalf or, I would hope, on behalf of the government, as to the morality or the ethics of taking taxes from somebody who through no fault of his own, is forced to spend large sums of money on a rebuilding program because of a natural disaster.
The particular disaster that came close to me personally began in southwestern Ontario on the evening of August 7, 1979, and involved two tornadoes. I emphasize that this disaster involved tornadoes, because most disasters in which the federal government has been involved by way of assistance have been floods. A flood in most cases does not create the same level ol damage to an individual as does a tornado. What I mean by that is that a person living in a rural area in the business of farming who is subjected to a natural disaster will probably be affected to a greater extent as a result of the tornado than as the result of any other kind of disaster.
Many people in the counties of Oxford, Brant, and Haldi-mand-Norfolk lost not only their homes but their businesses as well, that is, they lost their barns, their implements and their stock, as well as their income for the current year, namely, the
Excise Tax
crops. In many cases all of those things were lost in just a matter of a few minutes.
On that occasion there were two tornadoes about three-quarters of an hour apart, running parallel six or eight miles apart, for a total distance of about 50 miles.
As I make this plea to the government members today I would remind them of what Teddy Roosevelt said in the United States a number of years ago, back in 1910. When discussing the object of government he said, "The object of government is the welfare of the people." I want to suggest that if a government does indeed have the welfare of the people in mind its main role is to protect those people against things from which they are unable to protect themselves. A second role of government today is to do for the people those things they cannot possibly do for themselves.
Let me suggest to the parliamentary secretary and other members of the House that if the government is going to protect the citizens of Canada, one of the things it must protect them against is natural disaster. The fact that a government would exact taxes from those same people who, through no fault of their own, fell victim to a natural disaster, is hard to believe; it is almost unconscionable. I hope the parliamentary secretary will address himself to the propriety, the humaneness and the morality of a government taxing those who have suffered loss.
My whole story can be quickly summed up in a letter I received from a gentleman in Woodstock by the name of Mr. William Graham, a very well-known citizen in that area and across the country as he has been very much involved in the chamber of commerce for many years. This letter was sent to me on November 8, 1980, and 1 should like to read it:
This letter will confirm some of the discussions we have had over the past few months since the tornado of August 7, 1979, devastated this part of western Ontario and especially Oxford county.
As you know, at that time I was president of the Woodstock District Chamber of Commerce and at present I am Chairman of the Board of Trust of the Woodstock General Hospital. 1 am also president of a retail business (Reg Hall Ltd) and secretary-treasurer of a manufacturing company (Timbcrland Equipment Ltd). I am also still involved with the Ontario and Canadian Chamber of Commerce.
1 feel my personal involvement in the community allows me to speak with some authority as to how the federal government dealt with the above mentioned disaster.
I would like to add here parenthetically, that this is essentially non-partisan inasmuch as this disaster occurred when my party was in government but was following rules, regulations and agreements which were formulated by the former Liberal government in 1970. I do not have any particular brief from a partisan point of view as I present this particular problem. Mr. Graham goes on to state:
1 feel 1 can also speak with authority on the side of those who were affected as my personal residence sustained damage in excess of $40,000.00, and my personal loss for such things as landscaping, trees, driveways, excavating, tree removal, etc. will amount to well over $10,000.00.
This was a man who was able to insure himself to the extent he needed, but he still had a loss of $10,000 on things that were uninsurable.

Excise Tax
He goes on to state:
At the time of the tornado I sincerely felt that you and your colleague at Queen's Park, Dr. Harry Parrott, were doing everything possible to expedite the financial commitment of your respective governments but, as time passed, it became evident there was no clearout plan in place, especially at the federal level, and a lack of participation by Ottawa certainly left a very bad taste in the .mouths of many, many people.
As we have discussed on many occasions, I find it very difficult to understand why the federal government would want to collect taxes on building materials to rebuild a devastated area. I find such an act immoral or possibly I should say criminal. Many of those affected people did not know where their next dollar was coming from and the only thought in their minds was to get a roof over their family and a shelter over their animals, quickly, before winter came. From my discussions with the Canadian Chamber of Commerce who, as you know, had a conversation at that time with Mr. John Crosbie, then finance minister of the federal government, their findings indicated that the above mentioned tax exemption was a very popular suggestion with the politicians and not so popular with the bureaucrats in Ottawa who did not want the extra work in establishing a system to exempt 600 families from these taxes. I would like to see the federal government develop a plan in co-operation with the provinces for dealing with disasters such as the tornado.
I know there is a plan in effect but it does not deal adequately with this type of thing. This plan in effect gives the people of Canada the perception that the federal government, no matter which party is in power, does not care about the people of Canada who are faced with that kind of disaster.
Mr. Graham goes on to state:
This plan could be especially directed at putting into place proper funding arrangements. As far as I can understand, there is no such definite plan in place and I urge you and your colleagues in Ottawa to move on my suggestion.
He has a perception that there is no plan in place because there was no evidence from Ottawa that Ottawa had any concern about the fate of these people and about their deep financial losses.
I trust this letter will assist you in your efforts to move the politicians and bureaucrats toward the above mentioned suggestion. I sincerely hope so, 1 would not want to go through such a traumatic event again in my lifetime and 1 would hope that those who must would not have the worry of federal and provincial funding as we here in Oxford had in August, 1979.
Mr. Graham is obviously very concerned about the level of assistance and the evidence that the people at the senior government level do not care about people who suffer as a result of natural disasters.
I have just a few words to say about this disaster in order to explain what we were dealing with in this area at the time. This disaster affected about eight municipalities. As I mentioned, three counties were affected. Those were Oxford, Brant and the regional municipality of Haldimand-Norfolk. It affected the townships of East Zorra-Tavistock, Blandford-Blenheim, Southwest Oxford, Norwich, Delhi, Burford and the two cities of Nanticoke and Woodstock.
As a result of the losses which were suffered in this disaster a total of 688 claims were received by the committee which was put in charge of looking after disaster relief. About one-third of those were found not to be eligible. In that area 235 farms were affected, including 40 acres of apple trees
which were completely wiped out. Eight churches were badly damaged, as were four cemeteries and 256 homes in the city of Woodstock alone.
The Ontario government, which is governed by the dominion-provincial agreement, is responsible for tornado relief and disaster relief and has now come up with some figures on the over-all costs. When this tornado first struck, it was initially estimated that there was S60 million worth of damage and that perhaps $20 million of that damage was not insured.
The final figures which Ontario gave to us indicate a total loss of $13.5 million, which is one of the biggest losses Canada has had for a long time as a result of a natural disaster. Of that, $5.7 million worth of damage was insured. That left uninsured damages amounting to $7.8 million. The committee in the local area which was charged with the responsibility of paying out relief funds paid out a total of about $7.1 million.
The losses sustained in that disaster were quite significant and should certainly be of concern to us as legislators who are in a position to produce the laws which should help people across the country.
One cannot help but take account of the fact that many people deserve recognition for what was done after that disaster. I refer to people at the federal and provincial levels as well as local people. I refer to the Ontario Provincial Police and the public utilities commissions of the various areas. The Mennon-ite Disaster Service did a tremendous job in supplying help to those who needed it. Various churches, service clubs and individuals gave their time, money and goods to help those who were affected by this disaster.
I want to say a few words about the roles of the two senior governments after this disaster. There is no doubt that there is a federal-provincial agreement now in place which, I submit, is very inadequate. I know now there are plans afoot to change this, and I will come to that matter in a minute.
As I mentioned earlier, the federal role is very imperceptible to the Canadian people. They do not realize that the federal government has any role at all. As we look into the changes which are to come along, that has to be addressed. The Ontario provincial government has usually adopted a stance whereby it guarantees a matching payment to local funds set up to establish relief. The Ontario provincial government promised a matching grant in the ratio of three to one and, in some cases, possibly as high as four to one. There is some argument about this. I have a number of documents which show that there was a promise of three to one matching grants. This was never finally achieved because the final grant paid by the province of Ontario to the local fund for relief was somewhat less than the $3.7 million or $3.8 million raised by
January 19, 1981

the private sector in local campaigns. It is disappointing to me that the provincial government allowed people to believe that it would match personal donations in the ratio of three to one when in fact the ratio was less than one to one.
I know the Ontario government made other commitments, but the perception of the people of my area was that the provincial government would give S3 for every one dollar. There are many disillusioned people who would not now give in a similar disaster because of the way this was handled.
The effect of a disaster such as this was probably best summed up by the claims co-ordinator and his secretary who were in charge of the disaster relief program in the Oxford, Brant and Haldimand-Norfolk area. I have a 15-page document here in which they went through the chronological sequence of events during the rebuild period, and there is a summary at the end which is worth reading to show the emphasis put on the effect the disaster has had on human beings. The summary reads as follows:
The lives of the victims will probably never be quite the same again, because in less than one hour on the evening of August 7, 1979, their lives suffered a grave disruption in the form of total destruction of all they had worked for, and in many cases, for the whole of their lives, and now retirement was not to be so comfortable. Many memories had gone with the wind, literally. Most just began to realize, late in the winter months, how the shock had affected their personal beings. Many years will pass before a recovery can be realized both materially and emotionally.
Thanks to many generous and caring people, the trauma was eased somewhat.
Finally, I want to move to what I think should be the response of the government to the problem we have before us. Back in May of last year 1 asked a question of the Minister of Finance (Mr. MacEachen), and in my supplementary question I asked this:
Does the minister condone the raising of revenues by the federal tax on building materials at the expense of those who have suffered immeasurable loss and grief as a result of natural disasters?
The minister's reply was as follows:
Madam Speaker, I am sure that in certain cases the application of the tax system may have unfortunate effects such as the one he described, but there is not to my knowledge within that system at present a way by which these particular difficulties could be overcome.
I presume as a result of that question on May 20, 1980, that six weeks later, on July 4, the Prime Minister (Mr. Trudeau) announced the appointment of the President of the Privy Council (Mr. Pinard) as the person to be responsible for, and I quote:
-providing ministerial guidance for policy development, interdepartmental coordination and liaison with provincial governments in the area of emergency planning.
Mr. Pinard's new responsibilities will cover federal planning related to natural disasters, major accidents-
I see an attempt by the government, and I praise the government for it, to recognize the fact that there is a problem between the federal and provincial levels with respect to funding after natural disasters and, more particularly, a problem regarding the federal government's image. This is not a big problem. I hope the parliamentary secretary does not try to tell us that to rebate this kind of tax on building materials would be a problem because the federal government already
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rebates to schools. It rebates 1.5 per cent of tender prices to schools. It rebates about 2.5 per cent of total hospital construction costs. I know there are certain criteria within which eligibility lies, but nonetheless this is done for many other public and municipal institutions when rebates seem appropriate. Gasoline taxes are rebated to farmers. There is just no reason, from a logistical point of view, why this could not be handled simply in much the same way as it is for schools and hospitals.
I see that my time is almost up. I want to close by appealing to this House, and to the parliamentary secretary in particular because I realize he has an important role to play in this area relating to the remission of federal taxes on building materials.
In the broader area of disaster planning I remind the government of something Edmund Burke said a couple of centuries ago which is still very apt. When he was giving his second speech respecting conciliation with America Edmund Burke said this:
It is not what a lawyer tells me I may do; but what humanity, reason and justice tell me I ought to do.
I think all of us here in the House of Common as legislators must take heed of what Edmund Burke said, that we have an obligation to do what we ought to do. I urge the parliamentary secretary, as he speaks to this question, to address himself to the matter of whether or not there is an obligation on the part of governments to forgo that tax which is levied on the poor people who have suffered losses, losses which in no way can an insurance policy replace and in no way can funds raised by the public replace. Many of those losses consist of memorabilia, losses which cannot be replaced by money. The least we can do as a federal government is to forgo those taxes which we would take from Canadians, and rightly so in other situations, but not when they are the victims of a natural disaster designated as such by provincial governments.


John Leslie Evans: Mr. Speaker, I hope I can respond to some of the questions of the hon. member for Oxford (Mr. Halliday). He can rest assured that this government, and certainly the Minister of Finance (Mr. MacEachen), are extremely concerned about the problems he has put forward. It is my understanding that we will have difficulty in supporting this particular measure or this particular approach, but it certainly goes without saying that the hon. member has our whole support in his concern for disaster assistance, whether it be here in Canada or in other parts of the world. I am sure that his support is not only in the case of Canadian disasters but would go to other areas as well. An example of that, of course, is the disaster which has devastated villages in Italy recently. Certainly disaster assistance must be provided in such cases, as it should be in the case of the disaster in Mississauga.
If we want to establish some mechanism for assistance by the federal government, however, we should look for an approach which is both workable and efficient. There are some

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serious problems inherent in the proposal before us, I would contend, and that proposal, of course, is to provide for a remission of the excise tax on building materials used to restore buildings damaged or destroyed in the disaster.
The tax in question is the sales tax. The problem is that this tax is assessed on the value of goods shipped by the manufacturer of the building materials. By the time these goods pass through the hands of wholesalers and retailers to their ultimate use, the tax has long since been paid and is embedded in the price of the materials. So it is not at all clear how the refund can effectively be made, or indeed how to determine the amount that should be refunded.
I know the hon. member for Oxford has indicated that he hoped I would not raise the administrative problem and use that as a guise for saying that the government cannot accept his proposal. But certainly the administrative problems are obvious, whether one thinks of refunding the tax to the manufacturer who paid in the first place or to the eventual purchaser. The sales tax we are talking about is 5 per cent on the value of the manufacturer's shipment, not the 9 per cent rate which generally applies to other goods subject to sales tax.
When one adds on costs of warehousing and transportation after the building materials leave the manufacturer, plus markups at the wholesale and retail level, the original 5 per cent tax becomes a considerably smaller proportion of the final price of the materials, perhaps only 2 per cent or 3 per cent. Furthermore, the cost of building materials normally represents about one-half of the cost of the average construction.
So when we consider all of these factors I submit that the 5 per cent sales tax is a pretty small part, not much more than 1 per cent of the final cost of the building. It is clear that refunding this amount to a disaster victim would not go very far in helping to re-establish that person in the style to which he was accustomed prior to the disaster. As a result, it would certainly seem to me that we should be looking at much more generous and larger funds to be paid to the disaster victims, and whether there should be included in that particular package of funds which goes to an individual something that could be called a refund of the tax. It does not seem to me to make any difference to an individual who has been victim of a disaster whether the moneys that are being paid to him are earmarked as a partial refund or a total refund of a sales tax. What really matters to the individual is whether funds will be made available by the federal government, the provincial government or the municipal government to help re-establish himself, irrespective of where that money comes from or how it is earmarked.
One other factor which should be considered is the administrative cost of remitting the tax. There is a direct way of handling a problem which I have just described, which is the direct payment of funds to the individuals affected. It seems to me that if you have so much money available to pursue these programs and we use part of that available money for the administrative cost of making a specific form of payment, money which if it were not spent for that perhaps could enlarge the amount of money available to the government to
help the disaster victims, then it seems to me that that cost is something that is hard to justify. We should be using the moneys to help the disaster victims, as I have said. I suggest that this administrative cost might well be hard to justify in relation to the amount of the benefit we should try to provide under this particular program.
The kind of problems I have been describing are typical of the problems which arise when we seek to achieve a particular goal, whether to assist a certain group of taxpayers or to encourage certain kinds of business activity, or even to discourage other activities, by means of special tax provisions.
A year ago the Department of Finance provided an authoritative outline of what these special tax provisions have been costing in the way of tax revenues forgone. These so-called tax expenditures which were put out under the previous minister of finance, the hon. member for St. John's West (Mr. Crosbie) and the present Minister of Finance, indicated that these figures run into many billions of dollars. Obviously the proposal being debated today would not be an expensive one. However, we should examine carefully not only whether the expense is justified but also whether a tax exemption is the best way of assisting people who suffer losses from natural disasters. The alternative method, of course, is through an expenditure program.
For many years there has been a policy on federal financial assistance to victims of natural disasters. One of the principles underlying this policy is that the provincial governments have the primary responsibility for dealing with disasters. Not only do they have the constitutional responsibility for property, but provincial and municipal services are the ones most closely and directly involved in dealing with the kinds of disasters we have heard discussed here today.
However, the federal government stands ready to assist provinces where the cost of dealing with a disaster is greater than the province could reasonably be expected to bear on its own. Since 1970 the formula has been that federal aid becomes available when total costs exceed $1 per capita of population in the province. The federal contribution starts at 50 per cent and there is provision for an even larger federal share if the losses are particularly heavy.
One of the points which the hon. member for Oxford mentioned was that the federal government is not seen to be participating in the assistance to individuals who have been struck by a natural disaster. I agree with him wholeheartedly that that is of great concern because I think the Canadian taxpayers should understand and realize that the federal government is actually involved in looking after their welfare when a situation like a natural disaster occurs. I think the hon. member is totally correct, the federal government is not receiving the kind of credit it is due when those kinds of payments and those kinds of assistance are being put out by the federal government.
The federal contribution, as I said, starts at 50 per cent, but the federal contribution does not provide for federal aid where
January 19, 1981

losses could have been covered by insurance. With that exception, it includes the cost of restoring essential private property to its pre-disaster condition, or restoring small business enterprises where the owner's livelihood has been threatened by the disaster. I suggest this approach, Mr. Speaker, is a reasonable one. It does not attempt to respond to every situation involving property loss from natural causes.
For example, not long ago, as the hon. member for Oxford has mentioned, tornadoes caused extensive damage in his constituency. Almost all of the losses were covered by insurance. In any event, there was no request by the provincial authorities for federal aid in that case. Where citizens can provide their own protection through insurance, this should be the normal procedure. This is an area where the role of government should be to help with problems which are beyond the ability of individuals to deal with.
To conclude, Mr. Speaker, I do not feel this kind of problem should be dealt with by means of a further tax concession. At best, the proposed remission of sales tax would provide only marginal assistance, as 1 have indicated, even assuming that an answer could be found to the serious problem of how in the world to administer the particular tax remission. Where a case can be made for government assistance, I think it would be preferable to provide that aid through direct expenditure programs.
I thank the hon. member for bringing forward his suggestion and bringing this very important problem before the House for debate today.


Mrs. Margaret Mitchell (Vancouver East):: Mr. Speaker, I, too, thank the hon. member for bringing this issue before the House today. I think it is important, not only from the point of view of those who suffer from disasters, both past and future, but it gives us an opportunity to look at the whole question of what disaster is. It enables us to look at some extension of programs which would apply to housing and building improvements generally.
As a new member of the House, it is surprising to me that our federal government has not already made compensation by removing the excise tax for victims of major disasters. I thank the government member from Ottawa Centre (Mr. Evans) for explaining some of the intricacies of the financing of these matters. The fact is we can find ways to do these things and we should not be leaving it to such complicated mechanisms. Of course, I realize the provinces, too, are involved.
It is also important that we look back at the kinds of disasters we have had in Canada. While I was waiting to speak, I talked to several of my colleagues who reminded me of a number of disasters we suffered in recent years. Mississauga was mentioned. In the port of Vancouver, which surrounds my riding, we suffer the possibility of disasters from explosives coming into our port almost daily, not to mention the very dangerous materials which are brought into that area by rail, truck and, now, by air as well. So there is a high possibility of disasters happening there.
Excise Tax
We also recalled the floods in Manitoba. I think it was within the last two years where rural communities were inundated. Surely there was extensive damage to homes. In fact, whole rural communities suffered. They certainly would have appreciated help in the way of removal of the excise tax from any materials they would use for home repairs. In British Columbia, which is a mountainous community, houses are quite often built on the slopes of hills. We have disastrous floods in the spring. I recall on a number of occasions houses being flooded and, in fact, some houses being swept into gullies as the spring floods came down the mountainside.
My colleagues also reminded me of tidal waves. There was the Tsunami tidal wave in Port Alverni, which caused extreme damage to homes in that area. So there is no question we should do something about this immediately, to remove the excise tax and use mechanisms to make this a kind of relief for victims of disasters, not just for the person selling the building supplies.
We, in our party, believe that this measure does not go nearly far enough. We believe there should be no excise tax on building materials generally. Why should we be taxing and reaping a profit from the disaster our present housing crisis is creating? I know the IWA in British Columbia has a very strong policy with respect to the removal of this tax. It has pleaded for the removal of it. It does not like to see our Canadian forest products going over the border to the United States. The industry has not done too badly this year with regard to jobs, mostly because of the Canadian dollar and the fact that so many of our supplies, even our forestry supplies for housing, are going to the United States.
We would like the tax removed on building supplies generally so that not only would jobs be created for our people in the forest industry, but so that we would have more affordable housing supplies for the repair of homes and, of course, the building of new homes.
I think it is timely to look at the whole question of disasters. I spoke in the House last week, as did many other members, about the tragedy of our housing crisis in Canada. Surely this is a disaster of the first order which faces all of us in our constituencies.
If we look at the state of housing in certain areas, particularly on Indian reserves, what could be a worse national disaster and more of a national disgrace than that? Some 50 per cent of the people living on reserves are living in housing, if you can call it that, which is completely uninhabitable by our standards. The houses do not have running water, toilet or sanitation facilities. They do not provide any kind of warmth in the wintertime. In fact, the neglect of this housing is such a disaster that it is causing deaths in many Indian families.
Of course, just the removal of the excise tax on building materials will not completely solve that problem. The solution requires major and immediate government action to put more money into native housing and to work with native groups in order to do away with the bureaucratic hassles they constantly face. Thus, they would be able to get on with the job of upgrading present housing, bringing down the cost of construe-

January 19, 1981
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tion materials, which this removal of the tax would do, and building new houses. We are far behind in this area, and it is a national disgrace.
1 am reminded also of housing in some of our downtown areas, particularly in my own riding of Vancouver East. We have hundreds and hundreds of people who are living in really desperate housing conditions in downtown areas. There are workers from the forest and fishing industries of our province who have had health problems, and many women who are raising children on their own who must live in these conditions. They are living in fire traps, old rooming houses and hotels, with cockroaches as constant companions. There must be programs to upgrade this accommodation, and to build new accommodation.
I plead that the kind of incentives, including the removal of excise tax on building materials, not be given in such a way that the values of them go to the landlords or the absentee landlords who own this type of housing. It should be done in such a way that it would be an advantage to the people who need the housing. They deserve it and they have a right to decent housing.
There is also the need for the removal of this excise tax so that we may have a national program to improve older homes. Such a move would help undermine the escalated pricing which occurs as the result of speculation. In many of the older areas of Canada, such as the maritimes, Ontario and Quebec, if not the western areas, there are many houses which the owners cannot afford to repair and, as a result, that housing stock is being lost. I am glad that the minister responsible for CMHC has mentioned this matter as a priority. I wish that he would raise some money for the proposal. Major emphasis should be put on the renovation of older homes.
In conclusion, we feel that there should be no excise tax charged to people who suffer as the result of natural disaster. Even more important is the necessity to remove the tax from general building materials and, particularly, from materials used in the construction and repair of essential homes. We feel that the government should get on with such a program immediately.


Mr. Gordon Taylor (Bow River):: Mr. Speaker, I commend the hon. member for Oxford (Mr. Halliday) for introducing this motion. Nobody has control over natural catastrophes. They are an act of God. I was very disappointed in the comments of the parliamentary secretary. In the first place, insurance policies do not cover natural catastrophes such as floods, tornadoes, prairie fires and so on. There is no way that people, even if they have the money, can protect themselves from natural disasters.
I am always amazed at the way in which we scramble and jump to help those in another country who suffer a natural catastrophe. It seems that we can never do enough for such people. This occurred recently as the result of the Italian earthquake. Surely we should have policies which give as much
to our own people as we are prepared to give to other people. Charity begins at home. I do not object to sending help to those in other countries who suffer a natural catastrophe, but I do object to the way in which we deal with natural catastrophes in our own country.
The parliamentary secretary suggested that the federal government could pay half the expenses and the provincial government could pay the other half. When one looks at natural catastrophes, such as the flood in B.C. during the Christmas season, one sees that millions of dollars must be spent to restore highways, railways, railway beds, bridges and so on. It has been my experience that once these expenses have been paid, there is very little left for the pockets of the people who suffered a loss as a result of the catastrophe.
A natural catastrophe occurred in my riding just a few years ago. While my home was not involved, a terrific flood carried away homes, filled basements with silt and ruined furniture. There was no federal government or provincial government help. Contributions came from private citizens. When these contributions were divided among those who had suffered, people who had lost as much as $1,500, $2,000 or $4,000 in property received as little as $75, $40, $20 for their losses, a mere pittance. These people had no way of knowing that the Red Deer River would flood.
The constituents of the hon. member for Oxford had no way of knowing that a tornado would hit their area. I saw the results of a tornado out west. It lifted buildings right off their foundations and carried them for 20 feet and dropped them on the ground where they would splinter and be completely ruined, along with the furniture. It is a terrible catastrophe and something which is very hard to believe.
Surely, after a catastrophe in which ordinary people lose everything they have, we should not give them mere excuses of how difficult and how much it would cost to administer a program which would merely give back the excise tax, which is all the motion asks. I am sure that we are capable, with our sophisticated bookkeeping systems of today, of working out the amount of excise tax which would be applied to such homes. I agree that this tax would not be enough, but it would help. It would also show such people who may have to rebuild and refurnish their homes, after they have spent a lifetime reaching that goal, that at least the government is sympathetic to their plight.
I have another suggestion for the government. When a home owner has lost his home as the result of a natural catastrophe, he should be able to deduct the cost of rebuilding and replacing what he has lost from his income tax. One may say that many people do not pay income tax. Most workers pay income tax, and it would help many people. I see no reason why the excise tax could not be applied at the same time. The difficulty is that when the catastrophe occurs, everybody is sympathetic, but as time goes by, very little of the help goes to the individuals to help replace their losses, and that is why I think we need a policy for Canadians which is based on the help the government is prepared to give to people in other countries who suffer a natural catastrophe.
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I know that our hearts go out to those who suffer the ravages of a tornado or who suffer the effects of a volcano, and so we should help those in our country who suffer the loss of their buildings and their home, the people we know best. There should be an established policy. 1 hope that the next time there is a catastrophe, the party in power will establish a policy to deal with natural major catastrophes which will be just as good to the people of Canada as to people in other countries.
Removing the excise tax and deducting the cost of rebuilding from income tax, even if it is spread over two years or three years, would be a tremendous boost. At least it would show people that the Government of Canada is as concerned about Canadians who suffer a natural catastrophe, as it is about people in other parts of the world who suffer such a catastrophe. I strongly support this motion.


Mr. A1 MacBain (Niagara Falls):: Mr. Speaker, today we are being asked to support a proposal for tax relief by way of sales tax remission for persons who have suffered property losses from major national disasters. It seems that very often when it is felt that some group needs financial assistance or when some kind of social or economic activity needs to be encouraged, the solution is proposed by way of tax concessions. Perhaps the feeling is that we are not really spending public funds when we provide a tax concession. After all, it does not enter into the expenditure totals. Certainly, the past tendency has been that once the concession is written into the tax law, its annual cost in terms of lost revenue has been virtually ignored.
Tax concessions are not subject to the test of annual approval in the way direct spending programs are.
That situation has begun to be changed by the publication, starting a year ago, of a tax expenditure account. This provides estimates of the cost, in terms of revenue forgone, of the tax concessions now provided in federal tax laws. In reading this report, one is struck by the great number and complexity of these tax incentives and preferences. One is also struck by their very large cost, totalling many billions of dollars. Although the Department of Finance, in this publication, cautions that one cannot properly add them all together, because of the nature of the tax concessions, it is interesting to note that the total for 1979 is more than double the size of the budget deficit.
I should note in passing that this new attention to tax expenditures now means that the cost of new tax concessions is being taken into account in expenditure decisions of ministers. This is a progressive step, since it ensures that the impact on the total budget deficit of instituting new tax concessions will be fully taken into account in planning government expenditure priorities.
These considerations are relevant to debate on the motion before us. When we are being asked to provide a new tax concession, it is very valid to consider whether it would not be
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preferable to seek the same goal by means of some direct expenditure program.
In the case of losses from natural disasters, there is an established method for direct expenditure assistance by the federal government. Based on past experience, a policy has evolved on the scope of federal assistance and on the kinds of losses that qualify for aid.
The policy reflects Canada's federal structure in that it recognizes the prime responsibility of the provincial governments in dealing with property matters. Very often a situation can be dealt with by the local community, with provincial assistance. But where the disaster is of such a scope that it is beyond the reasonable capacity of the province, federal help is available. Since 1970, the policy has been that federal contributions are available when the losses exceed a threshold of one dollar per capita of population in the province. In Ontario, for example, this threshold would be about $8.5 million; in Manitoba, it would be just over $1 million. For total losses over this level, the federal government pays 50 per cent. The federal share can be even larger where the losses exceed higher thresholds-75 per cent of losses for the fourth and fifth dollar per capita of population, and 90 per cent for losses that exceed $5 per capita.
This policy does not cover losses on property that could have been covered by insurance. This is an understandable exception, since individuals should not be discouraged from taking reasonable steps to provide for their own protection when possible. Cost-sharing does apply to such things as the cost of meeting the immediate disaster situation, like emergency accommodation or the construction of temporary dikes, and also the cost of restoring public works and essential private property such as homes, barns and machinery, and small business enterprises, where the owner's livelihood has been threatened by the disaster.
I suggest that on the whole, this is a reasonable approach to the problem, once you accept the premise that the federal role should apply only to major disasters that are larger than the province should reasonably be expected to cope with. I note that the resolution we are debating states that it should apply to major disasters. However, it leaves it up to the provinces to decide when the assistance should come into play, and I suggest that it is not a good principle for one government's expenditures to be made on the initiative of another level of government.
In view of the fact that we do have a well elaborated policy of direct federal assistance, I find it hard to conclude that a further element of assistance should be provided by means of a tax concession. If governmental assistance to disaster victims is not adequate, then changes to the policy could be considered. But I should note that under the present approach, whereby provincial and at times federal support is available for rebuilding, the cost of sales tax on building materials is automatically covered. The same applies to losses covered by insurance.
A case can also be made for delivering assistance by means of direct expenditures rather than by tax concessions. There

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are situations where tax concessions are more appropriate, where the scope of assistance can be easily defined in tax law.
In the proposal before us, however, there would be large administration problems. It calls for remission of sales tax on building materials used for reconstruction of disaster losses. Since the tax is levied at the manufacturer's level on the value of goods shipped, by the time the materials are finally sold at retail, it would be most difficult to determine what part of the final price represented the original sales tax. We cannot talk in terms of remitting the tax at the manufacturer's level, since at that stage there would be no way of knowing which of his shipments would qualify for eventual exemption.
We are not talking about a large amount of money. The sales tax on building materials is 5 per cent. At the retail level, after all the intervening costs of shipping, handling and mark-ups, this tax would represent a considerably smaller percentage of the retail price. Bearing in mind the probable cost of administering such a specialized tax remission, I seriously wonder whether it would really be worth the effort.
In other words, what I am saying, Mr. Speaker, is that tax remission is not the way to go about solving this problem. I understand the concern and I appreciate the delivery and the passion of the hon. member for Oxford (Mr. Halliday) because of his close relationship to the two tornadoes in that area. I suggest to the House, however, that if we are to give more relief at the federal level than we have in the past, we should do so directly and not in a roundabout way by tax remission. This is costly from an administrative standpoint and it is difficult for the people who receive it to appreciate that it is federal help.
1 understand very well what the hon. member for Oxford said about the present program not showing sufficient federal presence. That is unfortunate, because in many of these cases federal money will be present but not perceived by the people who receive it directly or indirectly. I say to the hon. member that not only do I agree with him on that point, but I submit that there are many federal programs where the same point could be made, that notwithstanding the fact that federal moneys are present in abundance in many cases, the federal presence is not felt by those who receive its benefit.


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


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of the motion of Mr. MacEachen (Deputy Prime Minister and Minister of Finance) that Bill C-54, to amend the statute law relating to income tax and to provide other authority for the raising of funds, be read the second time and referred to Committee of the Whole.
Mr. Deputy Speaker:: When the debate was interrupted at five o'clock, the Parliamentary Secretary to the Minister of Finance (Mr. Evans) had the floor.


Donald Alex Blenkarn: Mr. Speaker, I rise on a point of order. Prior to the dinner hour the parliamentary secretary was speaking of savings and so on. I asked him in an earlier point of order about what items in this bill would refer to savings. He made comments about MURB programs. I do not know whether the parliamentary secretary knows it, but there is no MURB program in this bill.


Mr. Deputy Speaker:: Order, please. Is the hon. member making a point regarding relevance? If I may say so, the Chair has been very disturbed about the rule of relevance for some time during the course of debate. The Chair has done its best to call hon. members' attention to the point. In the case of the hon. member who is speaking, he prefaced his speech this evening by stating that he was giving part of the economic background to a measure concerning taxation. The Chair has had great difficulty in defining exactly what is relevant or irrelevant in the circumstances. In light of this explanation, the Chair proposes to allow a certain lenience to all hon. members, provided they talk generally about the subject.


Donald Alex Blenkarn: Mr. Speaker, I am suggesting that the parliamentary secretary, knowingly or unknowingly-I presume unknowingly because I suggest he has probably not read the bill-referred to the question of MURBs in the bill, but they do not exist-


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


John Leslie Evans: Mr. Speaker, as you mentioned at the outset, I did discuss the purposes of my intervention. The major purpose was to try to establish the foundation for the current tax legislation now before the House in the form of Bill C-54. It is extremely relevant to the debate to understand why the government has decided to introduce certain measures and why it has decided not to introduce other measures which hon. members have raised in this House.
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For example, the hon. member for Edmonton West (Mr. Lambert) raised a number of issues relating to energy which he said should be included in the bill. It is extremely important to understand the fiscal situation of the government and the reasons why the government has chosen to introduce some pieces of legislation and some tax measures and why it has chosen not to introduce others. Without that understanding, it seems to me the debate we are entered into now will be one which deals with very small, nit-picking issues. Now that hon. members understand, I hope they will take what I am about to say in a better light.
Earlier I talked about the problems of inflation, that inflation was the major problem. We must bring inflation under control for purposes of investment and productivity increases. The tax measures in Bill C-54 have a number of purposes, some of which relate directly to investment and productivity. Perhaps I was incorrect when I mentioned that the hon. member for Mississauga South (Mr. Blenkarn) misinterpreted me, but I was referring to MURBs and small business development bonds as the types of measures the government was bringing forward. This particular tax bill is a small but very important part of the over-all economic package arising out of the budget.
The Excise Tax Act and the Excise Act will come forward in due time. Previously 1 was talking about the uncompetitive situations and inefficiency in the Canadian economy. All of us must agree that there are industries in the economy which are having an extremely difficult time. The current Chrysler crisis is an example of what 1 mean. The automobile industry, and Chrysler in particular, is facing extreme difficulty competing in world markets with its product lines and in its financial situation. We must ask ourselves seriously whether industries which cannot compete in world markets should continue to be subsidized. Will we protect inefficiency or will we be forced by world competition to move away from such behaviour? We must free up capital now used for perhaps subsidizing industries which no longer compete in world markets, because the GATT treaty will force us to do it, for the purposes of building the industries and labour force of the future. I know all members are very concerned that we have the training and facilities in place to ensure that our workers are trained to do meaningful jobs and get paid worth-while salaries.
The Chrysler case points to another problem. Competitiveness will have to be the cause of the union movement as well as management. We are seeing that kind of action taking place right now with regard to Chrysler workers. Workers will have to ask themselves honestly, as have Chrysler workers-and I commend them for it-is what I am receiving fair relative to what I am producing, or does it put the firm for which I work in a position where not only can it not compete in world markets, but the possibility of failure is very serious and real? As I said earlier, this will be done voluntarily or, as in the case of the automobile industry, world competition will force it upon us.
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Let me turn to my final point, the role of government policy, specifically the budget and monetary policy embodied in Bill C-54, in responding to what I have described. The government understands the problem as I have described it. Its economic policy, including Bill C-54, is the beginning of the response we will see from the government in dealing with the problem. I believe the situation is serious, and both federal and provincial governments must respond. The October 28 budget is the beginning of this response, and I think it is an appropriate beginning. But first let me briefly address monetary policy.
I, like the minister, firmly endorse the actions of the governor of the Bank of Canada. Quite honestly, I think he is acting in the only truly effective way to bring inflation under control. He is reducing the growth of the money supply or the growth of purchasing power more into line with the potential output of the system. This is key to our success in conquering stagflation, as 1 pointed out in my earlier remarks.
Perhaps some will not argue with the policy of restraint itself, but with the means. They will say that interest rates should be held down and that the dollar should be allowed to fall. I would respond in two ways to this. First, the dollar has fallen from 87.5 cents earlier this year to 82.5 cents; second, interest rates have been kept below those in the United States with the consequent outflow of short-term capital. The Bank of Canada followed a balanced approach which puts clear priority on fighting inflation, one which does not succumb to what I would refer to as a Keynesian fallacy. This policy will continue, as the minister stated. It certainly should continue if we are to correct the basic problem facing us, that is, inflation. For if we succumb to demands for expansionary monetary policy and expansionary fiscal policy by bringing in additional tax measures under Bill C-54, then, while we may have a short-term drop in interest rates, the fires of inflation will be rekindled and we will set off another round resulting in even higher interest rates later.
The hon. member for Broadview-Greenwood (Mr. Rae) correctly noted this tendency for inflation and interest rates to ratchet higher in each successive cycle we have watched over the last ten years. The policy he proposed of easing monetary restraints, of expanding fiscal policies and of bringing in additional expenditure programs in Bill C-54 will ensure the perpetuation of this process.
From another point of view, others will say that the Bank of Canada is not being firm enough, that it should crack down much harder. I strongly disagree. The policy of gradualism will work and with less cost to society. The current British example is what happens during a hard crunch. We believe that such a policy would create a large number of Chryslers or a large number of industrial failures in the economy which would be highly disruptive and costly to Canadians.
With regard to the budget per se and the policies which have been translated into the tax measures in Bill C-54, they make a sound beginning in attacking the malaise I have described. Again the approach has been balanced, occasioned not only by choice but by the nature of federal fiscal realities. The minister has committed himself to a reduction in the deficit and in

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financial requirements. This is clear in the budget. Some will say that it is too gradual, that it should be tougher. Again it is a matter of balance. A tougher stand would require major tax increases during a recessionary period with much greater hardship on Canadians.
Those promoting the notion that great expenditure cuts are possible as an alternative to tax increases are simply fooling themselves, unless one would cut back on statutory programs to help those in greatest need, which is totally contrary to the commitment of the Prime Minister (Mr. Trudeau) to Canadian people. Indeed, that does not appear to be the case with regard to any opposition party since both call for major increases in such statutory expenditures. For example, the NDP calls for a cost of living tax credit to be included and a tax cut for low and middle-income Canadians. On the other hand, the Right Hon. Leader of the Opposition (Mr. Clark) has been even more aggressive. During the emergency debate, he called for the introduction of an energy tax credit, a shelter allowance, mortgage interest deductibility and an exemption for home heating fuels from the energy tax. With regard to the suggestions and the proposals of the right hon. gentleman, by using the figures in the December, 1979, and the October, 1980, budgets, I have calculated that these four policies would increase the deficit by $2.5 billion in 1981-82, climbing to over $5 billion in 1983-84. This is clearly inconsistent with deficit reduction and, indeed, with any notion of fiscal responsibility to which his party is supposedly committed.
The budget and this bill also set the stage for a redirection of fiscal priorities by placing heavy emphasis upon investment expenditure in the energy and economic development areas. Net expenditures in these areas will rise from $6.9 billion in 1981-82 to over $13 billion in 1983-84, making room for the new initiatives to be brought forward in the industrial and research development areas in coming months.
The government is also providing the foundations for an increase in productivity in Canada. A number of analyses have pointed to a number of causal factors in the decline of productivity: first, uncertainties which I have already mentioned brought on by inflation; second, the distortions in real rates of return, to which I alluded earlier, again caused by inflation; third, the lack of strong emphasis on savings and investment; fourth, legal-institutional setting which lessens the emphasis on competence and work effort; and, finally, reduced competition, paper burden, and the heavy burden of regulation.
This situation was correctly summarized in a statement by the U.S. Department of Commerce Advisory Committee on Industrial Innovation. It said:
It is necessary to recognize that the problems that confront today's economy are primarily problems of an inadequate or structurally constrained supply of investments or savings. This situation is different from the economic environment that has been the setting for most economic policy-making since the 1930s' depression, during which the primary concern has been a macroeconomic use of tax policy to increase consumption and limit savings in the economy.
The government's commitment to combat inflation and reduce the deficit, making more room for private investment growth, is clear, and is reinforced by budget measures to promote economic development, and more such measures will be forthcoming. The Prime Minister and the Minister of Finance (Mr. MacEachen) have both called for a shift in priorities which will result in greater saving; the Minister of Consumer and Corporate Affairs (Mr. Ouellet) has committed to bring in competition legislation; initiatives have been in place for some time to reduce paper burden on business; and new initiatives resulting from the regulatory studies done by the Economic Council and the parliamentary task force will be considered in the near future.
I believe these measures do indicate a commitment by the government to address the root causes of our economic malaise. The approach is a balanced one which promises to get us back on track in Canada without creating massive dislocations and hardships in the process.
Bill C-54 is one key element in that process of getting us back on track, implementing a solid and sound economic policy, and I urge all members in this House to give their full support to the bill. Thank you.


Some hon. Members:: Hear, hear!


Donald Alex Blenkarn: Mr. Speaker, the parliamentary secretary who has just spoken gave an excellent speech prepared in respect of the borrowing portions of this bill. Unfortunately the borrowing portions of the bill were struck out by the Chair earlier today. If we ever heard an irrelevant speech, we heard one today. I am surprised that this Parliamentary Secretary to the Minister of Finance (Mr. Evans), with these very important amendments to the Income Tax Act, would not on second reading have led us through the details of this rather complicated measure so that when we reach Committee of the Whole the parliamentary secretary-


John Leslie Evans: On a point of order, Mr. Speaker. I should like to inform the hon. member that I, the Minister of Finance (Mr. MacEachen), and the Minister of State for Finance (Mr. Bussieres) will certainly take him point by point through the bill during Committee of the Whole.


Mr. Deputy Speaker:: Order. That is not a point of order.


Donald Alex Blenkarn: Thank you, sir, for interrupting the parliamentary secretary. He clearly has had a difficult time understanding this bill. He read well and he managed one question concerning the savings concept when he was talking about macroeconomics; when talking about how this bill was important in respect of MURBs. Unfortunately, he did not understand MURBs. The whole concept of MURBs was developed in 1974 by regulation 1105B of the Income Tax Act. That regulation expired on December 31, 1979. New regulations in connection with MURBs were introduced by this government.
I do not have the new regulation number, but this has been done by regulation and it has absolutely nothing to do with this bill. Yet, the parliamentary secretary who is supposed to
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know about these things and is supposed to be able to come to this House as Parliamentary Secretary to the Minister of Finance to help explain the minister's bill does not even know what is in the bill.


An hon. Member:: He thought the borrowing part would still be there.


Donald Alex Blenkarn: I suppose my friend is right in that he thought the borrowing part would still be there and he had the department write his speech for him. The department wrote a wonderful speech about macroeconomics, which has absolutely nothing to do with this bill.
The parliamentary secretary mentioned the small business development clause, and I will be dealing with that in my speech in respect of the bill, but by and large what he said had nothing to do with the bill. He said we should improve savings, but all the way through the bill there are provisions where capital cost allowances are reduced and where allowances for exploration and development are reduced. In other words, the tax impact on the producing section of the country is increased. Yet the member talks about the necessity for increasing savings, and he talks about how the wonderful Liberal program is going to bring us to the new millenium. He has not read the bill and he has not even tried to read it, yet he comes to this House purporting to be the Parliamentary Secretary to the Minister of Finance, able to talk to us about the importance of this finance bill, a bill dealing with very complicated amendments to the Income Tax Act. Surely, Mr. Speaker, he ought to be chastised, if not by you, by his colleagues and by his minister.
Let me deal with one specific matter. He talked about the auto industry, he talked about Chrysler and he talked about the fact that we have to promote the sales of automobiles and so on. If he looks at the small business development portion of this bill, he will see it specifically excludes automobile and truck products from the provision of the small business development part. If anything, the bill discourages the purchase of automobiles and trucks. Yet, the parliamentary secretary talks about that as something the government is encouraging. He is the Parliamentary Secretary to the Minister of Finance-really!
Let us talk about the bill before us. First let me talk about the generalities in the bill. This bill is a cleanup statute. There was a budget presented in 1978 by the now Minister of Justice (Mr. Chretien). There was a budget presented on December 11, 1979, which was defeated. There was a statement called the "mini-mouse budget" on April 21. What happened to it? We never even had a vote on it. There was a budget on October 28 last year. We now have this very extensive statute attempting to clean up the income tax changes made over that three-year period.
One of the most serious problems we have in this country has been created by the delay, particularly of this government, in bringing forward income tax statutes in order that the business community could know where it stood. When the Minister of Finance (Mr. MacEachen) stands up on a budget
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night making suggestions in common parlance in respect of changes to the Income Tax Act, people cannot rely on those changes until they actually see the statutes in cold print, yet the business community has over the past three years been invited to think of what may well be in the statute, but never knowing for sure what is in it because the statutes have never been brought forward for passage.
Thank goodness this government has at last brought forward this bill. At least now we know where we stand. As an illustration of the problem of not knowing where we stand, let me talk about the Small Business Development Bond for a moment. It is in this legislation. That concept was first enunciated by the hon. member for St. John's West (Mr. Crosbie). Hon. members opposite threw it out. They thought it was no good. Hon. members to my left threw it out too. They thought it was no good. All of a sudden in April the concept of the Small Business Development Bond was reintroduced by the Minister of Finance. But did he introduce for the business community the details of the bond? Not on your life.


Mr. Miller:: He doesn't know what the details are.


Donald Alex Blenkarn: Did he do anything? In a press release he said what he would do, and when young businessmen, and businessmen generally, applied to banks and lending institutions in order to take advantage of the provisions of a Small Business Development Bond, they were told that until the banks and lending institutions saw the details of the legislation and until it was passed, they would not lend. They were told that if they wanted to borrow money in the meantime, the banks and lending institutions would give them the option to convert to the Small Business Development Bond if, as and when it turned out to be all right, but there were no guarantees with respect to interest rates at all. What has happened is that businessmen have been hornswoggled, diddled around and played with since December 11, 1979, because no government, and certainly not this one, has been prepared to introduce the details of the legislation on which the lending institutions could operate.
The same applies to the provisions in this bill whereby spouses of sole proprietors can be paid a wage. That was first introduced on December 11 but, of course, voted out by these fellows because they did not think that budget was any good.
They introduced those provisions on April 21. They thought they were good on April 21 but no good on December 11. When all of a sudden they became good, legislation still was not introduced. As a consequence, all through 1980 sole proprietors did not know whether they could pay their wives or not. Here we are in 1981 enacting an amendment to the Income Tax Act for the taxation year 1980. All through 1980 business people had no sense of where they were going. They called the Department of National Revenue, and I remember many of them calling my office and asking me what they should do. In Toronto, the department told them it was not sure whether the statute would ever be passed. The department told them to pay their wives if they wanted to, but that they

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might have to pay income tax on it. It is about time governments made it a strong policy that when they introduce budgets, they forthwith file notices of ways and means. 1 see the President of the Treasury Board (Mr. Johnston) nodding. It is about time they introduced income tax changes forthwith because in the business community, certainty is more important than almost anything.
When there are tax changes in budgetary provisions which are not included in specific amendments to the Income Tax Act, advisers to business people and to ordinary citizens in general cannot tell whether a thing is proper or improper. All they can go by is the general wordings of ways and means motions, which certainly are not in technical language, and they cannot give with certainty any advice to their clients.
Let me deal with the clauses in this bill. I propose to go through them from the beginning right through. The first clause with which I want to deal is clause 3(3) at page 3 which deals with volunteer firemen. A number of proposals were made, beginning in the spring of 1979 with respect to volunteer firemen. Throughout our country a great number of people work for volunteer fire departments. They feel that volunteer firemen should be able to deduct from their ordinary earned income up to $1,000 for costs associated with being volunteer firemen. Generally speaking, volunteer firemen are expected to pay for their clothes and those things which are at peril in fighting fires. If anything, what is in this bill is an insult to the volunteer field. The suggested allowance is up to $500.
That is not a tax credit of $500, but an allowance against earned income. Unless the volunteer fireman is in a tax bracket very close to 60 per cent, all he will get is a small percentage of $500. Let us assume, for example, that a volunteer fireman has an average rate of tax of about 20 per cent. That would mean he would be earning something in excess of $21,000 a year. At an average rate of tax, he will save $100, but out of his own tax paid earnings he has to pay the cost of another suit if his suit is ruined in a fire, the cost of boots or the cost of whatever is required. The allowance in this clause for volunteer firemen is insignificant, improper, unbelievably small and is a suggestion by the Minister of Finance that he does not appreciate volunteer firemen at all. I am not speaking in my own interests or in the interests of the city of Mississauga. When I first started practising law in the village of Port Credit, there was a volunteer fire department. I suppose its members were allowed $300 way back when a dollar was a dollar was a dollar.


Ian Deans: When was that?


Donald Alex Blenkarn: Now, after a 120 per cent devaluation of the dollar in the last 10 or 11 years, they are allowed to deduct $500 from their taxable income.


Mr. Jarvis:: That is shameful, you Grits.


Donald Alex Blenkarn: That is shameful. Hon. members opposite do not believe in the volunteer sector. They really do not want to do anything to help volunteer firemen, who are prepared to
give their time, their effort and, indeed, their lives to their fellow man, to cover their costs. The amount of $500 ought to be doubled. That would not cost the treasury much money. If the treasury, the minister and this government had any feeling for the cause of volunteers, who are prepared to risk their lives, they should at least double the amount. The $500 suggested in this clause is an insult to volunteer firemen in every small municipality, township and hamlet in this country.
Let us move to clause 4, which is at page 5, for the benefit of hon. members who happen to have their bills here. All of a sudden there is a suggestion that those who are in receipt of income from offices or employment are entitled to deduct the cost of interest associated with purchasing their airplanes if they are required for their employment.
Let us look at this clause very carefully because if a salesman can show that his automobile is used in his business, then the cost of interest associated with its purchase may be deductible to the extent that the automobile is used, but with respect to an airplane, all one need do is have his employer require him to have an airplane. He does not have to use it. He does not have to fly it anywhere. If his employer requires him to have an airplane, he is entitled to have the cost of interest associated with its purchase deducted from his income.
Is that not wonderful! Today I was expecting the parliamentary secretary to have explained why only those with airplanes are given this allowance, but not those with cars who have to use them. Is that not interesting! There is no provision for renting an airplane, you cannot deduct it. There is no provision for renting a car, you cannot deduct it. But if you have an airplane and you are required to have one, you can get away with an allowance. When this comes to Committee of the Whole, I think the minister's parliamentary secretary had better be able to answer some very serious questions on that.
I will now refer to page 9 of the bill where the number of grants is dealt with. Throughout the Income Tax Act and throughout the regulations, we have provisions for grants for insulation and energy conservation. I do not want to get into the whole question of urea formaldehyde on this point and the way the government has bungled that issue-that is a matter for another day-but apparently these grants are to be taxable. Probably that is proper. Perhaps the government could tell us where the grants to businesses are going. Has the government a grant program for businesses, for corporations, or is the grant merely for homes? Because the grant clause in the bill seems to refer to property used principally for the purpose of using income. I did not know that the minister had decided all of a sudden to establish a grant program for property for the purpose of income. We would like to know about that new grant because, presumably, all of a sudden we have one coming in.
I will now move on to the next matter which concerns me, that is in connection with interest income. At the bottom of page 9, subclause 3 of clause 12, which continues on to page 10, contains a provision which states that interest income
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accruing to a business can no longer be treated on a cash basis, but must be treated on an accrual basis. Presumably there is some benefit to a revenue when it is treated on an accrual basis rather than a cash basis. But my friend, the parliamentary secretary, was talking about the advantages of business, helping business, and so on. I want to point out to him that what he is saying is that business must accrue interest and pay tax on interest, whether or not it is collected, instead of, as at present, using interest income of a business on the basis of a cash declaration. A great number of businesses wind up entering into financial transactions where the interest on the loan or on the advance or sale of equipment is not payable for two or sometimes three years from the time the original transaction took place. The effect of this clause is to make those businesses pay income tax in the current business year, even though there is no possibility of receipt of income on a cash basis during that year, the next year or even the year after that. The effect is to improve the flow of revenue to the government, but it seriously impairs the ability of a business to pay.
In effect, the receipt of income, or income that you have not received but you are due to receive, is subject to cash on an accrual basis. This is a change in the rules. This change in the rules is a serious problem for many businesses, and we will want to hear in the Committee of the Whole stage the extent to which this change is necessary because it will seriously harm a number of businesses, particularly businesses involving the sale of real estate.
On pages 17, 18 and 19 of the bill, there is a clause dealing with Small Business Development Bonds. Those are the clauses to which I referred earlier which enable a small business to treat its advances from a lending institution in a fashion which is very much like a term preferred or an income bond which was previously allowed. The effect is that the small business pays the interest from its tax paid surplus and the recipient of the interest receives the money in the form of a dividend.
Since the small business tax rate is approximately 20 per cent to 25 per cent, depending on whether the small business is a manufacturing business or a general small business in another field, it is paying a tax rate which is significantly less than normally paid by the lending institution. Consequently, the lending institution can reduce the rate of interest it charges on loans to the small business by approximately 25 per cent. In other words, sir, under the provision on Small Business Development Bonds, conceivably a small business could borrow on today's market for somewhere around 12 per cent or 12.5 per cent on a term loan, whereas it would probably have to pay 17 per cent to 19.5 per cent on a term loan on straight interest. The effect is that the small business has a break.
The problem is that this provision in the bill, under which nobody will lend until the act is passed, expires on April 1, 1981. So, in effect, this is a gift for nothing because it will expire almost by the time the act is passed. Therefore, small business will not have much advantage. Secondly, the terms of the Small Business Development Bond are far more restrictive than those that were contained in the budget of my colleague, the hon. member for St. John's West. The money raised on
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this particular security must be raised to buy new productive equipment. Even the terms of the productive equipment are narrowed down.
As I mentioned earlier, you cannot include such things as automobiles or trucks. What you can invest money in is restricted. The problem with most small businesses is that they need money from banks and lenders to carry their inventory, their accounts receivable and their work in progress. But loans for that purpose are not allowed under a Small Business Development Bond. So, first, the act is narrow because it prevents the use of a Small Business Development Bond for normal commercial purposes, and secondly, the fool thing expires on April 1, 1981. Nobody has been able to borrow on it yet, and will not be able to until this act is passed, gone through the Senate and the rest of it. If he is lucky, a businessman may have two months to negotiate a deal. What foolishness!
Mir. Blais: It's retroactive.


Donald Alex Blenkarn: The minister says it is retroactive. Yes, sure it is retroactive, but nobody would lend on it, simply because they did not know the terms under which to make the loan. Does the minister know of anyone who has received one? He is the Minister of Supply and Services and is supposed to know these things. I do not know of anyone who has received one. I do not know of an institution which has made one yet.


John Leslie Evans: Roynat.


Donald Alex Blenkarn: The parliamentary secretary says Roynat has made them-yes, option deals, not real deals.


Jean-Jacques Blais: Most of the banks have lent all their money under the program.


Donald Alex Blenkarn: Let us leave this question of the Small Business Development Bonds. There are a great many things in this statute which must be looked at very closely.


Jean-Jacques Blais: There are only two banks which have any money left.


Donald Alex Blenkarn: 1 do not know anyone who has made one and I suggest that the minister does not have any client or constituent who has made one. The minister believes his own press clippings-or his own press release, since he does not get any press clippings.
I would like to deal with a matter which appears on page 28 of the bill, the question of the 3 per cent inventory allowance allowed to companies in the business field. This inventory allowance was first invented as an allowance to help business fight the problem of inflation. It allows business to receive a tax credit or a tax allowance against their taxable income, a 3 per cent inventory allowance. In a sense, that looks after the problem of the inflationary effect of inventory re-evaluation. This particular section clears up some of the abuses with respect to the inventory allowance.

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My point is this: the inventory allowance is not large enough. When this section was put in place, we were talking of inflation in the range of 5, 6 or 7 per cent. We are now talking of inflation, authorized and promoted by this government, in the range of 12, 13 and possibly 14 per cent. So, that inventory allowance should be increased. 1 say this in terms of the problem with respect to inflation to which the parliamentary secretary referred in his long remarks-perhaps irrelevant to this bill.
What the parliamentary secretary should be doing is proposing amendments to the inventory allowance which would increase it to 5 or 6 per cent to allow business, particularly manufacturing business, to have a better break against their inventory problems, which are created by inflation. As prices go up, the cost of replacing inventory becomes greater. Therefore, a tax allowance on inventory appropriate to shelter the inventory costs to some extent should be established. That inventory allowance is much more valuable to corporations paying 40 to 50 per cent in taxes. It is not as valuable to small business which only pays 20 or 25 per cent in taxes, but it is valuable. The inventory allowance should be larger in order to compensate for the inflationary effects on inventory.
On page 33, the bill deals with the question of cash accounting. At the present time, the only people entitled to be on a cash basis in business are farmers. The bill includes fishermen, to enable them to be on a cash basis as well as farmers. I have no quarrel with that. What really bothers me is why this government, which professes to be so interested in the benefits to small business, should not include them on that basis as well.
One of the great problems a businessman faces is when he suddenly arrives at year-end after having just made a sale. He must pay tax on that sale although he has not yet been paid for it. So he has a receivable. Big deal! He has a bank overdraft too. Big deal! He has the tax man screaming at him for money. Now, why are we not decent to this small businessman? Why select farmers and fishermen and not look after small businessmen in the same way? Is it because the small business community does not have the clout the fishermen or the farmers have?
I suggest this government had better smarten up and look after the interests of small business people. They do have clout and they will exercise it, particularly when they look at this bill and the horrors of accounting they face with respect to the wads of incomprehensible matter contained in it. It is about time the government seriously considered allowing those people who make up the small unincorporated businesses, whether they be fishermen, farmers or storekeepers, to conduct their business on a cash basis and to pay tax on cash receipts. I submit the difference in income to the government would not be that great. The cost of accounting on an accrual basis is an enormous penalty and it discourages people from going into business. It discourages people on every front. It imposes on them an obligation to pay tax before they receive the money. The elementary justice in taxation is you should not be taxed until you receive the pay. Surely small business ought to be
treated as equitably as the act proposes to treat farmers and fishermen.
I refer now to page 40, which is an amendment to subsection 44 of the act. It deals with the question of replacement property. This section and other sections thereafter deal with the whole question of capital gains. I am sorry the President of the Treasury Board has left the chamber. He wrote a book called "Fiscalamity". Its subject matter was capital gains. In it he indicated how disastrous capital gains were to the economy of this country. It is clear in analysing this statute that the government has been weaving its way around the problem of capital gains. The truth of the matter is, despite the government's white paper cooked up by some person in the Department of Finance who does not know his up from his down, capital gains are a real problem. They are largely a problem because of the incidence of inflation. Most of the capital gains earned in this country today are not capital gains, they are inflationary gains.
At 10 per cent inflation, the value of your money is less than half in seven years and less than one eighth in 20 years. Most of the gains which are attacked under the capital gains provision of this income tax bill are really inflationary gains. People have not earned anything. In fact, they have more pieces of paper for what they put up. But they have not earned a thing, nor received a thing. These are inflationary gains. So, a number of these sections attempt to deal with these inflationary gains.
These sections are gobbledygook. What we should have is an inquiry before the Standing Committee on Finance, Trade and Economic Affairs into the white paper concerning capital gains. The entire Income Tax Act with respect to capital gains ought to be rewritten. If there must be a capital gains tax at all, it must be indexed. I suggest that earning capital gains in Canada's economy with inflation is the same as the chance of winning a lottery. In other words, the chances of such gains are very small, and ultimately are not really capital gains.
If an organization is designed to make a capital gain, then surely that is income in the nature of trade. It is very unlikely in our society that one can make a real capital gain. The revenues which the government is presently collecting from capital gains tax, roughly $1 billion a year, is really an inflation tax. It is an improper, expropriatory, unjust tax. The hon. member for Broadview-Greenwood (Mr. Rae), who spoke on Friday while I was not present in the House, mentioned that Canada did not properly collect death or inheritance taxes. He is right, but it is for the wrong reasons.
We do collect death and inheritance taxes when we have deemed realization on death. Unfortunately, we only collect it from some people. If one has a deemed realization on a huge gain on a single family home and occupies that house, then he pays no tax. But if one has money in a farm which was not passed on to an offspring, then God help him, and that phrase indicates the hopelessness of the situation. The farmer is destroyed because he is wiped out simply because such a sale
January 19, 1981

immediately puts him in a 60 per cent tax range. If we take 60 per cent of 50 per cent of the gain, and the gain is all inflation, it means the farmer does not have anything like the purchasing power he thought he had to pass on to his family. The family may have to sell the place in order to pay the tax.
We must have an inquiry into capital gains tax and deemed realization of death. Perhaps we should exchange the capital gains tax for some type of estate tax, death tax or whatever one would like to call it. Certainly we could tax that type of transfer, but we should tax it equitably, unlike the present system which taxes persons who make taxable gains. But if a person does not make a taxable gain, but makes a gain, then that person is scot-free. It is unfair, inequitable and damaging to the economy of Canada.
Section 56 and a number of sections following deal with the support of children. I recently handled a most serious case in my constituency office which concerned a chap who had been ordered by the court to support his children from an arrangement in which he was not married. The chap found he could not deduct that support from his income. As I understand these particular sections, this will now be the case, and I think that is an equitable situation.
In the minute I have left, let me wind up by saying that, even though I have not finished with the statute, by and large, a number of these changes are proper. They should be proceeded with as quickly as possible. The Income Tax Act itself, however, should be reviewed by Parliament, it has now been ten years since the Carter commission and it is high time that we rewrite this statute to make it more readable, simpler and easier for people in general.


Mr. John Gamble (York North):: Mr. Speaker, I am delighted to have an opportunity to engage in this debate which deals with Bill C-54, a bill designed to amend the provisions of the Income Tax Act. I sat in this House and listened to the comments of the Minister of National Health and Welfare (Miss Begin) who, in making the majority of her remarks, directed them to the implications of subsections 3, 4 and 5 of section 74 of the act as it presently stands. There is no doubt that, justifiably, this government has taken upon itself the necessary steps to remedy one of the substantial, well-known inequities which appear in the provisions of our current tax legislation.
Subsection (3) of section 74, prior to the passage of this legislation with which we are concerned, permitted the taxation of income which was effectively in the hands of one spouse and which would otherwise have been paid and was indeed paid to another spouse in a proprietorship. Subsection (4) had the effect of allocating to a spouse who was a partner that portion of salary that was paid by a partnership to a spouse of one of the partners, while subsection (5) had the effect of permitting the minister, at his discretion, to allocate to either one of two partners the entire income of a partnership. Knowing the avaricious appetite of the Minister of National Revenue (Mr. Rompkey), there is no doubt as to where he directed "in his discretion", to use the words in the act, that income.
Income Tax Act
That income was directed to the taxpayer partner who had the greatest other than partnership income.
I listened with considerable interest to the remarks made by the Minister of National Health and Welfare when she commented on the purpose of the bill, which was to effect simple justice. She made reference to the fact that it was extremely difficult for tax laws to be changed in other than a prolonged period of time. She mentioned the term of ten years as being reasonable for one to expect an abusive provision of this statute to be removed. Accordingly, it will come as a great surprise to the minister to learn that these sections in their basic present form, appeared in the Income War Tax Act which was introduced in this House in September, 1917.
What we are confronted with is a situation where it has taken a full ten years longer to deal with this simple justice than it has taken for all the constitutional negotiations between the federal government and the provinces, which the Prime Minister (Mr. Trudeau) is inclined to speak of as being unreasonable for the purpose of the resolution of a problem of this nature. This problem, fortunately, is about to be resolved. It has taken a long time, but the government, in all fairness, should be commended for taking this position and for seeing the wisdom of a similar provision which appeared in the budget of the hon. member for St. John's West (Mr. Crosbie) in December, 1979.
The minister to whom I earlier referred spoke of an endeavour by the government through this bill to adapt to the wishes of the people as opposed to the reverse, where the people, presumably, are to adapt to the wishes of the government.
As I indicated, she also spoke of more simple justice. With respect to this bill and with the exception of the sections to which I have just referred and with the exception of the relief granted to volunteer firemen, that statement is utter nonsense.
From the beginning of 1972 when the present Income Tax Act in its existing form, subject to amendments, was passed, the public generally believed that once the amended act took form, there would be the elimination of anomalies, inconsistencies and injustices that had prevailed in the past. Instead of creating something that could be understood by the taxpayers of Canada we have created a labyrinth, a quagmire through which only the most audacious may venture.
There is a principle in law which holds that the citizen is presumed to know the law, and ignorance thereof is no excuse for any offence committed. We all know that this principle is reduced to absurdity when dealing with the provisions of the Income Tax Act.
The act to be amended by Bill C-54 is rendered no clearer, no more uneasily understood than it was before. As a matter of fact, this bill perpetuates the inconsistencies, difficulties and complexities that have existed in the past and adds to them. In a moment I shall deal with some of those specific provisions.

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Income Tax Act
Let me now turn, as an illustration of something that is overly complex, to the provisions related to the inclusion in income of a portion of contributions to an employee benefit plan. These provisions appear on page 4 of the bill and would constitute an addition by way of amendment to section 6 of the act as it stands.
What we are confronted with, if I may interpret and leave out some of the verbiage, is a situation where an amount included in income being that portion of an amount so received that does not exceed another amount, if any, by which the lesser of an amount exceeds the aggregate of an amount and that portion of one amount is the aggregate of other amounts, all of which are in excess of different amounts.


An hon. Member:: Would you repeat that?


John Albert Gamble: Mr. Speaker, that leaves something to be desired from the standpoint of simple clarity. It is not a joking matter, as my learned friend across the House seems to think. Not only is there a presumption of law that the citizen understands and knows the law, but there is a penalty for failing to comply with the law.
What is the requirement of section 6 of the act amended by the addition of this monstrous and complicated provision which appears on page 4 of Bill C-54? In this case I refer to section 239 of the act, which has not been amended, but which nevertheless will be of substantial significance for those who think the matter is something to joke and laugh about. Section 239(1) of this act provides very simply and succinctly for anyone failing by way of evasion to include any amount in the computation of income-I can envisage a situation here where someone in desperation, seeing this revised provision in section 6, will throw the revision aside and simply neglect, because the words are so unclear and complex, to include the required amount in the computation of his income. That being the case, then according to section 239(1) of the act, he is subject to the following penalties:
(f)	a fine of not less than 25 per cent and not more than double the amount of the tax that was sought to be evaded, or
(g)	both the fine described in paragraph (f) and imprisonment for a term not exceeding 2 years.
In grave circumstances he may be prosecuted by indictment and upon conviction may be incarcerated for a period of not more than five years!
We are providing here for the calculation of income. We have an obligation, I submit, to provide a way in which people can understand what is to be included as income.
I recognize that there are a number of guides published on how one is to interpret this act and, presumably, how one is to interpret this bill. Those guides take the form of information circulars and bulletins issued by Revenue Canada. To the assessors of Revenue Canada, these publications have the force and effect of law, despite the fact that they do not, and the assessors can be persuaded to abandon their determination that the printed word is gospel, only with the dynamite of a decision of the Supreme Court of Canada.
How have we come to the stage of enacting legislation of this complexity without regard to the general dictium to explain the requirements to the people of Canada.
It happens that immediately prior to this great tax revision that took place before the Income Tax Act of 1972 came into effect, the way they could best accomplish their needs- meaning the needs of the Department of Finance and Revenue Canada-was to make a determination of what they desired to achieve on a computer and through the use of algebraic formulae. The formulae and computer print-outs were then to be reduced to words by legislative draftsmen.
That is how we obtained this enigmatic piece of legislation known as the Income Tax Act, and that is how we come to have Bill C-54 before us.
It is not surprising, given the nature of the complexity of the bill, that government speakers have generally rejected the opportunity to deal with the substance of it. It is complex and it is difficult. It is our obligation, I submit, to prepare laws which we understand in the hope and expectation that the people against whom these laws are to be applied, will similarly understand them. That course has not been adopted by successive governments in dealing with tax legislation, since 1971.
I should like to deal specifically now with a problem that I have encountered in an examination of some of the provisions of the bill. We are aware that the ways and means motion, in paragraph 3, was to provide that certain Canadian taxpayers normally resident in Canada, who were absent from this country on their employers' business for a period of not less than six months, should be entitled to exclude from the computation of their income certain fixed amounts referred to in that resolution. Some of the operative words are as follows:
... an individual employed by a person resident in Canada or by a partnership or corporation in which such a person has a substantial interest-
Section 3 then goes on to deal with some of the specifics, but the words to which I wish to draw your attention are as follows, and I repeat:
... an individual employed by a person resident in Canada or by a partnership or corporation in which such a person-
That being a person resident in Canada.
-has a substantial interest.
In its customary fashion the Department of Finance and the draftsmen of this legislation have concocted a new definition. They refer to the person to which reference is made in the ways and means motion as being a "specified employer". The specified employer is defined, including a person resident in Canada as:
-a partnership in respect of which the aggregate fair market value of the interests in the partnership, each of which is owned by a member resident in Canada-
That extends so substantially the intent that is set forth in the ways and means motion that it completely changes the purpose and the intent as it appears in the motion itself. I
January 19, 1981

know the answer of the government. These ways and means motions are not the law, they are not intended to cover all the specific requirements. But one would have thought, having regard to the way in which the motion laid out rather explicitly and in detail those requirements to be met before income might be excluded that, broad as they were, but nevertheless specific as they were, we would find contained therein all the essential elements to be dealt with when the bill was introduced. But instead of that we have a new element.
Prior to the introduction of this bill, it was assumed that the individual might be employed by a partnership in which a Canadian resident had a substantial interest. We now find that this individual taxpayer must be employed by a partnership, all of the partners of which, based not upon their partnership interest, but upon the aggregate fair market value of the interest in the partnership, are Canadians. If anything, this unduly creates complexities to deal with the issue before the House, which are completely unnecessary.
Why does the Department of Finance believe that it is essential if a taxpayer is absent from Canada, thereby not requiring him to include an amount in the computation of his income, that he must be an employee of a partnership of which all of the partners, on the basis of the fair market value of their interest, are residents of Canada. What possible difference could it make if one or two of them happen to be resident outside of Canada? What possible difference could it make in the majority of these cases when the taxpayer involved, being an employee in any event, would give up his residence in Canada in order to assure himself that he was in fact not taxable under our legislation?
One of the most fundamental differences, both illustrative of undue complexity and change from the time of the original motion by way of ways and means, changing not only the intent but the effect of the hoped-for legislation, is to be found when we deal with the issue of the Small Business Development Bonds. We are not concerned here with an individual who may or may not find himself, as in the case I illustrated earlier on, taxable in Canada because he left the country to take up employment elsewhere. We are dealing with a provision which was promised small business in Canada in April, 1980, and again promised small business corporations in Canada in October, 1980.
The Minister of Finance (Mr. MacEachen) has in this House exhibited some exasperation with the questions asked of him as to the date of implementation of the provisions of the Income Tax Act as they related to the benefits of acquiring Small Business Development Bonds, saying that the business community, issuing corporations and lending institutions knew this was going to happen and the government would see that it did. Why then need we concern ourselves that the legislation may be just a little bit slow? I will tell you why, Mr. Speaker. Because the intent as described in the ways and means motion has been changed dramatically in the bill before this House. One of the requirements to be found in paragraph (c) of section 9 of that motion was that the issuer was "in financial difficulty."
Income Tax Act
The issue of financial difficulty is a question of fact to be determined, I submit, on the circumstances in the presentation of some kind of requirement for money for a legitimate business purpose, and the lack thereof. How does this bill deal with the issue of financial difficulty. It is to be found at page 20. One of the requirements for these bonds is that the obligation, being the bond, is issued by the corporation:
(A)	as part of a proposal to, or an arrangement with, its creditors that has been approved by a court under the Bankruptcy Act,
(B)	at a time when all or substantially all of its assets are under the control of a receiver, receiver-manager, sequestrator or trustee in bankruptcy, or
(C)	at a time when, by reason of financial difficulty, the corporation is in default, or could reasonably be expected to default, on a debt held by a person with whom the corporation was dealing at arm's length-
This suggests that a bank under any circumstances, whether it be by small business development bond or otherwise, would lend money to a corporation which had made a proposal under the Bankruptcy Act. This is utter nonsense. The suggestion is in order to be of any value that a Small Business Development Bond might be issued by a corporation to the bank when that corporation is in receivership. That is absolute nonsense. The suggestion is also that that occurrence might take place at a time when the corporation was in default under a debt due to a person with whom the corporation did not deal at arm's length.
That in itself would constitute in some cases an act of bankruptcy under our Bankruptcy Act. What lending institution, other than one which was in the business of sustaining business losses, would become involved in a small business development bond project of the kind contemplated by this bill. The answer is none but those who had taken leave of their senses.
What then is the purpose of the legislation? Why is it here? If you examine paragraph (c) of subparagraph (iv) to which I made reference, one of the requirements started out with the words "at a time when, by reason of financial difficulty". It was on the basis of those words that bonds, if any have been issued, were issued. Those were the words upon which the lending institution might have relied.
The hon. member for Mississauga South (Mr. Blenkarn) made the comment that to the best of his knowledge it is unlikely any bond in fact has been issued which will qualify for these provisions. If indeed this is the case, such a circumstance demonstrates the prudence not only of the knowledgeable taxpayer, who expected an arrangement which was beneficial to him, to take advantage of low interest payments so that he could in fact carry on his business, but also the wisdom of lending institutions which were not prepared to be entrapped by legislation promised by the government in the past but never delivered. Such, of course, is the case confronting us today.
This matter is of some substantial significance. The government promised bona fide, legitimate Small Business Development Bonds in April, 1980. It promised the same type of bond again on October 28, 1980. Yet, it has delivered nothing which could ever meet the requirements of the borrower and the

January 19, 1981
Income Tax Act
lender. This has been nothing but a sham and a subterfuge to deceive the business community of Canada.
This piece of legislation requires substantial change in committee if the integrity of the government is to be supported under any circumstances. But, the shocking thing is that the words illustrate the general concept which runs through tax legislation in Canada, that taxpayers will invariably design their plans to cheat Revenue Canada. Accordingly, phrases such as "at the time by reason of financial difficulty" and "with whom the corporation was dealing at arm's length" are included. Revenue Canada believes whatever plans businessmen make are designed to reduce the tax which might otherwise be paid.
At a meeting of the Standing Committee on Public Accounts about one month ago, the president of Eldorado Nuclear confessed that one of the reasons he preferred outside auditors to attend to the needs of the corporation was that they would provide the corporation with good tax advice. As a result of legislation of the kind presently before the House and legislation of the kind it is designed to amend, we have created an entire army of people who do nothing but interpret, advise and consult. Billions of dollars of a non-productive nature are spent which do not produce a ten-cent growth in our real GNP because of legislation of the kind confronting us tonight.
They are hell bent on continuing the program, adding confusion to an enigma, to a mystery, for most people in the country. I have dealt with the penalties which flow from failure to understand and failure to apply these complex provisions.
In the time remaining, I should like to deal with but a couple of matters which I consider to be, in the words of the Minister of National Health and Welfare, in the nature of promoting simple justice in our tax legislation. 1 refer to two sections of the Income Tax Act as they stand currently. One of them is section 152(4) which provides that the Minister of National Revenue may at any time in the event that there is neglect, carelessness or wilful default, or in the event that a taxpayer has committed any fraud, reassess a taxpayer. The Minister of National Revenue, in the event that such an assessment is issued, is under an obligation imposed upon him by statute. In section 165(3) of the Income Tax Act, upon receipt of the appeal process against that assessment, which happens to be the filing of a notice of objection, the minister shall with all due dispatch reconsider the assessment and vacate, confirm or vary the assessment or assessments. This action is to be undertaken following the filing of the objection, and the taxpayer against whom an assessment of this nature has been levied has 90 days from the date of the mailing of the notice of assessment to take the formal step of filing, by registered mail, the required objection.
It has always puzzled me how it is that the minister imposes the assessment, presumably knowing the facts upon which the assessment is based, and the taxpayer is given 90 days within which to either file an objection or lose all of his rights, subject to some restricted limitations. He basically loses all of his rights to further deal with that matter, and the minister upon receiving the notice of objection shall "with all due dispatch"
reconsider and attend to those required acts referred to therein.
One may ask what is the significance of that or why do we care? The fact of the matter is that having instituted the process, the taxpayer can do nothing until the minister moves and does what he is obliged to do under statute. If the Minister of National Health and Welfare has an eye for simple justice, she should refer to this section to place upon the Minister of National Revenue the same obligation which rests upon the shoulders of taxpayers, particularly when the minister presumably knew what he was doing at the time it was done. Why would it even take him 90 days to make up his mind, to confirm the assessment? Instead of that, he has 180 days, although it is not mentioned in the section to which I referred, before the taxpayer can take any step to appeal to a court or the tax review board for justice.
What may happen within that six-month period? Under the provisions of this act the Minister of National Revenue can in one day obtain an assessment against the taxpayer. On the same day, the minister can obtain a certificate of judgment from the Federal Court of Canada and on that day obtain a writ of execution out of the federal court, delivered and executed by any sheriff throughout Canada. Within ten days the sheriff can sell all the property seized from the taxpayer. There is absolutely nothing a Canadian taxpayer can do to stop the process. Of course the answer from Revenue Canada is: "Sue us, sue the Crown"; taxpayers are entitled to sue the Crown. But I ask, with what does the taxpayer retain counsel? The taxpayer has been stripped of every nickel and dime he possesses under the process I have described. The circumstances I describe are not wild figments of my imagination. There are cases where this has occurred in our country.
It is reprehensible that an obligation is not placed upon the Minister of National Revenue to do what should be done with all due dispatch. If need be, a time limitation should be imposed upon him so that the taxpayer can come before a court of competent jurisdiction, or a tribunal, such as the tax review board, for the purposes of determining whether the minister was right in all he has done, because everything he does under the guise of an assessment is properly done; he is not subjected to penalty.
These are significant matters in determining simple justice.
I fail to find any reference to any remedial action in Bill C-54.
I fail to find any effort made by the Department of Finance to rectify what has been an injustice in the taxing legislation of this country. It is well recognized by the courts in Canada that there is no equity in taxation. That is an accepted principle in law. But, we should not have our act abound with inequity, which is the position in which we currently find ourselves.
What is the motivating force behind assessors of Revenue Canada in issuing assessments of a kind that are unjustifiable?
1 had occasion before I entered the private practice of law to practise with what was then the Department of National Revenue. Assessors in the department receive their promotions
January 19, 1981

on the basis of the assessments that are levied. There is no corresponding reflection on their records when those assessments are reversed. There is a personal inclination and motivation to pursue the type of reprehensible conduct to which I made reference. It is to this kind of inequity I submit to you that this House and this government should direct its attention. Thank you, Mr. Speaker.


Some hon. Members:: Hear, hear!


Ian Deans: Thank you, Mr. Speaker. I will be fairly brief in dealing with some matters I feel are related to the bill before us. I want to speak about the principles contained within the act, the principles of taxation and the way in which taxes, once having been collected, are redistributed in our society.
I cannot recall an occasion when I have walked on the streets of Hamilton when someone has not come to me and said he was vitally concerned about both the level of taxation at the personal income tax level and, more importantly, about the way the government goes about spending the money it raises. Everyone has his own hobbyhorse, of course; everyone has his own area in which he feels the government is perhaps misdirecting his funds. People are expressing a frustration every day about the apparent desire of the government to continue to not only raise money, which I think we all understand is necessary, but over how the government determines its priorities in the expenditure of many of the dollars which are so difficult to come by for private individuals.
I was looking at a chart the other day which shows a dramatic turnaround in the balance of the total tax burden carried by the personal income tax sector over and against the corporate tax sector. Although the figures themselves may not be as meaningful, indeed, when you look at them in detail, as they are when you look at them baldly, they are still rather startling.
In 1980 the percentage of total government revenue raised from personal income tax will be 37 per cent while the percentage raised from the corporate tax will be 10.3 per cent. When you look at that over and against the situation which prevailed in 1950, you find that in 1950 the percentage of expenditures raised from personal income tax was 20 per cent while the percentage raised from corporate tax was 22.5 per cent. You have to ask yourself what has happened in society because we have moved the burden of taxation so dramatically from the corporate sector to the private taxpayer. We must ask what has happened in society that has required us to place such an onerous burden, particularly on the low and middle-income taxpayers, taking out of their income such a substantial amount of money at a time when that money might will be better used to purchase goods and services within the community and thereby creating an expanded economy that would enable the corporate sector, if I might say it, to pay a larger share of the over-all tax burden than it is presently paying, because it would be receiving considerably more of the expenditure moneys of the total population.
Income Tax Act
One cannot help wonder, and I wonder along with many of the people I represent, about the expenditures of government. People have reluctantly become accustomed to carrying the burden of inadequate government management. They have expressed, and I think quite rightly so, that the government does not do a very good job of managing. I think this is primarily because the governments which have been in power have had very natural tendencies to be reluctant to be managers of the economy. Governments do not see themselves in that role. They do not see that they have a responsibility to manage the economy, not only the tax area of the economy I am speaking of now, but the economy in general, and to have a say in the direction the economy will go and to have some influence on the final decisions which are made that so much affect the day to day lives of the people.
People are becoming increasingly aware that they are also having to carry the burden of inadequate corporate management through the tax structure. We have to look very seriously at that problem. It is bad enough that the average taxpayer, the low and middle-income taxpayer, the people who work in plants and can hardly make ends meet, should have to carry the burden daily of the government's stupidity, but that they should also now in this new evolving society have to carry the burden of inadequate corporate decisions through their tax structure is unconscionable. That is what we are seeing happening. On a day to day basis we see the corporate sector awakening to the new idea that it can come to government any time things go wrong and the government, under pressure, will have to hand out more and more tax dollars, primarily because of the inadequacy of the management of the corporations involved. Corporations have found a new method of funding their failures. It is not only becoming more common for small businesses to cry, and 1 think quite rightly so, that they are mistreated and having difficulty making it in the marketplace because of a very severely restricted economy, but the giants of the industrial sector are lining up one behind the other, unashamedly reaching into the public trough in order to finance their inadequate management decisions which have resulted in failures.
It is very difficult for me to rationalize with the people I represent that they should be burdened on a day to day business with giving handouts to the corporate giants of this world without their having some say in the decisions being made with respect to the futures of those corporate giants. That is the nub of the problem.
When I read the Income Tax Act and look at the suggestions being made, all I can see is a perpetuation of an existing inadequate and unfair system. I cannot express adequately how much I feel the injustice of what is happening in this society. It appears to me that bad management is to be rewarded and that people on the side of good management with foresight, good reinvestment policy and adequate labour relations policy seem to be asked to carry more and more of the burden, along with the average taxpayers of this country. The Chryslers come knocking on the door. The Massey-Fergu-

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Income Tax Act
sons come knocking on the door. There are so many of them it becomes impossible because, as we begin to look at them, we find companies which for years decried the management of government. They told government to stay out of their business. They said that government knew nothing about management and that they, the Chryslers, the Masseys and the others, were the people who knew how to operate in the marketplace.
Yet if we stop and look, we find that they knew nothing about how to operate in the marketplace. They did not know how to manage the businesses they were managing, and they are not alone. The problem with which we are faced is that we have to raise more and more money, not only to subsidize failures but also in order to maintain communities and families which are devastated by the stupidity of the corporations of which I speak. This is a cause for great concern, and I wish more people in this House would give some consideration to what really is happening in this society.
On the one hand, Chrysler is attempting to gain favour with the government in order to try to put back on the tracks a company which has been run into the ground. If we say no, we doom a great number of employees to very serious hardship. If we say yes, then we invite others in the field to line up at the door of the treasury building in order that they too can gain access to the same public funding, and in order that they too can have their bad management decisions funded at public expense. I think this is a cause for alarm. It is a fairly new phenomenon. Ten years ago one rarely, if ever, heard of major corporations knocking at the door of the government for handouts.
That has become a normal practice today, and what concerns me is that we are dealing with this in such a piecemeal fashion that the bottom line of the bill we will have to pay will in the final analysis far exceed the number of tax dollars we will be able to pull in through corporate tax. Eventually we will end up paying out more than we will be able to get back.
We must get a clear picture of what is really going on in this society. Why is it that in private lending institutions there is not an apparent desire to take some risks? It is their business to take some risks in the refinancing, redevelopment and reindustrialization which inevitably must take place in order to relieve taxpayers all across this country who, frankly, cannot afford at this point in time to fund out of their own tax dollars what in essence is the bad decision-making of a few individuals who are, incidentally, still running companies and still making decisions, which will again come back to haunt us. There are some serious problems here and, in looking at taxation and the distribution of taxation, the government will be required to look very long and hard at the kinds of programs which are introduced to try to accommodate the greed which I think has probably been in place over the last two or three decades and which has extracted from consumers substantial amounts, more than consumers ought to have been required to pay.
Having extracted that money, this greed has resulted in a refusal to put sufficient amounts back into the companies involved so that they could maintain levels of productivity and
technology which would have kept them in the forefront of the struggle for adequate and reasonably low cost commodities.
Today I went to a press conference held by three government ministers. Those ministers were telling my colleague, the hon. member for Winnipeg North (Mr. Orlikow), and me, together with the press, how they will spend another $350 million of taxpayers' money. They will spend $175 million of that $350 million on a number of grant programs and subsidization programs for workers who are dislocated as a result of the bad management decisions to which 1 have referred. Over the next three years, they will spend $175 million assisting in the redevelopment of the very companies and others which, by the very terms of reference of these programs, have also made bad management decisions. I must ask myself whether this kind of program is of any value to this country now or in the future. With your permission, Mr. Speaker, I will address that problem tomorrow afternoon.


Mr. Baker (Nepean-Carleton):: Mr. Speaker, I rise on a point of order. Perhaps when the hon. member speaks tomorrow afternoon he can tell us on what side he stands and what he is in favour of. I have heard a great deal of comment about both sides. It would be interesting if tomorrow he came down on one side or the other.


Ian Deans: Mr. Speaker, on the same point of order, I was under the impression-perhaps I was misguided-I had 40 minutes during which to speak and that at any time during that 40 minutes I would be able to explain what I thought was the appropriate course of action to take. I did not realize I had to do that in the time frame set by the hon. member for Nepean-Carleton (Mr. Baker).



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Bob Wenman (Fraser Valley West):: Mr. Speaker, Canadians are well aware that a large part of our foreign aid budget is transferred directly from Canada to the poorly developed countries in a form called bilateral aid.
Similarly, people are well aware that more aid is transferred to multinational organizations like the United Nations, called multilateral aid. A less common form of aid which encompasses almost none of the budget for foreign aid from Canada is in the form of trilateral or tripartite aid. Trilateral or
January 19, 1981

tripartite aid is not a new suggestion. It is only new in the sense that it has been brought forward in the North-South program for survival, the Brandt report.
In many cases you will find that there are all kinds of conferences and all kinds of reports such as the North-South dialogue, the Canadian House of Commons North-South Relations report, the report of the Prime Minister (Mr. Trudeau) who was skiing in the Alps, and so on, but when you get right down to it, so often all these reports evaporate like so much hot air because they contain so little substance, so little that is specific on what we might do to actually make the improvements that are required in the developing and the developed countries. One specific idea which was brought forward in the Brandt report is excellent. As I read it, I knew who it was meant for because it related to Canada. I should like to read from page 140 of the Brandt report a passage which reads as follows:
The emergence of capital surplus developing countries provides special scope for the establishment of projects on a basis of tripartite arrangements involving developing countries alone or in partnership with industrialized countries. Such arrangements should be supported by both developed and developing countries. Tripartite projects, including, when appropriate, industrialized countries, should be encouraged by nations with complementary resources such as capital and technology.
Our Prime Minister travelled through Saudi Arabia, a country with surplus petro dollars which, in fact, they had to recycle. That nation is known for its contributions to developing nations, specifically through bilateral aid.
But in addition to bilateral aid, there is another opportunity here. While Saudi Arabia has surplus capital, Canada has a great capacity for technological aid exchange. In addition to that, our plants can manufacture and produce surplus goods. So why should we not take the capital of Saudi Arabia and our capacity to produce goods and technological aid, put those two together and transfer them to a third country like Somalia?
In my question to the minister, I made a specific suggestion. The idea I suggested is that we combine the capital of Saudi Arabia with our technological capacity in so far as energy is concerned. In fact, Canada has just set up Enertech, a new corporation, which will do substantial work in research into our resources. Why should we not have Enertech together with CIDA and the capital of Saudi Arabia or that of another OPEC nation provide an exchange to a needy country like Somalia? Somalia is the fourth poorest country in the world with the most massive refugee problem in the world. Can we not, for example, transfer our solar energy technology to that country? We produce solar energy water pumps. The most basic element of life is water. Canada has the capacity to provide the pumps to bring out water from underground. Some nations are already doing it. Why not pump that water from the ground in Somalia, not only to provide water for the people but to provide water for their crops so that they can become more self-sufficient? Here is another kernel of an idea. As a Member of Parliament you wonder about these things, you have ideas and you bring them forward in the House of Commons.
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The minister says that he will certainly be prepared to give serious consideration to that proposal. That was November 16. The minister has had time for consideration. The Prime Minister has been to Saudi Arabia. He has been to undeveloped countries. There is no excuse to not move beyond the rhetoric, beyond the North-South dialogue and have that measured in some real and tangible way by Canada. Here is a specific idea. What must I do to have the government take an idea like this? It is not my own idea. It is an idea resulting from a great deal of study in the North-South report. Why do they not take this idea and in a real way measure the success of all these reports? That success is when the kernel of grain reaches the stomach or the soil of that Third World nation, which is poor and needy.
I hope that as a result of having raised this question here tonight in this House of Commons that maybe I will have touched a nerve or chord somewhere in a member or the Secretary of State for External Affairs (Mr. MacGuigan) on the other side of the House. I hope it will not be given some kind of passing, fleeting response but that it will be given consideration.
I brought forth the case of Somalia here in the House of Commons and also in committee. Others have done the same. What must we do to get through to the bureaucracy to tell them we have found a problem? We have found a need of the people to receive, not just this form of aid, but bilateral aid as well, to be identified as a country. Why can we not take the need td receive and connect it with our capacity as a nation to give and to share? I challenge the government with that tonight.


Mrs. Ursula Appolloni (Parliamentary Secretary to Minister of National Defence):: Mr. Speaker, first I would like to commend the hon. member who has just spoken on his sincere interest in the developing countries. The government has, of course, been exploring for some time now with key OPEC-Arab aid agencies possible arrangements to utilize OPEC funds to help finance the provision of goods, capital equipment and services for development projects in developing countries.
Although progress has so far been slow, we are currently engaged in, or discussing, participation in some ten projects which have a total cost of approximately $1.6 billion. Most of these projects involve parallel financing of components of very large projects developed by the World Bank and regional development banks. We have been attempting to interest Arab donors in some form of co-operative arrangments for the financing of high priority development projects, such as the hon. member already mentioned, in sectors where Canada has a recognized competence, such as transportation, communications, hydroelectric generation and transmission. Additional meetings at the level of officials are planned for 1981 to explore further the possibilities of such projects.
If I may, I would like to end on this note. It is an excerpt from the task force report on the North-South relations, which reads as follows:
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January 19, 1981
Adjournment Debate
In spite of substantial efforts at various times, Canada seems to have been able to achieve only limited impact in enlisting oil-rich countries in joint efforts, apparently the key objective here.
Apparently, the key objective of the hon. member's speech.


MUNICIPAL AFFAIRS-REQUEST FOR EXTENSION OF COMMUNITY SERVICES CONTRIBUTION PROGRAM
Mr. Maurice Foster (Algoma):: Mr. Speaker, on December 15 I put a question to the Minister of Public Works (Mr. Cosgrove), who is responsible for the Canada Mortgage and Housing Corporation, concerning the community services program. I asked this question of him because he recently announced that in 1982 he would be ceasing this program, which has been providing some $250 million per year of assistance to municipalities for municipal infrastructure for housing programs, community improvement programs and so on.
I have had a number of representations from municipalities in my constituency which are very concerned with the termination of this program. They are especially concerned in two communities in my constituency where there are projects which are already committed, where the project has been tendered and where a contract has been let. So, for these communities which so far have no definite commitment from the government, it is a matter of great concern.
One project is the $4 million sewer and water infrastructure project for Little Current, to which the Community Services Contribution Program was to provide $1.29 million. Another project is with regard to the new community development in Elliot Lake at a cost of some $29.9 million, of which the Community Services Contribution Program was to provide funding in the amount of $4.6 million. It was to be used for this rapidly expanding community where the funds are urgently required.
What I would like to know from the minister tonight is whether or not the province of Ontario has recommended these two projects. I understand that the cut-off date for the projects to be recommended by the province of Ontario is February 5. I am interested to know whether the two projects have been recommended, and are included in the funds allocated for the province of Ontario over the next couple of years.
There is no question that these funds and the projects are urgently needed for the communities. In the case of Little Current, the projects are needed for reasons of sanitation and the municipal infrastructure. In the case of Elliot Lake, the project is needed due to the massive expansion of this town, because of the uranium mining industry in that community, over the next four years or five years. When this program was put in place, these projects were planned. The projects were tendered and the contracts have been let, so the Community Services Contribution Program is a major funding instrument to these communities. Both communities will be placed in a catastrophic position financially if the money, totalling some $6 million for both communities, is not made available.
I hope the minister will be able to respond and indicate that the province of Ontario has recommended these two projects for funding under the Community Services Contribution Program and that the federal government is now prepared to extend this program for at least another year so that these projects may be completed and the benefits can accrue to the community and as a result to the entire country.


Mr. Robert Bockstael (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, I would like to respond further to the question raised on December 15 by the hon. member for Algoma (Mr. Foster) concerning the termination of the Community Services Contribution Program. The decision not to renew the program was a difficult one, and I would like to take this opportunity to outline the factors which contributed to the government's decision.
First, there was the question of whether it was appropriate for the federal government to continue funding the provision of services which, from a jurisdictional point of view, have been the responsibility of the provinces and the municipalities. It is not a matter of whether the program was good, but rather, who should pay for such a program. Second, there is the issue of accountability, whether the government responsible for raising resources through taxation should not also be responsible for the expenditures of such revenues. Third, the effectiveness of the program was analysed from the point of view of job generation and compared with other programs that demonstrate a better return from money spent.
Moreover, Mr. Speaker, the present climate of fiscal restraint contributed to this decision. In meeting the objective of providing more effective government, the continuation of existing programs has been studied with a view to providing funds for new programs or those of a higher priority. The decision not to renew the Community Services Contribution Program now results in more funds being available for addressing higher priorities in the fiscal year 1982-83. The task remains to determine precisely the federal housing priorities in the 1980s. The minister will continue to hold informal discussions with his provincial counterparts and with other interested groups on this matter. It is his hope that this will assist in developing federal housing priorities and programs and lead to the best distribution funds between them.
Under the Community Services Contribution Program, the federal government has allocated a total of $400 million for municipal projects, $150 million of which was for the 1979 program year and $250 million of which was for the 1980 program year.
Over 3,000 projects in some 1,000 communities will have received federal assistance. This is a significant contribution to the provision of local services to Canadians in every province.
The minister wishes to assure the hon. member that the government will meet all commitments under the present federal-provincial community services contribution agreements. As the hon. member is aware, concerns have been
January 19, 1981

raised about the time committed for the use of the 1980 program year funds. The funding is scheduled to terminate at the end of March, 1982. However, the minister is seeking an extension of that date, to enable communities to have the time to incur the necessary expenditures. He is confident that this extension will be granted, on the understanding that fiscal expenditures in 1981-82 will be reduced to reflect expenditures to be made in 1982-83.
I do not have specific answers about the two projects the hon. member has referred to, but 1 am sure the minister will be able to provide him with that information.


GRAIN-REIMBURSEMENT OF PRODUCERS FOR LOSS OF INCOME FROM DEPRESSED PRICES
Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, more than seven months ago I asked the Prime Minister (Mr. Trudeau) the following question:
Will the Prime Minister fulfil his promise to reimburse grain producers for their loss of income so that some extra cash can be injected into the drought-ridden farm economy?
The Prime Minister's answer on June 2 last year was that the matter "is being considered". At this time, seven months and seventeen days later, compensation for farmers who suffered income losses due to the grain embargo is still being considered.
As late as December 10 the Minister of Agriculture (Mr. Whelan) in an answer indicated as follows:
As far as I am concerned, we intend to live up to what we have said. As I said the other day in the House, we do not intend to welsh on any agreement made by the previous government; this is one we said we would fulfil.
It is good to see that the government is progressing after seven months, but 1 think all hon. members present tonight will admit that the progress is pretty slow. Let us review for a moment where we stand in terms of embargo losses.
The embargo was put in place on January 4 last year as co-operation with the U.S. in their action to protest Soviet action in Afghanistan. The embargoing of 17 million tonnes of U.S. grain immediately depressed Canadian prices of food and feed grains. Countries which sold into the Soviet market received as much as $50 per tonne more than the prices quoted in countries observing the embargo.
All of this added up to substantial losses for the Canadian Wheat Board which was forced to operate as an arm of federal government policy. This is very significant, because the Canadian Wheat Board is funded by farmers of Canada to sell, as is stated in the charter, "the most wheat at the best price". What we have is an agency, funded by the farmers, selling the farmers short.
We can imagine that the farmers of Canada were upset and that most members of Parliament were upset, including western Conservatives such as the hon. member for Lisgar (Mr. Murta) who brought this matter up in the House. During that period we had a delightful bit of fancy footwork by the Minister of State for the Canadian Wheat Board, Senator Argue, who said it was keeping up normal and traditional
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levels of sales. Those sales vary from 3 million tonnes to 3.3 million tonnes to 3.5 million tonnes, as the sales increased.
On the other hand, the Secretary of State for External Affairs (Mr. MacGuigan) insisted that this elastic band embargo still meant restrictions on the amount Canada would sell the Soviets until even he changed his position and decided that the government could not agree to restraints at the United States level, but the damage had been done. By not aggressively selling wheat into the Soviet markets, we lost premiums, and we almost lost the market. The Soviet market is where we sell the best grades of wheat. We also lost a good deal of money, an amount which the federal government has calculated several times but has failed to disclose.
In this year, when we are supposed to have freedom of information, Liberal style, I believe that we have arrived at 1984 three years in advance. We are not getting any information. I suggest that the government is doing very well in the "new-speak" department when, on the one hand, the government insists that compensation is going to be paid, that it is very much on its mind, but on the other hand it gives no inkling of how much the government intends to pay.
Many of us believe that the government will try to slip a nominal amount in between the 1979-1980 crop year final payments, which were announced on January 8, and the interim payments which will be announced at the end of the month. I would welcome any guarantees from the government side that this will not be the case. Luckily, we have had some public guidance as to the losses.
The University of Saskatchewan brought forward a study about the middle of July. That study showed the losses were $117 million for wheat and $9 million for barley for the period January to June last year. This amounted to 50 cents a bushel for wheat, approximately $1,200 for each of the 150,000 permit holders in the west. This would be welcome payment to many farmers who not only have to look at their staggering bank interest, but who have to put in next year's crop and feed cattle now at very high prices.
I want to ask the government the same questions again: when is the government going to pay compensation; how much and how did it arrive at the rate?


Robert Theodore Bockstael: Mr. Speaker, with reference to compensation, as I advised the House last Tuesday evening in answer to a similar question, the government is considering the question of compensation to producers for losses attributable to the partial embargo on grain to the U.S.S.R. A report on this subject has been prepared by officials and is now before the ministers for an early determination.
When the question was asked on June 2, the hon. member referred to the drought situation then prevailing in the west, along with cash flow problems being experienced by producers.
As all hon. members are aware, the situation has improved significantly since June. For example, in June the international

January 19, 1981
Adjournment Debate
price for No. 1 Canada western Red Spring wheat in store Thunder Bay was $197.56 per tonne or $5.38 per bushel. The comparable figure last Friday was $269.62 per tonne or $7.34 per bushel. That is an increase of almost $2 per bushel in seven months. Prices of other grains and oil seeds are also up sharply. Exports are running at a level above the record established a year ago, and this large movement is reflected in producers' deliveries and consequently in cash returns to producers.
In July the government announced higher initial payments for the current crop year, and before Christmas the Minister of State for the Canadian Wheat Board indicated, on December 16, that he expected to announce a further increase in initial payments early in 1981, possibly near the beginning of February.
Hon. members will also be aware of the final payments of the 1979-80 wheat and barley pools which were announced on January 9. The minister noted that the final payments will
amount to a total cash flow of more than $730 million to the prairie economy, with about $446.8 million going to Saskatchewan, about $187.3 million to Alberta and the Peace River area of British Columbia and about $96.4 million to Manitoba. The board will this week begin mailing over 336,000 final payment cheques to prairie producers.
As I said on Tuesday evening, to the extent that actual loss can be determined, the western producer can expect to be compensated in the near future. Determination of the amount is a complex problem. The hon. member mentioned the University of Saskatchewan study which indicated a $126 million loss, and the Conservatives last Tuesday said that the loss was $75 million. Government experts also have an evaluation which will be announced when the compensation is announced.


The Acting Speaker (Mr. Blaker):: The motion to adjourn the House has now deemed to have been adopted. Accordingly, this House stands adjourned until two o'clock tomorrow afternoon.
At 10.27 p.m. the House adjourned, without question put, pursuant to Standing Order.

Tuesday, January 20, 1981