1981-11-16

ROUTINE PROCEEDINGS


Mr. Blaine A. Thacker (Lethbridge-Foothiils):: Madam Speaker, whereas in its budget of November 12, 1981, the Liberal government cancelled a law which permitted farmers to sell their farms under agreements of sale and to pay the capital gains tax from future payments as received, and whereas the budget adds substantial taxes on fuel, fertilizers and chemicals, I move, seconded by the hon. member for Cambridge (Mr. Speyer):
That this House condemns the government for breaking its 1980 election promise to give farmers immediate relief from capital gains tax and for instead imposing immediate taxes on capital gains, farm fuel, fertilizers and chemicals.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN FEDERATION
Mr. Dave Nickerson (Western Arctic):: Madam Speaker, whereas the constitutional proposals of the Prime Minister (Mr. Trudeau), which would virtually entrench colonial status in the north, have so incensed the people of the Territories that the entire Legislative Assembly has found it necessary to travel to Ottawa, I move, seconded by the hon. member for Yukon (Mr. Nielsen):
That the Prime Minister adopt policies which would allow the Northwest Territories and Yukon to enter confederation as full partners as soon as possible, and that he arrange to meet with the 22 elected representatives who have travelled 3,000 miles to present these issues of such importance to northern Canadians.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE MINISTRY
Mr. Thomas Siddon (Richmond-South Delta):: Madam Speaker, given the incredibly stupid decision taken by the Minister of Transport (Mr. Pepin) to ruin the most cost effective long distance trains in Canada, VIA Rail's Atlantic Limited and the Super Continental, and whereas several of his fellow ministers have shown a corresponding degree of incompetence by their devious mishandling of the Constitution, high interest rates, the housing crisis, high energy costs, and industrial stagnation, I move, seconded by the hon. member for Annapolis Valley-Hants (Mr. Nowlan):
That the federal cabinet be subject to an immediate 20 per cent cutback by order of this House requiring the termination of services by laying off Chairman Pierre and his ministers of finance, energy, transport, housing and industry, all of whom are drawing heavy tax subsidies from Canadians in order to finance their own reckless incompetence, and that public hearings need not be held until after these cuts take effect on November 16, 1981.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


SOCIAL SECURITY
Mr. Ian Deans (Hamilton Mountain):: Madam Speaker, I move, seconded by the hon. member for Mission-Port Moody (Mr. Rose):
That the government stands condemned for its callous disregard for the plight of pensioners and others on fixed incomes and, further, that this House demands programs to assist those people whose income levels will not provide sufficiently to compensate for the increases in energy, rent, taxes and food costs which will inevitably result from the budget of November 12.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


POLITICAL PARTIES
Mr. Robert Bockstael (St. Boniface):: Madam Speaker, I rise under the provisions of Standing Order 43. The Progressive Conservative Party in Manitoba has been distributing literature claiming credit for projects which have been entirely funded by the federal government at no cost to the province. The Manitoba Conservative Party has taken credit for some 59 federal incentive offers involving about $45 million of federal moneys. This amount does not include joint federal-provincial programs the PCs are claiming as their own without reference to the dollar input of the federal government. I move, seconded by the hon. member for London-Middlesex (Mr. Bloomfield): That the federal government immediately publish a correct listing of those projects to demonstrate how the Manitoba Conservatives are guilty of publishing misleading and deceptive statements just before an election.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE BUDGET
Mr. Bill Domm (Peterborough):: Madam Speaker, since last week's budget will raise direct taxes for Canadians, according to page 72 of the main budget document, by fully 100 per cent by 1985-86, and direct taxes for corporations by almost 300 per cent in the same period of time, I move, seconded by the hon. member for Cambridge (Mr. Speyer):
That the Minister of Finance retract his misleading statement at page 2 of his budget speech when he said, "There is tax relief or no tax increase in this budget for the vast majority of Canadians".
That statement was wrong.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADA POST
Mr. Gordon Taylor (Bow River):: Madam Speaker, the Alberta Lung Association carries out education and research programs related to lung diseases, and finances this work through a mail service. The proposed increase in postal rates
will eat so badly into the donations to it that the whole program might be destroyed. I therefore move, seconded by the hon. member for Peace River (Mr. Cooper):
That this Flouse strongly recommends that Canada Post provide preferential rates to the Alberta Lung Association and other such health and voluntary organizations so that Christmas Seal efforts and valuable voluntary work may continue.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE CONSTITUTION
Mr. Jim Fulton (Skeena):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the fact that the hon. member for Provencher, Louis Riel, twice elected to this House of Commons, was hanged 96 years ago today for his stand on aboriginal rights, and in view of the fact that our Fathers of Confederation agreed 114 years ago that aboriginal rights are an absolute federal jurisdiction, I move, seconded by the hon. member for Oshawa (Mr. Broadbent):
That this House honour the memory of Louis Riel today and reconfirm the unanimous January 30 all-party support given to section 34, the constitutional recognition and affirmation of the rights of Canada's Indian, Inuit and Metis people.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


SCIENCE AND TECHNOLOGY
Mr. Stanley Hudecki (Hamilton West):: Madam Speaker, I rise today under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Over the weekend the second space shuttle landed, following a two-day space flight during which Canada's first major contribution to the space program was successfully tested. I refer to the Canadian government-funded remote manipulator system, better known as the Canadarm. In order that this very important project in international co-operation and space policy receive future sup-
November 16, 1981

port, I propose, seconded by the hon. member for Richmond-South Delta (Mr. Siddon):
That this House affirm our commitment toward Canadarm as an international joint project of tremendous significance, commend the skill and dedication of those responsible for the design and construction of the space arm, and express the hope that this joint effort involving Canadian expertise will be the first of many such undertakings.


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


Some hon. Members:: Agreed.


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


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. Gordon Towers (Red Deer):: Madam Speaker, I rise today under the provisions of Standing Order 43. More than 25 years ago the then Prime Minister, Mr. St. Laurent, called the CCF, now the NDP, "Liberals in a hurry". The question we ask ourselves today is who is in a hurry to claim the left and who has overtaken whom? I therefore move, seconded by the hon. member for Cambridge (Mr. Speyer):
That the Prime Minister and the Leader of the New Democratic Party fold their protective wings around the Minister of Finance so that all may share the credit for the resurrection of the Regina Manifesto in the current budget, and that taxpayers in Canada unite for they have nothing to lose but their shirts.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE BUDGET
Mr. Jim Hawkes (Calgary West):: Madam Speaker, the Liberal-NDP budget last Thursday is the most regressive in Canadian history. It is the poor who are being hardest hit. The average householder in Canada will pay over $2,500 in indirect taxes this year, an increase of more than $880 over last year. The poor in Canada cannot afford that massive increase and Canadians must be honestly told what this finance minister has done to them. Therefore I move, seconded by the hon. member for Simcoe North (Mr. Lewis):
Oral Questions
That this House direct the Minister of Finance to provide the Canadian people with an honest statement of the impact of all his taxes on households that fall below the poverty line.


Madam Speaker:: The House has heard the motion presented by the hon. member. Under the provisions of Standing Order 43, this motion requires the unanimous consent of the House. Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Miss Pat Carney (Vancouver Centre):: In the absence of the Minister of Finance, Madam Speaker, I will address my question to the acting minister of finance. The minister said last week that his budget was designed to increase employment. The government's answer to unemployment is to create it. Since the budget was introduced last Thursday night, construction has stopped, just ended, on 3,200 rental units worth half a billion dollars, from St. John's, Newfoundland, to Vancouver, throwing 3,400 people out of work. When the Minister of Finance brought in his restrictive budget, was the government aware that these projects would halt, that these jobs would be lost, and that an entire industry would be wiped out?


Hon. Pierre Bussieres (Minister of State (Finance)):: Madam Speaker, the hon. member is concerned about one particular situation that affects homebuilding. If the hon. member would look carefully at the measures taken to counter inflation, she will realize that those measures are the most effective way to revive that particular section of the industry. In fact, if we succeed in bringing down the present rates of inflation which are affecting the economy, the result will be a substantial reduction in interest rates, and hence more room and greater demand for construction; this industrial sector will get back on its feet and the economy will benefit because more jobs will be created as well.


REQUEST THAT PROVISIONS BE AMENDED
Pat Carney: Madam Speaker, my supplementary question is also directed to the Minister of State for Finance, who has managed to enunciate what econo-

November 16, 1981
Oral Questions
mists call the enema theory of fighting inflation, by flushing out the economy.


Some hon. Members:: Hear, hear!


Pat Carney: The minister has not addressed the question which was about specific projects, in specific centres, on which work has stopped and in which people are out of work today. People who were working last Thursday are not working today. The Canadian Institute of Public Real Estate Companies estimates that the number of lost rental units will be in the thousands, at a time when vacancy rates are at the lowest level in five years. Will the Minister of State for Finance consider recommending to the Minister of Finance that he amend his budget proposals affecting the soft costs, so that these projects can now proceed and that these jobs can be saved?


Some hon. Members:: Hear, hear!


Pierre Bussières: Madam Speaker, when referring to rhetoric and the practitioners thereof, one can use all kinds of expressions. The hon. member has used one, and I would like to suggest another; I would say that she is indulging in psittacism, just like her party leader who made a habit of imitating parrots.
Madam Speaker, to get back to the basic principles of the budget, these are to fight inflation, to get interest rates down and thus create more jobs as a result of the ensuing economic revival. The hon. member is referring to several problems which might be caused by certain arrangements concerning obligations to invest in housing. This is a problem the Minister of Finance is well aware of. We shall have an opportunity to look at this more closely during the next few days, and I am sure that if it is necessary to take special measures regarding this particular aspect, the Minister of Finance will consider such measures.


ANNOUNCEMENT OF STUDY RESULTS
Pat Carney: My supplementary question is directed to the Minister of State for Finance who, in his answer, indicated, at least as I heard it, that the government would consider looking into this aspect to see whether these jobs can be saved. Since these people are now out of work and since all these projects are now on hold, when will the minister be able to tell this House what the results of this extra scrutiny will be?


Pierre Bussières: Madam Speaker, I feel that there should be time to consider a situation or the consequences of a specific measure before we can say when a more definite answer can be given.


HOUSING
Hon. James A. McGrath (St. John's East):: Madam Speaker, my supplementary question is directed to the minister responsible for housing. The minister will know that on last Friday Canada Mortgage and Housing Corporation announced that the vacancy rate in all major metropolitan areas of the country had slipped to 1.4 per cent. He will also know that this is critical in some of the larger metropolitan areas such as the city of Toronto where the vacancy rate has gone from 1.7 per cent in 1979 to .3 per cent in 1981, a very critical factor.
Given the fact that the budget eliminated the MURB provision which, by the minister's own admission, resulted in the creation of 20,000 units last year, and that it will be replaced by a subsidization provision which will only allow for the building of 15,000 units, what does the minister propose to do to meet the critical shortfall in major metropolitan areas of the country which, by his dire predictions contained in his own cabinet document, could result and perhaps will result in a black market situation?


Hon. Paul J. Cosgrove (Minister of Public Works):: Madam Speaker, there are two things for which the budget is designed in addressing the problems raised by the hon. member. First, I believe that he overlooked, in the proposition for 15,000 new rental starts to be encouraged by the front-end loading of the $7,500 grant, that those units now under the program can at last be specifically directed to those markets where low vacancy rates exist. Heretofore under the MURB provision, that was a helter-skelter approach. It assisted the industry, it got units constructed, but they were not necessarily in the areas where they were needed. I have been told that many times by hon. members opposite. The advantage of this alternative approach taken in the budget is to address the assistance where it is required, in those markets experiencing the low vacancy rate.
Second, I would remind the hon. member that I answered the first question he raised in this resumed session of Parliament that the corporation had already directed Section 56(1) units, which are a substitute to rental units, non-profit and co-op units, to those markets. We have increased the allocation in the last two years. I gave as an example the city which the hon. member represents where there has been an increase in that type of alternative housing.


MONITORING OF SITUATION IN CITIES
James Aloysius McGrath: Madam Speaker, the budget has decreased the supply of co-op social housing by 5,000 units; it has gone from 30,000 to 25,000. The deferred mortgage interest payment situation will not address the problem, and that has been exacerbated by a considerable decline in investor confidence in the market by the elimination of the MURB provision. That has created a critical situation

in the country. It will result in a black market situation in major metropolitan areas, the so-called key money situations. The minister has to bear some responsibility in this regard. What steps does he propose to take to monitor the situation in major metropolitan areas to ensure that the black market key money situation which he predicted in his cabinet document which he signed will not in fact take place? We are now approaching the zero vacancy rate which he predicted in his document. The minister seems determined to make his own worst predictions come true.


Paul James Cosgrove: Madam Speaker, the first step, as the minister responsible for Canada Mortgage and Housing Corporation reporting to Parliament, that I will take is to meet with my provincial counterparts, the ministers of housing of all provinces. I requested that on Friday, the morning after the budget. I received confirmation from two ministers. I intend to meet with all of them in the next few weeks to discuss this very issue.
I point out to the hon. member, for example, that the province of Ontario has a comparable plan to assist rental housing by an up-front grant. We obviously have to work with that province in co-operation, to see that both programs achieve the desired element that is required in the plan. I was happy to see, for example, that last week after the budget announcement of plans in this House, and after I had requested that the provinces now consider what aid they would get, the province of Manitoba will pick up some slack and address some of its financial resources to the problem of housing. I will ask the other ministers of housing in the other provinces whether they as well can follow that leadership.


THE CONSTITUTION
Mr. Edward Broadbent (Oshawa):: Madam Speaker, my question is addressed to the minister responsible for the status of women. The minister knows that following certain answers given by the Prime Minister with respect to Clause 28 in the old constitutional resolution, the precise meaning and significance of that clause are unclear. She also knows that there have been discussions taking place, as I understand it, between the federal and provincial officials in recent days. I wonder if she is now in a position to outline to the House the precise meaning of that clause.


Hon. Judy Erola (Minister of State (Mines)):: Madam Speaker, I will be happy to answer the question. The precise meaning of the clause as we see it, is that Section 15, where the nonobstante applies, refers to the specific definition of sexual discrimination for a very specific act. In Clause 28 the broad principle is stated, one in which the women of Canada are very much interested and are very positive about. They wish this to remain within the charter, of course. I should like
Oral Questions
to advise hon. members that we are optimistic at this stage and hope that Clause 28 in the general section will remain intact. We may know by the end of the day.


ASSURANCE SOUGHT ON PRECISE MEANING OF FEDERAL-PROVINCIAL ACCORD
John Edward Broadbent: Madam Speaker, as I understand the minister's answer, the position of the federal government is to maintain the force of Clause 28 as it now is. She has indicated, though, that there is not yet agreement on that, I assume, by all those provinces that have participated in the accord. Since it has been suggested that we may well have a resolution before the House on Thursday of this week, may I ask the minister if she is prepared to assure the House that we will know ahead of that time what the precise meaning of Clause 28 is in terms of an accord that has been reached between the federal government and the provinces?


Judith A. Erola: Yes, Madam Speaker, I can assure the hon. member that hopefully by this evening we will have the precise meaning and the terms of the agreement with the premiers.


EFFECT OF UNITED NATIONS CONVENTION ON ELIMINATION OF DISCRIMINATION
Miss Pauline Jewett (New Westminster-Coquitlam):: Madam Speaker, my question is also for the minister responsible for the status of women. I am very pleased indeed, as I am sure all members of the House are, by the answer the minister has given that Clause 28, the equality clause, will remain intact, just as it is now.
If I may, I should like to congratulate the minister on opening her office to the representatives of millions of Canadian women who are extremely concerned that Clause 28 be kept intact.


Some hon. Members:: Hear, hear!


Pauline Jewett: We are very glad to join in the applause.
Article 2(a) of the United Nations Convention on the Elimination of All Forms of Discrimination Against Women requires state parties to "undertake to embody the principle of equality of men and women in their national constitutions". My first question was to have been whether the federal government still supports this convention and I take it the answer is yes. May I ask the minister whether it has been brought to the attention of the provinces that a serious violation of this convention would be brought about if Clause 28 were eliminated, overridden, or changed in any way?


Judith A. Erola: Yes, Madam Speaker, that has been a very forceful part of the argument presented to the premiers.

November 16, 1981
Oral Questions THE BUDGET


TRANSFER OF SALES TAX FROM MANUFACTURING TO WHOLESALE LEVEL
Hon. Michael Wilson (Etobicoke Centre):: Madam Speaker, my question is for the Minister of State for Finance in the absence of the Minister of Finance. We all know that total tax revenues will increase this year by 31 per cent as a result of the budget. What is not clear as a result of the budget is the impact of the shift of the federal sales tax from the manufacturing level to the wholesale level. The government has said it will reduce the rate from 9 per cent to 8 per cent, but many experts in the Consumers' Association of Canada and in the business community claim that this will result in a considerably larger revenue take than has been indicated in the budget.
Is the government trying to sneak in a further revenue increase on top of this 31 per cent increase, a tax increase which would be very, very damaging as far as Canadian consumers are concerned in that it will raise costs and will also be very damaging to the level of unemployment?


Pierre Bussières: Madam Speaker, the hon. member's question is very interesting. However, I should like to point out to the hon. member that in the preamble to his question which is specifically concerned with the shift of the sales tax from the manufacturing level to the wholesale level, he forgot to point out that at the same time, revenue is being generated by the removal of certain tax preferences, marginal income tax rates have been substantially reduced, and nearly six million Canadians will experience a reduction in marginal income tax rates for next year, which is very important.
As for the effects of the sales tax transfer from the manufacturing to the wholesale level, the hon. member is quite right to express his concerns which I feel are well founded. In fact, the purpose of the Minister of Finance and the government in making this change is not to generate new revenue for the government. The government's objective is to provide for greater equity in the sales tax system, first of all by shifting collection of this tax away from the manufacturing level. This does away with a multitude of problems that had made the levying of the sales tax at this level a veritable nightmare for the Department of National revenue. Second, as far as the amount to which the sales tax is to be applied is concerned, the new approach deals more equitably with, and provides a better balance between, imported goods and the same goods manufactured here in Canada. The objective is therefore not to generate more revenue but to apply the sales tax more equitably.


REASONS FOR TAX PROVISIONS
Michael Holcombe Wilson: Madam Speaker,
I should remind the minister that about ten years ago there were the same concerns as a result of the Benson tax reform. At that time the government said that if the tax reform generated further revenue increases than what it then anticipated, it would give that money back. Hon. members know, I know, and Your Honour knows what happened at that time. There were no tax reductions as a result of that. I am now asking the minister for a commitment on behalf of the government that that will take place.
The Minister of Finance obviously wrote the budget before he got the information concerning the high unemployment figures in October as well as the other very widespread signs of weakness in the economy. Therefore my supplementary question to the Minister of State for Finance is as follows: In this budget, why did the minister ignore the fact that today the economy is in a recession? Why did he increase the tax burden on Canadians by a further $1.4 billion on top of the $1,400 per family per year for the next five years that the energy tax increase will bring to the government?


Pierre Bussières: I would like to comment briefly on the hon. member's statement, in view of the neutrality that is desired when levying the sales tax at the wholesale rather than at the manufacturing level. I can assure the hon. member that we shall have an opportunity to discuss the matter with the parties concerned at committee hearings, that the hon. member will also have an opportunity to get his points across and that he will realize, in the course of the debate in committee, that the change will indeed provide for a more equitable and objective system. As for the general objectives of the budget with respect to the economy, I think the hon. member will agree that the government's main focus must be on the fight against inflation. The hon. member may recall that 13 months ago, before the Minister of Finance had brought down a budget, a number of members were saying: Listen, we are in a recession, be careful when you prepare your budget because the recession is going to be severe and there will be high unemployment rates. Several months later, the Canadian economy had shown a quite remarkable rate of growth. As every good physician knows, a hasty diagnosis is seldom right.


PRESENCE IN GALLERY OF THE HON. DONALD STEWART, SPEAKER OF THE LEGISLATIVE ASSEMBLY OF THE NORTHWEST TERRITORIES
Madam Speaker:: May I draw the attention of the House to the presence in our gallery of the Speaker of the Legislative
November 16, 1981

Assembly of the Northwest Territories, the Hon. Donald Stewart.


Some hon. Members:: Hear, hear!


THE CONSTITUTION
Dave Nickerson: Madam Speaker, in the absence of the Prime Minister and the Deputy Prime Minister, maybe I should address my question to the acting prime minister, who might be familiar with the the Prime Minister's schedule. As he will be aware, the entire legislative assembly of the Northwest Territories has come to Ottawa with the specific purpose of meeting with the Prime Minister concerning the Constitution. The Assembly has legitimate fears that the present colonial status in the north will be entrenched as a result of the proposal. I wonder if we could be advised whether a meeting has been put together yet, and at what time and place this meeting might take place.


Hon. John C. Munro (Minister of Indian Affairs and Northern Development):: Madam Speaker, I reply to the hon. member by telling him that, yes, they did meet with me about 1.30, just prior to the question period.


Mr. Nielsen:: His high ambitions know no bounds.


John Carr Munro: They will be meeting with me again around six o'clock tonight, for about an hour. Hopefully, I will have something further to report after that.


Dave Nickerson: My, how things change! Before asking a supplementary question of the Minister of Indian Affairs and Northern Development, I would like to extend to him my heartfelt condolences over certain things which happened in his constituency of Hamilton East over the weekend.


Mr. Jarvis:: The Tiger Cats!


An hon. Member:: So long, Tigers!


Dave Nickerson: Perhaps he could try to answer the question as to whether or not a meeting with the Prime Minister could be arranged.


RESPONSIBILITY FOR CREATION OF NEW PROVINCES
Dave Nickerson: I would also like to ask the minister the following question. When a new proposal is again put before this Parliament, can the minister ensure that the concept will be retained that creation of new provinces out of existing territories, not affecting existing provincial boundaries, lies solely within federal jurisdiction?


John Carr Munro: Madam Speaker, as the hon. member
Oral Questions
well knows, the accord agreed to between the provinces quite clearly indicates otherwise. That is the Vancouver formula without the compensation aspect to it. It does involve the provinces in consent of the nature the hon. member just identified. That is a situation with which we are faced. I am hearing the concerns of the northerners with respect to it, but I am assuming at this stage that any change in that respect would involve some amendment to the accord. I am not at all sure that we or many hon. members of the House would be prepared to contemplate that at this stage.


ENERGY CONSERVATION
Mr. D. M. Collenette (York East):: Madam Speaker, my question is addressed to the Minister of Energy, Mines and Resources.


Some hon. Members:: Oh, oh!


David Michael Collenette: There have been press reports that electricity may become a cheaper form of heating than natural gas. Given this new information, could the minister inform the House whether he has reservations in endorsing the policy of encouraging the conversion of oil heat to natural gas, keeping in mind the incentives for gas conversion contained in the National Energy Program and the recently concluded agreements with the producing provinces?


Hon. Marc Lalonde (Minister of Energy, Mines and Resources):: Madam Speaker, under the National Energy Program, the national government has indicated that it was neutral concerning the choice consumers would make between alternative forms of energy other than oil. As a matter of fact we left this to be worked out with the provincial governments. In some provinces the incentives program is open to consumers, both for electricity and gas; in others there are some additional reservations.
I think it is impossible to give an answer which would apply equally across the country because the price of electricity varies from province to province. We have assured that the price for natural gas at the wholesaler level will not exceed about 65 per cent of the price of oil. Therefore, there is no doubt that the price of natural gas will certainly remain very advantageous compared to heating oil. With respect to the outlook on electricity, as far as I know most provincial governments would prefer consumers to opt for natural gas.

Oral Questions INDUSTRY
spite of these lay-offs, to provide a company to which these workers can come back as sales improve.


SHUTDOWN OF MASSEY-FERGUSON PLANT IN BRANTFORD, ONT.
Mr. Derek Blackburn (Brant):: Madam Speaker, my question is directed to the Minister of Industry, Trade and Commerce. In view of the fact that a few hours ago Massey-Fergu-son announced the shutdown of its North American combines plant in Brantford, throwing another 1,800 employees out of work for a period of several months, in addition to the 700 already on lay-off, and in view of the fact that the main reason for this is market problems, which everyone knows are due to the exorbitant high interest rates that farmers are facing, would the minister tell this House what specific or new measures were contained in the budget last Thursday night that would directly assist companies such as Massey-Ferguson, and more specifically help the thousands of workers who are being thrown out of work because of the budget?


Mr. Baker (Nepean-Carleton):: Liberal times are tough times.


Hon. Herb Gray (Minister of Industry, Trade and Commerce):: Madam Speaker, the basic thrust of the budget-


Mr. McDermid:: Is to put people out of work.


Herbert Eser (Herb) Gray: -is to reduce the pressure on financial markets of the size of the federal deficit and to aid in the reduction of interest rates, something which has been taking place over the last several months.


Erik Nielsen: Resign.


Herbert Eser (Herb) Gray: In fact, the day of the budget there was a drop in the bank rate of a full point and a half. Interest rates right now, I think, are lower than at any time since last December. The budget in its over-all thrust very much reinforces the existing movement toward lower interest rates.


Some hon. Members:: Oh, oh!


Miss MacDonald:: You are a sham.


Herbert Eser (Herb) Gray: With respect to Massey-Ferguson, the plant in Brantford exports most of its production to the United States and other countries, and the state of those economies is very much a factor in the health of that plant.
The whole farm machinery industry is suffering sales declines.


John Horton McDermid: All industry is.


Herbert Eser (Herb) Gray: The competitors of Massey-Ferguson have also been laying off employees in their plants outside Canada, and yet Massey-Ferguson at the same time has been able to maintain its market share. The basic activity of the federal government has been to take steps to ensure the continuance of Massey as a viable company, to maintain jobs there and, in


Derek Nigel Ernest Blackburn: Madam Speaker, I notice that the Minister of Industry, Trade and Commerce did not speak specifically of the farm community. That is where the problem lies. Farmers cannot afford to buy these combines and tractors.


AGRICULTURE
Derek Nigel Ernest Blackburn: Madam Speaker, if I could get the Minister of Agriculture's attention, my supplementary question is for him.
What is the Minister of Agriculture planning at the present time to give assurance that there will be enough farm implements when demand returns, if it does return in a year's time? I ask this question because there was virtually no assistance in the budget to farmers at all, outside of the drop in the bucket through the FCC, and also because Agriculture Canada is spending thousands of dollars on useless advertisements in newspapers across the country. Why can the government not put some money into the hands of the farmers instead?


Hon. E. F. Whelan (Minister of Agriculture):: Madam Speaker, the hon. member may call the small business development bond and the $50 million for the FCC a drop in the bucket, but by working with the banking institutions in a proper fashion we can provide assistance to many of those farmers in dire need.


Some hon. Members:: Oh, oh!


Eugene Whelan: The hon. member asks what we have done. We have supported Massey-Ferguson because of its importance. It is needed to make sure that the farm implements are there for the most productive farmers in the whole world, the Canadian farmers. We also supported farm implement companies three years ago, I believe, with an interest free loan to the Canadian implement manufacturing organization-Co-op Implements- so that those companies could stay in business.
I would remind the hon. member that those farmers who do not require huge sums of money from the federal government, who are in supply type of a managed system of marketing their produce, are buying machinery, are paying their debts, and doing all those things necessary for a healthy farm operation. When the hon. member talks about agriculture he is making a widesweeping statement that is not quite accurate. Certain sections of the agricultural economy are in difficulty, but way over half of it is very healthy.
November 16, 1981


VIA RAIL
Mr. Pat Nowlan (Annapolis Valley-Hants):: Madam Speaker, my question is for the Minister of Transport. Now that November 15 has come and 20 per cent of VIA Rail has gone, showing that stubbornness has prevailed over common sense, will the minister now exercise a little political horse sense and assure this House that no further reductions or cuts in VIA passenger service will be made until the House of Commons Standing Committee on Transport is seized with them, or alternatively until the CTC at least can hold a hearing on the fairness of the costing order as well as the whole future of Canada's rail passenger service?


Some hon. Members:: Hear, hear!


Hon. Jean-Luc Pepin (Minister of Transport):: Madam Speaker, I would have said the exact opposite. What has been done proves that common sense has prevailed.


Some hon. Members:: Oh, oh!


Flora Isabel MacDonald: Deception.


Jean-Luc Pepin: In the last four years Canada has had a sort of haphazard elimination of 2,500 miles of railroads. My hon. friend did not see that. Therefore, instead of witnessing the slow decomposition of the system, the government decided to anticipate events and eliminate or reduce services now which would have to be eliminated in the future in order to make the necessary savings to give VIA what it needs to acquire the equipment, and so strengthen itself.
I heard a member say a few minutes ago that we were ruining VIA Rail. On the contrary, we are saving VIA Rail. That is a common sense approach. I realize that it is difficult for hon. members and for the public in general to share that view with me, but I am sure that in due course they will, and they will also realize that what we are doing now is really strengthening VIA and not ruining it.


REQUEST THAT STANDING COMMITTEE BE PERMITTED TO STUDY ANY FUTURE CUTBACKS
John Patrick (Pat) Nowlan: Madam Speaker, we know that 20 per cent of VIA has gone. November 15 came, and the minister has had his way. My question is in terms of the future since every problem that affected the 20 per cent that was cut is still there. In the rationalization and understanding of the costing order, perhaps even more so, the 80 per cent of VIA that is left is now the 100 per cent of VIA that is there, and if the minister is not worried about the future decomposition of the system, let alone the decomposition of his political party in areas adversely affected by the cuts, will the minister give a simple assurance to this House that we can
Oral Questions
study the problem in the Standing Committee on Transport so that representatives of the people affected by these changes or future cuts can have some input?


Jean-Luc Pepin: Madam Speaker, the very purpose of what we have done by the reductions and discontinuance of service is to prevent further-


An hon. Member:: Public hearings.


Jean-Luc Pepin: -discontinuances and reductions. Therefore, I can assure hon. members of that. That is the very purpose of the exercise. But I cannot give assurance that in the next four, five or ten years there will be no other reductions of services. That will depend on the use Canadians make of their trains. Nevertheless, I repeat, without being able to give a 100 per cent commitment, that the very purpose of what we have done is to prevent further reductions.


John Patrick (Pat) Nowlan: Fire Benny Benson.


Jean-Luc Pepin: On the subject of the committee, I was keen to explain the matter to the Standing Committee on Transport, but because the committee appeared to want to insist on reporting its recommendations and as a consequence take another working day of the House of Commons, I had to be disagreeable, which is something I do not like to be. Instead of that, I went to the Senate committee, which was more flexible on the subject, and I provided all the information requested of me.


John Patrick (Pat) Nowlan: Who the heck cares about the Senate committee?


An hon. Member:: You might as well close the House of Commons committee.


EXTERNAL AFFAIRS
Mr. Fred McCain (Carleton-Charlotte):: Madam Speaker, my question is directed to the Secretary of State for External Affairs. Has the Pittston oil company, which proposes to build a refinery in Eastport, Maine, been granted its clean water report by the environmental protection agency of the United States? If so, does this authorize that company to begin construction of the refinery?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, what the hon. member is asking about are matters concerning United States law, on which we

November 16, 1981
Oral Questions
are strictly an observer. 1 understand there yet may well be legal challenges taken in the United States, and it is not for us to decide what happens as a result of U.S. law.
I can tell the hon. gentleman and the House that we have made the United States government aware, via a note earlier this year, of our serious reservations on environmental grounds of the use of those waters by any oil tankers. That would be a consideration which certainly ought to be taken into account by any U.S. sponsors of a refinery.


NATURE OF REPRESENTATIONS MADE BY GOVERNMENT OF CANADA TO GOVERNMENT OF UNITED STATES
Fred Alward McCain: Madam Speaker, my supplementary question is to ask how firm have the representations been from the minister's department to the United States, and what measures is the government prepared to take for the protection of the fishing industry and the environment of the Bay of Fundy. Would he consider tabling the notes or messages which may have been exchanged between his department and that of his counterpart in the United States?


Mark R. MacGuigan: Madam Speaker, I believe the note has been made available in the United States and I think it perhaps can be made available in Canada, although that is-


An hon. Member:: That is nice.


Mark R. MacGuigan: It is not the usual practice to table notes between governments, but I believe in this case it may be appropriate to release it and I will look into that question. This is not a matter of having presented the United States government with a formal note stating our position, which we have to reiterate constantly, but we do keep a very close eye on the proceedings in that area.


CANADIAN BROADCASTING CORPORATION
Mr. Dan McKenzie (Winnipeg-Assiniboine):: Madam
Speaker, my question is for the minister responsible for the Canadian Broadcasting Corporation. In a November 13 phone-in poll conducted by the CBC program "24 Hours" in Winnipeg, Manitobans were invited to phone in their voting intentions for the upcoming Manitoba election. The CBC advised that preliminary results showed the New Democratic Party marginally ahead. The final results showed that there would be an overwhelming victory for the Conservative Party. However, the final results were not aired. Will the minister responsible for the CBC or the CRTC investigate the reason
for the suppression of the final result, and report back to the House on this discriminatory practice?


Some hon. Members:: Hear, hear!


Hon. Francis Fox (Minister of Communications):: Madam Speaker, quite obviously I will be pleased to bring the hon. member's representations to the attention of the CBC.


An hon. Member:: Wait until tomorrow.


SOCIAL SCIENCE
Mr. Mark Rose (Mission-Port Moody):: Madam Speaker, my question is also for the Minister of Communications. Members of the academic and research community are concerned about the inequitable funding treatment accorded the Social Science and Humanities Research Council which deals with studies in political science, the humanities, education, economics, etc. In contrast, the 1981-1982 budget for the Science Research Council received an additional $20 million, and the Medical Research Council received an extra $10 million this year. I would like to ask the minister, since learning more about how we should function as a society should be a high government priority, to tell us whether he intends to press for improved funding this year for the social sciences area so that programs already under way will not be scrapped.


Francis Fox: Madam Speaker, I of course share the hon. member's interest in the Social Science and Humanities Research Council. I would like to point out that the funding for the Council this year was somewhere in the range of $45 million. It did receive an increase of $3.8 million, which is an increase of approximately 9.3 per cent.
It is quite obvious that the Council itself would like to receive a greater amount of funding, as would all the other research councils. The Council has prepared a plan for the next five years which will be submitted to my colleagues in cabinet in the near future.


STATUS OF FIVE-YEAR PLAN
Mark Willson Rose: Madam Speaker, I notice that the minister did not tell the House whether he intends to press for this additional funding to save ongoing programs. Since he mentioned the five-year plan for the Social Sciences and Humanities Research Council which was approved in principle in December of 1979, and which established themes and strategies for Canadian studies into the effects of modern technology on the human condition, 1
November 16, 1981

wonder if the minister can tell the House whether this plan is alive and well, or has it been buried somewhere deep down in a dark corner of the social affairs envelope.


Francis Fox: Madam Speaker, as far as the Canadian studies are concerned, the hon. member knows that the Department of the Secretary of State is running a number of pilot projects with a number of Canadian organizations interested in the promotion of Canadian studies.
As far as the Social Sciences and Humanities Research Council is concerned, it has somewhat modified its approach and, at its request, the plan will be resubmitted to cabinet.


THE CONSTITUTION
Mr. Jesse P. Flis (Parkdale-High Park):: Madam Speaker, in the absence of the Minister of Justice my question is for the Acting Prime Minister. One of my constituents, Captain Ross Stevenson, the Air Canada pilot who obtained an injunction against Air Canada to allow him to work past the mandatory retirement age of 60, is presently awaiting the December 17 appeal hearing by Air Canada and the Canadian Airline Pilots Association. Would the Acting Prime Minister tell this House, in view of the accord signed on November 5 to patriate the Constitution with a Charter of Rights and Freedoms, whether Section 15 of the charter specifically concerning mandatory retirement will come into effect immediately after the Constitution is patriated, or will there be a waiting period, and could he further tell this House whether or not Captain Stevenson will be allowed to work for Air Canada past the age of 60?


Jean-Luc Pepin: Madam Speaker, I remember looking at this case previously. I have not looked at it recently, but, if my memory serves me well, there was a difference in the retirement ages in the different airlines. This matter is the subject of agreement between the employers and the employees. The aspect of the question having to do with the Constitution escapes me for the moment, but I will look into it and speak with the hon. member on the point.


WESTERN DEVELOPMENT FUND
Hon. Ray Hnatyshyn (Saskatoon West):: Madam Speaker, my question is for the Minister of Employment and Immigration, who is the chairman of the cabinet committee on western Canadian affairs. It relates to the handling in the budget of
Oral Questions
the Western Development Fund. The minister will now appreciate that more than 60 per cent of the amount originally indicated for the Western Development Fund, some $2.5 billion, has been put out into never-never land until some time in the 1990s, as opposed to any specific indication as to spending in this decade.
In view of the fact there was some $82 million in compensation for the Russian embargo which was taken out of the Western Development Fund, would the minister tell the House whether he was consulted and whether he approved of that expenditure from this year's estimates for the Western Development Fund, in this year's budget? If so, it seems to me the minister is not doing his job on behalf of western Canadian farmers.


Some hon. Members:: Hear, hear!


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, contrary to the assertions made by the hon. member, the commitment made by the government under the Western Development Fund indicates one of the most significant commitments to the modernization of western transportation of any government in the history of this country. We are putting $1.5 billion into the modernization of the western transportation network-


Some hon. Members:: Oh, oh!


Lloyd Axworthy: -plus $400 million allocated specifically to the achievement of economic development of native people. Those two-


An hon. Member:: Answer the question.


Lloyd Axworthy: Those two objectives constitute one of the most important ways the federal government can help western Canadians achieve their ambition through a diversified economy and deal with some of the most significant economic and social issues in the west. I hope the hon. member will have the good grace to appreciate those efforts.


Some hon. Members:: Hear, hear!


Madam Speaker:: I leave it to the minister's discretion whether he should answer this question, but I am not quite sure that ministers should be allowed to answer questions regarding regional responsibilities. I know it is probably in the cabinet's special title for western affairs. I will leave it to the discretion of the minister, but I will put a caveat on that.


CONSULTATION WITH PROVINCIAL GOVERNMENTS
Ramon John Hnatyshyn: Madam Speaker, I should say, with all deference, that the minister is the chairman of the cabinet committee dealing with this responsibility.
12784

November 16, 1981
Petitions
Apparently he has not been doing too much work on that responsibility-


An hon. Member:: Hear, hear!


Ramon John Hnatyshyn: -but I will leave it to the people in western Canada to decide about that.
I would like to ask the minister about the kind of treatment western Canada has received with respect to VIA Rail. Notwithstanding his brave statements about the kind of expenditures we are to see with respect to transportation in western Canada, the minister will recall the commitment of the Minister of Finance to consult with the provincial premiers and provincial governments about the expenditure of moneys in western Canada from the Western Development Fund. That was a firm commitment.
Will the minister reassert that commitment that there will be consultations with western governments in order to set priorities with respect to expenditures, whether they be on transport or native housing, or will the government move unilaterally in the same way as the minister's colleague, the Minister of Transport, has moved unilaterally to cut 20 per cent of VIA Rail's passenger service in Canada?


Lloyd Axworthy: Madam Speaker, I am very pleased to respond to questions relating to matters concerning western Canada because I think we are taking a number of very important measures in that area. In direct response to the hon. member, I remind him of the statement made by the Prime Minister that the sooner the provincial premiers are prepared to get their own gumption up and to make statements about what they are prepared to support in the way of modernization of the western railway system, the better off we all will be, but they have been hanging in the woods. We have been waiting to hear from them as to what reforms they are prepared to support, and we will work with them on the basis of co-operation and consensus, as we always do.


THE CONSTITUTION
Mr. Andre Maltais (Manicouagan):: Madam Speaker, in the absence of the Prime Minister and the Minister of Justice, my question is directed to the Minister of Energy, Mines and Resources. Considering statements made by the Prime Minister of Canada this weekend, when he said that he was prepared to reopen negotiations with Quebec on a number of pre-conditions which he had defined, and considering the fact that the
Premier of the PQ government has apparently decided to drop the association formula, does the Government of Canada intend to await Quebec's official reply before starting negotiations with that government with a view to reaching an agreement? Second, is it still possible to recognize the PQ government as a valid or representative government-


Madam Speaker:: Order, please. I am sorry, but constitutional matters are not the responsibility of the Minister of Energy, Mines and Resources.


PETITIONS
Madam Speaker:: I have the honour to inform the House that the Clerk of the House has laid upon the Table Reports of the Clerk of Petitions, stating that he has examined the petitions presented by hon. members on Friday, November 13, 1981, and finds that they meet the requirements of the Standing Orders as to form.


BUSINESS OF THE HOUSE
Erik Nielsen: Madam Speaker, I rise on a point of order which involves the business of the House. As recorded at page 12743 of Hansard for last Friday, the government House leader said, and I quote:
Furthermore by the beginning of next week-
That is, this week.
-I shall be able to determine the business for next Thursday and Friday. Finally, the government intends to give notice very shortly of a new resolution on the Constitution, in view of the agreement concluded last week.
In Saturday's issue of The Citizen there appeared a report which seemed to be based on information from the government House leader that the constitutional resolution may well be brought on on Thursday. That was news to me. The government House leader will have heard the Minister of State for Mines today, in answer to a question by the Leader of the New Democratic Party, say that we may very well know by the end of today when the new resolution will be brought on. I wonder if the government House leader would take us into his confidence and inform us whether the new resolution is ready. If it is not, when is it likely to be ready, and when does the government House leader intend to bring it in? Will we be using Thursday and Friday of this week for debate on that new resolution?


Mr. Pinard:: Madam Speaker, I want to give the hon. member for Yukon (Mr. Nielsen) the assurance that as soon as notice of the new resolution is given, I shall send him a copy and I shall not wait until he has been informed through other channels. The same applies to my learned colleague of the New Democratic Party, the hon. member for Hamilton Mountain (Mr. Deans). When are we going to give formal notice of the new resolution? Probably at the beginning of this week, and I consider tomorrow as still being the beginning of this week. Are we going to start the debate on the Constitution on Thursday morning? As 1 pointed out, that is a real possibility, but I cannot confirm this today. I can assure the hon. member that as far as the business of the House for today, tomorrow and Wednesday is concerned, the House knows there will be a debate on the budget, in all probability there will be votes of non-confidence this evening and Wednesday evening, and I shall try to advise the hon. member as soon as possible of the order of business for the days following Wednesday. That is the situation. Once more, I would like to assure my colleagues that as soon as notice of the new resolution is given, either later today or more probably tomorrow, I shall make sure they are sent a copy of the resolution as soon as possible, for their consideration, and we shall then meet in order to try to reach agreement on conditions for a reasonable debate.


Mr. Jim Peterson (Parliamentary Secretary to Minister of Justice and Minister of State for Social Development):: Madam Speaker, the hon. member for Manicouagan (Mr. Maltais) asked a question to the hon. Minister of Energy, Mines and Resources (Mr. Lalonde) concerning the constitutional negotiations in Quebec. I was ready to reply to his question and wanted to assure him that the Right Hon. Prime Minister (Mr. Trudeau) was-


Madam Speaker:: Order, please! I am very sorry not to have seen the hon. member rise in an attempt to reply to the question. I should probably have seen him, but I was looking at the Minister of Energy, Mines and Resources to whom the question was directed. I am very sorry, but the hon. parliamentary secretary will probably have another opportunity to ask a question and I shall be very happy to recognize him at that time.



ROUTINE PROCEEDINGS


[Stage Direction]
A message from His Excellency the Governor General transmitting supplementary Estimates (C) with regard to the sums required for the public service of Canada for the finan-
Supplementary Estimates (C), 1981-82
cial year ending March 31, 1982 was presented by the Hon. Donald J. Johnston (President of the Treasury Board) and read by Madam Speaker to the House.
Yvon Pinard: Madam Speaker, following the tabling of those Supplementary Estimates (C) I wish to move-


Erik Nielsen: Madam Speaker, I believe it is customary to ask the minister introducing the supplementary estimates for his assurance that they are in the usual form.


Hon. Donald J. Johnston (President of the Treasury Board):: Madam Speaker, the estimates being tabled are in the conventional form.


Yvon Pinard: Madam Speaker, I therefore move:
That the Supplementary Estimates (C) 1981-1982, tabled November 16, 1981, be referred to the several Standing Committees of the House as follows:
To the Standing Committee on Agriculture:
Agriculture Votes 5c and 15c
To the Standing Committee on Communications and Culture:
Communications Votes lc, 5c, 10c, 15c, 10c, 30c, 35c, 50c, 60c, 65c, 70c and 75c
Secretary of State Votes, lc, 5c, 15c, 25c and 30c To the Standing Committee on External Affairs and National Defence:
External Affairs Votes, lc, 5c, 10c, L16c, 25c, 30c, 35c and L40c To the Standing Committee on Finance. Trade and Economic Affairs:
Economic Development Vote 1 c Finance Votes, lc, 2c, 1 lc, 25c and 30c
Industry, Trade and Commerce Votes lc, 5c, 10c, L41c, 45c, 55c, 60c and 63c Privy Council Vote 20c
To the Standing Committee on Fisheries and Forestry:
Environment Votes lc, 5c, 10c and 20c Fisheries and Oceans Votes lc, 5c and 10c To the Standing Committee on Health, Welfare and Social Affairs:
Consumer and Corporate Affairs Votes lc and 5c National Health and Welfare Votes lc, 10c, 15c and 40c To the Standing Committee on Indian Affairs and Northern Development:
Indian Affairs and Northern Development Votes lc, 5c, 15c, 20c, 25c, 30c, L51c, 55c, L66c and 68c
To the Standing Committee Justice and Legal Affairs:
Justice Votes lc, 5c, 10c and 35c Solicitor General Votes lc, 5c, 20c and 25c To the Standing Committee on Labour, Manpower and Immigration: Employment and Immigration Votes 15c, 10c and 15c Labour Votes lc, 10c, 15c and 25c To the Standing Committee on Management and Members Services:
Parliament Vote 5c
To the Standing Committee on Miscellaneous Estimates:
Privy Council Votes lc and 15c
Science and Technology Votes lc, 5c, 10c, 15c and 30c
Secretary of State Vote 35c
Supply and Services Vote 5c
Treasury Board Votes lc, 5c and 15c

November 16, 1981
Order Paper Questions
To the Standing Committee on National Resources and Public Works:
Energy, Mines and Resources Votes lc, 10c, 30c, L51c, 55c, 60c, 65c, 70c and 75c
Public Works Votes 5c, 25c, 40c, 50c and 60c To the Standing Committee on Regional Development:
Regional Economic Expansion Votes lcand 10c To the Standing Committee on Transport:
Transport Votes 35c, 40c, L45c, 71c, 85c and 105c To the Standing Committee on Veterans Affairs:
Veterans Affairs Votes lc, 5c and 10c


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


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. David Smith (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 3,011, 3,046, 3,048 and 3,163.


Mr. Cossitt: Will the Department of External Affairs be revising the list of those permitted to act as guarantors on passport aplications to include such additional categories as (a) Justices of the Peace (b) Commissioners of Oaths?


Mark R. MacGuigan: See reply to question No. 3,010 answered November 6, 1981.


Mr. McKinnon: Was a food service contract let for $96,793 at Sidney, British Columbia and, if so, (a) for what purpose (b) was it for food and, if so, what amount?


Hon.   J.-J. Blais@Minister of Supply and Services: DSS awarded a contract, on behalf of the Department of National Defence, to Glacier Catering and Bar Services Ltd., in the amount of $96,793. The contract was for the provision of catering services at the cadet camp at Patricia Bay, Sidney, B.C., DND provided the food.


Mr. McKinnon: Did the Department of National Defence buy rum from the Alberta Liquor Control Board at a cost of $29,400 and, if so, for what purpose?


Hon.   J.-J. Blais@Minister of Supply and Services: awarded a contract, on behalf of the Department of National Defence, to the Alberta Liquor Control Board, for the initial amount of $29,400, plus an additional amount of $1,764, for a total amount of $31,164. The rum was purchased for the Canadian Forces Base Calgary, who issues the rum to military personnel on field exercises, living under canvas, during arduous weather conditions.


Mr. McKinnon: Did the Department of National Defence place a $20 million contract with Remtec Inc. for aircraft refueller trucks and, if so, how many trucks are being purchased?


Hon.   J.-J. Blais@Minister of Supply and Services: Yes. DSS, on behalf of the Department of National Defence, awarded a contract for the amount of $20 million to Remtec Inc. for 157 aircraft refueller trucks.


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


Madam Speaker:: Shall the remaining questions stand?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Friday, November 13, consideration of the motion of Mr. MacEachen that this House approves in general the budgetary policy of the government, and the amendment of Mr. Wilson (p. 12752), and the amendment to the amendment of Mr. Rae (p. 12756).
Donald James Johnston: Madam Speaker, I rise to participate in this budget debate with enthusiasm and with a good deal of satisfaction.


Flora Isabel MacDonald: You are the only one in Canada.


Erik Nielsen: How about hope?


Donald James Johnston: The budget tabled in this House by my colleague the Minister of Finance (Mr. MacEachen) on November 12 was by no means just an ordinary budget. It is not a budget which simply closed off a plethora of tax loopholes in order to provide more tax dollars to the government's treasury and, of course, to the treasuries of those provinces with which we have tax collection agreements. It is a budget which I believe in some respects represents a philosophical
November 16, 1981

turning point in the fiscal policy of the government, a philosophy which I personally have long espoused and one which to a considerable degree inspired me to enter politics in the mid-1970s.
Fiscal policy has long been for me a personal preoccupation. I believe that the fiscal policy of a nation, both on the tax side and on the expenditure side, tells us a great deal about the fundamental values of a particular society. I have long held the belief that our tax system, the one that emerged from so-called tax reform in 1971, has remained replete with inequities, anomalies and complexities, all of which I believe have served to weigh heavily upon the morale of Canadian taxpayers and perhaps to some degree even on the morality of Canadians.
I committed some of my criticisms to writing in a book on tax reform back in 1974 because I was convinced at that time that we were moving in the wrong direction. I believe that tax reform since that time has remained important. It is as important in 1981 as it was in 1971. The budget that was tabled by my colleague, the Minister of Finance, on November 12 is a very important step in that process of tax reform, a step which I hope will be pursued in successive budgets.

Mr. Speaker, there are many fiscal matters of which I would like to speak this afternoon. While I would wish to make a detailed examination of several aspects of the budget calling for a fundamental reform of our taxation system, I shall make only one rather general but in my opinion extremely important comment.
In my own experience as a tax law specialist and in the experience of my former professional colleagues in Canada and even in the United States, it is very obvious that marginal tax rates over 50 per cent have brought some taxpayers to look for loopholes to protect themselves against what they see as an undue appropriation of their own income. These loopholes have been used as much as possible because of the complexity of our legislation and of the tax burden imposed on our taxpayers. This is a way of thinking which I understand very well, Mr. Speaker, and I spent much of my professional life creating tax shelters or havens.
Mr. Speaker, can you imagine anything less positive than these efforts by professionals to make use of the loopholes in our tax laws? However, with taxation rates over 50 per cent, Canadian taxpayers will inevitably make every effort in this regard. I am convinced that, with a fair and equitable tax system where the rates do not exceed 50 per cent, there will be a significant reduction in the efforts made by taxpayers to evade the law. It is in that spirit that I wrote late in December 1976:

There is good authority for the view that a taxpayer's resistance to the expropriation of his income by government will increase when the tax rate exceeds 50 per cent. I believe this view has been reinforced through a recent experience in the United States where the highest tax rate on income at the federal level is now 50 per cent. Recently a U.S. tax attorney advised that with the introduction of a maximum 50 per cent rate, many of his clients have
The Budget-Mr. Johnston
abandoned tax avoidance schemes and are reconciled to paying 50 per cent of their earned income to the federal government. Because of this it may well be that more taxes are in fact collected where a 50 per cent maximum rate exists.

Mr. Speaker, that is one of the reasons for my satisfaction today and, before completing this secondary point, I should like to emphasize that the review of our tax system, an extremely significant stage of which is represented by this budget, would result in the elimination of those tax shelters and other kinds of loopholes so that our system will finally be simple and fair. This would also spur the innovative spirit of Canadian businessmen and the creation of capital, thus paving the way for an economic plan from which every Canadian would derive major benefits.

I hold the personal conviction that the taxation system is the single most important element of economic growth. That growth depends upon the successful marriage of capital resources and labour and that marriage can only be brought about by the efforts of our entrepreneurs, our innovators. The tax system must contribute to the formation of capital through appropriate incentives to save. It must be the principal vehicle that brings capital and labour to the resources. The tax system must be perceived as fair and equitable by Canadians and by Canadian workers. Finally, it must contain rewards for the risk-takers, our entrepreneurs who have successfully brought Canada from the wilderness to the forefront of the industrialized countries of the world.
I believe that this budget is in many respects a major step in the direction of satisfying all those objectives. It will contribute to productivity, economic growth, job creation and reduced inflation.
In my concern for fiscal reform, I am also riding another hobbyhorse, which was another factor which convinced me, and I am sure others, to enter the political process. I am referring to the other side of Fiscal policy, the expenditure side. I was convinced before I came to this place, and I am even more convinced now that I am here, that our clients, the Canadian taxpayers, are prepared to be generous with their tax dollars provided they see value for their money. When they perceive wasteful expenditures, or if they perceive a lack of controls, or when the Auditor General of this country tells them, as he did in 1976, that their parliamentarians have lost control or are about to lose control of the public purse, then the resistance of taxpayers to taxation is increased.


Mr. Beatty:: Have you seen this ad in today's Globe?


Donald James Johnston: They take it upon themselves to exploit every conceivable tax loophole so as to frustrate what they call the insatiable appetite of wasteful big government.


Henry Perrin Beatty: $16,000 for this ad alone in today's Globe.


Donald James Johnston: Unfortunately, that perception of big wasteful government remains the perception of many of my con-stitutents and it is this same perception, I suggest, which

November 16, 1981
The Budget-Mr. Johnston
causes Canadians to call for greater government expenditure cuts.
As I shall demonstrate in a few moments, my responsibilities as President of the Treasury Board extend to a wide range of reforms in these areas in terms of the accountability and management of the public service. I have spoken at some length upon these matters in this House in the past. In a moment I shall describe some significant developments since my last report. All must be placed in the context of a firm commitment by this government to accountability and providing taxpayers with value for their money so that the perception which I referred to of wasteful expenditures which developed in the past will be eliminated. I am not asking for elimination of the perception simply on the basis of rhetoric and stated intentions, Mr. Speaker, but only on the basis of performance, which I believe we will be able to demonstrate to the satisfaction of parliamentarians and to the satisfaction of the public. We have not reached our destination, but we are well on the road.
Before I review with the House some of these initiatives and programs, I should like to refer to a specific request which is referred to in the budget speech of the Minister of Finance, as described on page 27 of the document entitled "The Budget in More Detail."

More precisely, Mr. Speaker, the Minister of Finance has asked Treasury Board to cut by $100 million the government's annual administrative and general expenses. Mr. Speaker, that is indeed a challenge which I accept with enthusiasm and upon which we have already set our sights. Without overstressing the difficulties and the efforts required to reach that objective, Mr. Speaker, I commit myself not to stop at the $100 million mark should I find ways to save more without jeopardizing the services we are expected to offer to the public. I have already been asked where we shall apply the axe to make such savings. As I said in the past, Mr. Speaker, our policy is not to use an axe but rather a scalpel. What it means is that we will scrutinize specific fields where it is possible to make those savings. By way of example I would simply mention the fields of telecommunications, printing, photocopying, travel expenses and others. We have launched several studies and I am confident that, under the guidance of experts in the secretariat and the office of the Comptroller General, my colleagues in Treasury Board and I will be able to deliver the goods. [English]
I should like to refer to the progress which the government has been making in reforming the management of the Government of Canada in general. Hon. members will recall that on March 31, 1981, I tabled a progress report to Parliament entitled "Accountable Management". That document outlined the reforms which have been instituted by the government during the past four years and, in particular, set out the
government's response to the final report of the Lambert Royal Commission.
Today I am pleased to make a further progress report to the House. In doing so, I shall speak on behalf of my cabinet colleagues and on behalf of Treasury Board, which functions as the principal management area of government.
"Accountable Management" discussed government action in relation to the royal commission's recommendations and proposals under seven broad categories. In reporting on progress today, I shall follow those seven broad categories. They are as follows: The concept of a fiscal plan; second, a discipline on the resource allocation process related to the fiscal plan; third, accountability of government to Parliament; fourth, accountability within government; fifth, accountability and efficiency in the administration of financial systems; sixth, accountability and efficiency in human resource management; and seventh, a continuing strategy for reform.
[ Translation]
Honourable members will have noted that in last week's budget, my colleague, the Minister of Finance followed a practice started with last year's budget, namely the introduction in Parliament of a financial plan covering several years. As indicated in the document entitled "Accountable Management" which I just quoted, the 1980 financial plan covered four years instead of five, as was recommended by the Lambert Commission. But in 1981 we have a five-year plan. The publication of this financial plan therefore complies with the first of the two basic recommendations of the Lambert Commission, namely that the government project over several years its profits and expenditures for specific functions. That is a first and essential step towards ensuring parliamentary control over public expenditures and it is the basis upon which we can ensure responsible management within government.
The second basic recommendation of the Lambert Commission was to conduct an in-depth review of the definition and division of responsibilities in public administration so as to provide cabinet with the information it requires to limit public expenditures, and to ensure that departments and organizations follow sound management practices to provide taxpayers with adequate value for their tax dollars.
The policy and expenditure management system described in "Accountable Management" which is being applied for the second year, has an increasing influence on the procedures followed by government in establishing priorities, and arriving at necessary compromises between departments sharing the available resources, to ensure that programs are managed according to a results oriented approach.

Hon. members will recall, Mr. Speaker, that I recently sought their reaction to the new form of the estimates which has been developed by the Comptroller General. The government intends to proceed with this very important project. Not only will it provide Parliament with financial and program information in a more useful form, but it will also provide the
November 16, 1981

basis for results-oriented management of departmental programs.
The Comptroller General has also proceeded with improvements in systems for the management of financial resources. I shall refer to these systems in greater detail in a moment.
The Lambert report and the report of the Special Committee on Personnel Management and the Merit Principle, the D'Avignon report, both recommended a major realignment of the roles and responsibilities of the central agencies in the management of human resources and proposed a series of reforms in the personnel management function.
In addressing the roles of the central agencies, the government recognizes that the Public Service Commission derives its authority from the Public Service Employment Act while the Treasury Board's authority in the field of personnel management derives from the Financial Administration Act on one hand, and the Public Service Staff Relations Act on the other hand.
A comprehensive review of all aspects of the personnel function in the light of these statutory authorities has resulted in the text of a formal agreement between the Public Service Commission as an agency which is accountable directly to Parliament, and the Treasury Board on behalf of the government. This agreement reviews the whole field of personnel management and identifies those functions over which each agency has exclusive authority, those functions for which each agency has responsibilities which have been delegated from another agency, and finally, those functions for which both agencies have shared interests and responsibilities.
In my opinion, Mr. Speaker, this represents a major advance in resolving the uncertainty on the relative roles in personnel management. This uncertainty has existed in the public service ever since present legislation was enacted. In the functions which are shared between the two agencies, it has been agreed that Treasury Board should have the lead role and that major policy statements should be issued solely in the name of the Treasury Board, with acknowledgement obviously where applicable, that the policy has been developed in consultation with the Public Service Commission. One very practical result of this is that there is to be a single Handbook for Managers on Personnel Management.
A further step is to thoroughly overhaul the personnel Management Manual of the Treasury Board and to incorporate the Staffing Manual of the Public Service Commission so that there will only be one personnel management manual in the public service. The Secretary of the Treasury Board and the Chairman of the Public Service Commission will be jointly communicating details of this agreement to all departments and to all agencies of the public service.
The agreement in question also covers the roles to be played by the central agencies and deputy heads in the administration of the new management category, the creation of which has now been completed. Of course, it is very important to ensure
The Budget-Mr. Johnston
that firm, co-ordinated leadership in career planning for this vital management resource is evident from the outset.
Also hon. members will recall that the Lambert and D'Avignon reports recommended that the whole staffing function be transferred from the Public Service Commission to the Treasury Board. The government is confident that such a drastic measure should not be contemplated at this time because it would cause a disruption for several years in a personnel system which is already heavily burdened by change. The government believes it will be far better to undertake further reforms in the personnel function on the basis of the substantial agreement on roles which has now been reached between the Treasury Board and the Public Service Commission.
In addition to this update on accountable management, I should like to report to hon. members on some activities of the Office of the Comptroller General. It is particularly important that I deal with the activities of the Comptroller General during the course of the budget debate because they are fundamental to achieving our primary objective on the expenditure side of fiscal policy; that is to say, value for money, value for our taxpayers' dollars.

To begin with, I should like to refer to IMPAC, which is short for "Improvement in Management Practices and Controls", a major initiative of the Comptroller General designed to make sure that departments conceive, implement and use sound management practices, in other words, to make sure that objectives are defined as clearly as possible, that activities are planned, that the ensuing activities are checked against those planned, and that the results obtained are assessed.
To be effective, the various steps of all sound management practices must be integrated. For instance, good control is based on sound planning and the setting of relevant objectives depends on a clear review of past experiences. From this definition, it is clear that this system is neither a new management theory nor a solution geared to special problems within the civil service, but rather a means of improving management permanently and economically. This approach requires close co-operation between the office of the Comptroller General and departmental managers in order to identify the shortcomings of management practices, conceive an integrated plan of action to correct the identified shortcomings, and implement the plan of action.

I want to stress the comprehensiveness of the IMPAC approach. In the past it would seem that concerted efforts to strengthen one element of good management tended to occur at the expense of neglecting others. Because IMPAC insists on the integrity of a department's management processes, it is essential to set priorities for improvement and to phase in the required action with a clear view of the whole context.
The scope and complexity of the IMPAC project are formidable. Let me give examples. First, at the moment IMPAC embraces the 31 largest departments and agencies of govern-

The Budget-Mr. Johnston
ment which together account for 85 per cent of total government expenditure, excluding debt payments, and 95 per cent of public service employees.
Second, the action plan of a typical department includes dozens of projects involving hundreds of person-months of effort and several million dollars, spread over three to five years.
Third, the action plan addresses problems which are inherently difficult to overcome, for instance, measuring performance in areas where the products are very hard to quantify, such as scientific research or policy formulation.
Another problem is the sheer size and diversity of the operations of many departments. This poses technical obstacles to the installation of management reporting systems in order to meet the information needs of various levels of management without becoming impossibly complicated.
Fourth, and perhaps more importantly, implementing 1MPAC depends on changing attitudes and work habits, a process which never occurs easily or quickly.
Finally, comprehensive management improvement requires a sustained act of vision and will. In the dynamic environment of the public service, with frequently changing priorities and personnel, it is challenging to keep a long-term initiative of this importance focused on the real problems of individual departments.
Bearing in mind the nature of IMPAC which I have just described, let me quickly review for the benefit of hon. members of the House what has actually been accomplished in the three years since the Comptroller General launched this initiative. First, there have been surveys of all but two of the 31 departments included in the IMPAC study. They were completed in the spring of 1980. The thirtieth was completed this spring, and the thirty-first is now underway. As I described earlier, comprehensive action plans now exist for 25 departments. They have been endorsed by the Office of the Comptroller General; six more are expected over the next couple of months.
Implementation progress varies widely among departments, as some might expect. In some we are beginning to see much improved management practices. For example, in the Department of Public Works, this means setting up the systems needed to implement revenue dependency which, as hon. members are aware, cabinet approved in principle earlier this year. For the Canadian Employment and Immigration Commission, this means action to reduce over and underpayments of unemployment insurance benefits.
In the few moments which remain I should like to refer to some of the other initiatives. Program evaluation is absolutely fundamental to good, solid management practices. This is well established. Quite recently I issued a guide to program evaluation which was distributed to parliamentarians. Time does not permit me to devote the time to program evaluation that I would like. The same is true of internal audit. It is well advanced, but again the time remaining does not permit me to give hon. members of the House the benefit of a full report on
the status of internal audit. I can assure the House that, in keeping with the recommendations which have come forth from the Auditor General and the Lambert commission over the years, we are well advanced.
I have already referred to the reform of the estimates. Of course, Members of Parliament have concrete evidence of that reform through the projects tabled in the House and distributed by me to all members. What all these initiatives have in common is strengthened accountability. Particularly in times of economic hardship governments must set an example by finding ways to do more with less.


Mr, Nielsen:: When will you start?


Donald James Johnston: The initiatives I have described today are providing Parliament and the government with the tools needed to do that job.


Henry Perrin Beatty: Convince the taxpayer of that.


Donald James Johnston: In conclusion, the fiscal management of Canada is moving ahead on all fronts.


John Horton McDermid: You cannot even keep a straight face when you say that.


Donald James Johnston: Indeed it is.


Some hon. Members:: Oh, oh!


Donald James Johnston: I should like a little order, Mr. Speaker. I hope hon. members would like to be educated on the reforms which are taking place. Fiscal management is moving ahead efficiently, creatively, responsibly and, above all, is responsive to the needs of Canadians. My colleagues and I congratulate the Minister of Finance for responding so directly to the plight of those Canadians who are suffering from high interest rates, for the thrust of restraint and deficit reduction, and for the very creative steps toward long overdue tax reform.
On the expenditure, management and accountability side, I am sure that my remarks today on the status of our ambitious government-wide reforms on financial accountability, personnel management and management practices will satisfy members that this government is well on the road to obtaining more value for the taxpayer's dollars.


Some hon. Members:: Hear, hear!


Right Hon. Joe Clark (Leader of the Opposition):: Mr. Speaker, I am very pleased to have the opportunity to take part in this budget debate. I regret the absence of the Minister of Finance (Mr. MacEachen), but I understand that he is unavoidably absent today.

I regret it in particular because I find it almost impossible to address the budget without some reference to its author, since,
November 16, 1981

unfortunately, I think one of the major deficiencies in the budget reflects the approach that has been taken to this House and to the question of the economy by the Minister of Finance.
What we are dealing with here, Mr. Speaker, is probably the most dishonest budget ever introduced in Canada.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: The Minister of Finance has deliberately cultivated a reputation as a man of cunning, a man who will never give us a straight answer. I think we on this side of the House have to say that has served him well as a minister who did not want to answer questions but, sir, a different standard is expected of a Minister of Finance; that is, a standard of honesty.
The millions of individuals whose private economic decisions make our economy falter or make our economy grow must be able to trust the word of the chief economic spokesman of government. It his word cannot be trusted, then they will delay their economic decisions, whether those are individual decisions to get new training, to seek to buy a new house, to start a business or to make major investment decisions about whether to invest in Canada or elsewhere, whether to start a megaproject or delay it. Sir, where there is no trust there is no economic progress.
While this project has done immense immediate harm to hundreds of thousands of individual Canadians, while it has done harm that is literally irreparable to many of our fellow citizens-many of the people affected by this budget will never get over its impact upon their lives-the deepest damage it does is the damage to Canada's future.
We have become accustomed to Liberal budgets which have failed to build on the creative capacities of our people or our country, and that is bad enough. What is worse about this budget is that it is so tricky, so untrustworthy, so dishonest as to make it impossible for anyone to believe the word or count on the future actions of the Minister of Finance or a government which makes him its principal economic spokesman.
That is not simply the opinion expressed by members of this House; that is the opinion of the stock market. The stock market has already registered its official response. It fell 39 points after the budget came down and now, after investors have had an opportunity to consider the impact of the budget over the weekend, it has fallen another 32 points. That is after people have read the fine print in the budget.
We know that across the country and, indeed, across the world people are sitting down this very day and reading that budget. They are reading the fine print and trying to decide whether to cancel or carry on activities which would have created jobs and growth and which might have created confidence and progress in Canada.
Some of the early decisions have been taken already, in the immediate aftermath of the budget. It is difficult to get current reports on the response to a budget which came down only on Thursday. Naturally, some of those responses have
The Budget-Mr. Clark
been in the housing Field first, the field where there is real urgency to get on with development and construction.
I regret to report to the House that in Winnipeg Mar-West has stopped plans for a 1,500 unit apartment development because of the Liberal budget brought down on Thursday night. In Vancouver, Inter-West has stopped plans for a total of 605 duplex and apartment units because of the budget brought down on Thursday night by the Liberal government. Again in Vancouver, Community Buildings has stopped a total of 261 duplex and apartment units because of the budget brought down by the Liberal government last Thursday night. A total of 460 units in London, Ontario, and 350 in St. John's, Newfoundland have been stopped because of the budget brought down by the Liberal government on Thursday night. In total, in one day the Liberal budget brought down by the Minister of Finance has caused over 3,000 units of housing to be cancelled in this country. Those were units of housing under construction before the budget was brought down; they were under construction even at a time when it was risky to engage in that kind of enterprise. Now, as its latest contribution to the housing crisis in this country, the Liberal government has brought in a budget that has caused 3,000 units that were under construction to be withdrawn from the market available to Canadians.
That is the First wave of decision, Mr. Speaker-a reversal of plans to develop things, to build things, to make this country go. That is the first wave of plans that have been changed as the result of this budget.
Other decisions like that are going to come about; that is as certain as anything we know in this House. In some cases decisions will be reversed because programs that Liberal governments introduced as incentives have been abruptly cut off; in other cases because individuals or enterprises will simply decide that they cannot invest in a country whose government they cannot trust.
As we in this House know, the trustworthiness of this government is already in tatters as a result of its breaking its word on wage and price controls and because it opposed an 18 cents per gallon increase in the price of gasoline and then introduced a 65 cents per gallon increase in the price of gasoline.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: This budget carries deceit a step further. It quite deliberately tries to fool the people of Canada about the basic purposes and impact of the budget.
Let me contrast some of the minister's claims with the truth, Mr. Speaker. He says that the purpose of his tax changes is to "improve the fairness and equity of the system." The truth is that he is providing no new tax credits for those low-income Canadians who pay little or no tax. He is cutting the tax rates only at the top income levels. He is raising taxes for all single workers who earn in excess of $17,000, including the heads of single parent families, and he has smuggled in a bundle of new taxes that hit hardest at the ordinary working man and woman in this country.

November 16, 1981
The Budget-Mr. Clark
He claims that this is a budget of restraint. The truth is that government spending will increase by 22 per cent, that this budget sucks into the federal treasury the highest percentage of annual income since 1946, the first year of reconstruction, and increases government spending on virtually every item except health and post-secondary education.
The minister says that the main thrust of the budget is to fight inflation. The truth is that he plans to collect $4.2 billion more in energy taxes next year, virtually all of which will be inflationary, and his new taxes on employee benefits will guarantee new inflationary wage demands.
He says he has a plan for economic development in the 1980s. The truth is that his plan is just another promise of a couple of studies, a new bureaucracy and a vague commitment to consultation that, at best, will take us back to the sectoral studies of 1977-78, while job destruction proceeds apace in Canada and the megaprojects remain on the drawing boards.
He told the parliamentary task force on federal-provincial fiscal arrangements that he intended to cut his obligation to the provinces by only $1.5 billion in transfer payments for health, post-secondary education, social assistance and social services in 1982-83 and 1983-84. The truth is that he was preparing to cut that obligation by $1.9 billion during that period and a further $3.8 billion during the next three years.
The Parliamentary Secretary to the Minister of Finance (Mr. Evans) shakes his head, and I can understand why he would shake his head. Canadians across this country are shaking their heads at the deceit of this Liberal budget and the degree to which they have been betrayed by a government which not only had an obligation, but which had also given undertakings to come to the aid of Canadians.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Again, the Minister of Finance says that since 1973 Canada has been second only to Japan in terms of real growth. The truth is that between 1975 and 1980 we have ranked next to last in growth, despite the fact that we supply a larger share of our own oil needs than any of the six nations with which we are compared. Those are some of the differences between the minister's claims and the truth.
Perhaps the best way to judge this budget which masquerades as tax reform and as help for the ordinary Canadian is to look at exactly who is helped and who is hurt by this budget. The list of those who benefit is very short. The ranks of those who suffer include almost every Canadian.
To start, let us look at who this budget helps. First of all, and most of all, it helps the treasury of the federal government. From March 1, 1981, to March 1, 1983, the federal government will receive-I want hon. members to note this figure-$27.5 billion more on a national accounts basis. There will be an increase in its revenues of 52 per cent over two fiscal years. Therefore, the federal government is the big winner while individual Canadians lose their homes, their businesses,
their farms and their hopes. While provinces are forced to cut back on schooling and health care, the federal government is looking after itself, taking money from the people of Canada, raising Ottawa's revenues by 52 per cent over two fiscal years.
Who else benefits? The rich who are on salary benefit. This budget proposes cuts in marginal tax rates for people with high incomes. Therefore, wealthy individuals who get most of their income from salaries will benefit from this budget. The general rule is that Canadians who earn salaries over $40,000 a year are likely to gain from this budget. They are the people who are helped, particularly if their salaries are their principal sources of income. Who else does it help? It helps deputy ministers, indeed. Deputy ministers are among the principal beneficiaries of this particular budget because they are in the category of people who are paid very well and who draw most of their income from salaries. Those are the people who benefit from the budget that was brought down by the Minister of Finance on Thursday. Almost everyone else in the country suffers.
Again, one group which is helped by the budget is the banks and other lending institutions which hold mortgages. They will be directly helped by this budget because they will get the guarantee on the mortgage renewal loans they extend to those home owners whom the government decides happen to be in dire straits. There is another small group which will be helped. It will consist of the new bureaucrats who are hired to decide just who among those home owners, farmers and small-business men in dire straits is eligible for the meagre relief the budget provides. That, by the way, is the only job-creation component I can find in this new budget. It proposes to set up a new group of bureaucrats to decide who in Canada is really in trouble and then distribute meagre pittances of money to those Canadians.
The final category of people who will be helped by this budget consists of the government's old friends, the tax accountants and the tax lawyers. They will do not quite as well as the federal government will, but they will benefit from a budget which causes most Canadians to suffer.
That is the little list, the very short list of people who will benefit from this budget which was brought down in the name of equity. It is an odd kind of equity when the highest paid public servant in Canada receives a tax cut of at least $700 a year while Canadians who are too poor to pay tax get no help at all.


Some hon. Members:: Shame, shame!
[ Translation]
The other thing for us to do now is to identify the victims. Who are they? First, the Canadians who will lose their job or who will not be hired because the budget does nothing to correct the current recession which is stifling the labour market. The main victims of the loss of job opportunities are young Canadians, people in the Atlantic provinces and Quebec and factory workers. These Canadians are penalized by this Liberal budget. Other victims include every Canadian family
November 16, 1981

that uses heating oil and drives a car. At the end of 1982 they will each have paid at least $900 in indirect taxes to the federal government since the last budget. Also, low income Canadians who have to bear an excessive tax burden are penalized by this Liberal budget, as well as renters who are facing a housing shortage with a potential black market in many urban areas of tremendous rent increases. Because of these increases, the budget discourages rather than promotes the building of rental housing in spite of a shortfall in rental unit construction in the last few years. Canadian renters will be penalized by this Liberal budget. Because the basic tax rate is reduced to $200, every single person in Canada, including single parents, with an income of over $17,000 a year will have to pay more taxes. No assistance will be offered to single people who make under $17,000. Moreover, energy costs for both groups will increase tremendously without any compensation being offered. These Canadians will be penalized by the Liberal budget. In addition, the average worker will see his real income decrease next year. For the fifth year in a row, this Canadian citizen will be penalized by a Liberal budget. [English]
I want to speak for a moment about the provision as it affects employee benefits, because I think nothing better demonstrates the lack of equity in this fraud of a budget which has the effrontery to call itself a budget of equity. The minister spoke with some passion about closing the loopholes in the tax system. I think it worth noting in passing that what are called loopholes today by a Liberal government were called incentives yesterday by a Liberal government when they were introduced by that party.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: However, there is an interesting statistic which exists in the government's own papers, the papers which were not read to this House but which were tabled. I recommend that every Canadian read the papers with some care. Fifty-four per cent of the people who will pay more because of these changes, this so-called closing of the loopholes, earn less than $30,000 a year.


Some hon. Members:: Shame!


Charles Joseph Clark: What is even more shocking is that 22 per cent of the people who will lose money as a result of this Liberal action earn less than $ 15,000 per year.


Some hon. Members:: Shame, shame!


Charles Joseph Clark: The benefits of which they take advantage are principally the employee benefits on which this government has come crashing down. Let us take a look at those employee benefits. Every worker whose employer contributes to Blue Cross will now have to pay a new Liberal tax on Blue Cross. Every worker whose employer provides a dental insurance plan will now have to pay a new Liberal tax on dental insurance. Every worker whose employer provides subsidized lodging, board or transportation to attract a work-force to remote areas
The Budget-Mr. Clark
will now have to pay a new Liberal tax on those employee benefits. Every salesman or saleswoman whose company provides a company automobile will now have to pay a new Liberal tax on that company car. Every worker-


James Scott (Jim) Peterson: What's the matter with that?


Charles Joseph Clark: I am asked by the well-to-do lawyer, the Member of Parliament for Willowdale (Mr. Peterson), what is the matter with people such as travelling salesmen, women selling real estate, where they can sell it in this country, often earning a second income to keep families going, being unable to claim cars provided by their companies as an employee benefit, the only benefit that allows them to work? What is wrong with that is that the Liberal measure will stop these people from working, or will be imposing a new tax upon low-income Canadians. That is what is wrong with that.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: I can understand why the lawyer member from Willowdale is concerned about this. He is probably one of those who flies by government JetStar across the country either as a parliamentary secretary or as a guest of the government. These are untaxed government JetStars. Indeed, one of the few groups of people who are not subject to tax on employee benefits are ministers of the Crown and parliamentary secretaries who fly back and forth across the country on government JetStars, three at a time into the airport at Winnipeg.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: The Liberal party thinks it is just fine. We hear a great deal of heckling from the minister of state responsible from time to time for finance and from the government side. They are all for Liberal taxes on Blue Cross, for Liberal taxes on dental care and for Liberal taxes on automobiles used by travelling salesmen in the country. But what they want to protect are cabinet ministers who fly one JetStar at a time to Winnipeg, often for Liberal party purposes.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: We are not finished with the list of people who are affected by this new Liberal tax on employee benefits. The language of the law is not quite clear in the documents brought down. We will have to wait and see what it is as we get into more debate, but it occurred to me on the basis of what is available in the documents now that every worker whose employer maintains a daycare facility may now be forced to pay a new Liberal tax on daycare in this country.


Flora Isabel MacDonald: Shame.


Charles Joseph Clark: It also appears that every worker who is let go from his or her job may now have to pay a new Liberal tax on severance pay as a result of the budget brought down by the Minister of Finance last Thursday night. Those are some of the people who will have to pay.

November 16, 1981
The Budget-Mr. Clark
There are other victims of this budget brought down last Thursday night. There are the small business proprietors who used the Small Business Development Bond to get capital below market rates to expand their enterprises and provide new jobs in Canada. They will now be able to get capital only if their businesses are about to go into bankruptcy. It is no longer a development bond, it is now a small-business survival bond, and a group of bureaucrats, the only new people hired by this government, are going to decide who gets to survive in the small-business community and who is forced by Liberal economic policy to go under.
Among the others who suffer from this budget are the poor who pay no income tax. They will obtain no new benefits from this budget while the burden of indirect energy taxes will continue to rise and health services may deteriorate because of the reductions in established programs financing. Those low-income Canadians across the country are going to be hurt by the budget that was brought down and they will be hurt directly.
Again, the reductions in the established programs financing will also increase pressures for lay-offs at hospitals and postsecondary institutions across the country. People whose jobs are in jeopardy because of this budget brought down on Thursday night are among those who will suffer.
Young people who will not be able to find a job may not be able to attend community colleges or universities because the established programs funding reduction may result in higher tuition fees or in a shutdown of departments or programs in institutions close to where they would attend. Those young Canadians are in need of training so they can help build our future. Those young Canadians will suffer and be hurt because of the budget brought down by this Liberal government last Thursday night.
Farmers will see the energy portion of their costs go up while commodity prices fall and the grossly inadequate financial assistance provided by the budget is available only after farmers are in "financial distress". Therefore, most of the farmers in Canada will suffer as a result of the budget that was brought down.
Home owners who lost their homes or were forced to renew mortgages before September 1 at rates which sharply reduced their standard of living will get no help at all from this government. They, too, are people hurt by the budget that was brought down last Thursday night, despite all of the empty promises made by the minister responsible for housing. Of the 920,000 households renewing mortgages after the cut-off date at sharply higher rates, less than 2 per cent will get any help and they will have to take on additional debt burdens before they get that help.
Let me deal with the most cruel deceit of all in this deceitful budget, namely the minister's claim that it helps those Canadians who are suffering directly from the impact of this government's own high interest rate policy. I think it important that every Canadian home owner, every Canadian small-business man and every Canadian farmer know exactly what this government is doing to them by this budget which increases so
dramatically the revenues of the federal government and increases so dramatically the hardship of the ordinary, average Canadian.
Every member of this House knows the dimension of the crisis facing Canadian home owners. We on this side of the House have been raising the matter day after day through questions, through petitions and through demands for action from the government. More than 900,000 of our fellow Canadian citizens are facing mortgage renewal within the next 12 months, a period during which, by the minister responsible for housing's own figures, interest rates will remain at or near their present punitive levels. Even the minister responsible for housing, who by now should be the resigned minister responsible for housing, admits in his own department's documents the following:
-mortgage interest rates have now reached the point where it cannot be argued that the incidence of hardship of renewal is minimal.
It cannot be argued that that hardship is minimal. That is the minister's own statement. There are 900,000 Canadians facing what the minister admits is more than minimal hardship. And what does the government offer? By its own figures, it proposes programs that at the maximum will affect some 12,500 families.
We have heard a great deal about dire straits, Mr. Speaker. As I travelled across the country through community after community, people kept telling me that their community's name had been changed to "dire straits". The people from Kelowna came to me and told me that Kelowna is an old Indian word for "dire straits". We may not know exactly where "dire straits" is, but we now know the population. The population of "dire straits" is 12,500 people, and that is all. That is the only group of Canadians in danger of losing their homes which this government proposes to help.
At most, one out of every 75 Canadians facing mortgage renewals at these astronomical rates will get any help from this government. One out of 75 is barely a third of the almost 40,000 Canadians which the minister responsible for housing, again in his own documents, admits already have to pay well over 30 per cent of their family income in mortgage payments. Again, if I might, let me quote what the minister said in speaking about these people. He said:
Their choices are to pay a very large proportion of their income to retain their house, try to sell their home or just walk away and face foreclosures.
This government has sealed the choice for two out of every three of those Canadians. Those Canadians can either sell or walk away from their homes.
But what about that minority which the government says it is going to help meet soaring mortgage costs? For most of them the government, in fact, is providing no help at all. It is saying to them: "You go deeper and longer in debt by adding additional interest costs to your mortgage, and if you then find you cannot carry that kind of debt load, we will bail out the lender." That is exactly what the so-called guarantee program is about. It is not a home assistance program at all; the government has brought in a bank protection plan.
November 16, 1981

We have all heard the Minister of Finance during the past couple of weeks waging his phoney war of words against the banks. Then he brought in his budget, the budget in which he could have done something about the banks he was criticizing if he had been serious. He did do something; he protected the banks while sentencing thousands of Canadians to the almost certain loss of their homes.
I have just been handed a note, Mr. Speaker, which states that the stock market has gone down today by some 50 points. That is a total drop of 86 points since the MacEachen budget was brought in. That gives us an indication of what the budget has done to the confidence of those people in Canada whose confidence is essential if we are to continue to grow, to provide jobs and to realize the potential of this country.

And now, Mr. Speaker, I would like to comment on the situation of renters. Let us see how the government is helping tenants, a group that will become even larger when thousands more Canadians will be obliged to leave their homes and move to apartments. In his own documents the minister responsible for housing says that 105,000 Canadians are obliged to spend more than 30 per cent of their disposable income on housing. One reason is the housing shortage that exists in practically all Canadian cities. According to the government's figures, vacancy rates are at their lowest levels in five years. The government's response is to provide loans for exactly 15,000 new rental units next year. This does not even cover the requirements of our major cities. What about requirements throughout the country? As a result of these loans, the average rent for these units will be about $600 per month. To make matters worse, it seems the Minister of Finance is taking away the MURB program with the other hand. The result will be a reduction in the amount of capital available for the construction of new rental units, far beyond the 15,000 units being offered.
Because of this government and this liberal budget, not more but fewer new rental units will be built next year. It is not exaggeration to say that because of these liberal policies, the very existence of the housing industry in Canada could be threatened. This is a budget that is leaving hundreds of thousands of Canadians in a truly desperate situation. To all Canadians on low or fixed incomes, who are faced with massive increases in energy and housing costs, the budget does not offer a penny's worth of assistance. For all Canadians to whom the Minister responsible for housing said to wait until the budget was brought down before deciding what to do with their homes, the message is now very clear. As the minister said so succinctly: Sell or drop the whole thing. To all small-business men and to farmers whose way of life is being threatened, the budget says: Sink or swim, we are not going to help you.
The Budget-Mr. Clark

For small-business men and farmers on the verge of bankruptcy as a result of this government's high interest rate policy, the story in this budget is sadly the same. The minister pretends to hold out a helping hand. That helping hand, it turns out, doubles into a fist to sock them in the face. The minister pretends to extend the Small Business Development Bond program to unincorporated businesses and farmers. In fact, he has gutted that entire program and virtually cancelled it. He now limits access to the program to those small businesses and farmers which the minister describes as being "in financial difficulty". It is no longer a development program at all. There is no longer access to that program for any farmer or small-business man who is in a position to develop or expand his operation. Access to that program is now available only to those who are bleeding to death financially. It is just the kind of business you would expect the banks to make even subsidized loans to. What this budget offers them is not a development program but a band-aid so that they can go on bleeding. For a measurement of the effectiveness of this program you have only to look at the government's estimate that it will cost the treasury only $20 million in the next two years compared with $200 million now. That means the government anticipates approximately one tenth as many loans under this program as there has been to date.
The impact on agriculture is as severe. There has been a proposal to increase the funding of the Farm Credit Corporation to about one tenth of the amount that our party proposed. We have done a quick calculation as to how many farmers will benefit from those Farm Credit Corporation lending arrangements. How many farmers will benefit by aid and money from the Farm Credit Corporation? The total number of farmers across the country who could benefit from Farm Credit Cor-portion aid is 225.
The small business development bond, with its strict limitation of aid to people who are already almost out of business and on the verge of bankruptcy, will benefit a pittance of perhaps 350 farmers. That means to the Canadian farming population, to people who keep this a food-producing nation and who have borne the cost and difficulty of trying to compete in inflationary times longer than most of us, that this government, whose green-hatted minister spoke through that green hat so eloquently about help that would be available to them, proposes to extend help to exactly 575 farmers across the country and the rest can go broke.
In addition, farmers could be among those Canadians who will be severely affected by changes in the averaging provisions brought in by this government. Farmers and others respond to incentive in a country like Canada, and do not seek out loopholes.
The minister spoke fiercely of closing loopholes. He spoke about it with all the rhetoric of someone embarking on another crusade. He forgot to mention that most of what he called loopholes were written into Canadian tax law by governments of which he was a member. Those governments called them incentives at that time.

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The Budget-Mr. Clark
I will not read these into the record today but I have available quotes from the Hon. Edgar Benson, Donald Macdonald and John Turner when they introduced these very loopholes the Minister of Finance is today crusading against. When these architects of Canadian tax loopholes introduced them, they were not called loopholes. They introduced them because they believed they would help Canadians go out and invest in the country, take risks, create jobs and make the country grow.
This House of Commons will have to scrutinize very carefully just what the effect of this part of the budget will be. It is my suspicion that it was designed by people who have an admirable zeal against abuse but an abysmal understanding of how these incentives are used by ordinary Canadians to make the Canadian economy grow and create jobs and opportunites for citizens across our country.
One example of this is the change in the capital cost allowance. This will yield the government, according to its own figures, almost $1 billion in new revenue. When the Hon. John Turner introduced that proposal, of which he was the architect, it was to stimulate Canadian jobs in the Canadian manufacturing industry and to help smaller enterprises across the country get on with the work of making Canada grow.
We know this change in the capital cost allowance will bring a billion dollars to the government in the first year, but we do not know what damage it will do to the economy. Before this Parliament approves the disintegration of that incentive we will want to know what damage it does to the Canadian economy and not just simply the richness it adds to the already fat federal treasury. Other members will want to pursue this question. I simply want to remind the House again that what the government now calls loopholes were very recently called incentives.
This budget hits dental plans and health plans in Canada and it may well hit daycare. It hits incentive to businesses which want to expand in this country. This budget, in the name of the crusade against incentive, may very well cut deeply into the capacity of the nation to grow.
Not only are health and dental plans affected, but this budget seeks to destroy employee share purchase and profitsharing plans. It seeks to destroy them and undercuts them. What is the logic that causes the government to take a position in the budget against employee share purchase plans and employee profit-sharing plans? It makes it more difficult for Canadians with no pension plans to put money into retirement programs like RRSPs. Why? What is the logic of that in a society like ours? Even for this government of so-called economic nationalists it reduces the incentives for Canadians to invest in Canadian equities. It ends special allowances, at the end of next year, for those Canadians willing to work to develop our north. It makes every Canadian immigrant a second-class citizen when it comes to providing financial help to his or her family. As I indicated, it comes down hard on company automobiles used by all those "rich" Canadians like salesmen and local managers.


James Scott (Jim) Peterson: You are wrong.


Charles Joseph Clark: The parliamentary secretary tells me I am wrong. I will make a deal with him. If I am right and he is wrong, he can vote with us against his budget.


James Scott (Jim) Peterson: Will you vote with us if you are wrong?


Charles Joseph Clark: The Minister of Finance was on the television program "Question Period", and he was asked whether we are in a recession. He used a rather technical argument about not having two quarters together to indicate we are not in a recession yet, but he gave everyone to understand that he is working on it just as hard as he can and that he will have us there very quickly. Indeed, this is a recession budget. This is a document which not only pulls the economy down but also pulls down the state of enthusiasm of Canadians about our potential in this country. That is the stark reality of this budget. It was produced at a time when virtually every economic indicator available to the minister-growth rates, unemployment rates, the CPI, inventory and export figures, consumer confidence measurements-told him that our economy already was sliding into serious recession. Even his position of a year ago to do nothing and hope that the Americans would pull us out was no longer sustainable. His own documents forecast poor economic performance south of the border; yet, facing all that evidence, the minister offered nothing at all to make things better and a great deal to make things worse. Canadians are entitled to believe that this minister's real policy is that there is nothing like a good depression to correct economic problems.
As bad as the economic implications of this document might be, in some respects it is even more depressing for what it does to the deep and essential values of our society. Those of us on this side of the House and, I believe, the vast majority of Canadians believe that the ultimate strength of our nation lies in its people and in the energy and enterprise they bring to building their lives and, by building their lives, helping to build the country. Most Canadians live with a faith in individual responsibility and initiative, and they hope that if they are responsible and innovative in their own lives, they will be encouraged and even rewarded for their effort.
This depressing budget offers neither encouragement nor reward. Its only winner is a government which continues to claim more and more for itself. What is so shocking about this is that its message to the people of Canada is almost: "Why bother?" Why should individuals bother? For a young couple, why bother to scrimp and save for a home of their own? This government does not care if they keep or lose that home. If you are a small-business man or a farmer, why bother to put your life savings, your work and your dreams on the line? This government has no real commitment to you. If you are an entrepreneur who wants to build something for yourself and your country, why bother? This government has no direction to offer and no vision of a country in which you can join and be a part.
November 16, 1981

All those values which have built this country in the past, and in which many Canadians still believe, are shut out of this budget and in many cases are cut off by this budget. [Translation]
Finally, Mr. Speaker, I would like to address my comments to the backbenchers on the government side. They have a crucial role to play. We on the opposition side can fight the budget and we will do so with all the means at our disposal. However, only the Liberal backbenchers can prevail upon the Minister of Finance to do the only reasonable thing, which is to withdraw this document and substitute for it a budget that is worthy of Canada. I am not speaking glibly in putting this challenge to the members on the opposite side. I am challenging them because, on a matter as important as the constitution, some of these members said they were prepared to defend a principle in which they truly believe. I now say to them that this budget must be changed because of the harm it is doing to Canadians.
I know that many members on the opposite side are aware of the plight of the people we are representing here. They know because they can see what is happening in their own ridings, what Canadians who are trying to hold onto their homes, farms and businesses are going through. They know that Canadians with low incomes and pensions are in great difficulty, and that it will get even worse when they try to cope with rising energy costs and other price increases. They know, because people tell them and because they can see for themselves that Canada urgently needs an economic policy that will help people to get organized and to know where they are going. The government members know perfectly well that none of this is offered in the budget. If they want to join forces with us, with our party and with the party on my left, we can force the minister to change his budget. For Canada's sake, I ask them to join us in this request.

In his remarks on Thursday night the minister as much as confessed that for the last 18 months this government has been preoccupied with the Constitution and with the question of energy. He intimated, in his view at least, that those problems were over for Canada. In so far as the Constitution is concerned, we certainly hope it will be possible to find a way to resolve that question, and we hope the government will consider realistically some of the impacts its policies are having on energy policy in the country. The minister intimated that for him at least that preoccupation was passed, and he raised our hopes that there might now be a willingness on the part of this government to address the question which the great majority of Canadians believes is the principal question before the country, and that is the question of the Canadian economy, how we can get it growing again, how we can stop Canadians from experiencing personal disaster and how we can stop the country from experiencing national disaster.
In presenting his budget last Thursday night the Minister of Finance had a rare opportunity to provide some leadership to
The Budget-Mr. Broadbent
the country. As a result of the energy agreement-the details of which are obviously controversial-the Government of Canada will have massive new revenues of about $55 billion over the next five years. Those revenues would be sufficient to reduce the deficit and provide real aid to those Canadians in need and to build in or maintain incentive to the private sector, which has always been the engine of growth in this country and will continue to be the engine of growth, unless this budget drives entrepreneurs away or drives the entrepreneurial spirit away from those who remain in the country.
Instead of that response to the great opportunity for leadership, what we got was an attempt to fool Canadians. We got a budget which was a trick. It was a dishonest document designed to pretend that there was action and designed to pretend there was reform. But it was in fact a budget which will impose an unbearably hard burden upon countless average Canadians and has as its principal purpose the enrichment of the federal government. This budget sells our country short. We need in Canada now incentive to investment so that those Canadians who want to go out and take risks and make the nation grow will have the encouragement of their government to do so rather than being stopped by that government from doing so.
In a country like ours, the future of which lies in a competitive edge in the world, we desperately need much more investment in research and development. We need help for Canadians who want to go out and find job retraining so that they will have skills which suit the new decade that is developing. We need policies to encourage export promotion. We need policies to encourage the productive side of a country which has always been immensely productive when its government encouraged its people to take advantage of the resources that are here. However, what we need most of all is a sense that the government is facing our economic situation honestly and dealing with it seriously. We have none of that in this budget. It is a document that is inaccurate; it is a document that is inadequate; it is a document that is dishonest; it is a document which should be either withdrawn or changed fundamentally.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, we are here at 4.30 in the afternoon on the second day of the budget debate. We just listened to the Leader of the Official Opposition (Mr. Clark). There are in Canada more than a million unemployed, inflation is running at about 13 per cent, farmers are losing their farms, the stock market is dropping rapidly. And where is the Minister of Finance (Mr. MacEachen)? Where is the cabinet?
Today during question period, I repeat the second day of the budget debate, when members of both opposition parties ought to have had an opportunity to question the Minister of Finance, where was he? Where is he now for this debate? I will tell you. He is five minutes from the House of Commons. He was there at the noon hour. He is having a private briefing with a limited number of reporters instead of being here in the

November 16, 1981
The Budget-Mr. Broadbent
House of Commons to answer questions on the budget and listen to important speeches on this side of this House. Nothing can illustrate the arrogance and indifference to the people of Canada better than the absence of the minister from this crucial part of the debate this afternoon.
Having said that and having heard the budget last Thursday night, in terms of its content, in one sense at least I can understand why the minister is not here. Except for the 45,000 Canadian taxpayers who earn more than $100,000 a year and who will save $5,000 as a result of this budget, this budget is one without help, without heart and without hope for the people of Canada. To put it simply and accurately, as I shall try to develop in my comments this afternoon, this budget guarantees that Canada will not only have a severe but also a prolonged recession in the coming years.

In recent months the unemployed, wage earners, renters, home owners, young and middle-aged, had been hoping that their government would take measures to lighten their burden. But this government is bankrupt of ideas. It operates in a complete vacuum. They blame everybody else except themselves, of course. It is the fault of the Americans, the international situation, the angels and so forth. Everybody is responsible except the Liberals. And yet, other countries have succeeded in setting up original programs which have already paid off. I am thinking of France, for instance. That country does not have the same resources as we do, not by a long shot. And yet, it innovates by adopting grant programs and tax credit legislation for small and medium-sized businesses hiring youth; the state is thus creating jobs for young people. The French model is not necessarily fully compatible with the Canadian situation, but it does show that, through imagination and hard work, it is possible to get out of an economic stalemate.

Consider the problems and then think of the budget in the context of those very real human problems. First, the standard of living. For the past four years, Canadians have seen wages and salaries lag behind price increases. According to this budget, we are going to have a fifth year in a row of the same experience, a record sequence of years since World War II in which the standard of living of Canadians is going to decline.
Consider unemployment. For over three years, more than a million in real numbers, men and women of all ages who have wanted to work, have been unable to find a job. According to this budget, that situation is going not only to continue in 1982, but will get worse in 1983 and still worse in 1984. The most optimistic forecast found in the budget is that by 1985 we might finally begin to see a decline in the unemployment levels.
I want to stress that this budget is cause for despair, not simply for the unemployed men and women. It is also a matter of despair for all those men and women who are currently employed who feel quite insecure because of the economic
forecasts that are in the budget. They may have a job today, but they are appropriately apprehensive that they may lose it tomorrow.
In addition to the people who have lost their jobs or those who think they may, there are the parents of young men and women who this year are about to finish high school or a post-secondary education of some kind and will be looking for jobs. Those parents are very insecure about the prospect of their children being able to get a job in the coming year.
The concern, the insecurity, the despair is real in Canada. As leader of the New Democratic Party, it is entirely justified, I regret to say. One need only read the budget with some care to find that. There is not a single job-creation program in the budget for all of those people who are concerned.
The point is that our Minister of Finance thinks, and I use that term loosely, that Canada needs a recession to beat inflation. He is determined to inflict that recession upon us. He is going to sacrifice the production of goods and services that would be helpful in bringing down the level of prices if products were bring produced as well as provide jobs. He is also sacrificing the dignity that comes from work which is possessed by men and women who have a chance to contribute to the wellbeing of other people in society by their labour.
Quite apart from the lack of economic activity and the effects on human dignity with the perpetuation of this planned unemployment, which is what it is, I want to emphasize in my speech, and suggest some solution to it, that this approach is wrong economically. One might, under very peculiar and regrettable circumstances, allow for the kind of situation I have just described if it were necessary and if it were going to produce beneficial results down the road. I want to argue today that it is a profoundly wrong economic approach.
I would have hoped that after two years of this policy of high inflation rates related directly to high interest rates it would have been sufficient for the Minister of Finance in preparing this budget to come to his senses and change direction. I would have hoped he could have seen what Margaret Thatcher, by pursuing the same policies in England for three years, has inflicted upon the people of Great Britain. I would have hoped that he could see day after day what these policies under President Reagan are doing in the United States, and even that radical journal the Wall Street Journal has called into question recently the financial appropriateness of this approach to the economy.
Imbedded in the heart of the budget is this economic approach that is dependent on high interest rates that leaves unstated, but is there nonetheless, that if American interest rates increase, as a number of the long range forecasters are predicting, as surely as night follows day the Government of Canada, the Liberal government, will allow interest rates in Canada to continue to increase.
Whatever happened in the United Kingdom, United States and, importantly, whatever has happened in Canada as a result of this high interest rate policy has had no bearing on the arid,
November 16, 1981

academic, intellectual approach that is an arid, intellectual approach devoid of thought. It is an approach devoid of actually looking at the experience of what has happened in other countries.
Consider the impact of high interest rates on farmers. I talked to some farmers a short time ago in Saskatchewan. They told me directly how this interest rate policy affects them. Again, I should like to stress that I am not talking about the human impact. That is a fundamental concern because the Liberals like to boast that they are the pragmatic realists, that they are the competent managers of the economy.
I should like to deal with that issue in their terms. I asked the farmers, "Tell me directly what is happening with high interest rates in terms of its impact on you, as an economic unit, if you like." I received the following elementary points that should be of concern to the government. First, they said: "If we have to buy our machinery, whether it is made in Canada or imported from abroad, the high interest rate situation, the carrying charge that we have to pay, is just as bad". Their costs of production rise. Or they said to me: "If we have to carry inventories over the winter", which they do, "we have to pay 20 per cent plus." That also increases their production costs.
More often than not, the farmers of Canada are unable, for a variety of reasons, to pass their cost increases on to the consumers. They have to absorb them directly themselves and, therefore, the farmers' families suffer. But where a farmer can pass the increase on, and no one will blame him for it, the result is higher food prices for Canadian consumers. That is the result of high interest rates for the farming sector.
What has the government done? It has not changed the interest rate policy, and I will return to this point in a minute. It has pretended it is providing a solution for the farmers in difficulty. What is it, Mr. Speaker? In the budget the government will lend an additional $50 million at moderate interest to farmers who are on the brink of bankruptcy; but the Farm Credit Corporation's total lending budget will now represent nearly 2.6 per cent of the debts that Canada's farmers now owe. There will be no way for new farmers to expand or purchase needed equipment. There simply will not be enough money to keep more farmers from bankruptcy. That is the reality of the kind of assistance that the Liberal Party is prepared to provide for our farmers in difficulty.
Again from the point of view of economics alone, consider the small businesses. Before Parliament resumed, I was in Newfoundland where I visited Corner Brook and St. John's and, more particularly, the small community of Baie Verte. I should like to suggest this afternoon that Baie Verte is a microcosm of everything that is happening to the Canadian economy. In that community there are two mines that will close down. This is directly related to the interest rate factor.
The week before I visited Baie Verte I heard that one of the mines was to close because the markets in western Europe experienced a temporary turndown. Under normal circumstances, a mine or any other business can carry its inventory over a period of time until business picks up. It is particularly
The Budget-Mr. Broadbent
interesting for this mine because it had increased its productivity by some 50 per cent in the past three years. It had invested new capital in the mine so that it would become more efficient. The ore body was good. However, the markets were down and it was paying, if I recall correctly-I know this is the framework of the loan, anyway-some 25 per cent to the banks. Its line of credit ran out. The banks shut the mine down. Several hundred employees were laid off as a result of high interest rates. These people were laid off from an efficient mine that could have continued to employ people and that could have realized a profit for the owners if a situation existed where there were normal interest rates and had the owners been able to survive another few months.
Approximately two miles up the road was another mine. The day I arrived I heard that it was to shut down. I think it is due to be shut down by Christmas. This mine illustrates a different point. It was not losing money temporarily; in fact, it made a profit of $23 million. I said, "Why would they be closing down if they are making a profit?" I talked with the trade unionists, the mayor of the town, community representatives and the business people responsible for the mine. What did they tell me? They said, "Well, yes, we made $23 million profit, but if we take the $23 million and put it in the bank, we can get a 20 per cent return on that on a long-range investment without taking any risks at all in the marketplace, which we might have to do if we carried on with our mining business."
The situation of that one community is a good illustration of the lay-offs in Ontario, Quebec, British Columbia and elsewhere in Canada. On the one hand you have small businessmen who cannot carry inventory and will be forced into bankruptcy as a result of high interest rates, and on the other hand you have businessmen with capital to invest, but because they are not crazy they think it is more sensible to invest their money in the banks than to create jobs for Canadians. It is time to put an end to this absurd high interest rate policy, Mr. Speaker.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Then we come to the issue of home owners and renters, and that is perhaps the single most important category of people that certainly have been discussed in recent weeks. This group includes every Canadian, it seems to me, as the Liberals know. One is either a home owner or a renter. The government should be able to come to grips with that problem.
What has the budget done for these people? According to a document that we obtained some weeks ago, more than 100,000 Canadians are in serious difficulty in the coming year because they might lose their homes. That figure has moderated somewhat because interest rates and mortgage rates, which the government has allowed to follow market patterns, have decreased a little. However, the reality is that there are thousands, and if not 100,000, something close to it, facing serious difficulty. Why are they in serious difficulty? It is because they have to increase mortgages that are up for renewal.

November 16, 1981
The Budget-Mr. Broadbent
This past weekend I was in Calgary and Saskatoon. In both those places the average increase in a mortgage renewal comes to $250 to $350 a month. To put it another way, $300 a month is $3,600 a year, and that represents a decline in one's living standard by that amount.
Mr. Cosgrove and the Liberal government say: "Oh well, there have not been many people who have experienced foreclosure". Of course not, Mr. Speaker, because the people of Canada, men and women who have put their life savings into their home, will not go through foreclosure. What they will do is take on an additional job and start to work 50 or 60 hours a week. Or if one partner in a marriage is not working, he or she will go to work. In some cases they have cut back on the kids' clothing budget or cancel vacations. Or as my colleague says, in most cases right now they cannot get another job because another job is not available. What does the budget do for them? The Right Hon. Leader of the Opposition and we were correct. It will provide assistance for some 2 per cent of the people faced with the terrible situation of losing their homes.
I should like to elaborate on how the government will provide this assistance. Are they doing it through our financial institutions? No, they will do it through loan guarantees provided by taxpayers, but they will only do it after, for example, a family with a mortgage of $50,000 who cannot keep its home defers the mortgage payments and goes more deeply into debt with the bank. Under this scheme, if one has a $50,000 mortgage and accepts the budget's recommendation, after paying for an entire year one will owe more on his house than he owed on the date of his initial payment. The government in its generosity to 2 per cent of the people threatened with losing their homes has forced home owners to become tenants in their own homes or permanent debtors, but has offered a guaranteed profit program for the banks.
Our solution differs from that of the government and the Conservative Party and is very clear in its difference. One group which has done very well with inflation is the banks of Canada. In the first nine months of this year the five major banks have had a profit increase of $1.5 billion. We must remember that 97 per cent of the mortgages in Canada are held by the banks, the trust companies and the insurance industry. As a democratic socialistic party approaching the banking system, in the housing crisis in particular but not restricted to the housing crisis, we say that in a mixed economy the banks can make profits in certain of their activities. It would be ludicrous from an economic point of view to offer a counterargument. Some of our cabinet colleagues across the way can afford a $175 per plate dinner in Toronto to raise money for the Liberal Party. If they or any Canadian wants to borrow money to go on holidays in Florida or elsewhere, to purchase mink coats or to put in swimming pools, let the banks charge them what they want. But when there is a housing crisis in Canada and according to the minister some 100,000 Canadians from coast to coast are threatened, since the banks had a $1.5 billion profit in the first nine months of this year,
surely it is time to think about what the Bank Act provided before the Liberals changed it in 1969.
Before 1969 the Bank Act fixed mortgage moneys at 9 per cent. The banks put up mortgage moneys; the ceiling was 9 per cent. Then it was changed. At that time one party in the House opposed the change-the NDP. The then minister of housing, Mr. Paul Hellyer, spoke in the House. I remember very vividly what he said. He said that they wanted to take out of the Bank Act the principle which set the then ceiling of 9 per cent. Also he said that they wanted to introduce what was then called for the first time the roll-over principle for mortgages. There used to be long 20 or 25 year mortgages. Mr. Hellyer for the Liberals said that they wanted to get rid of it and that it was being done for home owners. He said that was in their real interest.
Then he did two things. He took off the 9 per cent mortgage ceiling and allowed the banks and other financial institutions to put out mortgages which were renewable every five years. To those of us on this side who said that that would only guarantee the profits of banks, Mr. Hellyer said that we were wrong and, "There you are, you predictors of gloom and doom." He said that if the government introduced the roll-over principle there would be a great influx of mortgage money, that mortgages would come down and that home owners would benefit.
I should like to indicate what has happened with the rollover principle. Ever since it was introduced the banks of Canada have been rolling over home owners in the country; that has been the result.


Some hon. Members:: Hear, hear!


John Edward Broadbent: We would say to all Canadian families who have to renew their mortgages at 18.5 per cent and upwards that they ought to be able to renew them during the next six months at the rates they are presently paying. The financial institutions can afford to absorb that. This is my first point. Second, we want to reintroduce the principle of social responsibility into the banking system. A New Democratic Party government would do the following within 24 hours. We would change the Bank Act and make it obligatory for banks to put up mortgage moneys at a level which average Canadian families can afford.
In terms of renters, if anything, the situation for renters in Vancouver, Toronto, Montreal, Halifax or any urban centre will be worse than the situation for home owners next year. What has this imaginative Liberal government done? Has it indicated that there are more than one million unemployed in the lumber and construction industry, in the furniture, refrigerator and stove manufacturing industry, and that we should be doing something to stimulate employment? If the government had even thought that way, the conclusion would be obvious.
The government has announced that it will provide 15,000 additional units-its big increase-over the next two years. This will not even meet the needs of Vancouver, let alone all of Canada. The NDP say that with the present unemployment


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The Budget-Mr. Broadbent
rate and with the housing crisis faced by human beings who need accommodation, there should be a massive increase in the Canadian housing budget to provide homes and rental accommodations for those who need them. Of course, this would provide jobs for the Canadians who would be building them.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Now I should like to deal with the interest rate argument in more detail than it has been dealt with in the past. When I was speaking at my party's convention in Saskatchewan, I was pleased to hear the Premier of that province say publicly that he was in agreement with what we had said about exchange controls. We think they are necessary now. I want to make the argument for them.


Mr. Blenkarn:: I want to hear this.


John Edward Broadbent: I hear a member of the Conservative Party saying that he wants to hear the argument. I make the argument for the benefit of people on both sides of the House, and I should like to hear their replies. The Minister of Finance and the Governor of the Bank of Canada, as well as the hon. member for St. John's West (Mr. Crosbie) as recently as last June in opposition, have indicated that we must keep raising our interest rate when the American rate is up or we will be in difficulty. We say that there is an answer. We can lower interest rates, but if we stop there those profound economic wizards in the Liberal and Conservative parties are correct that there would probably be an outflow of capital. We think we can go one step further. We do not just restrict ourselves to what social democrats have done around the world; we turn to the United States itself.
In the 1960s President Kennedy had an outflow of capital problem. What did he do? He established a system of controls on the export of capital to protect the American dollar for some time. Then in the 1970s when the well-known radical President Nixon was in charge of the United States, he had a problem as well. I do not think his office had been taken over by Trotskyites. He saw that there was a way to deal with an export of capital problem, so for a brief period of time he put export controls on capital.
We say that when farmers in Canada are going broke, when businessmen are going broke, when Canadians are losing their homes, if it was good enough for the Americans in the 1960s and 1970s to have controls on the export of capital, then it is good enough for Canada in the 1980s and it should be done.


The Acting Speaker (Mr. Ethier):: Order, please. I was going to intervene and advise the hon. member that his time had expired. Nevertheless, he may continue if there is unanimous consent.


Some hon. Members:: Agreed.


John Edward Broadbent: Mr. Speaker, I wish to thank the hon. members for their indulgence.

I shall try to conclude quickly, Mr. Speaker.
There is one other point in the budget that I want to deal with before I turn the floor over to a Liberal member who, I hope, will reply to some of the arguments that have been made. This concerns the question of equity.
In his speech to the House and to the people of Canada on Thursday, the Minister of Finance made much of his party's alleged concern with fairness and with equity. I was touched by that. I heard in advance that they were really going to sock it to the rich. Then again, I thought that perhaps the Trotskyites had taken over the Liberal Party.
I listened with a great deal of interest to what was said in the budget about income distribution and tax benefits. Instead of that, we found that what the Liberal Party was doing with its left hand, it was busy undoing with its right hand, which is always much stronger. It closed some loopholes but left many more in place.
When you look at the tables and the charts that accompanied the budget documents you discover the following facts, Mr. Speaker. First of all, the vast majority of Canadians get no tax cuts at all. I repeat, the vast majority get no tax cuts at all. Second, a small number at the bottom of the tax scale get something like $4 per week. We are pleased that they get something but $4 per week is hardly the symbol of a government generous toward its people if you are living in poverty.
At the other end of the economic scale we find that there are 45,000 taxpayers in Canada earning $100,000 or more per year who, with this Liberal budget, will save $5,000 per year in taxes. We say that this is not tax reform, this is typical Liberal chicanery. The government tries to pretend that it is providing justice for all, but instead it is providing additional benefits for upper-income Canadians who need it least.
I will conclude with this observation, Mr. Speaker. What we need now and what we have needed for years is serious tax reform. As long as pensioners in Canada are paying taxes, as long as the working poor in Canada are paying taxes, surely to God it is time that the rich, the banks and the oil companies were paying their fair share.


Some hon. Members:: Hear, hear!


John Edward Broadbent: I was going to have something to say about how the government has abandoned its total commitment to the further Canadianization of our economy and how it has sold out the west and the western development fund, but my time is running out. I shall conclude with the following words, Mr. Speaker. More than ever before Canadians must know that there is one party in this land that remains in their corner, that there is one party that does offer heart and help and hope. I want to say to the Liberals and the Tories that they can take

November 16, 1981
The Budget-Mr. Deniger
their stand with the banks and we will take our stand with the ordinary people of this country.


Some hon. Members:: Hear, hear!


Mr. Pierre Deniger (Parliamentary Secretary to Minister of State (Multiculturalism)):: Mr. Speaker, it is a great honour for me to have an opportunity to take part in the debate on the budget which was tabled last Thursday by the Minister of Finance (Mr. MacEachen). I believe, Mr. Speaker, that the three major themes of this budget cannot be overemphasized: restraint, equity and economic renewal. Indeed, the cornerstone of our government's budgetary policy is that it is vital that we should put an end to inflation if we want to reduce interest rates and tackle our other economic problems. Mr. Speaker, I plan to use the few minutes at my disposal to deal first of all with the immediate effects of the budget on Quebec taxpayers, especially those of the constituency of Laprairie of the cities of Saint-Lambert, Lemoyne, Greenfield Park, Bros-sard, Laprairie and Candiac, then, to comment on the various options which faced the Minister of Finance, and finally, to discuss the many contradictions in the attitude of the opposition members who addressed this budget, and God knows that we heard quite a few of them this afternoon, Mr. Speaker, voiced by both the Leader of the Official Opposition (Mr. Clark) and the Leader of the New Democratic Party (Mr. Broadbent).
It is important first of all to emphasize that by doing away with a great number of tax rebates, the government will be able to reduce the taxes that are paid by nearly 6 million taxpayers while increasing its revenue sufficiently to reduce the public deficit. For the Quebec taxpayers, in Canada, Mr. Speaker, these savings may be and are achieved in the following manner. First, the income tax rates for individuals whose income exceeds $ 11,000 will be reduced and the tax burden of individuals with lower incomes will be lightened. Those in the higher-income brackets will be encouraged to save and invest by the setting of a limit of 34 per cent for federal tax rates. The maximum tax rate will therefore be about 50 per cent, Mr. Speaker, depending on the provincial tax rate, rather than about 64 per cent as is now the case. The current tax reduction of 9 per cent will be replaced by a $200 credit granted to all taxpayers. Married taxpayers will be able to claim an additional $200 for a dependent spouse. This means that 620,000 lower income taxpayers will see their tax credit doubled or increased by $400. The indexing system provided by the act will remain the same, which will represent additional rebates of over $3 billion in federal and provincial taxes in 1982. The child tax credit will go from $261 to $293.
Generally speaking, personal income tax provisions for 1982, including the restrictions for preferential rates and indexation, will mean average individual rebates of $310 for nearly 12 million taxpayers, while approximately 795,000 taxpayers, most of whom have higher incomes, will pay more
federal taxes. A family of four will now be able to earn up to $15,000 without having to pay any federal income tax. In addition, in view of the lowering of unemployment insurance contributions, the net income of the wage-earning population will increase by $200 million. These tax incentives granted to all taxpayers are obvious and very important, but they mean even more, Mr. Speaker, for the Quebec taxpayer who is unfortunately governed in Quebec by a government known for its rather unhealthy administration.
Nonetheless, Mr. Levesque and the Parti Quebecois won the last election on the slogan of sound administration. Under a provincial Liberal government from 1970 to 1976, the average deficit of the government of Quebec was $451 million. Under the PQ it rose to more than $2 billion between 1976 and 1981. Between 1977 and 1981, the deficit increased 37.4 per cent under the Levesque government. The total indebtedness of the Quebec public sector went from $8,000 per family to nearly $15,000 in 1980. In 1980-81, provincial spending per capita were $2,700 in Quebec and $1,900 in Ontario. In the area of education alone, Mr. Parizeau recognized that in his 1979-80 budget Quebec was spending $500 more than Ontario per student.
In 1979, Mr. Parizeau discovered a $500 million shortfall in the department of education budget. He never succeeded in explaining that shortfall, and in the Quebec civil service, the remuneration per employee was $19,000 compared to $16,000 in Ontario. Clearly the Quebec taxpayer needs a sound fiscal administration, but he does not get it in Quebec. Quebecers are among the most heavily taxed citizens in America. The Canadian taxpayer with a $10,000 income pays $700 more income tax in Quebec than in Ontario. If he earns $20,000, the difference jumps to $2,000. Personal income tax in Quebec increased from $8.28 per $100 of personal income to nearly $9.50. The PQ government has just converted medicare, the automobile insurance board and Hydro-Quebec into tax collecting agencies. Not to mention the liquor board and all the other types of disguised taxes the government imposed on us Quebecers.
So, Mr. Speaker, I urge the PQ government to enter the federal arena. I invite them to come up with candidates against us. Of course, I wonder how they are going to call that group, whether it will be the Canadian Quebec Party or the Federalist Parti Quebecois, but I would urge them to do so because they should be made accountable.
In preparing this budget, our Minister of Finance was faced with the traditional economic dilemma facing every western democracy, namely to balance the demands of society for economic security with its need for economic growth and development. Of course, the answer is in our budget, that is equitable restraint. Over the last few weeks, Mr. Speaker, a number of groups from the municipal, provincial and federal
November 16, 1981

levels, a number of business groups, consumer groups, trade unions, home owners, renters and others suggested various fiscal measures to the minister for inclusion in his budget.
Unfortunately the common denominator of all those groups was indeed to reduce inflation, too often at the expense of all the other groups but not theirs. That is why the government must counter those inflationary demands with restrictive tax measures so as to maintain our anti-inflationary monetarist policy which, for awhile, was our only weapon to come to grips with the ever-escalating rate of inflation. Obviously the recent agreement between Alberta and the central government, and between nine out of ten provinces and the government of Canada with respect to both energy and the constitution will greatly improve the economic climate in Canada. Undoubtedly the fiscal measures introduced by the Minister of Finance in his budget last Thursday will bolster the dollar and lead to a definite lowering of interest rates.
An excellent example of inconsistent demand came from the ten provincial ministers when they were consulted about this budget last October. The provinces wanted the federal deficit reduced, of course, but none wanted the cuts to affect them. They all recognized that the most important fiscal measure we could take would be to reduce our deficit and our pressures on capital markets in order to fight inflation. But then most of them said that the federal government should not cut any revenue guarantees or transfer payments, should not raise or de-index any federal taxes, and should spend at least $800 million on a new federal subsidy program to protect all farmers, home owners and small-business men from the effects of high interest rates.
If they had the responsibility for balancing these conflicting demands for Canada's general economic progress on the one hand, and their own economic and political security on the other, perhaps they would recognize the desirability of phasing out the 1972 revenue guarantees in order to allow the federal government to reduce the deficit without affecting contributions to health care and post-secondary education. Perhaps they would recognize the need to end tax loopholes for the rich while reserving large cash expenditures on interest rate relief for those who need it most. In other words, they might be forced to make decisions about what is fair and equitable for Canada as a whole, instead of each demanding what is collectively impossible. That is what the Minister of Finance meant when he said that people must change their attitudes if inflation is to be beaten.

On the other hand, Mr. Speaker, the Canadian Federation of Independent Business recently made public its pre-budget review where it stated, and I quote:
-designed to dispel mistrust and uncertainties and to show the new way to follow.
Among other things, Mr. Speaker, the CFIB recommended that the $150,000 ceiling on the deduction granted to small-
The Budget-Mr. Deniger
and medium-sized businesses be raised to $200,000, and that the necessary amount of profits made by a business during all its operational life be increased from $750,000 to $1 million. This was approved. The CFIB asked for new unemployment insurance rules, so the budget provides for lower premiums for both employee and employer. The CFIB requested as well an extension of the Small Business Development Bond program for the expansion of small and medium-sized businesses and a wider field of application so that individual business owners might benefit from it as well. That proposition has been almost totally accepted.
The CFIB also urged the government to reduce federal expenditures and the share of government revenues now earmarked for servicing the debt. If I may, Mr. Speaker, I should like to point out that not only does the government intend to bring the deficit from $11.2 billion down to $9.8 billion in 1981-82 but it is also going to lower our cash requirements to $6.6 billion in 1982-83. We forecast a very sharp decline in our interest rates whose increase must drop from 38 per cent to less than 5 per cent if we are to pay our debt. It is important to recall that in our context of restraint and equity, the major requests of the CFIB have been met, even exceeded, and of course I am referring to the federal sales tax.

So, Mr. Speaker, do not misunderstand me. I am not criticizing Canada's economic interest groups for trying to protect themselves. Their leaders are elected or appointed to present a particular point of view. Their input into the decision-making process is invaluable; but all too often they make demands that are inconsistent from a social perspective, as if the pursuit of their own interests somehow automatically results in what is best for Canada as a whole.
The worst offenders are clearly the two opposition parties, for they are not supposed to be representative of particular interests. As national parties in a national parliament, they have a responsibility to reconcile conflicting interests and to balance conflicting demands for economic security and economic progress. That they have failed to accept that responsibility is plainly evident from the debate thus far. They are merely echoing the chorus of complaints.
Home owners and renters can be assisted in the long term by policies of fiscal and monetary restraint which will reduce inflation and interest rates.


An hon. Member:: You don't see it happening.


Pierre Deniger: What distinguishes our program of restraint from the drastic Conservative approach-


Donald Alex Blenkarn: If people are restrained, government should stand fast.


Pierre Deniger: -being undertaken in Britain and the United States is our additional emphasis on equity. The $350 million this government is allocating to help home owners and to stimulate construction of rental housing is going to those

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The Budget-Mr. Deniger
households with the greatest need, while tax exemptions for capital gains on a taxpayer's residence will be limited to one residence per family so that the cottages and summer homes of the affluent will no longer be subsidized.


Some hon. Members:: Oh, oh!


John Horton McDermid: Talk about restraint.


Pierre Deniger: Now comes the time to respond to both the NDP leader and the Tories. Let me start with the NDP leader. The Leader of the New Democratic Party (Mr. Broadbent) clearly exaggerates when he accuses us of Canadianizing "Reaganomics". I believe the hon. member for Broadview-Greenwood (Mr. Rae) was sincere when he said that the greatest problem facing the Canadian people today was economic insecurity. But is that the whole story, and is the only way to deal with it to spend billions more dollars on government guarantees of economic security than we already do? Is that why his leader called a $350 million housing program a "puny response"?
However genuine the New Democratic Party's concern for equity and security is, it is inconsistent with, and undermined by, its $1.5 billion housing program and its artificial reduction of interest rates, which would increase the deficit, devalue the -dollar, fuel inflation and discourage capital from investing in this country and providing the jobs are so desperately needed.
This afternoon the Leader of the NDP told us about his great cure for high interest rates. In order to subsidize low interest rates, the NDP has proposed exchange controls to prevent large movements of more than $5 million out of the country. This would damage Canada's international image and jeopardize its economic relations by inviting retaliation. Foreign investors would stay away in droves. It is an example of how controls lead to more controls. Controls are their answer for everything except union wages. The NDP leader has even admitted that his party might consider exchange controls on average Canadians trying to transfer as little as $5,000 out of the country. Even Canadian vacationers would have their freedom of choice curtailed. That does not strike me as being the best way to provide equity and fairness.

The Progressive Conservatives also contradict themselves. Last October 4, Mr. Speaker, their financial critic said, and I quote:

This coming budget must pick first and foremost as its primary target and almost everything in that budget must be aimed at fighting inflation.
[ Translation]
Yet, last Thursday night, the same member suggested that the $50 million set aside for the Farm Credit Corporation was not enough and what was needed was $500 million. Mr. Speaker, if we had those $500 million, we would surely give them out, but as we all know that is over and above the entire
DREE budget and is an inflationary amount. The energy tax credit suggested by the hon. member is also an inflationary measure. You will also recall that the mortgage deductibility scheme supported by his party was not only inflationary, it was unfair and restrictive. When the hon. member for Etobicoke Centre (Mr. Wilson) speaks of a program that would apply to 220,000 housing units instead of 40,000, that is also inflationary.
The Leader of the Opposition was speaking earlier of other funding needs. He said that we should not have abolished some tax shelters because not only rich Canadians took advantage of them. Naturally, that is costly but still he wanted further tax credit measures, further exemptions and all sorts of tax shelters, even though the latter would have in fact prevented the government from collecting enough money to reduce its deficit and prevented over 6 million Canadian taxpayers from paying lower taxes.
I was keenly interested in the remarks made by some hon. members opposite a while ago when they said that we were the party of the banking interests and that we are in bed with them. And I find it still more surprising when I realize, just as all other hon. members of the House certainly do, that the deputy minister of finance who wrote the budget which caused the downfall of the previous Progressive Conservative administration is now a senior vice president of the Bank of Montreal. I certainly do not understand how hon. members of the Progressive Conservative Party would say all of a sudden that banks are Canada's worst enemies. It is a quite recent discovery. It is a sealed case.
We need only go over the questions which the members of the official opposition have been asking over the past few months to realize that they have no true economic policy and are trying every moment to please everybody. I should have thought, Mr. Speaker, that the experience in power of my hon. Progressive Conservative friends, however brief it was, would have made them understand. I should have thought, Mr. Speaker, that the Crosbie budget would have made them wiser. But no, Mr. Speaker; we need but recall the many economic debates held in this House to realize that their economic policy is as follows: Cut out everything except in my riding, which is utter nonsense, Mr. Speaker.
The problem facing the official opposition is also, to some extent, that which faces our society. Can economic growth and economic security go hand in hand? Professor Thurow of the Massachusetts Institute of Technology has written, and I quote:

Today, as never before, all policy solutions involve some degree of redistribution of income and wealth. And until we face up to this painful reality and learn as a society to agree on who should bear what costs, economic growth will continue to elude us.
That is the key to economic renewal, Mr. Speaker, as the Minister of Finance so eloquently explained. Everyone, from the forester in British Columbia to the Conservative politician in Newfoundland, seems to be in favour of competitive eco-
November 16, 1981

nomics for others and protection for themselves. But this is Parliament and this is where the decisions must be taken. The buck stops here. It is no longer acceptable to make demands which are inconsistent. The challenge of government is to provide a balanced program of equity and restraint to ensure that we have both security and growth. And I once again congratulate the minister for meeting that challenge.

In conclusion, Mr. Speaker, there is no doubt that under the present economic circumstances in this country as in the whole world, a budget is the most difficult working paper which a government is called upon to bring down. Due to the pressures brought to bear on a government, a budget introduced under the theme of restraint, equity and economic renewal is to the advantage of all Canadians.


James Scott (Jim) Peterson: Mr. Speaker, I am pleased to be speaking today because the budget presented by the Minister of Finance (Mr. MacEachen) represents an expression of confidence in the ultimate strength of the Canadian economy. This budget sets its sights on the future and is laying the groundwork for the massive capital investment we will need in this decade and throughout the next to realize our development potential. The goals of this budget are not short term. The hon. Minister of Finance did not sacrifice long-term economic stability in Canada on the altar of short term political gain.
There can be no mistake. The major thrust of this budget is to meet the challenge of inflation, inflation which unfairly prejudices those on fixed incomes, inflation which erodes savings, inflation which exacerbates wage demands, inflation which decreases our productivity and international competitiveness, inflation which keeps interest rates high and which itself is fuelled by higher interest rates, each feeding voraciously on the other.
The single objective of this budget is to curb inflation and thus bring down interest rates. It does this by taking a large amount out of the budgetary deficit and thus out of the federal government's borrowing requirements. Last year the deficit was $1.5 billion less than had been predicted which, considering the high interest rates that we were required to pay, was welcome news to all Canadians. This year the deficit will be $0.4 billion less than predicted last year. It will decrease steadily in absolute dollar terms in the ensuing years. This means that as a percentage of our gross national product, the deficit will decline from a high of 4.4 per cent last year to 4.0 per cent this year and 2.8 per cent next year.
The leader of the New Democratic Party elaborately indicated to the House our major concerns about interest rates. The majority of his speech concerned the problems created by high interest rates. I had the impression that he was resigned to having high interest rates prevail in this country because he
The Budget-Mr. Peterson
believed that we should artificially force interest rates down and as enormous amounts of money flow out of the country we should stem the tide by imposing exchange controls and stopping it at our border. This approach has been tried in the past. He mentioned that it had been successful in the United States. In fact it did not work in the United States. First they tried the interest equalization tax, then in 1965 they tried the voluntary guidelines approach, and in 1968 they tried the mandatory guidelines approach. They finally had to abandon these measures in 1972. It has been tried in England and has not worked. It was tried in France-


An hon. Member:: They are going to do it again.


James Scott (Jim) Peterson: -and it has not worked. Let us not think there is a magical solution which can bring down interest rates overnight, set up barriers and create a watertight capital market in order to protect us. What the government is doing in this budget is attempting to bring interest rates down by bringing down inflation.
The reduction of the government deficit will have an even more important impact on our financial requirements. The actual amount of money we will have to borrow will decline more rapidly from $10 billion last year to $9.7 billion this year. Next year the reduction will plummet to $6.6 billion. This represents a real reduction from 3.5 per cent to 1.7 per cent of our gross national product. I believe this is a responsible approach to take to deal with the deficit.

Mr. Speaker, substantial results are made possible thanks to two procedures. The first is a more adequate control of government expenditures. As it was pointed out by a few members, our economy is at a standstill. Consequently, it would be neither wise nor advisable to try to reduce the deficit by chopping drastically at government expenditures. It is essential that the rate of increase of most of our expenditures remain lower than the rate of growth of our economy.
That is why our expenditures will show a slight drop-in line with our economy-from last year's 20 per cent to 19 per cent in 1985-86. One reason why the public debt could not be reduced more substantially this year was the high interest rate which caused an increase in the public debt of $2.3 billion projected for last October. We must fight high interest rates, and we are using this budget and our monetary policy to do so.
The second means of reducing the deficit will be to increase revenue. Before the effects of the energy agreement are felt in two years' time, tax increases provided in the budget will generate additional revenues of $1.4 billion in 1982-83 and $2.1 billion in 1983-84, dropping to $1.2 billion in 1985-86.

These additional tax revenues are being derived in an important way. Reduced tax rates will apply to individuals with an income in excess of $11,120. Reduced rates plus a continuation of indexing will mean, for example, that a family of four with an income of $15,000 or less will pay no income tax. At the

November 16, 1981
The Budget-Mr. Peterson
higher end of the scale, the top marginal federal tax rate has been reduced from 43 per cent to 34 per cent. This means that the combined federal and provincial tax rates will fall from the present high of 64 per cent down to 50 per cent, and there will be a reduction of taxes on capital gains from 32 per cent to 25 per cent.
The budget undertakes the first major overhaul of our tax system since 1972 to make up for this lost revenue. This is accomplished by eliminating a number of tax expenditure plans, or loopholes, which generally benefit individuals in higher income brackets. The declared thrust of this overhaul is to create equity or fairness among taxpayers. The result of this is that some taxpayers in a higher bracket who benefited from these expenditure plans will face a net increase in their taxes.
I cannot help but recall some of the remarks made by the Right Hon. Leader of the Opposition (Mr. Clark). I would not have mentioned this had he not returned to this subject twice. He seemed to be quite concerned about the fact-and exercised about it-that the government was ensuring that individuals who used company cars for personal benefit would not get a tax break. He said that we were not penalizing fairly people such a travelling sales persons or real estate sales persons. What we are doing in this area is simply ensuring that that portion of their automobile which is spent for business purposes is not taxable, but if they use their car for pleasure, for example, to go to Florida by car for a vacation, that portion of it will be treated as a taxable benefit. Every other taxpayer has to pay for it. That is all we are doing. As the hon. member says, we are ensuring proper collection procedures in this provision. The Right Hon. Leader of the Opposition made quite an issue out of that. He said that if I was wrong he would expect me to vote for his amendment on this budget. But he did not have the courage to accept my counter offer that if he was wrong he would vote for our motion on the budget.


An hon. Member:: That is great. Tell us about taxing Blue Cross and dental plans.


James Scott (Jim) Peterson: In the midst of these changes the budget has taken into account the devastating impact high interest rates can have on home owners who are facing the prospect of renewing their mortgages. A temporary system has been created combining guarantees and grants to ensure that home owners who might not otherwise be able to meet increased monthly charges will not be forced to sell their homes. Other measures have been designed to help small businesses and farmers to cope with the present high interest rates which we all agree are too high. For example, I believe our proposals regarding small businesses will bring them benefits amounting to an average of $27.5 million for each of the next two years.
Returning to the subject of interest rates, we must recognize that the help given to home owners, small business and farmers in order to allow them to cope with these high interest rates is only a stop-gap remedy. There can never be a real substitute for reducing inflation and thus reducing interest rates to a
reasonable level. We must ensure that the high rates do not again skyrocket.
I think it is important for us to recognize some important facts. Since August there have been ten successive decreases in the bank rate. It has come down from a high of 21.24 per cent to 16.13 per cent last Thursday, a decline of 5.11 percentage points. The prime lending rate has come down from a high of
22.75	per cent to 18 per cent, a drop of 4.75 percentage points. Likewise, the rate on five year mortgages has also declined
4.75	percentage points. I have not heard any approbation from hon. members opposite in this House as these rates have steadily come down. However, as those rates were going up, they criticized us. One would at least have thought that they would have been tempered and even in their distribution of praise and criticism. We recognize that the rates are still too high, which again dramatizes the need for measures which will bring down our rates.


John Horton McDermid: Are you taking credit for their falling?


James Scott (Jim) Peterson: I hope the hon. member will listen because, if he does, he might understand the full thrust of this budget.
As the Minister of Finance has said-and I echo his words here today-the foremost thrust of this budget is to control inflation and to keep bringing interest rates down. Let us look at the solutions offered by the Tories, who seem to be quite vocal this afternoon-through a rump group listening to the hon. member for Etobicoke Centre (Mr. Wilson), the Tory finance critic, one would think that he was in favour of our approach of reducing the deficit and bringing down interest rates, because he said this: "A manor drop in inflation and a major drop in interest rates is what this country needs most."
That was last Thursday. Thus far one would think that the hon. member is a fairly bright fellow. But wait; what he did after that was a complete U-turn. He criticized us by saying, "What we have is a restrictive budget when the reverse was called for." What he seemed to be saying in that last sentence was that he wants the government to enter into new expenditure programs, more government spending and a higher government deficit as a cure for inflation and high interest rates. However, 1 am not sure. That is what he seemed to be saying, but I am not sure because in another sentence he said that we should have been reducing the deficit even more. The only reasonable explanation for the U-turns and the contradictory statements by the hon. member for Etobicoke Centre is that he wrote his response to the budget last September just after he was appointed finance critic. You should have seen the look on his face, Mr. Speaker, when he actually saw our budget documents and realized that our Minister of Finance meant real business in terms of dealing with inflation and high interest rates.
So much for the Tories. In terms of positive alternatives they are as bankrupt as they would make this country if we followed their proposals.
November 16, 1981


John Horton McDermid: Why don't you go back to Ontario and run your little brother's campaign?


James Scott (Jim) Peterson: I am delighted about a particular provision in the budget to which I want to devote special attention. This particular provision is the one which deals with charities.


Flora Isabel MacDonald: Where is David?


James Scott (Jim) Peterson: I am glad hon. members support my brother for the leadership of the Liberal Party in Ontario. I know he will do a better job than they.


Henry Perrin Beatty: He is more a Tory than a Grit anyway.


James Scott (Jim) Peterson: I would like to address some remarks to the House concerning the tax provisions and changes dealing with charities. As hon. members are aware, the present system allows individuals or corporations to deduct up to 20 per cent of their income a year if they donate it to a charity. Any excess over the 20 per cent can be carried forward one year. The government has realized that this has not been adequate financial incentive to help the many individuals in this country who want to help the government assume part of the role of funding worth-while enterprises, so the budget has taken a very forward and far-reaching step and allowed donations in a year in excess of 20 per cent of income to be carried forward for five years. In addition, on death, donations exceeding the 20 per cent can be carried back for one tax year.
These measures are a constructive means to ensure that more of the burden of funding these worth-while and necessary institutions in our society is carried by the private sector. They are a direct encouragement to individuals and corporations to fulfil their responsibility to their fellow human beings in a way that no government institution could ever hope to emulate. I applaud the progressive steps of the Minister of Finance in this area.
In terms of social and economic development, many members of the opposition have said that we have not dealt with the question of development and that we do not have full provisions in the budget. However, if they read the documents tabled along with it, they would realize the commitment of this government to a full program of economic development. Let me give some examples. With respect to science and technology, research and development are at the heart of any industrial renewal. In terms of research and development the government has committed itself, in co-operation with the private sector, to reaching a level of 1.5 per cent of gross national product. To date we are already ahead of our commitment to reaching that goal. We have given over $1.5 billion this year. We have done it in a very constructive way in co-operation with the private sector. There is new funding for microelectronics centres in Vancouver, Edmonton, Winnipeg, Toronto, Sherbrooke and the Atlantic region. There is a new source development fund of $30 million to help Canadian suppliers of high technology goods and services. The Natural Sciences and Engineering Research Council has an extra $20 million. There is an extra $27.5 million for application and marketing of Telidon Video-
The Budget-Mr. Peterson
tex technology. We have established an industrial opportunities program to co-ordinate existing programs, involving expenditures of $275 million annually. The government's work with Telidon has made it a world leader of which hon. members on all sides of the House are proud. I commend the department for setting up a $12.5 million program involving an office communication systems program. This is done in conjunction with companies such as Mitel. It will help increase white collar productivity, and we know that the number of white collar workers is increasing at a much faster rate than that of any other workers in our economy.
The Corporate Productivity Research Group includes Motel, Skyline Cable, The Canadian Imperial Bank of Commerce and AES. This is an example of drawing together the strength of the private sector and the public sector to go on to new achievements in the fields of microprocessing and microtechnology. I believe microtechnology is important because it presents an incredible opportunity to create the new jobs which are going to be necessary in the future and and the extra productivity and social equity we want so that we can find, for example, more higher paying jobs for women.
In his remarks this afternoon the Right Hon. Leader of the Opposition said we are not dealing with our economy seriously. He is wrong. The Minister of Finance is dealing with it seriously. The budget represents a long-term approach to reducing inflation and the high interest rates which are the root causes of our economic ills and concerns today. Let me demonstrate what type of confidence has been expressed in this budget. On August 4 the Canadian dollar was worth 80.31 cents U.S. Last Friday, after the budget, it was worth 84.09 cents. At noon today it rose to 84.32 cents. That is an expression of confidence. With a higher dollar we will be able to reduce inflation further, and that will make it possible to reduce interest rates. This was an expression of confidence in the budget by the international community and an expression of confidence in the direction being taken by this budget.


Some hon. Members:: Hear, hear!


William Henry (Bill) Domm: Mr. Speaker, before getting into the main content of my remarks concerning the budget, I would like to refer to a couple of comments that have been made. It is quite astounding that members opposite are under the misapprehension that the people of Canada are sitting at home, reclining in their easy chairs, watching television as though the greatest thing to ever happen in their lives has happened.
Actually, these people are starting to wake up. They are beginning to put their chairs in a vertical position and are fast arriving at the conclusion that the budget has misrepresented to them the facts as they pertain to the speech of the Minister of Finance (Mr. MacEachen).
The budget brought down last Thursday night is nothing more than a blueprint for economic stagnation. As I proceed through my remarks, I will read into the record what the

November 16, 1981
The Budget-Mr. Domm
people in the ridings across Canada, both in the business and agricultural community, and home owners in particular, think about this budget and how it will affect them.
The government has spent a lot of time talking about restraint. In reality, it will be spending $13.1 billion more than it takes in. The people across Canada have reached the conclusion that for the government to have acquired over a period of a decade or more a debt of some hundred billion dollars with an interest payment to exceed $10 billion annually shows that it knows very little and practises absolutely nothing about restraint.
Another point made today regards the equity that appears in this new finance document known as our current budget. This budget is a bit of a sham. There is a lot of cover-up. People are beginning to realize that the higher income groups across Canada-and there are a lot of them as was stated by the Leader of the New Democratic Party (Mr. Broadbent) in his speech earlier-are the ones who will benefit from this budget. A lot of people in Canada earn $100,000 a year or more.
What is being done with that group of high-income people? Has the government taken from the rich and given to the poor? It has taken the 64 per cent tax rate of that group and lowered it. It has reduced the tax levied on high income people across this nation. The maximum personal tax that can be charged to that group has been set at 50 per cent.
It must be very difficult for a lot of Liberal Members of Parliament to return home and convince their constituents that this government has taken anything away from the rich. What it has done is to reduce their tax rate from 64 to 50 per cent.
Let us look at the fairness of this budget. A lot of deception can be read into the remarks by the Minister of Finance. This budget clearly and factually increases government revenues by 31 per cent while at the same time it will allow the government to continue to spend 22 per cent more than it did last year. It will be very clear to the people of Canada that the government is up to its old tricks. It is taking figures, juggling them, taking a little away here and a little away there. In reality, it very strongly favours the rich. I do not see much of a penalty imposed on the banks for the interest rates they derive or on high-income people who have had their tax rate reduced from 64 per cent to 50 per cent.
Let us look at what is in this budget for people in dire straits, those who were building up their hopes and expectations that the government was finally going to listen and implement a policy that would mean less of a financial burden in the coming year. What has been done for this group, namely, the home owners, small-business men and farmers?
First I want to deal with the home owners. I can speak with a reasonable amount of exposure to home owners, having been a real estate agent for a number of years. There is no doubt in my mind that the vast majority of Canadians who have scrimped, saved and invested in order to own a piece of Canada are in great jeopardy of losing that. It is not sufficient to tell those people that the government intends to address seriously the problem of high interest rates. This budget does
nothing more than subsidize the interest payments of a few hundred Canadians in some of the larger metropolitan areas in order that they will not have to spend more than 30 per cent of their gross income on interest payments for a mortgage.
There is a specific case in the constituency of Peterborough which has created a great deal of anxiety and concern for a home owner. The gentleman has allowed me to read into the record his specific situation. It clearly shows that what the government is offering home owners today is nothing new.
CMHC has followed the policy of advancing part of interest payments to home owners to tide them over a difficult financial period. I wish to refer to a specific case in my constituency.
In 1976, Mr. Tippet, a resident of R.R.2, Warsaw, took out a CMHC mortgage for $32,294. He required some assistance from the government in order to buy a home. CMHC arranged for AHOP assistance, assisted home ownership made easy. They advanced $3,200 to him since 1976 in order that he could reduce his payments.
The interest rate when the mortgage was renewed as recently as three years ago was 11% per cent. That is the interest figure I will use. It was lower than that in 1976. He has now added $3,200 to the original $32,294 mortgage and now owes $34,979. CMHC took a second mortgage for the $3,200. Mr. Tippet has to pay $342 a month. He went along with this plan from 1976 to 1981. They told him that the time has come for him to pay back the $3,200. They told him that they would like interest at the rate of 19'/2 per cent. I realize we are approaching six o'clock. I will complete my story later. We are now up to $34,979.
[ Translation]


The Acting Speaker (Mr. Ethier):: Order, please. It being six o'clock, I do now leave the chair until eight o'clock this evening.
At 6 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
Mr. Deputy Speaker:: Order, please. When the House rose at six o'clock, the hon. member for Peterborough (Mr. Domm) had the floor.


William Henry (Bill) Domm: Mr. Speaker, since Mr. Tippett's payments are now up to $566 a month on his mortgage payments, and they exceed 30 per cent of his income, he will be eligible for an interest loan on which there shall be interest charged to this new third mortgage, remembering that he has a first mortgage with CMHC, a second mortgage with AHOP, the assistant home ownership made easy, and now he is eligible under this new budget program for a third mortgage of $3,000.
November 16, 1981

We now have a constituent in my riding who purchased his home in 1976 with a first mortgage of $31,779, a second mortgage, an AHOP program that is compounded to $3,200, and now a third mortgage of $3,000, for a total of $37,979, as a result of the new budget introduced by the Minister of Finance. That means that in 1982 Mr. Tippett will owe $5,685 more than he did when he bought his home in 1976. He will be obliged to pay back all the Liberal government's interest assistance programs that he has enjoyed for the past five years.
Since I reviewed the mortgage interest situation, perhaps I might read into the record three statements from my constituents who have written me about the high interest rates and how they affect them. The first letter was received and signed by a depressed war veteran on Aylmer Street in Peterborough. Very briefly, he says:
Enclosed figures of my mortgage rates and so on ... my last mortgage which was just concluded was at 12'4 per cent and my payment was $330 and now I have just signed a new five-year contract at 20'/4 per cent for payments of $413. As a war veteran, I find this almost impossible. Bill, my take-home pay has dropped 75 per cent and I am going to lose my home. See what you can do. Thanks for any help.
I have another letter from Patricia St. Laurent of R.R. No. 4, Peterborough, which reads:
I am writing to express my great dismay with the present government's handling of the economy, and, in particular, the practice of maintaining high interest rates. In conclusion, I urge you to consider the plight of thousands of Canadians and try to convince the present government to remedy this very destructive situation.
Here is another letter from a single parent, Sylvia M. Munn of Water Street, Peterborough, who says that she for one would like me to bring this to the attention of the minister
because, as she says:
I will lose my home by July if assistance is not received. The terrible mortgage rate is a crime. I am a single parent and 1 greatly need help and I would appreciate receiving any that might be available.
I am sure she will be very happy to know that the present government, through its very generous mortgage assistance program, intends to compound more debt and add interest to
that.
I have another letter from Mr. Bolton of Terrace Road, Peterborough. He says:
I would like to submit my name to your list of high mortgage rates to be forwarded to the housing minister, Mr. Cosgrove, in Ottawa. My mortgage was renewed at 22 per cent. It was formerly 9.75 per cent. My payment went from $300 to $624, principal and interest, for my mortgage on my home.
Finally, I have a letter here that says:
We exist on a small income that 1 am able to bring in as a sales clerk in a store, and along with my husband's veteran's disability pension, we have found it impossible to carry on our existing mortgage at 12 per cent. However, the new mortgage makes it impossible for us. Any help would be very much appreciated.
And so the list goes on. Yesterday the government had the gal! to run an advertisement in the Peterborough Examiner which says, "Attention home owners". Any car dealer in
The Budget-Mr. Domm
Canada would be jailed for running an advertisement such as this one. The advertisement reads:
If you have more than 5 per cent equity in your home, your lender may be able to defer your interest payments by up to $3,000 for one year.
There is not a car dealer in Canada who could run this advertisement without telling his customers what the interest rate would be, what the payments would be and what the amortization would be. Yet the federal government spends tens of thousands of dollars on hoodwinking the Canadian public into a home ownership plan made easy, when in reality what it does is to compound the interest to the point where the people are forced out of their homes because of their inability to pay. Then it has the gall to put in a $16,000 ad in The Globe and Mail this morning which reads: "Canada, we have a lot to offer each other." This $16,000 was paid by the federal government. What small businessman could not put $16,000 to better advantage than that?
The minister tabled in the House of Commons today the supplementary estimates of the government, which supposedly practices restraint. In the supplementary estimates, hidden under a section of Industry, Trade and Commerce, is $1,200,000 as a supplementary one dollar estimate. What is the $1,200,000 for? It is to convince the grocers of Canada that they need metric in the retail food sector. This is the kind of nonsense with which the people of Canada are fed up, and the small business community is no exception. The former Liberal member who spoke before me, the hon. member for Willow-dale (Mr. Peterson), called this a budget of stability. I wonder what kind of stability the budget has? It was a Liberal member opposite who the morning after the budget was brought down stood in the House and said that The Globe and Mail flattered the government on this incentive budget and said that the budget would do much for Canadians.
I think The Globe and Mail finally got around to looking at the budget. I should like to quote from an editorial which appeared in that newspaper on the following day, in rebuttal to the Liberal member who said that The Globe and Mail liked the budget. It reads as follows:
The minister's own figures show an intended increase in the tax burden of fully 43.1 per cent over the course of this year and next. This $20 billion increase in taxes represents an average tax increase of about $1,700 per person employed. This unprecedented tax hike on top of 12.5 per cent inflation, high double-digit mortgage rates and mounting lay-offs will deliver stinging setbacks to the entire consumer sector which represents about two-thirds of the economy.
This is what The Globe and Mail thinks about it. What does a former Liberal finance minister think of this terrific budget, as reported in the Toronto Star in the section entitled "Insight"? That is a good section in which to put the budget because it took a couple of days for this disastrous budget to sink in. It was a statement by Mr. Eric Kierans. I think everyone on the other side will remember him. He was one of

November 16, 1981
The Budget-Mr. Domm
the former finance ministers. The Toronto Star indicated the following:
Eric Kierans is a former federal cabinet minister and professor of economics at McGill University.
Also it indicated that the economic package of the Minister of Finance "comes up empty". As reported in the article, Mr. Kierans said:
The budget as a whole reflects a complete ignorance of, or refusal to deal with, the economic reality of Canada-
This gives us some idea. What does the Canadian business community think of this terrific incentive budget which is supposed to turn the economy around, to reduce inflation and to create employment?
I should like to refer to a letter from Canadian Energy Systems which is located in Peterborough and in Grimsby, Ontario. It reads:
As our Member of Parliament, would you kindly put the fellowing question to the finance minister ... Do you have a mortgage on your own home . . .
As a small-business man, the only way 1 can afford these exorbitant interest rates is to raise the price of the goods 1 sell. Is this not considered by the minister to be inflationary?
I read that letter is answer to the hon. member for Willow-dale who said that the budget is a budget of stability. I do not think the business community thinks it is a budget of stability.
I should like to refer to a letter from a retired bank manager, Mr. Douglas Cruthers. He should be somewhat of an expert on financial forecasts and economic programs. His letter reads in part:
Having been a banker for 43 years all I can say is that this ... is the height of rationalization of the irrational.
All the present policies will accomplish is to rob those who have saved money and put it away to provide for a reasonable standard of living in retirement.
I suggest that the government must soon start to listen to the people of Canada if it is to turn the economy around, to create jobs, to reduce inflation and to strengthen the Canadian dollar.
Now I should like to turn to a letter from rural route No. 11, Peterborough, Ontario, which reads as follows:
My company went bankrupt in 1981 and I have been seeking employment ever since... I have worked very hard all my life and now I need some help. I can't get it... we live on $30 per week for groceries ... I have personally lost everything I have worked for, except the love of my family-
The author indicated that he needed some help from the government. I am sure that gentleman does not feel highly about the economic stability of the present Liberal budget.
The main problem with the budget is that it discourages investment. Investment is the lifeblood of business. It creates jobs, it creates expansion, it spurs growth, and it creates profits which in turn create tax revenue that should be spent through a responsible budget. We have not found that responsible budget. The governement has not created the added revenue which it is the first to realize it needs. It cannot create added
revenue for the benefit of the country by overtaxing people in a recessionary period. It must somehow or other figure out as a government how it will stimulate the economy, put people back to work, return to free enterprise, get out of the marketplace and stop taking over corporations. We as a government cannot run those corporations as well as the private sector. The more we meddle in the private sector, the more trouble we get into. I am sure everyone in Canada is pleased to own a piece of Air Canada and of Canada Post. I do not know how pleased they are to own Petro-Canada. I do not think anyone in Canada, although they use Petro-Canada service stations, have found that the gas is any cheaper. I do not think they are receiving any added service at Petro-Canada service stations which they did not get from private owners. There is nothing wrong with Canadian ownership, but there is a lot wrong with socialism and public ownership. That is the direction in which the government, with the help of the people to my left, is taking us. It was the people to my left who voted the Conservatives out of office. Now we can look at Manitoba and the other provinces in the west, at the huge deficit and at the fact that we are paying 60 to 80 cents per gallon more than we would have paid under a Conservative government, and say that the NDP and the government together have driven us a little further down the road to a socialist form of government. The budget does nothing to stimulate the economy or to encourage investment. In fact it penalizes people for investing both at a personal and a corporate level.
I should like to take another look at the Toronto Star, which is a favourite paper of members across the House. They love the Toronto Star. Let us see what that newspaper says about the construction industry and how it has been affected by this terrific, incentive budget, as the Liberals call it. The article, entitled, "Budget 'killed' rental construction economist says", appeared in the November 14 issue of the Toronto Star under "Budget Highlights". It was written by Denis Grayhurst, and reads:
Finance Minister Allan MacEachen's budget has effectively killed rental construction across Canada for the next six months at a time when vacancy rates are falling, housing economist Frank Clayton says.
"The budget speech deliberately misled people to believe rental construction was being stimulated," he said.
It continued:
Builders had planned and pre-sold buildings on the old basis, only to find the rules suddenly changed. And the change makes the deal much less attractive to investors.
He predicted that up to 4,000 MURB units planned for this year, but not yet sold, will be abandoned. And nothing will be built next year.
"I don't think they (Ottawa) were fully aware of the implications."
He was referring to the implications of the so-called housing program, the mortgage assistance program, and the rental unit assistance program. It is one of the few remaining areas of personal investment in companies taking a risk. At the personal level, an average Canadian today will not be able to borrow $1,000, put it into a starving company, and declare the interest
November 16, 1981

payments on the loan as a deduction while waiting for a return. In other words, if someone got the idea that they would like to open a little restaurant, a corner confectionary store or a service station and found that they could borrow $1,000, there is no way under this Liberal budget of writing that $1,000 interest off. I know the government does not care about that because the mood on the other side of the House is not one for creating the incentive for people to invest money and take a chance to build a piece of Canada.
The government's program is to deal exclusively with the large corporate conglomerates and gain entrance into profitable areas wherever it can, by expropriation if necessary, and to eliminate the guy in the middle and particularly the guy at the top who is on his own.
The government has the gall to reduce the personal income tax of an individual in Canada from 64 per cent to 50 per cent if he makes $100,000 per year. In press releases the government claims to have taken the money from the rich to give to the poor. That sounds good to the government. In practice it is good, but in reality it is not even in the back of the minds of the government, let alone the front of the budget. The government has reduced the amount of tax to be paid by men and women making $100,000 per year. They will now only have to pay 50 per cent tax, yet the government has the gall to claim that it has taken from the rich.
I think we should look very closely at what is happening to small companies that are having a problem raising cash for working capital today. The government is telling them to go to the Federal Business Development Bank. In my riding in Peterborough Mr. Speaker, the local Federal Business Development Bank approved eight applications out of 101 requests for financing in the last quarter. In Peterborough, eight out of 101 small businesses received a loan at the going rate, not a preferential interest rate. The FBDB is an institution that lends money to businesses as a last resort. The last resort in Peterborough is eight out of 101. That is not good enough, Mr. Speaker. It is not what the Federal Business Development Bank was set up to do. It was set up to give assistance.
The government has reduced the amount of the federal bond issue, which makes money available to small businesses at a preferential rate, from $200 million last year to $20 million this year. It has taken $180 million away from the business community and has reduced the money that is available though the Small Business Development Bond issue to $20 million.
That is what the government thinks of small business, Mr. Speaker, and that is why the small business community is going bankrupt at the rate of 5,000, 6,000 or 8,000 businesses per year. They cannot exist without access to money at a reasonable rate.
The Budget-Mr. Rompkey
The list is endless, Mr. Speaker. I am sure you would let me read two sentences from a letter which I received in my office as it pertains to the farm community. It reads as follows:
Because of setbacks in the dairy industry early in our life of this mortgage, production cuts and slowdowns, progress in our farm business has been slower than planned, about two years slower ...
The last alternative is to sell the farm. Not only do I want to keep the farm and farm it, but I can see a worth-while future resulting from our planning and hard work.


Mr. Deputy Speaker:: I regret to interrupt the hon. member but the time allotted to him has expired.


Some hon. Members:: Hear, hear!


Hon. William Rompkey (Minister of National Revenue):: Mr. Speaker, it is with great pride that I rise to speak in this debate. I say pride because this is a budget based on Liberal principles-the principles of a fair share for all and the principle of helping first those who need it most.
It is a budget that recognizes realities. It recognizes that inflation is an enemy growing stronger every day, an enemy that must be fought. All of us, individuals, governments and businesses, must do battle against that enemy, but the economically strong will be called upon to bear the greater burden. Conversely, we must take steps to protect and shelter the economically weak.
This budget provides that protection. It recognizes that provinces and individuals at the lower end of the scale must be helped. Let me cite a number of examples.
A family of four will now be able to earn up to $15,000 without paying any federal tax at all. There are a lot of families in that category in Newfoundland and Labrador, Mr. Speaker, and all of them will welcome this budget.
Tax rates will be reduced for all those with taxable incomes over $11,000. The top combined federal-provincial rate in Newfoundland will drop from 67.9 per cent to 53 per cent. That will mean more money in the pockets of the vast majority of people in my province.
The federal tax reduction will be set at $200 for all taxpayers, but married taxpayers will be able to claim an additional $200 for dependent spouses, thus doubling the tax credit for lower income couples. Moreover, indexing of income tax will continue for 1982, bringing further tax reductions and therefore savings.
The child tax credit will rise from $261 to $293 per child. This will be a tremendous help, Mr. Speaker, to the vast majority of families in my riding and throughout the province, and this assistance will continue and increase.
A reduction in unemployment insurance premiums will also increase take home pay and provide further cash assistance.
Home owners in greatest need have not been forgotten in this budget. Some time ago I received a petition from my

November 16, 1981
The Budget-Mr. Rompkey
riding calling on the government to provide help for those people with unbearable mortgage payments. This budget provides $350 million for home owners. It provides a guaranteed repayment of deferred interest to those whose payments would exceed 30 per cent of their household incomes. For those who do not have sufficient equity in their homes to support interest deferral, the government will pay up to 100 per cent of the interest deferred to a maximum of $3,000.
I am particularly pleased that the small business bond will be maintained, this has provided help to many small businesses in my province and across the country by ensuring loans at a lower rate of interest. The bond will now be available to unincorporated businesses as well as farmers and fishermen.


Some hon. Members:: Oh, oh!


Bill Rompkey: I would ask the same sort of consideration from my colleagues opposite that we gave them, Mr. Speaker. They have their time allocation. I would ask them to make their points then and be courteous enough to allow me to make mine now. The fat cats over there may think that this is not important for their riding.
We should not underestimate the degree of help this budget will provide in a province like Newfoundland, small businesses, particularly those connected with the fishery, are the backbone of many small rural communities in Newfoundland and Labrador, and this measure will be a break for them by reducing their financing costs by six to eight percentage points.
These measures will be a great help to people all over the province. Indeed, an economist with Touche Ross in St. John's, says this budget will benefit Newfoundlanders more than anybody else in Canada.
These are measures that show that inflation is not being fought on the backs of the needy. These are measures which help first those who need it most. These are measures designed to raise up those at the lower end of the economic scale.
It was the Minister of Finance (Mr. MacEachen) who introduced medicare to the House, and Liberal governments throughout the years have had a strong commitment to maintaining high standards in both health care and post-secondary education. This budget reaffirms our commitment. False rumours have been spread all across the country, mostly by the opposition, that federal aid to health and education would be cut.
I received a delegation from the council of the students union at Memorial University in Newfoundland. They pointed out to me the great difficulty the university would have and the students would find themselves in if this were to happen. There was never any intention of cutting funding for health and education. The budget indicates that on the basis of new federal proposals, federal contributions to health care and
post-secondary education are estimated to grow from $11.5 billion in 1982-83, to $19 billion in 1986-87, an annual rate of 13.4 per cent. That is the commitment.
For my own province, this story is as follows: in the five years from 1977 to 1981, Newfoundland received, in cash and tax, $850 million for health care and post-secondary education. Over the coming five years, the federal contribution will be $1,450 million, rising from $221 million in 1982-83, to $366 million in 1986-87. I am happy to say to the students and faculty at Memorial and other post-secondary institutions in Newfoundland and all across this country that we know the value of education to this country, and we intend to keep our commitment. However, some way must be found of ensuring that these funds actually go to finance education and health-


Mr. Laniel:: That's it. That's the problem.


Bill Rompkey: -for while federal contributions have been increasing, provincial contributions have been decreasing. The president of Memorial University, in his convocation speech last spring, pointed out that last year there was only an 8.5 per cent increase in the annual grant from the provincial government to the university at a time when government expenditures are increasing by 12 per cent and university costs are rising 15 per cent. He went on to say:
Another reason why I find the decision of the provincial government so difficult to understand is that it is receiving from Ottawa from the post-secondary portion of EPF more than it in fact spends on the programs approved within that fund. In short, all the dollars spent on the university are federal dollars. I realize that the transfer to the provincial government is unconditional. But the money so transferred was designed to be spent on the programs approved within that fund.
That was a quote from the president of the university in Newfoundland. I think that it is clear from that who is keeping his commitment to education and who is not. However, it will not be enough for the federal government to maintain and increase its support of post-secondary education. In light of what the former president of Memorial has said, ways and means must be found to ensure that those funds actually reach the students for whom they are meant, and are not simply caught up in other priorities of provincial governments. There is no point in allocating funds for education to the provinces if they continue to use this money for other things and, in the meantime, decrease their contributions to education.
In this budget we are proposing that new federal-provincial arrangements be devised for financing education and human resource development by March, 1983. We owe it to students to ensure that dollars earmarked for education go to education and not to something else. Equalization has been a fundamental principle of our federation. This government maintains its commitment to that principle. My own province has always been far too dependent on transfer payments. I think that is a point on which both the federal and provincial governments agree.
November 16, 1981

The task will be to free Newfoundland from its dependency on transfer payments and to make it self-supporting. If a deal can be made on the offshore, we will have taken a giant step toward that goal. I only wish the negotiations that are going on now had started two years ago, as I and others had urged. If this had happened, we would now be much closer to the creation of real dollars from resource development, and discussions of equalization payments would have been far less important. However, they are still important today, and this budget makes new proposals for federal-provincial transfers.
First of all, let me repeat that there will be no cuts in funding for education and health. There will be a loss to Newfoundland of $19.5 million in the coming year as a result of the discontinuation of the revenue guarantee compensation. However, the province stands to gain $11.7 million as a result of budget tax changes. If we subtract, we get a net loss of $7.8 million. However, all this is separate and apart from equalization payments.
We are proposing an improved equalization formula with a more comprehensive measure of fiscal capacity and an Ontario standard. When all elements-


Donald Alex Blenkarn: Not a Canadian standard, an Ontario standard! An Upper Canada standard is what you want! Is that right?


Bill Rompkey: Mr. Speaker, if the-


Donald Alex Blenkarn: Not the Canadian standard!


Bill Rompkey: If the hon. member wants to make speeches on subjects which are close to his heart, including native people in this country, let him rise at the appropriate time.


Donald Alex Blenkarn: I will.


Bill Rompkey: But all of this is separate and apart from equalization payments. We are proposing an improved equalization formula. When all of the elements of transfer payments are taken into account, including the new equalization formula, the cash flow to Newfoundland will increase by $70 million. For the year 1983-84, the cash flow is expected to increase by over $100 million. That is the real story. The bottom line is that when all forms of transfer payments are taken into account, Newfoundland will gain $70 million over the next year and $100 million the year after.
Newfoundland does not want to exist forever on transfer and equalization grants. We want to be equal partners in confederation, contributing and not taking. The government of Newfoundland has maintained this position, and I concur. That is why we are anxious to get on with megaprojects which can help Newfoundland grow. That is why we are offering 100 per cent of provincial type revenues on the offshore. That is why we created the Lower Churchill Development Corporation and put $200 million aside as our share of the equity in the Lower
The Budget-Mr. Rompkey
Churchill project. That is why we are devising ways and means to encourage the building of drill rigs and supply ships in Newfoundland. That is why we are proposing that $178 million per year be spent on transportation to bring the various modes up to standard. We now have $60 million ready to be spent from the ministry of transport budget in Newfoundland on roads, on airstrips and on ferry terminals. However, we cannot spend it because we cannot get an agreement with the province of Newfoundland.
Many economists and boards are forecasting that Newfoundland will lead all of Canada in growth in the coming year, and in view of our great resource potential, I have no doubt that that is true. The best way to develop the economy of Newfoundland would be for both governments jointly to seize opportunities for resource development, rather than continuing dependence on transfer payments.
The Government of Canada stands ready to build a new Newfoundland and Labrador which is not dependent. However, until such time as it is economically independent, we intend to see that it is treated with equity and fairness.
That leads me to measures in this budget which will concern me as Minister of Revenue. Fairness and equity in the tax system require that Canadians of equal incomes pay the same amount of tax and that those with higher incomes pay a greater proportion of their incomes in tax. In the past decade or so, a number of special tax preferences have developed in the tax system which allow some Canadians to reduce their share of the tax burden below what is paid by those on lower incomes. By eliminating many of those tax preferences, we can broaden the tax base and lower the tax rates, generally. Full indexing has been retained for the year 1982, and this ensures that taxpayers will not be pushed into higher tax brackets by the simple fact of inflation. It has helped to maintain the equity of the tax system by preventing the erosion of the real value of the basic tax deductions and exemptions.
The budget proposes, effective January 1, 1982, to repeal the general averaging provision of the Income Tax Act and delete the deduction for the purchase of income-averaging annuity contracts. It also proposes to end opportunities now available for individuals and corporations to defer income tax on capital gains by claiming reserves. A new forward-averaging provision will be made available to individuals, effective-


Donald Alex Blenkarn: Totally indecent!


Bill Rompkey: -for the 1982 taxation year. However, it will not be available to corporations or trusts. This provision will permit taxpayers with large increases of income in any year to average the increases out over future years when they anticipate being in a lower tax bracket.


Donald Alex Blenkarn: Providing they pay interest in advance.

November 16, 1981
The Budget-Mr. Rompkey


Bill Rompkey: The replacement of the general averaging and reserve provisions by this new forward-averaging measure will mean that the tax system will contain one averaging mechanism generally available to everyone.


Donald Alex Blenkarn: It already does.


Bill Rompkey: The Income Tax Act will also be amended to provide for the full taxation of certain employee benefits previously exempt from tax and to provide new rules for determining the appropriate taxable value of other benefits. The budget proposals in this area also reflect the government's attempt to apply the tax laws to all individuals on a more equitable basis.
The finance minister has indicated that my department should regard as income certain fringe benefits, including transportation passes and subsidized or free board and lodging. As these benefits are not available to all employees, the department will in future require that such benefits be reported on the basis of their fair market value and included as part of the employee's income for tax purposes.
Similarly, the rules concerning low interest loans to employees and shareholders will be tightened up to eliminate the exclusions that were formerly accepted. Those exclusions meant that employees and shareholders could receive, tax free, low interest loans of up to $50,000 on the purchase of homes.


Donald Alex Blenkarn: What was wrong with that?


Mr. Deputy Speaker:: Order, please. The hon. minister has the floor.


Bill Rompkey: I am glad that you rebuked the spokesman for the great corporate interests of this country, Mr. Speaker. As I was saying, such tightening of the tax rules creates a system more equitable in terms of taxpayers who are not privy to such arrangements.
The budget also proposed to tighten the rules of the use by an employee of the company's car. The taxation of the benefit that the personal use of the company car provides to the employee is determined as a minimum standby charge. That standby charge is to be increased one-and-a-half times in an effort to bring the value of the benefit more into line with the actual benefit of the car to the employee. However, in cases where the employee feels the value of the benefit exceeds his actual personal use of the car, he will be able to present documentation to the department to justify the lower benefit.
Another fringe benefit that will be taxable is the employer contribution to supplementary health or dental plans. Employer contributions to medical and hospital insurance plans administered by the provinces are currently taxable as income from employment and will now be extended to include contributions to other types of health or dental insurance plans.
The budget has also proposed that termination payments received by employees as of November 12, 1981, be fully taxable. There will no longer be a limit of six months' salary on the amount of the termination payment that is taxable.
On the question of ending one's employment, there is another important change proposed; this one to affect retiring allowances. As of November 12, the maximum amount of such retiring allowances that will qualify for a rollover to a registered retirement savings or registered pension plan will be $3,500 times the number of years of employment, excluding those years that the employee was a member of the employer's registered pension plan.
Business firms will not be permitted to deduct their contributions to a deferred profit-sharing plan that provides benefits to the principal shareholders of the firm.


Donald Alex Blenkarn: The profit should not be shared?


Bill Rompkey: Nor will such plans be accepted for registration in future.


Donald Alex Blenkarn: Don't share the profits.


Bill Rompkey: I would ask the hon. member with a size eight brain and a size ten mouth to please be quiet.


Donald Alex Blenkarn: Read on.


Bill Rompkey: Personal service corporations, established by senior executives and high-income individuals to convert their employment income into business income eligible for small business tax incentives will, in future, be subject to the full corporate income tax rates. In addition, expenses which are not ordinarily deductible by employees will also not be deductible when incurred through such personal service corporations.
Finally, in the area of northern benefits I am pleased to say the remission order has been extended until the end of 1982. This will allow the government time to review the need for and the means of providing alternative forms of assistance to employees working in the north and in isolated posts. However, the tax relief under the remission order will be confined to benefits granted under employer-employee agreements reached before November 13, 1981.
The north is a special area of Canada, resource rich but often isolated and sometimes seen as inhospitable. And yet the future of this country will depend in no small measure on how we develop our northern resources. Those who live to the south must recognize that people in the far north have greater costs and fewer services. Often they feel cut off from the rest of Canada which they refer to as the outside. The extension of the remission order and the plan to replace it with a new policy is a signal to people in the north that they are full partners in confederation and that their special circumstances will be addressed with fairness and equity.
November 16, 1981

I would like to touch on a few other areas covered by the budget that I know are of concern to many taxpayers. For example, the question of income from properties.
Under the present tax law, investors in rental or commercial developments have been able to obtain an immediate write-off, in full, of so-called soft costs incurred prior to completion of construction. Such soft costs include the interest on money to finance development, land taxes, legal and accounting fees, mortgage fees and other such costs. As of November 12, costs of this type will be capitalized rather than being immediately deductible.


Donald Alex Blenkarn: That stopped a lot of deals.


Bill Rompkey: I must also deal with the important issue of principal residence.


Donald Alex Blenkarn: That will make sure a lot of people won't have homes.


Bill Rompkey: As you are aware, the Income Tax Act has allowed every person a principal residence free from capital gains tax. The budget proposes that after the 1981 taxation year, a married couple should enjoy the benefit of only one principal residence between them for the purpose of capital gains.


Donald Alex Blenkarn: They should get a divorce, then they can have two.


Bill Rompkey: The gains on the second property that have accrued to the end of 1981 will continue to be free of capital gains, but after 1981 will start to accrue capital gains for tax purposes.
Again on the question of capital gains, 1 want to mention a proposed change to the Income Tax Act that will affect businesses and professionals. After November 12, no capital cost allowance will be allowed on art objects and antiques with the exception, and this is important to note, of initial purchases of the works of living Canadian artists. Until now, art work and antiques bought by business and professional firms could be written off at 20 per cent a year. In fact, such works of art and antiques most often appreciate in value rather than depreciate, and are often personal investments.
The customs and excise branch of my department will also be involved in the administration of certain budget changes. The federal sales tax will be moved from manufacturing to the wholesale level effective July 1, 1981, and the rate will be reduced so that revenue will not be affected. This new structure will remove a number of inequities as well as the present bias against Canadian-produced goods.


Donald Alex Blenkarn: And diddle the consumer.


Bill Rompkey: My department will be discussing this matter with those affected in the near future. Revenue Canada will also be involved in administering improvements in the general preferential tariff for developing countries. Its coverage will be extended and rates reduced on a range of products of interest
The Budget-Mr. Mayer
to developing countries. As well, duty free entry will be granted for imported products designed for disabled persons. Is the hon. member against duty free entry of goods for disabled persons? He is against that. Let the record show the hon. member for Mississauga South (Mr. Blenkarn) opposes that.
The main thrust of this budget is the fight against inflation. By bringing inflation down we will bring interest rates down and encourage investment. All across the country are projects waiting to be started. In my own province there are projects connected with offshore oil, the fishery and hydroelectric development which can create thousands of jobs. If the Government of Canada curtails its expenditures and thereby withdraws from the borrowing market, it will leave room for those firms which want to invest in these projects and create these jobs.
This country has a fantastic potential and it is the aim of this government to see that potential realized. But that aim will be difficult, if not impossible to reach, if we fail to lick inflation. And all must fight, each according to his capacity. Obviously, the economically powerful are better able to fight, and this budget issues the marching orders and the weapons for that fight. But each and every Canadian has a responsibility to fight inflation by living within his means and by keeping his own personal expenditures to a manageable limit. The battle against inflation must be won and can be won. But it must be carried on with fairness and equity, giving the rich a greater burden than the poor. That is what this budget does.


Mr. Charles Mayer (Portage-Marquette):: Mr. Speaker, I find it very interesting to follow the Minister of National Revenue (Mr. Rompkey) because it is his department and his responsibility to look after the implications of this budget and he, of all people, should understand them. When he rises in his place and says that he is proud of this budget, I have to feel sorry for him because obviously it does not take much to make him proud. When he talks about Liberal principles, the principle of equity, I believe it is already evident by the reaction of Canadians that the only equity which will be shared as a result of this budget is misery. That is exactly what this budget will cause from one end of the country to the other.
I recently had a conversation with my colleague, the hon. member for Calgary North (Mr. Wright) who told me that a contractor in his riding laid off 40 people this morning as a direct result of this budget. Although the minister talks about projects waiting to start, this was a project already in operation which has been forced to cease operation because of the provisions of this budget. The minister constantly talks about "marching orders". The only marching order issued by this government as a result of the budget is a marching order to go backward economically.
When we talk about an inflationary budget, the government should realize its own responsibility toward some of the things the minister so piously espoused tonight when he suggested that every Canadian must do his part to fight inflation.
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The hon. member for Peterborough (Mr. Domm) pointed out the callous waste of money being spent on advertising in this country and the ridiculous use of JetStar planes to fly cabinet ministers across the country needlessly. The government should be setting an example for Canadians if we are to fight inflation.


Some hon. Members:: Right on!


An hon. Member:: That would be un-Liberal!


Charles James Mayer: There are many issues to deal with, Mr. Speaker, but I would like to begin by posing the question of what a budget should be. If I were the Minister of Finance (Mr. MacEachen), one of the ways in which I would approach a budget would be to consider what Canada is. It is very similar to a very large corporation. A budget should provide solutions to problems facing Canada, and this is something that this budget does not do. The record of this government for the past 12 years has been disastrous. We can use statistics to prove this until people get very tired of them, but since the Prime Minister (Mr. Trudeau) has been leading the government, the interest rate payments have risen to an amount equal to the total budget for the federal government when he came to power in 1968. That is an explicit example of callous government spending.
When the voters go to the polls, they are in effect hiring a manager for a large corporation. If we view the performance of this government as we would the performance of a manager during the term he is hired, then this government comes up short.
I would like to turn now to the NDP. The reason this government is in power is that almost two years ago the NDP proposed a motion which defeated the Crosbie budget.


An hon. Member:: We had an election.


Bill Rompkey: Just like the one you are going to have tomorrow in Manitoba.


Charles James Mayer: That is right. And I hope some of the people are watching and paying attention to what I am saying. My point is that it was an NDP motion which defeated the Crosbie budget. We have heard the New Democratic Party talk in the last year about getting help for home owners and for people suffering from high mortgage interest costs. I point out to them if the Crosbie budget had been passed, there would have been approximately $1,000 or more available to each home owner in Canada to assist him with his interest payments on his home.


An hon. Member:: Subsidize the banks.


Charles James Mayer: This would have been available without the need for the home owner to beg for the money. It is my understanding of the budget that for a home owner to be eligible for the $3,000 provision, he must declare all his debts and be able to lay out his complete financial picture. When the Department of National Revenue decides that the home owner
is next to bankruptcy, it will give him the $3,000. Assistance would have been available to a home owner under the Crosbie budget without any questions asked. It would have been a dignified way of redistributing wealth across this country. That is something the New Democratic Party was against. They were also against the energy tax credit which resulted from an 18-cent a gallon excise tax on gas. I do not now hear the NDP talking about the additional $1,400 in revenue this government will derive from the last energy price agreement.


Mr. Rae:: That is not true.


An hon. Member:: They like high gas prices.


Bob Rae: Tell the truth.


Charles James Mayer: Are you now in favour of the energy tax credit you voted against two years ago? They are going through a conversion, Mr. Speaker, only it is a selective conversion. They like to forget conveniently some of the things they voted against and be conveniently in favour of some of the things which they realize now may have benefited Canadians.


An hon. Member:: How will you vote tonight?


Charles James Mayer: Mr. Speaker, I see you sitting on the edge of your chair paying attention to my every word, but I have a very rude group to my left who are chirping away like a bunch of chipmunks. When we get their attention I hope the truth hurts them and I hope Canadians will realize some of the benefits they would have had under the Crosbie budget if it were not for the chirping chipmunks.
A budget should provide inspiration for the country. It should not be hard to give Canadians a challenge and inspire them to work hard and be productive. Canada has more natural resources per capita than any country in the world. In my area of western Canada, we have more farmland per capita than any country in the world. What we are looking for is ways to be productive. However, this budget does everything possible to discourage production.
The minister spoke about some of the costs which were allowed to be claimed as an expense in the year they were incurred and which will now be capitalized. One of the results of this will be to discourage housing starts and prevent production. This budget discourages production and does not do anything to take advantage of the potential of our country. It provides for the government to take a larger share of Canada's production.
I have seen figures which show the government will take a larger share under this budget than it has at any time since 1946. The Minister of National Revenue talked about that. He was proud of the renewed effort of the government to become more involved in the private economy. The private economy has been the reason for this country's productivity in the past.
The minister also spoke about the small business development bond. The government has destroyed the basic concept of the small business development bond, and the minister admitted as much. He did not call it a development bond, he just
November 16, 1981

called it a small business bond. It will only be available after the end of this year to people in financial difficulty. It is not for development, it is simply there to help people in financial difficulty. It is a survival bond, and I suppose we need everything we can get in order to survive with the kind of ministers we have in this government. We may not even survive the winter as a result of the change in the Small Business Development Bond policy and many other detrimental effects of the budget.
The only beneficial provision dealing with the Small Business Development Bond is that it is extended to unincorporated business. We have suggested that on this side of the House and we are pleased to see it in the budget. It will help the farmers and-


An hon. Member:: The fishermen.


Charles James Mayer: I cannot forget them. However, as the hon. member for Peterborough pointed out, it has been cut in half to $20 million. We have all had a chance to make our plea that the small business development bond be expanded to cover unincorporated businesses, for which it was originally intended. About five months ago I had occasion to talk to the Canadian Federation of Independent Business. They pointed out to me that from the models they worked with, they arrived at a figure which showed the Small Business Development Bond was the cheapest way of creating jobs in Canada, less expensive than some of the DREE programs.
It seems to me that if the government were really serious about renewal and creating jobs in the economy, it would have taken a better look at the small business development bond and not changed it to the point where it will be ineffectual. It has been changed so that the interest will apply only at rates above 6 per cent. It has been said many times that the government has gutted the small business development bond. That demonstrates that the philosophy of this government is very similar to the philosophy of the New Democratic Party, and that is that everything produced by the private sector or by the individual is the government's and that only by decree and by the generosity of the government it allows people to keep what is rightfully theirs. That is not the way to encourage production or to attack inflation. The best way to attack inflation, as we all should know, is to encourage production and, as I have already said, this budget will discourage production. That is already happening across the country. In fact, if the minister were to be honest and straightforward and if he were to look at the editorials from across the country, he would have to admit that this budget has been questioned and condemned by more newspapers and more people than any other budget presented-in my memory, at least.


Mr. King:: Ever.


Charles James Mayer: I point out to the minister that some regulations will have to be changed, and I hope he is ready for the work
The Budget-Mr. Mayer
his department is going to have to do. According to a summary done by one of the chartered accounting firms in Canada:
The tax changes can only be described as massive; there are 165 resolutions dealing with the Income Tax Act, 3 amendments to the Income Tax Application Rules, 10 changes to the Petroleum and Gas Revenue Tax act, 17 resolutions dealing with the Excise Tax Act, not to mention the amendments (or perhaps a brand new act) required to shift the level of tax-
It seems to me that the budget falls very short on that score as well.
A budget should be fair to all people. All people should be able to take advantage of its provisions equally, and the provisions should be simple and straightforward. It seems to me that the people who will get the best advantage from this budget are tax accountants and tax lawyers. We have already seen evidence of that. The Income Tax Act is a massive document, and it is a horrendous job for the average person to try to understand it. In fact, I do not think the average person has a hope of understanding it. Therefore, he will have to rely on tax lawyers and tax accountants who will have to be in conversation and correspondence with the minister's department. This will create problems and prevent the country from being as productive as it is capable of being.
Getting to my area of the country, I would like to talk briefly about some of the transportation problems we have there and about the fact that this budget does not deal with those problems at all. In the Speech from the Throne a year and a half ago the Prime Minister promised double tracking. That was laughable. It was mentioned previously in the election campaign of 1980. We thought of it as a joke at that time. It would be double costing, double dealing, double talking- anything but an improvement on the transportation system, which needs to be improved so that all of Canada can take advantage of western Canada's ability to produce and export grain.
Saturday was a very sad day for me. I was in Portage la Prairie and watched the last VIA Rail Super Continental pull out. The Prime Minister's idea of double tracking seems to be to take away half our passenger service. I suppose that is what we have come to expect from the Prime Minister. He promised no wage and price controls and then brought them in. He promised that an 18-cent increase in the price of gasoline would not happen. The price went up 80 cents. We should learn that when he says double track, he means half track. That is exactly what has happened to our rail passenger service in western Canada.


Erik Nielsen: Half track Prime Minister.


Charles James Mayer: That is a good handle for him. What has happened is an insult to the good people who have dedicated their lives to the railroads of this country and to providing transportation for Canadians from one coast to the other.
To talk about something other than rail passenger movement, the whole area of grain transportation is in a crisis because of our ability to move grain to export position. We have seen no movement at all on the part of the Prime Minister, the minister in the other place responsible for the

November 16, 1981
The Budget-Mr. Mayer
Canadian Wheat Board or the Minister of Transport (Mr. Pepin) to resolve the problem the railroads tell us they are having in relation to earning not enough money from the movement of grain to maintain the kind of service they would like to maintain. We see no movement at all, and it has been said many times before-and needs to be said again-that when it comes to action on the Constitution, it is fine for the Prime Minister to expect that there be unanimity so that he can act on the basis of a consensus, but when it comes to something with which the government should be able to deal on a day to day basis, he expects unanimity among the many producers and producer groups in western Canada on how this very important problem should be resolved. If the government is truly interested in a united country, it should show leadership and provide benefits not only for the part of the country from which I come but for all parts of the country. The government has failed to do this, and that demonstrates again how bankrupt it is.
That reminds me of what crossed my mind when the Minister of National Revenue spoke about renewal. That bunch over there has been there for so long it is totally incapable of renewal, and that is reflected in the budget. The Minister of State for Finance (Mr. Bussieres) is shaking his head. I have spoken with him many times, and I would be happy to see him accept many of the suggestions we on this side have made in relation to small businesses and farmers. At least he should investigate some of those suggestions so that we can find out whether we can take advantage of them. I have sent letters to the Prime Minister and the Minister of Finance suggesting some things which could be done. The Department of Finance prepares answers and sends them back to us. The answers are ridiculous and show no understanding of the problems. There is no indication that the department is looking at our suggestions with a sincere intention to do anything about them.
It is disturbing to return to our constituencies and to talk to some of the younger people in them who are attempting to get started. They want to have property, to own farms and to own homes so that they can take pride in themselves and in their country. After all, that is why this country was settled. This country held out hope to people who came to Canada from all parts of the world and homesteaded property which was not settled. People could own land. However, this government, supported by the New Democratic Party, deliberately follows a high interest rate policy. Because of that, it will be very difficult for many young people who are starting out. I have had conversations with young farmers in my riding who have grown very good crops this year. If sold, those crops will generate several hundred thousand dollars each, but these young people are in very serious trouble because they cannot move their grain.
This brings me back to grain transportation. Producers will not be able to sell as much grain as they would like in order to meet their commitments, and there is a distinct possibility that they will not be around next spring to sow another crop. That is a terrible thing to allow to happen to a young person who is
starting out. Many young farmers have been in the business four or five years and are just now getting organized and obtaining machinery. They have two or three crops under their belts. This gave them some experience. They know the kinds of crops to grow and are demonstrating their ability to be productive. However, through no fault of their own-we can clearly lay the blame at the door of the federal government-they are now unable to move the products they produce. They are unable to generate cash and are in very serious trouble and may not be able to farm another year.
Those are the kinds of things which should have been attacked in the budget. There should have been a genuine attack on inflation. We should be getting at inflation from the productive side. We should encourage production around the country. Our socialist friends in the New Democratic Party and in the Liberal Party do not understand that we cannot continue to redistribute wealth unless somebody first generates it. We know from experience that the best method of generating wealth is to give initiative to the individual and to rely on the private sector and not the big government sector. People wonder why Russia is so unproductive. I will tell hon. members the simple reason. I would like the Minister of State for Finance to listen. When a Russian farmer raises a litter of piglets in the middle of winter and it is 40 degrees below zero-and it gets that cold in western Canada-the Russian farmer will not leave his mama and run out to the hog barn and lie with the sow to help save a couple of extra newborn pigs to sell the next summer, because they are the state's pigs. In a private economy the individual farmer has pride because he knows that if he saves a couple of piglets, he will have extra income the next summer. That is a simple lesson, but I do not know whether our two socialist parties will ever learn it. It is a lesson that applies in the small farming industry and the small business industry and it applies to the home owner who takes pride in his dwelling.
The hon. member for Peterborough read letters from young constituents of his who are having trouble hanging on to their homes. The same applies to them. They want to own their homes. They want to have pride in themselves. They want to be part of the country and to be productive, yet this government prevents that by some of the crazy things it does. I think the only election promise hon. members opposite could have fulfilled would have been a promise to do everything possible to throw a monkey wrench into the operation of the country in order to screw up the economy. That is the promise hon. members opposite are fulfilling. In fact, if they had promised that, I do not think they could be doing as good a job as they are doing, as evidenced by what we heard in the budget the other night.
There are many more items to talk about in the budget. We heard on budget night that there would be some assistance to farmers through the Farm Credit Corporation. An additional $45 million will be made available to assist farmers in meeting interest costs when they have financial problems. That is a
November 16, 1981

laughable amount. I want to put it in context so that it can be understood. On average, it amounts to about $160 per farmer right across the country. When you look at the average amount of interest now being paid by farmers, the average farmer pays $7,000, that is right across the country. I get that figure by dividing the total amount of interest being paid across the country by the number of farmers. Admittedly it is a crude way of arriving at it, but it does make the point that the amount of assistance available in the budget to farmers is minimal.
What could have been done to provide some immediate cash flow to grain farmers would have been to raise the cash advances paid to them. Something could have been done with our transportation system so that people would have the chance to earn money rather than borrow more. This government fails to see that in order to attack inflation it must do something besides raising interest rates. If it had any business sense it would know that one of the best ways to attack inflation is to encourage production.
I am a relatively new member of this House. I came here as a result of my constituents favouring me with the majority of votes in 1979, approximately two and a half years ago. In some ways 1 feel sad. It is not an act of pride to get up in a budget debate and condemn the government that brought down a budget which was not as the Minister of National Revenue said it was. That carries a certain amount of sadness because this is a great country. It has a tremendous potential. Those of us elected to this House have a chance to meet people from different areas of the country. We travel more than we would normally travel in private life.
It is a shame we cannot do a better job of realizing this country's potential. One reason seems to be that we are always fighting each other. I do not think there has been a time in history when we have been so much at war with each other. It is unprecedented that the provinces are taking the federal government to court over the Constitution. Just recently the provinces took the federal government to court over cutbacks in rail service.
Surely the federal government can show some leadership and iron out some of these problems in order that we can again have good will in this country. We should go to work realizing the potential that we have in this country. That is the sad part about this budget.
The Minister of National Revenue could not have looked at the budget papers. I use him as an example in order to try to make the point that we should be straightforward with each other and describe the situation as it is. Over the next five fiscal years, my province will lose $219.4 million in transfer payments. That is on page 55 of the Fiscal Arrangements in the Eighties, part of the budget documents.
The Minister of National Revenue said that would not happen, that there would not be any reductions in transfer payments. Either he has not read the figures or he does not understand them. I find it inexcusable that a minister of the
The Budget-Mr. Tardif
Crown would get up and say that no province is going to lose. I will be happy to have the minister check the record tomorrow.
The minister mentioned that Newfoundland would gain. A minus to me means less. There are five columns, each with a minus. If you total them, it amounts to $219 million over the next five years that Manitoba will lose in transfer payments. Surely there should be a better way to work out things rather than always arguing with each other. That is what makes me sad at having to get up and speak in this budget debate.
I would have liked to make some points in my speech saying that we are very happy with the budget, we can look forward to better times, we have some potential, we have more natural resources per capita than any country in the world, our resources are in demand around the world, we are fixing up our transportation system to take advantage of that, and our native people are happy because they do not feel they have been shortchanged in the bill of rights in the Constitution. However, we cannot say those things, and that makes me sad. This budget will make the whole country the poorer for it.
I hope that those who speak subsequently in this budget debate will take some of these matters into consideration and try to be constructive so that we can realize some of the potential this country has in order that everybody can partake in the wealth that Canadians have from coast to coast.


Mr. Alain Tardif (Richmond-Wolfe):: Mr. Speaker, in the course of this debate, I should like to express my views on the budget. Like the vast majority of Canadians, my constituents in the riding of Richmond-Wolfe which I represent in this House are also affected by inflation, unemployment and high interest rates. In my riding, which is semi-agricultural, the economy is highly dependent on agriculture, the asbestos, paper and footwear industries and, of course, on small and medium-sized businesses. In addition to the extremely difficult economic situation which has an impact on the daily lives of my constituents, there are two major problems facing two of the larger communities in my riding: the asbestos industry in Asbestos and the footwear industry in Richmond.
I must say a few words on these two subjects, but before elaborating any further, I should like to put before the House, with your permission, Mr. Speaker, some pertinent data on the subject. First of all, the asbestos market is going through a very difficult period. There are two reasons for the slowdown in this industry, one of which is that the construction industry is stagnating in most asbestos-importing countries. A direct consequence is a substantial drop in orders for producers. Furthermore, the asbestos market is suffering the damaging effects of the very poor reputation this natural resource has acquired. In this respect, the federal government has taken the excellent initiative of organizing a world conference for the purpose of clarifying this issue so that, hopefully, we will once again be able to use this mineral to its full extent, for the greater good of the industry, its workers and the Canadian

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economy. Until then, I am asking the government to act quickly in order to provide, and provide quickly, concrete assistance to hundreds of workers who have lost their jobs.
There is in fact an excellent program that was announced in this government's previous budget, which provided for a $350 million fund to provide relief to workers who were suddenly without jobs. Asbestos and the workers in the asbestos industry want our attention and above all, they want financial aid. The provincial governement's attitude to workers in this sector has been passive and indifferent. It has spent or will spend more than $100 million during the next few months without creating a single job. I say, with due respect, that our government can and should intervene on behalf of these workers through the fund I just mentioned. The Canadian government should also pursue and intensify its efforts to develop markets for asbestos, an industry that provides very well-paid jobs. Although asbestos is of prime importance to the economy of my riding, since it provides jobs that are much sought after, obviously because of the wages offered workers in the mining industry, another activity sector in my riding that is just as important is the footwear industry.
I agree that the wages are somewhat lower than in the asbestos industry. Nevertheless, this is basically an essential industry. The footwear industry now needs very specific measures to safeguard its market. We have to look ahead and develop a good quota formula. The wish to replace the footwear industry by high technology industries offering higher salaries is certainly worth while, but this could have disastrous results for several constituencies, including my own.
Indeed, the footwear industry is very decentralized and has plants in over 60 constituencies in Canada. Is it realistic to hope for any industry to settle in as many constituencies as that? The reason is very simple; investors usually look for densely populated centres in which to invest. I therefore believe it essential to regulate imports so as to allow manufacturers to produce according to their capacity, which will create thousands of new jobs.
At the present time, this manufacturing sector provides employment for nearly 20,000 Canadian workers divided equally between Ontario and Quebec. Until quite recently, these workers met about 43 per cent of the Canadian demand, while the various companies have the capacity to meet over 60 per cent of the demand. What is extremely interesting is that if the industry were to produce at full capacity, this would automatically result in the creation of thousands of new jobs.
In December 1980, the government renewed the quotas for a year. Presuming that the quotas would be abolished very soon, the importers glutted the Canadian market with imports, taking a large share of the market away from Canadian manufacturers to such an extent that their share is now estimated at 37 per cent and lay-offs now exceed 3,000. In these circumstances, it is a matter of extreme urgency to take aggressive action to protect adequately the Canadian market
for the benefit of Canadian footwear producers, and this in the best interests of manufacturers, workers and consumers. A lack of protection for this major manufacturing sector of the Canadian economy would eventually result in the loss of thousands of jobs and the complete disappearance of this sector. And finally, which is also very important, the consumer would be at the mercy of importers.
After these few comments about the two major concerns of my constituency and of hundreds, and even thousands of my constituents, I would like to deal specifically with this budget, which affects and will continue to affect all Canadians including all my constituents. In the weeks preceding the budget speech, the opposition was clamouring for it, probably being convinced that the budget would be in its favour and would enable it to improve its increasingly dull image. The opposition then believed that the budget would reduce the purchasing power of Canadians which had already been eroded by inflation. It perhaps imagined that the government was trapped. In other words, the opposition believed that it would capitalize on the budget. Finally, the Progressive Conservatives saw the budget as a means of scoring a few points with the Canadian voters. But the budget contains nothing of the kind, quite the opposite! The Minister of Finance (Mr. MacEachen) understood that it was essential to help the Canadian people who are hard hit by the ill of the century, namely inflation. He certainly could have increased taxes significantly on the one hand and redistributed revenues on the other by creating all sorts of programs. But he did not fall into that trap. On the contrary, he preferred to show confidence in Canadians by reducing significantly the tax burden for 5.8 million taxpayers with a taxable income over $11,120.
Mr. Speaker, who are the true victims of inflation? Which Canadian men and women suffer most from inflation? They are the low wage earners, the middle class, the Canadian men and women who work in mines, in the footwear, the textile, the clothing or the paper industry and agriculture. The great majority of these taxpayers have no way of protecting themselves against inflation even though some collective agreements contain provisions to that effect. These same taxpayers are not able to claim the equivalent of the loss in their purchasing power. They have to hear it without any kind of protection by depriving themselves of things which for a number of them are simply essential. Think of those who sign a two-year collective agreement without a COLA clause. There are many such people in Canada, especially in my constituency, and their reduced tax burden will allow them to cope better with those distressing economic circumstances.
This Liberal government has realized how important it is to set forth clearly and permanently the meaning of two significant concepts: equity and justice. Thus, the budget gives a real meaning to those two important concepts, as evidenced in several sections. I remember rather well the last Progressive Conservative budget. I agree that some aspects of that budget could have seemed rather generous. On the other hand, the
November 16, 1981

reality was very harsh for most of the electorate. The majority had to bear the cost of programs set up for a small minority. The transparency and equity of the budget brought down by the the Minister of Finance (Mr. MacEachen) was rather obvious the day following the budget, and in that connection 1 should like to quote a few headlines in the main French dailies on November 13.
Le Droit: Two targets of budget:
The rich and the provinces will pay
-MacEachen's budget: For 12 million taxpayers, $210 less on average.
Le Devoir: Modest aid to home owners-
MacEachen removes fiscal loopholes.
Business will pay 25 per cent more to treasury.
Journal de Montreal:
-$350 million for home owners -No tax increases for most taxpayers -Tax cuts for small and average wage earners -How the rich get caught -Ottawa at war with tax evaders.
La Presse:
-MacEachen's budget: Ottawa will make the wealthy and the provinces pay
-End of tax havens
Thus, most Canadians will enjoy quite substantial and significant tax cuts, while the rich and wealthy will he hit by tax increases. Inflation contributes in many cases to make the rich richer and to impoverish dramatically not only small wage earners but also the middle class.
That vast majority of electors who are becoming increasingly vulnerable to hight interest rates and inflation had to be taken into consideration. The fiscal renewal, or Canadian taxation reform, shall in the next few years restore the balance required to allow people to cope with the dramatic effects of inflation, those Canadians who, in many cases, were the favourite targets of the taxers because of their numbers. They can now reckon with that fairness and equity in the way the tax load is distributed.


Some hon. Members:: How true! Hear, hear!


Alain Tardif: Those tax cuts will doubtless be especially welcome to Canadians in Quebec who, in recent months, have been riddled with a lot of indirect or camouflaged taxes, in many cases, hypocritical taxes: I mean, amongst others, the increase in hydro rates, automobile registration costs insurance premiums and various other administrative costs. Contrary to
The Budget-Mr. Tardif
the principle of equity on which this budget is based, Quebecers who already carry the heaviest tax load in Canada, also have to face shocking cost increases in various forms, and that whether or not they can afford to pay.
In my humble opinion, that is the aspect of the budget which is the most outstanding. All the more so that the budget is brought in at a time when the majority of experts agree on the need to reduce the areas of government spending which have direct effects on inflation. Those same economic experts give as much weight to the need to reduce government debts. The November 12 budget clearly meets the need for restraint. The government, on the one hand, will cut its spending from 20.6 per cent of the gross national product in
1981-	82, to 19.2 per cent in 1985-86 while, on the other hand, reducing the federal deficit to a considerable extent during the
1982-	83 fiscal year. In fact, under the budget, financial needs which represent 3 per cent of the GNP this year, will decrease to 1.7 per cent in 1982-83 and to 1.2 per cent in 1985-1986. In other words, the deficit forecast for 1980-81 was $12.2 billion. In fact, it amounted to $10.1 billion, that is, $2 billion less than expected.
Mr. Parizeau, in Quebec, should perhaps follow the example of the Minister of Finance or seek his advice. For next year, 1981-82, the deficit forecast of a year ago, which was $11 billion, should in fact amount to something like $9.8 billion. Within a few years, if Mr. Parizeau remains Minister of Finance for Quebec, the deficit of the province may very well exceed that of the central government. Of course, such a determination to reduce government spending to that extent, for the good of all, naturally has an impact.
Of course, I should have liked to see more money allocated to new housing starts. I should have appreciated a more generous financial assistance to Canadians who now or in the near future must renew their mortgage. On the other hand, I am fully aware that such measures would have considerably impeded the fight against inflation. In my opinion, Mr. Speaker, that is the gist of this debate in the House. Should we spend billions of dollars to set up new programs? Should we increase considerably government spending? Should we increase the deficit? Should we increase the tax burden of Canadians to Finance part of these expenses? An affirmative reply to these questions would mean a still more dramatic inflation in the near future. The Canadian dollar would take a dive and interest rates would rise and not fall. As a direct result of this policy which appears to be the only one sought after by the Progressive Conservative Party and the New Democratic Party, the average voter at whom the new budget is aimed, would be literally choked, would become extremely vulnerable and sooner or later absolutely incapable to meet his most basic obligations. On the other hand, a negative reply to these questions is to demonstrate responsibility and maturity, because we have reasons to believe that the rate of inflation will decline very shortly, which means that Canadians will

November 16, 1981
The Budget-Mr. Tardif
benefit fully from their labour. Hon. members of the Progressive Conservative Party are probably eager to see their housing policy reactivated, together with a program costing several hundred millions, if not billions of dollars to help Canadian home owners who must renew their mortgages. What would they pay these costs with? With western oil? Of course not, since the previous Progressive Conservative administration had sought a lot less than the current Liberal government in the sharing of oil revenues.


An hon. Member:: The friends of the companies!


Alain Tardif: The reply to this question is quite simple. They would have forced the Canadian men and women who will be entitled to tax reductions instead of tax increases under this budget, to pay these costs. Obviously they would want the several millions of Canadian taxpayers who are already in dire straits, to foot the bill, made probably heavier by a higher rate of inflation. This kind of reasoning is an insult to common sense.
As to the New Democratic Party's reaction, I think that it can be described as shameful if not scandalous demagogy. Hon. members of that political formation are truly irresponsible when they deal with financial issues. The fact that nearly 12 million Canadians will benefit from an average reduction of $210 in 1982 will have extremely positive effects on the Canadian economy. This loss in revenues which will exceed $3 billion in 1982 will be offset by tax increases which the government will impose on 795,000 people, corporations included of course. Who are these 795,000 people, Mr. Speaker? They are taxpayers who contribute to a very large extent to the Canadian economy, who very often invest money and head corporations. Usually they are also the ones who create jobs. They have a prime responsibility to discharge on Canada's economic scene. Should this be a reason to alleviate their tax burden, as the Progressive Conservatives would have it? In my view, Mr. Speaker, we should grant them incentives to invest in job-creating industries. We should even enter into partnership with them. We should even supply these job makers with a favourable climate, valuable indications, because otherwise they will lose confidence in the future of Canadian business, and will probably invest where guarantees for success are greater. Although they are part and parcel of Canada's economic future, I believe that in periods of difficulty as the one we are now going through, in this inflationary context that affects the global economy, I believe the haves must assume obligations, responsibilities commensurate with their ability to pay.
Of course they are affected by inflation, but, on the other hand, contrary to most Canadians, they do not support the dire and dramatic consequences of inflation. The MacEachen budget was aimed at restoring a balance that seems to me most fair and equitable in the circumstances. The need for such a balance seems to me all the more obvious that those big
interests are faced with a number of opportunities for extending their involvement in the development of our Canadian economy. Indeed, the loopholes that have been plugged were a lot more profitable to the individuals than they were to the Canadian economy. The cost of the estimated tax reductions, to the tune of $3 billion, will be offset partly by increases to be borne by those in the higher income brackets, and partly by additional revenues resulting from recent agreements with the oil producing provinces. Together, these added revenues more than compensate for the $3 billion loss. Therefore, the government may reduce its deficit while helping Canadians beset by problems of inflation and interest rates.
The inflation and high interest rate problem is particularly acute in the case of small businesses, farmers and home owners who must renew their mortgage. The budget answer to that serious problem is the inflation fighting strategy of deficit reduction. However, specific help has been provided to help those groups most in need. The budget includes an envelope of $400 million, $50 million of which will be used to subsidize loans to farmers, the remainder, or $350 million, will help home owners who cannot bear the high mortgage costs and will also be used as an incentive for home building. Also, home owners will be able to obtain a government guarantee for their loans with lending institutions.
With regard to small and medium-sized businesses, which are the major job creators in this country, the budget provides for a one-year extension of the Small Business Development Bond program. The program will also be extended to include not only corporations but also small unincorporated businesses and farmers. Also, loans will be granted only to businesses experiencing financial difficulties. With this much appreciated and sought after program, the cost of financing for those who will take advantage of the program will drop six to eight points. My first reaction to these measures was somewhat mixed as I thought the amounts were not enough to encourage the construction of new housing units. But upon reflection, I realized that because of the government's determination to lower the deficit, combined with an anti-inflation strategy, the upward pressure on the interest rates would somewhat be eased.
To manage, Mr. Speaker, is to plan and to make choices. I for one go along with the decision to fight inflation and higher interest rates rather than to support measures that could worsen an already bad situation.
Before concluding, I would be remiss if I did not say how satisfied I am with the budget of the Minister of Finance with respect to the provisions aimed at helping farmers. Unlike many people who would do away with any form of agricultural assistance, I maintain and will always maintain that we must continue, as we have always done, to give our support to Canadian agriculture, one of the most productive in the world. In conclusion, Mr. Speaker, I would suggest that the Progressive Conservatives and the New Democratic Party would probably have preferred a budget which I would describe as a
November 16, 1981

band-aid or an aspirin. On the contrary, the government, without ignoring the most underprivileged Canadians, has seen fit to come to grips with the real basic causes of the destructive aliment which is inflation. The budget is an outstanding example of the will of the government to put up a strong fight against inflation, the major impediment to the sustained and constant improvement and development of growth, employment and the standard of living.
By drastically reducing its deficit and cash requirements through higher revenues and stricter controls over spending, the government reinforces and consolidates its determination to fight inflation. The direct aftermath of that policy will be to contribute as well to lower the interest rates for the greatest benefit of all Canadians.


Mr. Hees:: Mr. Speaker, may I call it 9.45 p.m.


The Acting Speaker (Mr. Blaker):: The Chair will recognize the hon. member for Northumberland (Mr. Hees) and thank him for calling it 9.45 p.m.
It being 9.45 p.m. it is my duty pursuant to Standing Order 60(6) to interrupt debate and put forthwith every question necessary to dispose of the subamendment and amendment now before the House.
The question is on the amendment to the amendment (Mr. Rae). Is it the pleasure of the House to adopt the amendment to the amendment?


Some hon. Members:: Agreed.


Some hon. Members:: No.


The Acting Speaker (Mr. Blaker):: Those in favour of the amendment will please say yea.


Some hon. Members:: Yea.


The Acting Speaker (Mr. Blaker):: Those opposed will please say nay.


Some hon. Members:: Nay!


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


The Acting Speaker (Mr. Blaker):: Call in the members.


Madam Speaker:: I declare the amendment to the amendment lost.
It being after ten o'clock, the House stands adjourned until tomorrow at 2 p.m. pursuant to Standing Order 2(1).
At 10.19 p.m. the House adjourned, without question put, pursuant to Standing Order.

Tuesday, November 17, 1981