1981-05-25

THE LATE DAVID LEWIS


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, it is the sad task of Parliament today to pay tribute to the memory of one of its most distinguished former members. The passing of David Lewis has deprived Canada of a man of passionate commitment, a man of ideas and conscience, a brilliant and eloquent person, a man who devoted the whole of his adult life to the service of others.
Canada's loss is felt nowhere more keenly than here in Parliament, a place he loved and honoured. It was here, as Leader of the New Democratic Party, that he found the fullest scope for the expression of his ideals and idealism. It was here that he was able to speak to Canadians, day in and day out, about social and economic justice, about the gap between what Canada was and could become, about the primary duty of Parliament to help and protect those who could not protect themselves.
By giving expression to his own profound belief that political action is the noblest and most effective means of achieving social change, he also lent added dignity and respect to the profession of politics, and to the Canadian political process.
Because he became best known to Canadians during his tenure as Leader of the New Democratic Party, it is sometimes forgotten that he was a political activist in the cause of social democracy for some forty-four years of his life.
His was a life-long commitment, played out principally away from the limelight of the national leadership, in the hard-slogging and frugal years organizing, travelling, and speaking in every part of Canada.
It was that commitment which gave power and forcefulness to his public performance. He was not one to play at politics for a time while waiting for more lucrative doors to open. He gave his life to politics, as his chosen way of giving his life to his country and its people.
David Lewis was a man in whom social idealism was combined with the most practical of political skills. He excelled as a strategist and orator, as a campaigner and organizer.
He knew every detail of the cost of every victory he won, because he had paid that cost in his own hard work.
He was a proud Canadian, imbued with the sense of wonder of one who was not born in this country. He both shamed and inspired many native-born Canadians by learning not just one of our official languages, but both of them, and he spoke them fluently. That was also a sign of his commitment to Canada and to all its people.
As we mourn the passing of this dedicated human being, our sympathy goes out to his beloved wife, Sophie, and to his family. May the knowledge of the great respect he earned throughout a life of service to Canada comfort them in this time of bereavement.


Some hon. Members:: Hear, hear!


Hon. Flora MacDonald (Kingston and the Islands):: Madam Speaker, I want to associate my leader and my party with the tributes being paid to David Lewis today.
David Lewis was a person who cared. It was evident in everything he did throughout his life. He cared about people and wanted to see their hopes and aspirations met. He cared about principles and strove to uphold them in his personal and public life. He cared about Canada and returned, in full measure, the opportunities and advantages this country afforded him.
David Lewis was an ardent socialist, and this led him to a life-long association with the working people of Canada. In union halls, in mining communities, in fishing hamlets and, finally, in Parliament, he argued their cause, passionately and persuasively. He could do it because he knew them so well. He met them in their homes and wherever working people gather in this country.
David Lewis was guided by his principles. He rejected inequality and injustice wherever they occurred, and strove to banish them. In his own words, he saw democracy as a dynamic weapon in the war against poverty, prejudice, and ignorance. He had a deep and abiding belief in civil liberties, and was willing to stand up and be counted no matter what the personal and political cost.
David Lewis saw in Canada a country where the principles he espoused so strongly and the convictions he held so firmly would be embodied in the law and life of the land. He never doubted that that would come to pass in Canada.
As with many new members who entered the House in which he was already a veteran, I was deeply impressed by the power of his oratory, his skill in debate, and the force and conviction with which he participated in the work of this chamber. It was indeed an inspiration to a new member to

May 25, 1981
The Late David Lewis
listen to both our official languages being used in a manner both persuasive and effective, and indeed it was a challenge to all of us to try to improve our performance.
David Lewis was a great parliamentarian and a great Canadian. His work in this House and elsewhere is his lasting legacy to Canada. We join with all members in expressing our sorrow at his passing, and our sympathy to his family.


Some hon. Members:: Hear, hear!


Hon. Stanley Knowles (Winnipeg North Centre):: Madam Speaker, we are most grateful to the Deputy Prime Minister (Mr. MacEachen) and to the hon. member for Kingston and the Islands (Miss MacDonald). Indeed, we are most grateful to the House for taking these few moments to remember the life and work of our friend whom we have lost, David Lewis.
I express that gratitude on behalf of our leader, the hon. member for Oshawa (Mr. Broadbent), who will be interrupting his mission in Central America to be here tomorrow for the funeral service. I express it on behalf of all the members of our caucus and all our members and supporters across the country. In particular, however, I want to express appreciation on behalf of the members of David Lewis's family. I am grateful to both of those who preceded me for mentioning them.
We are all aware of David Lewis's public life. We are particularly aware of the crowning achievement of that life in the years that he spent as a leader in this House. What is perhaps not so generally known is that he was a warm and devoted family man. He was extremely happy to be with his wife Sophie, his four children, Stephen, Michael, Janet and Nina, with their spouses, with his six grandchildren, his sister Doris and her two children. I am sure it will mean much to all of them that the sympathy of this House has been expressed today by the Deputy Prime Minister and by the hon. member for Kingston and the Islands who indeed were speaking on behalf of all of us.
We welcome the tributes that have been paid to the way in which David Lewis lived his life. We all know what a brilliant person he was, that he could have been a success in anything to which he turned his hand, but he believed so deeply in the right of common people to have a better life that he literally gave his life in their service in the political movement which he thought was best fitted to do just that.
As a party, we owe a debt to him for the organizational skills that he used to make our movement an effective force in the country. I believe the country is better off for there being the kind of democracy we have today, much of which is due to the impression made by our former leader. It is particularly fitting that this man who, as the Deputy Prime Minister said, spent many decades behind the scenes, was here as our party's leader during a couple of years when much of what he believed in was accomplished.
Therefore, Madam Speaker, we think today of the loss the family has sustained, we think of the loss that our movement
and our country have sustained, but we are also conscious of the fact that David Lewis was one who lived life in the very best way. Indeed, we are happy today, though we mourn his passing, to celebrate a life well lived.


Some hon. Members:: Hear, hear!



ROUTINE PROCEEDINGS


Mr. Dan McKenzie (Winnipeg-Assiniboine):: Madam
Speaker, I rise under the provisions of Standing Order 43.
Housing is a basic necessity, and home ownership is fundamental to the economic and social stability of our Canadian society. Whereas in one Canadian city alone evictions have risen by an amazing 237 per cent since 1976, and whereas 3,279 families in Toronto have been literally booted out of their homes as a direct result of the Liberal government's disgraceful high interest rate policies, I move, seconded by the hon. member for Red Deer (Mr. Towers):
That this House instruct the government to implement immediately the Conservative party's home mortgage interest deductibility program, and also have the Finance Committee resume its hearings aimed at solving and eliminating the Liberals' high interest rate policy.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL ENERGY PROGRAM
Mr. Gordon Taylor (Bow River):: Madam Speaker, I rise on a matter of urgent and pressing necessity under Standing Order 43.
Whereas the Minister of Energy, Mines and Resources (Mr. Lalonde), in a speech in Vancouver on May 22, 1981, indicated that the National Energy Program is "for all Canadians", and "the energy problems .. . are a burden we must all bear"; and whereas the excise tax on gas is aimed directly at Alberta and B.C. where it will take thousands of dollars out of the pockets of the rank and file westerner where it will have its greatest impact, therefore I move, seconded by the hon. member for Esquimalt-Saanich (Mr. Munro):

May 25, 1981

That this House demand that the said minister make good his words by immediately withdrawing the excise tax on gas, otherwise his speech will be just another example of "don't believe a word I say".


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AIR SAFETY
Hon. Elmer M. MacKay (Central Nova):: Madam Speaker, in view of the great public and governmental concern over safety in air travel, and in view of the fact there has been in storage since June, 1980, at the Halifax international airport, automatic terminal information service equipment, and that the immediate installation of such flight safety equipment should receive top priority but has not, I therefore move, seconded by the hon. member for Winnipeg-Assiniboine (Mr. McKenzie):
That the Minister of Transport take immediate steps to inquire why this equipment has not been installed, and to direct departmental officials to remedy this situation immediately.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN BROADCASTING CORPORATION
Mr. Lome Nystrom (Yorkton-Melville):: Madam Speaker, pursuant to the provisions of Standing Order 43 I seek the unanimous consent of the House to move a motion concerning an urgent matter.
Considering that Quebecers have been deprived of information for eight months, just as English Canadians are every now and then, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the Minister of Communications intervene forthwith so that the labour disputes affecting the CBC French network will be settled as soon as possible and in all fairness to its journalists and its technicians.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


POST OFFICE
Mr. Gordon Towers (Red Deer):: Madam Speaker, I rise, as is my privilege, under the provisions of Standing Order 43 to seek the redress of a grievance which has befallen thousands of Canadians through no fault of their own.
Postal service is a right and not a privilege. Postal service across Canada ought to be uniform and consistent, but it is not. Thousands of Canadians are reduced to second-class status when it comes to postal service. Therefore I move, seconded by the hon. member for Peterborough (Mr. Domm):
That Parliament request Mr. Michael Warren to ensure, as his most urgent priority as president of the newly created Post Office Crown corporation as soon as he assumes office, that all Canadians are elevated to first-class status in receiving mail.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ATOMIC ENERGY CONTROL BOARD
Mr. Bill Vankoughnet (Hastings-Frontenac-Lennox and Addington):: Madam Speaker, I rise on a matter of urgent and pressing necessity, under the provisions of Standing Order 43. Whereas the Atomic Energy Control Board of Canada has indicated that radioactive soil discovered last year in a Scarborough subdivision will be moved to Faraday township in Hastings county, against the wishes of the township of Faraday, the county of Hastings, the residents, the provincial MLA, and myself as the federal member of Parliament, I move, seconded by the hon. member for Peterborough (Mr. Domm):
That this House request the Government of Canada to direct the AECB to dispose of this material at existing dump sites at Chalk River or Elliot Lake.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

May 25, 1981


METRIC CONVERSION
Mr. Nelson A. Riis (Kamloops-Shuswap):: Madam Speaker, I rise under the provisions of Standing Order 43 to seek unanimous approval on a very important matter. The metrication program of the government requires thousands of retail outlets in Canada to convert to metric over the next number of months. This will require hundreds of millions of dollars worth of scales and other measuring devices to be purchased by these retailers. Since these purchases must be made over the next number of months, this will prohibit the sourcing of these from Canadian manufacturers and suppliers. Therefore, due to the government's metric policy we are creating jobs in foreign countries and manufacturing opportunities for foreign companies. Last week in committee the Minister of Industry, Trade and Commerce (Mr. Gray) indicated that this is the price we have to pay for metrication.
I move, seconded by the hon. member for Dauphin (Mr. Lewycky):
That this House unanimously support the nomination of the Minister of Industry, Trade and Commerce for the 1981 sell-out Canada award.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL SECURITY
Mr. Donald W. Munro (Esquimalt-Saanich):: Madam Speaker, the special report on the Taschereau papers will be in the hands of the government within the next few days. Therefore, under the provisions of Standing Order 43, and seconded by the hon. member for Grey-Simcoe (Mr. Mitges), I move:
That this House require the government to table this report within a week of its receipt by the government in its unexpurgated form as it is received from the officials to whom the task was entrusted.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Dave Nickerson (Western Arctic):: Madam Speaker, whereas in a speech in Halifax over the weekend the Minister of Regional Economic Expansion (Mr. De Bane) stated that there is a consensus in cabinet for regionally tailored monetary policies, whatever that might happen to mean, I move, seconded by the hon. member for Cambridge (Mr. Speyer):
That the Minister of Finance be required to make a statement on motions to say whether or not this is government policy and, if so, since when has the Minister of Regional Economic Expansion, who is even more clueless than himself, been given the responsibility for making announcements of major changes in government monetary policy.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FORESTRY
Mr. Jim Manly (Cowichan-Malahat-The Islands):: Madam Speaker, as a result of overcutting and poor management, the timber reserves of British Columbia are a dwindling resource. In view of the fact that some sawmills in British Columbia face serious log shortages, which will force widespread layoffs, and in view of the fact that unprocessed or semi-processed logs are still being exported from British Columbia to foreign countries, which means that jobs are being exported, I move, seconded by the hon. member for Kootenay East-Revelstoke (Mr. Parker):
That the government tighten up regulations regarding the export of unprocessed or semi-processed logs and ensure that Canadians get the maximum number of jobs from every tree cut in our forests.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PACIFIC RIM POTENTIAL-ORGANIZATION OF TRADE FAIRS IN VANCOUVER-MOTION UNDER S.O. 43
Mr. Robert Wenman (Fraser Valley West):: Madam Speaker, I rise under the provisions of Standing Order 43. In view of the fact that the future of Canada lies in the west and in the Pacific Rim, in view of the fact that the recently released
May 25, 1981

report of the Pacific Rim Opportunities Conference held last November in Vancouver recorded a number of important steps Canada might take in order for this country to take advantage of the tremendous potential of the Pacific Rim, and considering that some of the steps would involve the sponsoring of regular trade fairs in Vancouver, I move, seconded by the hon. member for Esquimalt-Saanich (Mr. Munro):
That the government accept the suggestions of the Pacific Rim Opportunities Conference and immediately take steps to organize a series of trade fairs to be held in Vancouver every two years.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Mr. Harvie Andre (Calgary Centre):: Madam Speaker, my question is directed to the Minister of Finance, and may I welcome him back to Canada from the International Monetary Fund meetings in Gabon.


Some hon. Members:: Hear, hear!


Harvie Andre: He will know that while he was away interest rates in Canada reached an historic new high and are now the highest, or next to highest, amongst the 14 largest OECD nations. Can the minister inform this House whether he was able to determine, during the IMF meetings with his fellow finance ministers, why these other countries are able to maintain lower interest rates than those in Canada, and can he tell the House whether he now has plans to implement these or any other ideas to bring down the atrociously high interest rates in Canada?


Allan Joseph MacEachen: Madam Speaker, first of all I want to thank the hon. member for his welcome. I assure him that 1 would have much preferred to have been in the House last week listening to the debate and to the comments being made about me in my absence than to be attending the meeting of the International Monetary Fund, but that was essential as part of my responsibility as Minister of Finance.
The question which the hon. member asks, Madam Speaker, is an important and very complicated one, but it is clear that interest rates in various countries vary, partly because-


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


Allan Joseph MacEachen: -of the differences in the rates of inflation, but it certainly was a common belief expressed by ministers from the OECD countries that the chief problem facing these countries in the forthcoming year is still the very deep inflationary momentum that had gained great force in every economy in that group, and one of the conclusions shared by all the countries was that we ought to maintain a non-accommodating monetary policy in the face of this still strong inflationary pressure.


PERFORMANCE OF OECD COUNTRIES
Harvie Andre: It is too bad the
minister did not find out how these other countries were able to do that with lesser interest rates. A week ago Friday the Prime Minister, while lamenting high prices announced in this House with some pride that between 1970 and 1980 Canadians were some 50 per cent better off on average. What he failed to mention was that in 1970 Canadians had the third highest living standard among the 24 OECD nations; by 1980, according to the latest OECD figures, we dropped to twelfth place and are soon going to be passed by Austria and Japan.
Can the minister explain, perhaps with the benefit of information he may have obtained from other OECD ministers in Gabon, why these ten countries have performed so much better than Canada given that all of them charge their citizens world prices for oil and, with the exception of Norway, all of them import virtually 100 per cent of their crude oil? Why is it that with Canada's tremendous advantages in terms of resources, especially oil, at least ten and perhaps a dozen countries have performed so much better than Canada over the last 12 years while we have had this same Liberal government in office?


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: Madam Speaker, of course I do not accept for a moment the statement made by the hon. member that all these other countries have performed better than Canada. In the past year Canada has created more jobs than any other industrialized country.


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: No industrialized country, including Japan and West Germany which are often held up as examples of good economic management, achieved the same rate of growth in employment which prevailed in Canada during the past year.


REQUEST FOR ECONOMIC PLAN
Harvie Andre: Madam Speaker, it seems the Prime Minister and the Minister of Finance cannot get their bases together. A week ago the Prime Minister said that we were so much better off. When I point out that the rest of the world has done better without our resources, the minis-

May 25, 1981
Oral Questions
ter changes his bases again and talks about the last few months. I ask him to check the OECD figures if he disputes that.
Recognizing the minister has taken on new onerous responsibilities as chairman of the interim committee of the IMF-


Some hon. Members:: Hear, hear!


Mr. Nielsen:: The whole world is going down the tube.


Harvie Andre: -I hope he still recognizes his first responsibility is to Canada. Given record high inflation rates, record high interest rates, and that there is a way to do it better, as proven by at least 12 nations with no way near the advantages we have, will the Minister of Finance address himself to an economic policy and/or to a budget for Canada? Will he commit himself now to introducing a budget or an economic plan for Canada prior to his obligations taking him off on another global trip?


Allan Joseph MacEachen: Madam Speaker, I would hardly describe a journey to West Africa to attend one meeting as a global trip. It was mainly to attend that meeting; it did not involve any other visits elsewhere.
Also I remind the hon. member that I believe I am discharging my responsibilities to Canada in assuming responsibilities on behalf of Canada as part of the international community. I believe we have a very important stake in the successful operation of an international system of trade and payments.
We have a very important stake in the over-all efforts to reduce inflation. I believe the hon. member would share that view. He asked me if I intended to bring in a new economic plan or a new economic budget before I take on another global trip. The answer is no, I have no global trip in mind, but I want to forewarn members that I will have to be away in the month of June for a few days to attend a meeting of the OECD in Paris. That is not a global trip either.


IMPACT OF HIGH INTEREST RATE POLICIES
Flora Isabel MacDonald: Madam Speaker, my question is also directed to the Deputy Prime Minister and Minister of Finance. I noticed his reference to his new international responsibilities, but one would be tempted to ask what the poor struggling Third World countries have done to deserve this.


Some hon. Members:: Hear, hear!


Flora Isabel MacDonald: The minister has been away for a week and the situation in Canada has become much worse during that week; 250 more home owners have lost their homes because of mortgage rates; 170 more small businessmen have gone bankrupt; 500 more personal bankruptcies have occurred. In light of these figures, and now that the minister has assumed straightening out the world's economic woes, could he tell us what he will do at home to take care of the burden of
his high interest rate policies on Canadians who are losing their homes, their farms, and their businesses?


Allan Joseph MacEachen: Madam Speaker, the first thing I would like to do is to be able to correct, if I had the time, all the inaccuracies the hon. member can put together in a single question, for example, the references to bankruptcies. The hon. member really knows, if she checked the facts, that the relationship between the number of business incorporations and the number of bankruptcies has not appreciably changed this year in Canada. To draw the conclusion that there has been an escalation in bankruptcies-


Harvie Andre: You stayed too long in the sun in Gabon.


Allan Joseph MacEachen: -in the last few months really is a mistake. She talked about bankruptcies among the farming population. If she had listened to or read the speech given by my parliamentary secretary the other evening, she would recall the number of bankruptcies in the farming community. Any bankruptcy is serious, but it must be related to many other factors. If she had read the speech, she would have realized that the increase in the number of bankruptcies compared to the very large number of Ontario farmers is not very great. Any one is serious, but the increase is not in the terms the hon. member mentioned.
If we are to have a debate, as we ought to have every day about the economy, there is no point in trying to exaggerate the difficulties as the hon. member is doing. She asked me what I would like to do. I would like to have the time to correct all the inaccuracies she put before the House.


INCREASE IN MORTGAGE COSTS FOR HOME OWNERS
Flora Isabel MacDonald: Madam Speaker, I know the minister would like us to believe that there are no bankruptcies in Canada, but if he would get out across Canada and talk to people, as I advised him more than a week ago, he would really find out what is happening. In the meantime, I refer him to a statement of one of his aides which came out of his office while he was away, about what would be done for home owners in the face of staggering mortgage rates. It was said:
It may be uncomfortable for them, but it is not the end of the world. People faced with higher monthly mortgage payments will simply have to put money earmarked for a new car or a vacation into housing.
This is what the minister's aide said. What about the thousands of Canadians who have not put money aside for a new car or a vacation? What about Canadians who have no extra money at all? What about Canadians for whom higher mortgages rates are not only uncomfortable but are downright impossible?


Allan Joseph MacEachen: Madam Speaker, I think the hon. member has taken a more responsible line in this particular question, as she attempted to relate the additional burdens of
May 25, 1981

higher interest payments to those who would have great difficulty in meeting those burdens. Although there has been a very substantial increase in interest rates, and individuals will have to renegotiate their mortgages at higher rates, in the interim there has been a very considerable increase in personal incomes.


An hon. Member:: For some.


Allan Joseph MacEachen: I am concerned to monitor very carefully the number of persons who will be faced with very deep or real difficulties in meeting these higher interest burdens. 1 remember the situation in the House of Commons about a year ago when we were faced with very high interest rates. I was pressured on all sides to bring in new and expensive programs to protect particular groups in the community. I was obligated to consider the burden on the treasury, but also to watch trends in interest rates. The fact of the matter is that rates came down very quickly and most individuals-almost all, in fact-were able to renegotiate their mortgages without any deep difficulty at that particular time.


Flora Isabel MacDonald: Live in the present.


Allan Joseph MacEachen: In the present circumstances, I hope that will also be the case. As I stated last year, and with the same attitude, we will be following the situation very carefully.


REQUEST FOR COMMITMENT TO LOWER INTEREST RATES
Nelson Andrew Riis: Madam Speaker, the words of the Minister of Finance today are indeed saddening. Although we have statistics which at least indicate to him that there is not a problem, in the last two weeks I have witnessed personal friends who have had to walk away from their homes because of high interest rates; I have visited small farmers who have walked away from their farms because of high interest rates; I have seen countless small businessmen closing their doors and walking away from their dreams because of high interest rates.
Last Friday the banks in the United States raised their prime lending rates in excess of 20 per cent. If the government continues to pursue its made-in-Washington interest rate policy, it will inevitably follow suit in the next number of days.
In light of the mounting criticism of spokespersons in the finance community across Canada that our slavish adherence to the United States monetary policy is having disastrous effects for both the short run and the long term, will the minister forget about the expensive small programs to assist various segments, and commit himself today to lowering Canadian interest rates-


Madam Speaker:: Order, please. Has the hon. member put his question now? The microphones were turned off. The preamble to the hon. member's question was quite long. If the minister has not understood the question, perhaps the hon. member could formulate his last sentence.
Oral Questions


Nelson Andrew Riis: Madam Speaker, my last sentence is: will the minister commit himself to establishing a made-in-Canada interest rate policy, drop interest rates for Canadians, and forget his expensive programs about which he has been warning us?


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: Madam Speaker, I propose to reduce interest rates, and the only way they can be reduced is through a gradual reduction in inflation. If the hon. member thinks that important progress can be made in reducing interest rates without reducing over-all inflation, then he is making a very big mistake.
I wish to draw to the attention of the hon. member that within the past week, I believe, interest rates under the new French government, the election of which was applauded by his leader, saw an increase from 14 per cent to 22 per cent. The new socialist minister of finance said that he wanted to tell the French people that France is being buffeted on the troubled seas at the present time like every other country in the world. He told them, too, of the impact on France of the high interest rate policy followed in the United States. Why does the hon. member not learn what is happening in the world?


Some hon. Members:: Hear, hear!


UNITED STATES POLICY ON INTEREST RATES
Nelson Andrew Riis: Madam Speaker, I hope the minister is not suggesting we should now be following a made-in-France interest rate policy, since for every country he points out with high interest rates we can point out countries which are following their own national interest rate policies.


Allan Joseph MacEachen: Name them.


Nelson Andrew Riis: Of course we can name them.
On November 6, 1979, the Prime Minister, who was then leader of the opposition, stated:
On interest rates, it says we will let the United States decide and we will follow their policy, no matter how high it goes.
The Prime Minister was criticizing the Tory government for following American interest rate decisions.
Would the Minister of Finance please explain to the members of this House and to the Canadian people why, in the last 18 months, the Prime Minister and the minister have reversed themselves on interest rate questions and are now committed to following the policy set by the United States?


Allan Joseph MacEachen: Madam Speaker, I do not accept the premise of the hon. member's question. If the hon. member would look at the trends of interest rates between Canada and the United States in the past year he would notice-it could
9860

May 25, 1981
Oral Questions
not escape him-that there were considerable differences and divergencies between various rates in Canada and the United States. Sometimes our rates were considerably lower, sometimes they were equal, and sometimes they were higher. There have been divergencies.
What the hon. member fails to understand is that, because of the importance to Canada of our trade and capital relationship with the United States, what happens in that economy is bound to influence Canada. That is why the minister of finance in France made a similar comment. That is why last week in Washington Mr. Helmut Schmidt complained vigorously about the impact of high American interest rates on the German economy, where rates are being pressed up and pressure is being put on the Deutschmark. That is a fact of life.
Even the socialist leader in France, whom the hon. member's leader extolled just last week, finds the facts the same as 1 find them, namely, that you cannot walk off the globe and find a world which does not exist without relationships with other countries.


Some hon. Members:: Hear, hear!


STATEMENT MADE BY DEPUTY GOVERNOR OF BANK OF CANADA
Nelson Andrew Riis: Madam Speaker, it would appear that rates will continue to increase. John Crow, the newly-appointed deputy governor of the Bank of Canada, is quoted in The Vancouver Sun of Saturday-


Madam Speaker:: Order, please. The hon. member has taken a great deal of latitude in asking his questions. This time I must ask him to go directly to his question.


Nelson Andrew Riis: Madam Speaker, the deputy governor says that interest rates are not high enough. Does this mean that the government will be pursuing even higher rates, as is suggested by the newly appointed deputy governor of the bank?


Allan Joseph MacEachen: No, Madam Speaker.


ATOMIC ENERGY CONTROL BOARD
William John Vankoughnet: Madam Speaker, my question is for the Minister of the Environment, but in his absence I will direct it to the Minister of Public Works. In light of recent reports that radioactive soil from a subdivision in Scarborough is to be moved to a uranium tailings site in Faraday township, west of Bancroft, following a decision by the Federal-Provincial Task
Force on Radioactivity, I would like to ask the minister if he concurs with the choice of this location.


Hon. Paul J. Cosgrove (Minister of Public Works):: Madam Speaker, it is true that the radioactive material was to be moved from the riding which I represent as a federal member. However, I think that this matter should more properly be directed to the Minister of Energy, Mines and Resources. I am sure he has the response.


REASON FOR LOCATING DUMP SITE NEAR BANCROFT, ONT.
William John Vankoughnet: Madam Speaker, my supplementary question is for the Minister of Energy, Mines and Resources. I understand that contaminated soil from the Port Hope area was disposed of at a Chalk River dump site. In light of the existence of this site, and a site at Elliot Lake, could the minister please advise this House why the Madawaska mines site near Bancroft has been chosen in which to locate the soil from Scarborough? Would the government consider relocating such contaminated soil to Chalk River or Elliot Lake, in view of the local protests from governments and residents?


Hon. Marc Lalonde (Minister of Energy, Mines and Resources):: Madam Speaker, the decision in this regard has been taken in full consultation and co-operation with the government of Ontario. It was a joint decision. The site which has been chosen is a site where, in effect, the fill which will be moved from the Scarborough site to the chosen site will cover tailings from the existing mine which are more radioactive than the new fill which will be brought in from Scarborough. This will improve the situation which exists at the present time at the site which has been chosen.
I am also advised that the material which is being moved to that mine is material which is quite safe at a distance of about 20 feet. It is being moved because it is located very close to residences. I understand there are consultations taking place with regional people. I hope the matter will be resolved to the satisfaction of everyone involved.


HAZARDOUS SUBSTANCES
Hon. David Crombie (Rosedale):: Madam Speaker, my question is for the minister responsible for social policy. It concerns the matter of the government's refusal to give information with respect to the fungicide Captan. The minister will recall that there was a letter from the health protection branch of the Department of National Health and Welfare recommending that Captan be banned or seriously restricted. He will also recall that last week the Minister of Agriculture appointed a 17-person committee to investigate the matter, particularly on the economic side. He will also know that last week the Minister of National Health and Welfare, who is absent from
May 25, 1981

the House today on other business, indicated that she is concerned about the household use of Captan. Finally, I am sure the minister will know that health protection branch officials are now concerned with respect to Captan residue on apples, grapes, and strawberries. Clearly, the government now regards the use of Captan an extremely serious health matter. When will the government release the report from the health protection branch?
[DOT] (M50)


Hon. Jean Chretien (Minister of Justice and Minister of State for Social Development):: Madam Speaker, I do not have the answer for the hon. member. This file comes under the jurisdiction of the Minister of National Health and Welfare. The minister is absent today. I will transmit the hon. member's question to her and I am sure she will want to give the information to her colleague as soon as possible.


INFORMATION AVAILABLE TO CITIZENS OF UNITED STATES
David Edward Crombie: In order to put this in perspective, Madam Speaker, and because the minister is senior in matters of social policy to the Minister of National Health and Welfare, I will put my supplementary question to him. The Environmental Law Association of Canada, which is a member of the Minister of Agriculture's committee, when looking for information with respect to the IBT Canadian tests on Captan, could not get it from Ottawa but had to go to Washington to get information which was obtained from Canada. Why does this government think that Americans should have the information, but not Canadians?


Joseph Jacques Jean Chrétien: Madam Speaker, I gave the answer that this is a problem in the Department of National Health and Welfare. I will talk to the Minister of National Health and Welfare, but I do not have an answer for the hon. member now.


DISASTERS
Mr. Derek Blackburn (Brant):: Madam Speaker, my question was intended for the Minister of Labour, but in his absence 1 will put it to his parliamentary secretary, if I can get his attention. It relates to the explosion early this morning in a grain elevator in Thunder Bay. This party's committee on occupational health and safety visited the grain elevators in January and recommended at that time that better conditions be established in case of an explosion. Examples of two explosions in the United States were cited. The committee found that there was no fire escape, very poor ventilation, and that there was imminent danger of an explosion.
Oral Questions
I should like to ask the parliamentary secretary what measures Labour Canada has taken to rectify this problem. I am directing this question to the Parliamentary Secretary to the Minister of Labour, who does not seem to be aware of it at this time.


Flora Isabel MacDonald: He does not have one.


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, in the absence of my colleague and the parliamentary secretary, I will take the hon. member's question as notice and bring it to the attention of the minister at the first opportunity.


AMENDMENT OF CANADA LABOUR CODE
Derek Nigel Ernest Blackburn: Madam Speaker, my supplementary question is directed to the Acting Prime Minister. As he knows, amendments to the Canada Labour Code are being drafted by Labour Canada at the present time. Would he assure the House that the three basic principles, that is, the right to participate, the right to know, and the right of workers to refuse work, will be written into the revisions of part IV of the code so that workers under federal jurisdiction will at least be brought up to the minimum standards now offered by most of the provinces of Canada?


Allan Joseph MacEachen: Madam Speaker, I am sure that the considerations mentioned by the hon. member will be dealt with by the Minister of Labour and considered before the bill is brought to the House. I cannot give him any assurance of what the result of that consideration will be, but I am sure his interest will be taken into account.


INQUIRY WHETHER INFORMATION HAS BEEN OBTAINED ON ALTERNATIVE ENERGY
Mr. Andre Bachand (Missisquoi):: Madam Speaker, my question is directed to the Minister of Energy, Mines and Resources. The minister announced today the general outline of Canada's petroleum substitution program. Since that program aroused a lot of interest among the people when it was announced last October, could the minister tell the House where the interested parties should apply for complete information so as to draw maximum benefits from the program?


Marc Lalonde: Madam Speaker, I had the pleasure of announcing today that the program involved is now operational and that as of today people may apply for the grants provided under this program. With regard to the conversion of oil heating systems to electricity or natural gas, Canadians are

May 25, 1981
Oral Questions
urged to apply to the public utilities companies which offer natural gas and electricity services, namely, hydro companies or natural gas corporations. As to other conversions to propane or other renewable energy sources, information is available from the regional offices of my department or from the EnerSave office. In any event, announcements will be published in newspapers in the next few days. Specific and detailed information will be given to Canadians so they will know exactly where to apply.


PUBLIC SERVICE
Mr. Jim Hawkes (Calgary West):: Madam Speaker, 1 almost sat down after 28 days of trying to be recognized.


Some hon. Members:: Oh, oh!


An hon. Member:: Are you never satisfied?


Donald W. Munro: What is the matter with the truth?


Frederick James (Jim) Hawkes: My question is directed to the Deputy Prime Minister in the absence of the Prime Minister. On March 24 at question period I received a communication from the Secretary of State for External Affairs. 1 rose in my place on that occasion because in that letter the minister indicated that in late summer or early fall he would correct the situation whereby secretaries in ten provinces, the Yukon and Northwest Territories, were not eligible to work for External Affairs. Late fall or early summer is unacceptable. I wonder whether the Deputy Prime Minister, on behalf of the Prime Minister, would give this House an undertaking that any minister of the Crown who discriminates against Canadians and their employment opportunities on the basis of province of residence, will be asked to resign.


Allan Joseph MacEachen: Madam Speaker, 1 cannot give any assurance to the hon. member along the lines of changes in the government but I can assure him that 1 will draw his renewed interest in the subject to the attention of the Secretary of State for External Affairs, who will likely communicate with him further.


THE CONSTITUTION
Frederick James (Jim) Hawkes: Madam Speaker, I will put the following question to the Deputy Prime Minister. On April 28 a communication was received by all our embassies around the world which indicated that, subsequent to April 23 and the votes in this House, two western premiers would have a veto relative to protecting themselves in the Constitution.
That information is incorrect. Prior to April 23 each western premier had a one half veto but since April 23, because of the Liberal party and New Democratic Party, each western premier has a one third veto.
Will the Deputy Prime Minister undertake to send a corrected communique to all our foreign embassies so that our staff around the world will have the correct information on what the government intends to do about the Canadian Constitution and the vetoes?


Allan Joseph MacEachen: Madam Speaker, I shall draw this question to the attention of the minister.


NORTH-SOUTH RELATIONS INTRODUCTION OF NEW ECONOMIC ORDER
Mr. John Gamble (York North):: Madam Speaker, my question is directed to the Deputy Prime Minister. Not long ago the Prime Minister indicated very clearly that in terms of government policy there was to be no government assistance for consumers in Canada. Immediately after making that statement the Prime Minister departed for North Africa, where he pursued his long-time goal for establishing a new international economic order which has as its chief purpose the redistribution of the wealth of the western world, including Canada, among countries of the Third World.
In view of the fact that the program of redistribution will involve either the imposition of taxes on Canadians, the creation of a greater deficit by the Canadian government, or the artificial fixing of high prices for foreign-made products imported to Canada and paid for by Canadian consumers, how does the Deputy Prime Minister equate these moves by the Prime Minister with reducing inflationary pressures in Canada which would have the effect, at the same time, of reducing the cost of interest to Canadians?


Allan Joseph MacEachen: Madam Speaker, the hon. member has put forward a number of views which he apparently holds as to what constitutes a new international economic order. Those are his views and not the views of the Government of Canada.


OPPOSITION TO CANADIAN PROGRAMS
John Albert Gamble: Madam Speaker, 1 take it that the Deputy Prime Minister does not agree that the purpose of the new international economic order, as part of the North-South dialogue, is the redistribution of the wealth of the world by what is alleged to be more fair sharing among Third World nations.
In any event, with respect to his intention the Prime Minister has been quoted as having found that the President of the United States will be a stumbling block to these intended processes. Is it not true that the Prime Minister has also found
May 25, 1981

that the governments of England and Germany are opposed to the programs he has advocated in this regard?


Allan Joseph MacEachen: Madam Speaker, the hon. member has certain views on what the views of the Prime Minister are on this subject. I do not think there is any compatibility between his perception and what the facts actually are. The question of improving the situation of the developing countries is a very complex one. It includes a large number of programs, including the ability of developing countries to improve their own production and create more wealth.
It seems to me that is the most important and long-term step that can be taken, namely, that of helping the developing countries to produce more food and to reduce their dependence on food importation. Second, it will permit them to discover greater amounts of indigenous energy supplies so as to reduce their dependence on imported energy. That is one important aspect which casts, I think, the over-all situation in a much different light.


FINANCE
Mr. Don Blenkarn (Mississauga South):: Madam Speaker, my question is for the minister responsible for the status of
115,000	Canadians who are retired and living on Government of Canada annuities, namely, the Minister of Employment and Immigration. The minister will know that in 1976 his predecessor promised to annuitants that the rate of return on annuities would be changed, subject and depending on future fluctuations in interest rates. Now that we are prepared to pay the banks 18.81 per cent interest, Canada Savings Bonds holders 13.75 per cent, and 16 per cent to market bond holders, does the minister not feel, bearing in mind the promise made in 1976, that it is time he gave those people, who lent Canada money back when the dollar was worth a dollar, a fair return in other words, better than 7 per cent on their money?


Lloyd Axworthy: The annuity program is a long-term fiscal instrument and it should not be adjusted according to fluctuations in the marketplace on a yearly basis. We are examining the situation as it affects annuities but I will have to discuss the matter further with the Minister of Finance to determine whether there should be any changes. At the present time we do not have any plans to change interest rates on annuities.


REQUEST FOR INCREASE IN RATE
Donald Alex Blenkarn: Madam Speaker, my question is then, of course, for the Minister of Finance, who knows that he has been a little fairer with Canada Savings Bond holders by increasing the rate of interest paid to 13.75
Oral Questions
per cent. Bearing in mind that we are supposed to be doing something for people who are retired, that we are supposed to encourage saving, and that we are supposed to encourage people to trust their government's fairness in this country, will the Minister of Finance now increase the rate on Government of Canada annuities to a fair rate of return for these retired savers?


Allan Joseph MacEachen: Madam Speaker, I will take into account the hon. member's views on this subject. If there is to be a change in policy, I will announce it in the House.


CRIMINAL CODE
Mr. Svend J. Robinson (Burnaby):: Madam Speaker, my question is for the Minister of Justice. As the minister knows, last week a 16-year-old Ontario high school student with no previous criminal records was sentenced to seven days in jail for possession of a very small quantity of marijuana. The sentencing judge indicated that he intends to impose similar Draconian sentences in the future.
How many more young Canadians must be expensively processed through our criminal justice system, thrown into jail and given criminal records, before the government will live up to its promises in the Speech from the Throne, and elsewhere, and finally bring in legislation putting the offence of possession of marijuana under the auspices of the Food and Drug Act, where it belongs?


Joseph Jacques Jean Chrétien: Madam Speaker, we are in the process of discussing this matter with the attorneys general for the provinces, and we hope to be able to be in a position to present legislation in this House soon.


CONTINUATION OF PRESENT POLICY
Svend Johannes Robinson: Madam Speaker, my supplementary question is for the Solicitor General, who told the justice committee last week that these consultations had already been concluded. How can the Solicitor General, who is supposedly committed to alternatives to imprisonment, defend the failure of his government to act on promises to decriminalize marijuana while discouraging its use by scientific education on the effects of marijuana on health? Now that the provinces have completed these consultations, which the Minister of Justice referred to, how much longer must this futile, archaic policy be continued before the government finally lives up to its responsibilities and changes the law?


Hon. Bob Kaplan (Solicitor General):: Madam Speaker, the consultations to which the hon. member referred have just been concluded in the last few days. For consultations to be

May 25, 1981
Oral Questions
meaningful, I think the government should take into account what we learned in the process, and that is what is being done now.


THE ADMINISTRATION
Mr. John Bosley (Don Valley West):: Madam Speaker, this is a supplementary question to an earlier one put by a member of the New Democratic Party to the Deputy Prime Minister. The hon. member asked some questions about labour only to discover that there is no parliamentary secretary to the Minister of Labour because he has resigned from his job as parliamentary secretary. This means that we cannot get answers to labour questions on Mondays or Fridays when the minister is not here because he prefers to be in Vancouver telling Liberals in the west that they have a problem.
Could we therefore have an undertaking that a parliamentary secretary will be appointed as quickly as possible so that we can begin again to have questions on labour answered in this House, particularly since the acting ministers have no idea of what is going on concerning revisions to the labour code?
Hon Allan J. MacEachen (Deputy Prime Minister and Minister of Finance): Madam Speaker, I will take note of the hon. member's question.


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: The Minister of Labour is in the House regularly and has given ample opportunity to hon. members to ask some questions. The fact is that the Minister of Labour sits in his seat day after day and no one on the other side seems to have very much to ask about labour matters.


ROYAL CANADIAN MOUNTED POLICE
Elmer MacIntosh MacKay: Madam Speaker, I have a brief question for the Solicitor General with respect to a situation on which he and I have exchanged views for some time. It has to do with the policy of the RCMP in treating informants.
One Robert McGarry, a former Surete de Quebec informant, an RCMP informer, has had his life threatened as a result of criminal proceedings involving one Serge Coallier, a former QPF member. His counsel has found it necessary to write to Assistant Commissioner Venner, requesting that the RCMP honour its commitments to give Mr. McGarry protection. Will the Solicitor General look into this matter and find out why the RCMP appears to be so lax and so reluctant to fulfil its obligations to Mr. McGarry?


Robert Phillip Kaplan: Madam Speaker, without agreeing with the hon. member's conclusions, I will undertake to look into the matter.


Elmer MacIntosh MacKay: Madam Speaker, will the Solicitor General also pursue further the inquries made by Deputy Inspector Rankin into this matter involving McGarry as it involves "A" Division, and ascertain the names of the members of the RCMP who are so unhappy about the situation that they are prepared to testify at a parliamentary committee or elsewhere, given the proper protection to do so?


Robert Phillip Kaplan: Madam Speaker, before doing that, I would be glad to meet with the hon. member behind the curtains after question period to get details of the information from him to which he has just referred.


POINTS OF ORDER
Harvie Andre: Madam Speaker, on April 8 I asked about the possibility of raising questions having to do with certain votes in the Main Estimates which I feel are out of order. At that time, Madam Speaker, you indicated that you would be prepared to hear the point of order but at a time closer to the day on which the estimates would be reported back to the House, to paraphrase what you said.
I just rise now to indicate that since the estimates are reported at the end of this week, perhaps some time this week might be the appropriate time. I have spoken to the President of the Treasury Board (Mr. Johnston) concerning tomorrow but that may be inconvenient to him because of a commitment to appear before the miscellaneous estimates committee. Unfortunately, Wednesday is inconvenient for me. Perhaps we might set Thursday as the appropriate day for the point of order, if that is agreeable to the President of the Treasury Board.


Madam Speaker:: If that suits both hon. members, 1 will be prepared to listen to the point of order at that time.


MR. MACEACHEN-ENERGY TAX INCREASES-CLARIFICATION OF ANSWER DURING QUESTION PERIOD
[Stage Direction]
Hon Allan J. MacEachen (Deputy Prime Minister and Minister of Finance): Madam Speaker, I rise on a point of order. Briefly, I wish to clarify an answer I gave to the hon. member for Simcoe North (Mr. Lewis) on the last day I was in the House, which was May 15.
I believe that my answer with respect to no new energy taxes should be interpreted to mean that no new types of taxes are contemplated at the present time. I believe my answer is ambiguous as it is given. I do not want to mislead the House or the hon. member so I am taking the first available opportunity to say that no new types of taxes are contemplated at the
May 25, 1981
[Stage Direction]
present time, but obviously the petroleum compensation charge might be increased or indeed decreased, depending upon developments with Alberta, exchange rate developments or international petroleum prices. I wanted that to be made clear so there would be no misunderstanding on that point.

[Stage Direction]
[ Translation]

Hon. Yvon Pinard (President of the Privy Council):: Madam Speaker, we are holding up the answers so we can give a larger number tomorrow. In the meantime, therefore, I would ask that the questions stand.


Madam Speaker:: Shall the questions stand?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


Mr. Bill Kempling (Burlington) moved:: That this House condemns the government for ignoring the consequences of its high interest rate policy and for its failure to assist the small business sector in Canada
(1)	by increasing and extending the small business development bond program;
(2)	by encouraging venture capital investment by means of appropriate tax adjustments;
(3)	by relieving the small business sector from the massive weight of government regulation; and
(4)	by fostering the research and development necessary to preserve the vitality of Canadian businesses of all sizes.
He said: Mr. Speaker, our motion sets forth the four main requirements if the small business sector is to survive and play its traditional role in our economy. That role is reflected by the fact that the small business sector is the largest employer in Canada, that it contributes a large percentage of the GNP to the national economy and the small business sector gives stability to the labour market because it traditionally retains its labour force when the market turns down.
The motion bears reading again:
That this House condemns the government for ignoring the consequences of its high interest policy and for its failure to assist the small business sector in Canada
Small Business
(1)	by increasing and extending the small business development bond program;
(2)	by encouraging venture capital investment by means of appropriate tax adjustments;
(3)	by relieving the small business sector from the massive weight of government regulation; and
(4)	by fostering the research and development necessary to preserve the vitality of Canadian business of all sizes.
The small business development bond is a good program but it must be extended. It should include unincorporated small businesses, farmers and fishermen. Where does the small businessman initially get his capital to start his business? He borrows it, or at least borrows to supplement his savings, or he cashes his life insurance, bonds or other assets, or he mortgages his house; and in many cases he does all of those things to accumulate enough capital to get going. He does this because he believes he has an idea that will be profitable or a service to render from which he feels he can make a reasonable fee.
If he is successful, how does he expand? In most cases an expansion of the small business is paid for out of retained earnings that are poured back into the business. Unless the small businessman becomes large enough to go public, he must find the capital for expansion from profits earned by the business or by borrowing from the bank.
The banks have not been all that helpful, particularly since capital gains have been imposed. Why do hon. members think the government introduced the Small Businesses Loans Act in 1960? It did so because the chartered banks were reluctant to make loans to small businesses. Even after the government guaranteed the loans, you could hardly find a bank that would admit such an act was in place. I could not begin to count the number of times small businessmen came to me complaining that their bank manager had never heard of the Small Businesses Loans Act or said he would have to check with his head office. However, once the rate for the loan moved to the current bank rate, the managers suddenly found the Small Businesses Loans Act in their files. While the rate was fixed lower by the government the banks were not interested; once it moved up to the current rate they became very interested.
The small businessman cannot survive the 19.6 per cent prime rate. The supply side of our economy is good, competition is strong, but inflation and increases in the rate of interest small businessmen must pay for the use of bank money is draining away these profits. What will happen is that inventories will drop and that drop will be rolled back onto the manufacturing side of our economy where the slowdown will be felt at a later time. The small business development bond must be extended to encompass the unincorporated businesses of farmers and fishermen and the term for repayment should be extended to ten years to allow for the regeneration of the small business sector.
If some relief, as suggested in my remarks, is not put in place and quickly, there will be a dramatic increase in bankruptcies. A bankruptcy is an economic tragedy. It is the cessation of the economic activity of an enterprise that means loss of employment, the loss of a contribution to the GNP, the

May 25, 1981
Small Business
loss of profits and, consequently, a loss to the tax base for three levels of government. If you are startled by the latest bankruptcy figures, Mr. Speaker, you will be really upset at the bankruptcies to come if some relief is not felt in the weeks ahead.
We have more than one million unemployed. The government talks about the work it has done in job creation. The reality is that many of those jobs are temporary. They are meant to get people into the labour force in the hope that they will stick. Most stick long enough to qualify for unemployment insurance, so they become a traveller between the employed and the unemployed.
One of the realities of the labour market is that the direction is the reverse to what most people believe. Many people are worried by automation in assembly operations. They fear automation and believe they may be replaced by a robot or some automatic assembly operation. The reality is that the fully employed worker of the future will be multitalented. He or she will be required to do several jobs and could move to a variety of employment. Some work will be performed in the home on computer terminals. That is almost a fact today.
If I had my way I would search out the most talented craftsmen in the world and bring them to Canada to teach their crafts to Canadians. The demand for the multitalented employee is growing. They are the core of the labour force in the small business sector. That is where the real strength is. They remain employed because they can turn their hands and head to a variety of jobs. They become indispensable to the small businessman. There is great vigour in the small business sector. That vigour and initiative must be matched with venture capital if it is to contribute to the economy in the very positive way it can.
Venture capital will only be made available with tax adjustments. The prospect of an unusual gain is the main reason people are willing to put venture capital on the line. The gain should be in the form of a non-taxable profit. There are as many ideas for venture capital formation as there are needs for it. Appropriate tax adjustments must be made to increase the flow of venture capital to the small business sector.
The plan I prefer is one developed by the Canadian Federation of Independent Business. That plan, in short, allows the person lending the money to write off the loan from his tax payable and would cause him to pay income tax on the return when it is repaid. There are a number of variations of that idea, but it is one simple way of channelling venture capital funds to the small business sector. If you want a future for small business, Mr. Speaker, you have to buy it today. We can develop from the tinkerer-inventor-scientist dream if we are prepared to put venture capital on the line.
Let me say a few words about profit, because if anything has been maligned in the business world today it is profit. It should be looked upon as a tool with which to create the future. One of the great hang-ups of the socialists is that they love money but they hate profit. They would have you believe
that profits are stored in the corporate vaults and the boards of directors are groups of robbers who divvy up the profit at the expense of the worker. Anyone with an ounce of insight knows that profit is what is left over after all costs, including labour and taxes, are paid.
You have to look at profit in a different dimension. If you look at profit in the form of time, brain power and money you will see it is a tool to create the future. If we want social programs to continue to look after the unemployable and the elderly, they can only be sustained if we have profits. If we want to continue to improve our way of life and our standards of employment and living in the future, then we must do it by rethinking attitudes toward profits. As I said, most socialists love money but they hate profit. I make reference to socialists because the general public today believes the Liberal party is a socialist party. In fact, someone said to me the other day they are like the NDP in a hurry. That is a twist I am sure the House will recognize, and I knew that would get Stanley!
I wonder how many people really understand the effect of the massive weight of government regulation. I wonder how many realize the massive power in those regulations. If hon. members analyse the preamble to the average statute they debate in this House, they will find these words: "The governor in council shall attach regulations thereto upon proclamation". Further, they will see these words: "The governor in council may change regulations from time to time as required". From those two sentences the authority for regulations springs. You never see them until they are proclaimed in The Canada Gazette. They, are not exposed to anyone but the persons within the bureaucracy who use them.
Regulations have a life and power of their own. They are administered by faceless, nameless people who, for the most part, are removed from the mainstream of the realities of the businesses they would regulate. Let me give a few examples. The Metric Commission, in its haste to turn Canada into a metric nation, decided all gasoline service station air pumps should be converted to record air pressure in kilopascals rather than in pounds per square inch. A conversion program followed. I suppose in their fiddleheaded way they thought everyone was going to jump up and down with joy because they had made this great decision.
Let us look at the reality. A sign is placed on the air pump which tells you that the pump has been converted. The sign is in both official languages so you can have bilingual frustration. But no conversion chart tells you what 28 pounds per square inch converts to in kilopascals. I asked the service station operator when I happened to go in one day wanting to put some air in tires: "What do I put on the pump"? He was busy serving a customer and he said: "I don't know and I don't care. It's free air-why should I bother".
I called the Metric Commission and told them my dilemma. I said: "I am at a service station, the air pump is in kilopascals, my tires take 28 pounds per square inch; what does that convert to?" That created quite a problem. I waited on the phone for 45 minutes and Finally a voice said to me: "If you multiply 28 psi by 6.805 you will get the kilopascal setting to
May 25, 1981

put on the pump". I told him where to stuff the air pump, hose and all, it was such a frustrating experience.
A few years ago we had a bill before the House which dealt with tire standards. It had been drafted with the assistance of the rubber industry association and its member companies. Most people were satisfied with the safety standards set forth in the bill. In fact, the government was satisfied. Then the bureaucracy got hold of it and wanted to create a whole new layer of regulations. They were going to have every retail outlet in Canada and every gasoline station keep records of the serial numbers and the name and address of every person who purchased a tire. The retail store would then have to initiate a recall should one be required. In spite of the fact that the tire manufacturers said they would take over the responsibility, the bureaucracy pressed on.
In addition, they would have had a series of inspectors, they said, who would regularly check the retail tire sales outlets to see that the records were being properly kept. Can you imagine the bureaucracy you would have had in a city like Ottawa; probably half a dozen retail tire records inspectors who would probably have to report to a district inspector, who would report to an area inspector, who would report to a provincial inspector, who would report to an eastern-western inspector! It just goes on and on and on, and all to be paid for, of course, by the taxpayers. This would have laid upon the small retailers an unbelievable responsibility and, of course, additional overhead. We fought hard and we won that one. We had the provision withdrawn from the bill and left it with the industry to advise purchasers of recalls through their computer control system.
That measure came into the House of Commons by reason of the bureaucracy copying almost verbatim a statute that was in place in the United States. We had the same thing happen with some provisions under the Motor Vehicle Safety Act.
I recall when I first came to Ottawa in 1972 meeting with a trade association and Dr. Campbell who was head of the motor vehicle safety division in the Department of Transport. Dr. Campbell wanted to have some control over motor vehicles. In fact, the Motor Vehicle Safety Act used by the Government of Canada is word for word, page for page, clause for clause, item for item identical to the one used in the United States. All one has to do is take out the word "state" and insert the word "province" or "territory" and the acts are identical. In fact, one can work from the American legislation in Canada quite easily.
What we found happening was that Dr. Campbell wanted to make the last person who worked on a motor truck responsible for that total motor vehicle, regardless if he only hung a mud flap back of the tires, if he moved the turn signal back on the frame, or if he put anything on the vehicle, such as a reflector or another mirror. If he was the last person who worked on that $60,000 or $75,000 Mack truck, he was going to be responsible for the total recall of that vehicle if in fact a recall was required. In other words, Mack truck would advise a wee little operator that a certain vehicle was believed to have a defect. The small operator would have to go to the expense,
Small Business
time and trouble of notifying the purchaser of the vehicle that he must return it for a warranty repair.
It was a silly situation. We argued all day, and we finally convinced Dr. Campbell to back off; but his inspectors still go to little businesses around the country which do installation work on motor trucks. Those businesses are quite prepared to be responsible for what they instal, but they think it is ludicrous that they should be responsible for the total vehicle which was designed by General Motors, Ford, Mack truck or whoever it might be. That is the type of bureaucracy which drives people right up the wall.
The bureaucracy of government depends upon a passive Parliament to allow it full rein. If there is one non-partisan theme we all could look at, it is the effect of regulations on the public. This whole Parliament should be together on that. There should be no political partisanship whatever involved.


Some hon. Members:: Hear, hear!


William James Kempling: We should be totally together. A rein should be put on this. Every country in the western world is faced with the same problem. We can see what is happening in the United States, which is attempting to deregulate. We have heard about regulation in Germany and in Japan. The bureaucracy gradually grows and grows until it swallows everyone. This Parliament would work better if we could spend a certain number of hours a week looking at regulations which are being introduced, even before they are put into The Canada Gazette. There should be references to an all-party committee. Such a committee could look at the regulations, rule on them or give its views on them before they are passed. There should be some type of review.
To go back to my story about tire inspectors, can hon. members imagine how many tire inspectors we would have in Canada if we had not stopped that measure? How many tires are damaged because of those idiots in the Metric Commission who decided that we should use kilopascals instead of pounds per square inch? Any safety expert or any tire shop operator can tell us that one of the greatest problems with tires is underinflation. Service station operators can tell us that the greatest trouble with bicycle tires is overinflation. If we go into any gasoline station, the operator can show us a line-up of blown bicycle tires.
The fact is that little, if anything, has been done to reduce regulations and paper loads respecting small businesses. I believe one of the previous ministers of state for small businesses set up a committee to look into the abuse of the small business community by means of paper work. I have not seen any results from that, but if the Minister of State for Small Businesses and Tourism (Mr. Lapointe) got together with the Minister of National Revenue (Mr. Rompkey), an income tax form could be devised on which all the information required by the government from the small business community could be gathered at the time income tax returns are filed. I am sure that could be done. It could be a once-a-year task. It could be

May 25, 1981
Small Business
kept simple and the amount of paper work kept to a minimum. That would stop Statistics Canada from calling and threatening small businessmen with fines if they do not send in certain returns by certain dates.
Let me turn to the fourth point in our motion respecting the fostering of research and development necessary to preserve the vitality of Canadian businesses of all sizes. Our contribution to research and development is one of the lowest of all OECD countries. It is far out of proportion to our labour force and the size of our primary and secondary industries. When we invest in research and development, we invest in the future. It seems to me that there is a mindset in the bureaucracy which firmly believes that the only new ideas we should use should come from outside Canada.
A former minister of state for science and technology-I believe he was also president of the treasury board at the same time-believed we could purchase our technology cheaper than we could develop it ourselves. I believe there are some in the Treasury Board and in the Department of Finance who still influence any move toward an expanded research and development program for industry. That kind of thinking will doom us forever to being a second or third-rate industrial nation. Some industries are large enough to have ongoing research and development programs of their own, but many undertake research and development only when their backs are to the wall.
I believe in the tinkerer-inventor-scientist theory that we have to begin somewhere. I have thought long and hard about the practical side of research and development funding. As I have stated many times in this House, the reality is that for all but a handful of industries which are large enough to sponsor full research and development programs the real problem is the availability of cash. The demands on profits and cash flow are so severe that research and development programs are shut down or never leave the ground in the first place.
I have suggested before in this House that we should put into place a registered research and development program. Under such a program a business could accumulate money for a period of time to ensure that funds are in place to undertake and complete a research and development program. The funds could be accumulated from a percentage of the tax payable and be drawn down once a project was decided upon by a business. We would find that an enormous amount of activity would ensue as a result of a program such as this. The government would not have to lay out $400 million or $500 million. The money would be drawn from the profits generated by a business, the government would hold the funds in a registered research and development trust fund and they could be drawn back by the business. That would allow businesses to complete projects which they want to get going.
There should be an emphasis on the training of technicians at community colleges. There should be more integrated programs with industry and, through a double write-off provision, businesses should be encouraged, wherever possible, to establish technical libraries. In the final analysis, we would be
investing in the future. We should do this with the sure knowledge that dividends would be returned many times over.
The motion before us is well thought out. I have attempted to give the House my thoughts in a positive, non-partisan manner. I believe the situation in the country today is very serious. This is a very serious motion, and it should be acted upon by the government with all possible speed.


Some hon. Members:: Hear, hear!


Nelson Andrew Riis: Mr. Speaker, I am very pleased to rise to speak in this Conservative opposition debate. This motion is indeed a thoughtful statement. It provides an opportunity for us to discuss some of the problems and challenges being faced by small businesses across Canada. Unfortunately, we seldom have an opportunity to discuss small business, and I am pleased to see the Minister of State for Small Businesses and Tourism (Mr. Lapointe) here today to listen to what opposition members have to say regarding that area of his portfolio. We look forward to hearing some new initiatives announced by the minister later this afternoon. We are anxious to hear what he has to say about the future of the small business community in Canada.
During these times there is no question that those who have been hardest hit by excessively high interest rates-the highest interest rates in Canadian history-have been people in the small business sector of our economy. For the more than
320.000 unincorporated small businesses and the more than
330.000	small and medium business corporations, interest rates of 19 and 20 per cent, now 21, 22 and 23 per cent, mean higher production costs and cutbacks in orders and inventory, which in turn mean lay-offs and production cuts for manufacturers and suppliers. Entrepreneurs and individuals interested in expansion and in seeing their businesses grow simply find that impossible with interest rates in the 20 plus percentile range. At a time when investment is crucial to improving Canada's productivity, they certainly mean delay, and in some cases permanent delay, in that investment.
As high interest rates wreak havoc throughout the economy, one of the biggest casualties is new job creation. This means higher unemployment at a time when unofficially well in excess of one million Canadians are unemployed. If one is to include in that figure those Canadians identified as being disabled, we are talking about a figure probably touching close to two million unemployed.
It is important to recognize that small business creates two out of every three new jobs in Canada and represents 42 per cent of the employment base, and that by pursuing this policy the government is doing so on the backs of secondary workers in Canada. By secondary workers I mean those workers that are young, old, women, native Canadians, disabled Canadians. These are the people that are first to be laid off, the first to go during an economic crunch. I noted with interest that the president of manpower temporary services, Mr. William Coke, said over the weekend that he would not be surprised to see
May 25, 1981

unemployment easily reach 9 per cent, and I suspect that to be a very conservative estimate.
Also, Mr. Speaker, high interest rates mean sharp increases in small business bankruptcies and the number of firms placed in receivership. Mr. Claude Leduc, the chief statistician for the Canadian Insolvency Association, said the number of business bankruptcies in the first four months of 1981 increased by 17 per cent, with total liabilities up 35 per cent over the same period last year. This indicates very clearly that not only small businesses are being hammered by these high interest rates, but medium and large businesses also are feeling the pinch.
Of course, the official figures on bankruptcy, as bad as they are, cover up the seriousness of the situation. They cover up the impact these high interest rates are having on our economy because for every thousand firms that go through formal bankruptcy, no less than 5,000 firms will finally give up and quietly go out of business or be placed in receivership.
The picture is indeed very bleak but the worst is not over yet, Mr. Speaker. Farmers must be included in our comments on small business. There are over 250,000 farmers operating across Canada, and whether they own a family farm or a corporate farm, it is fair to say that 99 per cent are indeed small businesses. High interest rates in the farm sector raise the cost of just maintaining herds, let alone expanding a cattle or hog operation. High interest rates raise the cost of financing new machinery and equipment as well. This, of course, hurts the thousands of small businesses across the country in our farm communities who sell and service farm machinery.
And what of the bigger businesses that manufacture farm machinery? What of the hundreds of smaller manufacturers that supply this industry with parts and components? Indeed, when one considers the cash flow problems that small farmers are facing and the fact they are unable to expand during this time, it is a sad day for the agriculture sector and for the small farmers in Canada that this government continues with its high interest rate policy, a policy made in the United States and which the government seems to be quite prepared to continue and increase.
Of course, as mortgage rates also climb above the 18 per cent range the housing market is shaken at its very foundations. Young Canadians who have saved and worked hoping one day to purchase their home watch their dreams crumble with each successive increase in mortgage rates. The great majority of construction firms are small businesses again, Mr. Speaker, and there are 88,000 of them across Canada. These are not the Cadillac Fairviews, NuWest or the Bramaleas; they are local firms employing local citizens in our communities and purchasing building materials and supplies from other small businesses.
High interest rates also take their pound of flesh out of the consumer. With finance charges at an all-time record level, consumers are reluctant to purchase new automobiles or new appliances such as refrigerators and ranges. This understandably is having a devastating effect on these industries as well. The Canadian Appliance Manufacturers Association now esti-
Small Business
mates that 4,000 fewer major appliances will be sold in Canada this year than were sold in 1980. But that is just sales, which includes imports. For the domestic industry the outlook is even worse. Major appliance imports as a percentage of the domestic market have risen to nearly 30 per cent from 24 per cent during the period 1975 to 1979. This government's high interest rate policy is guaranteed to accelerate further the decline of our manufacturing industry and slowly strangle thousands of small parts manufacturers dependent upon this industry, not to mention the small retail appliance stores in communities across Canada.
Of course, members of this House are well aware of the plight of Canada's auto industry and auto parts industry and one need not go into detail on this particular major sector of our economy.


An hon. Member:: Maybe the Liberals should hear it.


Nelson Andrew Riis: Maybe the Liberals should hear it one more time.
I could go on, Mr. Speaker, but the point I want to make is that this government's high interest rate policy is doing serious damage, both short and long term, to the entire economic fabric of Canada, not only to certain restricted sectors. The small business sector, the automobile industry, the construction industry, the farm sector, appliance manufacturers, first time home buyers, families renewing mortgages, even municipalities that need to borrow in order to make long-term public investments in sewage treatment plants, water systems and recreational facilities which are so important to their communities-nothing is left untouched by this government's high interest rate policy.
And what have we gained? Inflation has gone up since Mr. Bouey started tightening what he calls the money supply. That has obviously been a failure, but the Canadian dollar has more or less stabilized between 83 and 86 cents. The Minister of Finance (Mr. MacEachen) will probably go down in Canada's history books as not being the one million dollar man but the 30 cent man for Canada.
We have heard today, Mr. Speaker, that the government's response to these devastatingly high interest rates is the consideration of introducing a number of schemes, gimmicks, concessions or special deals. This is, of course, in response to the various lobby groups, pressure groups and special interest groups that are attempting to make their point with the Liberal cabinet. In other words, we have high interest rates but not for everyone. With these special arrangements we bring in further inequalities in the Canadian economic system and further disparities in the treatment of various groups.
The best example of this is the small business development bond. This was an idea first introduced by the Tories and brought into being by the Liberal government, which we, of course, supported because we believed the Prime Minister (Mr. Trudeau), and I am not certain why at this point, when he said it was the government's intention to assist and support small businesses in Canada. We took him at his word, much to our chagrin today.

May 25, 1981
Small Business
As the small business development bond began to take shape, we found that it would not provide much help to the
940.000	small businesses in Canada. There were a number of exclusions built into it. Right off the top, it excluded the
350.000	unincorporated businesses and the hundreds of thousands of small businesses requiring financial assistance in order to provide them with working capital. Other exclusions were the fact that the small business development bond could not be used to recycle equipment; it could not be used to purchase used material, equipment or machinery. The small business development bond does a great deal to create more inequalities in the Canadian economic system. In spite of its good intentions, many inequalities and exclusions are built into it. We really have a small business development bond which assists probably fewer than 5 per cent of the small business community.
Unfortunately this program also provides tax shelter relief to those who need it least. It provides tax shelter relief to the corporate lenders of Canada-they are the main beneficiaries-at a time when their profits are at all-time record levels.
The government should direct the Governor of the Bank of Canada to lower interest rates, in which case we will not need the small business development bond or the number of other schemes to assist small farmers and fishermen. They simply want reduced interest rates so that home owners, for example, can requalify for their mortgages and first time home owners can qualify for mortgages. Therefore, I hope the minister will have something for us, when he stands in the House shortly, which will indicate to the small business community that he is prepared to open up the SBDB to provide an opportunity to unincorporated businesses, farmers and fishermen and which will ensure, perhaps most importantly, that the benefits go to the borrowers, not the lenders.
For a country with the potential of Canada to be a dynamic and innovative leader in the world economy as well as its own, venture capital is much needed. In this respect, the Federal Business Development Bank has failed to provide risk capital or venture capital. It has failed to be a lender of last resort. It has turned out to be one of the most conservative lending institutions in Canada.
The high rate of staff turnovers often results in inadequately experienced loans officers. One could go on and on about the problems associated with the Federal Business Development Bank; they are well known. In many parts of Canada it is looked upon as nothing short of a financial disaster. Rather than encouraging Canadians to dream of a better future, it drags Canadian entrepreneurship down and essentially eliminates the possibility for many Canadians to build a better future for themselves and for Canada.
The FBDB must be totally re-evaluated in terms of its mandate, organization and policies. It should be a model or a leading light for venture capital opportunities for Canadian entrepreneurs. It should be used as a clearing house of information for all federal government programs to assist small businessmen. But it sits and essentially retards the development of Canada. This must be changed and the sooner the better.
The previous speaker mentioned the need for research and development. One cringes when one sees that the government's aim is to obtain 1.5 per cent of the GNP by 1985. The government itself admits that this is possibly a hopeless target. It should be recognized by us all as totally inadequate, because 1.5 per cent of the GNP for research and development will not provide the technological leadership the country drastically needs at this time.
More money and efforts should be expended on federal research institutes and educational institutions. More emphasis should be placed on industry and business to develop a more aggressive policy when it comes to research and development, through to the production stage. Research and development per se is inadequate. The government must set the guidelines or the parameters. It must provide initiative for the private sector to move in the direction the government seeks to develop. I am not certain we need another 50 kinds of underarm deodorant. We need research and development which is guided and makes sense in terms of industrial advantages in Canada and research and development through to the production end. It will create more jobs for Canada. It will provide expertise for Canadians and from Canadians. It will develop a technological leadership for Canadian industry and for the world.
At this point in time we mainly require an active commitment by the government to the small business sector. Earlier today we recognized that the government decided to introduce metrication in the retail sector which will require the spending of hundreds of millions of dollars on measuring devices and scales in order for retailers to comply with the initiative taken by the government. While we support the principle of metrication, we abhor that because of the timing hundreds of millions of dollars of equipment and machinery will have to be sourced from beyond Canada's borders; they will have to be sourced from the United States and abroad. If the government is committed to a buy-Canada policy, if the government is committed to the small business sector, this is where it can provide sound leadership and a strong model to business across the country.
Also the previous speaker mentioned the paperwork burden facing small businessmen. There is no question that this is the case. We must take seriously the matter of the paperwork burden of small businessmen. I spent the last number of days speaking with small businessmen from Kamloops who are good businessmen. They depend upon the state of the economy to develop their sector adequately. They are committed Canadians who want to do a good job. They want to co-operate with government authorities, but now they have reached the stage where they are prepared to say, "We cannot take it any longer".


Some hon. Members:: Hear, hear!
May 25, 1981


Hon. Charles Lapointe (Minister of State (Small Businesses and Tourism)):: Mr. Speaker, I would first like to congratulate the hon. member for Burlington (Mr. Kempling) on the motion which he introduced in the House today and which gives us the opportunity to discuss an important sector of our economy, namely Canadian small businesses. I would also like to congratulate him on the contents and the tone of his speech since, as he said in his introductory remarks, we have to rise above partisanship if we really want to serve well the interests of this community which concerns every one of us.
I appreciated particularly his comments concerning regulations and the horror stories which he told us because I also know a few of them. The hon. member can be assured that my colleague from the Treasury Board, who is responsible for the general deregulation on behalf of the Government of Canada and myself, as I am more specifically responsible for reducing paper work for small businesses in Canada, will be very happy, not only to follow his advice, but also to ask him for advice to bring about a situation where regulations will no longer be a constant barrier to entrepreneurship in Canada.
I am also happy to note that he speaks in his motion of the increased need for risk capital to provide additional stimulus and strength to the small business sector. It is obvious that at the present time in spite of the relatively important operations of the Federal Business Development Bank with regard to loans or the placing of risk capital on the market, in fact, no financial institution in Canada entirely meets this need.
However, I would like to mention to the hon. member simply for his information that there are agencies in certain provinces, such as the Small Business Development Corporation in Ontario, SODEC in Quebec and the Venture Capital Corporation in Nova Scotia. My colleague from Alberta also mentioned that he was establishing some type of agency to promote activities or loans for risk capital. There is only one question I would like to ask at this time: I wonder whether or not we need another federal agency in addition to those which now exist in the provinces in this field. I believe that it would be more appropriate to increase co-ordination with provincial agencies to be able to set up one system throughout the country which would make available more risk capital to men and women in business. I must say that I was very pleased with the comments of the hon. member concerning the profits of the business sector, and I agree completely that if we want to continue as a country and as a nation to have some of the most generous social, medical, old-age assistance and unemployment assistance programs to meet the needs of our community, it is essential quite obviously for small businesses in Canada to have the best possible margins of profit.
Like the hon. member for Burlington, I am not afraid of the word profit and I hope that an increasing number of our small
Small Business
businesses will be able to make these profits which they have a right to expect. I am also glad that his motion mentioned the issue of research and development. It is true that our country may not have a sufficient percentage of its revenue invested in research and development compared to other member countries of the OECD, but the government has undertaken to increase this percentage to 1.5 per cent of the gross national product. I hope that, as the years go by and as the financial situation of the government improves, we will be in a position to implement even more generous programs to promote research and development, either through tax measures or other means, to help the promoters establish these research and development programs, and we could perhaps even, as suggested by the hon. member, give a tax credit for the purchases made to set up scientific libraries in business companies, for instance.
I was therefore very pleased with the comments made by the hon. member for Burlington, but unfortunately, Mr. Speaker, the same cannot be said about my reaction to the whinings of the hon. member for Kamloops-Shuswap (Mr. Riis), who recited all he has learned by rote, which he has been repeating these last few months and which is full of untruths and half-truths. He indicated at the very beginning of his intervention that the present policies of the government delay the development plans of small businesses and prevent Canadian small businessmen from purchasing the new equipment they need and from expanding their business to create more jobs.
Well, Mr. Speaker, I should like to tell him that that was precisely why the Minister of Finance (Mr. MacEachen) promoted the small business development bond program in his budget. Under that program, as the hon. member knows, businessmen can borrow at roughly half the current or commercial rate. It is used specifically for business expansion purposes, either for the purchase of real assets, land, buildings or new equipment. So that answers the first objection raised by the hon. member. Then the hon. member said that the policies of this government are leading to higher unemployment rates. Mr. Speaker, he seems to forget, or he is probably not aware of this, that in April we reported the lowest unemployment rate since 1976. Instead of looking at the figures as they are he would rather throw a scare into everybody by saying that the unemployment rate will soar to 9 per cent, 10 per cent and 11 per cent. He wants to scare Canadians.
Then the hon. member went on to a topic so dear to his heart, bankruptcies, saying that they had gone up by 17 per cent in 1980 and during the first quarter of 1981. Mr. Speaker, as the Minister of Finance stated during today's question period, of course the economy suffers from any bankruptcy, but no useful purpose is served in stressing only one figure as did the hon. member who he failed to mention in the same breath that, although bankruptcies may have risen by 17 per cent in 1980 and in the first quarter of 1981, there were 20 per cent more new businesses in 1980 and that same percentage

May 25, 1981
Small Business
holds true for the first quarter of 1981. He also failed to point out that the total number of bankruptcies in the sector of small businesses still represents less than 1 per cent of all small businesses in Canada. And as a universal remedy, of course- this he suggested during the question period, as if he were living on a remote island in mid-Pacific or mid-Atlantic, I could not say-the universal panacea for all such woes he described to us, when he stated that the government only has to lower interest rates. I suggest that it is a rather simplistic view of the components of the Canadian economy, Mr. Speaker. Apparently the hon. member does not give a hoot either for the considerable damage done by inflation to the future of small businesses in Canada.
A little further on in his speech the hon. member for Kamloops-Shuswap again repeated his favourite statement, namely that the Federal Business Development Bank is Canada's most conservative financial institution, that it strangles small businesses, shies away from risks and no longer serves the purposes for which it was created. I should like to tell him very simply that the bank made a study of its lending characteristics, which study reveals that, in 1975, 52 per cent of FBDB loans were fully guaranteed as compared with only 31 per cent in 1980.
Since there were more loans that were not guaranteed, there were naturally more loan calls. In 1976, the reserve for losses included in operating costs was equal to .9 per cent of the total loans outstanding at the FBDB, in 1980, it was equal to 2.4 per cent. I wonder whether the hon. member could name me one commercial bank or "caisse populaire" or credit union which incurs losses of 2.4 per cent on loans to small business. If so, Mr. Speaker, I will agree with him that the Federal Development Bank is too conservative an institution for small business.
The bank's figures and an analysis of its loans show that the hon. member's assertion is unfounded. The hon. member did however make one good suggestion, that is that the Federal Development Bank with its network of 102 offices throughout the country should serve as a distribution center for federal programs. I certainly agree with that, and so do the bank's officials. During the training course that they must take, the bank's credit officers are made aware of all the existing programs that can aid the small business sector, and we try to use this network of 102 offices across the country to distribute information regarding federal programs.
The hon. member went onto talk about his latest pet peeve, metric scales. He thinks, Mr. Speaker, that it will cost hundreds of millions of dollars to replace existing scales by metric scales in grocery stores. That is another red herring, because according to the information I have, replacement costs in food chains and retail grocery stores will amount to between $45 and $58 million. That is a far cry from the hundreds of millions of dollars the hon. member speaks of.
He is shocked, perhaps not without just cause, that we do not at this time have the capability to manufacture such scales in Canada. Since 1976, all Canadians have known that metric scales would be introduced in retail food stores in 1979 and, for various reasons, this was delayed until January, 1982, that is three years later. And yet since 1976, despite all our efforts to encourage investors to go into the manufacture of metric scales, only one Canadian manufacturer, located in Ontario, decided to take up the challenge. We certainly hope that when conversion is implemented in 1982, he will do a booming business. Why did not other Canadian manufacturers go into that venture? Probably, Mr. Speaker, because they considered that the volume of sales, which is some $50 million, was not worth the investment required to go into this new line of production. We are not of the opinion, like members of the NDP, that we should take investors by the hand and tell them: Sir, Madam, would you please manufacture scales. Our programs are well known and so are our policies, and it is not by behaving in the paternalistic fashion suggested by the hon. member that we will develop in Canada a healthier, more aggressive and more dynamic business sector.
We do not deny, Mr. Speaker, that high interest rates affect small business in Canada and that the cost of borrowing money is getting ever higher for small businessmen. However, before considering new programs and setting up new stuctures, let us look at the programs already in place. The hon. member who moved the motion pointed out that the Small Businesses Loans Act has been in force since 1961, and in 1980 alone, it is interesting to note that Canadian small businessmen have borrowed over $400 million, Mr. Speaker, under the Small Businesses Loans Act.
You will remember that less than a year ago, last June, 1 introduced some amendments to that legislation in order to make more people eligible and to raise the maximum amount of loans through a more flexible rate scale providing for larger and easier loans. Loans granted under the Small Businesses Loans Act are 90 per cent state-guaranteed and may be granted to manufacturing concerns, to wholesale and retail firms, to service industries, to building, transportation, communication, real estate businesses as well as to insurance agents and brokers. We are then trying to cover the greatest possible number of small businesses so that they may enjoy state-guaranteed financing.
Secondly, I dealt briefly with the Federal Business Development Bank which, in spite of all its deficiencies and the present difficult economic conditions, plays an essential role in the country in that it is the only institution at present that provides a cheap management consultant service for small businesses. It also provides throughout the country, in our remotest cities, a series of management seminars so that businessmen and businesswomen may acquire new administrative techniques, learn how to improve their bookkeeping and to run their business most efficiently. In addition to the financial role played by the
May 25, 1981

Federal Business Development Bank-someone just said that such a bank has no place in the market-Mr. Speaker, I hasten to point out that the average loan granted by the Federal Business Development Bank is about $49,000. Let us look at the average loan granted by chartered banks. You will see that it is around $500,000 or more. It means that the small business community in Canada is not served by the Federal Business Development Bank. I think it is a gross distortion of the truth. The management consultant services such as the management seminars of the Federal Business Development Bank are a most valuable tool, particularly in remote communities, because up to 1980, the bank held more than 7,000 seminars throughout the country, not in cities such as Montreal, Toronto, Vancouver or Calgary but in more remote communities where customers do not have access to all the government services provided in large cities. In addition to the FBDB and the program under the Small Businesses Loans Act, there is another program, the business development program, which meets partly the needs of small businesses to finance their activities in the area of research and development.
Mr. Speaker, just to give you an idea, I have here an April press release that says that under the industrial development program, during January and February, $42 million were allocated to industrial development projects in Canada as innovation grants for new products, for design, for increased productivity, for the identification of new products and for proposed projects. This program also provides for adjustment assistance in the form of loan guarantees for the reorganization, development and upgrading of equipment, as working capital or contribution to hire consultants to prepare restructur-ating proposals.
Mr. Speaker, that was the business expansion program for February and January. The amount was $42 million. And another news release issued on May 12 showed that for March, an amount of $14,230,215 had been granted to support industrial expansion in Canada. This means, therefore, that there are at this moment programs which provide for and facilitate research and development, help our men and women in business develop new products and find their way, after months and years of effort, into the export markets. And this is exactly how all Canadian corporations, whether small, medium or large, will get a chance to survive. That is the reason why the government has decided to significantly increase both the credits allocated to the export promotion program, and the financial resources of the Export Development Corporation. If 1980 has been a record year as far as exports are concerned, this is due to all the mechanisms we have set up to help businessmen forge ahead in their quest for new markets outside Canada.
Moreover, the National Research Council has its own industrial research assistance program. Under this program, the council contributes approximately 40 per cent of the total costs of research and development carried out by Canadian corpora-
Small Business
tions. The industrial research and development mini-program implemented in 1979 was aimed at providing additional assistance to small businesses. We seek to encourage small businesses in Canada to participate more resolvedly in research and development activities, to develop new products, since we are all too aware that creativity is found mostly in small businesses. It is a fact that in 1980, small businesses were responsible for 62 per cent of the new jobs created in Canada. As a matter of fact, this sector is responsible for 42 per cent of all the jobs in Canada. It is clear that this government, like the other governments before it, is extremely concerned with the welfare of small businesses, just like all provincial governments for that matter. As I was saying earlier, an additional coordinating effort must be made in conjunction with all parties concerned, because as a result of the current fiscal situation, there is no longer any room for competition between the provincial and federal governments to set up programs, because we are all using taxpayers' money.
I suggest that the time has come to accept that when a province decides to support research activities in a particular area, the federal government should avoid getting involved in the same area. I think that we must co-ordinate all federal and provincial policies to help small businesses.
I have referred to the small business development bond program; this assistance, however, is not to be considered as a source of working capital. But I feel that the purpose was to have a special mechanism to favour the growth and development of dynamic small businesses and make it possible for them to purchase any new equipment they need to increase their production. Under item 4 of the small business development bond program, banking and lending institutions may consider using this program to refinance corporations which are facing serious financial difficulties. I think, therefore, that the necessary mechanisms exist to provide assistance in that area.
In addition, Mr. Speaker, hon. members will remember that some time during the summer, my colleague, the Minister of Supplies and Services (Mr. Blais) and I having told ourselves that the state should serve the small business sector, introduced the subcontracting program. As we know, the federal government is the largest in the country; it spends for goods and services about $4 billion a year. We therefore decided to recommend a subcontracting program providing that for all contracts entered into between the Department of Supply and Services and a supplier, and amounting to $2 million or more, the contractor be required to tender a plan of his subcontracts with small Canadian businesses. Even though at this time about 38 per cent of government purchases in supplies and services, and representing about $ 1 billion, go to small business, we hope, thanks to this subcontracting program, to reach a target of 45 per cent of all central purchasing, precisely to help small and medium-sized businesses.

May 25, 1981
Small Business
In addition to all those programs, as you know Mr. Speaker, there are special tax incentives for small businesses. The main one provides for a lower tax rate on their income. As you are aware, the rate on the first $150,000 earned by a private company under Canadian control is 21 per cent lower than that applying to big business. I know that in all my contacts with the small business community throughout Canada I am often reminded that the amount of $150,000 to which the preferential rate applies has not been changed in four years. I agree that at some time or other that ceiling will have to be raised, when the financial situation of the government allows. Moreover, again in the field of tax measures, let us keep in mind that the carry-over of as much as $200,000 in capital gains in the transfer of small businesses between generations has been proposed. There is also the tax credit on research and development spending by small businesses. Small private Canadian-owned companies that are entitled to the lower tax rate that I mentioned in the first tax measure can also benefit from an investment tax credit of 25 per cent on all their investments in research and development.
There is also the sales tax exemption on manufactured goods of up to $50,000, the tax-free allowance on provincial aid to risk investments such as, for instance, the investments made by the Small Business Ontario Development Corporation, or SODEC, or the Venture Capital Corporation of Nova Scotia. The assistance given by those corporations is tax exempt. The last budget also provides for deduction of the spouse's salary for non-incorporated businesses in Canada, and contains another program I have spoken of at length, the small business development bond.
I now come to the paperwork burden reduction, Mr. Speaker, since I am in charge of that program in the Department of Industry, Trade and Commerce. I know that this is one of the most constant and justified concerns of the Canadian small business community. It is figured that the paperwork required by the federal government from the business community, from both large and small businesses in Canada, would each year fill a train stretching from Montreal to Toronto. So this is to say to what extent we are flooded with paperwork, with a multiplicity of forms.
I was a little sorry to hear that the hon. member from the Progressive Conservative party was not aware of what had been achieved by the Paperwork Reduction Bureau, probably because he did not attend my press conferences. I would like to point out to him, for example, that in August of last year I announced a series of 50 measures precisely with a view to reducing the paperwork burden for small businesses in Canada. One of the most important will save about $100 million for the business community because we have limited to six years the retention of business records. Previously, as the hon. member knows, there was no limit, and some businesses kept papers for 50 years -


Donald W. Munro: You still have to fill out forms!


Charles Lapointe: I will come back to that if the hon. member for Esquimalt-Saanich (Mr. Munro) will allow me to continue. Until last August, the burden of proof lay with businesses. They had to write Department "X", "Y" or "Z" to ask when they would be allowed to destroy those-I was going to say darned papers encumbering their basement, attic and warehouses. The onus is now reversed: We say: "The six-year period is up, you can discard all the old papers". If some departments want businesses to keep records for more than six years, they now have to ask for it and specify why they have to be kept.
So, after six years, businesses no longer need ask permission to destroy their files or records, and the onus is on the department to justify any request for keeping papers going back more than six years. Here is a more practical example: customs and excise regulations were amended and now allow importers to list all their shipments on a single form instead of having to fill out a separate form each time. They remit taxes and charges once a month instead of doing so for every shipment.
Statistics Canada was requested to change a number of inquiries, particularly the monthly inquiry on employment, payrolls and individual hours; it is hoped this will reduce the burden imposed on small businesses, saving them some $35 million. Also, the Department of Labour was requested to review the famous question of the time logbook that every trucker in the country must fill each night.


The Acting Speaker (Mr. Ethier):: Order! I regret to interrupt the hon. minister, but his allotted time is expired.

Does the hon. member have unanimous consent to continue?


Some hon. Members:: Agreed.


Charles Lapointe: I am thankful to hon. members for allowing me to conclude my remarks. As I said at the beginning of my remarks, I am very grateful to the hon. member for introducing this motion. I would like to indicate to him that I share his concerns in respect of risk capital, the financing of working capital, the red tape and the matter of research and development, and I accept wholeheartedly his offer to co-operate. To sum up, I would like to submit to the hon. member that at this point in time, if we look at the whole range of loans guaranteed under the Small Businesses Loans Act, all the loans from the Federal Business Development Bank, loans guaranteed under the business development program, the Canadian government currently has upwards of $3 billion in guaranteed loans to small businesses as of May, 1981. And if we add to that business development program grants, grants from the Department of Regional Economic Expansion, grants from the National Research Council of

May 25, 1981

Canada and other departments, we see that some $100 million in grants are extended to small businesses every year. And finally, as far as fiscal measures are concerned, if all revenues lost in the form of either tax deductions, preferred rates or business expansion bonds were added up, they would amount to $2 billion a year of extra help to small businesses. These in my view are huge investments, but admittedly we still have a long way to go, and 1 count on my colleagues from all sides of the House to help me bring back to a more acceptable level the red tape and regulation burden and create an over-all economic climate that will be more favourable to small business expansion.


Mr. Otto Jelinek (Halton):: Mr. Speaker, it is obvious that the minister of state is sincere in his concern for the small business sector. I appreciate his sincerity, but I feel sorry for him. It is obvious that his hands are tied by the more senior cabinet ministers of this administration. They do not share his enthusiasm for small business. If one follows the record of the Trudeau administration, small business has been virtually ignored.
Just over one year ago the Liberal party platform during the election campaign was based on lower inflation, gasoline prices and interest rates. After the Liberals received their mandate presumably to pursue those policies, they instead subjected Canadians to over one year of debate on the Constitution. They virtually ignored the blatant signals of real economic difficulties.
When the constitutional debate left this House a few weeks ago to await the Supreme Court ruling, the first piece of legislation brought forward by the Liberal administration was the youth offenders legislation, followed by the elections act to shorten the period of elections. There has not been anything to deal with economic matters, especially those related to small businessmen. It has only been at the urging of the opposition parties that we have had an opportunity to debate any matters relating to the economy.
During this one-year period of inaction on the economy, gasoline prices increased by 49 cents per gallon and inflation climbed from around 10 per cent to nearly 13 per cent. The biggest culprit damaging the small business sector in Canada has been interest rates, which have now skyrocketed to nearly 20 per cent prime rate. That means small business pays well over that. At the same time, people are losing their homes, business bankruptcies are on the increase and farmers are being forced from the land.
The Prime Minister (Mr. Trudeau) and the Minister of Finance (Mr. MacEachen) have the gall to maintain that Canadians are much better off than they were a decade ago. I would like to quote from a letter to the editor in today's "Trudeau Star"-I mean the Toronto Star. I believe it expresses the feelings of the majority of Canadians. I quote:
Regarding the article "No more aid to consumers, Trudeau says," Prime Minister Trudeau's statement to the House of Commons that Canadians' after
Small Business
tax income has risen 50 per cent over the last decade and, therefore, "Canadians are 50 per cent better off, on average, in 1980 than they were in 1970" is asinine.
In 1970 we bought our home with a 10 per cent mortgage. My husband was and still is a municipal worker and I did not work. Our gas cost $10 a week to go to work and I could feed our family for $35 a week. Our property taxes were $250 a year. We managed on one salary.
Ten years later, my husband's salary has increased-averaged over 10 years- approximately 60 per cent. This does sound fantastic!
But it now costs us $30 per week for gas to go back and forth to work-an increase of 200 per cent. The mortgage rate is now 18 per cent, if you're lucky- an 80 per cent increase. It costs us $85 per week for food-another increase of almost 150 per cent and our taxes have more than doubled.
I could go on and on with percentages of price increases, but I think every working Canadian family knows this.
I now have a full time job myself, out of sheer necessity, and then I pick up the paper and read we are 50 per cent better off now than we were 10 years ago.
Garbage!
Trudeau's statement is an insult to my intelligence and the sooner he and Finance Minister Allan MacEachen get down off their high horses and start doing something to get Canada out of this economic mess it's in, the better off all Canadians will be.
I read that into the record because, from talking to my constituents and people across the country, I feel it exemplifies the feelings of Canadians today regarding the inaction of this government. The Minister of Finance says that high interest rates will reduce inflation. That is hogwash. The higher the interest rates, the more a businessman has to spend to finance his company. He will pass along the cost of that increase in his product to the consumer, the consumer will have to pay that much more and that feeds inflation. Economists do not often agree on anything, but they do agree that high interest rates feed inflation.
Government spending continues to rise. Government spending is the main reason for domestically caused inflation. There is no question about that. Last year this government spent an estimated $67.6 billion. Projected costs of services to government increased again this year by $4.7 billion. The Liberal government is spending at the rate of $129,000 per minute, 24 hours a day. It is the inability, ineffectiveness and obvious non-urgency of the Liberal administration which are causing the problems in our economy.
When they were in opposition, the Prime Minister and Minister of Finance condemned the PC government for trying to reduce government spending in the civil service in order to reduce inflation and, therefore, interest rates. During the election campaign, the present Minister of Industry, Trade and Commerce (Mr. Gray) promised to resign if interest rates did not go down if and when the Liberals again formed the government. The Liberals again form the government, interest rates have skyrocketed and the minister is still here, he is not resigning. On October 30, 1979, while a member of the loyal opposition, the same minister said:
Because of the harmful effects of high interest rates on consumers, businessmen, especially small businessmen, and the entire economy, there should be an urgent study by the finance committee, where the Governor of the Bank of Canada would come, and the Minister of Finance.
He went on to say to the then finance minister, the hon. member for St. John's West (Mr. Crosbie):

May 25, 1981
Small Business
I want to point out to you that your high interest rate policy would slow down the economy, it will mean the loss of thousands of jobs; it will mean increases in the cost of living. It will probably bring the housing and construction industry to a halt, with thousands of jobs being lost in these sectors.
How right he was, Mr. Speaker. Even so, the Progressive Conservative Party went on to meet his challenge by introducing a budget that would have returned purchasing power to the lower and middle-income earners. We were prepared to implement a small business policy that would meet the real needs of the vital sector of our economy. We reduced government spending and provided incentive to business and individuals. We proposed energy tax rebates to lower and middle-income families, an employment tax credit, and a mortgage and property tax reduction for middle and low-income families. We proposed all of these things, yet the government had the gall to tell us that interest was too high when it was below 14 per cent at the time and to defeat a budget which would have reduced interest rates and inflation even more.
What has this government done? It has initiated a debate on the Constitution for a year and has brought forward the young offenders legislation and things of that nature without having the least bit of compassion for the small businessman in this country or, indeed, for the individual across the land. Naturally every Canadian and every sector of the Canadian economy is adversely affected by this lack of action on the part of this insensitive and arrogant Liberal administration.
The one sector that is affected most by this lack of action is the small business community. We have said over and over again that the small business sector of this country is the backbone of our economy. It is the largest potential employing sector in Canada. In fact, the Minister of State for Small Businesses and Tourism (Mr. Lapointe) just stated it employed over 60 per cent of the labour force in Canada last year. This is why the Progressive Conservative Party has moved this motion today, and I should like to take the time to read it into the record once more:
That this House condemns the government for ignoring the consequences of its high interest policy and for its failure to assist the small business sector in Canada
(1)	by increasing and extending the small business development bond program;
(2)	by encouraging venture capital investment by means of appropriate tax adjustments;
(3)	by relieving the small business sector from the massive weight of government regulation; and
(4)	by fostering the research and development necessary to preserve the vitality of Canadian businesses of ail sizes.
I very seldom get angry, but I am getting fed up and very angry about this inaction. I have talked to small businessmen in my constituency and across the country, and they are angry about the inability and the inaction of this government to take the necessary steps to reduce inflation by reducing government spending and bringing down interest rates. It is a cop-out to tie interest rates to the weekly bond issue, as the Prime Minister has done, and therefore absolve himself from the responsibility
for high interest rates. It is a cop-out even to tie them to United States rates. They should not be tied to United States rates. We must accept temporarily lower exchange rates for the Canadian dollar if we untie interest rates from U.S. rates,
I agree, but I believe, as does the majority of businessmen, that we will temporarily have to suffer a tougher exchange on the dollar if we are to bring interest rates down. The government must act on this question.
I feel sorry for the Minister of State for Small Businesses because he is not allowed to act on his own. It is obvious that in dealing with interest rates his hands are tied. He just had an opportunity to take some specific action in reducing interest rates but he could not do so.
The small business development program should be extended beyond 1981. The government did not want to extend it even to the end of this year. It was as a result of urging by my colleagues, myself and others in opposition and across the country that finally the government reluctantly moved to extend the program. It should be extended for another one, two or three years so that businessmen can make long-range plans instead of depending on the ad hoc, band-aid approaches and temporary programs this government has set up.
Perhaps the small business development bond program should be expanded to include venture working capital, because businesses cannot continue to carry inventory, payrolls and day after day production paying over 20 per cent in interest. Small business development bonds do not cover working or venture capital.
Perhaps loans under the small business development bond program should be tax deductible in order to benefit small businesses with profits as well as those which are not in the black. Profit should not be considered a dirty word-something which has resulted from this Liberal administration's policy. Businesses with profits today cannot deduct the interest paid on borrowings made under the small business development bond provisions. Therefore, profits from that bond program are minimal. The rates are nearly parallel to conventional loans.
The Minister of Finance has said from time to time that the government cannot afford to do this. Let me refer very quickly to a study made by the Canadian Federation of Independent Business on the economic impact of the small business development bond. It concluded that there was no net cost to the federal treasury for small business development bonds, but an actual gain of $77 million in the first year of the program. Surely that reduces the validity of the argument of the Minister of Finance that it is too costly a program. He just does not care about small businessmen and the interest rates they are paying today.
Since my time is running out perhaps I could make one final recommendation. I have nothing against profits. As I just said, profit has become a dirty word around this place in recent years, but I think profits tend to create productivity and
May 25, 1981

expansion of businesses. However, during these present circumstances the high bank profits of today should be channelled into loans at preferential rates for small businesses guaranteed by the government. This could be done through the existing Small Loans Act under which the government is already guaranteeing chartered bank loans at prime plus one, I believe it is. The minister of state boasts about the number of loans the government is guaranteeing under this act, but does the guaranteeing of loans at 21 per cent or perhaps 22 per cent help small business? I do not think it does and nor do small businessmen. This preferential rate should be tied to the cost of living or the inflation rate. These are some of the things that should be considered.
Unless immediate action is taken to bring down interest rates in this country, particularly in the small business sector, we will lose this sector as we now know it. It will no longer exist. This country was built through incentives, initiatives and the well-being of small businessmen. This is what we can grow from and build in the future, but what is this government doing? It is reducing small business to a small portion of our economic productivity, because small businesses are now dependent on the government's actions which cause them to suffer 20 per cent interest rates and more on their borrowings.
I do not care if we have to sit here for months on end, but if this Parliament does nothing else it should lower interest rates. The only way to do so is to start by providing preferential interest rates to the small business sector.
In closing, let me say that my colleagues have talked about regulations, directives and controls. These things still exist and they must be replaced by incentives. We must give tax rebates and other incentives to those small businesses which invest in research and development. We should provide an incentive tax credit to any Canadian citizen who makes a direct investment in the equity of a Canadian-owned business. Incentives must replace the many stringent regulations and controls that have been established during the Liberal reign in the last ten years. It is time the Minister of Finance and the Prime Minister put small business where it belongs, and that is at the top of their list of priorities.
[ Translation]


Hon. Pierre Bussieres (Minister of State (Finance)):: Mr. Speaker, this is the third almost consecutive day-
Small Business



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
[ Translation]

The Acting Speaker (Mr. Ethier):: Order, please. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: The hon. member for Esquimalt-Saanich (Mr. Munro)-National Security-Missing Taschereau Commission papers and Mackenzie King diary; the hon. member for Edmonton-Stratchcona (Mr. Kilgour)-Supply and Services-Enquiry whether fire engine contract has been awarded to Walter Truck Canada; the hon. member for Cowichan-Malahat-The Islands (Mr. Manly)-Human rights and Indian Affairs.
I apologize for interrupting the hon. minister, but the list of questions had to be read before five o'clock. The hon. Minister of State (Finance).



GOVERNMENT ORDERS

[Stage Direction]
[ Translation]

[Stage Direction]
The House resumed consideration of the motion of Mr. Kempling:
That this House condemns the government for ignoring the consequences of its high interest policy and for its failure to assist the small business sector in Canada
(1)	by increasing and extending the small business development bond program;
(2)	by encouraging venture capital investment by means of appropriate tax adjustments;
(3)	by relieving the small business sector from the massive weight of government regulation; and
(4)	by fostering the research and development necessary to preserve the vitality of Canadian businesses of all sizes.
Pierre Bussières: Mr. Speaker, this is the third almost consecutive day that the business of the House has given us the opportunity to discuss the issue of high interest rates, and it is unfortunate that some forget to look at the problem in its general context. The opposition condemns the government for ignoring the consequences of high interest rates, as though short-term high interest rates did not result in the long run into a decrease in inflation and consequently in interest rates.

May 25, 1981
Small Business
As you will recall, Mr. Speaker, we were able to explain last week in what context the current high interest rates in Canada had to be considered during the debate on the motion introduced by the New Democratic Party which suggested that interest rates in Canada were being set outside the country. We saw how economic conditions caused inflationary pressures and expectations, how these pressures resulted in certain monetary and fiscal policies which brought about higher interest rates, and how, if we wanted to have an effective policy against inflation, we had to suffer in the short term the unfortunate effects of certain measures so as to meet this medium and long-term objective of fighting against inflation.
What I find surprising is that after the motion of the New Democratic Party, a motion for the Progressive Conservative party was introduced by the hon. member for York-Peel (Mr. Stevens). He blamed, of course, the government for its high interest rates, and singled out as one of the causes the very large government deficit and the unlimited expenditures of the central government.
Mr. Speaker, the members opposite, especially on the side of the Progressive Conservatives, should make up their mind and decide whether we should reduce the deficit as the Minister of Finance (Mr. MacEachen) has undertaken to do and is now doing, or else they should say unequivocally that they do not believe in reducing the deficit, and do what the hon. member has done today and ask the government to increase its expenditures and extend the program of small business development bonds. The hon. member who has just spoken told us, on the basis of solid Social Crediter arithmetic, that this measure would cost the government nothing. He said that it would cost nothing and would even bring revenue to the government. He would have to prove it, and he has not done so yet. However, it is a well-known fact that a tax credit allows a business to deduct from its payable tax part of the interest due on its loan and also allows a lending institution to deduct from its revenue that part of the interest it will not collect. One has to calculate like a Social Crediter to suggest that it does not cost the government a thing because revenues not collected by the government are losses, and a tax expenditure, whether it is a taxation or a budgetary item, is an expenditure all the same.
I want to believe in authoritative arguments, but in arithmetic as in taxation, such arguments are inconclusive. Even if Mr. Y said that a tax expenditure does not cost anything, we can very well believe him, but let us ask him to explain how a tax expenditure does not cost anything to the government.
When amendments to the Income Tax Act were considered-if I am not mistaken, it was in early February-several members in all corners of the House, especially the Minister of State for Small Businesses, urged the government to extend the small business development loan. We remember that the Minister of Finance had rightly and reluctantly agreed to extend for another year the small business development loan. He did it for two reasons: first, because of the economic
circumstances, high interest rates being prejudicial to the development of small business, and second-keep in mind that we were then still in a recession-in order to promote economic development. Small and medium-sized highly job-oriented businesses would be in a position to make further investments in order to give a new economic impetus.
The minister responsible told us a while ago how the government, with that small business development bond, with others institutions under his jurisdiction and with other government programs especially under the aegis of the Department of Industry, Trade and Commerce, promotes the development of small business and enables it not only to get through the difficult times we are now experiencing but to develop further in spite of those difficult times.
There was also some reference to tax measures designed to encourage small business risk capital. As for that particular aspect of risk capital, I should like to point out that the government has taken several steps to ensure the development of small businesses in a sound and favourable climate. Obviously, the measure I have just spoken of is of great importance to the development of small businesses, but we also have tax measures that are of great benefit to them. All privately-owned Canadian businesses enjoy a major income tax concession. The federal income tax rate that applies to them is 15.75 per cent as compared with the normal 37.8 per cent applied to big companies, or compared with the income tax rate that applies to foreign-controlled companies. In other words, the tax rate applied to small Canadian-owned companies, that is, 15.75 per cent, is roughly about half that applied to foreign-owned companies. So, when I am asked to provide special tax measures for risk capital, I say that having an income tax rate of barely half that normally applied to companies is clearly an advantageous tax measure, and it already exists, Mr. Speaker.
In the case of the profits of Canadian manufacturing and processing firms, the rate applied to small businesses is even lower than the privileged rate of 15.75 per cent I have been discussing; it stands at 10.5 per cent compared to the current rate of 31.5 per cent applied to unincorporated businesses. That substantially lower rate is clearly of special advantage to small Canadian business; it also represents an important federal government tax measure aimed at encouraging risk capital investment in small and medium-sized businesses. That type of tax expenditure in terms of lower tax rates amounts to about $1 billion in revenue losses for the Canadian treasury for the year 1979.
Research and development has also been mentioned, Mr. Speaker. In the field of taxation we also have an extremely important measure concerning research and development: a 25 per cent tax credit for investment in research and development in the case of expenses incurred by Canadian small businesses. A 25 per cent tax credit has to be a rather generous measure. Other tax measures are aimed at supporting provincial programs covering venture capital investment. There is also a
May 25, 1981

refundable 25 per cent tax exemption on investment dividends when the investor company is eligible as a venture capital company under certain provincial programs.
To sum up, Mr. Speaker, we are being urged to come up with special tax measures designed to promote research and development as well as venture capital investment, and it has been shown that our tax system already features measures applicable to any of the measures which the opposition is calling for.
Above all I would like to insist on the fact that three of the four suggestions made in the motion openly call for government expenditures. And yet, last week, the same Progressive Conservative party asked the government to reduce its deficit and its expenditures. Cut down your spending! Cut down the public deficit! But at the same time, hardly one day later, they forget everything they asked for and say: boost expenditures by extending the small business development bond program and by encouraging venture capital investment through tax measures. Where is the logic in that? It is the logic of the illogical Conservative policies. Now either you believe in the cutback approach or you do not. But if you do not, then you have to be consistent and stop behaving like a weathercock changing your views from day to day in an effort to gain some of the popularity that has been escaping you for some years now, and I am talking about the Progressive Conservatives.
Mr. Speaker, my colleague, the Minister of State for Small Businesses and Tourism (Mr. Lapointe) dealt eloquently with the third item, since he is responsible for lessening the burden of regulation and red tape which weighs down Canadian business. It is his responsibility and he is supported in his efforts by the President of Treasury Board (Mr. Johnston), and I certainly hope that with their combined efforts they will be able to lighten the burden of regulation and red tape which small business must now contend with.
In summary, Mr. Speaker, I would simply like to recall that the aim of this government is to fight against inflation so that in the short and mid-term, with a more balanced economy and improved economic health, Canadians will be better off. By trying to relieve some sectors, either temporarily by subsidies, or directly, or by tax deductions, we would only be destroying with the left hand what the right hand is trying to do as a matter of policy, that is to lessen inflationary pressures so as to have lower interest rates resulting from a more stable economy.
That was the basis and the outline of the budget the Minister of Finance introduced last October. I for one am convinced that if we pursue with determination this policy of reducing the federal deficit, of controlling expenditures, and of implementing a gradualist monetary policy, we will in the mid-term achieve a more stable economy, lower interest rates and a lower inflation rate.
Small Business


Mr. G. M. Gurbin (Bruce-Grey):: Mr. Speaker, I am pleased to take part in this debate today on a matter which I am sure is of extreme importance to all Canadians. In following the Minister of State for Finance (Mr. Bussieres) I think there are several comments that are appropriate, particularly to the references he has made both to the small business development bond and in terms of the government's monetary policy.
Perhaps one of the handicaps he has in looking at this is the advice of the same people who have been guiding the economic policy of the government for some years now, but I would like to refer him to a comment made May 20 in The Globe and Mail which was attributed to Walter Gordon, a previous minister of finance. Mr. Gordon, who was chairman of the Canadian Institute for Economic Policy, said at a press conference that the current high interest rate policy is fuelling, not fighting, inflation. The bank's present course has itself been a part of the problem rather than part of the solution.
The minister has just said that you get four different economists and four different policies. I suppose that is true. Perhaps it makes the objective assessment of what should really be done difficult, but at the very least it should bring into question the type of policy the government is following at the present time. Some of the other comments that have been made-and there have been many things written about this lately-would suggest indeed that the options of the Minister of Finance (Mr. MacEachen) are limited to the point where he is waiting to see what will happen with inactivity on his part. Indeed, as we recess for the summer the government will have an opportunity to remove itself from some of the pressure coming from a number of areas and different interest groups in the country that are feeling specific pressure for specific reasons, most of which are not of their own making.
As an example-and this stems from one of the comments of the minister in the Flouse today-it is very difficult to believe he is not aware of what is going on in the country. He seemed to suggest that he did not believe that farmers were in more difficulty, that people were actually having to walk away from homes, that small businesses were experiencing increased bankruptcies.
I think the first thing that has to happen if there is to be any movement in this whole area is that the government must recognize the problem, but in light of the kind of comments that the Minister of Finance has been making it appears that he does not recognize the problem. 1 would extend to him an invitation, as I am sure most members on both sides of the House would, to go out into the country and talk to people; not just those who have experienced bankruptcies, but people who are forced to leave their businesses or who decide they can no longer hang in there.
I can tell the minister that in one area alone where I made an effort to draw up some statistics we are facing a situation where on a year over year basis we will have nearly five times the number of people who may not face the spectre of bank-

May 25, 1981
Small Business
ruptcy but who will be forced, because of a change in their equity position in terms of their debt load, to get out of the business they are in, whether it be agriculture or otherwise. The number of farms for sale, particularly in my area, is expected to be 300 per cent higher this year than last year simply because of the economic climate the government is fostering now.
Also in his comments, the minister suggested that the reduction of the federal deficit was one of the prime efforts of the government. If we look at the deficit position of the government in the last year, it seems to me we are actually looking at an increase of $4 billion over what was projected in the Crosbie budget. I do not want to compare two different budgets, but in terms of looking at this as a mechanism for lowering inflation, 1 do not know from where the minister gets his figures. I have heard this several times in the House, but every time I look at the figures I realize they do not agree with his comments. Perhaps he would at some time try to bring me up to date on what kind of figures he is drawing from.
In this year alone government expenditures have risen to approximately $62 billion and the deficit is up to $14 billion. They are clearly giant increases in each area. It portends even worse for the future. In 1983, 1984 and 1985 we will be looking at yearly government expenditures somewhere near $90 billion. This is not in agreement with the kinds of things the minister has said.
I should like to comment briefly on what he said concerning the small business development bond. A previous speaker on this side of the House suggested that if the small business development bond were expanded, it would allow business to take advantage of lower interest rates. This would help them increase their activities and avoid bankruptcy. The minister suggested that it was costing the government a lot of money and that the presentation which has been made was not accurate.
Because there are a number of different economic theories from different economists, I think it is reasonable to quote one economist who suggested very strongly that we would benefit from this type of move because of the activity it would generate in the economy and, in the long run, tax dollars would be generated; this would return funds to the government. I think this is the idea of the hon. member. Certainly it suggests that the minister should rethink his position and perhaps take a look at a fresh viewpoint, rather that sticking with the same kind of attitude that has been adopted hitherto.
In a recent book entitled "How Ottawa Spends Your Tax * Dollars", Bruce Doern noted that the Liberals have abandoned social priorities of the Pearson era and that a prime example is its failure to cushion lower-income groups from the effects of higher oil and gas prices as in the 1979 Crosbie tax credit.
In the perspective of economic distress under which we are now, I suggest very strongly that we are not dealing with the social aspects of what we are supposed to be doing or what I suggest we should try to do. The difference between lower and
upper-income people and the number of people below the poverty line is increasing, not decreasing. We are not accomplishing the transfer of benefits to lower income groups, although it is suggested that we are doing all these things economically on behalf of the nation at large.
Much has been said about the government's interest rate policy, its impact on small business, and the way in which it is addressed. The Canadian Institute for Economic Policy indicated that small and medium-sized business, most of which are Canadian-owned, are borrowing heavily from the banks for their capital requirements. Many of these businesses have been driven into bankruptcy; they are in situations where they have no recourse but to go into bankruptcy.
Perhaps it is a sad commentary that one of the major bills before the House of Commons now is the bankruptcy bill. A bill addressing economic issues rather than bankruptcies would give a more favourable light to what are the activities and priorities of government. The number of bankruptcies in March, 1981 was 29 per cent higher than a year ago according to the figures of the institute. We heard a number of figures today, including 17 per cent and 18 per cent. Whatever it is, it is a significant amount. As was mentioned, even that amount does not address the entire problem because it does not indicate the number of people who are voluntarily withdrawing from business rather than face full bankruptcy.
There has been mention of the automobile industry. One of the more interesting and important viewpoints on this subject came recently from the United States and was published in the Atlantic Monthly. It drew a comparison between the automobile industry in North America and the automobile industry in Japan. Although we are addressing small business, I mention this becaause of the differentiation between small business and large business. Whether it is a large energy project or whatever the megaprojects will be, whether in fact it is agriculture versus small business, most come down to some common denominators. Certainly one major common denominator is the cost of borrowing money in order to do business.
The automobile industry in North America is experiencing severe distress. In the last year alone, Ford experienced a massive deficit of approximately $1.5 billion and Chrysler had losses of $1.7 billion. The market share of the North American industry has decreased significantly as Japanese models have come on stream.
There are many factors in this area. Many Canadians who have bought foreign cars tell us about their quality and the terrific relationship between Japanese workers and their parent organizations, as well as a number of other things.
The research and development aspect is perhaps one of the most important, but we should consider the amount of capital reinvested in research and development, the manner in which products are brought on stream and organized, as well as the entire series of marketing and other manoeuvres. The research and development aspect is one in which Canada in particular is vulnerable, as many people know, in a number of ways. It is vulnerable in the immediate sense in that we have not been able to maintain the competitive aspects either at the research
May 25, 1981

and development level or at the fully developed and commercialization phase. This speaks to the co-ordinating activity of the government as a prime mover in research and development. Regardless of its dedication to providing a certain percentage of the gross national product, allowing certain programs, a tax credit system or whatever mechanism it chooses, something has been lacking.
There are specific examples in a number of areas. However, the government has been lacking in the management aspect of the whole scene. This management aspect must be improved in terms of providing a relationship and a linkage between universities, government and business itself, particularly small business. Small business does not really have the facilities or the resources to develop products or do basic research on things which would be in their best interest, such as their product lines or things they would like to be innovative in. This was the consistent finding across Canada at all provincial government levels with which I had the opportunity to have discussions. It is something which has not been addressed meaningfully in the activities I have seen occurring or in government programming.
As the government looks at a five-year program in research and development, it is still treading lightly and very hesitantly in terms of adopting a full program. This is precisely the point. The management aspect of it requires a long-range view. It requires a consistency in funding and in programming. Indeed, it requires an understanding of the required management capabilities in order to be effective.
In a broader sense, I think the Canadian nuclear industry has been faced with the same thing. I mention that as an example since there is a recent reference to it which I think should be read by many people who are interested in this area. I am speaking about the Secor report which addresses Canada's situation in terms of the development of its research and the international aspect of what is quickly becoming a high cost and high technology area. The Candu reactor is a prime example of this.
There are many other areas which we will be developing, but the Secor report breaks down these so-called high cost and high technology areas into three or four major points. The report suggests that these areas have common factors in the global market and that the systems must really be sold across international boundaries in order to maintain a viable industry. The report states that these systems should be competitive in an international sense, that is, competing with other people in other countries at all times and continuing to do so. The competition must be won if these industries are to survive.
[DOT] <1720)
Finally, it is mentioned that there should be a technology push, that it is necessary and important to maintain technology investment and to keep up with changes in a technological way in terms of refinements which will allow industry to maintain whatever market share they have. These are matters which have never before been addressed in Canada. It does not appear as though they will be addressed in Canada.
Small Business
I think the whole system suffers simply because we do not have the management or involvement that we will need if we are to keep up with international competition and if we want this high technology to survive. One of the major points which I think must be made is that if we do not choose to do this, or if we are unable to achieve it, whilst remaining competitive- unless we go the route of continual subsidies-then we will put ourselves back into a state where we are only able to provide raw resources. It is as simple as that. We do not have a great number of options from which to choose. We must face the international marketplace and its requirements. This issue must be faced in a meaningful way, not just in terms of one big industry but in terms of the peripheral activities which take place and which cause our economy to function.
I draw attention to the tar sands projects. The Financial Post has suggested that one of the few short-term hopes we have is in the area of tar sands development and heavy oil projects, that if we do not get them off the ground with the investment they require and do not realize the economic activity they will generate for small industries across the country, we will be out of luck in three or four years.
I think it was interesting to hear the minister of state suggest that with the programs the government has in place now we will not be out of trouble any sooner than three or four years. That is a comment made by another economist, not by myself. He says it will take that long to achieve the effect we want-at least three or four years before we will achieve the desired result. I do not think we can wait that long. 1 know that a great many small businesses and industries involved in agriculture simply will not survive unless there is some shortterm redress to the problem which they are facing today.
One other point I would like to mention with regard to research and development which the government has missed to date is with regard to equipment. We could take a great deal of time to talk about what kind of training we must have. However, the limited time allotted to me at this juncture does not allow for that. There has been an additional assessment of the kinds of equipment our universities have and what is happening to our basic research and development programs at that level.
A task force which reported during the last few months has found that we are about ten years behind-most of our equipment is at about the ten-year vintage. While that speaks well for the maintainers of our technological equipment, it has put us out of the race in a great many high technology areas. We have been left behind because of the rapid change in equipment and the ability to maintain a competitive position is just not there. We have old equipment which will require a massive amount of investment in order to upgrade it. This task force report is available through the National Science and Engineering Research Council of Canada and I think would be worth while for many people to look at.
The Science Council report states in part:
Complex scientific, technological and economic problems of the future cannot be met by using second rate institutions to generate new concepts and to train the manpower required.

May 25, 1981
Small Business
Several times the priorities of the government have been mentioned and what has been done in the last year or so. I have a list before me of the government's priorities. At the top of the list, as we all know, is the Constitution, which has really taken a great deal of our energy. It is still very much unresolved and is a matter which still has to be addressed.
Returning to the list, the budget follows the Constitution in terms of priority. The number of budgetary measures which actually address the short-term economic problems which we face have been very few indeed. Next on the list come the National Energy Program, the western Canada strategy and a review of major social policy arrangements.
What has really been lacking is a sense of urgency with regard to making the economy the first priority. Until the government admits that the country is having difficulties we will not attain the appropriate priority this situation demands. We will continue to meet the foil of matters like the Constitution, matters of social policy and the like, which are not really addressing the real short-term needs of Canadians.
There are many things which can be said, but 1 feel that the major emphasis as far as research and development is concerned is that we must have a government which is sensitive, not just to simple funding, but to the entire concept of managing these programs. Co-operation among our universities, small businessmen and governments must be encouraged if we are to facilitate the basis for economic recovery in our country.


Mr. Norman Kelly (Parliamentary Secretary to Minister of Supply and Services):: Mr. Speaker, it is my privilege this afternoon to assess for the edification of members of this House the relationships that this administration has established and can be expected to promote between the federal government, research and development and the business community.
I would like to open my remarks by insisting that, the criticisms of the opposition notwithstanding, this government places a high priority on fostering research and development in industry, assisting companies of all sizes to increase their growth and profitability through the performance of R and D and by applying new technologies to their operations.
You will recall, Mr. Speaker, that the Minister of State for Science and Technology and Minister of the Environment (Mr. Roberts) announced the federal government's intention to foster an increase in national R and D expenditures to 1.5 per cent of GNP by 1985. Within this over-all target, it is proposed that the federal government's expenditures should rise from .4 per cent of GNP to .5 per cent, that industry shares should rise from .4 per cent to .75 per cent and that the balance of .25 per cent should be financed by the provinces, the universities and others.
It is clear, Mr. Speaker, that the largest increases in research and development will be required in the industrial sector, and the federal government intends to continue to place
a high priority on assisting Canadian companies to undertake profitable research and development activities. It is equally clear, as most hon. members already know, that the major role will have to be played by the industrial companies themselves, but I hasten to add they will be greatly assisted by a business environment in which innovative activities are strongly encouraged.
The federal government has long recognized the importance of supporting research and development activities, and has therefore introduced a range of incentive programs and taxation incentives which, I believe it is fair to say, are among the most generous in the world. For example, very substantial financial assistance has been given to companies such as Pratt & Whitney, de Havilland, Canadair, and Bombardier, as well as many others in the high technology sectors of Canadian industry.
To focus on an area of particular importance, I would direct the attention of the House to the federal government's announcement of April, 1979, which initiated a special electronics program to introduce the secondary industry in Canada to the benefits of using microelectronics in their manufacturing processes and product design. The first part of this program consists of grants for major projects in all sectors of the manufacturing industry. Two very substantial grants have already been made under this section of the program, one to Mitel, and the other to Sentrol. However, it would be wrong to give the impression that only large companies in the electronics area can gain from this program. A number of smaller companies have applied-in the food, textiles, metals processing, and other industrial sectors-and grants have been approved for monitoring of diesel engines for small fishing vessels, pantyhose manufacturing, and control systems for bakery operations, while others are expected to be approved in the near future.
A second part of this program will promote the awareness of Canadian companies of the importance of applying microelectronics technology to their operations. In considering the role of technology, we must recognize the importance of the application of technology to industrial processes, in order to make the processes more productive and competitive. It is not only the supply of high technology products to world markets which is important-it is absolutely vital that we increase the productivity of all our manufacturing and processing operations if we are to prosper, or, perhaps, even to survive, in the future. So, I can assure the House that the federal government intends to play its role in order to ensure that Canadian companies are aware of the importance of the application of technology.
A large proportion of financial assistance in support of R and D has gone to the larger companies, for the simple reason that their research and development operations are much larger than those of smaller companies. Nevertheless, a substantial amount of assistance has been provided to smaller companies. Departments of the federal government, including the Department of Industry, Trade and Commerce and the Department of Regional Economic Expansion, have regional
May 25, 1981

offices in all parts of the country for the purpose of ensuring that assistance from the federal government is as effective as possible.
A large number of smaller companies have also been assisted through a variety of institutions which have been established under programs of the Department of Industry, Trade and Commerce. I am pleased to say that over $23 million have been invested in the establishment of 27 of these institutions, which provide research and development, testing and technical training services to industry in a variety of industrial sectors and in all regions of Canada.
It is well known that small companies have a difficult time in commercializing technology and starting up new companies, especially those which involve inventions and technical ideas. To provide such assistance to small companies, and even private individuals, the Department of Industry, Trade and Commerce has financed the start-up of two industrial innovation centres, one located at the University of Waterloo and the other at Ecole Polytechnique in Montreal.
The Department of Industry, Trade and Commerce has a number of other programs to support industrial R and D. First, there is the Enterprise Development Program which will normally support 75 per cent of the direct costs of product and process development projects and market and productivity improvement studies. This program is administered, in the main, by the regional offices of DITC in the ten provinces in order that its application and use will be closely based on the needs of the various regions of Canada. Because of the criteria used in project selection, this program has been of particular assistance to small and medium-sized business.
Total spending under the program in 1980-81 was about $38 million, and it is estimated that approximately $2.0 billion of product sales will result over a period of five years.
The equivalent of the EDP program for those industries- primarily electronics and aerospace that are in the business of providing high technology military equipment for export market requirements-is the Defence Industry Productivity, DIP, Program. Under this program the federal government shares the cost of product developments related to export military markets as well as the costs of acquisition of modern production equipment. D1PP spending for the 1980-81 fiscal year is about $120 million and is expected to rise to over $150 million in 1981-82.
The National Research Council's Industrial Research Assistance Program, IRAP, and the Program Industry Laboratory Project, P1LP, are other government vehicles for promoting and supporting industrial research and development in industry. Under these programs, financial support is provided for selected industrial research projects of good potential. During the period from April, 1962, to March 31, 1981, IRAP supported 1,313 projects from 655 companies for a total contribution of $183 million. It is estimated that each dollar of funding produced $20 of sales on average. IRAP's budget for 1981-82 will be about $29.4 million of which some $2 million will be directed towards companies with less that 100 employees. Approximately 400 projects from industry
Small Business
have been supported under the PILP program since its inception in 1975 for a total contribution of about $40 million. Is is expected some $12 million will be spent in the 1981-82 fiscal year.
In addition to these specific programs, the federal government has adopted a contracting-out policy for its own R and D requirements. The objective is to increase Canadian industry's R and D and innovative capability. Under this policy, federal government departments must contract out their R and D requirements to the private sector, except in those instances where there are compelling reasons for the work to be done in government laboratories themselves. In 1980-81 approximately $139 million was spent under 2,500 individual contracts.
In the important field of energy, the federal government is currently contributing some $15 million to the private sector for R and D work in renewable forms of energy-such as solar and biomass-and in energy conservation in industrial processes. In addition, $3 million is being provided for research on improved methods of extracting crude oil from tar sands and heavy oil deposits and in coal gasification and liquefaction.
In total, the federal government contributed some $264 million in grants and contracts to industry in 1980-81 for industrially initiated R and D. That figure is expected to increase to well over $300 million in 1981-82.
I trust, Mr. Speaker, that I have provided this House with convincing evidence of the federal government's resolve to assist companies of all sizes to develop a technological capability, to perform R and D which will assist them to meet the challenges which Canada must face in domestic and international markets, and to apply new technology to their processes so that they can remain competitive and productive in the face of international competition. I realize, of course, that government programs are not the whole story, by a long shot. Canadian industry must share its burden of the responsibility to remain innovative and competitive as I am sure it will, and thus ensure a sustained economic growth in Canada.


Some hon. Members:: Hear, hear!


Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, it is a privilege to speak on this motion introduced by my colleague, the hon. member for Burlington (Mr. Kempling).
Each morning as I walk to my office I find myself pausing frequently to enjoy the beauty of the Parliament Buildings and surrounding grounds. Inevitably my eyes are drawn to the top of the Peace Tower. There, night and day in all seasons, is the flag of this great nation at once both a symbol and a commitment, a symbol of a land of freedom and opportunity; a commitment that the people of this land will keep it ever so.
But today as I looked at that flag, I was struck with the contrast evident between potential and reality. It came to mind that, given the record of this government, the flag should have been flying upside down. It should be flying upside down, not as a gesture of disrespect but in compliance with the international code of distress. This country is not only in distress, it is

May 25, 1981
Small Business
in severe distress. This country is in serious condition, and a great many of us are well aware of it. And because of the calculated indifference of this government, things seem to be getting worse. There is no doubt that everything else is upside down, so why not the flag? Is the government waiting perhaps until the economic chaos it has created gets so bad that it will simply then hoist the white flag of surrender? A good many of us feel the government should do that already.
The government is forcing thousands of Canadians to surrender. Every day that passes, more and more Canadians have to surrender their homes, their farms, their businesses and their jobs. Pretty soon we will all be waving white flags because there will be nothing more to surrender. There are others on this side of the House who have repeatedly and urgently tried to get the government to take responsible action to eliminate the mess we are now in. They have spoken of the plight of thousands of Canadians. They have dealt with the general situation and with particular segments. I join in condemning this government and wish to draw attention to a particular community in this country which is among those most hard hit by this government's economic mismanagement.
1 am speaking of the thousands and thousands of small businessmen in all provinces and in every sector of this country.
This government has subjected the small business community to a number of financially punishing burdens. The relentless push to metric conversion is a perfect example of this. Converting to the metric system has been a monetary nightmare for the business community and consequently the consumer.
Conversion in the retail food sector, forcing grocers to switch meat and produce scales from ounces and pounds to grams and kilograms, could cost us as much as $200 million. I noted the comments of the New Democratic critic, the hon. member for Kamloops-Shuswap (Mr. Riis). 1 also noted the comments of the Minister of State for Small Businesses and Tourism (Mr. Lapointe) who seemed to raise his eyebrows at that amount, implying he thought it was a ridiculous figure. I believe he quoted conversion costs as amounting to between $45,000 and $48,000. I presume he meant that $45,000 to $48,000 would apply to certain individual stores. He is shaking his head. But I am quite sure that for Eaton's, Simpsons, and the Bay the cost of conversion will be a lot higher than $50,000. It was mentioned earlier by other speakers that the majority of the metric scales will have to be purchased abroad which, in turn, will provide jobs outside of the country instead of here in Canada. This relentless target date of January 1, 1982, is certainly unpopular.
One grocer in a metric conversion test area said that he had to pay $900 to convert his scale, and the test cost him $100,000 in lost sales when customers went elsewhere.
An overwhelming majority of businessmen and consumers are opposed to metric conversion. But this government has never shown the slightest inclination or willingness to respond to public opinion, and there is no indication that it ever will. The devastating impact of the fiscal ineptitude of this government is quickly and painfully destroying hundreds of small
businesses in this country every day. Because the small businessman and businesswoman live in the shadow of the giant corporations, the impact is harder for many to recognize.
There are over one million small businesses in Canada and they create two thirds of the jobs. Small businesses in this country generate at least 20 per cent of the value of all goods and services produced. The small business community is obviously a vital segment in our economy, a very important constituency that cannot and should not be treated in an offhand manner.
1 am sure that the minister for small businesses understands this. I would suggest to him though that he ensure that his own aides realize it as well. It was disturbing to learn that a call to his office last week to obtain figures on the small businesses which I have just cited resulted in a reply that the office kept no such figures, and the suggestion was made that the caller try elsewhere. Surely the credibility of a minister is in question when people in the minister's own office plead ignorance when asked the most basic of questions. I heard the minister today give some indication as to the importance of small business. If people in his own office do not seem to have this information, I would suggest that he have his aides read his speech carefully so they will have it. If small businesses were to operate in the same manner as some of the people in the minister's office, they would soon be out of business. One would think, given the reams and reams of paperwork forced on small businesses by the government, that statistics would be crowding the minister right out of his office.
For years the small business community has been inundated with mandatory government forms. Some businessmen and women spend about as much time on government paper work as they do in operating their own businesses. This pile of paper, completed under duress, is both annoying and costly. It is frequently unnecessary. The small businessman and woman, not having the resources to hire high-priced lawyers or accountants like their multinational counterparts, must shoulder the paper work burden alone. A good many of them burn the midnight oil in order to complete these many forms. Some of the paper work these days involves government bankruptcy forms.
There are more bankruptcies in small businesses than in any other segment of the economy. We heard statistics and figures given showing just how many bankruptcies there are at the present time. Thanks to the government's acceptance of the policy of higher and higher interest rates, many small businesses have gone under, and there are reportedly hundreds more which are on the verge of bankruptcy.
Just this past weekend I spoke to two or three of the businessmen in my community. One in particular, a hardware merchant, mentioned the high interest rate he was paying on loans, I believe it was 21 per cent. This is a staggering amount. It is also a reason why so many small businesses are in such serious condition.
People all across the country, who have worked hard enough to save money to start their own businesses and who have put in long hours to make sure their business remains viable, are
May 25, 1981

now losing everything. Many of them mortgaged their own homes as collateral to help their businesses get started or to expand and are, therefore, in a position now where they may even be losing their own homes.
When small businesses fail, the owners of those businesses are not the only ones affected. Their businesses, collectively, employ millions of people. In fact, the majority of working men and women in this country work for small firms, not for large corporations and not for government. Therefore, when a business goes bankrupt, the unemployment level rises. When hundreds of businesses go under, thousands of people lose their jobs. This tragic situation did not occur overnight. On the contrary, things have been getting progressively worse for months. When members on this side of the House were requesting urgent and immediate action on economic issues, the Prime Minister (Mr. Trudeau) had more important matters. The Prime Minister had his Constitution and his charter of rights and, to him, these were of prime importance. We are well aware they took up the time of the House of Commons for months. They were concluded only recently, having been sent to the Supreme Court.
A place in the history of the nation will be valueless if the nation itself is destroyed. With the constitutional issue now before the Supreme Court, the Prime Minister wants to reassure the nation that the economy is headed in the right direction. To demonstrate that he is taking things seriously, he has spoken of holding a federal-provincial meeting on economic issues. If such a meeting is held, the climate of consensus would hardly be achieved.
How could the provincial premiers be expected to consult, exchange views and attempt to resolve problems with the very man who, during the constitutional debate, treated them with ridicule and contempt; much the same sort of contempt he and his government obviously have for the small business community. This government neither understands nor has compassion for the problems facing the owners of small businesses. The Prime Minister and members of his government have demonstrated they are oblivious to the problem. The only problem they seem to acknowledge is that people are angry and complaining.
The government does not know why people are upset. We are told time and time again that all is well, that the universe is unfolding as it should. Well, I have news for this government. The universe, for thousands of Canadians is coming apart at the seams. The threads of the economy of this nation are unravelling at an alarming rate.
The growing number of bankruptcies should indicate to this government that something is seriously wrong, wrong with its policies and wrong with its attitude. That hundreds of small businesses have gone bankrupt, and hundreds of others are on the verge of bankruptcy should be a source of alarm for this government.
Let me illustrate for members of this House the reason why even a single bankruptcy can result in a potentially horrendous
Small Business
domino effect. Let us take a small tourist operation, of which there are many in my constituency. The resort, faced with exorbitant interest rates, cannot afford to seek financial assistance for its summer operation. Without sufficient funds to cover the purchase of supplies and salaries for the initial startup, the tourist resort has to close. Cooks, waitresses, the cleaning staff, office staff and handymen are suddenly unemployed. The owner and employees now have no extra money with which to purchase goods and services in the community.
Other small businesses in the community immediately begin to feel the pinch. With fewer people to supply, the owners of these other firms soon have to lay off staff, and the list of the unemployed grows. The tourists who have in the past stayed at the resort now look for other facilities, and again business in the community suffers. Again other people are out of work. Some of those out of work will move to other centres in the hope of securing employment, but others, for a variety of circumstances, will be forced to apply for unemployment insurance or accept welfare. Then, because of one business closing, the community and the country is faced with the prospect of higher taxes to support those whose only resort is the social benefit programs. Everyone's disposable income takes a slight plunge, and the vicious cycle is about to be repeated on other levels.
What I have described is only a small part of the sad circumstances of a single bankruptcy. When you have several small firms going under, the effects on the community and the country are calamitous. How then in heaven's name can this government sit back and do nothing, tell us all is well, when what is happening now is affecting us all?
We cannot afford to lose one of our small businesses, but there are some whose loss to the nation will create more hardship than others. 1 am thinking now in particular of the small farmer. In these days of automation and plastic wrapped meat and produce, there are those who speak fondly of the farming of yesterday. Like sideshow attractions, historic villages offer glimpses of the disappearing communities of yore and display what are now considered quaint methods of production and commerce. Today's farm is indeed often automated, but today's farmer, trying to run his business, cannot cope with the rising interest rates and an absence of economic planning, and he too is going under.
When thousands of small farmers go bankrupt, or lose their farms through bank foreclosure, who will feed this nation? The farmer can be classified as a small businessman. When the price reaches even higher levels than those we have today, who will be able to afford to buy what is available? With so many businesses closing down, will there be anything left to buy?
Mention was made of the small business development bond which was introduced by the Clark government and adopted by the present government, for which they are to be commended. However, it is restrictive in the sense that it is only available to incorporated companies. I hope that because of pressure from all parties, including government backbenchers, the government will consider making it available to individuals and partnerships and continue it beyond the present deadline

May 25, 1981
Order Paper Questions
of December 31 next. It should be a law on the books, and it should continue.
Rather than being restrictive, the government would do well to enlarge the bond so that it provides working capital. Also, it should be available for used machinery and equipment. This would provide much needed assistance to the small businessman. As well, the farmers could take advantage of it.
The Minister of State for Finance (Mr. Bussieres) took exception with one statement coming from this side. It was said that this would not cost anything. The minister said it was costing X number of dollars. However, if the small business development bond helps businesses to stay in operation, pay salaries, make purchases and sell their goods, as the hon. member for Halton (Mr. Jelinek) stated, then in the long run the government will end up making money. It cannot be classed as an excessive cost when everything is weighed in the balance.
This government knows all about bankruptcy. In fact this government would have been bankrupt long ago had it not been for its taxing power which enables it to spend into eternity. It cannot go bankrupt. It just prints more money. The government has been bankrupt in thought and deed for some time. It has been said that misery loves company. Therefore, the government seems determined it will not be alone in its mess. The problem is that it is not. It is astonishing to hear the government say that high interest rates are not causing the problem.


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


Mr. D. M. Collenette (Parliamentary Secretary of President of the Privy Council):: Mr. Speaker, unfortunately I was absent briefly following the question period and unable to give the answers to the order paper questions. I understand there will be consent to my giving these answers now.


The Acting Speaker (Mr. Ethier):: This can be done with unanimous consent. We will interrupt the debate and go back to questions on the order paper. Is that agreed?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: It is so ordered.


David Michael Collenette: 1 thank hon. members for their consideration.



ROUTINE PROCEEDINGS


[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
David Michael Collenette: Mr. Speaker, the following questions will be answered today: Nos. 1,217, 1,314, 2,156, 2,201, 2,222, 2,314, 2,351, 2,378 and 2,386.


Mr. Cossitt: 1.	Was Mr. Michael Pitfield, secretary to the cabinet and Clerk of the Privy Council, absent from his job at any time since he reassumed his position and, if so (a) for how many days and on what dates (b) for what purpose and where (c) was he paid his usual government salary during the days absent and (i) if so, under what authority (ii) if not, what amount was deducted for each day absent or part thereof and what was the total amount deducted to the date this question is answered?
2.	Did his absences include first class transportation to Boston and, if so, was such travel made at public expense?


Right Hon. P. E. Trudeau (Prime Minister):: 1 and 2. Since his reappointment as Clerk of the Privy Council and secretary to the cabinet on March 11, 1980, Mr. Pitfield has not been absent from his job save for normal holiday leave. During the period immediately following his reappointment, and in accordance with arrangements made at that time, Mr. Pitfield's family continued to reside in Boston, Massachusetts, until the end of the 1980-81 academic year. He made regular visits there to visit his family and to complete his teaching obligations to Harvard University. Mr. Pitfield was authorized to use first class transportation where circumstances required. See also reply to question 2,386 answered today.


Mr. Cossitt: 1.	Was Mr. G. R. D'Avignon, deputy minister of Supply, appointed to the additional position of chairman of the board of directors of the Royal Canadian Mint and, if so (a) for what reason (b) what are his qualifications for the job?
2.	Is the Minister of Supply and Services presently making an investigation of any kind concerning Mr. Yvon Gariepy, Master of the Royal Canadian Mint and does the appointment of Mr. D'Avignon have significance of any kind in this connection?


Hon.   J.-J. Blais@Minister of Supply and Services: 1.	Yes.
(a)	It has been an established practice for the deputy minister of supply to hold that position.
(b)	Mr. D'Avignon's knowledge and experience makes him a highly suitable candidate for the job.
2.	(a) No; (b) No.


Mr. Turner: 1.	Did CNR purchase newspaper advertising in 24 Canadian newspapers congratulating CP of Montreal on its Centennial and, if so (a) at what cost (b) what was the cost in each case?
May 25, 1981

2.	(a) Which cities were chosen and for what reason (b) who made the decision to choose each of the 24 newspapers?
3.	What was the criterion for the selection of each newspaper and who made the final decision?
4.	Did Mr. Lome Perry, manager of advertising and graphics, make any decisions and, if so, what were they?
5.	Was the decision made by an advertising board and, if so, what was the name of each representative?
6.	For what reason was the advertising money not utilized by some other method so CNR equipment and road beds could be brought up to the high safety standards of the 1940s and 1950s?


Mr. Robert Bockstael (Parliamentary Secretary to Minister of Transport):: The management of Canadian National Railways advises as follows: 1. Canadian National purchased advertising space in 23 Canadian newspapers.
(a)	$64,244.
(b)	Through advertising agencies, CN purchased the space from the newspapers at their normal published space rates.
2.	(a) Moncton, Halifax, Montreal, Quebec, Toronto,
Ottawa, Calgary, Edmonton, Regina, Saskatoon, Winnipeg, Vancouver, St. Boniface. These cities are major Canadian centres where Canadian Pacific does a considerable volume of business, and wherein reside significant numbers of its employees and officers.
(b) Mr. D. E. Todd, general manager, public affairs and advertisement.
3.	The criteria used for selection of the newspapers was circulation, the appropriateness of the medium to the message, and recognition of the need to be represented in both English and French newspapers in cities where both exist. The final selection was made by Mr. D. E. Todd.
4.	Once the decision to go ahead had been made, Mr. Perry, manager, advertising and graphics fulfilled liaison duties with the various advertising agencies involved in the program.
5.	No, the decision was made by Mr. Robert A. Bandeen, president and chief executive officer.
6.	It is perceived by management and the board of directors that such a large and diverse enterprise as Canadian National should be involved in many activities unrelated to the maintenance of equipment and roadbeds, and that advertising is a proper and normal activity of the railway as it provides communications support for CN by enhancing the business climate in which it operates.
Since 1974 (when CN Rail computerized its accident reporting system), concerted efforts by both management and labour to improve safety performance have resulted in an annual decrease in practically all categories of accident and casualty statistics. These efforts include an ongoing track rehabilitation program, better equipment, more employee training, and the application of research to improve rail safety. In 1980, CN Rail was among the four safest railways in North America.
Order Paper Questions FARM OWNERSHIP


Mr. Herbert: 1.	What percentage of farms is owned by (a) incorporated companies (b) non-incorporated individuals or groups?
2.	What is the percentage of farm land owned by incorporated companies?
3.	What percentage of the incorporated companies is more than fifty per cent foreign owned and what percentage of farm land do they control?


Hon.   J.-J. Blais@Minister of Supply and Services: Statistics Canada reports: according to the 1976 Census of Agriculture,
1.	Percentage of farms owned by
3.78 per cent
.62 per cent 4.40 per cent
91.46 per cent
3.77 per cent
.26 per cent 95.49 per cent Other (lands operated privately for estate, trust company, Hutterite colonies, co-operative farms	. 11 per cent
Canada	100 per cent
2.	The Census of Agriculture asks farm operators to report information about the land they are operating. If an operator rents or leases all or a portion of the land area he operates, the area of rented land is known, but information is not given about the ownership of that land. The table below outlines the information available on areas of land operated and owned. The difference between the two totals (which represents roughly one third of all farm area operated) is acreage leased or rented by an operator for which no ownership information is available.
Type of Operator
Individual Partnership Institution Company-family Company-other Estate, Trust Co., etc.
Total
Number of Farms	Total Farm Area
Operated	Owned
(acres)
274,490	134,983,151	98,390,62411,313	7,979,595	4,892,755771	6,436,841	1,914,21011,348	12,505,476	7,780,3301,864	2,389,154	1,194,852332	1,682,043	1,375,105300,118	165,976,260	115,547,876(a)	Incorporated companies (incorporated business with shares owned by operator and his family)
or
Incorporated businesses (with shares owned by other than operator and family)
(b)	Non-incorporated individuals or groups
Individual or family (owned or not) Partnership (only operations having a formalized partnership agreement)
Institution or community pasture (land owned by municipality, province or federal government)
From these data, the proportion of farm area owned by an incorporated company (family and other) is 7.77 per cent.

May 25, 1981
Order Paper Questions
3. Foreign ownership information is collected under the Corporation and Labour Union Returns Act, and only corporations with $250,000 or more in assets are covered. In 1978, Statistics Canada estimates that 59 corporations in this class operating farms were foreign owned out of a population of farm corporations of 4,328. Thus 1.36 per cent of these farm corporations were foreign owned. No information is available on the area of farm land controlled by these corporations.


Mr. Herbert: In 1980, what percentage of the houses sold by CMHC after acquisition were sold for more than (a) 10 (b) 20 (c) 30 per cent less than the (i) original mortgage total (ii) cost of acquisition?


Paul James Cosgrove: I am
advised by Canada Mortgage and Housing Corporation as follows:
	Original Mortgage Total	Acquisition Cost
The percentage of sales over 100 per cent of	48.5 per cent	18.6 per centThe percentage of sales at 90-99 per cent of	21.4	17.5The percentage of sales at 80-89 per cent of	12.7	25.4The percentage of sales at 70-79 per cent of	7.3	19.0The percentage of sales at less than 70 per cent of	10.1	19.5100 per cent	100 per cent


Mr. Herbert: What amount (a) was paid in 1980 (b) will be paid in 1981 to the municipality of Coteau-Du-Lac, Quebec for the historical site under the municipal grants program?


Paul James Cosgrove: (a)	Appraisal cards requested from the municipality of Coteau-du-Lac, Quebec, have not yet been received, therefore no 1980 grant on this property has been paid.
(b)	The 1981 grant amount cannot be estimated until the values and tax rates are forwarded by the municipality.


Mr. McKenzie: Was Mr. William Ellis (L. 12973) a member of the South Saskatchewan Regiment during World War II and. if so (a) did he take part in the 1942 Dieppe Raid with the regiment (b) is he also a veteran of World War I (c) is he the last living Dieppe Raid survivor of the regiment who had also served in
World War 1 (d) does he receive a veterans pension or allowance from the government and, if not, for what reason?


Hon. J. Gilles Lamontagne (Minister of National Defence):: This question requests information of a personal nature concerning Mr. William Ellis, the disclosure of which is governed by the Canadian Human Rights Act, Part IV.


Mr. Cossitt: 1.	Did Mr. John de Bondt, acting director, public affairs division, Canadian International Development Agency, write a letter dated February 24, 1981 to Mr. Frank Hawes, 5-56 Rideau Terrace, Ottawa and, if so, was the letter to act as a contract when signed by both parties for a speech to be written for the director general, communications, C1DA, Mr. Paul Doucet?
2.	Was the speech to be delivered during the "round table on the North/South Dialogue of Sietar's Conference"?
3.	(a) Was Mr. Hawes offered $1,600 to prepare the speech and, if not, what was the amount (b) was Mr. Hawes asked to send an invoice in triplicate and was the invoice paid and, if so, in what amount?
4.	Did the letter further instruct Mr. Hawes as to what source material to utilize?
5.	For what reason could Mr. Doucet not prepare his own speech or use persons within CIDA to assist him?
6.	How many speeches has Mr. Doucet delivered since he was first employed by CIDA and, in each case (a) what was the cost to the taxpayer (b) where was it delivered (c) what was the subject-matter?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: 1.	Yes.
2.	Yes.
3.	(a) Yes.
(b) Yes, $1,600.
4.	Yes.
5.	A round table on the North-South Dialogue was one of the activities at the Sietar Conference. Mr. Louis Sabourin, president of the Development Centre of the Organization for Economic Co-operation and Development was to have participated in a round table which included a representative from Africa, a representative from Latin America, and the assistant secretary for administration of the Organization of American States. Mr. Sabourin, who would be the only Canadian present at this round table, had to cancel ten days before the opening of the conference.
In order to ensure a Canadian presence for this session, Mr. Paul Doucet agreed to be one of the panel participants. The subject was "The intercultural variable as a condition for the effectiveness of interventions by experts in developing countries".
Precise data on this aspect of international development exist in two studies. One was published by the Canadian government and entitled "Canadians in Development"; the other, by the University of Saarbrucken for the Federal Republic of Germany. Frank Hawes who had co-authored the Canadian study knew not only the results of the German study
May 25, 1981

but the non-published data of the two studies. That is why he was selected to prepare notes for Mr. Doucet's presentation.
It should be noted that at this conference and at the preceding working session, Mr. Doucet was co-host with Pierre Casse of the World Bank. Besides his role as host, Mr. Doucet had already agreed to make two presentations; one tracing the history of the project "Agenda for a Small Planet" and the other to deliver the final address.
6.	In his five years as director general of communications at CIDA, Mr. Paul Doucet gave at least 50 speeches and numerous interviews on radio, television and in the press on the subject of international development. He never had recourse to outside specialists for these activities.


Mr. Friesen: 1.	Is Mr. Michael Pitfield presently the William Lyon Mackenzie King Visiting Professor of Canadian Studies at Harvard University?
2.	Is he employed by the university in another capacity and (a) if so, what is his title (b) if not, on what date did he terminate his employment with the university?
3.	Is Mr. Pitfield on temporary leave from the university and, if so (a) from which position (b) what are the terms of the leave?
4.	Does Mr. Pitfield receive a salary, honorarium, stipend or other type of remuneration from the university and, if so, what are the terms?


Pierre Elliott Trudeau: 1.	Yes.
2.	No.
3.	Mr. Pitfield is on leave from the William Lyon Mackenzie King Visiting Professorship in Canadian Studies.
4.	Mr. Pitfield receives no remuneration from Harvard University. Nevertheless in recognition of Harvard University's generosity in releasing Mr. Pitfield to serve the Government of Canada at the Prime Minister's express request, the government asked Mr. Pitfield to ensure that any obligations remaining from the time when he was actively serving as the Mackenzie King Visiting Professor be fulfilled as part of Mr. Pitfield's responsibilities.


Mr.  D. M.@: Mr. Speaker, would you be so kind as to call starred question No. 2,308?


Mr. Bosley: Did Mr. James Fay, Executive Assistant to the Minister of Agriculture, take plane trips at government expense between Ottawa and Prince Edward Island in
Small Business
the fiscal year 1980-81 and, if so (a) how many at what cost (b) for each trip, what was the purpose?


David Michael Collenette: Mr. Speaker, in response to the hon. member for Don Valley West (Mr. Bosley), the answer is yes, eight trips at a cost of $1,523 excluding the return travel trips nos. 2 and 7 listed in part (b) of this answer, which were trips with the minister on a government aircraft.
The purpose of the trips were as follows: 1, to attend potato hearings and meet with producers on the minister's behalf; 2, to discuss a potato agency with members of the P.E.I. Potato Producers Association; 3, to meet with the Maritime Agency Potato Producers on the minister's behalf; 4, to meet individuals from the agricultural industry on the minister's behalf; 5, to meet with P.E.I. potato producers on the minister's behalf; 6, to meet with officials of the potato industry on the minister's behalf; 7, to attend meetings accompanying the minister; and 8, to meet agricultural groups on the minister's behalf. This answer was supplied on behalf of the Minister of Agriculture (Mr. Whelan).
I would ask that the remaining questions be allowed to stand.


The Acting Speaker (Mr. Ethier):: Is it agreed that the remaining questions be allowed to stand?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: It being six o'clock, I do now leave the chair to return at eight o'clock p.m.
At 6.02 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of the motion of Mr. Kempling:
That this House condemns the government for ignoring the consequences of its high interest policy and for its failure to assist the small business sector in Canada
(1)	by increasing and extending the small business development bond program;
(2)	by encouraging venture capital investment by means of appropriate tax adjustments;
[Stage Direction]
May 25, 1981
Small Business
(3)	by relieving the small business sector from the massive weight of government regulation; and
(4)	by fostering the research and development necessary to preserve the vitality of Canadian business of all sizes.
Mr. Deputy Speaker:: Order, please. When the debate was interrupted at six o'clock, the hon. member for Parry Sound-Muskoka (Mr. Darling) had about one minute remaining.


Stan Darling: Mr. Speaker, not much can be said in one minute, so 1 will defer to the next speaker.


Mr. Roy MacLaren (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, that was an admirably brief statement from the hon. member opposite. However, we have heard some rather longer statements today, which to my mind indicates how little some hon. members opposite appreciate what has been happening in the area of government support for the small business sector. The opposition motion might have been relevant 30 years ago, 20 years ago or perhaps even ten years ago, but today the motion seems to reflect the curiously anachronistic character of the party which sponsored it.
In any event, let us start at the beginning, because evidently hon. members opposite need information about what the national government is doing in terms of support and incentive for the growth of small business in Canada.
Back in 1976, some five years ago, this government appointed Canada's first minister of state for small business. Since then our efforts to assist small business have proliferated to the point where one of the outstanding, and occasionally justified, complaints of small businessmen was that they have been unable to find their way through the various programs offered by both the federal and provincial governments.
Accordingly, the Department of Industry, Trade and Commerce, through its regional offices located in every province and territory, and its unique small business secretariat, has maintained continuous contact with the small business community. Instant telephone service is available at all times to provide small businessmen with the information they require about the variety of services available. Of course, I want to emphasize that in addition to those services provided by the public service, members of Parliament, at least from this side of the House, have their doors open on all occasions to small businessmen seeking assistance.
It is obviously impossible in the short time allocated this evening to review all the efforts made by the national government to assist the growth of that essential sector of our economy, the small business sector; efforts which, I might note, have won the praise of chambers of commerce, boards of trade, and indeed of the Canadian Federation of Independent Business. However, since there seems to be some confusion in the minds of the members opposite about those programs, I wish to note a few highlights.
Some members may recall, for example, that we have introduced income tax measures which benefit small businesses by about $2 billion annually. Secondly, we have responded to the requests of individual entrepreneurs and business associations by reducing the amount of the paper burden that has proven increasingly bothersome to business over the past decades. Resultant savings amount now to something over $300 million annually. I only wish that some provincial governments had been equally imaginative and also had reduced that time-consuming demand facing the small businessman. We have greatly increased the opportunities for Canadian suppliers, especially small businesses, to obtain government contracts, often working nationally with provincial governments to achieve maximum benefit. Incidentally, for small businessmen with complaints about paperwork, red tape, excessive government regulation, or indeed any other problem, we have created a small business advocacy office within the small business secretariat.
Government help first becomes available, Mr. Speaker, when an entrepreneur is starting or contemplates expanding his existing operation. In such circumstances, his main concern is to obtain sound financing. Although the commercial banks necessarily remain the principal source of capital, some firms have continued to encounter difficulty in obtaining funds from them. However, these firms have access to the Federal Business Development Bank, an expanding corporation owned by the people of Canada which now has more than 100 branches across the country. Although the bank assists businesses of every size and variety, emphasis is placed on helping small business. In fact, of the 165,000 loans granted by the bank in 1979, over 90 per cent were for $100,000 or less, with the average loan being only about $50,000, obviously in response to the particular needs of small business. Customers of the FBDB may borrow in order to acquire land or to improve their buildings or equipment, to strengthen their working capital, or indeed to establish a new business. The point I wish to make in referring to the activities of the FBDB is simply that venture capital is available and indeed has been available in increasing amounts for some time. Not including the much larger level of direct loans now amounting to some $840 million to over
40,000	customers across Canada, the bank has recently embarked upon direct equity investment. This now amounts to some $25 million, which is in effect invested in the dreams and aspirations of Canadian entrepreneurs.
I should also briefly mention that the bank extends other services to businessmen, for example, the important services of counselling which are often provided by retired experts from the business community, and management training and investment services are available from the bank. Opposition members will, I hope, join with government members in referring their constituents interested in small business assistance to the local branch of the bank.
Another instance, Mr. Speaker, where government has encouraged venture capital development is through the Canada Development Corporation. The CDC has an important subsidiary which unfortunately is not generally recognized, called Canada Ventures. It in turn has significant holdings in several of Canada's major venture capital compa-
May 25, 1981

nies. Yet another source of financial assistance is provided by the Small Businesses Loans Act under which the government guarantees loans mades by commercial banks and other private sector financial institutions to assist small business to start up and to expand. 1 would note that last year this government raised the ceiling on such loans to $100,000. With the guarantee provided by this act, commercial banks, for example, are encouraged to make loans to small businesses which they might otherwise consider too risky. 1 might also note that last year the bank expanded its capacity by increasing the total amount that may be advanced from some $200 million to $475 million.
I have only sketched in outline, Mr. Speaker, the degree and variety of federal small business assistance. Once a small business has been established, however, there are a number of federal tax measures geared to promote and foster its growth. Let me mention one or two of the more important. Small business tax deductions substantially reduce the impact of federal taxes. What is the effect? Obviously the cash flow of the business improves substantially; there can be no question that the small business thereby gains in terms of its ability to reinvest, to expand and indeed to have a diminished need for financing from outside sources. Our government also extends assistance to small business for capital losses, which differs substantially from that afforded larger corporations. Small business investors are permitted unlimited deduction of their eligible capital losses from their income, a great advantage not available to larger enterprises.
Federal money, Mr. Speaker, is available to help small businesses improve their energy technology, a subject very much in the minds of Canadians today. We are working through the small business secretariat and the Department of Energy, Mines and Resources to improve the efficiency of energy use in small businesses. We have recently announced our intention to widen the extent of that commitment. Financial support is, for example, offered for research and demonstration projects to ensure that there is greater energy conservation in industrial processes. I might mention that only a fortnight or so ago the Minister of Energy, Mines and Resources (Mr. Lalonde) opened in Winnipeg the new headquarters of Canartech, the Crown corporation created to promote renewable energy technology. That technology is to be developed, through the use of small businesses in particular to promote small businesses engaged in the provision of renewable energy. I do not doubt that we shall see that Crown corporation grow into one of the most imaginative and effective catalysts for small business development.
Another source of federal assistance upon which I would like to touch for a moment with regard to energy management and conservation is a program that, when applied by industry, has substantially reduced energy consumption in the industrial processes, bringing spectacular savings for small businessmen as well as larger corporations that can reduce their expenditures for fuel and electricity.
Small Business
The fourth part of the opposition motion before us touches on the question of federal government support for research and development. The first three parts of the opposition motion pertain particularly to small business. The fourth part alleges that the federal government has been laggard in providing support for all types of business in the area of research and development. However, I would ask the mover of the motion and other hon. members opposite to note that only recently the business community widely welcomed the announcement that our government intends to raise the national research and development expenditure to 1.5 per cent of Canada's gross national product four years from now, in 1985.
The government itself will contribute about one third of this targeted figure, but in total it represents a co-operative effort with the private sector. Small businesses which have a particularly important part to play in entrepreneurship and in innovative technology, offer some of the best prospects for growth in research and development.
To that end, the federal government will spend about $200 million more this year than last year on research and development so as to move us toward the attainment of our national target of 1.5 per cent of the gross national product. Obviously a part of those funds will be channelled toward university research and development, some will go to government programs themselves, but a substantial proportion will go to co-operative programs with industry. We have already seen emerging in the private sector a concentration of R and D resources on space, communications and energy technology. But I have no doubt that in those areas the support of the federal government has been warmly welcomed and that the support will continue and expand in the future.
Also there are tax incentives available to companies engaged in research and development. Only 100 companies took advantage of those tax incentives as recently as 1977. But the following year the number ballooned to almost 500. That growth has continued, giving substance to the claim that the program is obviously taking effect.
I could continue about the work of the federal government in the area of research and development which the hon. member opposite seems to ignore or of which he is unaware. I want to note that fiscal incentives in the form of tax credits and accelerated write-offs have already had a substantial impact. The second area of concern is the general support programs of the federal government. Further recent initiatives indicate that funds are generally available for financing any sound project, irrespective of the industry sector in which it happens to fall. In that connection, small business support is particularly in the minds of those administering the program.
Also I want to draw attention to the government's policy of contracting out research and development which can have a major benefit on the growth and diversification of activities on the part of companies engaged in high technology areas.
I want to draw attention also to the industrial R and D available through a growing number of programs announced in recent months, programs which were virtually unknown only a few years ago. For example, the enterprise development pro-
9892

May 25, 1981
Small Business
gram has a special fund for microelectronics. In the area of energy, the Department of Energy, Mines and Resources and the Ministry of State for Small Businesses have a co-operative program in research. The Department of Communications recently had a major program which led to the development of Telidon, one of the more promising successes of Canadian technology in recent years.
I draw the attention of hon. members to the programs in aerospace which not only involve a significant number of major corporations, but also contribute substantially to the growing competence of a number of small enterprises. All these programs, of which the hon. member opposite seems either to be unaware or whose real importance he does not evaluate, require funds, of course. It seems to me idle for some members opposite to call for substantial reductions in government spending and at the same time to advocate expanded activities on the part of government to finance research and development and incentives for the growth of small business in Canada.


Mr. Deputy Speaker:: Order, please. I regret to interrupt the hon. parliamentary secretary, but the time allotted to him has expired.


Mr. Simon de Jong (Regina East):: Mr. Speaker, I wish to join in the debate this evening on the motion before us, and particularly to deal with the importance of research and development. It must play an important part in the development of a viable and strong small business sector in Canada today.
There is no doubt that various reports, very often commissioned by the government opposite, and various commissions, have shown the importance research and development can play in terms of creating jobs, increased productivity and increased exports, and helping with our balance of payments.
For example, Mr. Pocock, a researcher for the Lamontagne Commission on Research and Development stated:
if Canada had had a GERD of 1.5 per cent in 1978 and assuming 85 per cent of the increase would have been an increase in R&D by industry, there would have been an extra 10,600 jobs for scientists and engineers, which would have also resulted in a total of 1.52 million extra jobs created in new industrial activity and an extra $15.54 billion in exports.
It is amazing when government planners opposite look at ways and means to reduce unemployment and our adverse balance of payments that they do not listen and do not remember the recommendations and words of their own thinkers, their own commissions or their own inquiries. We know that sometimes the Liberals enjoy appointing royal commissions. They enjoy receiving reports and commissioning studies; but not very often do we see the government acting on its own recommendations and findings. Do I need to say that the benefits of increasing research and development would result in increased employment, greater output, greater productivity, improved competitiveness by Canadian industry and businessmen and, indeed, lower prices?
Since I am the critic for science and technology of the New Democratic Party and since I faithfully attend all of the committee meetings, I have learned a great deal. For example, I learned of the Industrial Research Assistance Program of the National Research Council. The NRC conducted an analysis of its program for the years 1973 to 1977. It took the 400 industrial projects represented by 250 companies and the IRAP invested some $93 million of public money which was matched dollar for dollar by private industry. These were the results of the analysis. The investment of some $93 million of private money resulted in a $1.8 billion return to the industries. In other words, it was a return of one dollar for every dollar. The government coffers were increased by some $350 million in taxes which were collected as a result of this investment.
The previous speaker from the government side indicated that the opposition was crying for fewer government expenditures. In some ways we are. I agree in some ways with the Conservative members to my right who say that there can be some trimming in the government's activities. Expenditures in the research and development field are not expenditures, they are an investment. It is an investment which will yield a return of greater tax dollars, of greater economic activity and employment. It is an investment in the country and in its human resources. The IRAP program is but one example of the success which direct investment in research and development can give to the country as a whole. There are several modifications to the IRAP program. For example, there is the mini-IRAP program which is especially geared to smaller industries. What this particular type of program does is to give access to the business community to the biggest resource and the greatest scientific knowledge in this country, that is, public knowledge and public research in the field of science and technology.
The goal of increasing our research and development to 1.5 per cent of our gross national product is certainly not a new goal. I believe it was in 1968 that we heard the government opposite suggesting this goal. It was repeated in 1972 by the Lamontagne commission. In fact, that commission suggested,
I understand, that up to 2 per cent of our gross national product should go to research and development. So, the government must understand that when it trots out with a new goal of 1.5 per cent for 1985, the Canadian public and the opposition remain a little sceptical. Our position is to wait and see.
Finally, I hope that the government is serious about increasing research and development in this country and that we will see some action. In some ways the jury is still out. Definitely, some of the five year plans proposed by such funding agencies as the Natural Science and Engineering Research Council have not been met. For example, the NSERC funding has not reached the level which the five-year plan projected for the second year-it is still below. The government has still not given it's commitment to these research organizations.
We are finding that the universities, which are essential if we are to have the trained personnel to fulfil our objectives,
May 25, 1981

are afraid. They are afraid that they will see a continuing decline in funding. Young university students are not completing their doctorate programs; they are not even commencing their master's programs because there is no assurance that there will be jobs for them. There is a general feeling of insecurity in the scientific community as to what the commitment of this government is and what the future will be. This will affect the business community as well.
One of the major reasons why we have very low expenditures in research and development in Canada compared to other developed countries is to be found in our economic and business structure. Our expenditure is roughly on par with what Portugal and Ireland spend on research and development. Why is this? The major reason is that private industry has not contributed to research and development activities as it has in other countries.
1 would like to read into the record the OECD international comparisons for R and D funding shares as a percentile for 1977 in various countries. For example, in Denmark industry contributed 51.3 per cent, in Finland it was 55.3 per cent, in France 41.1 per cent, in Germany 55.6 per cent, in Japan 65.8 per cent, in Norway 40.8 per cent, in Sweden 59.3 per cent and in the U.S.A. 43.9 per cent. In Canada the percentage is 35.8 per cent-dismally low. It is not small Canadian industry that is to blame. Canadian industry invests in research and development roughly on par with other countries. The fault is that much of the Canadian economy is controlled by multinational firms; and these firms, for a variety of reasons, prefer to do their research outside Canada. One of the two main reasons is that multinational firms have access to high technology from the parent company. Since we are a branch plant economy, there is no reason for them to do their research in the branch plant. This flow of technology across the border has hindered the development of a viable research and development community in Canada. This is the central problem which the government must tackle if we are to achieve our goal of 1.5 per cent. There is no indication that the government is willing or capable of tackling this essential problem. It is not that it does not know about it. The Science Council of Canada have pointed out in various reports the basic structural problem which exists in Canada and which prevents us from achieving our stated goal.
There are no solutions coming from this government. In fact, the slide continues, the slide that we saw during the 1970s when there was a decrease in the expenditures on research and development. We in the New Democratic Party believe that science and the development which flows from it, for example new technology, can and should be used as an important instrument by which Canadians can achieve a great measure of control over their destiny. We believe that R and D should rate a higher priority. It should have an essential priority in the development of any industrial, economic and social strategy for Canada.
We do not believe that throwing money into research and development is a solution. In the past, this government has spent huge sums of money on R and D from which multina-
Small Business
tional oil companies have benefited greatly. Technologies have been developed to which the Canadian public has no access but for which it has paid. This is not an appropriate type of research and development that we would talk about. We suggest that in Canada we agree with what the National Research Council of Canada presented in its five-year plan entitled "The Urgent Investment". I would like to quote three sentences from that report;
Because of Canada's comparatively low population and its unique geographical distribution, a large portion of Canada's manufactured goods is produced in relatively low volume. The technology introduced here must have the flexibility to reduce the inefficiencies found in traditional low volume production techniques.
The National Research Council in its five-year plan refers briefly to the appropriate technologies which we should develop in Canada because they are appropriate to us as a country. I mentioned before that we in this party believe that research and development must play an important part if we are to gain a measure of control over our destinies. It is not enough for us as a country to react to technological innovations all over the globe. It is not enough for us as a society to continually react. Surely we must begin to be in control of events. That is why we feel that the public has an important part to play in developing proper research strategies.
It is also important for us to develop the appropriate technologies. Very often these are not heavily capital intensive but are those that allow local self-sufficiency to develop and a move away from the large, capital intensive, centrally and globally controlled production toward greater decentralization and self-sufficiency.
I feel that this direction is very appropriate for our country, Mr. Speaker. It is an opportunity for Canada to make a significant contribution to the development of Third World countries in particular. It is also an area very appropriate for small Canadian businesses. It would strengthen small Canadian businesses immeasurably. Instead of technologies that require heavy capital funding that depend on the international capital markets, that depend on technologies whose patents are controlled and owned outside our borders, we would, should, and could, develop technologies appropriate to the small-scale production which is suited to our population and which would allow greater participation by small businesses. It would also be more labour intensive.
In the last few decades, small businesses have been wiped out all over the world and markets are controlled by larger and larger firms. High interest rates are but a continuation of this. The economic policies of this government and, in fact, the former Conservative government, and the attitude toward research and development, have all helped to engender a greater concentration on and control over the productive forces.
We suggest that there is a way out, Mr. Speaker. Indeed, research into the appropriate technologies for energy, food production and all the other basic human needs, would make this country into a new, more contemporary country-a coun-

May 25, 1981
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try which has a great deal of control over its destiny. It would allow this country to have the self-sufficiency and freedom that it does not have at present.
In conclusion, Mr. Speaker, I wish to say that much of what my colleagues in the Conservative party suggested today makes sense, particularly when they spoke of the neglect of research and development in this country. I hope the government is taking note of the presentations made in the various committees about the need to develop some clear plans for the future that would allow a strong and viable research community to grow in this country, that would benefit small business, the workers and the farmers, and that would make Canada a stronger country.


Some hon. Members:: Hear, hear!


William John Vankoughnet: Mr. Speaker, I welcome this opportunity to discuss various important and pressing issues facing Canadians and small business today as a result of the government's economic mismanagement and high interest rate policies.
We have a federal government that has done so little for so many for so long, at the same time as it has done so much to so many for so long. The government has become insensitive and uncaring about the plight of the average and low-income Canadian.
The farm and small business sector along with the consumer and home owner are suffering from the record interest rates that are in place today. To say that the interest rate is high is an understatement; soaring in the clouds is more like it. The government has been soaring high in the clouds for some time without sufficient oxygen to induce clear thinking. Interest rates have taken off like the space shuttle, but with one big difference-the space shuttle came back to earth. The government is taking us on a one-way trip-straight up. I suppose it could use the slogan, "Lost in Space" for its next campaign instead of some of its past logos, such as "The Land is Strong".
The land was strong and it can be strong again, but not under the spell and the rule of the federal government. Inflation, unemployment, interest rates and an energy policy are all important issues, and they need to be solved with leadership and initiative coming from the federal government. Industry needs long-term planning to be effective and competitive in a competitive world. We see countries with few resources become successful world trading nations. The reasons are government support, long-range planning and faith and belief in the country and in the people and, most important, pride in the future.
In Canada we have an abundance of raw materials, knowhow and human resources. Many other countries that have done so much with so little must wonder what on earth Canadians need in order to develop their potential. The government should come out of orbit and down to earth and provide some ground control and ground rules for our future.
I have spoken in the House about the need for a comprehensive industrial strategy for Canada, and made specific reference to the textile and clothing industry in particular and the need to ensure that this industry survives and grows. I have stressed the need for the government to ensure that Canadian industry grows for the future so that we do not become dangerously dependent on a wide range of imports.
In its latest report, the textile and clothing board recommended that bilateral agreements and quotas should be extended to cover the period ending December 31, 1990. I supported the industry's position in asking the Minister of Industry, Trade and Commerce (Mr. Gray) and the government to announce the decision on the board's report no later than March 31, 1981, so that business could look with more certainty and support to the future and get on with needed investment and growth.
The industry is still waiting for the government's decision, Mr. Speaker. It is not asking for handouts, but rather for guidance and direction so that it can effectively plan for the future.
The government should realize how important effective planning can be. It lets industry as well as the consumer feel confident about tomorrow and the day after. Planning offers incentives for advancement and the confidence to pursue this. It gets people stirred up in a constructive way. Idleness becomes eagerness, as Canadians are restored to working hard for that great concept of Canada.
Investors need confidence to make the large-scale commitments necessary today. Farming is very big business, even though it could be classified as small business. Start-up costs are extremely high, taking into account necessary machinery and land purchases. The textile and clothing industry requires large capital outlays as well. Such long-range expenditures require future security, and this in turn requires government support through an effective industrial strategy.
The government must combine this with effective emphasis on fostering research and development. This is the key to the future. We cannot sit around on our hands or our laurels and expect to compete or prosper. We can see examples of this in such cases as the British and Japanese automobile industries.
For years Britain had a thriving automobile industry. Then we saw the results of the Japanese introduction of intensive research and development. The British automobile industry was hard hit. We must ensure that our industries do not suffer the same fate.
Research and development and adequate technical training should be high on the government's list of priorities. The success of small and large business in the future requires a co-ordinated effort combined with a comprehensive industrial strategy. This is a big job but it is not insurmountable. Other countries have done it and so can we.
The government must realize the serious state of our economy and must direct its energies to priority issues. Let us tackle the bread and butter issues of inflation, unemployment and high interest rates, and then many of the other concerns will be
May 25, 1981

mitigated. If theories are not working, then the government must take some initiative and act, not sit back and watch the country slide down the rungs of the economic ladder.
Gross economic mismanagement and throwaway overspending have left Canada with a huge deficit and unhealthy interest payments. The government needs a plan to reduce the deficit in the hope of trying to get Canada back on its feet. While in opposition, the Liberals condemned the government of the day for high bank interest rates of some 14 per cent. On January 12, 1980, in Toronto the present Prime Minister (Mr. Trudeau) said the following:
We have an economic program for the 1980s which will enhance dignity, create opportunity, and provide security.
Since the Liberals took office, the bank rate has risen from 14 per cent to a record 19.06 per cent, as recently announced. The government says it can do nothing about this sorry trend. The truth is that the government cannot be bothered to do anything for the people of Canada who are being so burdened by present economic developments. For many Canadians their universe, instead of unfolding as it should, is closing around them.
The present economic policy of the federal government is a nightmare for small business, for home owners renewing mortgages and for farmers. High interest rates are said to slow down borrowing and spending in an effort to curb inflation. This might have some validity for needless expenditures or certain luxuries, but it is not fair for the Canadian home owner who has to renew his mortgage. This is not a frivolous expenditure, although in light of present government policy it certainly looks more like a luxury when it should, in effect, be a right.
The home owner has already borrowed this money to buy his house and is striving to pay off such a loan. This is not a deliberate new expenditure with new borrowed money to fuel inflation. Yet the home owner is forced to renew this existing debt at greatly increased interest costs in order to maintain the home in which he and his family live.
The government should realize the seriousness and unfairness of this situation and bring in some positive measure to aid home owners facing such high interest increases. We need action now.
Canada is its people and Canada's health and welfare depends on that of its people. How can a country be strong when its economic backbone, comprising small business and the farming industry, are scrambling to make ends meet instead of planning with certainty for the future? The answer is that it cannot. Government cannot sit back and wait for the bubble to burst. The nation, its industry, business and people, need action now. Confidence in the marketplace is essential for planning and future growth.
The present government promised to hold the line on government spending growth to under the rate of the Gross National Product and yet we see spending growth in fiscal year 1980-1981 at 15.2 per cent, compared to the nominal GNP growth of 10.7 per cent.
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The annual federal deficit is at a high $14 billion, and we pay over $ 11 billion a year on interest payments alone. These factors, along with borrowing on the foreign markets, are fuelling inflation. The federal government wants Canadians to show restraint and help combat inflation. Canadians would like the federal government to set an example and show some restraint and responsibility to commence and maintain the fight against inflation.
The average Canadian citizen is reeling from the current economic situation before us today. Their standard of living appears to be decreasing despite their efforts to get ahead. And yet, at the same time there is a $51 million increase in expenditures on the correctional service of Canada. This must seem hard to understand for the average law-abiding citizen who works to better himself in society. Perhaps such an amount of money would have been better spent if directed toward some mortgage assistance fund for home owners or to fund a program to aid small business and farmers in difficulty during these difficult times.
We have seen how the uncertainties of the National Energy Program have caused havoc in the oil and gas industry in Canada. This affects businesses both large and small. The government's Canadianization of the industry is at huge cost to the taxpayer while not ensuring one new drop of oil. Drilling exploration and capital expenditures are down substantially because of this program, along with a significant decrease in jobs in the industry. This slowdown is felt across Canada in the operations that supply the industry.
Energy supplies and costs are a significant aspect of the cost of doing business to both small business and large-scale business. Again, it is hard for business to plan and to budget when there exists so much uncertainty in the market today. We have been faced with a multitude of energy increases since the last federal election. Relations with the producing provinces have suffered because of the National Energy Program and the Constitution, both imposed on Canadians by the present government. All this leads to uncertainty in the marketplace.
The government is not setting the proper framework to produce the confidence and enthusiasm for investors and business to expand. This framework is needed now so that we can rebuild our economy, fight inflation and unemployment and return to the lifestyle Canadians used to enjoy. We have the potential, and what we need now is leadership and confidence which all together can snowball into a dynamic future for Canada. Concrete measures need to be taken.
While in power, the Progressive Conservative government introduced the small business development bond when interest rates started to climb. This was done in an effort to bring relief to incorporated small businesses. The measure was adopted by the present government and passed by the House in February of this year. After pressure from the Progressive Conservative party along with the business community, the small business development bond was extended to the end of 1981 for qualified borrowers.
This measure has been of great help to small businesses, especially in light of the escalating interest rates. The bond is

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helping to instil some growth in the economy by providing the vehicle to provide the capital needed to carry out plans for the expansion and renovation of businesses.
The government should look at the possibility of extending this measure to unincorporated businesses so that more farmers and small businesses could benefit.
Small business in general needs some relief from the crippling interest rates at which many of them are forced to borrow money. Programs, such as the small business development bond, are useful as positive government measures designed to support Canadian business.
Let us build up Canadian business with pride and give it the support it deserves. These small businesses and farm operations are run by our friends, neighbours and constituents, all fellow Canadians. They contribute to our lifestyle and our economic cycle. When their businesses are strong and growing we all benefit.
We must keep Canadian money in Canada to help Canadians. It does not make much sense to me to pay foreign countries, such as Mexico, millions and millions of dollars for oil when at the same time we pay fellow Canadians much less for a superior product produced at home. That money leaves Canada, much of it forever. Our borrowing on the foreign market has run up an unhealthy deficit which the government seems unable to control. Money that should be used for a variety of constructive measures goes just to try to pay the interest charges on the government's deficit. This adds to the inflation cycle. It is not a good way to run a business, let alone a country.
Canada has the potential to be great, and I think the people realize this. Government can co-exist with business in a free enterprise system without the aspect of socializing everything. There are many options open to a conscientious and responsible government willing to implement realistic long-term solutions for the good of the country. This can be done without stifling business with regulation upon regulation. A prime example of this is the metric madness before us today.
Therefore, I ask the government to come down to earth because that is where the people of Canada are living and trying to cope. A far-reaching and comprehensive industrial policy to allow business to plan for the future is needed to provide a stimulus for growth. Interest rates must be brought under control so that businesses can move ahead, not go under. Programs, such as the small business development bond, should be explored and made available to those businesses who need assistance before it is too late. Canadians want to be able to pay their mortgages while, at the same time, enjoying life, not mortgaging it away.
The government has much work ahead of it. It must build a strong foundation and attack the roots of our economic problems. Inflation must be brought under control and steadily reduced. The present administration has spent years getting Canada into its present condition with irresponsible spending and short-term inconsistencies. I would not be surprised if the government tried to reintroduce wage and price controls after
they had taken us even further down the road. The government cannot patch up its past mistakes with cosmetic measures. They put us into this economic mess and their meddling will only make things worse.
The people of Canada deserve better treatment and realistic long-term solutions, such as those proposed by the Clark Conservative government and the new U.S. administration.


Mr. Ralph Ferguson (Parliamentary Secretary to Minister of State (Small Businesses and Tourism)):: Mr. Speaker, I welcome this opportunity to take part in the debate this evening. While listening to the speakers this afternoon and this evening, I could not help thinking that perhaps they have overlooked a great deal that has been brought in by this government.
This afternoon we heard mention of the introduction of wages paid to spouses as a business expense. The rate of taxation on small businesses is lower as compared to larger corporations; it is 15.75 per cent. This lower rate is a clear advantage for small Canadian-owned businesses.
Some members feel we are not doing enough research and development. We have a 25 per cent tax credit for- research and development. This measure is designed to encourage venture capital and more Canadian research and development here in this country.
The small business development bond issue was spoken about this afternoon, as well as the Small Businesses Loans Act and amendments to the Federal Business Development Bank. The Federal Business Development Bank is one of the few lending institutions in this period of time in Canada which lends at a fixed interest rate that is renewable or renegotiable after three years.
We heard about the retail scale conversion program to metric which is estimated to cost between $45 million and $50 million. The government provides assistance with regard to retail scales of less than 100 kilograms. Remission of duty is available on imported conversion parts. Such parts are exempt from federal sales tax and are written off as an expense for business. A few days ago we heard indications that none of these are manufactured in Canada. They are manufactured in Canada, one of the plants being in Toronto.
I welcome this opportunity given me today to speak, for example, about the reduction of the paper burden that cuts the paper work required. This government initiative provides for the retention of records for only six years and allows for the submitting of customs and excise documents on a monthly basis. This is a very important move on behalf of the government to assist the small business person.
I would like to elaborate briefly on four major initiatives taken by four different groups pursuing a common goal, namely the alleviation of the paper burden and regulation on the small business community.
In February, 1978, the then minister of state for small business was charged with the responsibility of creating a
May 25, 1981

small business focal point in government, of finding solutions to specific paper burden problems, as well as of identifying long-term methods to alleviate this problem.
After listening to the small business community's complaints, suggestions and requests, after consulting and negotiating with the various departments, the present Minister of State for Small Businesses and Tourism (Mr. Lapointe) was in a position to put forward to cabinet a series of recommendations to reduce the paper burden stemming from government forms, reports and surveys, record-keeping requirements and unnecessarily complex regulations and procedures; the two major irritants to small businesses.
These specific measures, developed in co-operation with most government departments, resulted in annual savings to business of at least $300 million per year. These results would not have been achieved without everyone's co-operation in the public and private sectors.
The effort to reduce the paper burden in Canada is a very good example of the kind of action that can be undertaken successfully. Through this activity, however, it was confirmed that the paper burden was only a symptom of, and a direct result from, unnecessarily complex regulations and procedures.
Simultaneously, the federal government, in conjunction with the provincial governments, decided to attack the whole matter of economic regulations. At the meetings of first ministers on February 13-15, 1978, the following was agreed:
That the whole matter of economic regulations at all levels of government should be referred to the Economic Council of Canada for recommendations for action, in consultation with the provinces and the private sector.
The interim report of the council was produced in November, 1979. It contained procedural recommendations t( increase the accountability of government agencies. The report stressed the need for better consultation procedures with affected groups prior to the introduction of new regulatory initiatives through assessments of the costs and benefits of new regulations. This final report, which will be presented to the Prime Minister (Mr. Trudeau) and the government on June 11, 1981, will propose a system for better management of government decisions about economic regulations. It will feature three major components: First, advance notice and consultation; second, prior assessment; and third, periodic evaluation of existing regulatory programs. The efforts of the Economic Council will certainly serve as a catalyst for assessing the existing myriad of regulations and regulatory agencies.
This House also played a very active role in minimizing the regulatory burden on the private sector. A special House committee was formed to make recommendations on regulatory reform. Individuals, groups, provincial governments as well as officials from a variety of federal departments and agencies contributed to the effort of this committee.
The report released on December 19, 1980, contained 29 recommendations aimed at reaching three primary objectives: first, to improve the process whereby new regulations are drafted; second, to re-evaluate the effectiveness of existing regulations on a regular basis; third, to enhance the accounta-
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bility of regulation-making bodies to cabinet and to Parliament.
This special committee, among many excellent recommendations, stressed the early consultation aspect with the private sector, including the small business community in the following terms:
The key to more effective regulation involving the least possible burden on the private sector is the participation of a wide variety of interests in the process of regulation from the earliest possible stage.
While this committee found widespread support for regulatory reform from the public and private sectors, it did not obtain the same total support for "deregulation". However, we are positive that, in some instances, deregulation will result from the implementation of some of the committee's recommendations. This initiative will create major benefits for the small business sector.
Another example that proves the government's commitment to regulatory reform and, by the way, to help the small business sector, is the fact that the President of the Treasury Board (Mr. Johnston) has been assigned by the Prime Minister the responsibility to oversee and co-ordinate the government's regulatory reform efforts. I understand that good progress is being made in the elimination of unused, ineffective and undesirable laws and that a bill to this effect will be introduced very shortly.
Another activity that retains the attention of the small business sector is the one related to the guidelines for standardizing and, in some cases, reducing the periods of time for which the federal records must be retained by the business community. An interdepartmental committee, under the chairmanship of the co-ordinator, regulatory reform, is actively involved in the work, with the participation of all departments which administer statutes requiring the private sector to keep records. Ten other major projects now fall under the responsibility of that committee, projects which should have a greater impact on the small business community.
In my remarks today, Mr. Speaker, I have tried to show factually the serious commitment of the government toward reducing the paper burden and the regulations required of the small business community. These different approaches reflect the wisdom of the government in recognizing the fact that any effort to reduce the paper burden and the regulations must not compromise the needed flow of information. We all want regulatory reform. Great care and thought is needed to design the changes required. I believe the government is on the right track in this area of great importance to the private sector. The small business community is looking to this House for leadership and guidance in the matter of regulations and paper burden. Certainly we cannot and will not disappoint this important group. Thank you very much, Mr. Speaker.


Mr. Bill Wright (Calgary North):: Mr. Speaker, I rise to discuss this most important motion presented by the hon. member for Burlington (Mr. Kempling). I should like to read

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it into the record once again because of its importance. It states:
That this House condemns the government for ignoring the consequences of its high interest policy and for its failure to assist the small business sector in Canada
(1)	by increasing and extending the small business development bond program;
(2)	by encouraging venture capital investment by means of appropriate tax adjustments;
(3)	by relieving the small business sector from the massive weight of government regulation; and
(4)	by fostering the research and development necessary to preserve the vitality of Canadian businesses of all sizes.
I should like to discuss just a couple of things relating to this motion. My colleagues have addressed most of the matters, but let me deal first with the high interest rate policy of this government. 1 do not think there is anyone here who would deny that the high interest rate policy is ruining many individuals, many business people and many farmers in Canada. It is particularly hard on senior citizens and people on fixed incomes.
We have a prime rate in Canada of 19.5 per cent, but most people cannot borrow at that rate. That rate is only for the most credit-worthy customers of the chartered banks. Most people who borrow must borrow at commercial rates of around 20 per cent, 21 per cent or 22 per cent. Those who owe money through credit card use, pay anywhere from 24 per cent to 30 per cent, and those who borrow from finance companies, are paying 26 per cent, 27 per cent or 28 per cent. Those who are forced to borrow through second mortgages, are in some cases paying up to 35 per cent.
It is an atrocious situation when we have to put up with a government with another three years to go which is dedicated to high interest rates and more deficits. This government has no fiscal policy to speak of and it cannot defend this policy.
If we consider some of the rates in other countries and make a comparison of the inflation rates, we can see some of the areas in which we have gone wrong. In Canada we have a prime rate of 19.5 per cent with an inflation rate of 13.9 per cent, and rising. That is the bad feature. Our interest rates are going up while the interest rates in other countries are going down.
The United States at present has a prime interest rate of 20.5 per cent with an inflation rate of 10.2 per cent, and many economists suggest it is going down. If it does, it will pull ours along with it, as is usually the case when that economy recovers.
Germany has a prime interest rate of 12 per cent-and many businesses there are unhappy about that rate-with an inflation rate of only 5.6 per cent. That is a country which 35 years ago was ravished, with nothing left of its business community.
Japan has a prime interest rate of around 7 per cent with an inflation rate of 6.2 per cent. That country was also ravished, perhaps even worse than Germany in some respects.
I find it very strange that about one year ago the governor of the Bank of Canada stood before the committee on finance and said, "I will not allow the inflation rate to go to 15 per cent; under no conditions will I allow it". The rate is now almost at 14 per cent and is going up. What has happened to the governor of the Bank of Canada? I suggest he is simply following the instructions of the Minister of Finance (Mr. MacEachen). The Minister of Finance has no alternative, because of the deficits of this government but to keep interest rates high in order to encourage investors to buy Government of Canada bonds.
Government borrowings now account for over 50 per cent of all borrowing in Canada compared to 25 per cent 15 years ago. In the last seven years we have had over $20 billion in deficits. In this current year we have a $14 billion deficit, but the government is telling us it is going down. 1 do not believe that. Government spending is going up by 16 per cent this year. We know the estimates the government provides are not true estimates. If you or I as an individual were to show an expense of $7,000 on our income tax return, the Department of Revenue would assume that was a true expense. If we had $3,000 in revenue which we applied against those expenses, they would not be true expenses. Our expenses then should be $10,000. That is what the government is doing with its estimates. It uses the netting effect. What we see as government expenditures of approximately $61 billion is not a true figure; it is false. Of the $3.8 billion we are paying out for imported oil, the government is showing approximately $500 million. It is not showing the true figures, and this sort of thing goes on and on in the estimates. This is the netting effect. This is not a $61 billion or $64 billion expenditure, it is something more like $80 billion or $90 billion.
Once again the government does not want the people of Canada to know this and it says it will look after it. The government is spending approximately 25 per cent more than it is taking in. This is unbelievable, but it has been doing it for years. About 20 cents of every dollar the government takes in is used just to service debt. The government has no intention of ever paying off its debts. How could a small business or an individual operate like that? The government would never allow them to do that.
Just last week I did an analysis of the money supply in Canada and its relationship to inflation. In the mid-1970s the government told us it would have to control the rate of growth of the money supply-which is credit-so that it could control inflation. But when we control the money supply, there is a tendency for interest rates to go up. The government kept telling us that this would benefit us because inflation would be controlled. I have figures here for the last ten years. In only one year, 1977, when the money supply decreased did inflation go down. In four years the money supply increased and inflation decreased. In three years the money supply decreased and inflation increased. In two years the money supply increased and inflation also increased. We cannot control inflation by controlling the money supply unless we can control government spending. That is why this monetary policy of the
May 25, 1981

government does not work, and that is why small businesses have problems. They do not have access to many lenders. There is only one lender to which they go.
I hate to think of the legacy this Prime Minister is leaving behind. I am afraid the Liberal party will never recover. When this Prime Minister leaves this chamber, members of the Liberal party will be telling us they have new policies and new leaders. It will be the same old story. There will be large deficits, high interest rates and many bankruptices. The small business community is being ignored. Its profits are decreasing. It is not able to finance properly. Seven times in the last five elections this Prime Minister has stood before the people of Canada and said "I will control government spending". Government spending has increased from $500 million in deficits in 1968 to $14 billion annually in 1981. I do not know anyone in Canada who should believe the Prime Minister and the Liberal party, least of all the small business community.
There have been 11 increases in the price of gasoline and heating oil over the past year. Those prices have increased over 50 per cent. Those increases have been presided over by a government which said it would keep gasoline prices down. This government bought heavy oil, unseen, from Mexico. It cannot be refined at Canadian refineries. This government does not know what it is doing.
There are 1.1 million small businesses in Canada. They account for over 66 per cent of the employment and job creation in Canada. The small business community provides more opportunities for both skilled and unskilled labour than any other industry.
In 1979 the Canadian Federation of Independent Business surveyed 9,000 small businesses. Five of the most serious problems cited were, first, finance; second, inflation; third, shortage of skilled help; fourth, government regulation and paper work; and fifth, taxation. I would like to review a couple of these.
The small business development bond was introduced by the Conservative government. Fortunately the Liberal government decided to continue that program. It is a very favourable type of borrowing for small businesses. The terms are good, up to five years. The rate is approximately one half of prime, and small businesses can borrow amounts ranging from $10,000 to $0.5 million. However, small businesses were asked recently why they do not borrow from the small business development bond, and they replied that small businesses have considered, but rejected, government-backed loans because of the danger of becoming entangled in bureaucratic red tape. That red tape keeps getting worse and worse.
Small businesses are particularly hard hit by inflation. There is no question that large businesses can cut back on their inventories in certain areas, but small businesses cannot. There is no question that one of the major problems small businesses are having right now is the high cost of financing their inventories. In few areas other than the area of small business
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can one say that high financing costs will defeat a business so easily. Small businesses must finance to carry inventories.
Another concern of small business people is government regulation and paper work. Businessmen have told me that 20 per cent of their time is taken up by government regulation and paper work. Even the Minister of State for Small Businesses and Tourism (Mr. Lapointe) admits that there is too much paper work. I was astounded to hear him say this afternoon that there is a six-year limit on the retention of documents. That will not help relieve the paper burden. Having been involved in storing documents in a business for many years, I can tell the House that once documents are put away, they are put away. The biggest problem is the amount of paper which must be gathered each year and put away. The documents which are put aside do not take up anything but space. That is a cost to a business, but it is a minor cost compared with the cost of the time spent doing paper work. This minister tells us he is helping small business, but he really has not solved the problem. He had a lot of gall to say what he said this afternoon.
1 am going to present three recommendations to the government tonight. The Minister of Finance is always saying in this House that the opposition never makes any suggestions. The problem is that he is not listening. If I had my way, I would cancel the national energy policy completely. There is no question that that damned policy is ruining Canadians. It accounts for the high interest rates we have right now. Let me explain briefly why. Approximately two billion exploration dollars are leaving the country, and money will continue to leave the country over the next five years. It is not hard to find many businesses in Canada which do nothing else but raise money for Canadian drilling companies drilling in the United States. They are still doing it. It is estimated that the figure is up to $2 billion. I have spoken with representatives of firms which do this, and they have told me that they will raise $2 billion in total each year for the next five years. Fifty per cent of all the drilling rigs which operated in Canada last year are now in the United States, and they are being supported by funds from Canada. That is one of the reasons we have high interest rates.
With respect to the export of natural gas, natural gas firms in western Canada have stated on more than one occasion- and have proved it-that they can export up to 50 per cent more natural gas than they are exporting right now, but the price of natural gas is tied to the price of imported oil. Every time the price of imported oil increases, so does the price of natural gas. Those prices should not be tied. Natural gas has nothing to do with imported oil. It is not an import. We are exporting natural gas. We have to get away from the formula which ties the price of natural gas to the price of imported crude oil. In 1980 we exported $4 billion worth of natural gas. And that, these firms are telling us, is 50 per cent of what they could do. This is a very serious problem because we are not talking about multinationals but about small Canadian firms which have locked themselves in gas wells for a minimum of five years and they do not know what they are going to do. I

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can tell you what they are going to do: they are going to persist until they can no longer finance the wells and then they will be taken over by the governments. That is what this government wants to do. It will buy up these shut-in gas wells for 25 per cent of their real value, which is the value put on them right now by the banks. They are prepared to give credit for 25 per cent of the real value because they will be shut in for up to five years.
My last suggestion to the Liberals is that the government bring in a program related to mortgage interest and property tax credits. I was not here when the Conservative government brought in this policy, but of all the things I have seen this seemed to make the most sense because it has the immediate effect of reducing the financing costs of the average home owner by at least 3 to 4 per cent. My calculations suggest at least that, but it could perhaps be higher depending on the tax bracket. However, surely this government can bend a little on policy and recognize a few of the excellent programs the Conservative government brought in. There are 500,000 home owners renewing their mortgages this year. They just cannot go on with this.
The Minister of Finance was, for lack of a better term, sucked in by the Minister of Energy, Mines and Resources (Mr. Lalonde) on a program to nationalize the oil industry. There is no other word for it. You can talk to the staff in his department and they will tell you that they have a policy to nationalize the oil industry. If you want to read some of the books of our Prime Minister (Mr. Trudeau), it says right there that the way to socialize or nationalize this country is to make sure that private industry does not work.


Some hon. Members:: That is right.


Frederick William Wright: It says that in those words. You have to make sure private enterprise in this country does not work. And who operates 66 per cent of the business in Canada but small businessmen?


Mr. Deputy Speaker:: Order, please. I regret to interrupt the hon. member but his time has expired.


Mr. Jim Schroder (Guelph):: Mr. Speaker, I am pleased to add my voice to this debate. My constituency has a large number of small businesses, and we value them very highly. I am sure that everyone realizes the answers to our economic problems are not simple ones. They are complex problems and we do not want to be like that great knight Sir Ronald, the hero in Stephen Leacock's novel, who jumped upon his horse and rode off in all directions.
The question of who invented the small business development bond reminds me of the story about who invented the telephone. They finally came to the conclusion that the answer to this problem had to be that it was conceived in Brantford, Ontario and born in Boston. So I suppose that the small business development bond, we have to agree, was conceived
by the opposition when they were in power and was delivered by the Liberal government.
Now, I am somewhat disturbed when our Prime Minister (Mr. Trudeau) is criticized for his leadership in the North-South dialogue, and recently the Minister of Finance (Mr. MacEachen) was criticized for his activities in the World Bank, and I would just like to draw to your attention the fact there is a very close relationship and dependency between the economy of the rich and poor countries of the world.
I would just like to read to you for the record from a supplement to the report of the Parliamentary Task Force on North-South Relations. North-South, what is it? Why should Canadians care? Here are some examples of the consequences which might befall us if the governments of north and south do not curtail and reverse the growth of world poverty. If there is a loan default by only one or two of the ten countries which account for 70 per cent of the $300 billion debt owed mainly to northern banks, the industrialized countries face the possibility of a full-fledged depression. Political instability, fed by massive poverty increases the likelihood one of those isolated skirmishes in the Third World will escalate into super power confrontation, causing us to spend more and more tax dollars fortifying our security systems. Let there be no doubt that there is a relationship.
I would now like to talk for a moment about the small business development bond. The opposition contends that this government has been insensitive to the plight of the small businessman who today faces a record high interest burden. However, these critics choose to belittle an extremely significant interest subsidy that was implemented by this government for small businesses. I am speaking of the small business development bond.
The measure was designed primarily to assist small businesses to expand their operations by enabling them to obtain loans at reduced interest rates to carry out such expansions. However, its scope is much broader than that. It is also designed to assist small businesses that are unable to meet their financial commitments by enabling them to reduce their interest burden.
This latter aspect of the program is often overlooked but can be an extremely important one. For example, let us assume that a small incorporated hardware store owes $100,000 to a bank in respect of the mortgage on the property in which the store carries on its business. The mortgage has come up for renewal and the applicable rate has increased from 10 per cent to 18 per cent. Unfortunately, the actual and expected profits of the business are inadequate to cover this increased expense. The result would be a mortgage foreclosure.
The hardware store in this instance can likely reduce its interest costs to the 10 per cent level on the old mortgage by using the SBDB measure. The paperwork involved is minimal. The store and its bank need only complete a single page election form in respect of the new mortgage and mail it to the Revenue Canada district taxation office to which the store normally mails its annual tax return.
May 25, 1981

As a result of making such an election, the bank will not be taxed on any interest it earns on the new mortgage. Thus it will earn after tax the same amount on the new mortgage by charging 9 per cent interest as it did on the old mortgage by charging 18 per cent. The administration costs associated with the procedure will probably result in the bank requesting a 10 or 11 per cent rate of return. This rate is not fixed by the government and is completely subject to negotiation by the borrower and the lender.
The bank in the above example does not lose anything by accepting the reduced interest rate since it is not taxed on it. On the contrary, it benefits by the fact the hardware store will be more likely to repay its loan. There is no government department or agency from which the bank or hardware store is required to obtain approval before such a loan is made. However, in practice, cautious lenders often take steps to obtain an assurance from Revenue Canada officials that the prerequisites for making a small business development bond loan are satisfied.
This device can be used by incorporated farmers whose carrying costs have reached unmanageable levels. Although care should be taken to consult the actual small business development bond rules in specific cases, one can say in general that any small incorporated Canadian active business with retained earnings which do not surpass $750,000 which is unable to repay a loan can utilize the small business development bond vehicle to slash its interest costs by almost 50 per cent on up to $500,000 of qualifying debt.
Undoubtedly the opposition will point out that the measure is not available for healthy corporations which, though hard hit by high interest rates, are able to handle their debt load. We acknowledge this fact, but we do not feel the need to apologize for it. The government's interest rate policy would be severely undermined if all small businesses were insulated from its effects. The assistance provided was reserved for those who needed it most.
However, in order to help our economy to recover its former strength and vigour, provision was made in the small business development bond program to assist all small businesses to expand their operations. Thus, even healthy businesses can benefit from the interest rate relief afforded by the program if they use the funds obtained to build new structures, to purchase new equipment, or to carry out scientific research and development. In this manner we hope to foster growth in our economy and to lower levels of unemployment. The measure was restricted to new capital asset purchases in an effort to stimulate simultaneously the manufacturing sector.
The opposition suggested that the measure be made available to unincorporated businesses. The nature of unincorporated businesses is such that it would be very difficult to ensure that borrowed funds were used for permitted purposes, since even the separation of business and personal assets is often unclear in the case of unincorporated businesses.
Small Business
Further, complex rules would be required to assess the smallness of an unincorporated business, whereas well-known rules already exist to accomplish this objective in respect of incorporated businesses.
I must also point out that the incorporation of the business is now a simple and relatively inexpensive operation. In addition, rules were provided in the small business development bond legislation to permit qualifying assets acquired by unincorporated businesses to qualify when transferred to a newly incorporated company. Further, the existing tax law permits assets to be transferred without tax costs into a new company. In the case of unincorporated farmers and small family businesses, it provides parallel treatment for the intergenerational transfer of shares of a family farm or small business corporation. Thus, there appears to be no valid reason to introduce further complexity into the small business development bond legislation by creating rules for unincorporated businesses.
The suggestion has also been made that the measure be expanded to cover working capital loans. The revenue costs associated with an unlimited expansion to working capital loans are very significant. Our estimates indicate that such costs could attain several million dollars. As indicated, the measure was not intended to be a general interest rate subsidy. Such a subsidy would conflict with the government's over-all policy to reduce inflation. It was designed solely to provide relief in those cases where it was most needed, that is where there was genuine financial difficulty, and most desirable, that is where capital expansion and scientific research were to be done. The preceding considerations are equally applicable to all businesses. There is no justification for an extension of the measure to cover the inventory carrying costs of one particular business group.
Although we are unable to provide actual figures, all our sources in the financial community indicate that the small business development bond program has been very widely used by small businesses in all regions of the country and that it can only, at this point in time, be categorized as an unqualified success.
To summarize, it is erroneous to say that the government has failed to assist the small business sector in Canada. It is true that no general interest rate subsidy was made available to the small business sector. However, as indicated previously, relief was provided in those cases where it was most needed and most desirable. A general interest rate subsidy for the small business sector was not provided for two very important reasons. First, such a move would largely undermine the very purpose which present interest rates are intended to serve. Second, such a program would likely cost the government and taxpayers several hundred million dollars. We are not prepared to adopt such a course of action at this time.
In so far as the possible extension of the program is concerned, such a decision requires that we carefully assess whether there is a continued need for the program and whether it is cost effective. It is much too early to attempt to predict whether there will be a need for the program next year. Further, the data required to assess the cost effectiveness of

May 25, 1981
Small Business
the measure is not yet available. These matters will likely be dealt with in the course of our upcoming budget in October.


Some hon. Members:: Hear, hear!


Donald Alex Blenkarn: Mr. Speaker, 1 was most interested in the eulogy given by the hon. member for Guelph (Mr. Schroder). He read the departmental letter most beautifully. He did not give credit where credit is due.
When the small business development bond program was introduced in the House, the government wanted the bond issue ended on last March 31. It was only as a result of one week of tough debate by this side that the government finally relented and made the bond run until the end of December for new investment.
The hon. member for Guelph read a departmental memo. There are rules in the House about reading things. One usually quotes the author. I hope he tells Hansard who the author was so that they can put quotation marks around it.


Mr. Deputy Speaker:: Order, please. The hon. member has delivered his speech and it is not in order to reflect in that sense on it. I invite the hon. member for Mississauga South (Mr. Blenkarn) to keep his remarks in the conventional parliamentary context.


Donald Alex Blenkarn: Certainly I want to keep my remarks in proper parliamentary context, Mr. Speaker. When I came back from my recent trip with the House committee on fiscal arrangements, I received a wonderful booklet; Mr. Speaker probably received it too. It is entitled: "The Government of Canada and the small business". I whipped over to the section entitled: "getting started". It is a fine publication. It is in both languages, of course. It is pocket size. It reads:
Although the FBDB assists businesses of almost every type and size, special emphasis is put on helping smaller enterprises. In fact, 90 per cent of the 16,500 loans it authorized in 1979 were for $100,000 or less-
The last time I talked to the FDBD, it indicated that it made loans to businessmen at four points over prime. Their prime rate is four points over prime. Its prime rate is 23'/2 per cent. Its rate for loans which are a bit risky is six points over prime-only 25'/2 per cent! That is the kind of help this government advertises as giving to small business. Mr. Speaker, that is the kind of help that Household Finance used to offer. Superior Discount used to offer the same kind of help. Those are the kinds of rates that you would go to jail for if you were part of the mafia. This is the brochure the Minister of Finance (Mr. MacEachen) hands out in all seriousness. It is fancy, and well-printed. There are coloured pictures in it of young people who are getting along. Household Finance ads used to look like this. It looks like great stuff. This is the kind of help we receive from the Government of Canada for small business.
In order to borrow $60 million of fresh money on Thursday last, the Government of Canada renewed about $1 billion worth of treasury bills. To borrow $60 million worth of fresh
money the government had to bid the rate up to 18.1 per cent. Why did it do that? It wanted to preserve the validity of the Canadian dollar. It wanted to ensure that we did not have a devaluation of our dollar so that the Canadian dollar would remain at about 83.5 cents. So the Government of Canada went out into the marketplace and paid 3 per cent more than the government of the United States had to pay on equal security. Of course we could say that the credit of the Government of Canada is that much worse than the credit of the government of the United States. With our natural resources maybe our credit is worse than the United States.


Dave Nickerson: Of course it is worse. Look at the kind of government we have.


Donald Alex Blenkarn: My friend says of course it is worse than the United States. The truth of the matter is that we paid 3 per cent more than the government of the United States paid for money because we do not manage our affairs in Canada properly and because people need that kind of return in order to invest in Canada. This is because we do not have an energy policy which means anything to anybody, because we have a government which drives investors away from the private market. This is what our Prime Minister (Mr. Trudeau) did when he tried to drive investors away from the Canada Development Corporation. Of course we have to pay more- because we have to bribe people to bring their money to Canada.


An hon. Member:: They retire here.


Donald Alex Blenkarn: The hon. member opposite says they retire here. They don't retire here, they retire in a great many other places, but not necessarily here. The hon. member opposite will have to retire soon, when his constituents begin to realize what kind of government he is sponsoring.
Sir, what happens with the prime rate? The Government of Canada creates an interest rate and the banks immediately follow. So, we have a 19.5 per cent prime rate. Let us look at how that works with respect to small business. A small businessman goes to his banker and says, "I need a line of credit for 1981." Let us say that he receives approval for a line of credit of $300,000, which is not that much today. The banker says, "The rate of interest you will have to pay is 1V2 over prime." When the small businessman made that arrangement in September of last year, he could have had his interest factor somewhere around 13.5 per cent. Today he is paying 21 per cent. How can he make a profit at 21 per cent? There is no way he can.
The other day I was examining a balance sheet and a proposal for some clients who were organizing the purchase of a business through my law firm. I was giving them advice on the proposal. The business was earning 16.5 per cent. Not very long ago that would have been a pretty good business. But today anyone who bought that kind of business would have to have scrambled eggs for brains. It would be more sensible to go out and buy treasury bills at 18.81 per cent rather than to invest in Canada. That is certainly what is being done. Why is
May 25, 1981

that the case? It need not be the caSe, but it is. This is so because of the totally inept financial leadership that we have seen in this country.
When we get into this kind of situation, we are asked by the Minister of Finance to supply some alternative. In the motion before us we have suggested to the minister that here is a tax expenditure method like the small business development bond. We have suggested that he expand the purpose of that bond to allow small businessmen the use of it for inventory, for accounts receivable or for working capital. The Minister of Finance says, "My goodness, my treasury will be raided." But does he talk that way when he allows foreign investors to buy Government of Canada securities, foreign investors who pay no withholding tax and no income tax to Canada when those securities are bought and when interest is received from Canada on them? Not in the least. He said that is quite all right. In fact, foreign investors can come into this country, buy bonds, even corporate ones, and pay no income tax on the interest received from Canada. But when a small businessman wants to borrow from his bank the minister says, "My goodness, you will tear my budget apart. You will rip me asunder." Mr. Speaker, the minister says that the small businessman is not entitled to the same advantages that the big boys are entitled to because this government wants to tax, tax and tax small business since it is not prepared to be imaginative in financing the small businesses of this country. That is why interest rates are between 23 and 25 per cent at the Federal Business Development Bank. That is why we have two situations occurring throughout the country. We have big business able to swallow up the little guys because it has the credit to go to the banks and borrow the money for takeovers, while small business can either try to pass the cost of credit on to consumers or go bust. And the very nature of small business is that there are a number of little fellows in the game competing with one another. The result of this high interest rate policy is that only the very strong will survive-the weak will perish and prices will rise.
When the government says that this interest rate policy is an anti-inflation policy, it is really saying that it is a big business policy, a high price policy-a policy in favour of inflation. There is only one way that business can survive with this kind of policy, and that is to raise prices. If it does not raise prices, it will go bust. That is the result of the high interest policy with which we are faced today.
[ Translation]


Mr. Deputy Speaker:: Order, please. The debate being concluded, pursuant to Section (11) of Standing Order 58, the proceedings on the motion now before the House have expired.
Adjournment Debate



PROCEEDINGS ON ADJOURNMENT MOTION

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

Donald W. Munro: Mr. Speaker, in reply to a question I put to him on April 13 about missing documents in the Taschereau-Mackenzie King papers, the Solicitor General (Mr. Kaplan) indicated to me, as reported at page 9197 of Hansard, without so much as batting an eyelid, that his interest in the question was more historical than political because, he said, the loss of one of Mackenzie King's diaries was recorded years ago.
Has it occurred to him to be a little curious about why the diary should have disappeared in 1947? Is he so sure that the Taschereau documentation is complete? If that documentation reveals gaps, what does he propose to do?
Is the man naive? Has he learned nothing from interwar history, or more particularly, from post-war history? Does he give no credence to what those outstanding Russian dissidents, Aleksandr Solzhenitsyn and Andrei Sakharov have been saying about Soviet threats to the west for the past decade or so-not the nuclear threat, but the threat to our social fabric and to our economic organization that the Soviet Union and its workers are set on destroying one way or another? Does he discount such pleas, such urgings, such warnings as mere rhetoric spawned in the minds of overwrought neurotics? Has he written Solzhenitsyn and Sakharov off as kooks? He is ready enough to charge the Soviet Union with bad faith when it comes to mistreating their citizens and denying exit permits to the Shumok's and the Shcharansky's of this world. Why does he refuse to believe the Soviet Union when it says to the West, "We'll bury you"? Why should he berate them in one instance and be ready to exonerate them in the other?
Has he read Sakharov's "Letter from Exile" written in exile in Gorky in May, 1980, and smuggled out of the Soviet Union to appear in print in the New York Times Magazine Supplement on June 8, 1980? Does he consider that Sakharov is a raving lunatic when he lists the four groups of citizens in the west who, by reason of their positions in government, in the industrial sector and in the media, are able to promote Soviet influence and expansionist goals? Or does he hold that the Sakharov letter is a forgery? He may have forgotten that Gouzenko said as much in a letter published on October 12, 1968, in the Congressional Record, 20 years after giving evidence in Ottawa.
Why should he think Canada is immune from subversion? Does the loss of documents relating to subversion not make him feel just a little, tiny bit uncomfortable? Is he really

May 25, 1981
Adjournment Debate
concerned with history and with personal privacy, as he says in answer to my supplementary question? Has he not thought of the implications of the losses for the nation's security? How has he come to convince himself, given the loss of strategic documentation, and for other reasons, that there are no moles at work at various levels in Canada's government service? Strategically important documents do not disappear on their own. They need a helping hand. Whose hand was at work and is it still at work? Is he not concerned about the apparent indifference of the government in determining whether those moles are not still burrowing away? Where are they located or is he so blind because he has been hoodwinked into believing there are no such moles? How naive can the Solicitor General be? Has it not struck him and the Canadian people that, since 1945, Canada is the only major western country which has not had a first-rate spy scandal? To what do we owe this special immunity? I lay this at the door of the government's indifference. It is purblindness or even perversity, whichever is the worst. There may even be a more sinister explanation. Are those moles in Canada being protected by persons in positions of influence?
Britain has had its Philbys, its Burgesses and its MacLeans. More recently it has had its Blunts, and now a shadow is cast over another prominent British secret agent. The Germans have had their problems too, as have the U.S.A. and Australia. Are Canadians such dedicated patriots that we have prevented infiltration entirely? That is difficult to credit. Given our strategic position geographically and politically in the western world, Canada cannot be anything else but a prime target for infiltration and subversion unless, of course, suspicion about our moles had made our friends unwilling to show us any vital secrets. I fear for the future of this country when I am obliged to note the attitude of this government to the live threat confronting us. I am at a loss to know how to shake it up. I am the more fearful when I recall that 35 years ago, the Tas-chereau report of the Gouzenko investigation mentioned the presence of several spy rings in Canada and referred to the difficulty in identifying the members of more than one of them, namely the Zabotin Ring-


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


Donald W. Munro: Where are the other rings and why have they not been discovered?


Norman Kelly: Mr. Speaker, we could be here all night if we all attempted to address the broad issues raised by the hon. gentleman opposite. Therefore, I shall restrict my remarks specifically to one portion of his address, namely the Taschereau commission papers.
I am pleased to respond to the question raised by the hon. member for Esquimalt-Saanich (Mr. Munro). In his question of April 13, 1981, the hon. member asked several questions relating to the so-called missing Taschereau commission
papers and the so-called missing Mackenzie King diaries. Specifically, the hon. member asked why the minister and his colleagues were "so indifferent to the disappearance of these documents." He also asked for an assurance that an inquiry was taking place within the department and in the department of the Secretary of State, "to make sure every possible clue is being followed up to find out where these documents might be." The minister has asked officials in his department and in other departments of the Government of Canada to attempt to determine the exact composition and present disposition of the documentation relating to the Taschereau commission and the papers of the late prime minister.
It has been determined that there are four known copies of the transcripts of the Taschereau-Kellock royal commission. One copy is divided into ten volumes with two indices and comprises the testimony of 110 witnesses recorded in 6,042 pages. This copy was retained by the Privy Council office until 1963, and then transferred to the Public Archives. It was retrieved by the Privy Council office in 1976 for examination, and returned again in 1978 to the Public Archives. It was withdrawn once again by the Privy Council office in March, 1981, and is the document currently under review for the purposes of eventual publication. This document is complete, and there are no missing sections.
Copies two and three are divided into 49 volumes and both are located at the RCMP archives. These documents are complete. I wish to notify hon. members that the exhibits and miscellaneous papers of the Taschereau-Kellock commission, involving some 601 original statements, personal notebooks of persons interviewed by the commission, etc., are also stored in RCMP archives.


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


Donald W. Munro: Give him another minute.


SUPPLY AND SERVICES-INQUIRY WHETHER FIRE ENGINE CONTRACT HAS BEEN AWARDED TO WALTER TRUCK CANADA
[Stage Direction]

Mr. David Kilgour (Edmonton-Strathcona):: Mr. Speaker, last Thursday, I asked a question of the Minister of Supply and Services (Mr. Blais) about the award of a fire engine contract in connection with the Walter Truck affair. The contract has been awarded to the Walter Truck Canada Company, and I thought that I had found certain facts which deserved the attention of the House. The Department of National Defence needed these special crash trucks and the order amounted to $6 million for 32 trucks. The lowest bidder was the firm les Camions Pierre Thibault Inc., of Pierreville, in Quebec, which has a well-established reputation, good Canadian content and the required expertise.
The second lowest bidder was the Walter Truck Canada Company, from Ville D'Ajou, in Quebec. This company was
May 25, 1981

purchased at the time when the bids were submitted, it had never built fire engines such as those requested and it had neither the staff nor the expertise required when the bid was made. The only thing they had in hand were the plans for a fire truck almost identical to that requested, and indeed the plans were bought from a bankrupt American company. If I may be allowed a comparison, let us say that the Walter Truck Company, at the time of tendering, was as well equipped as any private individual in Canada having in hand the plans for a warship which would meet the requirements of a Supply and Services order. That individual could be awarded the contract without any previous experience in shipbuilding. The least we could say is that such tendering practices are unbelievable. To my supplementary question in this House, the minister answered as follows, and I quote:
-the contract was awarded to the Walter Truck Canada Company because it did guarantee more Canadian content than the lowest bid which was rejected.
In a press interview, the president of the Walter Truck Company, Mr. Georges Laporte, stated on November 11, 1980, he had the plans from an American company and the Canadian content was only 62 per cent, while the Thibault trucks had a 70 per cent content.
As the saying goes in trade talk, it is the pump that makes the fire truck. The Walter pump is made in the U.S.A., while the Thibault pump is manufactured here in Canada. The Pierre Thibault company have been manufacturing all kinds of fire trucks for more than 72 years. The Walter Truck Canada Company is a recently established firm which as of the time tenders were called had never built anything else but snow-plows.
The thought of questioning the integrity of our officials never occurred to me. I was myself a civil servant for ten years and I am sure that they correctly performed the work that they were asked to do. However, one may wonder whether at the time tenders were called there was not a lack of information or at least of flexibility which did not allow for a more serious perusal of that tender nor a greater stress on the benefit of experience, technique and the more competitive prices of Pierre Thibault Inc.
Last Thursday, in reply to a question I asked him, the Minister of Supply and Services said that Walter Truck Canada had a greater Canadian content than Pierre Thibault Inc., that being one of the reasons why it was chosen.
Now, I would like to say, Mr. Speaker, in the few minutes I have left, that that argument simply does not hold water. This company's Canadian content is only 62 per cent. Thibault, on the other hand, states that the Canadian content of its trucks is 70 per cent. Is it the kind of Canadian content that is considered?
This is the answer the minister gave to my first question, and I quote:
-the bids filed were very thoroughly examined.
I wonder, in closing, Mr. Speaker, whether the minister would consider asking for a review by an independent
Adjournment Debate
engineering firm to ascertain the quality of the trucks submitted and to determine which is the better one.


Norman Kelly: Mr. Speaker, I want to preface my remarks by saying I am pleased the hon. member has desisted from implying that there has been any wrongdoing by officials of the Department of Supply and Services. That certainly was his original intent and I am delighted now that he has publicly recanted.


David Kilgour: On a point of order, Mr. Speaker.


Mr. Deputy Speaker:: I recognize the hon. member for Edmonton-Strathcona (Mr. Kilgour) on a point of order. At this stage of the proceedings points of order are rarely entertained, but in these circumstances I will recognize the hon. member.


David Kilgour: My opinion concerning the Canadian content is still the same. Mr. Speaker, I have never suggested that the officials were guilty of anything-


Mr. Deputy Speaker:: Order, please. I recognize the Parliamentary Secretary to the Minister of Supply and Services (Mr. Kelly).


Norman Kelly: By way of elaboration, Mr. Speaker, let me say that I think I stated very clearly that the hon. member implied that very strongly in his statement in the House earlier, and he certainly implied it during his appearance at the Miscellaneous Estimates Committee this evening.
Everyone in this House should know that no government at any level of major jurisdiction accepts the lowest bid automatically. The bid that is considered acceptable is the bid that is the lowest and that is compatible with the specifications of the contract. In this particular instance, the Walter Truck company submitted the lowest bid which met the specifications. The specification was that the bidder present to the government evidence of a foam system that was tried and true. The company did that, whereas the other bidder did not. There was absolutely nothing untoward about this particular bid. Different contracts at times carry different specifications. In this instance the specifications were met and the contract was offered to the lowest bidder. Everything was above board and according to the practices of this government and every other government which is involved in the bidding or tendering process in Canada.


HUMAN RIGHTS AND INDIAN AFFAIRS-1. INTRODUCTION OF LEGISLATION TO END DISCRIMINATION AGAINST INDIAN WOMEN. 2. REQUEST FOR INCREASE IN BAND RESOURCES
James Douglas Manly: Mr. Speaker, on April 6 I asked the Secretary of State for External

May 25, 1981
Adjournment Debate
Affairs (Mr. MacGuigan) and the Minister of Indian Affairs and Northern Development (Mr. Munro) about Canada's commitment to the United Nation's Human Rights Committee. Last November Canada indicated to the committee that it would introduce legislation by mid-1981 to end the discrimination against Indian women which now exists under the Indian Act.
In response to my question, the minister referred once again to his "powers under the Indian Act to set aside those provisions which discriminate against status women who marry white men and lose their status" whenever a band chief and council passed resolutions asking him to do so. The minister said:
We have received some of these resolutions now, and I am acting on them.
That same day, April 6, 1981, in response to a question asked in the Standing Committee on Indian Affairs and Northern Development on April 2, 1981, a departmental official wrote:
Unfortunately we have not been able to act on any of these requests. Simply removing application of Section 12(l)(b) will not achieve the minister's objective of placing Indian women who marry non-Indians on equal footing with Indian men who marry non-Indians. The Department of Justice has not as yet been able to determine which sections can be removed to achieve this goal.
Obviously when the minister promised to use Section 4 of the Indian Act to get around the ugly fact of discrimination, he was either perpetrating a fraud or he did not know what he was talking about.
In the same way, the Department of External Affairs deceived the United Nations Human Rights Committee when it suggested mid-1981 as the time when legislation would be introduced to eliminate this discrimination. On May 12 when the Minister of Indian Affairs and Northern Development appeared before the committee, he finally admitted that there would be no such legislation by mid-1981. Rather, he talked about a three-year period while we are waiting for the Charter of Rights and Freedoms to come into effect.
I would be interested in knowing if Canada is going to revise the answer it gave to the United Nations Human Rights Committee. In November the government said to that committee that the legislation would be tabled by mid-1981. Last summer the Prime Minister (Mr. Trudeau) said that Indian women would have to wait one or two years more for justice. Now the minister tells us not to worry and that we have a period of three years to find a solution to this problem. Is Canada going to go to the United Nations and inform it about this change in its intentions? I agree with the minister that the problem is complex and that in our desire to do justice to Indian women we do not want to ride roughshod over the rights of the Indian people as a whole. But the Canadian government's failure to act will not make the problem go away. Instead, it will continue to fester until it erupts in a manner which will hurt all Indian people.
We in our party do not want to see a solution imposed. We hope that by a process of negotiation, this discrimination can
be eliminated quickly without doing violence to the Indian people. More and more of the Indian people themselves, both men and women, are speaking up on this matter and urging that the government take action.
My question is: when will the government show some leadership and some initiative to end this discrimination? Or is it going to continue a policy of drift and indecision and of promising one thing to the United Nations, something else to the House of Commons and something else again to the Indian people? I fear that unless the government does show leadership, it will end up with a crisis on its hands and it will act in a stupid, unthinking manner which will only make matters worse.
When will the government show some leadership and sit down with Indian organizations, including Indian women's organizations, to erase this black mark against human rights in Canada?


Norman Kelly: Mr. Speaker, Canada's response to the questions from the United Nations Human Rights Committee arising from the submission of Sandra Lovelace and her loss of Indian status as a result of her marriage to a non-Indian under section 12(1 )(b) of the Indian Act was forwarded by the Government of Canada in November, 1980. In the course of that response, the federal government outlined the nature of the situation facing Indian women marrying non-Indian men and, in particular, referred to statements made by Ms Lovelace herself concerning her relationships with the Tobique Indian Band Council, particularly in respect of housing on the reserve.
In addition, the question of what steps the Government of Canada was contemplating in respect of section 12(1 )(b) was asked. The government's reply indicated that there was a commitment to end discrimination based upon sex against Indian women, and further outlined that any future revisions to the Indian Act would address this question in such a way that provisions in the act would apply equally to both Indian men and Indian women.
Some of the proposed items under consideration were referred to as well as the fact that additional revision concerning local Indian band government was also being considered at this time. The nature of this legislation which my colleague, the Minister of Indian Affairs and Northern Development (Mr. Munro), has referred to on a number of occasions in this chamber would be enabling legislation under which individual Indian bands could choose to operate under a newly legislated form of Indian government giving them responsibility and authority for their own social, economic and cultural development at the local band level.
The response to the United Nations Human Rights Committee specifically stated that one of the items being considered under that enabling legislation referred to band control over membership. It is anticipated that any such band control would also be exercised on the basis of the application of uniform, non-discriminatory bylaws concerning membership.
May 25. 1981

The government's reply indicated that it hoped to present legislation containing non-discriminatory membership provisions to the House during 1981. As the members are aware, the Prime Minister (Mr. Trudeau) has also referred to the fact that it is this government's intention to seek general Indian agreement on revisions to these sections of the Indian Act, and he hoped that such an agreement could be obtained within the next year or so. If it continues to be difficult to achieve such a consensus, then the Prime Minister also indicated that the
Adjournment Debate
government would be prepared to move on its own accord in introducing such revisions to the Indian Act.


Mr. Deputy Speaker:: Order, please. A motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at two o'clock p.m.
At 10.26 p.m. the House adjourned, without question put, pursuant to Standing Order.

Tuesday, May 26, 1981