1982-03-22

ROUTINE PROCEEDINGS


Mr. Donald W. Munro (Esquimalt-Saanich):: Madam Speaker, as is usual on the first sitting of the House following the first day of spring, I rise to invite all hon. members to enjoy the evidences of spring symbolized by the daffodils from Esquimalt-Saanich available in the lobbies, and to seek their support in favour of this motion, which is seconded by the hon. member for Carleton-Charlotte (Mr. McCain):
That this House urge the government, in close consultation with the Horticultural Council of Canada and other producer spokesmen, to ensure that Canadian producers of flowers, vegetables, fruits, fish and other natural products shall not be forever disadvantaged as they now are by the preferential freight rates, particularly air freight rates, accorded by their governments or national airlines to some offshore suppliers of these products to the Canadian market.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


GOVERNMENT OF CANADA
Mr. Stan Darling (Parry Sound-Muskoka):: Madam Speaker, earlier this month an article in the American Wall Street Journal revealed that last year the Canadian government spent $58 million on advertising itself. This level of expenditure placed the government not only as the number one advertiser in Canada, higher than General Foods, but at the top of a list of all western nations, including the United States, based upon the percentage of each nation's total advertising spending. This leads me to move, seconded by the hon. member for Brampton-Georgetown (Mr. McDermid):
That this government immediately cease these costly, self-aggrandizement programs and use the millions of dollars saved to provide urgent and much needed assistance to the thousands of Canadians who have lost or are losing their jobs, their homes, their farms and their businesses.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ASTRA TRUST
Mr. Joe Reid (St. Catharines):: Madam Speaker, an interim distribution of the assets of the federally incorporated Astra Trust Company is now under way with the federal government receiving almost 92 per cent of the proceeds. In these hard-pressed times when the government is already gleefully taxing away the retirement savings of people, I move, seconded by the hon. member for Erie (Mr. Fretz):
That the government first look after Canadian investors who have lost their savings in this fiasco, rather than scratch and claw its way through the courts to claim a lion's share of the Astra Trust pie.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ALLEGED CAVALIER ATTITUDE OF MINISTER CONCERNING
Mr. Edward Broadbent (Oshawa):: Madam Speaker, 1 rise on a matter of urgent and pressing necessity, under the provisions of Standing Order 43.
Whereas a resolution proposed by Quebec Liberal delegates at a convention in Trois-Rivieres on the week-end, asking the government to make a 25 per cent cut in interest rates for farmers, small businesses and property owners was headed off as a result of action taken by the Minister of Energy, Mines and Resources (Mr. Lalonde) I move, seconded by the hon. member for Hamilton Mountain (Mr. Deans):

March 22, 1982
That this House censure the Minister of Energy, Mines and Resources for his cavalier attitude to problems raised by militant Liberals from Quebec.


Madam Speaker:: Order, please! This motion requires the unanimous consent of the Elouse. Is there unanimous consent for this motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


BANKS AND BANKING
Mr. Gordon Taylor (Bow River):: Madam Speaker, some of the banks today are charging compound interest on long-term loans on homes and land. As a result a person, after paying interest for a number of years, finds that he owes almost as much as he owed in the beginning and, in some cases, a little more. This is most unfair and actually is worse than piracy on the high seas. Therefore I move, seconded by the hon. member for Esquimalt-Saanich (Mr. Munro):
That the government investigate this practice immediately with a view to stopping this robbery of our people.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FITNESS AND AMATEUR SPORTS
Hon. Allan B. McKinnon (Victoria):: Madam Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. Whereas on Saturday, March 20, the Victoria Vikings won, for an unprecedented third consecutive time, the Canadian interuniversity athletic union men's basketball title with a 74-60 victory over St. Mary's Huskies of Halifax, and whereas the University of Victoria women's team, the Vikettes, earlier this month also captured, for the third consecutive time, the women's national title, I move, seconded by the hon. member for Esquimalt-Saanich (Mr. Munro):
That the House send a message of congratulations to the Victoria Vikings and the Victoria Vikettes and their coaches, Mr. and Mrs. Ken and Kathy Shields.


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


Some hon. Members:: Agreed.


Madam Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. Dave Nickerson (Western Arctic):: Madam Speaker, whereas the Minister of Finance (Mr. MacEachen) has obdurately maintained that his harsh budgetary and tax measures were necessary to control inflation, and whereas latest figures show that this policy is not working and that inflation continues to run rampant, I move, seconded by the hon. member for Brampton-Georgetown (Mr. McDermid):
That the Minister of Finance now recognize the futility of his policies and that, on failing to do so, he be replaced by the Minister of State, the Minister of National Health and Welfare, or the Solicitor General.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NUCLEAR ARMAMENTS
Miss Pauline Jewett (New Westminster-Coquitlam):: Madam Speaker, I rise on a matter of urgent and pressing necessity under the provision of Standing Order 43. In light of the dramatic escalation of the nuclear arms race; in light, particularly, of the development and planned deployment of the Cruise missile, a new weapon with great sophistication, accuracy, undetectability and potential "first strike" use; in light of the fact that two of our five NATO partners that have been asked to base these missiles within their borders have so far refused to agree; and in light of the need both to suffocate the nuclear arms race and prevent the Soviet Union from seeking a weapon equivalent to the Cruise missile, I move, seconded by the hon. member for Saskatoon East (Mr. Ogle):
That this House endorse the Prime Minister's strategy of nuclear suffocation as presented to the United Nations in 1978, take note of the refusal of two NATO partners, the Netherlands and Belgium, to have the Cruise missile deployed on their soil, and urge that Canada, in the interest of freezing the nuclear arms race, refuse to allow the testing of this new generation of nuclear weapons on Canadian soil.


Madam Speaker:: Is there unanimous consent for this motion?
March 22, 1982


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE ECONOMY
Mr. David Kilgour (Edmonton-Strathcona):: Madam
Speaker, I rise on a matter of urgent and pressing necessity, under the provisions of Standing Order 43.
Whereas present interest rates set by the government through the Bank of Canada are creating tremendous problems for Canadians, and especially for farmers, small and medium-sized businesses and home owners and renters; whereas the adoption of a resolution in favour of reducing interest rates, moved by the member for Terrebonne (Mr. Comtois), was rejected by the Minister of Energy, Mines and Resources (Mr. Lalonde) last Saturday at a convention of the Quebec wing of the Liberal Party of Canada, 1 move, seconded by the hon. member for Joliette (Mr. La Salle):
That the Minister of Energy, Mines and Resources and the entire cabinet spend some time with Canadians across the country to see for themselves the disastrous effects of their high interest rate policy.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



RAILWAYS


Mr. Mark Rose (Mission-Port Moody):: Madam Speaker, I rise under the provisions of Standing Order 43. There is an urgent need for commuter rail service to begin in the B.C. lower mainland as soon as possible. One impediment to establishing this important transportation alternative is the reported demand by CPR for $30 million to be used for track upgrading. Since the upgraded trackage will be used more for freight than for commuter trains, I move, seconded by the hon. member for New Westminster-Coquitlam (Miss Jewett):
That the Minister of Transport advise the CPR that he condemns this latest attempt by CP to hold Canadians up to ransom, and further that the minister
direct the railway to permit commuter access at a cost no greater than that charged to VIA under the CTC costing regulations.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



FINANCE


Mr. Bill Wright (Calgary North):: Madam Speaker, I rise to move a motion under the provisions of Standing Order 43. The proposed budget of the Minister of Finance (Mr. MacEachen) is a cruel hoax perpetrated on the Canadian people. Nowhere is this more evident than the outrageous suggestion by this finance minister that home owners may be taxed on the imputed rental value of their own homes. I move, seconded by the hon. member for Red Deer (Mr. Towers):
That the government withdraw immediately this Damoclean sword hanging over the heads of Canadian home owners.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



FREEDOM OF SPEECH


Mr. Gordon Towers (Red Deer):: Madam Speaker, I rise to move a motion under the provisions of Standing Order 43. My motion concerns that most basic of freedoms, freedom of speech in Canada. The Liberal government has a double standard, one for the Joyals, the Begins, and the Kaplans, and another for the Neil Frasers. Cabinet ministers enjoy selective immunity while public servants are punisned for their candidness. Therefore I move, seconded by the hon. member for Central Nova (Mr. MacKay):
That the government be reprimanded for violating its own charter of rights in denying Neil Fraser his most basic freedom while allowing its own members off the hook, at the same time retaining their jobs.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

March 22, 1982
Oral Questions



ORAL QUESTION PERIOD


Hon. Bill Jarvis (Perth):: Madam Speaker, my question is for the Minister of Industry, Trade and Commerce who will be aware that, according to figures published today, 38 per cent of employees in the Canadian auto parts industry are unemployed. This industry is not experiencing a recession for its workers; it is a new depression. What exactly does the minister propose to do about this economic and social disgrace?


Hon. Herb Gray (Minister of Industry, Trade and Commerce and Minister of Regional Economic Expansion):: Madam Speaker, we have already taken a number of substantial steps to help deal with the situation even though the problem is linked with the fact that some 80 per cent of our production is exported to the United States, and they are in a major recession.
However, just a few weeks ago we instituted a new program to provide $25 million over the next two years to the auto parts industry to help firms take advantage of new productive opportunities. We have also taken steps to restructure and help continue in operation companies like Chrysler, and Ford in Oakville, which provide important outlets for the production of independent Canadian auto parts manufacturers. So we have taken important steps, and we are going to be taking other steps in the future.


CANADIAN SHARE OF UNITED STATES MARKET
William Herbert Jarvis: Madam Speaker, I draw to the minister's attention that the result of these steps so far has been that 38 out of every 100 auto parts workers are out of a job. Fifteen years ago Canada accounted for 75 per cent of American imports of auto parts; today that that figure is 38 per cent. Under the auto pact our share of the U.S. market has been cut in half and the result, of course, is the human and economic misery which is the by-product of thousands of lost jobs. Is the Minister of Industry, Trade and Commerce content that these jobs be lost permanently and, if not, precisely what does he propose to do to recapture a reasonable share of that market?


Herbert Eser (Herb) Gray: I am
glad my hon. friend has confirmed the importance of the United States market to Canadian auto parts and vehicles, and I want to repeat that there is no question that the severe recession in the United States and the resulting downturn in the market for automobiles has hurt the opportunities for employment of Canadian auto parts workers. We certainly want to see their economy recover, but certainly their economic policy is not something under our control.


An hon. Member:: Thank God.


John Edward Broadbent: That is why they are doing well.


Herbert Eser (Herb) Gray: But we are continuing to work to make sure that, through the auto pact, we continue to have fair access to that market. We are going to continue our consultations with the United States authorities to deal with problem areas we have seen emerge under that pact, so that we continue to have our present and hopefully increasing access to that key market for Canadian auto parts companies and workers.


EFFECT OF CHANGE IN CAPITAL COST ALLOWANCE
William Herbert Jarvis: Madam Speaker, conditions in the United States have absolutely nothing whatsoever to do with the percentage of that market that Canadians get. That the pie is reduced has nothing to do with the share of the pie that Canadians get.
Let me go to the new automobile manufacturing industry where thousands of jobs have also been lost in places like Windsor, Stratford, and dozens of other communities across Canada, as a direct result of the change in the capital cost allowance provisions in last November's budget. Can the minister explain, if he knew beforehand, why he would permit this provision to be included, knowing full well that it will dramatically reduce the number of new car sales in an industry which is more depressed now than it ever has been since World War II, and if he did not know beforehand, does he now support that provision which is costing thousands of Canadians their jobs in order to provide this government with additional tax revenues? In other words, Madam speaker, is he content to justify this federal tax grab on the backs of thousands of unemployed Canadian auto workers?


Herbert Eser (Herb) Gray: Madam Speaker, I do not accept the premise of my hon. friend's question. We on this side have voted-and the majority of the House has voted-to support the budgetary proposals of the Minister of Finance.
I know something more important when it comes to the reality of new investment in the industry, and that is that last week the president of Chrysler Corporation announced that Chrysler was beginning an expansion program for its plants in Windsor, leading to an investment of about half a billion dollars. This is as a result of the action taken by this government in its restructuring agreement with Chrysler.
Just a few weeks earlier, through an initiative by this government, Volkswagen announced it was opening a plant at Barrie and, in addition, sourcing $150 million of parts from independent Canadian parts producers, aimed at bringing some 1,500 new jobs to that important sector. My hon. friend is spinning around. We are taking concrete action in support of maintaining and creating jobs for Canadian auto workers.


William Herbert Jarvis: Tell that to the unemployed, Herb.
March 22, 1982


REQUEST FOR RENEGOTIATION OF CANADA-UNITED STATES AUTO PACT
Joseph Lloyd Reid: Madam Speaker, my question is directed to the same minister. I want to assure him that hon. members on all sides of the House know the importance of the American market, but our share should be bigger.
During the last 17 years since the auto pact was signed we have built up a $20 billion surplus in vehicle assembly, but also an incredible $35 billion deficit in automotive parts, and that is where most jobs are. Studies undertaken by the province of Ontario have indicated that if Canada had a fair share of both the parts and the assembly business in the automotive trade, our fair share would result in an additional 25,000 jobs. An additional 25,000 workers would now be employed. Is the minister sufficiently committed to Canadian jobs for Canadians that he will negotiate a fair share clause in the auto trade agreement?


Herbert Eser (Herb) Gray: Madam Speaker, there has been a substantial increase in employment in the auto parts sector in Canada since the auto pact began. If I am not mistaken, there has been about a doubling of employment in that sector since 1965 when the pact went into operation. At the same time, there is no doubt that while there has been a tremendous increase in investment and production in the Canadian auto parts sector since the pact began, as well as a tremendous increase in exports of auto parts, this deficit situation my hon. friend has mentioned definitely exists, and that is why we have begun consultations with American authorities about problem areas we see connected with the auto pact, and why we intend to continue these consultations actively to bring about solutions in problem areas such as the deficit on auto parts.


QUERY RESPECTING MINISTER'S POSITION
Joseph Lloyd Reid: Madam Speaker, I wonder how I can tell the additional 1,100 persons who were laid off in St. Catharines this morning that the minister has increased employment in the automotive industry. The minister knows that the automotive parts industry is in difficulty because of the policy of his government respecting the importation of motor vehicles and the $15 billion deficit in the auto trade agreement. Is the minister prepared to stand idly by and watch the automobile business disappear just as the electronic business disappeared, and let imports come into this country without even so much as a single Canadian bolt in them?


Gordon Edward Taylor: All he will do is talk about it.


Herbert Eser (Herb) Gray: Madam Speaker, in spite of the lay-offs about which the hon. member is talking I think it is a fact that the over-all number of people working in the auto parts sector in Canada is substantially higher than the number working in that sector when the auto pact began. At the same time, in recent months and years we have taken a number of substantive steps aimed at
Oral Questions
strengthening employment opportunities in the auto parts sector.
I have mentioned the Volkswagen agreement. I have mentioned the programs to strengthen Chrysler and Ford in Oakville. I have mentioned the $25 million auto parts investment program. I have also just mentioned our discussions with the Americans. My colleague, the Minister of State for International Trade, has also been carrying on discussions with the Japanese. Those discussions obviously must be actively pursued, but we are certainly committed to maintaining and continuing efforts to have strong employment levels in the auto parts sector. I think we have taken very strong action in the past, and we will continue to do so in the future.


NEGOTIATIONS WITH JAPANESE GOVERNMENT ON EXPORTATION OF AUTOMOBILES TO CANADA
John Edward Broadbent: Madam Speaker, I have a question for the Secretary of State for External Affairs, but before asking it I would like to say that the Minister of Industry, Trade and Commerce should know very well that in spite of his rhetoric our imbalance in trade in automotive parts is worse now than it was before the auto pact came into being.
I would like to ask the Secretary of State for External Affairs this question, following the statement made in Japan by the minister of trade, prior to the weekend, that he was not concerned even though his proposal for increasing Canadian content in Japanese-produced vehicles was turned down flat, and seeing that the import agreement negotiated between Canada and Japan terminates within a week, and that it did not bother the Minister of State for International Trade that nothing was put in its place. Considering this, and considering that the Japanese increased their sales in the Canadian market, obtaining a 54 per cent increase in one year, is the minister himself more concerned than the Minister of State for International Trade, and can he give us one concrete achievement that was negotiated with the Japanese last week?


Mr. Deans:: Or even last year?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, the Minister of State responsible for international trade and I take exactly the same position.


Some hon. Members:: Oh, oh!


Mark R. MacGuigan: Obviously, it is precisely because we are concerned about the content of the possible arrangement with the Japanese that we have not come to an agreement at this point. We regard the negotiations as continuing, and they will be continuing soon with officials, and probably subsequently again with ministers.

March 22, 1982
Oral Questions
We do not regard the date of April 1 as being of great importance. You will recall that last year the agreement for the year beginning April 1 was reached only in June. Since the Japanese are not disputing whether or not there will be an agreement but what the contents of the agreement will be, we do not deem it to be a matter of great concern whether we reach the agreement by April 1 or not. We are confident that when an agreement is reached it will begin on April 1, and since it will be a year-long agreement, the shipping of automobiles in the early months will, of course, be taken into account in the over-all figures for the year.


CANADIAN CONTENT IN IMPORTS
John Edward Broadbent: Madam Speaker, I remind the minister that the agreement we got last year was supposed to achieve a 4 per cent reduction in imports from Japan, and as a result of the brilliant negotiations conducted by the Liberals it resulted in a 54 per cent increase.
We are a little concerned on this side of the Elouse, I can tell the minister. Can he tell us why it is the case that Brazil has a 95 per cent Brazilian content requirement for foreign automotive companies; that Mexico has a 50 per cent Mexican content requirement for automotive companies; that Australia has an 85 per cent Australian content requirement for companies operating there; and why it is that these countries which are concerned about their industrial future can obtain these objectives when the Canadian government obtains absolutely nothing?


Mark R. MacGuigan: Madam Speaker, I am sure the hon. member would not really ask me to comment-


An hon. Member:: Why not?


Mark R. MacGuigan: -to comment on the policies of other countries.


An hon. Member:: Poland?


Mark R. MacGuigan: It is true that we have-


An hon. Member:: You do it every other time.


Mark R. MacGuigan: It is true that we have not reached agreement with the Japanese up to this point for the next year. The reason we have not is precisely that we are not satisfied with the kind of arrangement which is available and we are negotiating for a better arrangement. I want to assure the hon. member that we will make the best arrangement which is possible with the Japanese, and I would also remind him of the fact that we have a favourable balance of trade with Japan.


JAPANESE TARIFF ON CANADIAN LUMBER EXPORTS
John Edward Broadbent: Madam Speaker, the more than 30,000 laid-off automotive workers will find a lot of reassurance in that answer from the minister.


Some hon. Members:: Oh, oh!


John Edward Broadbent: I would like to switch to a different part of the country also involved in the trade negotiations that are going on in Japan. Right now in British Columbia there are 30 per cent of the workers in the lumber business who are unemployed. Many of them could be at work producing finished lumber for export, in part going to Japan, if it were not for a Japanese 10 per cent tariff which in effect keeps it from coming into the country. How can the government account for its failure in this area? Why could it not get that 10 per cent barrier removed entirely, or substantially reduced, so that some of these British Columbia workers could be put back to work? Finally, when is the government going to come to grips with producing a manufacturing strategy for Canada instead of perpetuating its resource sell-out strategy?


Mark R. MacGuigan: Madam Speaker, I thank the hon. member for making my case. The fact is that our negotiations with Japan do not concern only the automotive industry, although that is a very important part of our negotiations with the Japanese. They concern other products such as the white woods of British Columbia, which he mentions. My colleague was negotiating on those subjects as well with the Japanese.


John Edward Broadbent: He lost that as well.


Mark R. MacGuigan: We have not lost anything. We are negotiating with the Japanese.


INDIAN AFFAIRS
Mr. Lome Greenaway (Cariboo-Chilcotin):: Madam Speaker, my question is for the Minister of National Health and Welfare. She has lost so much weight lately, I am not sure she is in the House.


Some hon. Members:: Hear, hear!


Lorne Everett Greenaway: My question concerns the situation where Indian women marry non-natives and lose their status. I notice in the March 12 edition of the Vancouver Province that the minister had been speaking to the Women's Network in Vancouver. I will read part of one sentence where she said:
-the fact that no Indian woman has lost her status rights by marrying a nonIndian since she was first appointed a minister in 1976.
I thought that was a rather interesting statement. We telephoned the Department of Indian Affairs. In the four years from 1976 to 1979, 1,792 women in Canada lost their status for this very reason. Can the minister clarify this statement for us?


Hon. Monique Begin (Minister of National Health and Welfare):: With pleasure, Madam Speaker, because it is a very
March 22, 1982

important matter. The hon. member has made innuendoes that are not acceptable, beginning with a false quotation which I would like him to check and correct. What I said and repeat to the House, and it can be confirmed by my women colleagues in cabinet in particular, is that in the past five or six years the members of the special committee of council, which is the committee that must approve in order that such loss of status can be enforced, has not approved them while I was a member. I understand it is continuing to do the same. In fact 41 women have been reinstated in the recent past as far as their status is concerned. The hon. member should state the complete situation.


REQUEST FOR CLARIFICATION OF MINISTER'S SPEECH
Lorne Everett Greenaway: Madam Speaker, I anticipated that the minister would probably say I had not given her the facts. I have a copy of the speech she gave on March 5. I quote from page 9:
Well, I will tell you that since 1976, when 1 was first appointed minister ... no Indian woman has lost her status as an Indian.
That is her speech. The same thing was reported in the paper. The minister is telling me I do not have the facts. Last year she told me I did not have the facts when I told her there was tuberculosis in northern Quebec. There is still tuberculosis in northern Quebec. I would ask her to clarify the statement once more for the House.


Monique Bégin: Madam Speaker, I must say that the hon. member's questions are among the most dangerous ones I have ever heard in the House, because of their distortion of the facts. Last year, the hon. member did not say there were cases of tuberculosis, because everyone was aware of this, and we are trying to deal with it. He said that people had died. He is not playing fair ball, and today, he is still distorting the facts. I am going to repeat what I said before. I could even send him a tape. I repeat, for his sake, that the special committee of council and the cabinet committee that has to approve the procedures to which he is referring and which are carried out in the department, did not approve them.


SALES OF LUMBER TO UNITED STATES
Hon. J. Robert Howie (York-Sunbury):: Madam Speaker, my question is for the Minister of Regional Economic Expansion. Whereas employees in over three quarters of the lumber mills in the Atlantic provinces are out of work because of the loss of Canadian and American markets, and in view of the recent upturn in housing starts in the United States, what measures is the minister taking to promote sales of Canadian lumber in the United States and Canada? Specifically, has he
Oral Questions
recommended a reduction in the federal sales tax on building materials as it relates to lumber, to the Minister of Finance?


Herbert Eser (Herb) Gray: Madam Speaker, I do not think it would be appropriate for me to comment here on the range of comments or advice I may give from time to time to the Minister of Finance or that he may give to me from time to time.
The hon. member raises an important point when he says there has been some upturn in housing in the United States. This is a factor that should lead to some improvement in the situation involving sawmills in his province and elsewhere in Canada. In the light of this upturn, our trade commissioners and our offices across the United States will continue and hopefully intensify their efforts to make sure that the good qualities of Canadian lumber are kept in mind by American home builders. I am sure this is the case not only with our efforts in the United States but in other important markets as well.


REGIONAL ECONOMIC EXPANSION
J. Robert Howie: Madam Speaker, I thank the minister for his answer. I suggest to the minister that the range and value of the federal instruments used to promote an economic catch-up have obviously not been equal to the task. I would urge him to explore some further measures along the lines I have suggested to the Minister of Finance.
The Department of Regional Economic Expansion is currently engaged in an expensive media advertising campaign to pat itself on the back for the past glories of DREE before it was dismantled. Instead of using the campaign for self-praise, will the minister use the campaign to encourage industries to locate in the Atlantic provinces, promote the purposes of his programs, and advise Canadian firms across Canada, not just in the Atlantic provinces, how they can obtain incentives and of the real benefits to locating in this most attractive part of Canada?


Herbert Eser (Herb) Gray: Madam Speaker, my hon. friend's question and the premises in it explain why this relatively limited information program is required. DREE has not been dismantled. It is very much in business providing its very worth-while programs to Atlantic Canada and similar regions across our country. Instead of being dismantled, it will eventually be integrated with the Department of Industry, Trade and Commerce to form a larger, even stronger and more active department of regional industrial expansion.
One of the objectives of this information program is to remind those who have made use of the department's service,

March 22, 1982
Oral Questions
and others who may make use of it, of the very strong incentives available and of the very important success stories that have already come to a number of firms in Atlantic Canada because of these programs. Therefore, they should think further of making use of these incentives for the kinds of purposes mentioned by my hon. friend.


REQUEST FOR ASSISTANCE FOR COMPANIES IN NOVA SCOTIA
Hon. Elmer M. MacKay (Central Nova):: Madam Speaker, I have already sent a letter to the minister regarding two important maritime companies. This was over a month ago, and the minister has not yet answered. Now that he has been made aware of the need for rail car orders for Hawker Sidde-ley in Trenton, N.S. and orders for rails from the CNR for the Sydney Steel Corporation, what are the prospects for immediate help for these two important corporations which are so important to the Nova Scotia economy and to the communities concerned? I know that CN has given its usual 88,000-tonne order to SYSCO, but this is just a continuation of past ordering practice. What new incentives of the type the minister talks about is he prepared to give to these two companies which have already had so much assistance from the taxpayers?


Herbert Eser (Herb) Gray: Madam Speaker, if my recollection is correct, the bids from the steel car manufacturing companies in Canada, including the Hawker Siddeley company, were received by the Department of Transport around March 8. They are being actively evaluated with the assistance of my officials. I would anticipate that the results would certainly be to recognize the very good capacities for manufacturing in the firms my hon. friend mentioned.


SHIPBUILDING
Elmer MacIntosh MacKay: Madam Speaker, the minister must also be concerned about the fact that PetroCan is in the process of chartering offshore supply vessels built by the Hyundai shipyards in Korea while east coast shipyards need a great deal of help. What steps is the minister going to take in connection with his important portfolio, and in connection with his cabinet colleagues, to Canadianize not just the energy sector of our economy but also a little bit of our shipbuilding capacity?


Herbert Eser (Herb) Gray: Madam Speaker, Petro-Canada, if I am not mistaken, has recently placed a contract for a supply vessel with the Saint John shipyard in New Brunswick, and as part of our industrial benefits policy we want to make sure that all companies, including Crown companies, are aware of the importance of
providing a full and fair opportunity to Canadian suppliers on a competitive basis, including Canadian shipyards.
We are reviewing a number of options at the present time to make this existing policy which we announced at the end of August even more effective, and the point raised by the hon. member is certainly very much part of our concern and part of our ongoing policy.


BANK OF CANADA
Mr. Nelson A. Riis (Kamloops-Shuswap):: Madam Speaker, last Friday the Governor of the Bank of Canada handed down his sentence to the people of Canada by indicating that he was not prepared to relent from his tight-money and high interest rate policy. This policy has been in effect since 1975, and the Governor himself has acknowledged that inflation remains at the same level today as it did in 1975.
Will the Minister of Finance continue to allow the Governor of the Bank of Canada to tighten the screws even further into the Canadian economy as a result of his present monetary policy?


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, 1 had an opportunity on Friday to deal more extensively with the view of the hon. member which has been so frequently expressed by members of his party, that inflation really is not a matter which should be taken into account and causes no cost to the economy. That view which is so frequently expressed by the members of the New Democratic Party-


Ian Deans: That is quite untrue.


Allan Joseph MacEachen: -puts us miles apart. Therefore I do not know how it would be possible for me, if that is the view of the New Democratic Party, to justify to him the necessity of controlling the money supply in circumstances of an antiinflationary program.


Nelson Andrew Riis: That accusation is absolutely untrue. This party has never taken that position.


MINISTER'S POSITION ON POLICY
Nelson Andrew Riis: Madam Speaker, the minister knows that we are deep into a recession and falling deeper all the time as a result of the present monetary policy. How many Canadians must be unemployed, how many businesses must go bankrupt, how many personal bankruptcies must be filed, how many businesses must go into receivership, how many farms must go into bankruptcy, how many cattlemen will have to sell their herds at fire sale prices-what is the minister's bottom line before he admits that this policy is inappropriate, and when will he start listening to the people of Canada and not to the Governor of the Bank of Canada?
March 22, 1982


Allan Joseph MacEachen: Madam Speaker, the members of the New Democratic Party had an opportunity on Friday to lay before the country their policy to fight inflation.


An hon. Member:: Give us the bottom line.


Allan Joseph MacEachen: The fact of the matter is that they have no concern about inflation. They do not care about inflation.


Ian Deans: That is not true.


Allan Joseph MacEachen: They are prepared to see prices rise even further, because every policy that they recommend would lead to higher prices, more inflation, and higher interest rates.


Ian Deans: No. Lower inflation.


Allan Joseph MacEachen: That would be the result of their policy. It is time that the people of Canada understood how careless the NDP is about high prices. They do not care about that phenomenon in our economy.


Some hon. Members:: Hear, hear!


TOURISM
Miss Aideen Nicholson (Trinity):: Madam Speaker, my question is for the Minister of State responsible for Small Businesses and Tourism. In view of the announcement of the merger of Sunflight Vacations Ltd. and Skylark Holidays Ltd., a step which will create a company more than three times larger than any other company in the industry, with control of more than 50 per cent of the Canadian travel industry, is the minister concerned about the impact both on smaller competitors and on the consumer, and has he referred the matter to his colleague, the Minister of Consumer and Corporate Affairs?


Hon. Charles Lapointe (Minister of State (Small Businesses and Tourism)):: Madam Speaker, I have read about this in various press reports in Canadian newspapers. I share the hon. member's concern for maintaining the competitive value of this industry for the sake of the Canadian consumer, and I have already raised the matter with my colleague, the Minister of Consumer and Corporate Affairs.


AGRICULTURE
Mr. Bert Hargrave (Medicine Hat):: Madam Speaker, my question is for the Minister of Agriculture. The Minister of Agriculture will be aware of an outbreak of foot and mouth disease on an island off the coast of Denmark. He will also be
Oral Questions
aware of the serious concern of the entire cattle and sheep industry about even the thought of that disease. He will also remember, as I do, the outbreak of foot and mouth disease in Regina in 1952. I would ask the minister, therefore, what steps he and his health of animals branch are taking to protect the cattle and sheep industry from any possible outbreak of this disease in our country as a result of the ongoing export of Common Market surplus frozen beef supplies presently coming into Canada from Denmark?


Hon. E. F. Whelan (Minister of Agriculture):: Madam Speaker, we are very concerned about this disease and its outbreak in Denmark. They do not know how it happened. It has been confined to one herd, and not even to the total herd in that farming enterprise. Those animals have been destroyed and every precaution possible has been taken. We have banned all meat products brought into Canada, either frozen or fresh, that are in store. Our records show that none have come to Canada for two months.
If the hon. member has any other evidence, I would like to have it because we are very concerned about what this could do. According to the rules under international trade, I believe they will need to be free of the disease for two years from the time that they discovered this disease in their country before they can export to us again. They follow the same pattern we do with other trading partners. I am told that they believe that this is a reasonable pattern to follow.
It is a disastrous occurrence for Denmark because they depend on the export of agricultural products for their livelihood and the export generally of swine-over three quarters of their production. So, it can be economically disastrous for their country. We sympathize with them because, even as cautious as Denmark or any country can be, it just proves the fact that this can happen.


DANISH BEEF EXPORTS TO CANADA
Herbert Thomas (Bert) Hargrave: Madam Speaker, my supplementary question is to the same minister. I am sure that the minister is aware that there are several million pounds of European Common Market surplus export beef coming from Denmark presently in storage in Canada. What are we doing in Canada with that supply since it is a possible contamination source, and in view of the fact that foot and mouth disease cannot be detected in beef supplies? This is a serious situation. Can the minister say what our policy has been on it, and if he has been in touch with corresponding officers in the United States about this matter?


Eugene Whelan: Madam Speaker, I do not know if they have been in touch with the United States concerning this situation but we have issued an order that all beef and any fresh beef product, whether beef or pork from Denmark, be detained wherever it is in Canada and not allowed to be distributed.

March 22, 1982
Ora! Questions INDIAN AFFAIRS


STATUS OF INDIAN WOMEN MARRYING NON-NATIVES
Mr. F. Oberle (Prince George-Peace River):: Madam Speaker, my question is for the Minister of Indian Affairs and Northern Development and it is supplementary to that asked by my colleague from Cariboo-Chilcotin. The minister knows that there is a requirement for the cabinet to approve the disenfranchisement of Indian women, in other words, the removal from the Indian rolls of women who, by reason of marriage, no longer have status in their reserve. The minister also heard his colleague say that there has not been such cabinet approval since she and her colleague have sat in cabinet since 1976. I would simply ask the minister how he can explain that his department has disenfranchised, not including 1980 figures, 1,792 women since 1976 without cabinet approval.


Hon. John C. Munro (Minister of Indian Affairs and Northern Development):: Madam Speaker, 1976 is going back a few years. Needless to say, the hon. member must have pursued this with the same zeal with my predecessor, the minister in the Conservative government. Having said that, I think the hon. member is well aware of the provisions of that particuliar act of Parliament called the Indian Act which indicates quite clearly that a status Indian woman who marries a non-Indian male loses her status under the Indian Act. There is in addition another discriminatory provision in the Indian Act with respect to the double motherhood clause, as the hon. member is aware.
There is also provision in the Indian Act that allows the minister to exempt application of this particular section but, according to legal opinions, it is only to be exercised very rarely. That is the law that Parliament has approved. I can only assume that the hon. member wishes any minister to obey the laws of Parliament until such time as they are changed. That is the situation as it stands.
I think the best possible way to correct this is the way that I have gone about it. I have sent a notice to every Indian chief and band council in the country saying that if they will give me a band council resolution asking me to use my powers of exemption under the Indian Act not to apply the provision of the Indian Act that results in an Indian woman losing her status, I will obey that direction, so that I could not be accused of arbitrarily flouting the law.
Of course the bottom line solution to the whole question, as the hon. member is well aware, is to amend the Indian Act so that this discriminatory feature can be done away with once and for all.


REQUEST THAT MINISTER TAKE LEGISLATIVE ACTION TO PROTECT INDIAN WOMEN
Frank Oberle: Madam Speaker, the minister knows full well that I do not need a
lecture on what the Indian Act says about this particular problem. The lecture is required by his colleague in cabinet who said that there has not been any disenfranchisement since 1976. In 1980, 1979, 1978, 1977 and 1976 there have been over 2,000.
May I ask the minister how it is possible for his department to proceed with removing Indian women from the rolls without cabinet approval? His colleague said that she is sitting in cabinet and that there has not been any disenfranchisement throughout the country.
What is the minister going to do about this? The time to do something was when the Constitution was passed. What is he going to do now in terms of legislative action, instead of writing to Indian chiefs? How much response has he had from the Indian chiefs? What is he doing in terms of legislative action to remove and redress this incredible disgrace that our country has placed on his shoulders?


John Carr Munro: Madam Speaker, this contrived outrage by the hon. member-


Some hon. Members:: Oh, oh!


Mr. Lewis:: She made the speech.


John Carr Munro: -is really something to behold. There was and is a section in the constitutional provisions which are on the verge of being patriated, that does away with this discrimination once and for all.


Frank Oberle: Nonsense; it does not. You have sold them out. That is what you have done.


John Carr Munro: As I recall, it was that very Constitution containing that provision that every member of the opposition-


Frank Oberle: You sold them out.


John Carr Munro: -opposed, week after week. Perhaps the hon. member would like to face every Indian woman who is going to lose her status and explain why he sat there and opposed the Constitution for so many months.


Some hon. Members:: Hear, hear!


RESPONSE MADE BY MINISTER OF NATIONAL HEALTH AND WELFARE
Right Hon. Joe Clark (Leader of the Opposition):: Madam Speaker, I have a supplementary question for the Minister of Indian Affairs and Northern Development. Was the Minister of National Health and Welfare speaking for the government when she responded to my colleague, the hon. member for Cariboo-Chilcotin?


Monique Bégin: He doesn't know.
March 22, 1982


John Carr Munro: Madam Speaker, 1 would have to read the provisions. I would have to read her speech. I have not read the speech but I will read it and I will be pleased to answer the Leader of the Opposition tomorrow. I do not think it is unreasonable to say that we do not all zealously go around reading each other's speeches. I assume that my colleagues can make a speech, speaking for government authority, and I am assuming that my colleague the Minister of National Health and Welfare did so.
There is a refinement, however, that perhaps the Leader of the Opposition should consider. 1 will check the legality of it, but if my memory serves me right, when a minister does exercise those unique powers of exemption under the Indian Act-which in fact frustrates the application of the Indian Act, which is the discriminatory part-then I believe a special order in council procedure is required. 1 will check that. It may be that this is what my colleague is referring to.
May I conclude by saying that not only is my colleague, the Minister of National Health and Welfare, particularly concerned about this discriminatory feature, but she has been one of the foremost spokesmen in the government for doing away with this discrimination once and for all.


Some hon. Members:: Hear, hear!


GOVERNMENT POLICY
Charles Joseph Clark: Madam Speaker, I was not asking a question about a speech. I was asking whether, when the Minister of National Health and Welfare answered a question posed by the hon. member for Cariboo-Chilcotin in this House today, she was speaking the policy of the government. Can the Minister of Indian Affairs and Northern Development say that?


Monique Bégin: Ask me.


John Carr Munro: Madam Speaker, I have already told the opposition, and 1 am now telling the Leader of the Opposition, what the policy of the government is. Whatever I heard quoted in her speech did not differ from that policy one iota, in my opinion. What I have said is with regard to the fine print in my colleague's speech which was quoted, and knowing the capacity of some hon. members to be rather selective in their quotes, I should like to read the speech and then I will be more than happy to answer the Leader of the Opposition tomorrow.


MINISTER'S STATEMENT
Charles Joseph Clark: Madam Speaker, the government might seek refuge in fine print but the status Indian women have lost their status unnecessarily over the last two years, because this government refused to act, unlike the government I had the honour to lead which was beginning to act in January, 1980.


Some hon. Members:: Hear, hear!
Oral Questions


Charles Joseph Clark: Indeed, this government is still delaying action that would bring equality to Canadian status Indian women.
Let me ask the Minister of National Health and Welfare if her colleague agrees with her when she indicated in the House today that no Indian woman has lost her status since 1976.


Monique Bégin: Madam Speaker, I would be happy to repeat exactly what 1 hope I said in Vancouver since I do not have the transcript of my speech.
I explained to the Women's Network in Vancouver that there is a role that could be actively played everywhere in government in various instances. I used as an example the occasions when my former colleague, Iona Campagnolo, who sat next to me, and I were women ministers sitting in particular on the special committee of council, and used the limited power, it is true, but we used it positively all the time I sat on that committee, and I sat on it since 1976, although I do not sit on it now. We refused the unanimity needed to approve certain losses of status by Indian women. We did that systematically. That was within our power and we exercised it, knowing full well what we were doing. We did that expressing the wish of this government that Section 12 be repealed, and it will be repealed. My colleague, the minister responsible for the status of women, announced that some time ago in this House, and it is being done and will be done in a human way by consultation with the various bands.
I am pleased to have an opportunity to make a correction of some words. I said 41 women were reinstated in their status but 1 made a mistake. I meant 41 bands.
Further to that policy of the government, which the Right Hon. Leader of the Opposition knows very well because his colleague, the hon. member for Kingston and The Islands, subscribed fully to the only action the caucus of women of this House of Commons took, and that this government applied. Forty-one bands have already-


Madam Speaker:: Order, please. Order, please.


NUMBER OF WOMEN AFFECTED
Charles Joseph Clark: Madam Speaker, will the Minister of National Health and Welfare or the Minister of Indian Affairs and Northern Development tell this House how many status Indian women have lost their status since 1976?


John Carr Munro: Madam Speaker, I will get the precise figure, but I can almost assure the Leader of the Opposition that fewer women have lost their status as a result of the policy implemented by this government, when we succeeded his government and applied the policy whereby we met the chief and band council to direct us to use our powers of exemption to prevent Indian women from losing their status.

March 22, 1982
Oral Questions
In examining the record of my immediate predecessor, may I say that not one constructive act was undertaken by the previous government to do anything about this discriminatory feature.


Charles Joseph Clark: Ask native women.


REVIEW OF FEED GRAINS POLICY
Mr. Vic Althouse (Humboldt-Lake Centre):: Madam Speaker, my question is directed to the Minister of Agriculture, and it relates to feed grains policy. In light of the recent announcement of a partial move away from the corn competitive pricing formula and the introduction of subsidy programs to keep stocks available in central and Atlantic Canada through the Canadian Wheat Board, proving that the open market is unable to supply adequate feed supplies, could the minister tell the House if and when he will be conducting a full review of the feed grains policy? When will he be submitting the entire question of the open marketing of feed grains to a plebiscite of producers, as promised when the program was first introduced in the mid-1970s?


Eugene Whelan: Madam Speaker, I disagree with some of the things the hon. member has said. First, there has never been a shortage of feed grain on the feed market for those people who use western feed grain, whether it be in British Columbia or in eastern Canada. The hon. member knows full well that central Canada is more than self-sufficient, and that in part of Ontario and part of western Quebec there is a surplus in grain production. Ontario produces surplus production of about 400,000 tonnes at the present time. This does not mean that they may not use some western grain at different times, but this policy is one which will take out the inequity of grain supplied at the Chicago competitive price by the Canadian Wheat Board. There is still a lot of grain being supplied-and he knows it-by the off-board grain sales, by that operation. We said in the press release we made last week that we would continue to review the feed grains policy. We want to be fair and equitable to all concerned.


FARM STORAGE PROGRAM
Victor Fredrich (Vic) Althouse: Madam Speaker, I note that the minister did not discuss the question of a plebiscite, which was part of the original proposal. However, in addition to that question, I should like to ask the minister what work, if any, has taken place to pursue the proposals for a farm storage program, following the suggestions of the advisory committees to the Canadian Livestock Feed Board and to the Canadian Wheat Board.


Eugene Whelan: Madam Speaker, at the present time, concerning farm storage proposals, 1 do not believe any further action has been taken. As the hon. member knows, the program has worked fairly well in those areas where there has been a shortage of feed grain.
Concerning the plebiscite, the hon. member also knows that it was not a firm part of the agreement. It was a suggested part of the agreement by some people, but the agreement indicated that we would review it. Naturally, we are reviewing the possibility, but not in the great detail of a plebiscite at this time. He knows that full well also.


PETITION
Madam Speaker:: I have the honour to inform the House that the Clerk of the House has laid upon the Table the one hundred and eighty-fifth report of the Clerk of Petitions stating that he has examined the petition presented by the hon. member for North Vancouver-Burnaby (Mr. Cook) on Friday, March 19, 1982, and finds that the petition meets the requirements of the Standing Orders as to form.


STANDING ORDERS
Hon. Yvon Pinard (President of the Privy Council):: Madam Speaker, we have concluded the negotiations commenced immediately after the vote on the motion of the official opposition to adjourn last Wednesday. I am pleased to report that we have reached a major agreement. May I now seek unanimous consent to move the appropriate motion?


Madam Speaker:: Does the House give unanimous consent to the hon. minister to move the motion?


Some hon. Members:: Agreed.
[ Translation]


Yvon Pinard: Madam Speaker, I move, seconded by the hon. member for Yukon (Mr. Nielsen) and by the hon. member for Hamilton Mountain (Mr. Deans):
That the Standing Orders be amended by adding, immediately following Standing Order 75, the following:
75.1(a) The purpose of this Standing Order is to provide for the orderly and
timely consideration of the following proposed bills, to be introduced no later
than april 8, 1982 and to be finally disposed of no later than June 30, 1982:
1.	An act respecting petroleum incentives and Canadian ownership and control determination and to amend the Foreign Investment Review Act;
2.	An act to amend the Petro-Canada Act;
3.	An act to amend the Canada Business Corporations Act;
March 22, 1982

4.	An act to amend the Department of Energy, Mines and Resources Act;
5.	An act to amend the Petroleum Administration Act and to enact provisions related thereto;
6.	An act respecting energy monitoring and to amend the Energy Supplies Emergency Act, 1979 and the Oil Substitution and Conservation Act;
7.	An act to amend the National Energy Board Act (No. 3);
8.	An act respecting motor vehicle fuel consumption standards.
(b)	When the House is considering any of the said bills. Standing Order 31(1) shall not apply and notwithstanding any Standing Order the House shall sit between 6 p.m. and 8 p.m. on Mondays, Tuesdays and Thursdays.
(c)	Maximum cumulative totals of time for debate shall be allotted to the various stages of the said bills as follows: a combined total of 35 hours to the second reading stages and a combined total of 35 hours to the report and third reading stages, to be divided among the parties as set out in subsequent paragraphs of this order.
(d)	When the cumulative total of time for debate by members of a party has reached the limit set out in this order for that party for a given stage of the said bills, no additional member of that party may be recognized for the purposes of debate at that stage of any of the said bills.
(e)	When all parties have exhausted their time allocation for debate at a given stage, or when no more eligible members rise to participate in the debate at that stage, the Speaker shall forthwith put, without further debate, any questions necessary to dispose of that stage of any of the said bills which have not already been disposed of at that stage, and for that purpose any necessary motions, including motions to amend, shall be deemed to have been proposed. For greater clarity, each bill may proceed through its several stages independently, subject to the time limits set out in this order; and a bill may be considered at a subsequent stage notwithstanding that the over-all time limits applicable to an earlier stage have not yet been reached.
(0 Each party shall be entitled to participate in the debate at second reading stage of the said bills for a maximum cumulative total of not more than 21 hours for Progressive Conservative Party members, 7 hours for New Democratic Party members and 7 hours for Liberal Party members.
The Government and the opposition parties shall endeavour to ensure that all the said bills are referred to committee no later than May 1, 1982.
(g)	A Standing Committee on Energy Legislation, consisting of 10 Members to be named at a later date, shall be appointed for the purpose of considering the said bills, and the provisions of Standing Orders 65 and 66 shall apply thereto.
(h)	Notwithstanding any other Standing Order, each of the said bills shall upon completion of second reading be referred to the Standing Committee on Energy Legislation, and each of the said bills shall, subject to paragraph (k) of this order, be reported or deemed to have been reported to the House, with or without amendments, no later than June 4, 1982.
(i)	Each party shall be entitled to participate in the debates at report stage and third reading stage of the said bills for a maximum cumulative total for both stages of not more than 21 hours for Progressive Conservative Party members, 7 hours for New Democratic Party members and 7 hours for Liberal Party members, and each party may apportion this time as between the debates at report stage and third reading stage in such manner as it determines.
(j)	In any case, notwithstanding any other Order of the House, but subject to paragraph (k) of this order, at 15 minutes before the ordinary time of adjournment on June 30, 1982, the Speaker shall, if any of the said bills remain to be disposed of, interrupt the proceedings and put all remaining questions necessary for the passage at all remaining stages of any remaining bills, without further debate or amendment.

(k)	If Parliament is prorogued before all of the said bills have received the royal assent, in the next ensuing session such of the said bills that have not received the royal assent shall, at the request of a minister of the Crown and following concurrence in any relevant Ways and Means motions, be deemed to have been proceeded with at all stages attained in the previous session and
Revision to Standing Orders
restored to their respective status at the time of prorogation, and any evidence adduced by the Standing Committee on Energy Legislation shall be deemed to have been tabled in the House; and the dates set out in paragraphs (f), (h) and (j) shall be read as if they referred to the fifteenth, thirtieth and fiftieth sitting days respectively of the new session; and any time used in the previous session in debate at any stage of the said bills by members of a party shall be deducted from the time allotted to that party by this order.
(l)	This order shall not be construed so as to deprive an independent member of the right to be recognized by the Speaker.
(m)	This Standing Order shall expire and be deleted when the said bills have been finally disposed of by Parliament.
I seek unanimous consent, Madam Speaker, for you to dispense with reading the motion again and for it be approved without delay.


Hon. Erik Nielsen (Yukon):: Madam Speaker, I know the difficulties that are present in the translation of a very complex order such as this, and while consent is immediate for paragraphs (k), (1) and (m) as read in English by the government House leader, if you will forgive me and if the House will be tolerant, 1 will read the rest in order in English because I conducted our discussions in good faith on the basis of English and that is what 1 agreed to. 1 did not get the correct translation. Indeed, some of it did not come across. Therefore, with the indulgence of the House, what we are agreeing to is this:
That the Standing Orders be amended by adding, immediately following Standing Order 75, the following:
75.1(a) The purpose of this Standing Order is to provide for the orderly and timely consideration of the following proposed bills, to be introduced no later than April 8, 1982 and to be finally disposed of no later than June 30, 1982:
1.	An act respecting petroleum incentives and Canadian ownership and control determination and to amend the Foreign Investment Review Act;
2.	An act to amend the Petro-Canada Act;
3.	An act to amend the Canada Business Corporations Act;
4.	An act to amend the Department of Energy, Mines and Resources Act;
5.	An act to amend the Petroleum Administration Act and to enact provisions related thereto;
6.	An act respecting energy monitoring and to amend the Energy Supplies Emergency Act, 1979 and the Oil Substitution and Conservation Act;
7.	An act to amend the National Energy Board Act (No. 3);
8.	An act respecting motor vehicle fuel consumption standards.
(b)	When the House is considering any of the said bills, Standing Order 31(1) shall not apply and notwithstanding any Standing Order the House shall sit between 6 p.m. and 8 p.m. on Mondays, Tuesdays and Thursdays.
(c)	Maximum cumulative totals of time for debate shall be allotted to the various stages of the said bills as follows: a combined total of 35 hours to the second reading stages and a combined total of 35 hours to the report and third reading stages, to be divided among the parties as set out in subsequent paragraphs of this order.
(d)	When the cumulative total of time for debate by members of a party has reached the limit set out in this order for that party for a given stage of the said bills, no additional member of that party may be recognized for the purposes of debate at that stage of any of the said bills.
(e)	When all parties have exhausted their time allocation for debate at a given stage, or when no more eligible members rise to participate in the debate at that stage, the Speaker shall forthwith put, without further debate, any

March 22, 1982
Revision to Standing Orders
questions necessary to dispose of that stage of any of the said bills which have not already been disposed of at that stage, and for that purpose any necessary motions, including motions to amend, shall be deemed to have been proposed. For greater clarity, each bill may proceed through its several stages independently, subject to the time limits set out in this order; and a bill may be considered at a subsequent stage notwithstanding that the over-all time limits applicable to an earlier stage have not yet been reached.
(f)	Each party shall be entitled to participate in the debate at second reading stage of the said bills for a maximum cumulative total of not more than:
21 hours for Progressive Conservative Party members 7 hours for New Democratic Party members 7 hours for Liberal Party members
The government and the opposition parties shall endeavour to ensure that all the said bills are referred to committee no later than May 1, 1982.
(g)	A Standing Committee on Energy Legislation, consisting of 10 members to be named at a later date, shall be appointed for the purpose of considering the said bills, and the provisions of Standing Orders 65 and 66 shall apply thereto.
(h)	Notwithstanding any other Standing Order, each of the said bills shall upon completion of second reading be referred to the Standing Committee on Energy Legislation, and each of the said bills shall, subject to paragraph (k) of this order, be reported or deemed to have been reported to the House, with or without amendments, no later than June 4, 1982.
(i)	Each party shall be entitled to participate in the debates at report stage and third reading stage of the said bills for a maximum cumulative total for both stages of not more than:
21 hours for Progressive Conservative Party members 7 hours for New Democratic Party members 7 hours for Liberal Party members
and each party may apportion this time as between the debates at report stage and third reading stage in such manner as it determines.
(j)	In any case, notwithstanding any other order of the House, but subject to paragraph (k) of this order, at 15 minutes before the ordinary time of adjournement on June 30, 1982, the Speaker shall, if any of the said bills remain to be disposed of, interrupt the proceedings and put all remaining questions necessary for the passage at all remaining stages of any remaining bills, without further debate or amendment.
The remaining clauses of the House order, namely, paragraphs (k), (1) and (m), had already been read in English by the government House leader. What he read reflects accurately the agreement which was reached among the House leaders.


Yvon Pinard: Madam Speaker, for the first time in history we were able to have translation in both official languages of a major complicated and long House order. The opposition House leader saw fit, after having listened to it being read in French, to make sure that it reflected our will and our agreement by reading it in English. I do not mind his doing that, but to be consistent I would like to hear the opposition House leader read paragraphs (k), (1) and (m) in French. If he cannot do that, 1 insist on doing it myself.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Erik Nielsen: Madam Speaker, since my skills are not of a degree to permit me to read those paragraphs in French-I could read them in German but not in French-I will ask my colleague the hon. member for Joliette (Mr. La Salle) to read them in French so that 1 do not fracture the French language. We will, therefore, hear the hon. member for Joliette read paragraphs (k), (I) and (m) in French.


Hon. Roch La Salle (Joliette):: It is with great pleasure, Madam Speaker, that 1 shall respond to the wishes of both sides of the House.
(k)	If Parliament is prorogued before all of the said bills have received the royal assent, in the next ensuing session such of the said bills that have not received the royal assent shall, at the request of a minister of the Crown and following concurrence in any relevant Ways and Means motions, be deemed to have been proceeded with at all stages attained in the previous session and restored to their respective status at the time of prorogation, and any evidence adduced by the Standing Committee on Energy Legislation shall be deemed to have been tabled in the House; and the dates set out in paragraphs (f), (h) and (j) shall be read as if they referred to the fifteenth, thirtieth and fiftieth sitting days respectively of the new session; and any time used in the previous session in debate at any stage of the said bills by members of a party shall be deducted from the time allotted to that party by this order.
(l)	This Order shall not be construed so as to deprive an independent member of the right to be recognized by the Speaker.
(m)	This Standing Order shall expire and be deleted when the said bills have been finally disposed of by Parliament.


Ian Deans: Madam Speaker, I hope this is not the practice that we are going to follow on every occasion; otherwise there would be no purpose in having instant translation, would there?


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Ian Deans: The Standing Order as read and reread in both official languages is exactly as I anticipated it was going to be presented. We support it.
We hope that it might be possible in the future to get the kind of co-operation that was shown over the course of the last few days by all members doing things similar to this with regard to House orders in dealing both with government and opposition business. You can understand, having seen what happened here, why it took us five days.


Madam Speaker:: Does the House give unanimous consent to the motion moved by the President of the Privy Council?


Some hon. Members:: Agreed.


Madam Speaker:: Carried and so ordered.


[Stage Direction]
Motion agreed to.

Madam Speaker:: I have notice of a question of privilege by the hon. member for Victoria (Mr. McKinnon). I must tell him that, from reading his notice, my feeling is very clear that he does hot have a question of privilege. Furthermore, it deals with matters having taken place in a standing committee, and
March 22, 1982

if the hon. member has a grievance and wishes redress he should seek it through the committee, not through the House.


Erik Nielsen: Madam Speaker, I think I understand the nature of the question of privilege the hon. member for Victoria (Mr. McKinnon) intends to raise. While I agree immediately and completely with the Chair that the question of privilege may not now exist, once the committee reports and the evidence is before the House it may well be that at that time the Chair may wish to consider it a valid question of privilege.


Madam Speaker:: The hon. member is quite right. If at a later time this grievance is reported to the House, then it can be discussed in the House.



ROUTINE PROCEEDINGS


Mr. Bill Clarke (Vancouver Quadra):: Madam Speaker, 1 have the honour to present the thirteenth report of the Standing Committee on Public Accounts.
[Editor's Note: For above report, see today's Votes and Proceedings.]


PETITION
Mr. Bruce Halliday (Oxford):: Madam Speaker, it is my duty and privilege today to table a petition signed by concerned citizens of the constituency of Oxford who decry the Prime Minister's (Mr. Trudeau's) weak and lamentable response to the imposition of martial law in Poland. The petitioners feel that the Prime Minister's statements about Poland have given comfort to the enemies of freedom and have been used for propaganda purposes, to the detriment of the Polish people.


CANADA AGRICULTURAL PRODUCTS STANDARDS ACT
Eugene Whelan: for leave to introduce Bill C-98, to amend the Canada Agricultural Products Standards Act.
Order Paper Questions


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. David Smith (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 676, 2,364, 2,701, 3,481, 3,730, 4,035, and 4,055.


Mr. Cossitt: 1.	With reference to the answer to a question by the hon. member for Leeds-Grenville concerning Igor Gouzenko on May 21, 1975 at page 5981 of Hansard, which stated in part "from 1946 to 1962 Mr. Gouzenko was looked after entirely by the Canadian government", is the government aware that Mr. Gouzenko claimed in a press interview with the Toronto Sunday Star of April 13, 1980, that he received nothing from the government in the way of support during the years in question and, if so (a) in what way can the government account for this discrepancy (b) were cheques issued payable to Igor Gouzenko or any members of his family and, if so, were they given to the payees?
2.	Did an Inspector Chick of the RCMP visit Mr. Gouzenko shortly after the question was answered in the House?
3.	To the knowledge of the government, did Inspector Chick tell him that "there'd been a mistake, that politicians talk a lot of baloney" as claimed by Mr. Gouzenko in the Toronto Sunday Start
4.	Was the first pension received by Mr. Gouzenko paid in 1962 by the government?


Hon. Bob Kaplan (Solicitor General):: 1. The government is aware that Mr. Gouzenko claimed in a press interview with the Toronto Sunday Star of April 13, 1980, that he received nothing in the way of support during the years in question.
(a)	The discrepancy would appear to have been the consequence of an administrative error. According to the McDonald commission, which investigated the matter of Mr. Gouzenko's finances, a phrase was omitted from the initial RCMP draft reply. This omission substantially altered the meaning of the reply. However, the commissioners have concluded that no intentional design was apparent to mislead as a result of the answer given in the House of Commons in 1975.
(b)	No cheques were issued payable to Mr. Gouzenko or his family, nor were government funds allocated for the Gouzenko family during the 1946-62 period.
2.	Inspector Chick did not visit Mr. Gouzenko shortly after the question was answered in the House.
3.	No, not to the knowledge of the government.
4.	The first government pension was granted to Mr. Gouzenko in 1962.
15676

March 22, 1982
Order Paper Questions


Mr. Crosby: 1.	Was Canada granted reciprocal status under the Mineral Lands Leasing Act of 1920 in the United States and, if so, for how long has the grant been in force?
2.	Was an application made to Mr. James G. Watt, the secretary of the interior of the United States, to withdraw the grant of reciprocal status on the grounds that Canada no longer grants similar privileges to persons or companies resident in the United States?
3.	Will Canada's ability to obtain and retain reciprocal status under the act be affected by the provisions of Bill C-48 which enacts the Canada Oil and Gas Act?
4.	Did Seagrams Company Limited of Montreal make requests to the Prime Minister or to the government or to any member thereof concerning the possible loss of reciprocal status by Canadians under the act?


Mark R. MacGuigan: 1. Canada was granted reciprocal status under the U.S. Mineral Lands Leasing Act of 1920 (MLLA) before 1936.
2.	On March 26, St. Joe Minerals Corporation petitioned the U.S. secretary of interior to declare Canada a non-reciprocal country under the terms of the MLLA. St. Joe requested "(i) that Canada be declared a non-reciprocal country based on the denial of similar or like privileges to citizens or corporations of this country under FIRA, (ii) if the department of interior cannot order an immediate decision that Canada's current reciprocal status is not valid, then the status should be suspended until the department has an opportunity to evaluate the effect of FIRA and the consequences when the Parliament of Canada passes the Canada Oil and Gas Act, which is discriminatory on its face." This petition will be considered as part of interior's year old study of the MLLA.
3.	Canada's reciprocal status under the MLLA will ultimately be determined by the U.S. government. One of the factors which the administration could choose to consider in the course of their review of the MLLA is the bill enacting the Canada Oil and Gas Act.
4.	The Department of External Affairs is unaware of any requests concerning possible changes to the MLLA regulations made to the Prime Minister, the government or any of its members by Seagram Company Limited of Montreal.


Mr. Cossitt: 1.	Was Mr. Giuseppe Calamusa deported by the Department of Employment and Immigration and. if so, in each case (a) on what date and for what reason (b) did he first illegally enter the country and, if so. by what means?
2.	To the knowledge of the government, does he have a criminal record and, if so, what is the record?
3.	(a) Did he live in the Hamilton-Niagara Falls area and, if so, at what address (b) what are all his other known addresses in Canada, as far as the department is concerned?
4.	(a) On his final illegal re-entry to Canada, did he proceed to the area of Winnipeg, Manitoba (b) was he deported via Emerson, Manitoba and (i) if so, what are all the details (ii) if not, what was the point of deportation?
5.	Did he arrive in the United States after being deported from Emerson and was he immediately presented with a ministerial permit from the Minister of
Employment and Immigration allowing him to return to Canada forthwith and, if so, on what grounds did the minister take such a step?
6.	Did a member of the staff of the Department of Employment and Immigration raise serious objections to the treatment afforded Mr. Calamusa at Emerson and were his objections acted upon and, if not, for what reason?


David P. Smith: I am informed by the Employment and Immigration Commission and the Ministry of the Solicitor General as follows:
1.	Yes.
(a)	Ordered deported 8/4/70 for criminal convictions and because he did not possess an immigrant visa. Ordered deported 11/9/74 for returning without consent. Ordered deported 8/12/76 for returning without consent. Ordered deported 9/5/79 for returning without consent, not in possession of a valid passport, engaging in unauthorized employment, overstaying visitor's status.
(b)	No, entered as a visitor 25/3/68.
2.	Policy emanating from the Identification of Criminals Act and cabinet directive No. 35 does not permit the RCMP, who maintain the national repository for criminal records, to reveal the existence of a criminal record to a third party. However, this does not preclude anyone from personally obtaining his own criminal record, if one exists, by submitting such a request, along with a set of his fingerprints, to police authorities.
3.	(a) He lived in Niagara Falls at 7375 Westfield Drive.
(b) Toronto-815 Coxwell Ave.; 232 Monarch Park Ave.; Winnipeg-6 Southam Street. As far as we know these are the only addresses where he resided.
4.	(a) No. The commission was under the impression that Mr. Calamusa and his family were living in Niagara Falls. They subsequently moved to Winnipeg without informing commission officials and the date of their move is unknown.
(b) Yes. He entered the U.S.A. on June 20, 1980, from Emerson, Manitoba.
5.	Yes. He was allowed to re-enter Canada at Emerson on a minister's permit on June 20, 1980. The permit was issued for humanitarian and compassionate reasons.
6.	The Employment and Immigration Commission has no record of any such objection being raised.


Mr. Malone: 1.	What was the total number of staff from CBC radio and TV that were on hand during the summit conference on world poverty at Cancun, Mexico?
2.	What was the (a) daily per diem (b) highest daily per diem of the staff?
3.	What was the total cost of air travel, air freight charges, food and hotel facilities for the staff?
4.	Who was the immediate CBC staff personnel representative in charge of determining the size of the staff delegation and/or allotting and approving the budget for travel to Cancun?
5.	To the knowledge of the government, what was the size of the (a) CTV staff (b) Global TV staff for the conference?
March 22, 1982


David P. Smith: I am informed by the Canadian Broadcasting Corporation and the Privy Council Office as follows:
1.	Fourty-one. These were production staff and reporters assigned to the conference on behalf of five separate services, each with its own distinct and specialized coverage requirements: English radio and television, French radio and television, and Radio-Canada International.
2,	3 and 4. It has not been customary to require the CBC to provide such details of its internal management and administration as the costs related to individual program projects or the names of staff members involved in such projects. The background to this custom is explained in detail in the reply to question No. 2,530, answered November 6, 1975.
5.	(a) Six. (b) Three.


Mr. Herbert: What percentage of public servants working in the Department of Veterans Affairs in Quebec indicate English as their first official language?


Hon. W. Bennett Campbell (Minister of Veterans Affairs):: The answer is 15 per cent.


Mr. Isabelle: 1.	Since 1978, did the Department of National Health and Welfare hire medical doctors from the United Kingdom and, if so (a) how many (b) according to what criteria (c) what is/was their position?
2.	Were the doctors British public servants and, if so, in each case, what was his/her (a) position (b) area of specialization?


Mr. Doug Frith (Parliamentary Secretary to Minister of National Health and Welfare):: 1. No.
2.	Not applicable.


Mr. Neil: Was a $4 million contribution in wheat made to the People's Republic of China and, if so, what was the price per ton paid to the Canadian Wheat Board?
Hon. Mark MacGuigan (Secretary of State for External
Affairs): Canada has supplied two $2 million contributions in wheat to the People's Republic of China. The first contribution was 8,221 metric tons at $231 per metric ton and 426 metric tons at $231 per metric ton. The second contribution was 8,432 metric tons at $237 per metric ton; for a total of 17,079 metric tons.


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


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


Allan Joseph MacEachen: that Bill C-97, to amend the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, 1977, and to provide for payments to certain provinces, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
He said: Madam Speaker, the bill now called deals with fiscal arrangements which will prevail during the next five years. It reflects consultations which have taken place with the provinces beginning in December, 1980, and intensifying after the tabling of the government's proposals on November 12. During that period I met frequently with my provincial counterparts, individually, at federal-provincial conferences of finance ministers, and most recently at the first ministers' conference.
The bill also reflects the fact that for the first time members of this House were given the opportunity to become directly involved in the review of the fiscal arrangements before the legislative stage was reached. This work was done through a parliamentary task force chaired by the hon. member for Gloucester (Mr. Breau). The task force held hearings in every part of the country, met with representatives of all provincial governments, and produced a substantive report last August which has helped us to understand more thoroughly the concerns of the provinces and the people most directly affected by those arrangements. Most provisions of the bill now before us are compatible with the recommendations of the task force.
The bill, Mr. Speaker, is an important one. If passed it will transfer an estimated $105 billion to provinces over the next five years under two major programs: fiscal equalization; and established programs financing. This amount is substantially larger than the comparable figure of $61 billion for these two programs in the five years which are now ending. The bill will also provide our federation with a new equalization formula. This will meet the needs of financially disadvantaged provinces for assistance, and take account of representations they have made as to how my proposal of last November for a new formula could be strengthened. In addition, the bill will

March 22, 1982
Federal Transfers to Provinces
continue this government's strong support for health and postsecondary education. Finally, the bill will meet to some extent the government's own need for fiscal restraint.
As 1 indicated in the budget, current circumstances require that the federal government apply restraint in all areas. Since transfers to provinces account for approximately 20 per cent of total federal expenditures, they cannot be insulated from our restraint effort. However, the restraint which must apply to federal transfers to provinces should be tempered with equity. 1 am convinced that the means whereby we propose to moderate the growth of these transfers is equitable. While the changes we propose to established program financing would affect all provinces, except the richest, in more or less the same way, the new equalization system would be particularly beneficial to those with the lowest fiscal capacity.
In arriving at the government's position on fiscal arrangements, we have taken account of the marked shift in the distribution of total government revenues in the past 20 years. Between 1961 and 1981 the federal share of total government revenues declined from over 57 per cent to 49 per cent, while the provincial local share increased from 43 per cent to 51 per cent. The change in the federal government's position is even more striking when intergovernmental transfers are taken into account. When federal transfers to provinces are deducted from federal revenues and considered as provincial revenues, the federal share of the total revenue pie, which was 50 per cent in 1961, drops to 38 per cent in 1981. It is evident that the provinces now spend the largest share of public moneys raised in Canada. What these numbers indicate is that Canada is one of the most fiscally decentralized countries of the western world.
Specifically, the measure before Parliament would do the following: First, it would provide for a substantially changed fiscal equalization formula featuring a representative average standard and a comprehensive measure of fiscal capacity.
Second, it would modify established programs financing arrangements by eliminating the portion of these transfers compensating provinces for termination of the 1972 revenue guarantee and by making established programs financing transfers to all provinces equal per capita, without reducing federal contributions, to health and post-secondary education programs.
Third, it would authorize the federal government to transfer to oil-producing provinces their share of the federal oil export charge for oil exported during the period November 1, 1980, to January, 1982.
Fourth, it provides for special arrangements under which the federal government would make payments to certain provinces equal to the amount of recoveries under the equalization program for the 1980-81 and the 1981-82 fiscal years attributable to the June, 1981 census of population.
Fifth, it extends for an indefinite period the fiscal stabilization program which protects provinces against a reduction in
revenues arising from a sharp downturn in economic activity and, therefore, would facilitate their borrowings.
Sixth, it extends for another five years the personal income tax revenue guarantee program which is associated with the income tax collection agreements.
Finally, it provides for technical amendments to sections of the fiscal arrangements act dealing with reciprocal taxation.
The fiscal equalization program is a cornerstone of the Canadian federation, and I now turn to the specific provisions of the bill which give effect to that particular aspect of the Canadian federation. These provisions are in two parts. Part I of the bill modifies the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, 1977 and, more particularly, the provisions of the act relating to fiscal equalization and established programs financing.
Part II of the bill empowers the Government of Canada to transfer to the oil-producing provinces their share of the oil export charge and to make payments to certain provinces equal to the amount of recoveries under the equalization program for the 1980-81 and 1981-82 fiscal years attributable to the June, 1981, census of population.
Among the most important provisions of the bill are those modifying Part I of the fiscal arrangements act, which sets out the fiscal equalization system. The program seeks to make it possible for all provinces to provide reasonable standards of basic public service to their residents without having to resort to unduly high levels of taxation. It is estimated that under this new system about $29.3 billion of equalization would be paid to six provinces during the next five years compared with $16.5 billion under the present system over the past five-year period.
With the formula provided for in the bill, over-all federal cash outlays over the next five years are projected to be $1.148 billion higher than the original budget estimate. That results from the fact that at the first ministers' conference the initial proposal was enriched by $1,148 billion. All of this amount would go to the six equalization receiving provinces. Some $311 million would be delivered through the fiscal equalization program, and $837 million would be delivered through EPF, which would have higher cash payments as a result of replacing the proposed Ontario standard by the representative average standard.
As I have suggested, the new formula will be based on a representative average standard instead of an Ontario standard as initially proposed last November. It would also apply to a much more comprehensive set of provincial and local revenues than the current formula.
In order to understand why these changes are being made, it is important to appreciate that the equalization program has two fundamental components. The first is the measure of provincial fiscal capacity, that is, the capacity or potential of a province to raise revenues through taxes and levies of various kinds relative to the capacity of other provinces.
Hon. members will recall that I had originally proposed to broaden the measure of fiscal capacity by bringing into the
March 22, 1982

formula, in addition to the various provincial and local taxes and levies now subject to equalization, all provincial revenues from natural resources which are currently excluded and all local taxes currently excluded, namely, taxes levied for municipal purposes.
The bill now provides for an even broader measure of fiscal capacity. It is proposed to include a further source of local government revenues, namely, receipts from the sales of goods and services. As a result of the broadening of provincial fiscal capacity an additional $16.5 billion of provincial revenues would be equalized under the formula in 1982-83. Broadening the measure of fiscal capacity meets the requests of provinces and, as the hon. member for Mississauga South (Mr. Blen-karn) will recall, the recommendations of other groups, notably the parliamentary task force in which the hon. member participated and also the Economic Council of Canada.
The second basic element or component of the formula is the equalization standard. That is the minimum level to which the potential revenues of all provinces based upon the comparable measure of the fiscal capacity should be raised. We had initially proposed to combine the broadening of the fiscal capacity measure with a shift to an Ontario standard. Of course, that was changed as a result of representations made by the provinces, which argued, for various reasons, that a more representative selection or, indeed, a broader basis was better from their point of view.
The bill also provides for a number of additional features which in certain circumstances would make the new system more advantageous for the provinces than the initial proposal. One of these is a minimal level of payment or "floor" provision which the government is proposing in response to the concerns of certain provinces which feared that their equalization entitlement might drop drastically if they were to experience a sudden upsurge in their resource revenues.
On January 22, I proposed a floor provision whereby beginning with 1983-84 no equalization receiving province could have a total entitlement for a fiscal year that would be less than 85 per cent of its total entitlement for the preceding year. As a result of further provincial representations, particularly from the province of Nova Scotia, the floor provision provided for in the bill is even more generous. The 85 per cent minimum is now increased to 95 per cent for provinces whose per capita fiscal capacity is equal to, or less than, 70 per cent of the national average per capita capacity, and to 90 per cent for provinces whose per capita fiscal capacity is over 70 per cent of the national average per capita fiscal capacity but equal to, or less than, 75 per cent. Putting it more understandably, Mr. Speaker, the minimim payment will be higher for provinces with a lesser fiscal capacity. I believe that is an aspect that hon. members would be inclined to agree with.
In the course of consultations held since the budget, provincial ministers of finance expressed some concern about the initial proposal, that is, bringing all provinces up to the Ontario standard. I had believed that the province of Ontario provided a level of services that was good, that was regarded as
Federal Transfers to Provinces
good by the people of Canada. I had believed that to bring all provinces at least up to the standard provided in Ontario would be satisfactory. Well, some concern was expressed by the finance ministers. They argued that no single province could be sufficiently representative of the ten provinces to constitute an appropriate standard, and that equalization payments would be unstable with a single province standard since the standard would be influenced by economic developments in one province only. I was confident that we were hitching our wagon, so to speak, to a rising star in the case of the province of Ontario, and that its economic future was bright and prosperous. But others were less confident; they felt they would be more at ease if we could broaden the base.
The provinces were concerned also that such a formula would result in an undesirable treatment of natural resource revenues because of the relatively small natural resource base of Ontario.
In order to meet these concerns, the government has put forward in the bill a more broadly-based standard, taking account of five provinces with over 80 per cent of the total provincial population. Under the new system the fiscal capacity of recipient provinces-the four Atlantic provinces, Quebec and Manitoba-would be raised to the average per capita capacity of provinces collectively considered to be most representative of all ten provinces, namely, Ontario, Quebec, British Columbia, Saskatchewan and Manitoba. These provinces constitute a type of median of the provinces in terms of per capita fiscal capacity. Alberta would be excluded at the top, and the four Atlantic provinces at the bottom. The two exclusions would be closely balanced, since Alberta and the Atlantic region each account for approximately 9.2 per cent of the total provincial population.
Another new feature is the transitional arrangement protecting provinces against too abrupt a change in the level of their equalization as we move from the current system to the new one. In this case, following representations from the provinces, particularly Manitoba, I proposed in January that any province entitled to equalization in 1982-83 be guaranteed an increase in its equalization in that year at least equivalent to its average annual increase in equalization in absolute terms between 1977-78 and 1981-82. The arrangement provided for in the bill extends the transitional protection from one year to three years and builds steps into it so that the minimum equalization entitlement of each province would be higher in the second and third years.
That is a vitally important provision for the province of Manitoba because, as I recollect the numbers, the providing bill's feature will mean, if approved by Parliament, a flow of an additional $165 million into the province of Manitoba.
Finally, as proposed in the budget, the bill provides for a ceiling under which the growth of total equalization payments to all provinces will be constrained by the rate of growth of the gross national product. However, to accommodate the provinces, the ceiling would begin to apply only in 1983-84. Our original proposal was that it should apply in 1982-83. It is

March 22, 1982
Federal Transfers to Provinces
obviously a contingency measure. Our forecasts indicate that it will not likely come into play, but past experiences have shown that it is wise to provide for such a contingency.
There you have it, Mr. Speaker; those are the essential features of the equalization system provided for in the bill. It would achieve the historic purpose of equalization by means of the most comprehensive measure of fiscal capacity ever used since the inception of the program 25 years ago, and of a more stable standard, reflecting economic and fiscal developments in five provinces accounting for about 80 per cent of the country's population and provincial fiscal capacity. Equalization payments would increase by 13.6 per cent in 1982-83 over 198182; and the average annual rate of increase of equalization over the five full years would be 11.2 per cent.
I do not understand how the term "cutback" can be applied to this particular program. A rate of growth next year of 13.6 per cent and a five-year rate of growth of 11.2 per cent is, in my view, a reasonable annual rate of growth to the provinces.
It is obvious that the system provided for in the bill is significantly different from the one proposed in the budget, and it is different because the government has tried to accommodate the provinces as much as possible. We have provided the features that I have mentioned at the suggestion and on the representations of the provinces. 1 am hopeful that the equalization receiving provinces will in the main support our efforts.
Four of the six equalization receiving provinces have formally indicated to me that they find the representative average standard system conceptually superior to the Ontario standard and consequently they are able to support it. I have received written communications to that effect from the Hon. Richard Hatfield, Premier of New Brunswick, the Hon. Joel Matheson, Minister of Finance of Nova Scotia; the Hon. Dr. John Collins, Minister of Finance of Newfoundland; and the Hon. Lloyd MacPhail, Minister of Finance of Prince Edward Island. I have had detailed discussions with each of these ministers on the implications of the equalization formula for the province concerned. I have had negotiations with finance ministers as a group; I have had them individually; and I have had discussions with them by telephone since the first ministers' conference. I believe that we have made an effort, an honest and successful effort, to accommodate the principal concerns of equalization receiving provinces.
I now want to turn to another major component of our fiscal arrangements known as established programs financing, commonly called EPF. These are dealt with in Part VI of the fiscal arrangements act. The transfers made under EPF since 1977 have served two distinct purposes. First, they have funded provincial health care and post-secondary education programs. Second, they have compensated provinces for termination of the 1972 tax reform revenue guarantee.
The bill before us modifies EPF in two ways. The first change stems from our concern for equity. Federal EPF contributions have two elements, the transfer of tax room and
a payment in cash. Under the present legislation, the total per capita federal contribution is higher in those provinces where the yield from the tax transfer is higher.
As a result, over the coming years Alberta and British Columbia would benefit substantially more from established programs financing than any other province. This is inequitable since those receiving more are the provinces best able to finance activities. Consequently, the bill modifies the computation of EPF cash transfers so that the per capita value of the total federal contribution to all provinces will be equal.
This change would rectify one aspect of established programs financing which both Quebec and Ontario have criticized in the past. It would also implement once again a major recommendation of the parliamentary task force on fiscal arrangements.
The second modification to EPF proposed in the bill would end that portion of the EPF transfer that has so far compensated for the termination five years ago of the 1972 tax reform revenue guarantee. This element was added to the EPF arrangements in 1977 at the request of the provinces, although the EPF arrangements were essentially designed to provide financial support for public health insurance and post-secondary education. One personal income tax point and the cash equivalent of a second point were added to the arrangements in 1977 by way of compensation.
Provinces have argued in the past that compensation for the revenue guarantee should not be taken into account in computing the federal share of the financing of these programs. It will be argued in the House that, by removing the revenue guarantee, we are undermining our support for post-secondary education and health. I am saying that is not so, because it cannot be defended.
Even the premiers, meeting last summer, when putting together the contributions by the federal government to these important elements of our Canadian society, health and education, explicitly declined to include the revenue guarantee as a portion of the federal contribution to these two sectors. The same view as that expressed by the premiers was adopted by Justice Hall in his 1980 report on health programs, which states that the federal contribution to health programs does not include the two tax points attributable to the revenue guarantee negotiations.
If I had more time, I would add to the list of authorities a number of others, including the president of the Canadian Medical Association who argued in Halifax after the budget that the revenue guarantee was never and was not intended to be a part of the contribution by the federal government to health care. I believe similar statements can be attributed to spokesmen for those interested in post-secondary education.
I state quite firmly that ending the revenue guarantee will not lower the level of federal support for these two programs. In fact, the value of the federal contribution to these programs will continue to grow in line with the gross national product over the 1982-87 period. Removing the revenue guarantee will
March 22, 1982

simply moderate the growth of the total established programs financing transfer in 1982-83.
I should also add that the effect of removing the revenue guarantee compensation will be partly offset by the increase in provincial income tax revenues arising out of the tax measures announced in the November 12 budget. In 1982-83 alone, the resulting increase in provincial revenues is estimated at $685 million.
I want to say again that following the presentation of the report of the parliamentary task force and hearing the views of the provinces, I made a deliberate effort in the budget through the selection of these tax changes to flow revenues into the provinces in order to mitigate for them the loss of the revenue guarantee. It was a deliberate choice. It was very carefully decided. Mind you, I did not get very much credit or acknowledgement for that. However, it is still a fact that in 1982-83 alone, the resulting increase in provincial revenues as a result of the tax changes made in the November budget will amount to $685 million. That is an important sum of money.
I know that the intention to restrain the rate of growth of transfers to the provinces has been criticized in some quarters. We are not cutting back. We are not refusing growth. Transfers to the provinces will continue to grow, as I have indicated, by 13.6 per cent for equalization in 1982-83, plus 11 per cent for the five-year period for EPF, growing in line with the gross national product, growing as fast as the economy. Therefore, there is no intention to cut back. There is no justification for the use of the word "cut".
It is true that it is not possible to satisfy-I was going to say the wildest expectations, but that might be misunderstood. It is not possible in present circumstances to allow transfers to the provinces to grow at 15 per cent and 20 per cent when it is absolutely essential to apply restraint to all expenditures of the Government of Canada if we are going to control our deficit.
As I have already mentioned, transfers to the provinces account for approximately 20 per cent of total federal expenditures. One fifth of what we spend goes to the provinces. Is it reasonable to decide to moderate the rate of growth for 80 per cent and not moderate the rate of growth for the 20 per cent that goes to the provinces? I argue that it is not reasonable to think we cannot apply some restraint even as we increase the transfers to the provinces.
I could not find any valid reason for continuing the revenue guarantee compensation. The revenue guarantee program was first designed to protect provinces against unforeseen reductions in revenues which might have resulted from the 1972 tax reform. The beginning of the revenue guarantee was in 1972 when we undertook tax reform. It was initially intended to last two years only. It was extended to five years at the request of the provinces and expired at the end of 1976. But then, throughout the consultation that led to the 1977 fiscal arrangements act, the provinces sought compensation for the termination of the program. Although the federal government felt the program had fulfilled its purpose, it offered to enrich the EPF transfer then being negotiated by one personal income
Federal Transfers to Provinces
tax point and the cash equivalent of another point to settle all outstanding issues. The offer was accepted. I argue that the provinces have now had ten years in which to adjust their tax rates since the 1972 tax reforms. The justification for this particular aspect of our system no longer exists. It no longer has any raison d'etre.
I should also add that the budget proposals dealt with the program aspects of EPF. The government has proposed that the national standards for health care be clarified and an effective mechanism for their maintenance be developed in consultation with the provinces for incorporation in new federal legislation by March 31, 1983. We also propose that new federal-provincial arrangements for the financing of postsecondary education and human resources development be devised in consultation with the provinces for incorporation into new federal legislation by March 31, 1982.
I recall that the parliamentary task force had a good deal to say about the program aspects of EPF. They did not neglect that area at all. They made some rather helpful proposals in support of the direction in which we are now moving. Having made this proposal to incorporate these changes in new federal legislation by March, 1983, at the first ministers' conference held in February, the Prime Minister (Mr. Trudeau) tabled a proposal that would maintain the EPF transfer unchanged until March, 1984, subject to certain stipulations. This new proposal would allow two full years for consultations and discussion of ways of implementing the national objectives with respect to post-secondary education. My colleague the Secretary of State (Mr. Regan) will be pursuing this matter.
There are other provisions as well modifying the fiscal arrangements act. Other provisions of the bill would extend those parts of the fiscal arrangements act dealing with the fiscal stabilization program, the personal income tax guarantee program, and the reciprocal taxation program.
Part II of the fiscal arrangements act authorizes the government to make fiscal stabilization payments for the period beginning April 1, 1977, and ending March 31, 1982. The bill provides for an extension of that authority for an indefinite period. The purpose of these payments is to protect provinces from sudden year to year losses in revenue as a result of a severe economic downturn in the national economy or, indeed, in their own economies. This provision has been of value to provinces when they borrow in foreign capital markets and we believe its value would be enhanced by making it of indefinite duration.
Part IV of the fiscal arrangements act authorizes the federal government to make revenue guarantee payments in cases of a serious disruption to provincial financial planning resulting from federal tax policy changes during the five-year period ending March 31, 1982. The bill extends the authority to make such payments to March 31, 1987. The purpose of this program is to encourage the maintenance of a common tax system across Canada.

March 22, 1982
Federal Transfers to Provinces
Part VIII of the fiscal arrangements act authorizes the federal government to enter into reciprocal taxation agreements with provinces whereby provinces pay the federal manufacturers' sales tax and the federal government makes payments in respect of sales taxes, gasoline taxes and motor vehicle licence fees as if it were taxable. The bill provides for a few amendments to relevant sections of the act. The government continues to hope that in the interest of tax harmonization, the other four provinces will eventually enter into similar agreements.
The bill also provides for the transfer to oil producing provinces of their share of the federal revenues which accrued from the oil export charge from November 1, 1980, to January 32, 1982. It was originally intended that the provinces' share of export charge revenue, estimated to be approximately $450 million for the above 14-month period, would be transferred under authority contained in the energy security bill, that this transfer would be effective before March 31, 1982, and that 50 per cent of the revenues transferred would be equalized in
1981-	82, as is done for other provincial revenues for nonrenewable resources. However, it is now evident that sharing payments could not be made under this authority until the
1982-	83 fiscal year.
The province of Saskatchewan has asked that some method be found to allow it to receive its share of the oil export charge before March 31, 1982. This is a reasonable request given that the revenues have actually accrued and are being held by the federal government pending the passage of legislation to authorize the sharing. It is in the light of these considerations that we have decided to include in this bill a special provision authorizing the Minister of Energy, Mines and Resources (Mr. Lalonde) to transfer the provincial share of the federal export charge that has accrued in respect of oil produced in Manitoba, Saskatchewan and Alberta from November I, 1980, to January 31, 1982. The relevant provisions are in Part 11 of the bill.
The bill also authorizes the government to make payments to certain provinces equal to the amount of recoveries under the fiscal equalization program for the 1980-81, and 1981-82 fiscal years attributable to the June, 1981, population census.
It is very important to observe that preliminary data recently issued by Statistics Canada indicate that the estimated population of certain provinces is significantly lower in each of the two years mentioned than the pre-census population estimates used in computing equalization payments for those years. Because population is a key factor in determining a province's equalization entitlement, the equalization payments to all provinces must be recalculated on the basis of census estimates. This means that rather sizeable amounts would normally have to be recovered from provinces whose share of total census population is lower than that used in the precensus estimates.
These recoveries are quite substantial. They certainly could create very serious problems for the five affected provinces whose fiscal capacity is below average. The fact of the matter is that, based on the revised population data issued by Statistics Canada, for the last two years the five provinces would
have had to pay back to the federal treasury an amount of $217 million. I believe it ranges from $70 million in the case of Newfoundland to the amount of $30 million for the province of Manitoba, except for a lesser amount for the province of Prince Edward Island, with Nova Scotia and New Brunswick falling between Newfoundland and Manitoba. Certainly in the case of these provinces, the requirement to pay, which is in the law, would be very serious. As I recollect the figures, $70 million for the province of Newfoundland would be more than serious.
Therefore, following representations from the four Atlantic provinces and Manitoba, the government has agreed to make special payments which would fully offset the recovery of these post-census population adjustments from provinces applying for equalization in 1982-83. This is provided for in Part II of the bill. The payments would be determined by calculating a province's final entitlement to equalization for each of the two years mentioned, with pre-census population substituted for post-census population, and then deducting the amount obtained from the province's final equalization entitlement, which would continue to be based upon census population.
On this particular point I had detailed negotiations with the Premier of New Brunswick and the minister of finance of Newfoundland, as well as some discussions with the ministers from Nova Scotia, Prince Edward Island and Manitoba. I am pleased that I have been given the authority by cabinet to include in the bill a provision that would waive the recovery of these amounts which were owing to the Government of Canada from the equalization receiving provinces.
I believe it is evident from what I have been saying that, since the tabling of the proposals in November, the government has gone a considerable way toward meeting the concerns expressed by the provinces. This is illustrated by the fact that four of the six provinces which will receive equalization have expressed their support for the new equalization formula provided for in the bill. Adoption of this legislation will make it possible for the federal government to contribute an estimated $105 billion for equalization, health care and post-secondary education over the next five years. That $105 billion speaks volumes about the strong role which the Government of Canada will continue to play in providing to Canadians the services that they need and deserve.
I know that members of the House of Commons are equally determined to ensure that equalization is maintained and strengthened. I know they are equally concerned that our support for post-secondary education and health is maintained and strengthened. I believe the sums provided for in the bill will carry out these commitments which we all share, and I hope the House will be able to give this bill careful study, but study that will not prevent the recipient provinces from receiving their payments at the appropriate time.


Some hon. Members:: Hear, hear!


Mr. Don Blenkarn (Mississauga South):: Mr. Speaker, before I get into my remarks I want to draw your attention to
March 22, 1982

the minister's mention of $105 billion. He will appreciate that it is only $105 billion if he counts the money the provinces raise in taxes. When the government starts counting money that the provinces raise in taxes as its contribution to established programs and other clearly provincial responsibilities and, through a press release, claims that it is giving the money to the provinces, it creates a rather false impression. I think the minister would probably want to correct the amount of cash he says is being transferred. Perhaps he should talk about the cash being transferred, not about what is supposed to be a nominal tax point average and so on, that the provinces might receive if they happen to levy taxes in accordance with the suggestions in his iniquitous budget of November 12.
The minister suggested that the provinces were going to be well off if they followed his budget. He said they would receive $685 million more this year if they went along with the budget. How would that happen, Mr. Speaker? In the case of the province of Quebec, it would have radically to change the corporate tax structure, as would Ontario and Alberta. Only if they made the massive amendments suggested by the minister would they get that kind of money. The money comes from capital cost allowances.
The November 12 budget tore industry apart in those provinces. It provided that industry and people in business in those provinces would have to settle for half capital cost allowances in the first year. But Mr. Speaker, that is when people need the money to buy assets; it is when business needs stimulus in order to get going. It is only if a government wants to rip business apart or wants to hurt its industry that it will adopt the stupid, idiotic course outlined in the November 12 budget which was declared a political disaster. That is the only way the provinces could come anywhere close to $685 million. That projection is based on an increase in the GNP. We know what has happened to Canada since November 12. We know that the projections in the November 12 budget, as the minister's projections usually are, were fraught with something that the minister must have been smoking.
The budget of November 12 called for equity. The minister said that the budget stood for equity, renewal and restraint. We know what kind of equity it produced-absolutely none. He made sure that people who earn over $53,334 per year pay less income tax and that 54 per cent of those earning under $30,000 pay more income tax. That is the minister's idea of equity.
The minister talked about renewal but made sure that there is no development in business and industry. We have seen people thrown out of their jobs. We have seen bankruptcies and farm foreclosures. We have seen the kinds of things that he promised in renewal. I do not know what kind of renewal it was, but the other day the Solicitor General (Mr. Kaplan) called it a political disaster. I say it was an economic disaster. The minister knows that his budget provided no renewal.
Where is the restraint, Mr. Speaker? The only restraint shown in the budget of November 12 was the restraint on the
Federal Transfers to Provinces
money being transferred to the provinces-a restraint of nearly $1 billion in the reduction of EPF transfers to the provinces.
Let us go over the figures, Mr. Speaker, and not talk about the man in the moon ideas of the minister. The minister said that the provinces will get more money, but the blue book gives the answer, Mr. Speaker. The blue book shows that for health related matters about $4 billion will be transferred to the provinces this year. Last year roughly $4.3 billion was transferred in nominal dollars, ignoring inflation. The provinces will get $300 million less for health care, for hospitalization, medicare nursing homes for old people and extended health care. It will be $300 million less cash, Mr. Speaker.
For the year ending March 31, 1982, the minister will transfer $1.68 billion for post-secondary education. For the year 1982-83 only $1.5 billion will be transferred, which means a difference of $ 180 million less in nominal dollars going to the provinces. Yet the minister says more is going to the provinces. The blue book gives a different answer. In total, $480 million less cash will be transferred than was the case a year ago.
The established programs financing arrangements call for the amount of money to be transferred in accordance with the moving average of GNE. If the amount last year was increased on the moving average of GNE, instead of receiving $480 million less, the provinces would have been receiving $450 million more. In total, nearly $1 billion is being taken out of the hands of the provinces or is being taken out of postsecondary education and health care.
Let us not have any more smoke, mirrors or suggestions about what one obtains in taxes according to the budget. Let us not hear any more about how wonderful is the minister or how he is not cutting anything. The facts are that he is cutting $500 million from the cash last year and there should be another $500 million next year because of escalation and the moving GNE. Everyone knows that goods will be more expensive next year than they are this year; the rate of inflation has been 11 per cent to 12 per cent. Of course the minister should be transferring more. He should be transferring $500 million more, but he will be transferring $500 million less. This is what it is all about. This is what the blue book indicates, this is the record. Let us not have any more drivel and nonsense from the minister. The former member for Broadview-Greenwood spoke about smoke and mirrors. The minister provides lots of smoke, lots of mirrors and lots of illusions. This is what it is all about!
Let us talk about how expenses have been curtailed. I thumbed through the blue book and noticed that while the government can restrain medicare, hospitalization expenses by the provinces by $1 billion, it can give the National Film Board $7 million and the National Arts Centre another $3 million; it can increase foreign aid under CIDA from $802 million to $945 million, which is almost another $141 million; it can increase the CBC by $73 million, which is well over 15 per cent. These are the priorities of the government. Restraint

March 22, 1982
Federal Transfers to Provinces
is not one of the priorities of the government. The government's priorities are in its own power. The minister sees money which should go to the provinces to pay for established programs, and he says, "I cannot control those established programs, so let us cut them back; let us have more foreign aid; let us give more money to the CBC and to the Commissioner of Official Languages." We can say something about these departments, but the government restrains what Canadians want in terms of education for their children, education which ensures that the country grows and develops and ensures a supply of engineers and foresters, which we heard in committee were needed to build the country through the 1980s and 1990s.
What about the health care upon which all of us have come to depend? No, the government will spend money on foreign aid, the Commissioner of Official Languages and the CBC. They are important because the government controls them. It will spend less on the things it does not control. We could have restraint across the board, we could have budgetary restraint. I do not think anyone would object to that. I do not think anyone would object to each of us bearing his own share of the load; but let us not say that restraint is when the government transfers less money to the provinces, and that because less money has been transferred somehow expenditures have been restrained. This is not the case and the minister knows it. He knows that his budget costs, on a national accounts basis, will be up from $74 billion this year to $86 billion next year. There is no restraint. His expenses are up right across the board at 13.5 per cent.
The minister talked about the fact that the provinces were receiving too much money and that they had a fiscal balance in their favour. I remind him that the net after transfers by the federal government will amount to 38.3 per cent of the spending power or the taxes collected in the country in 1981. In 1978 it was only 32.3 per cent. In other words, the effect of the minister's actions over the past two years has been to increase the percentage of money spent by the federal government and to decrease proportionately the influence, power or spending of provincial and local governments.
We all know that this does not make much sense. Most of the services we receive are provided by the municipalities. They pick up the garbage, they run local primary and secondary schools, they look after local roads and such. The next most important service in society is education and health care which are supplied by provincial governments. When we look at what the federal government does for us, we wonder whether in truth it provides 38.1 per cent of what we receive from government, or is it to some extent not nearly worth 38.1 per cent?
The outlook is quite different than the minister suggested. According to figures published in the budget, between the current fiscal year and the 1983-84 year, the federal government expects to increase its revenue after transfers by 38.1 per cent and to increase its expenditures after transfers excluding public debt by 31.8 per cent. We must remember that the increase in transfers to other levels of government is rising 38 per cent on taxation and 31 per cent on expenditures, but the
expenditure increase to provincial governments is only 13.7 per cent, which is very considerably less than the rate of inflation.
In terms of gross revenue received and relating revenue received to transfers to provinces, in 1978 28.4 per cent of the revenue of the Government of Canada went to other levels of government. Last year it was down to 22 per cent, and very shortly it will be down to 18 per cent. We have had a massive seizure of revenue-raising potential and expenditure plans by the federal government, which is now trying to squeeze even more out of local taxpayers, as it takes a greater and greater share of the national product. This might be appropriate in times of war, but in times of peace it is inappropriate. The fiscal arrangements task force analysed the appropriateness of the level of taxation and the level of government expenditure which should take place. Prior to the Second World War, and for a short time after, provincial expenditures were considerably more than federal ones. Indeed, the natural mean is for provincial and municipal expenditures to be about 70 per cent and for federal expenditures to be about 30 per cent.
I want to deal now with the question of equalization. The minister will know that equalization was thoroughly explored by the task force. For the minister's benefit, we analysed the question of the Ontario standard and threw it out as totally inappropriate. I am pleased that after consultation the minister has thrown it out as being totally inappropriate. We analyzed other forms of breakdown.
However, the minister has come up with a five-province theory. The five-province theme is probably a poor scheme for him. When we were analysing how we should work out an equalization formula, the task force accepted the concept that you have to put all provinces in the pot in terms of determining the representative tax system and in determining what equalization should be.
One of the problems of going to a situation, as in this bill, of using only five provinces for the standard is that you create a phony or unreal situation. There is no evidence that the five provinces now selected, being Quebec, Ontario, Manitoba, Saskatchewan and B.C., are appropriate provinces for a mean average of Canada. Indeed, going back over the question of equalization over the years, we note the only province that has never received equalization is the province of Ontario. If we look at the fiscal capacity of Ontario, it will be noted that the fiscal capacity of Ontario province is deteriorating. Indeed, it would have been a situation under the present act whereby Ontario would have received significant sums of equalization. Linder the amendments now proposed, Ontario probably will not receive equalization, but it could. What we have is an equalization situation where we try to spread and create an equal fiscal capacity for all provinces. But to pick out five provinces and say all of a sudden that it is their average that will be used will create a problem in the future.
I say that to the minister because one of the justifications the government has had for its raid on what was previously
March 22, 1982

provincial sources of revenue-being taxation on natural resources-was that the federal government had to have revenue in order to treat provinces equally. In other words, to create the equalization we have had. But, first, when you take only five provinces as a standard, you lose a great deal of the justification for the taking of those revenues.
Second, when you have only five provinces you do not justify a federal national taxation system. At the moment that system is broken down. At one time the federal government was the tax agent for personal income tax and for corporate tax for all of Canada. Quebec now has its own personal and corporate tax system. Ontario has broken away with its corporate system, as well as Alberta. There is even the possibility of British Columbia setting up its own tax collection system. We are breaking away from this federal taxing system. However, when you use only five provinces for equalization, you create the tendency to break away from a national taxation system.
The formula given will produce a return to the provinces on equalization very much like the kind of formula recommended by the fiscal arrangements task force. That task force recommended-and I am pleased the minister has followed through-that a number of matters should be brought into the pot of provincial revenues to be equalized. Up to this point there have been 29 tax areas that have been equalized. This bill brings in a great many more. It breaks up old oil and new oil, as well as a number of other things not mentioned by the minister. There are municipal revenues from municipal taxation. The bill goes on further to mention municipal licence fees and the like, presumably for the sale of water and hydro by municipal utilities, etc. It takes those revenues or profits into account. That is good. I think had the task force gone on and felt that these were valid arrangements, the task force members would have said: "Good; we think all revenues should be brought in." I think the new equalization arrangement of bringing in new forms of revenue will improve the quality of equalization.
The minister says he is bringing in $16.5 billion of further provincial revenues to be equalized. He says that and sort of leaves the impression with the House-maybe I am mistaken-that somehow he was adding in more money to recipient provinces. That is not the case. Equalization is really a balancing act.
It is done by taking the income that an average province would receive and averaging out how all provinces receive income from a taxation source. We do that now from 32, 33 or 35 taxation sources or whatever it is. We average it out on a per head basis to find out whether a province is above or below average. The result is a balance.
Last year the provinces received $4,285 billion from this form of payment. According to the estimates, the provinces will receive $4,709 billion. The minister tries to give us the impression that this is of great benefit to the provinces, as though he had created a system that would make the provinces vastly more well off. But the minister does not tell us that he now has far greater access to oil and gas revenues than he ever had before. He does not point out that in 1980-1981 the amount of money transferred for equalization was 3.53 billion.
Federal Transfers to Provinces
Therefore, the increase is not much different than has always existed.
For the past three years equalization payments by the federal government to the provinces have increased by about half a billion per year. The reason for the increase is not the minister's fancy new formula, but because parts of the country do not have the fiscal capacity they should have. Equalization attempts to balance the fiscal capacity on a per capita basis between provinces. It does not take too much from the rich or give too much to the poor; it averages them out. The reason for this increase over the past three years is not the changing formulae; it is because an imbalance has occurred in the community. That imbalance has to be corrected by the federal government in accordance with our new Constitution because we have entrenched equalization in that Constitution. This is not a gift to the provinces; it is not something which the minister has that belongs to the federal government. It is something which the federal government exists to do. It is a question of fiscal balance and the responsibility of the government under the Constitution. It is no more and no less than that.
I wish now, Mr. Speaker, to turn to the question of revenue guarantees. The minister made a great thing about the fact that the revenue guarantee was some sort of protection to the provinces because of an arrangement made after tax reform came in on January 1, 1972. He said that really what we were doing was carrying on that arrangement and, you know, it is now 1982 and that is all past now and we do not need to worry about it. I want to quote what the minister said to the fiscal arrangements task force in his submission on April 23, 1981, in connection with revenue guarantees. On page 83 of his brief he said:
The latter amount is the cash equivalent of one equalized personal income tax point per capita in 1975-76. This was part of the negotiated settlement. It was intended to provide compensation for termination of the 1972 Revenue Guarantee program and was given to the provinces on the condition that they agreed to integrate the hospital insurance program into the EPF arrangements on April I, 1977. (The provinces had the option of continuing to receive shared cost entitlements for hospital insurance until July 15, 1980, when the hospital insurance agreements were due to expire.)
That revenue guarantee, Sir, was part of a deal in 1977. It was one equalized tax point in cash which was added to the deal to get the provinces to sign. It was not a revenue guarantee, it was added to a block transfer. How the provinces used that block transfer was nobody's business but theirs. They could use it any way they wanted to. There is nothing in the agreement which demanded the provinces use one iota of it for medicare or post-secondary education. They had a block transfer and they had the responsibility.
Let us now talk about what Donald Macdonald, the then minister of finance, said on third reading of the bill. Reading from page 4264 of Hansard for March 23, 1977, he said:
We started off with the position from the revenue guarantee, which terminated as of the end of 1976, that there was no further obligation to pay. We met the provinces half way on that, split the difference, and settled the compromise. Even

March 22, 1982
Federal Transfers to Provinces
that was finally agreed to by the provinces. Sure they would have liked more. Sure, from the standpoint of our having to go to the federal taxpayer we would have liked to pay less. I think it was Premier Davis who said at the end of the meeting that it was as the result of a compromise between parties. The allegation was made that the final authority rested with the federal government and therefore they had to accept the fact. In a certain sense that is true, but it is also false.
For example, the arrangement with respect to the hospital program could not have been carried out by the federal government without the agreement of the provinces. This was their blocking point with respect to the established programs financing. As I said, they agreed with the principles and they are prepared to come up in this regard.
Sir, clearly there was no arrangement that revenue guarantees were separate, and all we have to do is look at the blue books for 1977, 1978 and 1979. The President of the Treasury Board (Mr. Johnston) is here and he can tell us that nowhere in the blue book last year did it say there was a transfer for revenue guarantees.
What happened was that the block fund determined in the 1976 negotiations was arbitrarily split. Roughly 68 per cent was for health concerns and 32 per cent for post-secondary education. The cash for health concerns was broken down in some fashion and the minister of health wrote a cheque. The cash for post-secondary education was broken down and the minister responsible wrote a cheque. Nowhere did it say "revenue guarantee". Nowhere did it say anything about escalating $20 per year per capita, or whatever, for extended health care. And for the government to come along and say that somehow for all of this period of time the revenue guarantee is something else, is for the Minister of Finance (Mr. MacEachen) to say: "I have been sucking along for five years and now I want to whistle." The trouble, Sir, is that he has too many soda crackers in his mouth to whistle. He will not be believed. Nowhere in the record did he say anything about that.
The whole question of revenue guarantee was thoroughly analysed by the task force, Mr. Speaker. On page 7 of their recommendations they said:
-that the division of the EPF program transfer (that is, the total EPF transfer excluding that portion associated with termination of the revenue guarantee) be allocated to the health and post-secondary components in the proportions established in 1977.
They conclude that:
-by virtue of the internal allocation established by the federal government, fiscal transfers associated with the revenue guarantee must now be considered part of the health care package and/or post-secondary education transfers and should therefore be allocated, in the renewed EPF arrangements, to health and/or post-secondary education, in proportions to be negotiated.
Sir, that should deal with that issue. The minister should forget about that and come clean with us. If he wants to reduce money flowing to the provinces by a billion dollars, then he should come clean with the provinces and say so; but let him not confuse the subject with some spurious statement about revenue guarantees no longer being applicable and with the assertion that that revenue guarantee is in relation to the 1972 change to the Income Tax Act. That is nonsense and the minister knows it. He has admitted it is and he should not come before us now and try to con us more.
I want to deal next with the question of cash and tax transfers and how they work out in relation to post-secondary education and health care. The transfers under the EPF are a mixture of cash and tax points. Up until now each province received 50 per cent of its allocation in cash, and the balance of 50 per cent was made up of tax transfers plus cash. In other words, no matter how well a province did under the tax system-if it did really well, as Alberta has been doing lately-that province got all the money it got out of the tax system and 50 per cent cash. On the other hand, if a province was not doing so well-like Ontario lately-and it was not raising enough revenue through equalized tax points, it got what it raised in taxes plus enough to bring it up to 50 per cent in cash and then another 50 per cent in cash. That is how these transfers were worked out.
Under the bill the minister, as he says, follows the prescription of the task force and says we will treat it all as one; the provinces take the money they get out of the tax points, and whatever money is required to bring them up to the full EPF transfer we make up in cash so that each province is treated equally. Those provinces which have the ability to raise more money on tax points do not receive extra benefits because, after all, as the minister points out, they can afford it. I have some concerns about that in the long run. There is nothing wrong with that in the short run, but 1 would be concerned if in the long run the amount of federal transfers for these programs diminished to the extent that the amount of cash to some provinces became virtually nil. We might then run into some serious concerns about established programs and federal standards.
The task force spent a great deal of time dealing not with the question of whether there should be revenue guarantees but with the necessity of maintaining transfers for health care and post-secondary education. With respect to health care the task force concluded that the present block-funding arrangements should have stricter conditions and monitoring enforcement mechanisms that would provide effective mechanisms to ensure compliance with national program conditions. They say:
For this purpose, it will be necessary to establish operational program criteria, perhaps monitored by a parliamentary committee or a national health council, with federal payments conditional on compliance with program criteria, but conditional in a flexible manner-
They go on to say:
-that the Minister of National Health and Welfare report to Parliament-
The report concludes that hospital and medical care premiums should perhaps not form part of taxation, and so forth.
There are a number of recommendations in the task force report suggesting that Parliament monitor effects on health care and concerning how money transferred by this Parliament to the provinces is spent. The same generally is the case with respect to post-secondary education. In that regard we recommended that the first ministers' commitment made in 1976 with respect to consultation be honoured. We suggested that there is a federal interest in post-secondary education in terms
March 22, 1982

of manpower training, that there should be consultation in relation to goals for future higher education and that in particular the council of ministers of education report annually to Parliament about transfers and the appropriateness of federal support programs.
What has happened is that the federal government had some leverage and has now decided that its leverage is not important at all. The federal government has elected to forgo any leverage it had with respect to education and health care. How did that happen? The federal government has taken $1 billion this year from what it would normally have transferred in cash to the provinces. The federal government has decided to cut that back. In so doing it has made it virtually impossible for any of the recommendations of the task force concerning monitoring and splitting block funds into two separate blocks, one for education and one for health care, to be carried out. There can be no monitoring of any federal influence on how educational programs or medical care programs can best be worked out for Canada as a whole. The federal government has abandoned all that completely. When the minister takes this money away, he in effect hangs the Minister of National Health and Welfare (Miss Begin) out to dry. Perhaps she should be held out to dry.
I want to refer to some questions asked of the Minister of National Health and Welfare by my friend, the hon. member for Winnipeg-Birds Hill (Mr. Blaikie) who is here today. As recorded at page 14610 of Hansard for February 3, in answer to the hon. member's question, the minister said:
Other than that, the member should know, because I think I stated it a few times in answers to him, that we are planning the first of a series of conferences on renewing medicare, at which time I will put to my provincial colleagues the new rules of the game to strengthen medicare. He knows this is not a simple black and white matter where we can suddenly withhold payment and slow down services. 1 do not see how that would help people who have health problems.
It is true that we are manoeuvring around these various roadblocks-
One of the roadblocks she was talking about is quite clear now. That roadblock happens to be the Minister of Finance. The Minister of National Health and Welfare huffs and puffs, hems and haws and talks about the great things she is going to do in acting on the Hall commission report. She says she is upset about things like balanced billing and extra billing. She says she is all worked up about extra charges in hospitals. She goes about the country talking this way, but she is actually nothing more than a pussycat with no power whatsoever. She has no control or clout. She might as well resign. If the minister thinks she will have any power at all in terms of reviving, improving and changing medicare, she should not worry; if she has been upsetting some members of the medical profession who are opting out, they need not worry because she has no control. She has lost all the control in the cabinet she had; she is down the drain.
According to the same issue of Hansard to which I previously referred, the minister went on to say that the cost to her department would be increased in the coming five years by an average of 13.4 per cent. The minister's mathematics are rather strange. This year the amount of money passing from her department to medical care and medical concerns is decreased by 8 per cent. She says there will be a 13.4 per cent
Federal Transfers to Provinces
increase. The dear minister cannot add or subtract. In view of this bill, I suggest her only recourse is to hand in her resignation. That would be the responsible thing to do. But I am not so sure she will do that. She has already indicated that she does not think that the budget is too good, but she still stays on. Here again she has shown to the House and to the nation her incompetence. She cannot add or subtract, she cannot figure out a percentage. When we see transfers for medical concerns reduced by 8 per cent a year and she says they are going up 13.4 per cent, we know that this minister is finished politically and is without clout.
Mr. Speaker, it is not just that minister that is finished. The former premier of the province of Nova Scotia, that brave province, is now the Secretary of State (Mr. Regan). He claimed, in answer to questions by me, as reported in Hansard of February 10, 1982, at page 14855, that there was going to be more funds. He said there was going to be an increase of 12 per cent in each year for the next three years. His parliamentary secretary, speaking in the late show debate, at page 15090 on February 16, 1982, had this to say:
The Prime Minister (Mr. Trudeau) offered to continue the present EPF program and give it a 12 per cent increase per year until March 1984. The hon. member may want to call an increase of 12 per cent a cut. I cannot rewrite the dictionary.
I do not know what he was talking about. Where is the 12 per cent increase per year, for three years, that the Prime Minister (Mr. Trudeau) was talking about, according to the Secretary of State and the parliamentary secretary? We cannot find that increase. We find a reduction in the cash by 8 per cent this year. We find that the amount goes up by the moving average of the GNE but there is no arrangement in this bill for an extension for post-secondary education, any monitoring of the activities of councils of ministers of education. So we have a Secretary of State who comes to us and he huffs and he puffs and he says that the transfers for education are going to go up by 12 per cent, but they are going down by 8 per cent. He proudly tells a meeting of the Canadian Association of University Teachers that they are going to have no cuts, that they are going to be better off and are going to get more money. He even tells his own university in the city of Halifax that they are going to get more money. He has to look at the blue book where the transfers of post-secondary education are reduced from $1.65 billion last year to $1.5 billion this year. That is his record. On that basis, having made those representations, he has no alternative but to give up his ministry.
Mr. Speaker, the task force committee was made up of four Liberal members, two members from this party, myself and the member from Lethbridge-Foothills (Mr. Thacker), and one from the New Democratic Party, the hon. member from Winnipeg-Birds Hill. The hon. member for Gloucester (Mr. Breau) was chairman. The hon. members from Vaudreuil (Mr. Herbert) and Vercheres (Mr. Loiselle), both from the province of Quebec, were there. The hon. member for Scarborough

March 22, 1982
Federal Transfers to Provinces
West (Mr. Weatherhead) was there; he was on the Liberal team.
That team unanimously made a number of recommendations. 1 wonder how the member for Scarborough West is going to vote on this bill. I remember time after time in the committee meetings across Canada he boasted about the fact that his daughter was at Queen's University. He told students there would be no reduction in post-secondary education transfers. I wonder how that member is going to vote when this issue comes up. I wonder if he is going to vote the same way as he did with respect to the budget, after his comments concerning the budget.
I wonder also how the hon. member for Gloucester will vote. He so proudly talked about his alumni from his alma mater, the University of Moncton. 1 wonder how he is going to vote when he sees these transfers reduced for post-secondary education.
I really wonder how the hon. members for Vaudreuil and Vercheres will vote. They were so proud of the Quebec medicare system. They said that the doctors in Quebec cannot send an extra bill. They said that medicare is free in Quebec and doctors are not entitled to overbill or opt out, and if they do, their patients do not get paid, the additional fees. Oh no, that cannot happen. That is the kind of report that was presented and they stood behind medicare there. They were proud of their system; they were proud of the fact that the province of Quebec, alone among the provinces in Canada, spends more money on post-secondary education, proportionately, than any other province. I am sure they are going to be able to stand up and vote according to their conscience, and according to the way they voted in committee. That is their obligation; their obligation is to point out to the Minister of Finance where he has gone wrong. Somewhere along the line they have an obligation to their colleagues in the committee to stand up for the report of the committee.
We all signed the report, Mr. Speaker. I will quote two paragraphs from that report. In Chapter X, on page 193, we
said:
We hope that the general message of this long and complex report is clear, however. We are agreed that the programs examined in the course of our work are serving vital social needs and merit undiminished support. Over-all funding of these programs should, in our view, be maintained at no less than current levels. In our appraisal of the programs falling within our order of reference, we identified none in which reductions in over-all levels of funding could be undertaken without a serious risk that important program goals and standards would be jeopardized.
We are all agreed, therefore, that federal-provincial negotiations should be directed toward the goal of undiminished funding for both the health and postsecondary sectors supported through EPF and the social security programs financed in part through CAP.
Down further on that same page we say:
It is our view that there is now, for the most part, no fat left in the system-no fat in post-secondary education, no fat in the health system, no excess spending in social assistance, little redundancy in social services. We accept the representations of those who argued before the task force that serious cuts in program funding would cut into muscle and sinew, not fat. Unless one could presume that federal reductions in funding would automatically be matched by corresponding increases in provincial expenditures-a presumption that may not be considered altogether plausible-then in order to maintain present standards, programs would have to be privately financed to a greater extent than at present. In health, this would mean greater appeal to user charges and more extra-billing; in
education, higher fees. In either case, basic national objectives of equity and equality of access would suffer.
This country is going to see the basic qualities of equity and accessibility suffer. We are going to have higher student fees, we are going to have increased provincial taxes. This business of restraint is a transfer of a federal expense to a provincial expense. It would be different if the federal take of taxes in the country were going down, but it is not, it is going up. It is going up by 13.5 per cent. So we are going to have the provinces forced to add in something. We will wind up with people paying for going to operating rooms or for using emergency centres in hospitals. We will wind up with doctors having extra billing and maybe a two-level medicare system.
There is no rationalization here, Mr. Speaker. It may be that our country is not doing as well as it once did. It may be that we are not as affluent as we once were. It may be that we have to restrain ourselves. It may be that the government must cut back on expenditures. But to the public out there, there is no apparent cutback in expense. Our salaries were not cut back, nor was the cost of running the House of Commons, the foreign aid bill or the salaries of senior civil servants. What was cut back was what the public wanted, what people demanded. I read briefly from the representation made to the task force by the Canadian Medical Association:
The delivery of health care has become interwoven with the fabric of government and intergovernmental financing arrangements. The people of Canada invariably rate health care insurance-medicare-as the most valuable, most appreciated service provided by government. We believe that the public ascribe that connotation to government in the generic sense of the word, not specifically related to either the federal or provincial government.
What we have, then, is a cutting back of that which the federal government somehow does not control, and spending, spending, spending on that which the federal government does control. The time has come when this budget, with these arrangements made in the budget and since negotiated in this bill, should be set aside for perhaps a year or two so that we can reorient our priorities.
I am not saying that we do not need to cut back. As a country we cannot go on spending as though we were earning. We could be earning if we were properly directed, represented and organized financially, but we cannot go on in a willy-nilly fashion. We must set aside this cutback on post-secondary education and health care transfers and analyse where these cutbacks fit in with other things that should be cut back.
*Ask somebody whether he would like an increase in the CBC budget and a decrease in the medicare budget. Ask somebody if he would like to see $141 million more go to a CIDA project for foreign aid while at the same time having his kids pay a great deal more for university tuition or not ensuring that the books are in the library and that the university is able to work well. Ask Canadians what their priorities are.
Let us remove those provisions from the bill and go ahead with the equalization arrangements. Let us go ahead with the
March 22, 1982

other projects, but with respect to established programs financing, EPF, let us get some reason.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Ethier):: Order, please. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Laval (Mr. Roy)-The Economy-Inquiry whether minister will meet provincial ministers to establish program to stimulate economic recovery; the hon. member for Central Nova (Mr. MacKay)-Regional Economic Expansion-Request for measures to assist industries in Nova Scotia; the hon. member for New Westminster-Coquitlam (Miss Jewett)-External Affairs-(a)Canada-United States agreement on testing of Cruise missiles, (b) Request that agreement be tabled.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. MacEachen that Bill C-97, to amend the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, 1977, and to provide for payments to certain provinces, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, I would like to begin this debate on equalization and established programs financing, or as they are also known, federal-provincial fiscal arrangements, by pointing out that the situation in which Parliament and particularly members of the opposition find themselves in is similar to the situation which led to the event known as "The Bells" over the past few weeks. By this I mean that we have before us a false dilemma.
The finance minister claims that this legislation has to go through by the end of the month. Of course, it creates a lot of pressure when a bill is brought in ten or 12 days before the end of the month when the legislation has to be passed. It is only the equalization aspects of the financial arrangements which expire at the end of March. The established programs financing aspect of the legislation could well continue past March 31, 1982, and be presumably debated for a much lengthier period of time, and it deserves to be debated for a much longer period of time.
Federal Transfers to Provinces
It is in the proposals of the government with regard to established programs financing for health care and postsecondary education that I find the most offence. Yet, we are in the situation of being presented with a package and not having the ability or the opportunity to debate it as long as it deserves.
It is appropriate to reflect for a minute on the debate that occurred the last time the established programs financing arrangements were set out by this Parliament in 1977. I have had the opportunity to look through some of the debates at that time. Our party was concerned about the fiscal arrangements coming into place at that time. Tommy Douglas, our spokesman and former leader of the party, expressed the concern of the NDP that the block-funding arrangements would lead to an erosion of health care standards in the country. He said it would lead to the situation spoken about earlier where the federal government would not have leverage over the provinces. The provinces would be given too free a hand as far as standards were concerned.
I hate to be an "I-told-you-so", but the fact is that many of the concerns expressed at that time by Mr. Douglas have turned out to be quite legitimate. I hope the government might learn from history and listen to members of the opposition, particularly the NDP, on this issue because we have a concern about medicare. We have made predictions about Liberal actions in this area in the past and on the whole they have turned out to be remarkably accurate. I ask the Minister of Finance (Mr. MacEachen), his parliamentary secretary and others who will participate in the debate this afternoon to consider that they might be wrong and to consider the predictions I am about to make as to what the present proposals will do to medicare. Consider that they might be as accurate and as legitimate as the concerns expressed by my party five years ago when the government was setting out its proposals for fiscal arrangements.
Our concern about the established programs financing is that there is going to be a cutback in the support for health care and post-secondary education. I would like Liberal backbenchers to listen to me. If they accept the rhetoric of their party and the finance minister on this, they are being deceived.
As the hon. member for Mississauga South (Mr. Blenkarn) pointed out, the revenue guarantee is a fiction. It has had no status since 1977. It is simply a term for an agreement between the federal government and the provinces which expired in 1977. While they were renegotiating the established program financing, the provinces were grumbling that this revenue guarantee agreement had expired and that the federal government was attempting to negotiate an agreement in a completely different area. The federal government told the provinces that it realized they were unhappy about the expiry of the revenue guarantee and would therefore throw in so much more money to sweeten the EPF pot and enhance the

March 22, 1982
Federal Transfers to Provinces
bargain. It asked the provinces if it would go for this proposal and they said they would.
There was an extra amount of money contributed to the established programs financing. It did not have the name "revenue guarantee". It went into a program called established programs financing. Unless I have a complete misunderstanding of linguistics, it seems to me that when you contribute money to a program called established programs financing, it is money for programs.
The fact of the matter is that the Liberal government itself saw the revenue guarantee this way. It went across Canada, particularly at the beginning of 1979, self-righteously quoting the percentage of federal spending on health care and postsecondary education which included the revenue guarantee. They were quoting these figures to the provinces and would indicate to a province that the federal percentage of spending had risen to 56 per cent in "x" province, for example, while the province's expenditure had gone down to 44 per cent and wasn't that terrible. They were pounding the hustings with these figures which they then completely disowned in their budget and now in this particular proposal. For five years those funds attributable to the revenue guarantee, which were thrown in to sweeten the bargain in 1977 were said by the Liberal government to be used for health care and postsecondary education, and they chastised the provinces for not spending that money for that purpose, from one end of the country to the other.
I admit that those provinces which adopted those arguments talked themselves into a corner. The provinces have said the contrary, that the money attributable to the revenue guarantee was not earmarked. They said they did not have to spend it on health care and post-secondary education. In fact, some provinces said that the money which they received through the tax point transfers was not earmarked and they were not accountable for that money. The fact is that the Liberal government said that those funds were to be used for health care and post-secondary education. We supported their position. It was our belief that the money was earmarked for those two particular programs.
The irony of this situation, which I have been trying to articulate since the budget, is that the Minister of Finance is now beginning to sound like the provinces when he says that the money is not for health care and post-secondary education. We refer to this situation as the irony in the task force report on fiscal arrangements. The federal government now appears to have adopted the views of the provinces and the provinces seem to have adopted the views of the federal government.
After seeing this irony and considering the various alternatives of how this money which is attributable to the compensation for the termination of the revenue guarantee can be used, what were the recommendations of the task force? The task force said that by virtue of the federal government's own internal allocation over the years the revenue guarantee should be regarded as money for health care and post-secondary education. The reason for this view was that we did not want
to see any reduction in the over-all funding for those programs. In addition, there is the question of consistency and, 1 submit, of honesty. If the federal government has taken the position for the last five years that the money was provided for health care and post-secondary education, it cannot withdraw that perception whenever it feels it is convenient to do so. We will not let the Minister of Finance get away with that kind of sophistry.
No matter how many times the Minister of National Health and Welfare (Miss Begin) rises to say that she has obtained a 12 per cent or 13 per cent increase in funding, it is clear that the percentage she is talking about is a percentage of the base without the revenue guarantee. When you take into account that revenue guarantee, the result is approximately a 4.6 per cent increase and really an 8 per cent reduction. Those are the facts.
What will be the consequences of this? Not only will there be less money for these programs, which is a serious consequence in itself, but the political consequences, as I see it, will be even greater. The Minister of Finance is creating a political context, indeed, the political pretext for the provincial governments-at least some of them-to blame the federal government for the erosion of medicare. There are those provinces which are not philosophically wild about medicare. The province of Ontario is one example. The difficult economic times we are experiencing would have been reason enough for some provinces to say they have to find more ways of obtaining private funding for their publically funded health care programs. They are beginning to do so already, but now the federal government has aided and abetted those forces which would like to dismantle the extent to which the medicare system is publically funded.
Once again, this is an irony. The Minister of Finance introduced medicare in the House when he was the Minister of National Health and Welfare. I suggest that he is now creating a political scenario which will eventually lead to the erosion of medicare as a national health care system. There will be those provinces which will, for various reasons, not see their health care standards eroded; but mark my words: the Minister of Finance has created the political pretext for governments such as the Ontario government-which does not want medicare in any event-to introduce more private funding mechanisms while using the federal government as an excuse for doing it.
I wish to make it clear that 1 do not feel that the provinces were without guilt in the past or will be in the future, but as a member of the House of Commons of Canada, it is my responsibility to point out to the government what it is doing wrong. It is not sufficient for members opposite to blame the provinces, two wrongs do not make a right. As a result of the Liberal government adding to the restraint which has been practised by so many provinces, particularly in health care, since the 1977 agreement, the problems which face medicare have become compounded rather than improved.
In that respect, the confidence with which the Minister of Finance claims that the government's proposals are in tune
March 22, 1982

with those of the parliamentary task force on federal-provincial arrangements is completely false. The federal government has followed through with some recommendations of the task force, but they are not central to the over-all political and social impact of this particular proposal. For example, the task force recommended that municipal property taxes be included in the equalization scheme. That has been done. The task force recommended that there be an equal per capita entitlement in EPF. That has been done. These are some of the recommendations of the task force which have been adopted, but recommendations such as the one with regard to the revenue guarantee being money used for anything other than health care and post-secondary education have been ignored by the government and there is absolutely no way to read the report otherwise.
With respect to equalization itself, the proposal of the government for the five-province standard has only been in existence for about a month. 1 believe it was first proposed to the provinces at the first ministers' conference in February. We are expected to pass this particular proposal by the end of the month, however. The provinces have not had a decent chance to look at it nor have we in this House had a decent chance to look at it. The number crunching will go on for weeks in an attempt to figure out who is losing and who is gaining from this new equalization scheme proposed in the bill. It is very complicated, Mr. Speaker. The complication of the census figures, the relationship between the EPF equalized tax points, the budget tax changes, what the provinces will collect as a result of those changes and what they will receive in cash, is difficult to understand. I do not believe that the government has provided enough time for Members of Parliament, let alone the public, to understand what is going on. That is why 1 deeply regret that the government decided to bring these measures forward in a package.
The hon. member for Mississauga South referred to a question that I put to the Minister of National Health and Welfare last month. I asked whether she would consider graduating the withholding of funds when provinces do not meet certain national standards. Of course, the question presupposes that the minister would get around to defining what she or the government means by national standards. The medicare crisis has been with us since 1979-some people say since the fall of 1978; actually it has been with us since the last fiscal arrangements were negotiated. Since then we have had the Hall report and the report of the task force, but there has been no action on national standards. There have only been vague promises of meetings with health ministers in the future.
This proposal makes it less likely that when the Minister of National Health and Welfare meets with her counterparts to negotiate national health care standards, she will be able to obtain a ban on extra billing or whatever she has in mind. We are never quite sure what that is. The government cannot, on the other hand, ask the provinces to accept tougher and therefore more expensive health care standards while, on the other hand, taking money from them or while acting unilaterally on equalization at the same time that the Prime Minister
Federal Transfers to Provinces
(Mr. Trudeau) is saying that co-operative federalism is dead. The minister cannot expect to act in a complete political vacuum. What she wants to accomplish can only be done with the co-operation of the provinces. The actions of her colleagues make it impossible for her to meet her goals. That is the terrible irony of the situation, Mr. Speaker. If she is as serious about health care in this country as she sounds, then it is about time she began to stand up to the Minister of Finance about the cutbacks in health care and post-secondary education and to the Prime Minister who goes around the country bad mouthing co-operative federalism. Until they are put in their place, what she says she has in mind is not likely to come about.
So far, I have tended to concentrate on the medicare question, but I should now like to turn to the question of postsecondary education, Mr. Speaker. Over the course of the last few weeks thousands and thousands of students have tried to bring their concerns to the attention of politicians. They are rightly concerned that the cutbacks that begin at this level will filter down and mean higher tuition fees, fewer books in the libraries and a reduced quality of education. There is not just the question of the effect of the cutbacks; there is also the question of motive, which is suspect on two grounds. First, there is the general suspicion that we ought to have of any government which, when it is faced with a deficit, declares that it must go after health care and education to alleviate the situation. I think this is an indication that its priorities are all fouled up. I hope to get back to that matter, Mr. Speaker.
The second suspicion concerns the approach that the federal government seems to be taking to post-secondary education. All the hints and approaches that we see seem to suggest that it wants to turn our universities and community colleges into instruments of the national economy-that it wants to reduce education to an economic instrument. It is angry at the universities because they are not turning out the kind of people it wants. It would like to have greater leverage in the postsecondary education community, and so it proposes to cut back the money for them and use it somewhere else in a more manipulative fashion in order to bring the university community into line. This is a serious situation, Mr. Speaker. We find ourselves with a government that wants to redefine postsecondary education and make it instrumental to its own larger economic goals.
I am not saying that people should not have good advice and be trained for the jobs that actually exist. On this side we are very well aware of the difficulties of planning for training to meet the economic needs of the future. We would like to see some work done on that question. I am worried about some of the rhetoric that I hear from cabinet ministers, however, and the rhetoric that I see in the various documents issued by the government which seem to indicate that it wants the postsecondary education system to wither or become something that is only instrumental to what the government perceives as the needs of the economy.

March 22, 1982
Federal Transfers to Provinces
I said that the government's motives in regard to postsecondary education were suspect for two reasons. The first is that we must be suspicious of any government which, when there is a deficit, looks to health care and post-secondary education as a way of meeting it.
One of the findings of the task force did not receive too much attention, Mr. Speaker. It was to the effect that the fiscal imbalance, which the government has been talking about for a number of years, is a fiction-that there is no structural imbalance between the fiscal capacity of the federal government and the fiscal capacity of the provinces. There is no reason for the federal government to feel sorry for itself and cut back on transfers to the provinces because it thinks the provinces are spending more money than it is. It never mentions that one reason for this is the decisions taken by the Liberal government. Mr. Speaker, the Liberals always act as if they had just arrived here when actually, of course, they have presided over many of the decisions that led to the situations they now lament. The task force concluded that there was no fiscal imbalance; that is, that the deficit that the Minister of Finance wants to correct is a discretionary deficit. It is an accumulation of political choices made by the Liberal Party and by the Liberal government over the years. The deficit has grown, for reasons other than the established programs financing, and faster than the rate at which the money spent on established programs financing has grown. To turn around and do anything to suggest that these are the kinds of programs which are at the root of or the cause of the deficit is, in my view, totally repugnant. By taking this avenue out of the deficit, rather than having the political guts to raise the money which is out there by closing tax loopholes which should have been closed in the last budget, instead of the ones that were closed, the Liberal government is attacking medicare and postsecondary education.
In principle we are against that strategy; we are against it symbolically and practically. We were against it when it was followed by Progressive Conservative provincial governments across the country which really never gave block funding a chance. We were against block funding, but speaking in sympathy with it for a moment, one of the reasons block funding never got a good opportunity was that it was coincident with the existence of seven or eight Progressive Conservative governments across the country which used the freedom under the new system to save money, not to innovate, to spend on new programs or to do the very best possible within the system. It was as simple as that.
In this case we have the Liberals aping the provincial Conservatives. During the course of the debate we hope that they will be persuaded-but we do not really believe that they will be persuaded; we do not expect that any more, do we-to see the folly of their ways with regard to cutbacks in established programs financing and not follow down the road of their Conservative colleagues who would sacrifice these programs to attacks on their respective deficits.
That is about all I have to say at this point. I suspect my time is running out in any event. The point has been made that what the Minister of Finance and the Minister of National Health and Welfare are telling the nation, quite simply, is just not true. They are taking a great risk with the medicare program and with post-secondary education. They are contributing to a political scenario which I believe will be very damaging to medicare over the short and the long run. They are acting with regard to federalism in a way which will further contribute to the lack of co-operation we have witnessed over the last while. I think it is a tragedy, and I hope they will see fit to change their minds, even at this eleventh hour.


Mr. John Bosley (Don Valley West):: Mr. Speaker, perhaps one of the strengths of our arguments, which should be mentioned early in the debate, is that I do not know of very many times when the hon. member for Mississauga South (Mr. Blenkarn) and the hon. member for Winnipeg-Birds Hill (Mr. Blaikie), coming as they do from quite different parts of the political spectrum, would find complete agreement on the facts, as they have shown by their comments thus far in the debate. Perhaps this might add to the hon. members' suggestions that backbenchers opposite should take seriously the claims being made about the facts represented in the bill.
I must say that I was somewhat worried when I heard the hon. member for Winnipeg-Birds Hill commence his speech today by linking the suggestion that the bill should be split to a mention of the bells. For a moment I expected the infamous motion. Of course he is correct that the package makes it very difficult to consider the bill. We had hoped, perhaps as a result of the experience of the last while, that we would no longer see packages that tie the House to a timetable on one necessary part of the bill and at the same time restrain adequate debate on another part of the bill to which the mandatory timetable does not apply. Therefore, one wonders why the bill was introduced in this way.
I listened with great interest to what the Minister of Finance (Mr. MacEachen) had to say today. I had hoped he would tell us why it was necessary to tie the two parts together under that timetable. Among other things' he did not tell us that. Also it became clear today that, unlike the budget, the Minister of Finance had at least read this bill before presenting it to the House. This indicates that perhaps he is, more than anyone realizes, no longer willing to negotiate any of the matters in the bill, that it is all a "done" thing.
I noted with great interest his particular comments with regard to the source of these proposals being his deliberate commitment in the budget to these matters. This may in fact suggest that what he has been saying for some months, namely, that other matters in the budget are open for further representation and negotiation by Canadians, is equally untrue. This is extremely worrisome.
I have some substantive comments I want to make, but perhaps I can preface them by saying that when I was a little boy in Toronto-
March 22, 1982


Some hon. Members:: Oh, oh!


John William Bosley: The hon. member for York East (Mr. Col-lenette) will know to what I am referring. When I was a little boy in Toronto, if I was lucky, I was taken to the then art gallery of Toronto, which is now the Art Gallery of Ontario. On Saturday mornings there were sessions for young people, which was one way in which we were encouraged to take an interest in the arts. A morning show was put on for children, the star of which was a gentleman known as Peter the Magician. He also performed at the toy department of Eaton's. As children, most of us thought that we would never see again the likes of Peter the Magician. He had an incredible capacity for sleight of hand. 1 listened today to the Minister of Finance, and I think Peter the Magician has met his equal. The suggestion that one can take $111 billion over five years, cut it to $105 billion and say, "I have not cut but have increased", is a sleight of hand worthy of Peter the Magician.
Also I was reminded of one of the most famous debates which occurred between the Oxford and the Harvard debating teams. The Harvard team rolled in with reams of facts, impressive lists of facts, and used statistics which boggled the mind and numbers which spewed out of card file systems. In response, the captain of the Oxford debating team simply looked at the captain of the Harvard team and said, "I have listened with great interest to all the items mentioned by the captain of the Harvard debating team. 1 have to say to him in humility that much of what he said was true and much of what he said was relevant. Unfortunately none of what he said that was true was relevant, and none of what he said that was relevant was true." This is the exact thing I want to pursue with regard to what we heard today. For example, the minister made a great deal of the changes in federal spending power from 1961 to 1981. He indicated that the federal share in advance of transfer payments had dropped from 57 per cent to 49 per cent, and that the total revenue pie, after transfers, had dropped from 50 per cent to 37 per cent. Those are true figures but they are irrelevant to the issue. The issue is a change in procedures agreed to originally by the provinces and the federal government, for the purposes of this debate, in 1971 and modified in 1976 and 1977. If one wants to use relevant figures in order somehow to prove a point, one should at least use figures which relate to the period of time about which we are talking. I understand why the minister did not use those figures. It was because they do not make his case. In fact, they make the opposite case. Not surprisingly, he would not quote them to the House, but I will.
In the period from 1971 to 1981, federal revenues after transfers increased by 286.5 per cent. Federal expenditures after transfers increased by 339.6 per cent. Federal transfers to other levels of government increased by only 225.2 per cent. Those numbers are all large numbers, Mr. Speaker. But between 1971 and 1981 the federal government has increased its share of spending on everything else. It can hardly argue now that it must reduce transfer payment requirements, because it has been giving away all spending power to the provincial governments. The figures are clear. The figures are from the minister's own budget document. The minister ought at least to use the accurate figures relating to the period of
Federal Transfers to Provinces
time that he is talking about if he ever wants to convince anybody that somehow the federal government has been hard done by during that period of time.
.
If the minister's figures are irrelevant, we might go to one of the minister's relevant comments. His most relevant comment occurred, I suggest, in the debate today when he pleaded on behalf of restraint. The minister suggested that because the government is so committed to restraint on the 80 per cent- and I will return in a moment to the topic of the government's commitment to restraint-that as it is doubling the advertising budget and buying two new planes for cabinet ministers, the government clearly must be committed to restraint on the 20 per cent that goes to the provinces under these programs. That is certainly a relevant argument, but it is simply not true.
It is not true that the government proposes to restrain its spending on the other 80 per cent. Those figures are equally from the minister's own documents. The hon. member for Mississauga South spoke about this, and I will expand on these figures. They are very revealing. According to figures published in the budget, between the current fiscal year and 19831984 the federal government expects to increase its revenues after transfers by 38.1 per cent; to increase its expenditures after transfers-excluding public debt interest, which under this government is likely to become a horrendous figure-by 31.8 per cent, while increasing its transfer payments to other levels of government by only 13.7 per cent. That is considerably less than the expected rate of inflation over that period. Consequently, according to the government's own figure, contrary to the claim of the Minister of Finance, relevant as it was but not true, transfers as a percentage of federal revenues will drop from their projected 1982-1983 level of 21.3 per cent to 18.3 per cent in 1983-1984. But the share of federal expenditures, again including public debt interest, will fall from a projected level of 23.8 per cent in 1981-1982 to 21.2 per cent by 1983-1984. Those figures would compare to levels-and these are most revealing-of 25.1 per cent for revenues and 28.0 per cent for expenditures in 1971. Not only has the government chosen, as is its privilege, to increase its spending rapidly and dramatically on everything else, but it is now choosing to reduce the share of its budget that will go to programs which support the basic services on which Canadians rely across this country, delivered to them by provincial governments, originally at the request of the federal government. This is a point to which I will return later.
To suggest, therefore, that the reason these transfer payments need to be restrained is the restraint program globally, implies that the federal government was actually proposing to restrain the rest of its spending and taxation of Canadians. Perhaps in that context it would be fair to restrain transfer payments.
I think most Canadians are well aware that restraint must now be the order of the day until the economy grows again.

March 22, 1982
Federal Transfers to Provinces
Most Canadians understand that the economy is not going to grow again until governments of the day-notably the government opposite-truly begins to restrain its take of the economic pie; otherwise there will be no economic pie to tax, there will be no money to transfer. In spite of all this, the government proposes to increase its revenues in the first two fiscal years by 52 per cent, according to the minister's last budget. It is proposing to increase both its spending and its taxation at a rate substantially greater than inflation, substantially greater than the transfer payments, which are taking a real dollar cut, and the government is then arguing that the transfer payments for medical care and university support are simply being restrained in line with the government's over-all budget. But the facts do not bear out that claim. I repeat that if they did, there would be some logic to what the minister is saying. 1 am convinced that he will have a very difficult time explaining this. He has already had a difficult time. But he will have difficulty explaining why the government was justified in taxing people more and more and putting less and less in real dollars into the services on which they rely. For instance, it will be very difficult to explain this to students over the next two or three years who will find themselves faced with tuition increases. What about those who will be faced with increases in OHIP in the province of Ontario? The minister will have a very difficult time explaining those increases.
To understand this government's logic, which says, "We have to restrain transfer payments just like we are restraining everything else," you would have to see a real dollar doubling in transfer payments over the next five years, because that is what the government is doing with everything else. But the government is saying that in real dollars, transfer payments will fall. This is very similar to the way the government has treated those who live on the guaranteed income supplement. The government promised in the election campaign an increase of $35 per person, but when it was elected it granted only $35 a household. But this government has also hit people with nearly $1,400 in new indirect energy taxes per household over the next five years, with no corresponding tax cut for those who are on GIS. In other words, the current strategy of Allan J. MacEachen, The Magician, is to say to Canadians, "First, I will give you $35 more per household, but in return you get taxed $1,400 per household." People are supposed to believe they are better off.
That is the same theory as is explicit in the argument made today by the Minister of Finance in the House when he said "I am not going to cut your funds, I am just going to reduce them a little." That will not wash. It will be perfectly clear to Canadians. Canadians only have to listen to what the minister says about the revenue guarantee. I have several things I would like to say about the revenue guarantee. With your permission, Mr. Speaker, I would like to continue my remarks on that later. Perhaps we could call it six o'clock.


The Acting Speaker (Mr. Ethier):: Order, please. It being six o'clock, I do now leave the chair until 8 p.m.
At 5.59 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
John William Bosley: Mr. Speaker, before we adjourned at six o'clock I was attempting to move into the revenue guarantee items of the bill. I should perhaps orient members in the chamber this evening by indicating that the basic argument being made by the Minister of Finance with regard to this proposal is that the government believes that it has two needs for the changes it proposes to equalization and for the established program financing proposals, first, that there is somehow a fiscal imbalance in the relationship between federal and provincial financing today, and second, that it fits in line with the government's restraint program.
Prior to six o'clock, Mr. Speaker, I said that the second argument is utter nonsense given the fact the government proposes to increase its revenue and spending on everything else in the budget by two or three times the amount of its transfer payments. In addition, Mr. Speaker, I read some figures into the record with regard to what has in fact happened between the levels of government between 1971 and 1981, and I should like to continue that because they are the figures which most accurately describe the current fiscal relationship as regards government revenues and spending in Canada.
The federal government maintains that its position vis-a-vis the provincial governments has worsened. In fact, Mr. Speaker, it is worth remembering, as I indicated earlier, that the federal figures alone indicated that while federal revenues after transfers have gone up 286.5 per cent, federal expenditures after transfers have gone up 339.6 per cent, and federal transfers have gone up only 225.2 per cent between 1971 and 1981. The comparable figures at the provincial level are revealing, Mr. Speaker. As I indicated, the federal government argues that its position has worsened vis-a-vis the provincial governments. Since 1971, federal revenues after transfers have gone up by 286.5 per cent. The comparable figure for provincial and local government revenues, after transfer payments, is 285.9 per cent. In other words, using the government's own figures, even after transfer payments, the amount of money collected by the federal government has been just slightly higher, over that period of time, than provincial revenues, including transfer payments. Perhaps we can therefore dispose of the arguments made by the Minister of Finance and his colleagues to suggest tht somehow the federal government is worse off now vis-a-vis the provinces compared with 1971. Clearly that is not the case.
There must be, therefore, other reasons for the urgent need for this bill as claimed by the minister. One has to go inside the bill to find its effect on our provinces and our people, Mr. Speaker. Certainly those from Ontario have never really understood equalization because it has not been a matter which, until now, has affected us greatly. Only recently has Ontario qualified for equalization, and perhaps members will forgive me if I do not spend a lot of time on that except to say that equalization has been the backbone of other provinces and
March 22, 1982

should continue to be that, if only for that reason. I think that was indicated quite clearly in the constitutional discussions.
However, I should point out the irony of the original idea of changing equalization to base the formula on Ontario alone, which was an earlier proposal of this government. Most of us from Ontario took that as a way of making sure that Ontario would never qualify for equalization because it would be the mid-ground. There are some of us from Ontario who think there is something to be said for that idea, because 1 am not sure that Ontarians are ready for the idea that Ontario may be a have-not province. Nevertheless, the new formula would appear to be the best of both worlds in that it creates a more honest balance and still leaves Ontario the opportunity to benefit should things get terribly worse in Ontario, which they may do under the policies of this government.
However, Mr. Speaker, the other part of this bill which changes the established programs financing provisions is of direct and vital importance to Ontario. I am going to take a couple of minutes to explain to those outside the House who are not familiar with what is involved. The established programs for most Canadians, are known most simply as medical support programs and the university financing provisions that the federal government enters into. Two elements of EPF in general are being changed, Mr. Speaker. The revenue guarantee component of the EPF entitlement is being eliminated; that was the provision introduced by the then minister of finance, Mr. Macdonald, in 1977, in order to get provincial approval for changes. The formula for calculating the cash proportion of the EPF entitlement is being changed. The EPF is transferred both as tax points under which the provinces get more money, and as cash payments directly from the federal government. The elimination of the revenue guarantee component of EPF reduces the level of provincial entitlements by 6 per cent to 7 per cent from what they would have been had the existing formula been continued. Moreover, until now the cash portion of EPF has consisted of three elements: basic cash, which was equal to half the entitlement; equalization payments to those provinces where the value of the tax transfer was less per capita than the national average; and a transitional payment in cash to those provinces where the value of the tax transfer plus equalization did not equal the value of the basic cash. Provinces where the combined value of the tax transfer and basic cash exceeded the entitlement level were allowed to keep the surplus.
*
Under this bill the federal government pays in cash from now on only the difference between the value of the entitlement and the value of the tax transfer. This ensures equal treatment for all provinces under EPF and does correct an inequity by which the richer the yield from a province's personal and corporate income taxes the more EPF was worth, which was, under the old provision, a kind of reverse equalization.
Federal Transfers to Provinces
Together, these two changes will reduce the level of federal cash payments by about $915 million from what it would have been in 1982-83. So much for the minister's argument that this change in EPF, and particularly the revenue guarantee, will not cost anybody anything. In fact, actual cash payments will be almost $400 million less than in 1981-82. That is less by that amount in real dollars. The revenue guarantee termination accounts for well over 90 per cent of this decline. Moreover, by permanently lowering the base on which EPF entitlements are escalated they will save the federal government a total of $5.7 billion over the five-year term of the fiscal arrangements. For Ontario that is extremely important because Ontario alone will experience a cut from what it would otherwise have received of nearly $1.9 billion. So this particular change in the bill is much more important today and in the next five years to Ontario than equalization ever was.
When he was explaining this provision the minister said that in effect it was not a cut in funds for service-this is what he said earlier today-that removing the revenue guarantees simply moderated the rate of increase in 1982-83, that it was in fact offset by increases in provincial taxes as a result of the budget, that all it had the effect of doing, he said, was to mitigate the effect of eliminating the revenue guarantee, and that that is what his tax proposals would do. He cannot have it both ways. The minister attempts to say it will not cost Ontarians, for example, $1.9 billion in lost services. The minister knows full well that $1.9 billion will not flow, as it would have, from this capital to that capital. Someone has to pick up that bill. The minister cannot argue in good conscience that by taking the money away from the provinces there is not in fact the likelihood of a cut in services. That is what every responsible expert who has looked at these proposals, including the parliamentary task force, has determined. The all-party task force, one Liberal member of which is next to speak in the debate-and we will be waiting to see whether he supports in the House the provisions he supported as a member of the task force-in effect said it was vital not to do this.
The minister argues that the problem is solved because the tax changes in the budget which give the federal government more money will produce more money for the provinces. How can the minister try to have it both ways all the time? According to the minister, the federal government needs to make these cuts because of its general program of restraint. To the average Canadian, restraint means the government will spend less and tax less in real dollars. How can the minister therefore argue that it is not a cut, and use as his defence the fact that he is going to increase taxes and thereby increase provincial taxes?
Let us just look at the numbers and even accept the current estimate of revenues likely to accrue to the provinces in total of something over $3.1 billion under the new budget arrangements and new taxes, which, I might point out, are down from the $3.7 billion which was originally claimed by the minister- until the accountants got at it and said, "Well, just a minute; it is not quite that much"-and nobody is yet clear what the

March 22, 1982
Federal Transfers to Provinces
amount will actually be. Certainly with an economic slowdown we have no way today of predicting what tax revenues the federal and provincial governments will actually have accruing to them. However, if we are going to argue that the provinces will inevitably receive more money because of the federal increase in taxation, we ought at least to admit that we are therefore not restraining the size of government budgets, and therefore the earlier argument which was used to defend the restraint in the transfer program is defeated by the minister's own comments about the value of the provincial taxes which will be increased by the budget which the minister uses to defend eliminating the revenue guarantee.
Whichever way we play the minister's own argument we wind up with the fact that the federal government will have substantially more money than it had under last year's budget. Those estimates have ranged in the minister's own budget estimates, but minimum assumptions are $54 billion from the energy deals, if the energy program comes on stream as it should. The minister's own budget expectations say the government will increase its spending by 52 per cent to 53 per cent in the next year or two. That is not restraint, and it is only because that is not restraint that the provinces will get more money as they are tied into the tax arrangements. I repeat that we cannot therefore argue-because this is the guts of the argument as to whether in fact a cut is occurring-and we cannot in good conscience turn to Canadians, after we tax them more at this level by 50 per cent or 60 per cent, and say, "Look what we are doing for you by restraining the transfers to the provinces," because the net effect is that the federal government inevitably is saying it will simply spend even more than that on the rest of its programs. Otherwise we cannot square the circle.
For example, the government has argued under one set of figuers that its over-all spending next year will be up only 16 per cent or 17 per cent net of these transfer payments. If the transfer payments drop to 12 per cent or 13 per cent increases, clearly everything else will be up. That is self-evident. That is the first lesson in basic mathematics when we go to school. If that is true, there is not restraint elsewhere, and it becomes clear when we get into this bill and look at the evidence used by the minister to defend it that the arguments being advanced to defend this bill are the single best proof that the government is not restraining its over-all expenditures in other areas. Otherwise it could not come up with the figures it uses as net figures.
Second, it will be very difficult to explain to my people-and I frankly think it will be impossible-how it makes sense to impose more taxes here and give less of that to the provinces, so that they will have to tax our people in Ontario again to pay for the same service they now have. But that is what is being proposed. Let us be very clear that the argument is being advanced that in order somehow to save us money, it makes sense to increase taxes here, to reduce transfers to the provinces, and to have them increase taxes to pay for those services. What happens in the end is that we will have the same level of services. We will have paid the federal government roughly 50
per cent more taxes over the next couple of years, directly and indirectly-that is 50 per cent in two years net-and meanwhile the provinces will have had to put up their taxes in order to pay for services Canadians already use, trust and rely upon. Those are such services as university education, hospital services, homes for the aged and all those gut level basic social services which are fundamental to the welfare of Canadians, either for training our next generation or looking after those many in our senior generation who cannot now care for themselves adequately. The argument is that simple.
In its case the parliamentary task force put it as clearly as it could be put. It would be wise to read it into the record one last time, and then I will conclude. The task force argued several things. I am sorry I cannot find the actual quote at the moment, but I can paraphrase it. The task force argued persuasively that in no way could it be said with any kind of fairness that existing services at the provincial level on which Canadians depend have any fat left in them. There is no justification at the federal level for moving to make those cuts. It also argued persuasively, Mr. Speaker, if you read the report carefully, that fundamental to the principles of federalism is the way in which you rationalize the programs which both levels of government pay for. It should be remembered, if anyone argues about who actually spends the money in Canada-which is one of the minister's arguments-that these programs are largely programs which the federal government quite properly encouraged the provinces to get into on the basis that they would pay for large chunks of them. Therefore, those provincial payments are in fact on behalf of all of us. It is almost nonsense to argue that somehow, if we take the money from here and have it spent there, and have it spent on jointly agreed programs, we are not in fact all getting the benefit. It becomes nonsense to argue whether it shows up in the spending column of this government or that government, when it is always the same pocket that pays the bill and it is Canadians everywhere, whether they are federal or provincial Canadians, who get the benefit. To argue now to rationalize those services by a unilateral decision of this level of government, flies absolutely in the face of what Canadians have understood for years to be the federal-provincial relationships which makes this country work.
It may not be surprising to see that today, after what happened with VIA Rail, after what happened on the Constitution, after what happened in the recent conversations about the energy omnibus bill, where the members opposite waited 15 days to make the deal which they knew they could make in the beginning and which they ultimately brought in today.


Mr. Evans:: It was the members opposite!


John William Bosley: They would not even discuss it until this weekend. Let me say this, Mr. Speaker to the hon. member for Ottawa Centre (Mr. Evans), who is no longer a parliamentary secretary, who may now finally be able to tell the truth about
March 22, 1982

the budget he so loudly supported around this country, knowing he was saying to other people around this town that maybe he was not quite so sure. Perhaps we will see what he does now that he is not a parliamentary secretary.
Mr. Speaker, 1 want to conclude with this. This country will not work if provisions like this change, which radically affects 20 per cent of federal spending and the basic services to Canadians. The country cannot stand another attack by this level of government on those programs unilaterally. We are in a state of difficulty in Canada, and those who do not understand that yet have only to go west and look at some of the feelings about central Canada and about Canada in the west. We do not need another attack on co-operative federalism from the other side. In my view, Mr. Speaker, this proposal, imposing as it does unilateral cuts on the provinces without their support and agreement, is a method that is opposed to the royal commission that was recommended by my leader, wherin we had it as a policy to review federal-provincial payments and transfers in order to get the co-operation of the provinces, to recognize the realities that are coming to Canada.
If you choose not to do it that way-as this government proposes to do-if you choose to move again against the provinces and against those services that the people care about, then you can expect that you will get-and you are getting it-an ever greater concern, ever greater belief that Ottawa does not listen, that Ottawa does not care, and that Ottawa is interested only in pretending to be interested in restraint, while it cuts off those services that the people care about.
Mr. Speaker, surely we should know by now that that attitude will not work and that we risk something very dangerous when we continue with an attitude that flies directly in the face of those Canadians who care deeply about true federalism and co-operative federalism.
I hope, Mr. Speaker, that we will see throughout this debate the beginnings of the change which is necessary on the other side on this, as we had to wait to see it on the energy bill, as we had to wait to see it on the constitutional proposals. I hope, at least now that it is here, that we will see a recognition finally, that you cannot cut off transfer payments to other levels of government unilaterally and cut services that people like and are used to and need, without expecting a terrible backlash against the level of government that proposes to do that; and we need and can stand no more of that.


Some hon. Members:: Hear, hear!


Mr. Hal Herbert (Vaudreuil):: Mr. Speaker, I am not in the habit of responding to remarks of previous speakers, but the hon. member who has just taken his seat did make a direct reference to me, and in the course of my remarks I shall be replying specifically to the point he raised concerning the recommendations of the special parliamentary task force and the position which I played on that committee.
The provisions of Bill C-97, which amends the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, follow many of the recommendations of the allparty parliamentary task force which reported last August. The task force, on which I was privileged to serve, held hearings in every part of the country, and met with representatives
Federal Transfers to Provinces
of all the provincial governments. These meetings led me to understand better the concerns of the provinces and of the many groups and individuals affected by these arrangements. As a participant in that special task force I paid particular attention to each recommendation and I fully support every one of the unanimous recommendations.
Where a recommendation was not unanimous, and where 1 wanted to make it clear that I was not in agreement with the recommendation, I did so by recording in writing to the Minister of Finance (Mr. MacEachen), on the day that the report was released, my own comments on the particular recommendations. I made that letter public. I did so not because I had any major disagreement with the report of the task force but because I felt that it was necessary to elaborate on certain points. Since I could not get them into print in the report, I added them at the time that the report was released.
There is one such item which I will mention here, and I will not hide behind either the report or its recommendations. The recommendation to continue the revenue guarantee was not a unanimous recommendation. I was one member of the committee who wanted the revenue guarantee discontinued. I saw no value to the continuing of the revenue guarantee; in my opinion it should have been discontinued in 1977. Nine of our ten provinces can decide on the percentage that they will get from the amount that is levied by the federal government on its tax form. Each year each individual province can change that percentage if it so wishes. The provinces therefore can take upon themselves the raising of the funds which they need for their own provincial purposes. In my own province, the province of Quebec, the province has its own direct provincial personal income tax. Thus, that province also can decide the level to which it wants to tax its citizens. In seven of the ten provinces there is an agreement on corporation taxes. However, three of the provinces levy their own corporation taxes. Once again the provinces themselves can decide to what level they want to tax their citizens.
I fully support the maximum possible funding at the federal level, and I support it for a reason which is not often discussed, and I am not afraid to discuss it. I support it because, in my opinion, the raising of funds at the federal level is in itself a form of equalization. Quite apparently, more money is taken from those who are wealthier, who have larger incomes and therefore pay more taxes. Quite obviously and quite apparently the people in the province of Alberta pay more in taxes than the people in the province of Newfoundland.
Thus I fully support the maximum use of the federal taxation powers as a form of distribution in this country where, in my opinion, there is already too much decentralization. However, as far as the revenue guarantee was concerned, which was introduced in 1972 in order to tide over the provinces while they made their own arrangements for the raising of funds, which, it was alleged in 1972, could have been reduced as a result of a federal budget, they did not take

March 22, 1982
Federal Transfers to Provinces
advantage of the opportunity between 1972 and 1977 and asked for a further extension.
Under the circumstances, I suggest there is absolutely no logic and can be no logic to the continuation of the revenue guarantee. I say publicly and openly that as far as I am concerned, it should be discontinued in its entirety. I am very pleased that the Minister of Finance has seen it that way. I have previously supported him, as I did after the budget speech, in the discontinuance of that particular program.
This bill is going to transfer $105 billion to the provinces in the next five years under the two major programs I will be talking about in more detail in a little while: fiscal equalization and established programs financing. It is a 72 per cent increase over the amount of $61 billion which has been transferred in the past five-year period. These totals do not include many other major fiscal transfer payments from the federal treasury such as, for example, the Canada Assistance Plan.
The bill provides a new equalization formula to help financially disadvantaged provinces such as my province of Quebec. It continues the government's very strong support for health and post-secondary education. I shall be making remarks on both the health program and the post-secondary education program in a few moments.
The critical issue on fiscal arrangements is the re-establishment of the political and financial balance within the federation. This involves the financial balance between the federal government and the provinces and the financial balance among provinces. Since 1975, the federal government has more than quadrupled the amount of tax room made available to provinces in the personal income tax field, particularly by means of tax transfers, enabling the provinces to finance expenditures in the areas of health and education.
The significant development of the past few years has been the decline in the financial position of the federal government. This is indicated among other things by the size of its deficit and has reached the point where its freedom to initiate policies and programs is severely limited, even when the national interest is at stake. At the same time, the over-all deficit of provincial governments has built into a surplus.
The seven provinces without oil and gas revenues continue to have deficits, but these, with the exception of Quebec, have been relatively stable compared with the federal deficit. As far as the interprovincial balance is concerned, the enormous increase in provincial natural resource revenues has so far accrued almost entirely to three provinces. The spread between the fiscal capacity of Alberta and the other provinces is now well in excess of any gap which existed in the past between rich and poor provinces. Alberta's fiscal capacity prior to federal transfers is virtually double that of all other provinces and about four times that of the Atlantic provinces. These disparities between Alberta and other provinces are not significantly taking account of intergovernmental transfers.
While there are numerous considerations which determine the political leverage of any government within a federal
system, it is clear that fiscal strength is one of them. To avoid competition between the two orders of government, it is necessary that the balance which exists in the fiscal and political situations of the two orders of government be capable of gradual adaptation to reflect shifts in the other social and economic circumstances. One of the means of ensuring this is periodically to review fiscal arrangements, as we are doing.
Transfers to provinces account for approximately 20 per cent of total federal expenditures. Between 1961 and 1981, the federal share of total government revenues declined while the provincial and municipal share increased. The change in the federal government's position, when intergovernmental transfers are taken into account and federal transfers to provinces are deducted from federal revenues and considered as provincial revenues, is striking.
The federal share of total revenues, which was 50 per cent in 1961, dropped to 38 per cent in 1981. One can see that the provinces now spend the largest share of public moneys raised in Canada. It is abundantly apparent that Canada is one of the most fiscally decentralized countries in the western world.

Mr. Speaker, 1 often get angry when I hear ministers from the government of my province, the province of Quebec, complain about transfer payments made by the federal government to the provinces. Last Friday, in a question to the President of the Treasury Board (Mr. Johnston), I said, and I quote:
-for the equalization program alone during the current fiscal year had increased by some $400 million, from $1.7 billion to $2.1 billion-
I asked the question because when I travelled across this country last spring, the figure given for the equalization program was $3.4 billion for all provinces receiving funds under the program, including $1.7 billion for the province of Quebec. A month ago, I saw the revised figures, and I asked the Minister of Finance whether it was true that the amount had now been raised to a total of $2.1 billion, and I received a letter confirming this. Yes, I did. It means that since last spring, for April, May and June, the amount earmarked for the province of Quebec under the equalization program was increased by a total of $400 million. So I wonder why the province's ministers and premier keep complaining that they are getting less from the federal government.
I also mentioned the fact that in addition, the supplementary estimates of the President of the Treasury Board show $124 million for the Canada Assistance Plan. That means additional expenditures, and I am sure that the province of Quebec will get probably one quarter or one third of that amount.
When I look at these figures, I see that between April 1 of this year and March 31 of next year, Quebec will be getting another $5.5 billion out of the two programs we are discussing this evening, and this funding is to go up to nearly $9 billion by 1986-87, so that again, I fail to understand why there are complaints from the province of Quebec.

March 22, 1982
The fiscal equalization system makes its possible for all provinces to provide reasonable standards for basic public services to their residents without having to resort to unduly high levels of taxation. With this bill, about $29.3 billion of equalization will be paid to six provinces during the next five years compared with $16.5 billion under the present system over the past five-year period. That is an increase of over 77 per cent.
As I have already mentioned, the province of Quebec will share in this amount, going from $5.5 billion next year to almost $9 billion in 1986-87. In addition, this bill extends, for an indefinite period, the fiscal stabilization program which protects the provinces against a reduction in revenues arising from a sharp downturn in economic activity. Therefore, it facilitates their borrowings. I need not say that the province of Quebec will have difficulty borrowing in the next year or two.
I will talk about the economic situation in Quebec in a few minutes.
Furthermore, there is a floor provision whereby no equalization receiving province could have a total entitlement for a fiscal year which would be less than 90 per cent of its total entitlement for the preceeding year. Payments would increase by 13.6 per cent in 1982-83 over 1981-82. The average rate of increase of equalization over the full five year period would be 11.2 per cent.
Preliminary census data recently issued by Statistics Canada indicate that the estimated population of certain provinces is falling significantly. Once again need I say that in my province we see the population decreasing. Once again I ask myself why we hear so much double-talk from the government of Quebec. It has introduced legislation that discourages the entry into the province of those persons who would ordinarily replace those who are moving to other provinces to find jobs or have been transfered by their companies. It is suddenly discovering that its tax base is becoming lower and lower and its capability to tax its citizens is becoming increasingly difficult. Its present level of taxation of the individual in Quebec is so high that anyone who now has the choice chooses to live in another province. Yet the federal program still tries to take care of such a situation and tries to help a province that is doing precious little to help itself.
Population is a key factor in determining the equalization entitlement of a province. Sizeable amounts would normally have to be recovered from provinces whose share of the total population is lower than that used in the present census estimate. Recent calculations indicate that these recoveries could be substantial and could create cash flow problems for affected provinces whose fiscal capacity is below average. The federal government has agreed to make special payments which would fully offset the recovery of these census adjustments from provinces qualifying for equalization in 1982-83. Even when the population falls because of the actions of the provincial government itself, the federal government still tries to help.
Federal Transfers to Provinces
The equalization system provided for in the bill would achieve the purpose of equalization by means of the most comprehensive measure of fiscal capacity ever used since the inception of the program 25 years ago.
I would like to address a few remarks on established programs financing. These transfers have funded provincial health care and post secondary education programs. The bill modifies the computation of the EPF cash transfers so that the per capita value of the total federal contribution to all provinces will be equal. This change would rectify one aspect of the EPF that Quebec has criticized in the past. It would also implement a major recommendation of the Parliamentary Task Force on Fiscal Arrangements. Once again Quebec spits in our face then turns around and asks for more.
The fiscal arrangements act authorizes the federal government to make fiscal stabilization payments, and this bill provides for an extension of that authority for an indefinite period. The purpose of these payments is to protect the provinces from sudden year to year losses in revenue as a result of a severe economic downturn in the national economy or their own economies. Once again, the downturn in the Quebec economy is greater than in any of the other provinces except for some of the smaller Maritime provinces. This provision has been of value to provinces when they borrow in foreign capital markets and its value would be enhanced by its indefinite duration.
The major issue with respect to the EPF arrangement is whether the additional flexibility that the provinces now enjoy compared to that under previous cost sharing is compatible with the maintenance of national standards in the health care field. The provinces have always had to comply with certain program conditions in this area, but recent developments have raised an important question, namely, how the federal government can effectively enforce the national health care standards.
I would like to spend a little time on this because it was an issue which was discussed at length by the members of the parliamentary task force. I do not think I would be telling any secrets if I said that the division was very clearly on party lines, certainly in the position of the more right-wing members of the committee, that the provinces should have the freedom to decide, for example, whether they would permit extra billing by doctors, whether they would permit daily charges by the hospitals, and on all kinds of methods by which these provinces with Tory governments would try to raise funds. I do not think I would be telling tales if I indicated that the Liberal members of that committee were strongly opposed to the continuation of these practices. It goes without saying that so was the representative from the New Democratic Party. But we did not get a recommandation into the report that these practices, of which I strongly disapprove, be discontinued. Part of the reason for that was that it was recognized that the responsibility lies with the provinces. Being a provincial responsibility, there was probably no way in which the federal government could enforce any such conditions that would require the

March 22, 1982
Federal Transfers to Provinces
provinces to either discontinue or refuse to allow extra billing by doctors plus charges such as daily charges for hospital care.
Personally, I can only plead that the provinces recognize that it is their responsibility; they also recognize that such charges are made to the sick and that in those circumstances the charges are grossly unfair. I will also point the finger at the federal government, however, and I have done this by letter on many occasions.
The government of the province of Ontario levies a charge under the Ontario Hospital Insurance Plan. Everyone who works is obliged to make a contribution. The contribution is the same for every person, without regard to level of income. Thus, it is obviously much harder for a person with a low income to pay than it is for a person with a high income. In other words, it is a very regressive form of taxation. It is a means of raising money of which I strongly disapprove. As I said previously, however, members of the committee recognized that it was impractical for the federal government to try to impose conditions on a provincial government in connection with such health insurance payments.
Where the federal government can play its part is by discontinuing the contribution it makes for such payments to the employees in the federal public service. When I say discontinue, let me hasten to say that I recognize that payments to anyone are never reduced these days. What I suggest is simply that as the various agreements with the unions terminate, we fold into the salary scales the amount the federal government now contributes for health insurance premiums and that we no longer consider ourselves obliged to participate in this regressive form of taxation. This would be one way the federal government, which has attempted to indicate its feelings for the poorer people in the country, could use its federal powers and could discontinue what I consider to be a very poor practice.
I want to spend a few minutes now on the subject of postsecondary education. As you may be aware, Mr. Speaker, in one province this year-which will terminate on March 31- the amount of federal contributions to post-secondary education exceeds, by a considerable amount, the total that that particular province spent on post-secondary education. In fact, there is even a second province that does not spend all the moneys it receives for post-secondary education. I feel that this is unjust. I tried to get the committee to look at a different method by which it could share the moneys that were available for post-secondary education among the provinces. I reiterate that it would not bother me if the total amount were increased, but nevertheless, I wanted to see a fair distribution.
Since I have been critical of my own province in my previous remarks this evening, I will now say a good word for what Quebec has done in the field of post-secondary education. In the universities in the province of Quebec there are, on a percentage basis, more out-of-province students and more outof-country students than there are in any other province. In fact, as a percentage of the total funds spent on post-secondary education, on a per capita basis, the Quebec government spends more than any other province. To be fair, I will say that I should like to see the example set by the province of Quebec followed in the other provinces. I say this because I believe that portability, accessibility and the exchange of students from province to province is an excellent thing for the country. I am very pleased that Quebec students can go to St. Francis Xavier university in the maritimes, to Queen's and to Toronto university and others across the country and that students from Ontario can come to the universities in the Province of Quebec.
The daughter of the hostess where I was staying last summer, while on holiday in Victoria, British Columbia, was a student at the University of Quebec where she was majoring in language. I think that is what our country is all about, and I was very proud and I want to say publicly how pleased I was that a girl from Victoria, British Columbia-which is not known for its bilingualism, and I say that not in too critical a sense-was a student in the province of Quebec majoring in the French language. This is an excellent thing for the country.
I was disappointed that the three provinces of Saskatchewan, Alberta and Manitoba, had a rather restrictive policy. In fact, they restricted the out-of-province students to a total of 5 per cent. I recognize that distances in this country are such that it is not likely that that percentage would be substantially increased, but I do not like the fact that it exists. For that reason I suggested to the committee-my suggestion did not carry but I am trying to make a point tonight-that part of the payment for post-secondary education should be based on fulltime enrolment. Obviously the point would be that more moneys would go to the provinces that had, on a per capita basis, more students in the universities. I did not win my point and we are continuing with the present arrangements. I am not particularly sad about that, and I make the point tonight only because I want to explain why not every one of the recommendations in the report is unanimous. Mind you, I must add that I was very happy, in a general way, with the report and that the points I have raised tonight are not of great significance.
Despite the difficulty we have had with criticisms of the budget-and I see the Minister of Finance is here tonight and he will remember that the day after the budget I had the opportunity to speak in the House and I fully supported the direction of that budget-I want to reiterate that the general direction taken by the Minister of Finance in his budget was one that I fully supported the day after and fully support today. I received several hundred complaints from my constituents and, with the exception of about 20, every one was based on a false assumption-the number of representations which I received from airline company employees, for example, who were worried about the taxation of their passes. The point is that the Minister of Finance in his budget was taking
March 22, 1982

care of expenses which must be looked after as a result of Bill C-97, which we are hoping to pass into law before March 31.
1 have brought into my remarks tonight my concerns about the fact that the province of Quebec complains on a daily basis about the federal government, despite the fact that it is the major beneficiary of the programs included in the bill. Of course that is no reason for the amounts to be reduced. Nevertheless, I hope, in the course of the debate and the passage of the bill, that members from the province of Quebec will talk about the amount of these transfers, the fact that in fiscal equalization the sum is not fixed and that as a result, within the current fiscal year the province of Quebec will benefit by $400 million more than it could have expected last spring. Also 1 hope that they will mention such programs as the Canada Assistance Plan which pays, without limit, 50 per cent of the cost of social programs, and that the province of Quebec, once again finding itself in difficulty, is able to turn to the federal government for financial assistance.
I sincerely hope that this bill, which in my opinion is extremely generous and extremely beneficial to the province of Quebec, will be passed with the approval of all hon. members of the House including the opposition. I hope it receives speedy passage.


Mr. Pat Nowlan (Annapolis Valley-Hants):: Mr. Speaker, I am happy to participate in the debate on Bill C-97, which has a fairly complex sounding title which reads:
An act to amend the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, 1977 and to provide for payments to certain provinces.
That is the short title of Bill C-97 which is being debated this evening.
I do not imagine there is a bill which could be debated in the House of Commons that would more accurately reflect the reality of Canada than this one which deals with equalization payments to the provinces which have and the provinces which have not. With the complicated formulas in the bill and the many clauses of it, I share the concern of many other hon. members who have spoken today that we are faced with a relatively short period of time in which to analyse fully all its implications. In that context, I compliment the parliamentary task force and several of the members who have spoken. 1 congratulate my colleague who led off the debate, the hon. member for Mississauga South (Mr. Blenkarn), the hon. member for Winnipeg-Birds Hill (Mr. Blaikie), the hon. member for Vaudreuil (Mr. Herbert), and other members who were on the task force. There were approximately nine members on the task force who contributed much time and effort to this most complex subject. In view of the amount of paper which comes across one's desk, I dare say that all members have not had the opportunity or taken the time to digest the report of the task force which, in short, is called, "Fiscal Federalism in Canada". I think the members who served on that committee deserve credit. It was really the blueprint, the map and certainly the photograph of what happened in terms of rationalizing fiscal arrangements between provinces and the
Federal Transfers to Provinces
federal government. It tried to balance national objectives and to pay respect to provincial jurisdictions. I think the task force did a very good job.
Something that has not been mentioned much thus far is that as we talk loftily about federal transfers and provincial jurisdictions, we are really just talking about something which has a common denominator, that is, the needs of the people of the country being taken care of out of their pocketbooks. The pocketbook is not federal or provincial. It is the pocketbook of taxpayers which pay for social, health and educational needs.


An hon. Member:: It is the same old pocketbook.


John Patrick (Pat) Nowlan: As my friend behind me says, fundamentally it is the same old pocketbook. We are really following the steps of history tonight, as did the task force earlier in the year. We can follow them right back to the Rowell-Sirois commission which in effect conducted the first major review of tax policy and fiscal arrangements between provinces and the federal government ever held in the country. It started to chart what is here today. It certainly reviewed the changes which occurred from confederation to 1940, when I think the commission finally reported. In that context, we are dealing with the fundamentals of providing for the social needs of Canadians from coast to coast. Certainly we in Atlantic Canada are most sensitive when members start talking about equalization payments because, as Alberta was in the Rowell-Sirois days, at the present time we are still a have-not area. Thus, any change in the formula, the base or the percentage which affects the dollars flowing to Atlantic Canada, in particular to the province of Nova Scotia, causes us a great deal of concern.
As I listened to the debate thus far, I thought that perhaps there were two things polluting a rational, objective discussion of the bill. One was very political and concerned the credibility of the Minister of Finance (Mr. MacEachen) from Nova Scotia. If the present Minister of Finance could obtain the crystal ball which Mackenzie King, his erstwhile mentor, followed, if he could look at the path followed by the last Liberal minister of finance from Nova Scotia, the Hon. J. L. Ilsley, the hon. member for Digby-Annapolis-Kings, and if he could have a conversation with that gentleman who was a classical Liberal full of principle-


Allan Joseph MacEachen: Why do you not refer to the hon. member for St. John's West (Mr. Crosbie)?


John Patrick (Pat) Nowlan: I distinctly said the last Liberal minister of finance from Nova Scotia, the Hon. J. L. Ilsley. He was a very fine Canadian and a very fine classical Liberal in the finest sense of the word, before it was polluted and changed from Liberalism to Trudeauism. I will not comment upon that too much because my speech will not be partisan tonight. If the present Minister of Finance could talk to Mr. Ilsley in the hereafter, 1 am sure Mr. Ilsley would say, "For goodness sake, Allan, you can play with the figures all you want, you can talk about a 1961 base, but watch out". It was not relevant for the minister to talk about the 1961 base and how federal revenues slid down because we are talking about 1971 to 1981 when in

March 22, 1982
Federal Transfers to Provinces
fact the increase in federal revenues and the increase in provincial revenues were approximately the same.
It concerned me when I heard the Minister of Finance this afternoon talk about how the federal government would increase the gross absolute figures of the established programs financing from something like $60 billion to $105 billion five years down the road. Statistically he was correct, but he did not point out-and I do not think he forgot it-that if there was any change in the financing formula under EPF arrangements, instead of $105 billion five years down the road, there would be an extra $5.8 billion in the program to help with the health care needs of all those who receive it and to help with the post-secondary education costs of those who require it. That is one thing the minister has to confront, because it comes back to the old credibility situation which he faces on the basic message of the budget.
I will come back to the shell game, but first I want to mention something the hon. member for Vaudreuil said, which I do not think he intended to say but it might be repeated by other members here in this debate, because, frankly, I think it pollutes discussion on any bill before us. I am a realist in terms of politics, but I wonder, in terms of rational, objective discussion on this equalization bill and anything else, how much we are adversely affected by the present political reality of the country. There seems to be a pecking order whereby the federal government has to make sure it is supreme because there is another government in Quebec that has a certain philosophy-it is certainly not my philosophy for Canada, but the governing party there is a recognized political party. There does seem to be an issue here on the floor of the House about whether what the Ottawa government says will put the Quebec government in its place.
. In the 1940s, or whenever the Rowell-Sirois commission was created, there was the interesting irony that Alberta stayed out of the deliberations. I do not think Alberta put in an appearance before the Rowell-Sirois commission, but the government of Quebec did. I do not know all the history of the 1930s and the 1940s when Mr. Aberhart was Premier of Alberta, but if one reads the debates or the press reports of the day, I do not think one would find there was the emotional negativism registered against the have-not province of Alberta that there is today being registered by the federal government against, admittedly, a separatist government in Quebec. In my opinion, this pollutes the atmosphere of any discussion we have in the House of Commons even on something as fundamental as the unity of the country as contained in this bill which is to amend the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act. Those two matters are a sort of shroud of Quebec that hangs over this chamber and at the present time over the future and the credibility of the Minister of Finance. This affects rational, objective discussion of Bill C-97. Those two matters give me a great deal of concern because this bill is really the financial mortar which helps to hold this country together with the financing formula and arrangements it defines and implements for the benefit of most parts of Canada, and certainly the have-not parts of Canada.
I hope that somehow we can discuss those points on their merits. We should not always cast stones at different provinces. We should not try to play a financial shell game right here in this chamber when we deal with figures in a bill. What accentuates this situation is not just the Minister of Finance and the shell game, but the classical statement which I think represents the present philosophy of the Prime Minister (Mr. Trudeau) when he said not too long ago that co-operative federalism is dead; that it is over, that it is through, that he tried and he was rebuffed, he was burned in the kitchen. It is like a little boy in grade seven playing football who said that if we did not play to his rules, he would take the football home so we could not continue to play the game. That type of petulance is fine for a boy in grade seven but it is not very fine for a Prime Minister of this country who has a responsibility and a duty to make federalism work.
In effect, that is the overriding matter which adversely affects rational discussion of Bill C-97. Let us be realistic and human. What premier of a province, not just Quebec's premier, or what provincial treasurer worth his salt, on hearing the epitaph from the Prime Minister that co-operative federalism is dead and from now on the federal government will charge ahead regardless of jurisdiction to do its will, will sit down and rationally be able to negotiate and discuss matters as serious as equalization when a red flag is waved before his eyes? I suggest this country is in serious trouble, Mr. Speaker. Personally, I do not believe that it has ever been in more serious trouble, certainly not in the 16 years I have been in this chamber. Unless the leader of the land, fundamentally the Prime Minister, develops in his psyche some capacity for conciliation and rationalization to challenge that intellect he has, rather than his attitude of confrontation and simplistic epitaphs which insult Canadians, provincial premiers and treasurers, we will not have that type of atmosphere of trust and respect that one has to have in the House of Commons.
We all know that it was missing in the last few days, and the clanging of the bells testified to this. If that is symbolic here in the House-there is not a bell outside of this chamber from coast to coast-what we have is disagreement, discord and distrust. That is one of the reasons the Minister of Finance has a very difficult job despite the budget. Even if his budget of November 12 were not politically flawed, as the Solicitor General (Mr. Kaplan) calls it, his job is difficult. The Solicitor General is now standing firmly behind the Minister of Finance. I am very glad for the Minister of Finance that the Solicitor General did not say on March 11 or whenever the Ides of March are he was standing behind the Minister of Finance. We all know what happened to Caesar and Brutus. I do not know if the Solicitor General really has the strength to lift a knife, but verbally he certainly cut into the back of the Minister of Finance, behind whom he was standing, with his rhetoric and his letter to the Toronto Real Estate Board. Be that as it may, assuming the budget was really well thought out and put together and tried to achieve the objectives which,
March 22, 1982

as the minister so proudly stated here tonight, he delivered before it was dissected, even if it were a good document, with the atmosphere outside the House among the first ministers of the land-and we can forget about the Canada bill because it is out of the way-the Prime Minister said that co-operative federalism is dead.
Earlier 1 said half facetiously that the Minister of Finance should talk to the former Liberal minister of finance from Nova Scotia. But I say that a former Liberal prime minister, the person who coined the term "co-operative federalism" is not very happy tonight, wherever he may be, about the present Prime Minister saying that co-operative federalism is dead. If co-operative federalism is dead, how can one expect agreement on federal-provincial fiscal arrangements? At the moment there is no agreement. That is part of the problem.
I spoke earlier today about the credibility of the minister on this matter. It was repeated by the hon. member for Vaudreuil who was trying to justify the argument that in effect the reason federal-provincial transfers were being cut down was the restraint program here in Ottawa. But the figures actually show that, in terms of federal revenue after transfers from 1971 to 1981, the federal revenue grew by 286 per cent, which is about the same rate of growth of provincial revenues after transfers. Yet the interesting contrast is that in the same period federal spending increased 335 per cent, whereas provincial spending increased approximately 250 per cent. A very real difference. Admittedly, between 1961 and 1971 federal revenues showed quite a substantial change, but the point is that this government has been in control basically for all that period of time. The programs they brought in were under their control. How can they now come into the House complaining about changes in 1961 to 1971, when we are talking about 1971 to 1981, when they were fundamentally in control of all programs and tax policies? To suggest now that the provinces, which did exercise restraint, should now have their transfers decreased to help compensate for the excess spending of the federal government is to penalize those provinces and the people in those provinces, which is manifestly unfair.
I come back to the other point about the shell game tag which is going to be applied to the minister continually if he continues to play with figures the way he did today. Statistically speaking, there is no doubt that under the new program there is a spending increase in dollar terms. Of course there is an increase, just as there is an increase in everything else, such as the population and the inflation rate. Every year there is an increase in almost everything. Yet the minister stands here this afternoon and without even a smile suggests that five years down the road we will have spent from S60 billion to $105 billion, but he does not point out that without these changes this amount would have gone up by an extra $5.8 billion to over $110 billion.
I do not know about you, Mr. Speaker, but when I get into billions of dollars it is almost impossible to relate it to people, but let us talk about the differences which will result from C-97 and what the situation would be if there was no change. We
Federal Transfers to Provinces
are talking about a shortfall of over $5 billion, and someone has to pick up that shortfall. I said earlier that it was the same taxpayer who pays the bill, at whichever level of government, but in this shell game between governments where the federal government is, in effect, going to cut back over $5 billion on programs established by the provinces for health care, hospitalization and post-secondary education, the federal government is going to put real pressure on those provinces to pick up the shortfall. They are going to have to either increase university fees, increase the cost of health care or cut back in service, or a combination of all those things. I suggest, Mr. Speaker, that this, especially for the region I come from, that is Atlantic Canada, places an unfair hardship on the provinces which will have to make up the shortfall of several hundreds of millions of dollars. The minister will have to take the political responsibility for that shortfall, and he will have to explain it to the university students and, certainly, to those in need of hospital and medical care in Atlantic Canada.
That is why, Mr. Speaker, I am so happy to participate in this debate in order to accentuate the fact that over all of this you have the federal provincial equation-Quebec against Ottawa-which adversely affects almost every type of discussion we have in this chamber. Compounding that, we have the credibility problem of the Minister of Finance with regard to his own budget. I just do not see how the minister can justify this, Mr. Speaker. To summarize the conclusions of the "Fiscal Federalism in Canada" report, it says in effect that there is no more fat to be cut from health programs or postsecondary education. It has been cut to the bone now, and if you cut any more, you are going to affect the programs adversely. Those are not my words, Mr. Speaker; that is the conclusion of this all-party task force on page 193 of its report where it says this;
We hope that the general message of this long and complex report is clear, however.
We are agreed that the programs examined in the course of our work are serving vital social needs and merit undimished support.
I would just point out that the programs they talk about are the programs under EPF: hospital care, medical care and postsecondary education. It goes on to say:
Over-all funding of these programs should, in our view, be maintained at no less than current levels. In our appraisal of the programs falling within our order of reference, we identified none in which reductions in over-all levels of funding could be undertaken without a serious risk that important program goals and standards would be jeopardized.
We are all agreed, therefore, that federal-provincial negotiations should be directed toward the goal of undiminished funding for both the health and postsecondary sectors supported through EPF and the social security programs financed in part through CAP.
It seems clear to us that levels of federal funding in these programs to date have been adequate to initiate and sustain them through early development phases. But since 1977, within the discretion that was deliberately made part of the arrangement negotiated at that time, most provincial governments have significantly restricted program funding under EPF and under CAP. It is our view that there is now, for the most part, no fat left in the system-no fat in postsecondary education, no fat in the health system, no excess spending in social assistance, little redundancy in social services. We accept the representations of those who argued before the task force that serious cuts in program funding would cut into muscle and sinew, not fat. Unless one could presume that federal reductions in funding would automatically be matched by corresponding

March 22, 1982
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increases in provincial expenditures-a presumption that may not be considered altogether plausible-then in order to maintain present standards, programs would have to be privately financed to a greater extent than at present. In health, this would mean greater appeal to user charges and more extrabilling; in education, higher fees. In either case, basic national objectives of equity and equality of access would suffer.
That is the conclusion of the task force on Bill C-97 as it affects hospital care, medical care, and post-secondary education. These are the very things that members on all sides have asked questions and shown concern about. Increased costs and user fees are going to result if there is no change in C-97 to make sure that five years down the road there is the same funding as exists today.
So, in conclusion, Mr. Speaker, I hope that when this matter is referred to committee changes can be made to protect the have-not provinces which depend on equalization as a fundamental contract of confederation. I cannot think of another mortar which would bind together the bricks which form the foundation of this country more securely than the principle in which all parties believe, namely, equalization, which simply means that those who have share with those who have not. One could almost preach a sermon on this in terms of the Christian ethic. It is fundamental, and we should not start playing around with the formula in such a way as to leave the have-not provinces without the tools to carry on the programs they presently have. National goals are set by the national government. We know we need national goals in our programs, but if we play around with the formula, we will put an unduly heavy burden on the provinces.
This matter should be resolved by negotiation. It cannot be resolved through unilateral challenges, and it cannot be helped by the Prime Minister, who says that the whole essence of this land, co-operative federalism-a phrase coined by former Prime Minister Pearson-is dead. If the Prime Minister honestly believes that, then for the sake of this country he should get out and let someone else who believes in this country and in co-operative federalism carry on. He should let a minister of finance who believes in that philosophy carry on in a constructive way rather than take a negative approach. It was not a negative approach that developed this country in the first place, and a negative approach will not get us out of the difficulties we are in today. It will take a much more objective and constructive attitude to bring the diverse parts of this country together.
It is a tragedy that the Prime Minister knows more about the world than he knows about this country. I wish he had worked in the woods of British Columbia when he was going to school, in the survey camps of the Iron Ore Company up the Moisie River, in the iron ore fields of Labrador, at Scheffer-ville, Algoma or at the Kitimat plant. I wish he had gone across this country when he was young so he could have a feeling about this country as he does a little bit about the world.
It is sad that he says co-operative federalism is dead because there are good Canadians in all political parties from coast to coast who believe in this land. There are students who believe
in this land, yet the number one man in the House of Commons, the Prime Minister, says that the concept which is the reason we came together is dead. That does not augur very well for the future.
Hopefully, the Prime Minister will listen to some hon. members on the government side who have an appreciation for this land. It is not too late, but it is a challenge. It is a difficult challenge for the Minister of Finance in the face of the totality of the political circumstances in this land tonight, but part of the challenge will be for the Minister of Finance to come to an agreement with the provinces on fiscal transfers-transfer payments-in a spirit of mutuality. His challenge is to rekindle some of the trust and respect which was there before. If we cannot develop that in this House-and we have shown that it is and has been missing-I am not optimistic about the success of the minister in meeting the challenge confronting him. Perhaps the best thing to do is to debate in the House as objectively as we can. If we did that, we might be able to set a standard for the ministers who are responsible for carrying out the law in their dealings with other governments. We might give them some background and support. But if we cannot support each other in a spirit of mutuality, respect and goodwill, as I said during the reform debate, we can pervert or prostitute any rule of procedure. If that happens to be the law and the lesson of parliamentary rules, I think it is even more the lesson for dealings between the federal government and its provincial counterparts.
Taxpayers are not federal taxpayers. The federal government collects the taxes. We all know what happened after the Rowell-Sirois commission in 1941; the provinces rented out the taxing system to a centralized authority because of the war effort. The centralized authority has kept that authority since, and that is likely a good thing, but it is the Canadian taxpayer who pays the tax, and we must recognize the needs of the taxpayer as we try to share the wealth.


Mr. Jim Hawkes (Calgary West):: Mr. Speaker, I rise this evening to speak about Bill C-97 at the second reading stage of debate. This is the stage when we deal with the principles of the bill, and I stand with some sense of sadness because one of the principles lying behind this bill is the principle of unilateral action by an unpopular central government. In its unilateral action this central government would reduce funding to provincial governments for human services in the fields of health and education. This cut in funding brings to mind the fact that the Prime Minister (Mr. Trudeau) announced with great fanfare some 13 years ago the existence of an across Canada medical program by which the health of Canadians would be improved because the federal government, the collector of taxes at the central level, would make a significant contribution to the payment of the bills that would result from the provision of improved health care.
As I examined the accounts of Canada I found that not once in the last eight years, since 1974, has the federal government been able or would have been able to make its payments to provincial governments and to the people of the provinces if it had not borrowed the money. As I look at the public accounts
March 22, 1982

of Canada, 1 am forced to the conclusion that over the last eight years we have enjoyed a health care system which is probably the envy of most countries of the world, but it is a system which is deteriorating and no longer improving. We have enjoyed that system at the expense of the taxpayers of tomorrow. We have a government which wants the political credit for contributions to post-secondary education. It clearly wants the credit for contributions to our health care system. However, at the same time it wants to blame the providers of the services, the people of the provinces through their provincial governments, for any inadequacies. The federal government wants to take credit for any successes, but lurking in the background somewhere is the fact that the credit it wants to take is credit it is paying for with borrowed dollars which the taxpayers of tomorrow will have to repay for the sake of those who are enjoying the health care and post-secondary education of today. I have been in this House only two and a half and going on three years. When I was elected, the size of that debt required 18 cents of every tax dollar to pay the interest. As I stand here today, it requires 23 cents of every tax dollar collected. That is five more cents of every dollar for bankers in Sweden, New York and London. Five more cents of every tax dollar is not available for health care or post-secondary education.
Where does the blame lie? Why are we considering a bill today which might cut the guts out of our health care system and our post-secondary education system because we are more interested in paying money to bankers? We have been forced into that, and where does the blame lie? I suggest it lies in part with the New Democratic Pary which, back in 1972-74, bargained with and leapt into bed with the Liberal government to create an explosion of spending, borrowing and long-term commitments without the necessary revenues and without the discipline required to collect the money. Then, in 1979, when we were finally presented with a budget deemed to be the fairest to poor people, a budget which would have brought interest rates down and a budget which would have cut down payments to bankers and made money available for health care and post-secondary education, members of the New Democratic Party stood in the House and threw that budget out. They threw that government out. Therefore, they must accept the responsibility, at least in part, for the tragedy that exists in so much of the legislation which we face in this House.


William Alexander (Bill) Blaikie: You could have been smart enough to get reelected, but you weren't.


Frederick James (Jim) Hawkes: The hon. member says, you could have been bright enough to get re-elected, but you weren't, that from a member of the New Democratic Party that went to the Canadian people, in bed with the Liberals, and said that an 18cent tax on a gallon of gasoline was too much; and who refused to join in our bells for freedom in any kind of active sense, when we said 98 cents a gallon, hidden in 15 bills, was quite a bit more than 18 cents and far too much against freedom. The
Federal Transfers to Provinces
NDP speak out of several sides of their mouth and they should be careful. But they are culpable and they are small.
Mr. Speaker, the tragedy of this chamber is that there are so many silent members on the government side. They will not speak to this bill, they will not speak on a lot of legislation. I suspect they will not speak up strongly in caucus. They will not build an alliance to put the reins on a cabinet minister who is going astray. Somehow they are more concerned with some kind of future gain, perhaps, and their concern is so strong that they will not join together to act on behalf of their constituents.
Mr. Speaker, I come from the province of Alberta. As most members of this House know, the per capita income of people in that province is higher than the national average. There is room for increased taxation for the kinds of services that people want, the health services and post-secondary education.
I stand in this House, Mr. Speaker, as someone from that province, trying to draw the attention of the House, and of the cabinet minister from Prince Edward Island, and of Members of Parliament from Newfoundland and from Quebec, to the fact that the people in their provinces are quite heavily taxed, that the people in their provinces do not have the same average per capita income, that they do not enjoy the same level of medical facilities and the same kind of medical care.
Yet, some day in the not too distant future, the members from those provinces, Liberal Members of this Parliament from Quebec and Newfoundland and Prince Edward Island, will stand in the House and will vote on this bill, and with their vote they are going to be saying to the people of their province that those people will have to cut the health care services and the expenditure on post-secondary education.
We can often escape facts, we can play games with the truth, but there is a bottom line and that bottom line is that once this bill is passed, the governments which are charged with the responsibility of providing medical services and postsecondary education will have less money and will have very little capacity to tax their citizens in more ways to raise more revenue.
The fact remains that this piece of legislation will do that to those people in Newfoundland and Quebec and New Brunswick and Nova Scotia. The only reason that bill will pass this chamber is that the people, the voters of those provinces, who sent Liberal members to the House, will watch those Liberal members stand up and vote for those budget cuts, they will watch those Liberal members put loyalty to the party ahead of sound planning, ahead of humane considerations. That is what that vote will signify, Mr. Speaker. We on this side of the House, in the Progressive Conservative Party, will carry the case once again for the people of Quebec. The people of Quebec sent 74 members to this House out of 75 seats. Our one lone member, the member from Joliette (Mr. La Salle), is very busy on all kinds of standing committees, he speaks on all kinds of subjects-


Mr. Roy:: And master of none!

March 22, 1982
Federal Transfers to Provinces


Frederick James (Jim) Hawkes: -he does so much of what this government is doing and intends to do, he is responsible to the people of Quebec.
The bells rang for two weeks to bring to the attention of Quebecers that the government wants to tax gasoline at 98 cents a gallon. The people of Quebec were not supposed to find out about that. This government wants to turn over to an appointed body the authority to take land away from the province of Quebec for a power corridor, in a manner that would not allow witnesses to appear, that would not allow public input. And 74 members of this chamber from that province sat mute, sat silent, not concerned about the people of Quebec. One member of this chamber from that province stood up and one party stood up.
As I stand here tonight, very vivid in my mind is a speech given by the Prime Minister about one week ago, when he stood on a platform in the city of Toronto and said that this party, the Progressive Conservative Party, in standing up for the rights of democracy, for the rights of Canadians to be heard, was fascist, just like, he said, a number of countries that he cited, including Spain.
Mr. Speaker, the first thing to note from that is that the Prime Minister is not an adequate student of history, that he has not examined those European countries and the conditions which led those countries to the fall of their democracies. If the Prime Minister had taken the trouble to read a history book about a country like Spain, what would he find? He used Spain as an example. If he looked at the history of Spain and its difficulties, from a historical perspective-


William Alexander (Bill) Blaikie: Mr. Speaker, on a point of order. I am wondering what the history of Spain and the debate about fascism and about bells and all that have to do with the fiscal arrangements, and I wonder if you might call the hon. member's attention to the rule that he is supposed to speak to the bill.


Mr. Deputy Speaker:: The Chair has been listening with interest and attention to what has been said. There has been a general discussion about powers and transfer of powers. The rule of relevance has not been infringed upon, but I am sure the hon. member will take notice of what has been said.


Frederick James (Jim) Hawkes: Mr. Speaker, 1 mentioned in my opening statement that the issue of unilateral action was one of the principles that this House and every member in it had to consider. When they vote on this bill, they are voting for unilateral action. They do so in a context in the month of March, 1982. That unilateral action bothers me, partly from its consequence for the health care system and partly because some five miles from my riding border a separatist was elected in the province of Alberta. That came about partly because the people of my region on principle did not like unilateral action. They recognized that unilateral action is frequently uninformed action.
Democracy died in Spain because of two or three major factors. One of them was regionalism. Many regions of Spain, if I can quote the following:
-especially the Basques and the Catalans, strongly opposed a central government which they saw as being paternalistic, authoritarian, incompetent and as favouring the economic interests of central Spain-Castile.
Thus there was a struggle between Madrid and the regions and, as contemporary events indicate, that regional struggle is alive and well in Spain today. Republican Spain was polarized between competing social and economic philosophies.


Mr. Deputy Speaker:: Order. The hon. member does appear to be straying from the point at the present time. Perhaps he can come back to the bill before us.


Frederick James (Jim) Hawkes: Thank you, Mr. Speaker. This country is straying between competing social and economic philosophies and we are faced with a unilateral action. We are faced with a decay and decline in our capacity to provide health services and in our capacity to provide post-secondary education services. I could go on about that comparison.


William Alexander (Bill) Blaikie: Don't.


Frederick James (Jim) Hawkes: "Don't", say the NDP. The decay of democracy was brought about by left-wing forces in Spain and not a right-wing force. It was the leftists and their belief in central government, their belief in appointed people, instead of democratically elected people who brought about the decline of parliamentary traditions and practices and ultimately of the democracy. It is the same in southern Europe and Weimar-Germany.


An hon. Member:: Great friends of yours.


Frederick James (Jim) Hawkes: The NDP say they are great friends of mine. This is the party that consistently stands up for the weak in Canadian society, those less able to take care of themselves. It stands up for the right of the opposition in a Parliament and the right of individual members, whether they are in the NDP or government back benches. It stands up and encourages this chamber and all members in it to move toward a system where collective wisdom shall prevail and not a system where people are told what to do, where this chamber is used simply as a voting chamber, where members collectively, like a group of sheep, pass legislation which is bad for this country. That was never the purpose of this chamber.
I wonder how Liberal members from Cape Breton, Prince Edward Island, Newfoundland, Nova Scotia and Quebec are going to explain to their constituents that they stood in this chamber and, on second reading, voted to reduce the money available for the health care system in those provinces. They stood in this chamber and voted to reduce the money available to the students and educational institutions in those provinces. How do they justify that? It will not just be on second reading but, 1 suspect, at report stage and third reading stage. They will stand again and again in the House and support policies that do not harm my region in particular, but harm their
March 22, 1982

regions, the regions which sent them to this chamber. How can they justify that in their minds?
Saturday afternoon, there was a public meeting in my riding. Several things were bothering the people of my riding, that are reflected in this bill. Somebody said to me that the record of the last 14 years of this government is characterized by several strategies, supported in large measure by the NDP. One of the characteristics of this government is to cover up or hide the truth, especially financial truth.
The history of EPF and the government's lies about what is going on with EPF is a characteristic strategy of that time. They try to cover up the truth. The finance minister said there was going to be a shortfall of a little over $3 billion. Lo and behold, a month later when some provincial people computed the numbers, the finance department admits it had underestimated the amount by $1.9 billion. That is one thousand nine hundred million dollars, a small mistake. It is a typical mistake. What will the mistake be tomorrow? That is one of the strategies of the government as supported by members opposite.
The second strategy is to transfer the decision-making, the blame and everything else, to appointed people and away from elected people. There are over 450 Crown corporations. All deputy ministers are appointed by the Prime Minister. There are our courts. In almost every piece of legislation, there is a new board or commission being appointed in private through order in council. The amount of remuneration is determined by the cabinet, not by elected people. There is never a principle of scrutiny.
The third tactic is to create chaos, discord and fights, so that the media will concentrate on the fight and the personalities and lose sight of the policy issue. Can we concentrate the media fight between provincial ministers and federal ministers and get all the press people and television cameras looking at the fight, and ignore the fact that in Canada today waiting lists for entry into hospitals are growing? Our Minister of National Health and Welfare (Miss Begin), talks about finances. I searched long and hard to see whether she had made a speech which talked about health care issues, and I cannot find any. May 1 call it ten o'clock, Mr. Speaker?



S (2200) PROCEEDINGS ON ADJOURNMENT MOTION

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

Marcel-Claude Roy: Mr. Speaker, last year on December 4, 1 asked the Minister responsible for Small Businesses and Tourism (Mr. Lapointe) about the Parti Quebecois government's habit of boycotting federal-provincial conferences held in Ottawa. In fact, this boycott had affected a number of departments and agencies including Agriculture, Justice and Status of Women, and finally Tourism. The boycott was not only political, as practised by members of the National Assembly and ministers, but also involved Quebec civil servants who were forbidden to take part in federal-provincial conferences.
Considering this question, Mr. Speaker, and the disastrous economic situation in Quebec-25 per cent of the labour force lives in Quebec and one out of every three unemployed Canadians lives in Quebec as well. The province has about one third of Canada's unemployed workers, and 1 and all federal Liberal members from Quebec are particularly concerned that 20 per cent of those under 25 are among the unemployed, that we have the highest tax rates in Canada-20 per cent to 25 per cent higher than anywhere else-and that we pay the highest price for gas compared to the other Canadian provinces.
Mr. Speaker, 52 per cent of the province's budget is spent on the civil service payroll and only 2 per cent on job creation. This is a matter of concern, Mr. Speaker. The province has 8 per cent fewer civil servants than Ontario, but has 35 per cent fewer people, which means that Quebec's civil service is much larger than Ontario's, and its members earn $3,250 more, on average.
That reminds me, Mr. Speaker, of the report on the economic situation tabled by the Quebec development and planning board. The board is a provincial agency, and in its report, it pointed out that for the year 1981-82, the government of Quebec would have a budget deficit of $2.5 billion, and that three quarters of the deficit, namely, $1.7 billion, was due to the fact that employees in the public sector were better paid than those in the private sector. That was one of the conclusions drawn by the Quebec development and planning board.
In light of the facts I have just mentioned, I asked the Minister of Industry, Trade and Commerce (Mr. Gray) whether there were any plans for a meeting with provincial authorities in order to establish a joint economic recovery program for Quebec. Instead of thinking about fielding candidates in the next federal elections, perhaps the Parti Quebecois would be better advised to put its own house in order before criticizing its next door neighbour.
It seems to me that in light of this situation-these olympicsized deficits-we as federal members from Quebec have a share in the development of these policies, and I therefore ask the Minister of Industry, Trade and Commerce and Regional Economic Expansion to meet with his Quebec counterparts in
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March 22, 1982
Adjournment Debate
order to stimulate the recovery of the Quebec economy. That is why I asked the minister how important a meeting of this kind would be. This evening, I want to stress the importance of this matter once again to the parliamentary secretary, and I want to ask the minister to set up a weekly review of all economic files at Regional Economic Expansion or Industry, Trade and Commerce and any related department, to keep our Quebec file from gathering dust on the desks of public servants. I feel that we should all work together and that we need active cooperation to keep those files moving, and that decisions must be made as soon as possible so that we can help industry and small- and medium-sized businesses in Quebec benefit from various federal programs.


Mr. David Berger (Parliamentary Secretary to Minister of State (Small Businesses and Tourism)):: Mr. Speaker, I should like to say that in fact as a result of the hon. member's suggestion and suggestions by a number of our colleagues in the Quebec caucus, a meeting was held in Quebec City on March 1. The meeting involved the Minister of Industry, Trade and Commerce and Minister of Regional Economic Expansion (Mr. Gray), the Minister of Energy, Mines and Resources (Mr. Lalonde) and the Minister of State for Small Businesses and Tourism (Mr. Lapointe), representing the Government of Canada, and on the other side, Ministers Landry, Parizeau and Biron. On that occasion, a senior officials liaison committee was formed with orders to report in a month's time on ways and means of harmonizing and co-ordinating business assistance programs administered by both governments.
However, I would point out to the hon. member that the federal ministers reminded their provincial counterparts that the Canadian government lends assistance to small and medium-size businesses in Quebec through the following seven instruments:
(1)	The Small Businesses Loans Act. More than 5,000 loan guarantees were authorized in Quebec in 1980-81 under this program;
(2)	The business expansion program under which 250 grants and 54 loan guarantees were approved in Quebec in 1980-81;
(3)	The Federal Business Development Bank authorized more that 1,200 loans in Quebec in 1980-81 and underwrote 13 risk capital ventures;
(4)	The program for export market development. No fewer than 477 grants were authorized in Quebec during fiscal year 1980-81;
(5)	The Department of Regional Economic Expansion legislation on industrial grants. No fewer than 612 grants were approved in Quebec in 1980-81;
(6)	The Export Development Corporation loaned $608 million to Quebec companies and provided insurance coverage on goods exported from Quebec and valued at $931 million;
(7)	The federal bond program for small and medium-size businesses enabled over 1,318 Quebec businesses to secure loans worth $186 million during the period from April, 1981, to January, 1982.
In addition to those seven instruments, the Canadian government has established in the past year, as the hon. member knows, a few programs aimed at helping businesses and workers adversely affected by foreign competition, including the industry and labour adjustment program and the Canadian Industrial Renewal Board-


Mr. Deputy Speaker:: I regret to interrupt the hon. parliamentary secretary, but his time has expired. The hon. member for Central Nova (Mr. MacKay).
[DOT]	(2205)


REGIONAL ECONOMIC EXPANSION-REQUEST FOR MEASURES TO ASSIST INDUSTRIES IN NOVA SCOTIA
Elmer MacIntosh MacKay: Mr. Speaker, this evening I wish to continue the statements I made on February 25 to the Minister of Industry Trade and Commerce and Minister of Regional Economic Expansion (Mr. Gray). On that occasion I requested, on an urgent basis, some aid for key Nova Scotia industries, specifically Hawker Siddeley Corporation and Sydney Steel. I was told by the minister who answered my question, the Minister of State for Small Businesses and Tourism (Mr. Lapointe) that I would get a satisfactory response. As yet I have not received one.
It is very tempting to be sarcastic and partisan tonight and point out to the minister that his priorities are wacky, and that so are those of his government in that they expanded greatly the foreign aid of this country to the tune of 20 per cent. Among other things this will build a $200 million airport in Trinidad and Tobago. It has recently increased the allocation through export development by another $50 million, so that it can fund to a greater extent that monument to the Algerian revolution. There is still no meaningful response to the real requirement that something be done to save the trained work force and the proven capacity of industry in places like Halifax, Trenton, Sydney and others in the entire Atlantic region.
[DOT]	(2210)
However, I will resist the temptation to be totally negative tonight, although I must say I think I have provocation because of the complete lack of courtesy shown to me by my colleague in responding on an urgent basis to some of the requests I made. I suggest to him that if it is a question of funds which he requires to provide some much-needed material for the CNR, for Canadian shipyards and, indeed, for SYSCO, I trust I can show him a couple of avenues he might pursue.
March 22, 1982

First, 1 point out that as far as the Hawker Siddeley corporation is concerned, Sections 261(b) and 262 of the Railway Act-and I asked the minister to bring this to the attention of his colleague, the Minister of Transport (Mr. Pepin)-requires or stipulates that railways must furnish adequate and suitable accommodation, that is to say rolling stock, for carrying of traffic.
CN has hardly been operating without a profit within the last year or so. A simple directive to CN stipulating that it use some of its profit to purchase some rolling stock from an industry such as Hawker Siddeley would be in the national interest. It has recently given its usual order of 88,000 tonnes of rail to the Sydney Steel Corporation. That order could very easily be expanded, in the same ways, to this industry which is already in dire straits. Despite the fact that for a change it is being well-managed and has received substantial help from the federal government, it requires more assistance, and at the present time CN has the capacity to order more rail. Certainly it has the capacity and obligation to provide more rolling stock which could be purchased from a very suitable corporation; that is to say, Hawker Siddeley.
There is another source of revenue which I believe is available, provided the legislation were changed to make it possible. As Mr. Speaker will recall, several years ago when Don Jamieson was minister of transport, the Maritime Pollution Claims Fund was set up. At the present time there is around $50 million in the fund. There has never been a significant drawdown from it, and, indeed, 1 believe insurance companies have furnished much of the funds which were used to take care of any marine disasters.
In Korea at the present time offshore supply vessels are being built, thanks to the policies of Korea and the lack of policies of our government, for use in the Atlantic region of Canada. In all seriousness I ask, why not take $10 million or $20 million of that $50 million presently in the Maritime Pollution Claims Fund and use it to subsidize, to some extent, the construction of vessels which will be used in east coast oil exploration, so that shipyards all the way from Lauzon to Marystown, Newfoundland, will receive the benefit of the construction of these types of vessels. They are ideal, for example, for Halifax Industries Fimited or Ferguson Industries Limited, to name two important shipyards in Nova Scotia. Instead, what is happening is that Husky Oil and Federal Commerce are having these ships built offshore. They are doing it to the detriment of the shipyards in our country which badly need the work.
I am sure the Minister of Industry, Trade and Commerce has had this matter brought to his attention, but I want to draw his attention to an aide memoire which I will be very pleased to give to him, if he does not have the information. It was prepared for me by the Canadian Shipbuilding & Ship Repairing Association on March 8. I sent Mr. Henry Walsh a copy of the urgent letter which I sent to the minister. The same minister has not replied to my letter or my request for a meeting about Hawker Siddeley. I asked on an urgent basis that we talk about sortie way to promote shipbuilding-'Cm the
Adjournment Debate
east coast. Mr. Walsh pointed out a somewhat shocking statistic:
Importing companies tend not to publicize their offshore purchases. However, the CSSRA by reviewing the foreign technical press has identified close to $1 billion worth of foreign purchases by Canadian companies over the last 18 months.
The government and the minister have stated in the past that they will bring a new dimension to regional development and that they will place greater emphasis upon the industrial side to help industry which has a proven capacity for domestic as well as export production. I remember the minister telling me via satellite from Ottawa, when we were conducting an information program on the CBC, what he was going to do for the maritime region to help industries. The minister has done the square root of nothing so far. Some of us were alarmed at the tendency of this minister when he was minister of industry, trade and commerce to spend a minuscule amount of his budget on the eastern part of Canada. We were hoping when he was given the opportunity of regional expansion, the old DREE portfolio, that he would put that tendency aside and do something meaningful to develop industry in Atlantic Canada, but those of us who were hoping he would turn over a new leaf, as it were, have been very disappointed so far.
I noted today in response to my colleague, the hon. member for York-Sunbury (Mr. Howie), the minister stated there were certain good things he was doing or about to do. I urge him tonight to take a very close look at what is required to save three important industries in Nova Scotia, namely, ship building, steel production and railway car production.


David Berger: Mr. Speaker, on behalf of the minister I wish to acknowledge receipt of the letter to which the hon. member has made reference. Indeed, the minister has been giving considerable attention to its contents. I also acknowledge the additional comments made by the hon. member this evening. I can assure him that the minister will give his utmost attention to this matter and I will personally undertake to ensure that the minister is made aware of the hon. member's concerns.
The importance to the economy of Nova Scotia of the Sydney Steel Corporation and the Hawker Siddeley (Canada) Ltd. works in Trenton is undeniable. The federal government, through a cost-sharing subsidiary agreement with the province of Nova Scotia, is engaged at the present time in a $96 million program to modernize the facilities at the steel plant, the first phase of such a program. A firm of project management consultants has been hired and contracts are shortly to be let for blast furnace design and rolling mill design. Discussions are currently under way with the Minister of Transport (Mr. Pepin) on the possibility of expediting rail orders by Canadian National. The minister is confident that this can be done since rail quality problems, which seem to have occurred in the past at SYSCO, have been overcome at the present time.

March 22, 1982
Adjournment Debate
This latter point refers directly to one of the comments made by the hon. member in which he noted that SYSCO has received an order for 88,000 tonnes of rail. He suggested that perhaps this could be extended. There seems to be an indication from the comments of the minister that this is indeed possible.


Mr. Deputy Speaker:: Order, please. The allotted time of the parliamentary secretary has expired.


EXTERNAL AFFAIRS-(A) CANADA-UNITED STATES AGREEMENT ON TESTING OF CRUISE MISSILES (B) REQUEST THAT AGREEMENT BE TABLED
Pauline Jewett: Mr. Speaker, I asked the Secretary of State for External Affairs (Mr. MacGuigan) why Canada had entered into an agreement at the request of the United States to flight-test the new Cruise missile on Canadian soil. This missile is sophisticated, highly accurate and potentially capable of first strike use. This missile, if developed and deployed, will only lead the Soviet Union, the other super power, to try to develop an equivalent weapon. In short, why is Canada allowing the arms race to be further escalated.
Second, I ask why this was kept secret. Why did Canada settle upon what the minister refers to as a framework agreement late last year, secretly, without informing the Canadian public, Parliament or the Standing Committee on External Affairs and National Defence, which is at this very moment preparing a report on Canada's position to be presented to the United Nations' special session on disarmament? Was the minister and the government afraid that if they made it public there might be, as indeed there now is, some public opposition to our complicity in the escalation of the nuclear arms race by giving support to the testing of the Cruise missile? Was the government afraid there might be a response here comparable to that in western Europe where a great many people are vigorously protesting the deployment of this very Cruise missile?
The minister says we cannot pursue a course of unilateral disarmament. That is a red herring. We are not talking about unilateral disarmament any more than The Netherlands which refuses to deploy the Cruise missile, or Belgium which refuses to take any decision on it at all-not at all. I would have hoped the Canadian government could have taken an independent stand, perhaps even set an example, since it was Canada which first enunciated the strategy of nuclear suffocation, by saying no, we do not want Cruise missile testing on Canadian soil anymore than we would want Cruise missile deployment. The two are inextricably linked.
In addition, the minister did not answer the question as to whether the reason we so supinely and secretly agreed to this testing was because it was part of a deal; perhaps in return for some benefits we might receive in the purchase of the F-18s. He seemed only confused when I asked whether we were still pursuing a strategy of nuclear suffocation, yet the Prime
Minister (Mr. Trudeau), just on Saturday, according to The Globe and Mail, said that Cruise missile testing would contradict that very strategy.
It is absolutely imperative, Mr. Speaker, that the minister or the Prime Minister immediately table in this House-not just "give consideration to it"-the framework agreement drawn up late last year so that we in this Parliament, and through us the Canadian public, will know exactly how we have been further unnecessarily and wrongfully involved in this incredible escalation of the arms race which, as I said, will only lead to the Soviet Union attempting to get an equivalent weapon.
The minister must also make up for the affront both he and the Minister of National Defence (Mr. Lamontagne) perpetrated against the standing committee discussing questions of security and disarmament, and come back to that committee this week-because this is the last week of our deliberations- and tell us what is in the agreement and why it was kept secret. Two Canadian journalists found out the truth in Washington. Why was it kept secret, and in what way will it possibly advance the cause of ceasing the escalation in the arms race and working toward arms control?


David Berger: Mr. Speaker, on behalf of the Secretary of State for External Affairs (Mr. MacGuigan) I will attempt to answer some of the questions raised by the hon. member.
Throughout her remarks the hon. member kept referring to a secret agreement. It seems quite clear from the answers given by the minister to her questions that there is no such secret agreement and the proposals have indeed been made for the negotiation of a framework agreement under which Canadian test ranges and associated air space may be used for the testing and evaluation of United States defence systems. Such tests would take advantage of Canadian conditions of climate and terrain not available in the United States. Among the tests anticipated under the agreement would be tests of unarmed air launched Cruise missiles.
The Canadian decision in principle to permit such testing, subject to the negotiation and conclusion of the appropriate agreement and arrangements with the United States, demonstrates Canada's support for NATO. I stress the fact again that this is subject to the negotiation and conclusion of the appropriate agreement and arrangements with the United States. Contrary to what the hon. member has said, there has been no agreement to date, and such an agreement remains to be negotiated.


Pauline Jewett: The framework agreement.


David Berger: Air launched Cruise missiles are intended to form part of the United States strategic deterrent force which provides the nuclear umbrella for both North American and other NATO countries on which our alliance depends, as it
March 22, 1982

must in the present circumstances, to prevent war and preserve peace.


Pauline Jewett: It is a fighting instrument.


David Berger: Canadian security policy in the past 30 years has rested on three complementary foundations: First, deterrence of war through the collective security arrangements of NATO and NORAD; second, pursuit of verifiable arms control and disarmament agreements; and, third, commitment to the peaceful settlement of disputes and collective efforts to resolve the underlying economic and social causes of international tension. In this context, allowing the flight testing of the Cruise missile by the United States in Canadian air space is entirely consistent with Canadian arms control and disarmament policy.
Canada remains fully committed to the pursuit of equitable arms control and disarmament measures. The government has
Adjournment Debate
advocated and will continue to advocate the negotiation of agreements between the two major nuclear powers to achieve balanced limitations and reductions of nuclear weapons.
In conclusion, I might add that, in his answer to the hon. member on March 18, the minister said he would consider tabling the agreement once it has been concluded.


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at two o'clock.
At 10.30 p.m. the House adjourned, without question put, pursuant to Standing Order.

Tuesday, March 23, 1982