1982-05-11

ROUTINE PROCEEDINGS


Mr. Donald W. Munro (Esquimalt-Saanich):: Madam Speaker, it is widely recognized that the construction industry in Canada is in a serious decline, largely because of the budget and the high cost of mortgage money. HUDAC told us this morning, for example, that 30,000 housing units already started at budget time have since had to be abandoned. In order to turn this disastrous prospect around and get the construction industry, to begin with, moving upwards, I move, seconded by the hon. member for Fraser Valley East (Mr. Patterson):
That this House urge the government to reintroduce the mortgage interest deductibility feature of the budget introduced by the Clark government in December, 1979.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PUBLIC WORKS
Mr. Gordon Towers (Red Deer):: Madam Speaker, I rise under the provisions of Standing Order 43 to take strong exception to reports that the Prime Minister (Mr. Trudeau) has again short-circuited the merit system by engaging his friend, Arthur Erickson, as architect for the proposed new Canadian Embassy in Washington. Mr. Erickson was vaulted by the Prime Minister over the four finalists recommended by the selection committee. I therefore move, seconded by the hon. member for Moose Jaw (Mr. Neil):
That this represents pork-barrel politics of the worst kind and makes a complete mockery of the tender and competition process, and that the decision be returned to cabinet for honest review and the ed 177;-1 eventual appointment of one of the four candidates recommended by the selection committee.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


SUGGESTED REIMBURSEMENT OF EXPENSES FOR COMPETING FIRMS-MOTION UNDER S.O. 43
Mr. Don Blenkarn (Mississauga South):: Madam Speaker, in view of the fact that the alleged architectural contest for the design of the new Washington embassy was fraudulent and deceitful in that Arthur Erickson was guaranteed the job over two years ago, and this action by the government calls into question the entire bid system for public works, I therefore move, seconded by the hon. member for Parry Sound-Muskoka (Mr. Darling):
That this House directs the government to reimburse all architectural firms that submitted proposals to the committee set up by the government for their expenses, including some 71 firms which were alleged to have spent $8,000 to $10,000 each on the general presentation, and 11 semi-finalists who spent as much as $60,000 in their semi-final presentation, and that the Prime Minister apologize to the Canadian people for his dishonesty and deceit and resign in accordance with parliamentary precedent.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


DISARMAMENT
Mr. Dan Heap (Spadina):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Recently over 1,200 readers of the Toronto Star in many parts of Canada wrote to that paper supporting nuclear disarmament. The Star, as it promised, offered the letters to the Secretary of State for External Affairs (Mr. MacGuigan), who expressed interest in reading them but said he could not receive them outside this House. Therefore I move:
That this House encourage the hon. Secretary of State for External Affairs to read the letters sent to the Star and in so doing consider how widely the Canadian public is dissatisfied with the government's failure to take a stand against the arms race.

May 11, 1982
For that purpose I offer the letters to the minister. My motion is seconded by the hon. member for Beaches (Mr. Young).


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


EMPLOYMENT
Mr. Bill Domm (Peterborough):: Madam Speaker, the Minister of Mines (Mrs. Erola) announced on the weekend a $2.3 million dollar job-creation program for her riding of Nickel Belt and workers at Inco in Sudbury. Therefore I move, seconded by the hon. member for Central Nova (Mr. Mac-Kay):
That this same minister immediately advise this House how unemployed people get on this preferential list if they do not reside in the cabinet minister's riding, or like architect Erickson are a personal friend of the Prime Minister. Perhaps the Minister of Mines would make this $300 per week program available to unemployed Cape Breton steel workers until the CNR gives them some more rail orders, to the auto workers of Oshawa, the lumber workers of British Columbia, and to the steel workers of Hamilton.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


MEMBERS OF PARLIAMENT
Mr. Bill Yurko (Edmonton East):: Madam Speaker, as the only independent Member of Parliament I am in the unique position of being able to move motions with the unanimous and unqualified support of my caucus. Having said that, I have concluded, Madam Speaker, that MPs should lead the nation in the fight against inflation and unemployment. Therefore I move:
That all Members of Parliament voluntarily accept a 10 per cent cut in their basic indemnity during the remaining duration of the 32nd Parliament and that the $1.5 million arising from this salary cut be used to create 1,000 student summer jobs per year.
Madam Speaker, I am certain that each and every member of this House will be pleased to second and support this initiative.


Some hon. Members:: Oh, oh!


Madam Speaker:: There was no seconder to that motion.


PUBLICATION OF &quot;CANADIAN PARLIAMENTARY HANDBOOK&quot;- MOTION UNDER S.O. 43
Hon. Walter Baker (Nepean-Carleton):: Madam Speaker, I move, seconded by the hon. member for Don Valley East (Mr. Smith), and I know that the hon. member for Mission-Port Moody (Mr. Rose) is in concurrence with us:
That this House express its congratulations to John Bejermi, an employee of the House of Commons, who has authored a new and unique book entitled "Canadian Parliamentary Handbook", published by Borealis Press Limited of the City of Nepean, and request that the Standing Committee on Management and Members' Services forthwith consider the proposition that the administration supply to each member of the House of Commons a copy of the said book.


Some hon. Members:: Hear, hear!


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.

Mrs. Margaret Mitchell (Vancouver East):: Madam Speaker, I rise to move a motion under the provisions of Standing Order 43. While the federal government evades action by conducting studies and holding conferences, hundreds of thousands of Canadian women are struggling to survive on low wages, without adequate training programs, decent day care, or equal pay for work of equal value. Many have been laid off and thousands more face permanent unemployment due to technological change. Therefore I move, seconded by the hon. member for Churchill (Mr. Murphy):
That the federal government and the minister responsible for the status of women set a positive example for the provinces by establishing adequate pension plans for women, providing start up funds for universal day care, implementing mandatory affirmative action, and expanding pre-employment and high tech training programs for women, with allowances to cover child care.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
May 11, 1982


CORPORATE AFFAIRS
Mr. Rod Murphy (Churchill):: Madam Speaker, I rise to move a motion under the provisions of Standing Order 43. In light of the fact that Quebec and Ottawa motorists are being ripped off by the oil industry by up to 15 cents per gallon, I move, seconded by the hon. member for Beaches (Mr. Young):
That this House instruct the Minister of Consumer and Corporate Affairs to investigate the imposition of a 3 cents to 4 cents a litre increase by the oil companies in Quebec and in the City of Ottawa above the increases in the provincial sales tax in the province of Quebec, and that, if these charges are proved to be true, the minister order an immediate rollback of these excessive increases in the price of gas and oil.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN ARMED FORCES
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Madam Speaker, I rise to move a motion under the provisions of Standing Order 43. Because of the urgency of the current state of the development of our fleet replacement program, I move, seconded by the hon. member for Annapolis Valley-Hants (Mr. Nowlan):
That the Minister of National Defence take the earliest opportunity on motions to defend statements by the Prime Minister that all is "first class" with Canada's navy; to indicate clearly the government's planning for our naval fleet, including its armament systems, mix of roles and the means of achieving the taskings to be given the fleet; and, in addition, in such a statement explain why it is the government will not produce a white paper on defence policy, the present policy having been produced on information almost as old as our aging naval fleet.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Hon. David Crombie (Rosedale):: Before I ask my question, Madam Speaker, I am sure the Chair and the House would want me to extend on behalf of the House our condolences to the Right Hon. Leader of the Opposition (Mr. Clark), whose father passed away last night.
Oral Questions
My question is directed to the Right Hon. Prime Minister. He is aware from the figures published last Friday that unemployment in the country now stands at the highest level since the depression. Yesterday the Minister of Finance said in Paris that unemployment is unlikely to rise further and that there was a new urgency for efforts to promote what he called sustainable recovery. What new policies is the Prime Minister or his government bringing forward in order that we have the recovery about which the Minister of Finance spoke in Paris, without throwing more hundreds and hundreds of people out of work?


Right Hon. P. E. Trudeau (Prime Minister):: Madam Speaker, certainly I want to associate myself and my party with the condolences expressed by the hon. member to the Right Hon. Leader of the Opposition and to say that that sad event is felt by all of us.
In so far as the reference to the minister in Paris is concerned, 1 am in the process of looking at his speech notes. As I understand it, he was in that forum at the IMF urging measures which would lead to a worldwide recovery and would permit the Canadian economy to recover along with the economies of other major countries. He was pointing out the seriousness of unemployment rates in our country and in all other countries represented in the IMF, and urging particularly that high interest rates prevailing in the United States be addressed so that we all have greater incentive facilities.


REQUEST FOR REMOVAL OF TAX ON BUILDING MATERIALS
David Edward Crombie: Madam Speaker, my supplementary question is directed to the minister responsible for housing. I am sure that he will know that the unemployment level in the construction industry now stands at 20 per cent, that is, in the order of 150,000 construction workers out of work. It is the worst situation in which the construction industry has found itself in two decades. Also the minister will know that the Canadian construction industry has repeatedly asked the federal government either to withdraw or seriously reduce the federal tax on construction materials. The construction industry regards that as fundamental to stimulating its economy and the economy as a whole. Does the minister support its request and, if so, what will he do with it? If not, why not?


Hon. Paul J. Cosgrove (Minister of Public Works):: Madam Speaker, in anticipation of the challenge to the industry and the strength of the demand for units in the country this year, particularly multiple units, the government decided, rather than adopt the step just mentioned by the hon. member for Rosedale, to include funds in the budget of last November which would be of direct and massive assistance to getting multiple construction of units. This is why, for example, $350

May 11, 1982
Oral Questions
million was designated to start the construction of 15,000 units of rental accommodations across Canada and why, for example, just a few weeks ago, that 15,000 units were accelerated with a commitment to start the construction of 30,000 rental units in the country this year, depending upon the ability and the response of the industry to take up those funds. We think that that $350 million, compared with the small benefit of the other tax incentive which is being talked about, is much more significant and much more useful.


David Edward Crombie: Madam Speaker, I am sure the Canadian construction industry takes that as an answer saying no, that the government will not take off the federal sales tax on construction materials. I suggest that the minister may want to meet with those people again to see whether he can find some way to assist them. They regard that as fundamental to the recovery of the construction industry.


SMALL BUSINESS
David Edward Crombie: Madam Speaker, my third supplementary is to the Minister of State for Small Business and Tourism. I am sure the minister is aware that small and medium-sized businesses have suffered very badly during the current recession. Indeed, the figure now stands at 3,651 bankruptcies in the first four months of this year alone.
The small business organizations have repeatedly asked the minister if he would establish emergency short-term loans under the Small Businesses Loans Act. Does the minister intend to act on their request, or will he continue to refuse to do so?


Hon. Charles Lapointe (Minister of State (Small Businesses and Tourism)):: Madam Speaker, I agree with the hon. member that small businesses are suffering as a result of the present state of the economy. However, the hon. member will recall that as far as the Small Businesses Loans Act is concerned, in 1981, 19,600 small Canadian businesses received guaranteed loans from the federal government under this legislation, an increase of 31 per cent over the previous year. I think we are making a serious effort to promote the use of programs available to small businesses, and according to the response from this sector, it is clear that utilization of these programs has increased.


INDUSTRY
Hon. Elmer M. MacKay (Central Nova):: Madam Speaker, my question is for the Minister of Transport. He knows that unemployment is rampant in Cape Breton and that thousands of workers in that area of the province of Nova Scotia are dependant upon Sydney Steel Corporation and its success. Therefore I would ask the minister about his statements, which have been widely reported, questioning the quality of the rails being produced at Sydney Steel Corporation, which are rigidly inspected. The company has enjoyed a national and international reputation for quality rails. What evidence does the minister have to back up or justify his counterproductive statements? Can he produce any tangible evidence of current bad quality and, more important, can he say when any of these alleged deficiencies were brought to the attention of SYSCO management, and has he bothered to check? As well, what about the deleterious effect on the company, its work force, and its future prospects?


Hon. Jean-Luc Pepin (Minister of Transport):: Madam Speaker, this is something which is well known by the people at SYSCO. The proof of it is simply the fact that CN has been forced, because of these circumstances, to reduce the level of rail purchases from the SYSCO plant.
The management of SYSCO has asked for another meeting with the CN management on that subject. This will take place. CN accepts the current proposal that an independent assessor be appointed in order to determine the degree of technical difficulty encountered by SYSCO in the production of some types of rail.


Elmer MacIntosh MacKay: Madam Speaker, I want to take issue in a most respectful and vigorous way with what the minister has said. I would question the basis of his information.


IMPORTATION OF RAILS
Elmer MacIntosh MacKay: Madam Speaker,
I would ask the minister again about the rails which are imported by Canadian National from other countries. Can the minister explain why Sydney Steel Corporation was never given an opportunity to tender on these rails or be informed of any specifications which made them unique, if in fact they are so, so that it also would have an opportunity to manufacture them and further the company's future?
Would he not agree that it would be more appropriate for him to concentrate on arranging more CN rail orders instead of making these counter-productive statements which can only keep the work force in Cape Breton from achieving not only orders for the CN, but for other customers as well? The reputation of SYSCO has been badly damaged by the minister, and I think he should verify his facts, because any problems which existed with Sydney Steel rails were in 1980 and
May 11, 1982

most of the rails involved were re-inspected and accepted by CN. In any event, the rails are now the best that have ever been produced there, and they are nothing to be ashamed of in any way, shape or form.


Some hon. Members:: Hear, hear!


Jean-Luc Pepin: Madam Speaker, if my hon. friend insists on talking and thinking the way he does, it is okay with me. He can go on. Unfortunately, however, the facts are different.


Elmer MacIntosh MacKay: You do not know the facts.


Jean-Luc Pepin: In 1980-81, CN was purchasing 151,000 tons of rail from SYSCO. In 1982 it was brought down to 97,000 tons, while 11 per cent of CN's needs in 1981-82 were purchased abroad. This, again, is something it does when it has to, when the two Canadian plants, SYSCO and Algoma, cannot provide CN with the quantity or quality it needs. CN has to operate a railway. It has to be certain that the track it buys will stand the wear and tear of everyday operation. It has to do that in the interest of safety. Please bear this in mind. In 198283, CN will purchase 88,000 tons of rail, none from outside the country. Again, CN only purchases rail outside Canada when it cannot avoid it. That is all.


LABOUR CONDITIONS
Hon. Edward Broadbent (Oshawa):: Madam Speaker, my question is directed to the Prime Minister. Yesterday in Paris, the Minister of Finance suddenly discovered-abroad-that unemployment was a problem here at home. If the Minister of Finance is at long last saying that unemployment is the number one priority here in Canada or ought to be, with more than a million Canadians unemployed and a record level of unemployment since the great Depression, does the Prime Minister have a single new job-creating program to announce to the people of Canada?


Pierre Elliott Trudeau: Madam Speaker, I would not want the hon. member to be misled as to what the minister said in Paris. He did say what he always says, that he is disturbed, and increasingly so, by the high level of unemployment, but not that it was a problem which could be solved without solving the inflationary problem. I refer the hon. member to the minister's speech.
In so far as single new programs are concerned, let me just announce-reannounce a few of the recent ones-


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: -on direct job creation and training initiatives.


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


Pierre Elliott Trudeau: On March 25 there was an announcement of expanded use of job-creation provisions of UI funds to support summer forestry and fisheries stock improvement projects, amounting to funding of $220 million over the next two years.
A couple of days earlier we had announced increased funding for construction of rental housing and renovation of existing houses, totalling $130 million, a matter which was just referred to in an earlier answer given by the minister responsible for housing. On March 11 there was a boost in training and job-creation programs by $208 million. There were other announcements in April, with a designation of several special areas in eastern Ontario and Quebec which are dependant on the textile, clothing and footwear industries. On March 23 the CHIP eligibility date moved forward from 1961 to 1971 in Newfoundland, in Yukon and in the Northwest Territories. I could go on.
As I have answered the hon. member before, every month, and often every week, we are announcing new job-creation programs. The hon. member has to be constantly reminded of these, because he always forgets the one that was announced yesterday and is wondering what will be announced tomorrow.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Madam Speaker, unlike the Prime Minister, we do pay attention to what his ministers have to say. For example, we know that the grand rental program he just announced-


Some hon. Members:: Reannounced!


John Edward Broadbent: -reannounced, to use his own term, will not meet the nation's needs. That program will scarcely meet the rental needs of Vancouver alone, let alone the rest of the cities in Canada. I take it, from his answer, that he has nothing new to announce.


THE ECONOMY
John Edward Broadbent: I would also refer the Prime Minister to the statement made by the United States Secretary of the Treasury at the same meeting in Paris. He said that the United States' high interest rate policy will not change. If independent action is not taken, this will have devastating implications for many economies around the world, as the Prime Minister knows.
Considering that Francois Mitterrand brought in special programs for home owners, for small businessmen, and also for other sectors of the French economy, and considering that Chancellor Schmidt of the Germany added between $3 billion and $4 billion to provide additional stimulus some two months ago to the German economy, does the Prime Minister now have anything new, of this magnitude, to offer the people of Canada, or will he just reannounce the same old stuff?

May 11, 1982
Oral Questions


Pierre Elliott Trudeau: Madam Speaker, I cannot comment on the announcement by a United States official. I would merely say that if he is quoted or interpreted as inaccurately as the hon. member interpreted the speech of the Minister of Finance, then I would want to look at the speech before commenting on the quote.
I find it strange that the hon. member refers to actions which President Mitterrand and Chancellor Schmidt took several months ago and claims them to be great new announcements, whereas ours, which were made just a few weeks ago, he describes as old hat. It seems there is a double standard there.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: I appeal to the hon. member. Why is he claiming as a recent announcement measures taken several months ago by these two heads of governments, whereas ours were announced in the past few weeks and, incrementally, they are as significant as anything done over there.


John Edward Broadbent: Madam Speaker, the matter is very simple. It is twofold. First, the action they took was some time ago, which means they recognized unemployment as a serious issue well ahead of this government. Second, the impact of their programs in terms of their economies is all out of proportion to what this government has announced. They are not trying to nickel-and-dime their countries to death and pretend they are doing something; they are doing something.


REQUEST THAT BYELECTIONS BE HELD
John Edward Broadbent: My final question to the Prime Minister is as follows. There are three constituencies in Canada, namely, Timiskaming, Broadview-Greenwood, and Leeds-Grenville which are not represented in the House of Commons, one since as long ago as Christmas when it lost its member, and two since then. Will the Prime Minister at least give to the people in these constituencies their democratic right to have members in the House of Commons? Let the people in these areas decide what they think of the government's economic performance by announcing byelections.


Pierre Elliott Trudeau: Madam Speaker, I think the first step in ascertaining what the people think would be to convey to them clear facts and thoughts, which the hon. member is failing to do. He refers to the impact of others' programs. If he is talking of the impact of President Mitterrand's program, it has been to send interest rates up to 20 per cent, as the Minister of Finance told him the other day. The impact of Chancellor Schmidt's program has certainly not been to prevent an increase in unemployment, which has increased substantially since he introduced those measures, as
well as seeing a devaluation of the mark. I put it to the hon. member that if he is going to go to the electorate with such false representations-


John Edward Broadbent: Call the byelections.


Pierre Elliott Trudeau: The point I am making is that the hon. member cannot understand the facts in this House. How can we rely on him to convey them to the people?


PUBLIC WORKS
Hon. John C. Crosbie (St. John's West):: Madam Speaker, my question is for the Prime Minister. It has to do with his friend, Mr. Arthur Erickson. We are advised today by The Globe and Mail that Mr. Erickson knew two years ago, in 1980, that he was going to be chosen as the Canadian government architect for the Washington embassy. We are told he was offered the embassy in China and the one in Saudi Arabia by the Prime Minister, but decided to wait for Washington. We are told that he phoned Mr. Guy Desbarats, the assistant deputy minister of public works, when the committee was announced and, was told by Mr. Desbarats that the appointment of the committee was just a formality, the job was his. We are told by Mr. Erickson's assistant, Mr. Charles Gurd-


Madam Speaker:: Order. Does the hon. member have a question?


John Carnell Crosbie: I do.


Madam Speaker:: Will he please put it now.


John Carnell Crosbie: In other words, before the selection committee was appointed in 1981, the job was promised to Mr. Erickson. Will the Prime Minister reverse this award to Mr. Erickson and award this commission to the recommended firm, Zeidler Roberts of Toronto? Will he disallow any further extension of the Erickson patronage principle in the public service? Finally, will he resign his position, having failed to be truthful and scrupulous in his conduct, having participated in a series of fraudulent misrepresentations to the people of Canada? Will he do that?


Pierre Elliott Trudeau: Madam Speaker, many of the allegations made by the hon. member seem to have been drawn from a report in this morning's newspaper. If I read it correctly, the allegation is that Mr. Erickson was promised this job two and a half years ago, not two years ago as the hon. member says. Of course, two and a half years ago the Clark government was in power.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: I cannot, of course, contradict Mr. Erickson on that. I just know that he was one of a group of 11 semi-
May 11, 1982

finalists, if I can use that expression to satisfy the hon. member. I took the view that the recommendations would be of people qualified to build an embassy. I never believe that the government has to take number one on the list. This is a view that I explained in the House before. I think the government should be helped by the professionals as to who would be qualified to build the embassy, but I do not believe the government has to take number one on the list. If that were the case, the government would lose all discretion, and I do not think that is a proper course. The government should be given a choice, and we exercised that choice.


REQUEST FOR APPOINTMENT OF JUDICIAL INQUIRY
John Carnell Crosbie: Madam Speaker, these allegations are from Arthur Erickson and his associate architect, Charles Gurd. They have not been repudiated or refuted by the Prime Minister. He has not said they are false. I ask the Prime Minister this. On May 2 when you were at St. Francis Xavier University, you gave the graduates this advice. You spoke of the need for a new code of international morality. When is the Prime Minister going to apply this new code of morality and these new ethics to his own conduct in this shameful, tawdry affair? The allegations are from your friend that you appointed-


Madam Speaker:: Order.


John Carnell Crosbie: -a committee after you promised him this job-


Madam Speaker:: Order.


John Carnell Crosbie: -and then engaged in a fraudulent course of conduct. What is the Prime Minister's answer?


Madam Speaker:: Order.


John Carnell Crosbie: Will the Prime Minister answer that question?


Madam Speaker:: Order. On two counts I have to call the hon. member to order. Members are not supposed to refer to other members either by name or as "you", but should address the Chair. On that count I must call the hon. member to order. On the other count, I must call him to order on a question that is not a question. It is obvious to anyone in this House that that was a speech. I urge the hon. member to ask questions, which he is entitled to do, but they must be questions.


John Carnell Crosbie: Will the Prime Minister appoint a judicial inquiry in view of these allegations to tell the public-


Some hon. Members:: Oh, oh!


John Carnell Crosbie: This is not amusing, gentlemen-a judicial inquiry to investigate and give the facts of this situation to the people of Canada? Also, will he resign if it is found that he did promise the job to his friend and then set up this fraudulent course of conduct with a selection committee that was doomed in advance? Will he do that?
Oral Questions


Pierre Elliott Trudeau: Madam Speaker, I do not see the need for a judicial inquiry. I am prepared to give all the facts here and answer all the questions-


John Carnell Crosbie: Do it.


Pierre Elliott Trudeau: -if they are asked in a sequence in which I can order them, and if I can get the attention of the House. With regard to the alleged statements of Mr. Erickson and Mr. Gurd, I am informed that both of them are now saying they have been misquoted.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: Well, this draws laughs, but if they are saying that, I imagine they would say the same thing to a judicial inquiry.


John Carnell Crosbie: Let's see. They are under oath then and so are you.


Pierre Elliott Trudeau: This is what I mean, Madam Speaker. We listened to the hon. member's questions. I attempt to answer them seriously and I keep getting this bellowing from across the aisle from the hon. member. If he is interested in morality,
I indicated that I did not feel the government had to choose the one at the top of the list. If I read the same newspaper, apparently Mr. Zeidler finds this, that he was at the top of the list and therefore thinks that he should have had it. I imagine that is the point of view of the hon. member for St. John's West. That is not my point of view, Madam Speaker.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: I do not see any reason why the Government of Canada should not have a say in the kind of embassy which is going to be built in a prestigious location as is the case in Washington.
Since I have been in government all kinds of embassies have been built abroad. I have never had a say, nor do I remember the government ever having had a say, in the choice of those embassies or those architects.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: I am prepared to see that changed. I do not have to tell it to a judicial commission. Indeed, I think the government should be able to choose the architect. I would admit, Madam Speaker, that in the case of very important embassies like this one, the government should be guided in the choice, by having a small number of qualified architects recommended by the architects' institute. I do not believe that we have to choose the top one off the list.


An hon. Member:: What about the Minister of Finance?


Pierre Elliott Trudeau: I can understand the other side not liking that system, Madam Speaker. I can see, too, that if the hon.
May 11, 1982

Oral Questions
member were in charge of choosing a design, I too would be very frightened. That is why I think that there should be a small list of people who are qualified to build. But within that list 1 see no reason at all why the government would have to take that name which is recommended by the Royal Institute of Architects-which is another form of patronage.


Some hon. Members:: Hear, hear!


REQUEST THAT COMPETING FIRMS BE REIMBURSED FOR EXPENSES
Hon. Ray Hnatyshyn (Saskatoon West):: Madam Speaker, methinks the Prime Minister doth protest too much, and too long.


Some hon. Members:: Oh, oh!


Ramon John Hnatyshyn: Madam Speaker, there is a lot of interruptions from the Liberal Party. If I may use a spoonerism, the Liberal Party is a bunch of shining wits. May I ask the Prime Minister this? The indictment comes from the Prime Minister's own lips. He indicates that Mr. Erickson was not the first choice, indeed he was not in the first four choices; and Mr. Ritchie, the chairman of this selection panel, has said with regard to Mr. Erickson that he was unlikely to do as good a job as the four finalists in this case. If they put on a charade of having a selection committee, and if in fact the Secretary of State for External Affairs has indicated that this is the wrong way of proceeding, and that they are going to revise the method respecting these architectural candidates, I want to ask the Prime Minister, in view of the fact that over one and one-quarter million dollars has been spent by the 71 architectural firms which were involved in this process, whether he will not, under the circumstances, indicate whether they will be reimbursed for the very substantial amount of money they have put out-under false pretenses by this government.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Madam Speaker, 1 do not know where the hon. member gets that figure, but whatever the figure was, it was obviously spent by a lot of people who knew that only one would be chosen, therefore, that there was going to be money lost, to use the hon. member's phrase, by all but the winner. Now he says that there was a group of four recommended by the board. That is true, Madam Speaker, but I understand from the member for St. John's West that somehow we would have had to choose the one at the top of the list.


Ramon John Hnatyshyn: No.


Pierre Elliott Trudeau: Am I being told now that it would have been okay if we had chosen one of the four rather than one of the 11? I would like to know what the opposition is taking as its morality in this particular case. Do members opposite think the government has any choice at all, or was it necessary to choose among four, or among 11 ?
The point I am taking, Madam Speaker, is that these boards can be useful to narrow down the list, in order that people who are capable of building and who have the reputation of building good buildings, will be chosen; but I do not think, I repeat, I do not think that the government should automatically choose one which has had the first place. And I do not think that is the point of view of the member for St. John's West either, but he keeps saying it.


Some hon. Members:: Oh, oh!


REQUEST FOR INDEPENDENT INVESTIGATION
Ramon John Hnatyshyn: Madam Speaker, the point I want to make for the Prime Minister is that the Prime Minister is in effect saying to the selection panel that they are a bunch of incompetents and that, no matter what they suggest to the government, they are not going to be given attention. They did narrow down the number of architects to the last four.


Some hon. Members:: Oh, oh!


Ramon John Hnatyshyn: I repeat "shining wits", and maybe they will pick that up a little later on. I want to ask the Prime Minister this. In the interest of the integrity of the office, why is it that the Prime Minister, when there are obviously differing statements with respect to what actually transpired-and the Prime Minister is so obviously embarrassed about this matter-he has been caught with his pants down on this issue-refuses to accept the legitimate proposition of having an independent investigation into this matter? Why? Does he think he is above the law? Does he think that the Charter of Rights does not apply to him?


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: Madam Speaker, I can remind the member of the hundreds of times that the opposition has called for commissions of inquiry. The facts are not being hidden by me. I am admitting I did not choose the first. I am giving the reasons why. There may be a political difference here,
I feel that amongst the top ones chosen by the committee there were several people who could have built the building. I think that within those choices it would have been even nicer if we could have said to four, five or six of them, "Let us see some designs, let us see some mock-ups of the building, let us choose." I have seen a lot of our embassies now, Madam Speaker. As I say, I have been Prime Minister and travelling abroad for some years. I think it amazing that until now not a single project, to my recollection, has ever come to the Government of Canada for even a look at these prestigious buildings, and that it is some people out there who make the choice.


An hon. Member:: No, no.
May 11, 1982


Pierre Elliott Trudeau: At least as far as this government is concerned, I think we have a sense of taste which perhaps would not exist on the other side-


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: -and that we are able to make some choice in this case, Madam Speaker.


Madam Speaker:: Order. Order. I am sorry to interrupt the Prime Minister, but that answer was rather long.


CORPORATE AFFAIRS
Mr. Vic Althouse (Humboldt-Lake Centre):: Madam Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. Last week there were reports that Loblaws Ltd. was trying to buy shares in Dominion Stores Ltd. This came only a few days after reports that Steinbergs and Dominion were trying to get together. Since gobbling up Dominion may be good for the supermarket companies but certainly is not good for the consumers, the farmers, or the smaller independent Canadian food processors, can the minister tell this House whether his ministry has investigated these attempts to buy into Dominion and, if so, what are the conclusions of himself and his department regarding this further concentration of ownership and control in the retail food market?


Hon. Andre Ouellet (Minister of Consumer and Corporate Affairs):: Madam Speaker, as you know, it is not appropriate to deny or to confirm that an inquiry is being held. I can give the hon. member the assurance that his remarks will be brought to the attention of the Director of Investigation and Research.


CONSOLIDATION OF PURCHASING POWER
Victor Fredrich (Vic) Althouse: Madam Speaker, the minister will remember that the Leach inquiry in Ontario heard a great deal of testimony some time ago from farmers and smaller food processors about chain store buying techniques, like demanding volume rebates, co-operative advertising allowances, and a whole lot of other ways that the supermarkets have of reducing their procurement costs. While at first glance this may appear to be an advantage to the consumer, does the minister agree that over time this sort of growing, privately-controlled power in the hands of the supermarkets will eventually bring higher prices to consumers? If he does agree, what do he and his department intend to do about it?
Hon. Andre Ouellet (Minister of Consumer and Corporate
Affairs): Yes, Madam Speaker, indeed I share the concern of the hon. member. This is one of the reasons why we hope in the
Oral Questions
next session of Parliament to introduce appropriate amendments to the combines legislation.


STATUS OF WOMEN
Mrs. Celine Hervieux-Payette (Montreal-Mercier):: Madam Speaker, my question is directed to the Minister of State responsible for the Status of Women. The ministers responsible for the status of women in the provincial and territorial governments have been meeting in Ottawa for the last two days. Madam Speaker, I should like to know whether the ministers have reached any conclusions, and whether the minister can inform the House of these conclusions and any measures the ministers intend to take to implement the Charter of Rights and improve the economic status of women in Canada.


Hon. Judy Frola (Minister of State (Mines)):: Madam Speaker, I welcome this opportunity to explain what happened during the past day and a half in Ottawa. This was a rather historic event, the first meeting ever of the ministers responsible for the status of women. We were delighted to come to conclusions that I think will improve the status of women in Canada on a very general basis. We agreed that the machinery of government must be improved both at the federal and provincial levels. There must be a greater understanding of those problems which face women in the work force today. Daycare, maternity benefits, sexual harassment, all came under intense discussion.


EMPLOYMENT
Hon. Flora MacDonald (Kingston and the Islands):: Madam Speaker, my question is directed to the Minister of Employment and Immigration. Regardless of the Prime Minister's approach to the unemployment situation, nevertheless the situation with regard to 1.5 million unemployed Canadians is really tragic. One of the groups that is suffering most from unemployment is women who are heads of single-parent families. The number of people in this group without jobs has doubled in the last year from 25,000 to 51,000.
In view of the fact that these women, on their own, have to provide for their children, maintain their homes, and put food
17278

May 11, 1982
Oral Questions
on the table, is any special emphasis being given to job retraining for these women who are probably the most vulnerable group in our society?


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, I certainly agree with the hon. member that this particular group in our society is the one that faces by far the most serious difficulty in the workplace. I can report to the House that one of the major emphases of the new national training plan we have put forward will provide special incentive grants to employers to take women into non-traditional training programs and provide them with the opportunity to gain training in a wider range of occupations than has previously been the case.
We also have a special direct employment program, Canada Community Services Projects, which particularly hires women who are single parents to work in a wide variety of community-based services. I believe the enrolment is about 70 per cent women in that direct employment program. We are targeting our efforts to meeting the problem, and we would certainly appreciate any support that the hon. member could give to those efforts.


CANADA MANPOWER DECISIONS
Flora Isabel MacDonald: Madam Speaker, I have a supplementary question for the minister. I should like him to consider the case of a single parent who is a 42-year old female sales clerk, with two children at home, who was given two weeks termination notice. She applied through Canada Manpower for retraining in word processing. She was told she would need a typing speed of 50 words per minute to qualify. She did not have that, so she applied for retraining in typing. Then she was told at Canada Manpower that that would not do, because typing leads to a dead end occupation for women and therefore she would not be allowed to retrain in typing. Then she was told, "Besides that, you are listed as a sales clerk."
How long are women like this going to be given the runaround by the department, and when is the department going to consider seriously the fact that such women are desperately in need of retraining?


Lloyd Axworthy: Madam Speaker, I would be very pleased to receive specific information on that case from the hon. member. I would be prepared to look into it. I would point out that, in order to deal with the problems she raises concerning the need for special counselling, we have opened eight special women's employment centres across Canada in the past year. They are designed specifically to look at the problems of women coming into the work force who need training or need to change occupations.
I would be very glad if the hon. member would give me a report on this case which I would refer to one of the special women's employment centres that we have established to deal with that kind of problem.


PUBLIC WORKS
Hon. Roch La Salle (Joliette):: Madam Speaker, my question is directed to the Right Hon. Prime Minister and concerns the embassy project. I have the impression that the Prime Minister gave a very poor defense of his point of view in a matter that is extremely important, considering his position. The Prime Minister mentioned 11 finalists, who today have become "semi-finalists". The Prime Minister knows perfectly well that the committee recommended four firms, and I believe he has a duty to the public to give his real reasons for not selecting one of the four recommended firms or finalists and for selecting a firm that ranked lower on the list.


Pierre Elliott Trudeau: Madam Speaker, the hon. member is asking me to repeat what I said earlier. It is my view that the government had to make a selection from a group of architects who were recognized as being eminently capable of building an embassy of this size. Whether there were 11 in the group or four, I suppose it hardly matters, unless the hon. member is trying to claim that the government has to select the first one on the list. That is what I asked his colleagues, and I did not get an answer. Is the government bound by the selection made by a group of government officials and architects, in which no politician had a say. Is this selection to be imposed on us or should the government act responsibly and exercise its discretion in selecting the architect? It so happens that in exercising that discretion, we selected one of the 11 finalists or semi-finalists, and it so happens that our choice fell on an internationally acclaimed architect, whose reputation is well established in Canada and beyond our borders. Personally, I cannot accept the principle that in selecting an embassy of this size, the government is bound by the decision of a group of officials or architects and that the government itself has nothing to say in the matter. If that is the hon. member's theory, he probably made this discovery since he became a member of the opposition, because it was certainly not his position before.


Roch La Salle: Madam Speaker, I can assure you that not my theory but the Right Hon. Prime Minister has changed during the last thirty years, since the time when he attacked the Union Nationale in Quebec on contracts. The Prime Minister knows perfectly well that his government asked for a special committee to do an evaluation of this prestigious project. The opposition never requested that the first person on the list should be selected, but the Prime Minister is sticking to this story although he knows perfectly well, and that is where he is misrepresenting the facts, Madam Speaker-


Madam Speaker:: Order, please. I am sorry, but I must ask the hon. member to put his question.
May 11, 1982


Roch La Salle: Madam Speaker, since the Prime Minister received four recommendations and was not bound to select the first person recommended, why did the Prime Minister refuse to consider representations made by a competent committee? Does he want to give us the impression that the government is more competent than the task force he himself formed to help the government and the country to carry out this prestigious project? That is what Canadians would like to know.


Pierre Elliott Trudeau: Madam Speaker, the hon. member is saying now that we were not bound to select the first one on the list. Madam Speaker, I may refer the hon. member to his colleague from St. John's West, who earlier seemed to indicate the exact opposite, when he spoke in support of the press report, and, more specifically, named Mr. Zeidler, who said that he was the first one on the list and that he should have-


Roch La Salle: There were four recommendations and you ignored them!


Pierre Elliott Trudeau: Yes, Madam Speaker, but I cannot seem to make the hon. member agree with his colleague. He should first get things straightened out with him and tell us whether according to their side, we are bound to select the first candidate or whether we have some latitude to select among those who qualified. If the hon. member, unlike the member for St. John's West, is saying that we do have some latitude, I would ask him now why this latitude should extend to four rather than to 11 people, because none of the 11 and none of the four submitted a real project or even a mock-up or sketches, and that the point was to select a competent person. I suggest that there were probably several competent architects among the 11, but I do not think that anyone in this House or in the country will deny that Mr. Erickson is competent. The hon. member said that he happens to be one of my friends. I would like to tell the hon. member that if Mr. Erickson is a great architect, it is not because he is my friend. Perhaps the reverse is true.


EXTERNAL AFFAIRS
Miss Pauline Jewett (New Westminster-Coquitlam):: Madam Speaker, my question is for the Secretary of State for External Affairs. He will know that Pretoria and Washington seem to be combining to hold up as long as they possibly can, if not forever, the independence of Namibia, which the minister himself said last November he hoped to see come about this year in accordance with the UN resolution. Can the minister explain why Canada, as a member of the contact group, is not
Oral Questions
protesting in the most strenuous way possible the manner in which various electoral systems are being proposed? First of all there is the suggestion that there be one person with two votes, and of course SWAPO turned that down; and they are now proposing there be one person with one vote but each vote be counted twice. As the minister knows, all these devices are contrary to what we should be pressing for in the contact group. I ask the minister are we pressing for or is there any hope of having a genuinely democratic system in Namibia of one person, one vote?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, as the hon. member knows, there are a great many valid electoral systems in the democratic world. In each case it is important that the system be devised with the needs of the people in mind. Namibia is a country in which there are a great many different groups, none of which, I understand, comprises as much as half the population. Therefore it is important to get an electoral system which gives some weight to all of the various groups in that country. That is what the contact group has been trying to facilitate with its various proposals. It is not open to me to discuss those proposals in this formula, but we have been trying to facilitate the process. This is not a process which involves bad faith on anyone's part, as some have alleged, or some kind of blindness to the needs of the situation. Indeed, it is an attempt to meet the needs of the situation exactly.


POSITION TAKEN BY SOUTH AFRICA AND UNITED STATES
Pauline Jewett: Madam Speaker, I would like the minister to note specifically that one person, one vote, under a system of proportional representation, which is what many in the area have proposed, or something comparable to Zimbabwe, is what would be the most fair in this circumstance. I agree with him there are a great variety, and I believe a proportional representation system would be the most appropriate. Would the minister not agree to that, and also agree that the hopes he had, when I questioned him last November in committee, of Namibia achieving independence in 1982 are now being once again totally stalled by South Africa, and possibly even by Washington as well?


Mark R. MacGuigan: Madam Speaker, I would agree with the hon. member that some measure of proportional representation may well be needed in that situation. I would tell her that the timetable we had last fall has proved to be overly optimistic in light of events. But I can certainly deny that the kind of difficulties which have arisen have arisen because of any specific attitude on the part of South Africa, and of course not on the part of the United States which has been working with other members of the contact group to try to facilitate the process.

May 11, 1982
Order Paper Questions BUSINESS OF THE HOUSE


Mr. Nielsen:: May I ask the government House leader to confirm the business for tomorrow and Thursday.


Mr. Pinard:: Madam Speaker, the business for tomorrow will be the consideration on second reading of one of two bills resulting from the splitting of Bill C-93, namely Bill C-lll. On Thursday we will be dealing with the second reading of Bill C-112.



ROUTINE PROCEEDINGS


Mr. D. M. Collenette (York East):: Madam Speaker, I have the honour to present the third report of the Standing Committee on Energy Legislation, in both official languages.


HEALTH, WELFARE AND SOCIAL AFFAIRS-PRESENTATION OF THIRD REPORT OF STANDING COMMITTEE
Mr. Marcel Roy (Laval):: Madam Speaker, I have the honour of tabling, in both official languages, the third report of the Standing Committee on Health, Welfare and Social Affairs.
[Editor's Note: For above reports, see today's Votes and Proceedings.]


QUESTIONS ON THE ORDER PAPER
[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. 2,829, 2,870, 2,937, 3,531, 3,554, 3,705, 3,706, 3,707, 3,708, 3,709, 3,710, 3,711, 3,712, 4,096, 4,163, 4,164, 4,215, 4,217, 4,219 and 4,223.


Mr. Clarke: 1.	With reference to the education leave costs recorded by the Post Office Department at page 13.6, Volume I of the 1979-80 Public Accounts of Canada, what guidelines were used to determine (a) which employees should obtain educational leave and whether such employees should be granted (i) leave with pay (ii) travel expenses (iii) payment for tuition (b) whether the skills to be acquired were needed on a permanent basis?
2.	What percentage of the education leave cost of $36,430 was necessitated by the acquisition of new equipment and by the need to have new skills in order to use the equipment?
3.	What percentage of the education leave was necessitated by reason of job redundancy because of the (a) acquisition of equipment (b) change in the role of the employing agency (c) change in the capabilities of employees?
4.	What percentage of employees granted such leave in the past three years have subsequently left the public service?


Mr. Gary F. McCauley (Parliamentary Secretary to Minister of Consumer and Corporate Affairs):: I am informed by Canada Post Corporation as follows: 1. (a) and (b) The guidelines contained in the Canada Post Personnel Manual, Chapter 9-1 which are in accordance with Treasury Board policy as expressed in the Personnel Management Manual, Chapter 110-5.
2.	None.
3.	(a) and (b) None, (c) Employees are usually granted educational leave not because of a change in their capabilities but rather to increase their capabilities so that they become more valuable employees for the organization.
4.	Of the five employees recorded on page 13.6, Volume I of the 1979-80 Public Accounts of Canada, 20 per cent left the public service.


Mr. Clarke: With reference to the professional and special services recorded by the Post Office Department at page 32.25, Volume II of the 1979-80 Public Accounts of Canada, with particular reference to hospitality services (a) what was the name of each type of service (b) what was the amount paid for each service and, for contracts of a value more than $2,000, to whom was it paid (c) are guidelines used to determine when the department will pay for hospitality and, if so, what are they (d) of the $70,786 paid for hospitality, what percentage was principally used to entertain (i) foreign visitors (ii) Canadian businessmen (iii) provincial public servants (iv) federal public servants (v) ministerial exempt staff (vi) Members of Parliament (vii) Members of Provincial Parliaments, Legislative Assemblies and the National Assembly (viii) Canadian dignitaries, such as the Governor General and Lieutenant-Governors General (ix) federal Crown corporation executives (x) provincial Crown corporation executives (xi) members of federal commissions, boards and councils (xii) any other categories?


Gary Francis McCauley: I am informed by Canada Post Corporation as follows:
(a)	Meals and receptions only.
(b)	The amount paid was $70,786 as recorded in the Public Accounts of Canada and no contracts were issued for $2,000 or more.
(c)	The guidelines set out in Treasury Board Administration Policy Manual, Chapter 360.
(d)	(i) 42 per cent (ii) 20 per cent (iv) 18 per cent (vi) (vii) (ix) 20 per cent (iii) (v) (viii) (x) (xi) (xii) Nil.


Mr. Clarke: With reference to the professional and special services recorded by the Post Office Department at page 32.25, Volume II of the 1979-80 Public Accounts of

Canada, with particular reference to training services (a) how does the department explain the 24 per cent increase in expenditure for the item over that for 1978-79 (b) what services does this entail (c) what is a list of each contract of a value more than $2,000 (d) what services did George Brown College in Toronto provide?


Gary Francis McCauley: 1 am informed by Canada Post Corporation as follows:
(a)	The 1978-79 reported amount of $591,072 included only individual payments in excess of $2,000. The 1978-79 amount of $802,495 includes all payments including those under $2,000 and as a result a comparison is misleading. If in 1978-79 the under $2,000 payments are included the compared amount would be $802,495 and 1979-80 would in fact show a decrease of 8.2 per cent.
(b)	The training program services include the costs related to University, College, Public Service Commission and correspondence courses as well as technical training.
(c)	Not available for 1979-80. We were required to list only individual payments $25,000 and over.
(d)	The George Brown College in Toronto gives technical training for postal employees. This training provided the prerequisite skills and knowledge to maintain postal equipment and to undertake further specialized training to maintain complex equipment systems in the mechanized postal plants.


Mr. Cossitt: 1.	Did the Governor of the Bank of Canada recently state that "if all workers demand pay increases of 10 to 12 per cent annually, inflation will never be licked" and, if so, at what location and under what circumstances?
2.	Did the Governor recently accept an approximately 10 per cent salary increase and, if so, how does the government and the Governor reconcile this statement with the sizeable increase received by the Governor?
3.	What is the salary of the Governor now and what was it before the raise?


Hon. Pierre Bussieres (Minister of State (Finance)):: 1. The Bank of Canada has no record of a statement in these terms by the Governor. What the Governor said in his speech to the Board of Trade of Montreal on December 1, 1981 was the following: "The more readily we Canadians accept the fact that more moderate increases in total spending imply more moderate increases in money incomes and prices for everyone, the better will be the trend of employment, output, and real income in Canada in the months ahead."
2.	The Governor of the Bank of Canada received a salary increase effective April 1, 1981. The salary of the Governor had been frozen for six years from January 30, 1973 to January 1, 1979. From 1973 to date, the salary of the Governor has increased 39 per cent; during the same period, average wages in the entire economy have increased about 130 per cent.
3.	For those positions to which a salary range is not attached and where the determination of salary increases includes considerations of assessed performance, as a matter of privacy the government does not release individual salaries or the percent-
Order Paper Questions
age increase in salary applicable to individuals. These circumstances apply in the case of the Governor of the Bank of Canada.


Mr. Blenkarn: 1.	With reference to Harbourfront, is it the government's policy to resist any effort by employees to form a union in order to bargain collectively with Harbourfront?
2.	Did the directors of Harbourfront vigorously oppose the efforts by theatrical stage employees to join the International Alliance of Theatrical Stage Employees Local 58 and, if so, for what reason?


Paul James Cosgrove: 1 and
2. There is an application now being heard by the province of Ontario Labour Relations Board for certification of a small group of employees at Harbourfront. The board is the suitable body to hear this matter and it is therefore not appropriate for the federal government to comment. I am satisfied, however, that Harbourfront management, as the local organization responsible for the site, is carrying out its responsibilities in a proper manner.


Mr. Cossitt: What is the salary to the nearest dollar paid to Mr. Gerald Bouey, Governor of the Bank of Canada, as of February 2, 1982 and what are the percentage increases he received since taking office?


David P. Smith: For those positions to which a salary range is not attached and where the determination of salary increases includes considerations of assessed performance, as a matter of privacy the government does not release individual salaries or the percentage increase in salary applicable to individuals. These circumstances apply in the case of Mr. Gerald Bouey, Governor of the Bank of Canada.


Mr. Cossitt: What is the salary to the nearest dollar paid to Mr. Edgar Benson, Chairman of the Canadian Transport Commission, as of February 2, 1982 and what are the percentage increases he received since taking office?


David P. Smith: Mr. Edgar Benson, Chairman of the Canadian Transport Commission, is paid as a DM3, the range for which is $84,300 to $99,200. Since Mr. Benson's appointment in September of 1972, the DM3 range has been adjusted as follows:
April I, 1973	- 10 per cent
April I, 1974	- 9.1 percent
April 1, 1975	- 10 per cent
April 1976	- 3.6 per cent *
April 1, 1977	- 3.5 per cent
April 1, 1978	- 3.4 per cent
* No increase provided to individuals

May 11, 1982
Order Paper Questions
April I, 1979	- 6.7 per cent
April I, 1980	- 9.5 per cent
April 1, 1981	[DOT]- 9.2 per cent
Nov. 1, 1981 - 6.0percent**
* * No automatic increase provided to individuals
Individuals within the DM3 classification may receive adjustments either greater than or less than the movement of the range structures based on assessed performance. Where position in the range stucture or level of salary increase reflect performance judgments, individual salaries and salary increases are not released.


Mr. Cossitt: What is the salary to the nearest dollar paid to Mr. Frank Roberts, Chairman of VIA Rail, as of February 2, 1982, and what are the percentage increases he received since taking office?


David P. Smith: For those positions to which a salary range is not attached and where the determination of salary increases includes considerations of assessed performance, as a matter of privacy the government does not release individual salaries or the percentage increase in salary applicable to individuals. These circumstances apply in the case of Mr. Frank Roberts, Chairman of VIA Rail.


Mr. Cossitt: What is the salary to the nearest dollar paid to Mr. Bill Hopper, Chairman of Petro-Canada, as of February 2, 1982, and what are the percentage increases he received since taking office?


David P. Smith: For those positions to which a salary range is not attached and where the determination of salary increases includes considerations of assessed performance, as a matter of privacy the government does not release individual salaries or the percentage increase in salary applicable to individuals. These circumstances apply in the case of Mr. Bill Hopper, Chairman of Petro-Canada.


Mr. Cossitt: What is the salary to the nearest dollar paid to Mr. Mitchell Sharp, Commissioner of the Northern Pipeline Agency, as of February 2, 1982, and what are the percentage increases he received since taking office?


David P. Smith: For those positions to which a salary range is not attached and where the determination of salary increases includes considerations of assessed performance, as a matter of privacy the government does not release individual salaries or the percentage increase in salary applicable to individuals.
These circumstances apply in the case of Mr. Mitchell Sharp, Commissioner of the Northern Pipeline Agency.


Mr. Cossitt: What is the salary to the nearest dollar paid to Mr. A1 Johnson, President of the CBC, as of February 2, 1982, and what are the percentage increases he received since taking office?


David P. Smith: For those positions to which a salary range is not attached and where the determination of salary increases includes considerations of assessed performance, as a matter of privacy the government does not release individual salaries or the percentage increase in salary applicable to individuals. These circumstances apply in the case of Mr. A1 Johnson, President of the CBC.


Mr. Cossitt: What is the salary to the nearest dollar paid to Mr. Claude Taylor, President of Air Canada, as of February 2, 1982, and what are the percentage increases he received since taking office?


David P. Smith: For those positions to which a salary range is not attached and where the determination of salary increases includes considerations of assessed performance, as a matter of privacy the government does not release individual salaries or the percentage increase in salary applicable to individuals. These circumstances apply in the case of Mr. Claude Taylor, President of Air Canada.


Mr. Cossitt: 1.	What was the exact salary to the nearest dollar paid to Mr. Michael Warren, head of the Canada Post Corporation, at the time of his appointment effective September 1, 1981?
2.	What is the exact salary to the nearest dollar received by Mr. Warren as a result of an increase approved by cabinet last week?
3.	What were all the reasons justifying such a large raise in salary when Mr. Warren has only been in office for a relatively short period of time and was one of the reasons that Canadian postal rates for first-class mail were recently raised to provide for funds in order to increase Mr. Warren's salary?


David P. Smith: 1 and 2. For those positions to which a salary range is not attached and where the determination of salary increases includes considerations of assessed performance, as a matter of privacy the government does not release individual salaries or the percentage increase in salary applicable to individuals. These circumstances apply in the case of Mr. Michael Warren, President of the Canada Post Corporation.
3. It was agreed with Mr. Warren, when he accepted the position of the Canada Post Corporation on April 2, 1981, that his salary would be included in the 1981 annual pay review for
May 11, 1982

Crown corporations, which was concluded on January 27, 1982. The salary of the President of the Canada Post Corporation is not a factor in the establishment of Canadian postal rates.


Mr. McKinnon: 1.	Did the Department of National Defence place a $5,000 contract with Carleton University for a "study of the cohesiveness of the Warsaw Treaty Organization-Phase II" under contract serial No. 05SU-0141105 (2SU81-00400) and, if so (a) for what reason could the study not be done within the department (b) on what date will it be completed (c) how many parts or phases are there to the study and what is the total expected cost (d) will the study, in whole or in part, be made available to (i) Members of Parliament (ii) the Department of External Affairs?
2.	Did the department place a $148,000 contract with W.R. Davis Engineering Limited for "study of the motion of a cable towed flexible cylinder" under contract serial No. 07SC-3210154 (8SC81-00248) and, if so (a) for what purpose is a towed flexible cylinder used (b) what is the unit cost of a cylinder?
3.	Did the department place a $276,860 contract with Air Canada for aircraft passenger seats under file No. HE.2721361-HE80 (2HE81-02038) and, if so (a) for which and for how many aircraft are the seats being purchased (b) how many seats are being purchased?


David P. Smith: I am informed by the Departments of National Defence and Supply and Services as follows:
1.	Yes. The study is carried out under the sponsorship of Carleton University and jointly funded by several organizations including DND.
(a)	While DND provides project co-ordination, it does not have the linguistic capability nor the human and financial resources to carry out the project on its own.
(b)	Fall of 1983.
(c)	Four phases with several parts to each phase. The total expected cost up to and including Phase III is estimated at $153,889. The cost of Phase IV, which will be the final report, has still to be determined.
(d)	The study will be available to Members of Parliament and to all interested government departments; it will also be distributed throughout NATO.
2.	Yes, the said contract was issued by DSS on behalf of DND to W.R. Davis Engineering Ltd.
(a)	The work under the contract is for the development, validation and implementation of a computer program to simulate the motions of a long, flexible, neutrally buoyant cylinder towed by a long, heavy cable. The "flexible cylinder" could be any long, flexible object, cylindrical in shape, that could be towed behind a ship. This could be a fish net or an antenna array used in detection systems.
(b)	The project is a computer exercise only and no "cylinder", as such, will be used or purchased.
3.	Yes, the said contract was issued by DSS on behalf of DND to Air Canada.
(a)	The seats are being purchased for the five DND CC137 (Boeing 707) aircraft.
Order Paper Questions
(b)	A total of 215 used refurbished seats are on order.


Mr. Nystrom: 1.	Has the government made reference to an economic strategy based on megaprojects and, if so (a) which projects (b) what are the projections for the next 20 years (c) where will they be located (d) under which sector of the economy will they come (e) what is their (i) total (ii) individual value (f) for (i) all projects (ii) each project, what industrial benefits are forecasted for Canada's economy (g) for (i) all projects (ii) each project, how many jobs will be created?
2.	Are there guidelines stipulating that subcontractors and other companies must be Canadian-owned in a given percentage and, if so, what are the details?
3.	Does the government contemplate investing in the projects and, if so (a) approximately how much for (i) all projects (ii) each project (b) under what form (grants, guarantees, tax credits, etc.)?


Pierre Bussières: 1. (a)
The government has not made reference to an economic strategy based exclusively on megaprojects. The government in its policy paper entitled "Economic Development for Canada in the 1980's", tabled at the time of the November budget, stated that the 1980s hold great promise, offering opportunities of unprecedented magnitude and the potential for lasting benefits from economic renewal. Specifically, the policy paper set out three areas of major opportunity:
(i)	the development of our natural resources; energy, food products, such as grain and fish, forest products and minerals, such as coal and potash.
(ii)	the second area of economic development opportunity lies in manufacturing activity. The paper cites the published report of the Major Projects Task Force which identifies $440 billion in potential projects predominantly in the energy and resource sectors, noting the opportunity presented to the manufacturing sector to both supply machinery, equipment and materials needed for resource development and to extend the further processing of resource products beyond the primary stage.
(iii)	the third area of growth is in the innovation, development and exploitation of advanced technology and high productivity goods and services. The paper notes that Canadian creativity has proven in the manufacturing, engineering and service areas, such as nuclear technology, aerospace, communications, electronic data processing, retailing and urban transportation equipment, that we can place ourselves at the forefront of technological change in selected world markets. It is equally clear, however, that we must build upon and strengthen our technological infrastructure.
(b) The major project task force report of June, 1981, provides an inventory of specific projects tc the year 2000 having a cost of $100 million or more. The government in October, 1981, published a major capital projects inventory containing projects with an investment value of more than $100 million. These projects were divided into categories of "committed", "planned" or "possible" to the year 1990

May 11, 1982
Order Paper Questions
depending upon the status of industry plans. The government inventory also provides an address list of all the sponsor companies, including a contract name and other relevant project information. It is intended, if industry agrees it would be useful, to annually up-date this inventory. Canadian industry is therefore to be kept appraised of possible current and future opportunities arising from major projects.
(c)(d)(e)(f) The two above-mentioned publications not only set out a project, specific inventory of currently identified projects, but as well set out the costs, projected employment where known and sectoral and regional distribution of the project inventory. It is expected that the massive investment in these resource development projects will generate many billions of dollars worth of opportunities for supplying these projects or developing new resource-based products.
2.	In order for Canadian industry and workers to benefit to the maximum extent possible from major activity the federal government announced new initiatives in August, 1981. These initiatives were (i) the announcement of industrial benefits objectives and guidelines for owner-sponsors of major projects,
(ii)	the creation of an office of industrial and regional benefits within the Department of Industry, Trade and Commerce; and
(iii)	the formation of a committee on industrial and regional benefits replacing the existing advisory committee on industrial benefits. These measures are intended to increase the federal government's ability to identify and stimulate industrial benefits associated with, in particular, the development of Canada's natural resources. They also respond to a need to have a system in place to administer the industrial benefits provisions of Bill C-48.
With respect to supplier development, a critical role must be played by project sponsors. The government will encourage sponsors to put in place policies and practices that ensure that Canadian suppliers benefit from supplier development activities that are seen as good procurement strategy in many industries. These include phased contracts, performance milestones, early definition of requirements, participation in start-up costs, assistance with technical or managerial skills, etc.
3.	The government, through Crown corporations, may invest in some megaprojects. The level and nature of investment in any specific project will depend upon several factors, including the magnitude of the project and the role which the project plays in the achievement of national economic objectives. For example, through Petro-Canada the government may invest in major energy projects which have the potential to add significantly to Canada's domestic oil supplies, and thus contribute to the achievement of oil self-sufficiency. The precise nature of each Crown corporation's investment will depend upon its nature and financial situation.
It is not possible at this time to estimate how much the government will invest in the several projects listed in the major capital projects inventory. Many of these projects are still in a preliminary planning stage, and even those in an
advanced stage of planning may not yet have received full review by regulatory bodies and government departments to determine whether they are consistent with the public interest.
It also is not possible at this time to predict the precise form which government financial participation might take. Crown corporations will participate as equity investors in some projects. In other cases, the government may provide tax and direct incentives. The form of the government's participation will be dependent upon, inter alia, its judgment as to the national economic benefits to be derived from the project, the capability and willingness of private sponsors to assume the associated risks, the financial benefits to be derived by Crown corporations from investments, and the impact of different forms of participation such as tax expenditures upon related government policies and programs.


Mr. Siddon: With reference to the state visit of President Siad Barre of Somalia (a) how many Somalian flags were purchased and installed in the National Capital Region for the visit (b) which department paid for the acquisition and installation (c) what was the total cost of their (i) acquisition (ii) installation (iii) removal (d) what will be the disposition of the flags when they are removed (e) are the flags to be stored and, if so (i) where (ii) what will be the cost of storage?


Paul James Cosgrove: (a)
Three hundred and four.
(b)	Acquisition and installation paid for by Public Works Canada. $3,764.43 is to be recovered from the Department of External Affairs.
(c)	(i) $3,764.43, (ii) $3,365, (iii) $2,753.18.
(d)	Public Works storage.
(e)	(i) Yes, at Public Works Stores, Plouffe Park, Ottawa, (ii) $70.20 per year.


Mr. Robinson (Burnaby): 1.	With reference to the education leave costs recorded by the Department of Justice for the Canadian Human Rights Commission at page 13.6, volume I of the 1980-81 Public Accounts of Canada, what guidelines were used to determine (a) which employees should obtain educational leave and whether such employees should be granted leave with pay (b) whether the skills to be acquired were needed on a permanent basis?
2.	What percentage of the education leave was necessitated by reason of job redundancy because of the (a) acquisition of equipment (b) change in the role of the employing agency (c) change in the capabilities of employees?


Hon. Jean Chretien (Minister of Justice and Minister of State for Social Development):: 1. (a) Guidelines used are contained in Training Administration Guide issued under Section 7 of the Financial Administration Act and the government's policies on staff training (chapters 110-1 and 110-2 of the Personnel Management Manual), (b) The skills to be acquired were needed on a permanent basis.
2. (a) and (b) Nil. (c) One hundred per cent of the education leave was necessitated due to changes in the capabilities of the employee.
May 11, 1982


Mr. Robinson (Burnaby): 1.	With reference to the education leave costs recorded by the Department of Justice for the Law Reform Commission of Canada at page 13.6, Volume I of the 1980-81 Public Accounts of Canada, what guidelines were used to determine (a) which employees should obtain educational leave and whether such employees should be granted leave without pay (b) whether the skills to be acquired were needed on a permanent basis?
2.	What percentage of the education leave was necessitated by reason of job redundancy because of the (a) acquisition of equipment (b) change in the role of the employing agency (c) change in the capabilities of employees?


Joseph Jacques Jean Chrétien: Page 13.6 of Volume I of the 1980-81 Public Accounts of Canada appears to contain a misprint as regards purported information regarding the Law Reform Commission of Canada. In fact, no personnel of the commission were on education leave during that fiscal year and, consequently, no costs were incurred for that purpose.


Mr. Crosby: 1.	Was an application made to the Minister of Justice or another officer by or on behalf of Mr. Donald Marshall for a pardon, new trial or other remedy with respect to his conviction for a murder?
2.	Does the minister or other official have any information indicating that Mr. Marshall was improperly convicted of the murder of Sandy Seale or does he or any other official have any information respecting the person who did murder Sandy Seale?
3.	What action can be taken or what remedy can be granted to a person who has been improperly convicted of murder in Canada and who has spent a substantial period of time in prison and is there any financial or other compensation available to such a person?


Joseph Jacques Jean Chrétien: 1. Dartmouth lawyer Stephen Aronson met with one of my officials on April 1, 1982, to discuss the case of Donald Marshall, Jr. He has just lately tendered written materials in connection with Mr. Marshall's application for a pardon, or for one of the remedies under Section 617 of the Criminal Code. Section 617 permits me to order a new trial or appeal proceeding where I feel that such relief is warranted.
2.	This case is currently being investigated by my officials, and I hope will be resolved with some dispatch. I cannot comment on any substantive aspect of it, until the matter is concluded.
3.	There has been no suggestion that compensation might be sought from the federal government in a matter such as this, for we had no role in the investigation or prosecution of this case. I cannot speculate about what recourse might be sought from others if there were any impropriety.


Mr. Friesen: 1. How many veterans of World War II who served with (a) the Canadian Armed Forces (b) other allied forces were interned in (i) Japanese (ii) German prisoners of war camps and, in each case, how many surviving veterans are now known sufferers of multiple sclerosis?
Order Paper Questions
2. Of those veterans who have died, how many contracted multiple sclerosis before their deaths?


Hon. W. Bennett Campbell (Minister of Veterans Affairs):: 1. No such statistics maintained or available. Compensation under the provisions of the Compensation for Former Prisoners of War Act is currently being paid to 980 former members of the Canadian Armed Forces who were prisoners of war of the Japanese during World War II, and to 4,936 former members of the Canadian Armed Forces who were prisoners of war of other powers during World War II.
2. No such statistics maintained or available. The Canadian Pension Commission does not maintain statistics on the number of former prisoners of war who are now suffering from multiple sclerosis, or who suffered from this condition prior to their death.


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


Mr. Stevens:: Madam Speaker, if I may, I would like once again to ask the parliamentary secretary why he has not been able to give us a reply to question No. 2,042, which touches on the Prime Minister's December-January world tour of 198081.1 point out to the parliamentary secretary that there are questions on the Order Paper which go back two years and one month. There are 278 pages of unanswered questions. Surely the government, if it has the will, could answer these questions more promptly, including not only the question I have referred to but my five questions Nos. 3,216 to 3,220, all dealing with these trips the Prime Minister has taken to various exotic spots around the world.


David P. Smith: Well, Madam Speaker, as we all know, the hon. member is a very cost-conscious Member of Parliament, but I point out that the government has as of today answered 3,128 questions during this session. The hon. member has raised this question before and the answer is in progress. We have tabled some answers which have been three inches thick and cost several thousands of dollars to compile. Notwithstanding that, we are endeavouring to answer these questions in a reasonable and expeditious way.


Erik Nielsen: Madam Speaker, if I might briefly address a question to the parliamentary secretary, would it not be appropriate, out of respect for the memory of the late hon. member for Leeds-Grenville, to answer his question with respect to Air Canada passes which has been on the Order Paper for some five and a half years?


David P. Smith: Well, Madam Speaker, of course having been on the Order Paper that long it was there the entire time the hon. member for Yukon was a minister and his government did not get around to answering it during their nine-month period. I would point out that the government answered two of the questions standing in the name of the late hon. member for
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Leeds-Grenville today. We have been answering his questions regularly on a daily basis, and we will continue to do so.


Erik Nielsen: How about that one?


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


Mr. Chris Speyer (Cambridge) moved:: That this House, alarmed by the fact that over 1,500,000 Canadians are unemployed and aware that small businesses generate more than 60 per cent of all new jobs created in Canada, condemns this government for its ruinous economic policies, particularly those contained in the budget, which have effectively destroyed the spirit of entrepreneurship in the small business community, have contributed substantially to the loss of job-creating opportunities and which have drastically diminished investment in Canada.
He said: Mr. Speaker, in commencing debate on this important motion, let me waste no time in stating that it is difficult to exaggerate the sense of rage, frustration and anger felt in the Canadian small business community as a result of the disastrous economic policies which are being pursued by this government. That vital sector of our economy which we call the small business community has special qualities which distinguish it from other economic groups in our society.
The Canadian small businessman and woman have the characteristic of being the risk-takers flowing from their belief in the free enterprise system. This economic group creates 60 per cent of all new jobs in Canada. These men and women believe in the values of initiative, incentive and the spirit of entrepreneurship. These traits which are the hallmark of the small business community of our society are being sapped because of government interference and ill-conceived economic policies.
From the small service company in the petroleum industry in western Canada to the manufacturer of auto parts in Ontario to the small vessel construction industry in Atlantic Canada, the over-all outlook for prosperity is grimmer than it ever has been since the bleak days of the depression.
In normal times, statistics demonstrate that one-half of all small businesses fail in the first two years. Further, four out of five businesses are unsuccessful after five years. This is primarily because of under-capitalization of the enterprise, mismanagement or a combination of both. But in today's economic climate, superimposed on these factors the small businessman and woman must contend with punishing interest
May 11, 1982
rates and a budget that snuffs out any sense of incentive. It is not enough for me to speak in terms of bold generalities. I wish to direct my attention to certain aspects of the budget which are presently having a crippling effect on small business people and must be changed.
In a budget which was replete with policies that extinguish incentives and one's personal sense of enterprise, no proposal was more destructive in the budget for the small business person than the decision to tax dividends by a distribution tax of 12.5 per cent.
The small business rate of taxation is normally 25 per cent, subject to provincial variations. But the effect of this proposal will actually raise the corporate tax on active business to thirty three and one-third per cent when funds are paid out of dividends.
Let me illustrate a typical situation by way of specific example prepared for me by a pre-eminent tax lawyer. Let us assume we have a small businessman who has a non-working wife. He has two children both under the age of 18 years. The businessman draws $2,000 a month for living expenses and when profits allow he takes $10,000 in dividends. Let us assume that the gross income from the business is $39,000 including the payment of dividends. In comparing this factual information on the basis of a 1981 return with that of a tax return which must be filed in 1982 pursuant to the provisions of the budget, there is a 10.1 per cent increase in the tax payable by such a small business person. This is so even after including the benefit of indexing and the change in the tax credit.
Thus we have the following incredible situation. We have a gross income in these two years which is exactly the same. But inflation has to be taken into account. Therefore, the purchasing power of that income is reduced in the second year, that is in 1982, by 12 per cent or more. In addition there is an increase in tax of 10.1 per cent. This is a common situation. The numbers I have used are conservative-and I use that word in the best sense-namely $2,000 by way of a draw and $10,000 taken out at the end of the year when profits allow.
A second and equally important example of a policy that works to the detriment of a small-business man pertains to the treatment of capital cost allowance. The new provisions cut the write-off in half in the year of the asset in which it is acquired. The Minister of Finance (Mr. MacEachen), in a piece of propaganda that was sent out to 200,000 small business people in Canada, stated that the change in depreciation write-off in the first year "merely alters the timing of the depreciation". This is simply not true. Let me give an example to back it up.
For depreciable property there is what is known as class 12 write-offs. Class 12 write-offs apply to restaurateurs, doctors, plumbers, electricians and to people who have small tools. In my community there is restaurant called "The Mill". Assume that restaurant has breakage amounting to $500 a month. Taken over a year, it totals $6,000. Formerly under class 12

May 11, 1982

depreciable property a person was entitled to write off the total amount of breakage, but that amount is now cut in half.
Let us take a look at another illustration. A small businessman or woman wishes to purchase a building for $500,000. The capital cost allowance is 5 per cent. In year one, the owner of that building under pre-budget conditions would write off $25,000. Under the provisions of the budget, a person is entitled to write off only $13,500. At the end of ten years, the difference in deductions is $7,878.12. That is the difference after ten years and yet the Minister of Finance says it is only a matter of timing.
I want to pause for a moment to make a point. I am concerned that there is no one in this House who has not received, quite rightly and quite justifiably, many protests from the insurance industry. The insurance industry has mobilized a blitzkrieg which would make Hitler pale. There is going to be a change in the budget as a result of the pressure that has been applied by people with insurance policies who have been writing to their Members of Parliament. They have also been phoning their Members of Parliament. It is very easy to understand the inequity of the situation which occurs when a person has to pay income tax on a benefit he or she has not received. That is easy for anyone to understand. But my concern with respect to the Minister of Finance is that most people do not understand what capital cost allowance is. It is complicated but it is essential and important to the small business community. Most Canadians do not understand what dividends are, the taxation and the effect of dividends. My concern is that people will not understand.
Only political pressure, I think, will initiate any change in this disastrous budget. But for the small business community which is the backbone of our economy, in spite of the good work by the John Bullochs, and the Jim Bennetts, by our party and the other party to my left, in terms of pressuring the government, I do not see the Minister of Finance moving from his position.
I want to use one more illustration because I want to make the point that although some of these matters are very complicated, they are very, very important. The third illustration of duplicity and inconsistency in government policy applies to the raising of the limits from $750,000 to $1 million in terms of retained earnings for a company to qualify as a small business for the preferred rate of tax. While the raising of the limit is to be welcomed, in my opinion it does not go nearly far enough to take into consideration inflation. Dividends paid out of retained earnings will no longer cause a reduction in retained earnings for the purposes of tax.
Again I wish to give an illustration. Suppose company A and company B were set up in 1975, each earning $100,000 per year and paying $25,000 in taxes. Further suppose that company A annually pays dividends out of its funds, whereas company B retains all its earnings. If company B shareholders pay out the retained cash after budget night, they will be subject to a corporate distribution tax of $50,000. Further, company B has cumulative deductions of $600,000 as of
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January 1, 1982, leaving only $400,000 available for the small business deduction.
The point is that every Liberal minister of finance has encouraged small business people of Canada to retain earnings within the company. Now we have a situation where the small business person who has stripped the treasury by way of paying out dividends has a preferred advantage because he has from $1 to $1 million to go, whereas the company that retained earnings in the circumstances is in a less preferred position. In addition, the company that has abided by government policy in terms of retained earnings, if he wants to take it out by way of dividends, will have to pay the 12.5 per cent tax on dividends. I think this is totally wrong. Despite the fact that it is complicated, I insist that the Minister of Finance pay attention to it because it is one factor which has provided disincentive to the small business community.
During the course of the budget debate a document was sent out to 200,000 small business people in Canada. It was replete with fraudulent statements and inaccuracies; it was a piece of propaganda. I have given three illustrations of where it is incorrect, one being the 12.5 per cent tax dividend and the other the statement that investors will pay less tax. That is just absolute nonsense, and patently so. It is absolutely not the case that changes in depreciation or write-offs do not have a significant effect upon small businesses.
One of the hallmarks of the system of taxation has always been the confidentiality of the tax returns of taxpayers, yet the 200,000 recipients of this piece of propaganda received this brochure as a result of the computers of Revenue Canada being utilized for the purpose. If that is not a formal breach of the Income Tax Act, it is a tremendous violation of the spirit of the act. Whether or not a person is a prostitute or whatever, everyone is compelled to disclose their income. The quid pro quo is that no one will know about it except if a person lies or commits a fraud, yet the Minister of Finance utilized the facilities of Revenue Canada for this purpose. It does not surprise me; it is consistent with the conduct of the government. I register my protest with respect to the way this political propaganda was disseminated.
I have tried to illustrate, by the examples I have given, the betrayal in specific terms of risk-takers and small entrepreneurs, those people with incentive who have traditionally been the backbone of our economy. Although the ways and means necessary to implement the policy outlined in the budget have not been passed, there is no sign that the Minister of Finance is willing to change his posture.
As of Friday, Statistics Canada told us that there were officially 1.2 million Canadians unemployed, yet we know that the real figure is closer to 1.5 million. My community is in the heartland of southwestern Ontario. In Cambridge we have 17.5 per cent registered unemployment. We have gone from a situation where there has never been any question of employment in Cambridge to a situation where one out of five men and women cannot obtain jobs. We have 14,000 people from Portugal and 15,000 people from Newfoundland who came to

May 11, 1982
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Cambridge because they could always find employment; it is in the industrial heartland of Ontario. We also know that with respect to new jobs 60 per cent are created by the small business community.
In an excellent speech which was given by Mr. J. K. Gray, vice-president of Canadian Hunter Exploration Limited, he referred to the United States senate committee which in its recent investigation concluded that 97 per cent of new jobs being created in the United States were created by companies that did not make it into the list of the top 1,000 in Fortune . magazine. A report of the Massachusetts Institute of Technology demonstrated that small firms with 20 or fewer employees generate 66 per cent of all new jobs in the United States. This dovetails almost precisely with our statistics on small businesses. We need new small companies to create jobs, yet the government established an economic climate which stifles initiative and enterprise.
When massive numbers of people are out of work as they are today, one only has to pick up the morning paper and look at the rocketing number of insolvencies of businesses in Canada. The statistics published by Statistics Canada for the first four months of 1982 show that bankruptcies increased by 37 per cent over the same period last year. In Ontario the number of business bankruptcies increased from 198 to 288 over the first four months. Yet bankruptcies are only one form of insolvency. Previously I told the Minister of Consumer and Corporate Affairs (Mr. Ouellet) that since the change to the Bank Act in the mid-1960s the number of bankruptcies does not fairly represent the number of businesses which have gone broke. This is because of what is known as the floating charge debenture which is utilized by banks today. When a creditor signs a floating charge debenture securing the money borrowed for his small business, it is only between him and the banks, not between the government, the bank and the borrower. What has happened as a result is that the number of insolvencies in Canada today cannot be calculated because we have absolutely no figures. It is my estimation that there are four insolvencies caused by receivership for one bankruptcy.
The reason is that the people who go bankrupt are the people who want to have their debts extinguished after a certain period of time. What normally happens to a businessman when the banker sees that he cannot meet his liabilities as they come due is that the bank walks in and exercises its security. Although people might be reading the morning papers and saying it is tragic that 37 per cent more businesses have gone into bankruptcy, it does not tell the whole story. Receiverships do not include the group of people who have lost faith, who have some money but are not making money and decide to close the doors because there is no economic environment in which they can sell their goods.
There are three categories in this area; those who close the door, those who go into receivership and those in bankruptcy.
There are no statistics available for those people in the first two categories to show how serious the situation really is.
What is a better indicator are the unemployment figures. The reason most people are unemployed is that businesses have either laid them off or shut down. Therefore, unemployment statistics are a better gauge. When you see 17.5 per cent of the people of Cambridge registered with Manpower as unemployed, it gives an indication of how many businesses are shutting down and laying people off.
I will now move on to another point. Our way of life has been guided by this government which has an insatiable appetite for revenue. There is no better illustration of its insatiability than the new provisions of the budget dealing with the use of company cars. I would like to talk about the average Canadian who has the use of a company car for the purposes of his business. The provision with respect to company cars affects thousands of people in every province.
Since it is a complicated measure people do not want to pay attention and examine its details, but it is my duty to explain as simply as possible the ramifications of this proposal. The stand-by charge, which is a technical word for the minimum charge for the personal use of a car, is being raised by 150 per cent if the car is owned by the company; that is, from 1 per cent to 2Vi per cent per month. In the case of leased vehicles, the minimum charge is being increased from two-sixths to five-sixths of the leasing costs of the undepreciated value of an automobile.
Let me expand on that point. Whether the car is being used for five years or ten years, the charge is based on the undepreciated value of that car. There is no consideration of when it is bought or how long it has been used but only of the sticker price of the car at the time of purchase.
Once again, the percentages used in the case of a company owned or leased car will be taken on the basis of the undepreciated value of the automobile, notwithstanding that such a car might be three, four or ten years old.
Let me cite a further illustration of the effect on a $15,000 company car at 1981 and 1982 rates using the stand-by charge. In this case, the amount to be added to income in 1981 would be $1,800. The stand-by charge in 1982 will be $4,500 which must be added to income. For a taxpayer earning $22,000 this will mean a $689 increase in his tax. For a taxpayer earning $35,000 this will amount to a $841 increase. For the income earner in the $60,000 bracket, the increase in tax due to the stand-by charge will be $945.
Under the new provisions of this budget, the taxpayer will have to satisfy the Minister of National Revenue (Mr. Romp-key) that the personal revenue he received was less than that minimum charge. To do this, every time an employee uses his company car to go to church or to the grocery store, he had better itemize the mileage. I predict that there will be more cheats and frauds created by reason of this new iniquitous measure respecting the use of company automobiles than on any other aspect of the budget.


An hon. Member:: Canadians do not cheat.
May 11, 1982


Chris Speyer: Not with respect to this provision. I ask the hon. member if he would record-because the taxpayer will have to prove it to the Minister of National Revenue-every time he used his car for personal use. Can you imagine Mr. Speaker, the book work necessary and the cost?
Every member of the House knows that punishing interest rates are the most serious problem that small-business men and women have had to contend with. Due to annual inflation of more than 12 per cent, the prospect of interest rates coming down significantly are not good. Just as the Solicitor General (Mr. Kaplan) told the truth about the budget when he called it a disaster, it was refreshing for me to hear the Minister of State for Small Businesses and Tourism (Mr. Lapointe) quoted as saying, "We are fearful that if there were a recovery in the U.S., we are not sure whether we would be able to join the bandwagon."
The minister is correct. Everyone took cognizance last week of the new American statistics, showing that for the first time in 17 years the United States experienced a month where the cost of living actually went down instead of up. There was deflation instead of inflation. Inflation for the first quarter of this year in the United States is running at 3 per cent, and if this trend continues, as economic indications show it will, interest rates will plummet in the United States later this summer. Yet this is not the case in Canada; our prospects are that high interest rates and high rates of inflation will continue unabated while more businesses go broke.
The Small Business Development Bond was established in the Crosbie budget of 1979. The emphasis of that bond was on development and expansion. Its purpose was to give the small business community a cushion against high interest rates and to permit expansion and development. It would accomplish that by giving small business the incentive through cash flow- a term for which the government has no understanding-to purchase machines and increase development. When a business has expansion and development, jobs are then created. But what has this government done? It has made the Small Business Development Bond nothing more than a bail-out bond. The bond is only used in cases of desperation and where it is to the advantage of the bank to bail out a customer who is about to go under. This is just one more illustration of the element of disincentive which exists in this budget.
In order to dramatize the insensitivity of this government, I ask the House to hark back to the comments of the Minister of Consumer and Corporate Affairs, who said; "I cannot accept that businessmen have to rely on the post office to make a living; if they do, they had better find other ways". Could any statement by a minister be more illuminating? If this is an indication of the thinking of this minister, who is in charge of the post office, in his attitude towards small business, surely this demonstrates how impoverished and out of touch the cabinet is with the real world on the street where the small business person is.
I take you back to last summer, Mr. Speaker, when businesses were folding as a result of lack of mail service during
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the postal strike. Almost immediately after the strike ended, the post office was transformed into a Crown corporation and postal rates were raised to 30 cents. The minister is still in charge and responsible for the Crown corporation. In effect, the public-including the small business community-were barely recovering from this serious jolt to the solar prexus when they received a judo chop to the neck in the form of a dramatic postal increase. Even with these increases, there are very few of my constituents who would argue that the postal service has improved.
During the course of my speech I have attempted to enumerate and expand upon in some cases the causes of resentment within the small business community and the public at large.
Mr. Speaker, since I am the first speaker I assume I have longer than 20 minutes?


Mr. Deputy Speaker:: The hon. member has one and a half minutes remaining.


Some hon. Members:: Continue.


Chris Speyer: Let me say a word about the Federal Business Development Bank. On February 18 last, the Minister of Industry, Trade and Commerce and Minister of Regional Economic Expansion (Mr. Gray) came to Cambridge armed with briefing notes about my community. There are 75,000 people who reside in the city of Cambridge alone. It came to light that during the last nine months of last year, the Federal Business Development Bank advanced one loan in the amount of $30,000 within my community. I am not sure of the experiences of other members, but when constituents attended at my offices having been turned down by the chartered banks, the first solution I thought of since reading the government propaganda was to send them to the Federal Business Development Bank. The government has indicated that the bank of last resort was the Federal Business Development Bank. What did we find? Last summer, people in my community of 75,000 were paying interest rates of 25 per cent as opposed to the prime rate, and sometimes more. We found that the Federal Business Development Bank, which charges two points above prime, made one loan.


Mr. McGrath:: Some "last resort".


Chris Speyer: It has been what seems to me an eternity, almost a year, since the minister promised the small business community that he intended to release the information garnered from the small business financing review. In an economic climate that includes record bankruptcies, skyrocketing interest rates and a recessionary decrease in business demand, where is this financing review that the minister promised? When the most serious problem facing small businesses today is the drying up of working capital, and the consequent inability of the businessman or businesswoman to meet his or her debts and obligations as they come due, this financing review is desperately needed. How long does the minister-

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Mr. Deputy Speaker:: I regret to interrupt, but the hon. member will need the unanimous consent of the House to continue.


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: There is unanimous consent.


Chris Speyer: How long does the minister expect Canadians patiently to listen to this government's empty promises? We on this side of the House pray that this review, whenever it is released, will contain some new measure of help to alleviate the crisis which has developed in the small business community with respect to short-term cash flow problems. That is the problem to which the hon. member for Rosedale (Mr. Crom-bie) alluded during question period today.
The difficulty is that with respect to small businesses, people are not paying small businesses for 90 to 120 days and, in some cases, longer than that. These small businesses go to the banks, they cannot cover the inventory, and they are closing up. This is a serious and desperate problem. In order for small businesses to survive, they must be able to extend credit to their customers. Today, many of our small businesses have reached the extent of their credit lines through chartered banks and there is just no money available for them to finance their operations while waiting for customers to settle their accounts. If they cannot obtain some working capital financing, they must halt their operations, lay off some or all of their work force and wait to collect their accounts receivable.
I am about to conclude my remarks. I wanted to mention a few more things, but I wish to make one last point. I was very impressed by what the hon. member for Kingston and the Islands (Miss MacDonald), the former minister of external affairs, told me in casual conversation after she had stepped down from that portfolio. She said that in her experience while we were in government, the most brilliant man that she had come across was the former external affairs minister in Great Britain, Lord Peter Carrington. He was a leader among leaders in the international community. He was a brilliant man, yet because he had improperly assessed the Argentine invasion of the Falklands, he felt he should resign as a matter of honour. I look to the Solicitor General. When he called the budget a political disaster, he was doing nothing less than telling the truth. In my opinion, he would have served as a far better member, in terms of his own credibility, if he had resigned.
I now look to the minister who is responsible for small business and consider the disastrous shape of the small business community. I like the minister. He is a man of goodwill and a fine man. But I say to him that he has been undercut, dramatically and seriously, by the Minister of Finance and the policies he has implemented. I say to the minister that if he is to retain the credibility and respect I have for him, he had better give serious consideration to tendering his resignation.


Some hon. Members:: Hear, hear!


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, we debate a motion today which we in the NDP are happy to
support. We must look at what is going on in this country and realize that we are facing the kind of recession which this country has not seen since the 1930s, just before World War II. Unemployment last month affected 1,233,000 people, or 9.6 per cent of the work force according to Statistics Canada. Added to that are another 250,000 workers who have not been counted because they have given up looking for work as there simply is not any work to be found.
The figures are so large that we cannot really realize what this means. Each one of these people, when he or she worked, was producing goods, was purchasing homes, appliances or clothes, was taking holidays, paying taxes, spending money which would help employ other people. For each of them, unemployment is a disaster. Inflation is running 11.6 per cent; that is higher than it was in 1975 when the government imposed its wage and price controls. Interest on housing mortgages is running at 20 per cent, so it is effectively stopping most Canadians who need homes from being able to purchase them because they cannot afford to carry mortgages at the rates now being charged. The rates now being charged may go up six months or a year from now. The days when people could buy a house knowing that the interest rates they were charged on their mortgages would remain the same for at least five years are long gone. The bank interest rate for the best customer is 17 per cent and, for the ordinary small businessman, it is probably 20 per cent or more.
In April, housing starts were so low that it was projected we would build only 142,000 homes in the year. That figure is down by a third over what we were building until recently. Bankruptcies are up by 45 per cent over the same period last year. In April, 850 companies went bankrupt. The liabilities for outstanding debts from business bankruptcies across Canada rose by 82 per cent from April of last year, to $139 million this year. Let us keep in mind that for every company which went bankrupt, probably five to ten went into receivership or voluntarily closed up because they realized they would not be able to continue to operate successfully.
John Maynard Keynes once said that if a company had to borrow a hundred pounds from a bank, it would really have to worry if it could not pay the money back; but if it could borrow a million pounds from the bank, it became the bank's worry, because the bank could not afford to let the company fail. Those words spoken in jest are very true. We know that a company like Massey-Ferguson owes the banks of Canada hundreds of millions of dollars. The banks cannot afford to let Massey-Ferguson go bankrupt. We know that Dome Petroleum borrowed $1.25 billion last year to buy Hudson's Bay Oil and Gas. We know that if these companies cannot meet their interest payments or pay off their loans on time, the banks will extend their loans because the banks cannot afford to accept that kind of loss.
For the small businessman and for the farmer, there is no such option because the banks are refusing to increase the amount of money they will lend them, as indicated by the
May 11, 1982

bankruptcy figures. Banks are increasing the interest rates which these people have to pay. In fact, the banks are very effectively doubling the collateral they request if the loans are to be continued.
All the indicators show that the Canadian economy is not only in a recession but that it is also being driven into a greater recession, and that that recession will be prolonged.
The minister will tell us, as the Minister of Finance (Mr. MacEachen) has frequently told us, that all industrial countries are faced with severe economic problems. It appears that Canada's economy is in a more pronounced recession than any of the other industrialized countries and that any improvement in business conditions will be delayed and lag behind the other economies.
The Chase Econometrics Association has predicted for 1982 a real growth in gross national product of 2.6 per cent in France, 2.3 per cent in West Germany, 2 per cent in Japan and 1.5 per cent in Britain. What does it predict for Canada? A decline of seven-tenths of 1 per cent.
This tends to show that our high interest rate policies, advocated and carried out on the advice of the Governor of the Bank of Canada and successive finance ministers, Liberal as well as Conservative in the short period when the Conservatives were in power, are not helping the economy to move out of the recession. Moreover, they do not seem to contribute toward solving the problem of inflation which, according to the most optimistic estimates, can only fall to about 10 per cent for the next year.
High interest rates coupled with a high rate of inflation hits small business people especially hard. The record number of bankruptcies reached in March, over 1,000, will likely increase if the necessary policy measures to reduce interest rates are not taken immediately. According to the Canadian Federation of Independent Business, high interest rates are the major factor leading to the decreased profitability and increased number of bankruptcies of small-business men in this country.
In a letter which the president of the Canadian Federation of Agriculture, Glen Flaten, wrote to the Minister of Finance and which was recently circulated to all Members of Parliament, he pointed out that the depressed returns to most of the farming industry mean that the industry cannot support any significant level of indebtedness, even for current operating purposes, at present interest rates. He pointed out previously acquired indebtedness has increased in cost 75 to 100 per cent for many farmers and there is no way it can be repaid at today's prices or at any prices which farmers are likely to see in the near future.
Farmers and small manufacturing firms that regarded the small business bond policy of tax concessional lending by the banks as a source of hope now find that it was a hoax and a delusion. The policy does not affect any guarantee that the loans would actually be available and imposes overly strict eligibility criteria, which leads to a situation where loans are available only after it is too late for most business people. Moreover, in spite of the high demand for the program,
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Department of Finance officials say that they have not stepped up their spending estimates, set at $20 million compared with $150 million last year.
The Canadian Federation of Agriculture is urgently calling on the government to replace the small business bond with a policy of real substance to face the critical situation which farmers and small businessmen have to cope with. It suggests that the Farm Credit Corporation should be empowered to borrow the quantities needed immediately on a tax concessional basis so that it can lend at 10 per cent interest to the farmers, especially those in difficulty.
The availability of loans to small businesses is an important issue which must and should be dealt with through an efficient mechanism of credit rationing which cannot be left entirely to the willingness of the lender. At present the chartered banks control the allocation of investment funds. We know of the tremendous loans which the chartered banks made to the oil, gas and mining companies in the last year or year and a half. As I indicated earlier, one and a quarter billion dollars was loaned to Dome Petroleum, Inco, Brascan and others. They could get hundreds of millions of dollars to permit them to go ahead with take-overs. At the same time, in the third quarter of 1981, the mining and petroleum industries received 44 per cent of all loans made by chartered banks in the industrial sector. In the same period, business loans to industries under the Small Businesses Loans Act was around 1 per cent of all business loans made by the chartered banks.
As has already been indicated, small businesses employ 60 per cent or more of all workers in this country. The large corporations such as the mining and petroleum industry are capital-intensive and employ a relatively small number of workers. Yet because government policies have encouraged them to do so, the banks made the vast bulk of their loans to the large companies instead of the small entrepreneurs operating in the service sector, manufacturing and agriculture.
The recent changes in the tax system are imposing a heavy burden on small enterprises. As the Financial Times put it in a recent issue, the November 12 federal budget discourages expansion in the small business sector, minimizes the opportunity for equity financing from outside sources, and reduces the market value of each small business.
The problem areas of the budget pointed out by the Canadian Federation of Independent Business are as follows. Interest expense allowable as a tax deduction will be restricted to the amount of income earned from investments during the year. Any excess interest costs will be deferred or will be treated as capital losses, only one-half deductible against capital gains.
Instalment sales require the payment of taxes on the sale immediately rather than when the buyer makes payments. Prior to November 12, 1981 reserves were allowed to all taxpayers in respect of instalment sales where a portion of the proceeds would not be paid until a future date. Only one-half of the normal capital cost allowance is now available to be deducted in the first year. A special tax of 12.5 per cent is imposed on dividends paid by small corporations.

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The tax system has become progressively more complex for small businesses already struggling under the avalanche of government red tape. This implies increased professional fees, which small business can ill afford. In this period of crisis, government should intervene to help small business and put a stop to ever-increasing unemployment and the growing number of bankruptcies.
I wish to make a few suggestions to the minister. We suggest the reversal of the high interest policy which is severely hurting small enterprises. We want a comprehensive reform of the tax system as well as a system of industrial incentives to ensure equitable treatment of large and small businesses alike.
We want policies to facilitate the access of small businesses to financial, managerial and technical advice. It is inappropriate to blame small businesses for mismanaging their affairs, as is sometimes done without taking into account the difficulties of access to expertise so readily available to large corporations. In this respect, strengthening of the CASE program is indispensable.
Foreign trade policy should be elaborated to encourage small businesses to sell overseas, thereby promoting exports. A large number of industrial countries, including West Germany and Japan, have programs to help industrial enterprises find markets for their products in foreign countries.
The emphasis of the Export Development Corporation, which has already favoured big business, should be changed to give equal attention to small and medium-sized businesses. Government investment should be redirected and restructured to help the problem areas in a way to create the maximum possible number of jobs.
In government procurement, since governments, federal, provincial and municipal, are between them the biggest purchasers of goods and services, they should be developed so that small enterprises can share in the business and purchases of government.
I should like to say a few words about that infamous pamphlet sent out by the Department of Finance to small-business men, telling them about all the goodies which were in the most recent budget. I am sure the Minister of State for Small Businesses and Tourism (Mr. Lapointe), who is going to follow me, knows that the mailing out of that brochure by the Department of Finance was greeted with unanimous hostility by all the organizations which represent small-business men. They argued, and I think their arguments were sound, that the claims made in that brochure were mostly spurious and false. That brochure was printed at government expense and was sent out from lists procured from Revenue Canada. Mr. Speaker, it may not have been illegal, it may not have been a breach of the confidentiality sections of the Income Tax Act, but if it was not illegal it came as close to being illegal as was possible and it certainly was a violation of the spirit of the act.
I want to tell the Minister of State for Small Businesses and Tourism that when I heard the complaints about that pamphlet and listened to the complaints of the representatives of the Canadian Federation of Independent Business, I thought it
would be a good idea, and only fair, to send out their complaints to the same group of people who got that brochure from the government using the confidential lists of Revenue Canada. Therefore, I wrote to the minister in charge of Revenue Canada. I did not ask him to give me the list; I knew that it would be improper and illegal for him to give me the names and addresses. All I asked him to do was provide me with the same service which he had provided to the Minister of Finance.
I had a mistaken idea, Mr. Speaker-I have been here long enough and I should have known better-that all Members of Parliament are somehow equal. We have all been elected by our constituents and we should all have the same rights and privileges. So I had the idea-which, of course, proved incorrect,-that I could get from Revenue Canada the same kind of service which they provided to the Minister of Finance. But, Mr. Speaker, after a good long time, after five or six weeks, I got back a letter from the Minister of National Revenue (Mr. Rompkey) telling me that he could not do for me what he had done for the Minister of Finance.
I was not so concerned that the 200,000 businessmen should know what I thought about the budget; I thought they should know what their own organizations thought about it. But, Mr. Speaker, as I might have expected, as I have learned to expect from Liberal governments, what is good for the government, what is proper for them, is improper for everybody else. So I understand that.
I say to the minister that, as has happened in all democratic countries, there will come a time, not too long from now, when the present Liberal government members will find themselves in the opposition. I will not be surprised if they find that they get the same treatment from whoever is then the government as we receive now. Then they will realize that real democracy means that every person and every elected representative is entitled to the same rights and privileges. When they realize that, we will begin to have a more open, a more honest and a more real democratic form of government than we have at the present time.


Charles Lapointe: Mr. Speaker, I welcome the opportunity to speak in this matter and set the record straight on the efforts of this government to assist the small business community. I listened very carefully to the speeches of my two colleagues, the hon. member for Cambridge (Mr. Speyer) and the hon. member for Winnipeg North (Mr. Orlikow).
If I may deal briefly with what my colleague from Winnipeg North has said, particularly the part of his speech when he told me and the House that he was ready to give me some advice, I would like to give him a few answers to his suggestions. First of all, he spoke of the high interest rate policy. There is no such thing as a high interest rate policy in this country. There is a policy to fight inflation, and one of the means to fight inflation-


David Orlikow: Is high interest rates.
May 11, 1982


Charles Lapointe: -in order to restore a higher level of employment, is to use this mechanism of high interest rates, which is quite similar to the mechanism utilized in the United States and in other countries.
Second, he is seeking that we use more government procurement in order to help small business. I would like to tell him that with regard to this suggestion I fully agree with him. That is why over the last year we have increased by 8 per cent the percentage of Canadian procurement towards small business. Here I quote an article from The Globe and Mail which says that small business increased its share of federal government contracts for purchases of goods and services by 8 per cent to 1.28 billion for the fiscal year ended March 31, 1981. I think this is a sound policy and I am glad that the hon. member for Winnipeg North is supporting it.
He also said that we should review the tax system in order to provide more incentives for investors. I am glad to hear that from the member for Winnipeg North because I can remember quite vividly his leader saying that we should have closed more loopholes, or so-called loopholes, in the last budget.
With regard to fostering the capabilities of the small business community towards exportation, I would like to remind the hon. member that there is such a mechanism in the system to help small businesses export more goods. There is one program particularly which is called the program for development of export marketing, the PDEM program. Approximately 1,000 small businesses have been encouraged under the terms of that program in 1981. So he did not come out with many very exciting new ideas, unfortunately, as is always the case.
With regard to the speech of my colleague for Cambridge, he made the usual plea that the last federal budget of November 12 is going to kill entrepreneurship and kill the small business community. He mentioned two items particularly, the tax on dividends and capital cost allowances. He certainly did forget-as is customary for members opposite-to mention all the special aspects in the Canadian tax system which affect and assist small businesses. One of these aspects-

-Mr. Speaker, is the special income tax rate applied to Canadian small businesses. We all know about this on both the opposition and the government side, but it is conveniently ignored, perhaps because it is a unique advantage in our Canadian economy. When the first $200,000 of a business with a total income of $1 million are taxed at 25 per cent instead of the 46 per cent rate for large corporations, it is not mentioned because, of course, it does not apply in the United States. We conveniently forget that the system is more generous in Canada than in the United States. In the U.S., a small business with an income of up to $75,000 will pay a 30 per cent income tax.
In Canada, as I said before, the first $200,000 of a small business is taxed at 25 per cent. Again, in the United States- people always say that American small businesses are better off than their Canadian counterparts-a small business with
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an income of up to $100,000 is taxed at a rate of 40 per cent. Again, in Canada, the first $200,000 is taxed at 25 per cent. In the United States, all businesses are taxed at a uniform rate of 46 per cent on income over and above $100,000. This is not mentioned because it is a loss of revenue for the government: in other words, the money remains part of the budgets of small businesses, and is either invested or reinvested, representing annually $1.5 billion in revenue that is not collected by the government, because we maintain and shall continue to maintain a special tax system for small businesses.
I looked into the situation in the United Kingdom, France and Australia as far as taxation of small businesses is concerned, and I found that in the U.K., the first $180,000 of a small business's income was taxed at the special rate of 40 per cent, while all other businesses were taxed at a rate of 52 per cent. Of course, all this is not mentioned, because it means that small businesses are getting a very good deal. In his last budget, the Minister of Finance (Mr. MacEachen) not only enshrined this practice in the Canadian taxation system but even added a number of improvements. What were these improvements? The minister, before bringing down his budget on November 12, decided to increase the original amount of $175,000, taxed at the special rate of 25 per cent, to $200,000. So that more businesses could qualify for the special income tax rate for small businesses, he raised the maximum cumulative income from $750,000 to $1 million.
There has been no mention, of course, of the fact that under the Canadian tax system, businesses qualifying for the special tax rate for small businesses are entitled to a 25 per cent tax credit-a tax credit, Mr. Speaker, is a refund-on all research and development expenditures. No mention, again, of the fact that under our system, small businesses are entitled to a deferral of up to $200,000 of capital gains resulting from the transfer of small businesses from one generation to the next. Another very popular measure, especially for very small businesses with incomes of up to $50,000 from the manufacture of a product, is exemption from federal sales tax. And still under our system, a little over a year now, unincorporated small businessmen may deduct from their income the salary paid to their spouse. Of course, this does not seem very important to the members opposite, but nevertheless, these incentives to small business represent a loss in revenue of $1 billion a year for the government. Furthermore, in one of the amendments proposed on December 18 to the November 12 budget, at the request of various small business organizations, the Minister of Finance announced that interest costs on investment in small businesses would be deductible, up to $10,000. The amount is exactly the same in the United States. Probably because they forgot to study the budget, the members opposite also forgot to mention that, in the last budget, the Minister of Finance abolished the 5 per cent surtax on small Canadian businesses. They cannot talk about this because it would perhaps show the government in too good a light. They would rather use old horror stories to try and show that small Canadian businesses

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are on the brink of disaster and unable to face today's economic conditions.
I think that Canada's small entrepreneurs are aware of all those incentives. They are also aware of all the programs, subsidies and loan mechanisms of federal government programs in the system and are taking advantage of these opportunities.
As an example, the most recent report of the Conference Board points this out. In the first quarter of 1982 the Conference Board surveyed 4,000 small and medium-sized companies along with its usual panel of 240 large companies. The results appear in its "Survey of Business Attitudes and Investment Spending Intentions" which was published on April 28. Both the government and the private sector recognize how tough international economic conditions are impacting on investment decisions in Canada as in other countries. We do not deny that.
The Conference Board found that the small entrepreneurs in this country are more optimistic than their counterparts in large businesses about their future sales prospects, about increasing employment in their companies by the end of the year and about getting a proper return on their money.
[Translation)
What does this means, Mr. Speaker? It means that businessmen and women, especially in small businesses, are not crybabies like hon. members opposite, but people who have confidence in their country, who are ready to risk their capital and to invest in high technology or service industries to promote a harmonious economic development in Canada.
I agree with my colleagues opposite that the men and the women involved in Canadian small businesses are the backbone of economic development in Canada. There are 1.2 million businesses which qualify as Canadian small businesses. The small business sector accounts for over 40 per cent of all jobs in Canada and for 60 per cent of all new jobs created in 1981. Of course, it is important for the Canadian government to provide these businesses with maximum assistance through its taxation system and its various programs, and I believe that all the examples I gave earlier in my speech show that the taxation system is designed to help small businesses.
I did not even mention yet the various programs developed to help small businesses. I shall begin by the small businesses loans program. During the oral question period today, the hon. member for Rosedale (Mr. Crombie) asked me: Is there a special program which provides advances for small businesses? Under the Small Businesses Loans Act, Mr. Speaker, $502 million was loaned to small Canadian businesses in 1981 with full guarantees from the government. These $502 million was loaned to 17,000 small Canadian businesses under the Small Businesses Loans Act. There is also the small business bond program. The hon. member for Cambridge (Mr. Speyer) indicated that this program was introduced by the Minister of
Finance of the Progressive Conservative government in his budget. That is correct and it was a good program. This is why the Minister of Finance maintained this program in 1981. In 1981 alone, $2.4 billion was loaned to about 13,000 small Canadian businesses under the Small Business Development Bond program.
As you know, Mr. Speaker, under that program banks could grant loans at about half the commercial rate, so in 1981 13,000 small businesses took advantage of the small business development bond, which meant a $2.4 billion investment in the small business sector. What was provided in the recent budget for that program? It was not cancelled, as implied by opposition members. What we have said is that until the November 12 budget, the program was available to incorporated businesses only. We have received numerous requests from the private sector asking us why the program was not made available to all businesses, whether incorporated or not. We also received requests from farmers and fishermen who wanted to be eligible. They wanted the program to be made available to them so they could make ends meet during this difficult period when they have a hard time making their payments because of unduly high interest rates. Well, the Minister of Finance had a positive response, Mr. Speaker, and we introduced the measure called the Small Business Development Bond program that applies to both incorporated and unincorporated businesses, fishermen and farmers alike. We said it would apply to them, because we wanted to help the people in greatest need, businesses, fishermen and farmers in dire straits, instead of promoting business development as was the case in 1981. This is the budget proposal. I would remind you that in 1981, $2.4 billion was loaned at 10 per cent or so to some 13,000 Canadian businesses, and, of course, this is in addition to the 17,000 Canadian businesses that could get loans with a 100 per cent government guarantee, as I said earlier.
In addition to these two programs, Mr. Speaker, there is, of course, the Enterprise Development Program. As you know, it is a program designed to help businesses develop new products, make feasibility studies before marketing new products, improve their performance, and so forth. And in 1981, $329 million was invested in small businesses under the EDP, either as grants of up to 75 per cent of the cost of developing a prototype, either as loan guarantees to help businesses refinance and restructure financially. Some 1,000 businesses benefited from the Enterprise Development Program during the fiscal year 1980-81. And then I can refer to the program for Export Market Development, the so-called PEMD program. And also in 1981, that program enabled some 1,000 Canadian small businesses to seek new markets for their products, either in the United States, Europe or Asia, because the government knows full well that without exports, it would,
May 11, 1982

of course, be very difficult to maintain our production level and increase the number of jobs and small business earnings. I just said that 1,000 businesses benefited from that program during 1981, but after checking my notes, 1 find that the figure is 2,300 Canadian businesses.
I could also mention the Federal Development Bank referred to by the hon. member for Cambridge and the hon. member for Winnipeg North. The Federal Development Bank this year attained a $1 billion total loan volume. Someone may object to my throwing around those huge amounts, because such enormous figures are bewildering but the fact is, Mr. Speaker, that $1 billion is circulating in the Canadian economy as loans from the Federal Business Development Bank. In addition, the Federal Business Development Bank's average loan is known to be $52,000. That gives you an idea of the absolutely phenomenal number of small Canadian businesses which have access to FBDB's loans. Furthermore, small entrepreneurs are aware of the services which are available to them at the Bank, for example the advisory service to small businesses to assist people who are hard pressed or concerned about the future of their business. It is a management assistance program which for a minimal fee will help businesses draw up a development plan expenditure projections and a research strategy for new markets etc. Regarding the seminars and information meetings which are sponsered by the Federal Business Development Bank throughout the country, Mr. Speaker, to help businessmen and women develop their managerial skills, I think they are seldom mentioned, because they are either taken for granted or deemed useless to the community.
I feel that the speeches of my colleagues opposite are too gloomy. Of course, they are expected to play politics and club the government over the head but it seems to me, Mr. Speaker that now and then they should be broadminded enough to see exactly what is going on. I would welcome suggestions but all I hear is: "The budget is no good, withdraw it." In short, that is the gist of what the hon. member for Cambridge has said. Essentially, the hon. member for Winnipeg North said this: We are going to put an end to high interest rates, increase exports and promote investments. Well, Mr. Speaker, everybody, including you, I and all other hon. members are for motherhood. But it would be most refreshing once in a while to hear an hon. member opposite contribute a constructive suggestion to help me, as minister responsible for small business, to define new avenues for the government, which is seeking further solutions to the existing programs. For instance, I hope next fall to introduce amendments to the Small Business Loans Act, but we must first explore several avenues; you just cannot get up one morning and decide on the spur of the moment that you are going to introduce this or that amendment. You must examine the amendment, consider its ramifications, its costs, etc. Should operating costs be included
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and covered by the government's guarantee on chartered bank loans? That is a possibility.
That possibility was not suggested to me be any hon. member opposite. That is the kind of new idea and approach I should like to hear. But because you preside over the proceedings of the House, Mr. Speaker, surely you are bound to hear a great many more speeches than 1 am, and you do realize that unavoidably, whenever there is an allotted day, our hon. friends take up their time trying to find as many faults with the government, hoping that by spreading their loads of halftruths and quoting all sorts of analyses which are out of touch with reality as a whole, they may slowly convince Canadian voters to fall for their tall stories. Unfortunately, today was not yet to be the day when we would be exposed to refreshing and up-dated ideas from hon. members opposite. There is nothing new in their position: Get rid of the budget, they say, and everything will be fine and dandy! I suggest that this is a somewhat simplistic approach to an essentially difficult economic situation.
Mr. Speaker, I have referred to all the tax measures we have introduced to help small businesses. I have mentioned some of the programs provided under the Federal Business Development Bank Act, the Small Business Loans Act, and the Small Business Development Bonds act. I have failed to mention the Department of Regional Economic Expansion which, only last year, subsidized small businesses in Canada to the tune of $280 million. But the fact is, there are so many good programs that there is not enough time to deal with them all. Yet, we know that through briefings and by way of the offices of the Federal Business Development Bank the Department of Industry, Trade and Commerce, and the Department of Regional Economic Expansion in all parts of Canada, Canadian men and women involved in business activities have access to these programs.
Further to the administrative reorganization announced by the Prime Minister (Mr. Trudeau) on January 11, when the two main economically oriented departments were merged, we want to go one step further, Mr. Speaker, and use all the programs of the Department of Industry, Trade and Commerce, all the programs of the Department of Regional Economic Expansion, and their regional offices, and even in due course, in a second stage, use the 103 offices of the Federal Business Development Bank across the country, to bring the services of the government of Canada to the very doorstep of the businessmen and businesswomen, so that they need not come from various parts of the country to the large cities or Ottawa, but that they may find in their own regions what services the Canadian government offers them. That is the orientation, Mr. Speaker, we are giving the administrative restructuring announced last January. And it is with that purpose in mind that we want our programs to have a regional character so that everyone might have equal access to them.

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All these programs, new initiatives, and new taxation measures of the Canadian government not only provide strong support for Canadian small businesses, but also reflect a number of basic principles which guide the decisions made by the government to promote continuous development of the private sector. The first of these basic principles is, of course, a free enterprise system which gives Canadian small businesses equal opportunities to compete on the market. The second principle is a firm commitment by the Canadian government to promote the growth and the development of small and medium-size businesses, and I have already mentioned the programs which now aim at meeting this objective. The third principle is to create a dynamic economic environment in which small and medium-size businesses can start, survive and grow. The fourth principle is to make a fair assessment of the problems faced by small and medium-size businesses and to develop effective policies to assist them. This is why we are constantly trying to adjust our programs to existing conditions. Finally, we want to ensure equitable chances for small and medium-size businesses as far as supply opportunities and availability of government information, programs and services are concerned. As I have already explained, we have not only increased to 40 per cent the purchases of the Canadian government, which represents $1.28 billion a year, but we have also attempted to provide equal opportunities for all businesses by making the Canadian government services available to entrepreneurs and businessmen and women. Finally, we want to create a spirit of co-operation between all economic agents to ensure the development of small and medium-size businesses. In this respect of course members opposite try to suggest that there is no consultation between the business community and the government.
Mr. Speaker, sometimes I wish that hon. members opposite would participate in our consultations throughout the country. I was myself in Saint-Georges-de-Beauce last evening and I met with 200 businessmen and women to discuss the economic situation as well as existing government programs and the way to improve them. I must say that what I hear from Canadian men and women in business are not complaints such as those which I hear today but rather messages of optimism, messages which say: Try to support us with your programs, and we, the businessmen and women of Canada, shall do the rest because we believe in this country and in the economy of Canada. I wish hon. members opposite would believe the same things, Mr. Speaker.


William Henry (Bill) Domm: Mr. Speaker, I want to mention a couple of things by way of introduction. The Minister of State for Small Businesses and Tourism (Mr. Lapointe) spent a great deal of time elaborating on the position of the opposition as being opposed for the sake of objecting, for being crybabies, for not being optimistic and for not offering tangible programs for the future, instead of-and I assume this is what
he means-supporting the disastrous programs of the present government.
I remind the House and the minister that on April 27, as reported in the Montreal Gazette, he said:
We're fearful that if there were a recovery in the U.S. we're not sure we would be able to join the bandwagon.
That is the statement of the minister, the optimistic minister who said that even if there is a recovery in the United States we in Canada would not be able to benefit. The minister also noted that while the inflation rate in the United States had dropped to 6.8 per cent, it remains at 11.6 per cent in Canada. The minister goes on in his optimistic way by saying:
Consumer prices in Canada rose at an annual rate of 13.6 per cent in March while they dropped 3.3 per cent in the U.S.
The minister still in his optimistic way went on:
-the recession is severely hurting all levels of the economy from the retail sectors to manufacturing and that consumer and foreign investor confidence is decreasing.
I see the minister is leaving the House at this time. The minister went on to say:
-studies show only about 37 per cent of Quebec businesses are aware of federal government programs-
Here is a government that causes us to be concerned that we might be critical when here in Canada we are experiencing the fact that small businesses account for 23 per cent of provincial sales. There were 8,055 corporate bankruptcies in Canada in 1981. Small business sales were $112 billion-obviously a crucial factor in economic growth-up 21 per cent from 1980 and up 43 per cent from 1979. And the minister says that we are critical, that we are not optimistic.
I remind the Minister of State for Small Businesses and Tourism that the industrial production change is down from 7.8 per cent from one year ago; that urban housing starts are down 17.1 per cent from a year ago; new orders for durable goods are down 10.3 per cent from a year ago; and the unemployment rate is standing at 9.6 per cent, which is a post-war record. The Consumer Price Index-in other words, inflation-is up 11.6 per cent from a year ago; steel output is down 16.2 per cent.
What is there to be optimistic about in Canada? When will this government get through its head that there is a national emergency? Let me put on the record for the government some statements made by the Canadian organization of small business and the Canadian Federation of Independent Business. I will use just a few of them; they came in the wake of the disastrous government budget, and I cite six of them:
1.	Restrict the cash flow for businesses facing excruciating pressures financing capital expenditures at high interest rates.
5. Increase massively professional fees for small businesses that must cope with more than 165 technical tax amendments.
6. Threaten estate planning for small businesses.
2.	Increase the tax burden on investors in small corporations.
3.	Discriminate unfairly against professionals who are unable to incorporate.
4.	Restrict the ability of entrepreneurs to provide for their own retirement.
May 11, 1982

On and on it goes, yet the minister expects us to be optimistic here in Canada. Behind those stark, cold four-digit figures on bankruptcies and business failures you will find not only boarded up store fronts, locked doors of businesses and disconnected telephones, Mr. Speaker, but ruined businesses. You will find men who have had their lives ruined and women who have been driven out of business. You will also find broken personal dreams of thousands of families, mothers, fathers and children whose lives may now be irreparably damaged through no fault of their own.
One of our largest corporations in the city of Peterborough wrote a letter to me and I was asked to bring it to the attention of the government. This letter was written by the president of this corporation and says:
What in fact this new budget does is not to penalize the rich, but rather eliminates the middle-class business or professional who risks, through borrowed funds, money to be invested in speculative or growth ventures that will likely not pay dividends for some years. In fact, the budget proposal on interest deductibility benefits the rich. Wealthy individuals, out of their cash reserves, write a cheque-people like myself must borrow the money to make the same type of investment.
We are not at the stage either through age or inherited wealth to use capital already accumulated for investment purposes.
The net result of this budget, from my point of view, is very clear. I will dispose of all investments in which the interest is non-deductible and will further ignore any equity positions and concentrate on cash savings as the years go on.
Ele concluded by saying:
I am concerned that there is a philosophy behind this budget change that is extremely concerning. By eliminating younger investors who contribute to Canada's growth, the government will be in a much more advantageous position to take over more segments of the private sector, since, in effect, they have removed any entrepreneurial spirit from the younger business and professional class. If that is their intention, then they should have fully stated that in their philosophy behind interest deductibility.
So as not to be accused of only quoting the comments of the president of a major corporation in Canada, I will quote a couple of paragraphs from a letter by Mr. Jack McGee, a Chevrolet-Oldsmobile-Cadillac dealer in Peterborough, which was directed to the Minister of Finance (Mr. MacEachen). He wrote:
Not once in my nearly 34 years of employment have I ever drawn unemployment insurance, not once have I ever failed to pay my income tax on time, not once have I ever bounced a cheque or missed a payment to cover private or government obligations. I am not, nor was not unique; millions of Canadians perform in exactly the same manner!
He went on to write:
It wasn't enough that they got their share every month and every year without any investment. Now they wanted a share of my profit of after tax dollars that I owned and they still wanted to tax me on my retirement money that we were going to use to live on for the rest of our lives.
He continued:
We don't need "empire builders'' in government. Where we need them is in the private sector where jobs should be created. This logically creates more of those income taxes that you need so badly.
He concluded:
I will close with this plea which hopefully you will read and consider before you make your way back to Ottawa.
I ask the Government of Canada to be responsible to its citizens. I ask the Government of Canada to be aware of the importance of the free enterprise
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system to the continuance of Canada's growth. I ask the Government of Canada to be mindful of the system of government we enjoy and expect-a democracy led by representatives elected by their peers to carry out the wishes of the majority of their constituents.
I sent copies of that letter to every Liberal Member of Parliament.
Turning to a small manufacturer in Peterborough, Peterboro Culvert-of course; the budget is disastrous to every sector of our economy-I should like to quote from a letter signed by Mr. J. Wallace Finnie, president of the firm:
We are presently endeavouring to diversify our line and are tooling up to make grain bins for the agricultural market, but with decline in cash reserves it is difficult to finance this type of venture. Government assistance in this area is so uncertain, as to be considered detrimental.
I present this situation to you in order that you, as our representative, may make the government aware of the deterioration that has taken place particularly in the past four or five months, among small business concerns such as ours. I feel that the government has mishandled, misunderstood and is apathetic in its handling of the affairs of the Canadian people.
I received a telephone call today from the vice-president of Silverwood Industries Limited. His office is in Toronto but its head office is in London, Ontario. It was announced today in a press release that because business conditions were not viable and government programs failed to make small business ventures attractive, it was closing its milk producing plant in Peterborough and laying off the staff involved. Silverwood Dairies, a company which does $500 million worth of business per year in Canada, cannot make viable a business in a community the size of Peterborough because the government has failed to make it attractive. As a result there was a net loss of $3.5 million on that amount of volume.
The Minister of State for Small Businesses and Tourism said that we are crybabies and that we are complaining unnecessarily. To use his words, he said: "Small businesses are aware of all the benefits they derive from our fantastic budget." This is a lot of nonsense! People are not prepared today to invest as the minister would have us believe. This is the principal reason $13.5 billion left the country for more favourable climates. For example, in the oil and gas industry, money has flowed south. Why are they investing in Montana and Texas, but not in Alberta which would provide spin-off effects and jobs in Ontario? They are investing in the United States because they receive a return on their investment. They do not fear government expropriation, government take-over and a national policy which puts more and more control in the hands of government and less and less control in the hands of the business community.
We must remember it is cold comfort for thousands of families-wives, husbands and children-that the government is still dithering around six months after its budget in massive, collective confusion over what on earth it can do to retrieve something from a budget which has been roundly and soundly condemned in virtually every sector and quarter of the Canadian economy. The Minister of Finance, who looks more dangerously unnerved each passing day, cries that Canada's hands are tied, that she is prey to the winds of inflation and tight

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money blowing over the border and that the flexibility of government is limited by circumstances at large in the western industrialized world. This is nothing but feeble excuse-making and deception.
There is much the Government of Canada could do to eliminate hardships presently experienced by a very large segment of Canadians. The House should ponder very carefully the key elements which rightly preoccupy us today- unemployment at 1.5 million, inflation at 11.6 per cent, interest rates over 17 per cent and real wages declining for the fifth year in a row. To alleviate its dismal performance record, a performance record which is much worse than that of the United States, this government constantly maintains that our fortunes rise and fall. The only departure from the government position that our fortunes rise and fall predicated upon the United States is the Minister of State for Small Businesses and Tourism, who denies the statement. As I said earlier, he indicated that even if the United States recovers, he doubts whether we in Canada shall.
Of course, the government will try to detach itself from responsibility for the disastrous state of the Canadian economy today and from the effect it is having on small business. There are clear measures which the government could take to alleviate at least some of the hardships-and I do not mean that it should send key ministers to Houston and Paris respectively. It could scrap the National Energy Program. It could withdraw the budget. It could call an election if it really wanted to get things turned around in a hurry.
A leading businessman in Peterborough wrote to me in the wake of the budget of last November and said, with what I can only call remarkable clarity, that if something was not done soon, the country would be in a depression. Also I am sad to report that the vice-president of Silverwood Dairies in Canada said that the government should be made aware this afternoon in this debate that "the nation is not in a recession, it is in a depression".
It is clear, as it should be clear to anyone who has contemplated the major economic statistics which I cited before, that the government's plan to beat inflation through a high interest rate policy and to sustain it with consequent record unemployment is simply not working. What will it take for this government to realize that its present economic policies are not working? Obviously, this punitive budget must go. A budget which encourages entrepreneurial expansion, the creation of a savings and investment capital pool and, yes, even contemplates tax reduction, is what is needed.
A responsible Canadian government would provide tax incentives to invest or expand. A responsible Canadian government would take steps to increase the cash flow to small business through a truly revamped tax policy review. A responsible Canadian government would not insist on an addlebrained Canadian content requirement in the industrial energy sector as a condition for business activity. This is all very well on the airwaves, but the fact is that it is costing Canadians jobs everywhere and not just in Fort McMurray.
A responsible Canadian government would not force businesses to retool for international metric systems at tremendous cost at a time when small businessmen can barely meet their payroll, much less spend thousands of dollars for new scales, new tool-sets and new equipment of one kind or another- especially when the equipment they have now is good for another ten, 20 or 30 years.
To those who say that we have to go metric in order to increase and protect our export trade, I say "rubbish". The Minister of Industry, Trade and Commerce and Minister of Regional Economic Expansion (Mr. Gray) will confirm, for example, a multimillion dollar deal signed last week between Vellan Incorporated of Montreal and a Hungarian nuclear plant to supply a Hungarian-built, Russian-designed nuclear power plant with 10-inch valves. This is only one of many export contracts closed in the past year which supply imperial or Canadian parts and services.
This $4 billion cost to the Canadian economy of going metric is another program for which this government should be held accountable. At last, a growing number of people are demanding the answers.
The principal question being asked is, "Why is the Canadian government trying to ruin me? Why is it making me a bankruptcy statistic in my own country?" The answer is that this government is bankrupt itself. It is bankrupt of ideas, bankrupt of principles, bankrupt of responsibility and, as we shall see in the next election, bankrupt of votes.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Blaker):: Order, please. In accordance with Standing Order 40, it is my duty to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Saskatoon West (Mr. Hnatyshyn)-Public Works-(a) Request that competing firms be reimbursed for expenses, (b) Request for independent investigation; the hon. member for Vegreville (Mr. Mazankowski)-Bankruptcies-(a) Position of purchasers of insurance from companies placed in receivership, (b) Request that purchasers be treated as preferred creditors; the hon. member for Burnaby (Mr. Robinson)-The Judiciary-[DOT] (a) Statements on constitution made by British Columbia Supreme Court Justice, (b) Judicial Council inquiry.
May 11, 1982



GOVERNMENT ORDERS

[Stage Direction]
[ Translation]

[Stage Direction]
The House resumed consideration of the motion of Mr. Speyer:
That this House, alarmed by the fact that over 1,500,000 Canadians are unemployed and aware that small businesses generate more than 60 per cent of all new jobs created in Canada, condemns this government for its ruinous economic policies, particularly those contained in the budget, which have effectively destroyed the spirit of entrepreneurship in the small business community, have contributed substantially to the loss of job-creating opportunities and which have drastically diminished investment in Canada.
Céline Hervieux-Payette: Mr. Speaker, it is with great pleasure that I take part in this debate on the motion presented by the opposition, in which three points are raised. The motion accuses us of destroying the spirit of entrepreneurship in the small business community, of contributing to the loss of job-creating opportunities and also states there has been a drastic reduction in investment in Canada. Mr. Speaker, I intend to respond to the three main allegations made in the opposition motion.
To begin with, on the subject of destroying the spirit of entrepreneurship, 1 believe my hon. colleagues have often mentioned the issue of Canada's high interest rates. I think it is too easy to work on people's emotions, and certainly no one on this side of the House will deny that interest rates are much higher than we would like them to be. However, it would be very simplistic to say that tomorrow morning we are going to reduce interest rates unilaterally to around 10 per cent, without causing undue disruption of the Canadian economy. In fact, Mr. Speaker, when one of the OECD countries, namely France, decided to maintain interest rates at a level generally acceptable to the French people, this artificial measure resulted in a very substantial drop in the value of the French franc, to the point that the same government decided to bring interest rates up with lightning speed to their present level of 20 per cent. May I remind my hon. colleagues that the present prime rate in Canada is set at approximately 15.39, and that there is continued progress from week to week. However, there is no magic formula, although our hon. colleagues seem to think there is, to make interest rates drop overnight to around 10 per cent, that is, to a level generally acceptable in our economic system, although not to the prevailing levels of a few years ago.
Mr. Speaker, I am convinced that the members of this House have a duty to take the present situation seriously. However, there is a difference between what the government on this side of the House is doing and making emotionally charged speeches or causing panic among investors. In any case, last week, I met a group of some twenty-five businessmen from my riding, with an annual turnover varying from $500,000 to $25 million. They graciously agreed to spend more
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than three hours of their time at a round-table discussion with the member for Montreal-Mercier to analyse the economic situation. And as the minister said earlier, I say that these people are far more reasonable, take a far more serious attitude to the issue, and are willing to co-operate in applying the corrective measures our economy needs. They realize that our economy does not stand alone and that the problems cannot all be blamed on the Canadian government. In fact, they believe that it is of vital importance to maintain the federal government's present policy and to maintain a monetary policy that will prevent the Canadian dollar from sliding downwards, which would be the case if tomorrow morning the reins on our monetary policy were loosened, and also, of course, if interest rates were allowed to drop which again would result in a drop in the value of the Canadian dollar.
Mr. Speaker, these businessmen do not believe in magic cure-alls or panaceas. They believe in difficult solutions that may be painful for some businesses, but they do not feel it is up to the government to intervene in all areas and at all times, to cure society of a disease which I do not think is caused by the government alone, but by every member of that society. The businessmen in question acknowledged that they were partly responsible for the problem and that all citizens, all consumers were partly responsible, and that, in fact, our entire society must share the responsibility. We have known prosperous and happy times, and these may well come back again, if the right measures are taken to deal with the present situation. Mr. Speaker, these businessmen are aware of the fact that there is not much room to manoeuvre, and they are willing to make every effort to get through the present situation. They did not ask me to double or reduce or be very generous and change the Small Business Development Bond program, in the belief that this would solve all our economic problems overnight. I do not think they believe in band-aid solutions. They feel that the present programs are flexible enough to enable small- and medium-size businesses to cope with these difficult times, and some went so far as to say that the present situation would weed out the weaker elements. Mr. Speaker, I trust that we shall all have learned a valuable lesson in this difficult period, and that the measures to be taken by our government, especially those announced in the budget, will enable us to overcome our problems in the not too distant future.
In their motion, my hon. colleagues refer to the loss of job-creating opportunities. Still within the context 1 mentioned earlier, namely, that the government should not take up the entire slack through unilateral measures, the fact remains that the business sector realizes that unemployment is particularly acute in two sectors, namely in the construction and forestry industries, and feels that the measures taken by this government are likely to be of some help. I am thinking of the Canada Rental Supply plan, a measure included in the budget

May 11, 1982
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and passed by the Elouse which provides for the creation of some 60,000 direct and indirect jobs and has increased by some 30,000 units the supply of rental accommodation in Canada. Another program announced by the department last week and which is particularly interesting for constituencies like mine where a fair number of houses are rather old, is the Canada home renovation program. This program will help create some 10,000 jobs. In view of its flexibility, I urge my colleagues opposite to let their constituents know about it, because ultimately that measure could be beneficial to all Canadians. It is of course, people with an average salary of $30,000 per year who will be able to take full advantage of this renovation program.
However, from a description of this program, it is surprising to find how flexible it is. Among the work that can be carried out under the program, let us mention the construction of a greenhouse or such facilities; the landscaping of a permanent house; the construction or repair of fences; the construction or repair of a side entrance; the installation of various domestic appliances. Indeed, Mr. Speaker, the renovation program will enable many households to hire construction workers and take advantage of job-creation measures recently taken by this government. Another very popular program, Mr. Speaker, which now applies to houses built up to 1970, is the Canadian Home Insulation Program. This program is designed to help people involved in the building industry, people who are having problems at the present time because of the slowdown in the residential construction industry. These people will be able to benefit from an additional $280 million to complete home insulation. I believe that this program is doubly beneficial as it will help reduce energy costs on the one hand and stimulate an industry in distress on the other hand.
Mr. Speaker, when we speak about industries that are in distress, we realize that one of the most tragic aspects of the unemployment problem-and I have here the figures made public by Statistics Canada for the month of March-is of course the fact that one specific group is hit harder than the others, namely young people aged between 15 and 24, who have an unemployment rate of about 20 per cent. It is tragic to see that our young people joining the labour market cannot find any employment to test their talents, their abilities and their imagination. However, I would like to point out that our government has allocated quite recently $280 million for training and job-creation programs aimed at our young people. This is not enough to create jobs for all the young unemployed, but the private sector has certainly a significant role to play in this regard. It is obviously the private sector which should do the most.
However, Mr. Speaker, I believe that this summer the employers will have to realize that they have to take an active part in the employment programs for young people and give a helping hand to those who will be going back to school in
September. In this regard, we are providing employment offices for young Canadians which are now open to young people throughout Canada, and I hope that employers in the private sector will make use of the services offered by these offices so that our young people may work in very flexible conditions and not necessarily as permanent employees. I believe that many jobs can be done at very competitive prices and that our young people will be all too happy to contribute their talents in doing light repair work and various odd jobs that come up during the summertime.
With respect to the decrease in investments in Canada, Mr. Speaker-despite the fact my hon. colleagues do not seem to have much confidence in these data they have not as yet challenged them-I believe I can still use the budget paper entitled "The Current Economic Situation and Prospects for the Canadian Economy for the Short and Medium Term". When discussing investments I feel one must use some data, and we have those provided by OECD. I am sure we can rely on statistics produced by an organization of such outstanding prestige. We see that from 1974 to 1979, investments grew faster in Canada than in any other of the OECD countries, Canada being the only country to devote an increased share of output to investment. Thus, in recent years, Canada has shown a relatively better investment performance that any other country.
That, I feel, must be recognized and noted. In discussing investments, a distinction must be made between residential and non-residential investments, the latter being mostly that of the manufacturing or natural resources sectors. In that connection, Mr. Speaker, though hon. members opposite were quite cynical last week when the Alsands project was discussed, they should know that when it comes to viability, to investment yields, the projects involved should bear within themselves the possibility of a reasonable return. In that case, public money was involved, tax money collected from the Canadian taxpayers, and I think that the Canadian government has shown its wisdom in these rather unfavourable conditions. On the other hand, hon. members opposite did not dwell yesterday on the $600 million which the Canadian government is going to invest with Esso Resources for exploration in the Beaufort Sea and especially the implementation of our national energy policy. There is an area where investments will pay off, where the combination of private enterprise and government undertaking holds the promise of a very rewarding future, and where one of the first steps in the implementation of the Canadian energy policy can be the reconciliation of the economic interest of Canadians and the know-how of foreign companies.
My colleague who reported an increase in investment money in the United States claimed that all the investment money in Canada was leaving this country for the United States. I should like to remind him that the unemployment picture in the United States is not much brighter than it is in Canada,
May 11, 1982

and that the investment money, which is not coming into Canada is certainly not flowing into the United States. There is now a decrease in investment money in all OECD countries, as amply demonstrated by statistical data. I hope that this situation is only temporary and that the finance ministers currently taking part in OECD meetings will find ways to help our Western economies recover without disastrous repercussions on society as a whole.
My colleague, the hon. member responsible for small businesses, felt that we had better come up with solutions instead of lamenting over our predicament. Ele was right. One of the solutions which I personally favour is better co-operation among employers, employees and governments, including provincial governments, in the future economic direction of Canada. As a matter of fact, those who know something about the techniques used in Germany to plan the long-term economic future of that country are aware that the social partners sit down and discuss their economic future. I think it is high time our federal and provincial governments sat down and discussed our future with Canadian employers and employees. Recently the Minister of Finance visited many parts of Canada to meet various groups, but I think there is only one way to go about this, and it is to sit down together at the same table and talk. It is my view that a country like Canada cannot afford to waste its energies in virtually creating conflicts that should not exist with respect to this country's economic future.
Our country is mature enough for Canadian men and women to be more readily involved in the development of their economy and in the management of their businesses by ensuring that at the boardroom level employers and employees sit side by side in an effort to plan the economic future of their undertakings, to discuss productivity and quality of life at work. I believe that whatever examples we find in European countries could be very usefully followed here. Also, Mr. Speaker, I think that another avenue for concertation would be the opportunity for the employers to share their profits with the employees, when, of course, there are profits to be shared, by ensuring over-all involvement not only in management but also in equity, and in the small business sector, such a system is long overdue. Unfortunately, on account of the current recession and because of financial difficulties, management is now inviting employees to sit in their boardrooms. Mr. Speaker, I will point out that the very same employees should also be sitting at the table in times of prosperity, to plan the future of businesses. In this way we could perhaps prevent unnecessary plant shutdowns and might rapidly come up with solutions and arrive at better planning and productivity schemes. I would therefore invite my colleagues to reflect on these proposals. I share the view that small businesses in Canada may still look forward to a healthy future. We have specific programs for assisting them. We have a fiscal structure that is favourable to them, and I believe that by consultation and united efforts, the government, small businesses and labour will find ways to improve the economic future of Canadian men and women.
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Thomas Gordon Towers: Mr. Speaker, the issue we are debating today is one of the most important to be before this House of Commons for some time. Listening to previous speakers, I can understand their naivete as well as the lack of understanding of the previous speaker, the hon. member for Montreal-Mercier (Mrs. Hervieux-Payette). However, I cannot accept the ignorance, incompetence and arrogance of the Minister of State for Small Businesses and Tourism (Mr. Lapointe). His is the responsibility. I see him smirking at a time when we are trying to bring to the attention of this government the problems that small businesses are experiencing. If he would speak to some of my businessmen, the smirk would be on the other side of his face.
There are people who have spent a lifetime and have put all their earnings together only to see them go down the tube because of the policies or lack of policies of the federal government. People are brokenhearted as well as bankrupt. The place where they put their faith no longer exists.
The other day I spoke to someone working for a company which had a $10 million turnover last year and employed 100 people at any given time. Thursday night he received a call telling him to turn in his keys on Friday morning because the firm was going into bankruptcy. Yet we have the minister smirking. Canadians deserve better than that.
My colleague from Cambridge (Mr. Speyer) should be congratulated for bringing this motion before the House of Commons. As he said, from the small service companies in the petroleum industry in western Canada to the manufacturers of auto parts in Ontario to the small vessel construction in Atlantic Canada companies are in trouble.
The service companies in the petroleum industry have possibly been the hardest hit. This part of the industry was expanding more rapidly than any other segment. We tried to tell members opposite what they were doing with their National Energy Program, but they would not listen. We tried to tell them it would eventually be felt in Ontario when the service industries would no longer be able to purchase trucks and automobiles, but they would not listen.
Last January I had the privilege of travelling through southern Ontario with the task force. I came face to face with those having to deal with bankruptcies and receiverships, yet we have a minister who smirks. This is not acceptable to the people out there trying to make their way.
We must realize that the small business community provides more jobs than any other segment of our economy. At this time we have a million and a half unemployed. People are blaming the high interest rates for this. There are three components which are creating these high interest rates; it is not just the Governor of the Bank of Canada trying to protect

May 11, 1982
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the Canadian dollar with high interest rates. The government has a responsibility. It has a responsibility to establish a climate in which the small business community can survive.
I agree with the hon. member for Montreal-Mercier that government should not provide subsidies to small business. It does not have to. Small business does not require that. What it requires is a climate in which it can survive. We must get away from this massive tax grab which this government embarked upon with its National Energy Program and over-all taxation policy. That is what is killing the small business community. It cannot survive. It cannot afford the expenditures of this government.
The fiscal policy of the federal government, plus the monetary policy of the Bank of Canada and the growth in our gross national product, form the basic components of our economy. Those three segments are responsible for the protection of the Canadian dollar. Governor Bouey of the Bank of Canada is trying to do all three with high interest rates. This has created the nemesis for the small business community, whether it be farming or whatever.
Based on the Revenue Canada definition of "small business", which is sales of $10,000 to $2 million, over 700,000 Canadians earn all or a yearly significant part of their income through their entrepreneurial skills as small business people. An additional 480,000 earn part-time income through businesses with sales of less than $10,000. They are the linchpin of the Canadian economy.
Small business accounts for about two thirds of our job creation. It is highly labour-intensive and has a higher ratio of jobs from investment dollars than any other segment of our economy. Small business provides more business opportunities for less skilled workers. Ninety per cent of the businesses in Canada employ less than 200 people. Small businesses account for 57 per cent of all sales in the service industry and 52 per cent of all sales in the construction industry.
As I said earlier, we in Alberta are suffering more today than in the last 50 years. A lot of our people were working in the oil service industry. Now, with the National Energy Program, with the outflow of the billions of dollars to the United States because the industry has moved south and the outflow of petroleum dollars as a result of our purchases offshore, we leave the Governor of the Bank of Canada trying to protect that amount of money, trying to protect the value of the Canadian dollar, with high interest rates and with the government reneging on its total responsibility.
We have tried to explain to the members opposite what they have been doing wrong, but they have not been listening and they will not listen, and there is as yet no sign that they are changing their attitude.
There are over 1.2 million small businesses in Canada. There are a lot of small businesses which are not trying to be small businesses. They are small because of the inhibiting influence of federal government policies. They are kept small because of the stifling and suffocating impact of the federal
government's dismal performance in the areas of economic stimulation and incentives.
Our record in research and development is one of the most pitiful in all of the industrialized world. The minister said earlier that he wished we would tell him and his government how to go about correcting the problems. Now he is not even in the House to listen. When this government opposite entered office in 1968, we were allocating about 1.5 per cent of our GNP to research and development. Now the figure is down to below 1 per cent and has been at that level for about ten years.
In the early 1970s the Special Senate Committee on Science Policy, the Lamontagne committee, pointed out the benefits of an enlightened science policy with the accent or emphasis on boosting spending on research and development to 2.4 per cent of GNP. Instead of doing that, what does the government opposite do? They chased the expertise and the technical ability that we have in our oil industry out of the country. You can make faces if you like, my hon. friend, but that is exactly what happened, and until you start to realize that this is what has taken place we are not going to correct the problem.
The United States are very clever. They do not take our labourers down there to work in their oil industries but they certainly are willing to take our expertise. If you talk to some of the people who are in the business, they still tell you that it takes two or three years to train these people. Of course, those are the people who have gone to the United States and to other parts of the world. This government will not heed and instead we as a country, as a people and as Canadians lumber along as exporters of our raw resources. We continue to be hewers of wood and drawers of water.
Dr. Larkin Kerwin, president of the National Research Council, said that we may be able to survive as a nation of woodcutters but if we do we will then have to be content to receive woodcutters' wages. Dr. Kerwin, in a recent speech, lamented that while Japan does so much with so little, Canada does so little with so much. Dr. Kerwin has told the government that an increase of just half a per cent in research and development spending as a percentage of GNP would create 400,000 new jobs. His research agency demonstrated in a pilot project that research and development seed money is returned to the investor manyfold. The pilot project I am referring to involved the investment of $93 million in about 500 projects with about 200 Canadian companies. NRC's monitoring of the results indicated that that small infusion of research and development capital resulted in new product sales of $1.8 billion. Every million dollars invested in research and development meant 1,500 man-years of jobs. The multiplier effect varied from project to project, but it went as high as 100 to one. The average return was $20 for every research and development dollar invested.
As a nation we have been plodding along, selling off our resources in raw form and then buying them back as finished imports. Let no one on the opposite side tell me that there is not a market there, because our deficit in manufactured products in any one given year would average out at about $20 billion.
May 11, 1982

My colleague from Scarborough East (Mr. Gilchrist) told the House some time ago that we are selling coal, steel, aluminum and other non-renewable resources for an average of 50 cents a pound and we are buying them back at over $3 a pound in the form of Datsuns and Toyotas.
This government has demonstrated in the past that it is not interested in developing a made-in-Canada research industry. Instead, it has been content to import technology at a great cost in jobs and growth in Canada. For a while, the door to the minister's office in the science and technology ministry was a revolving door. The joke in the department used to be: "If the minister calls, get his name." Science and technology was given, and still has, a very low priority by this government, even though it may be the key to our economic recovery and survival.
I took the time and trouble to do a little mathematics, a little arithmetic, on just what research and development could mean to this country. The National Research Council estimates that each million dollars invested in research and development requires 1,500 man-years of work-or 1,500 jobs are created for one year.
In 1981 our GNP was slightly more than $328 billion-and we spent about 0.9 per cent on research and development. If we had spent 1.5 per cent, we would have created at least 295,000 new jobs and probably closer to the 400,000 that Dr. Larkin Kerwin projected. If we had spent 2 per cent, we would have created more than a half a million jobs-546,000 in ballpark figures; and if we had spent 2.5 per cent, the recommendation of the Lamontagne committee, we would have created more than 786,000 new jobs. We tell the minister this but he is not even in the House to hear. And these figures, which come not only from the Conservative side of the House, are really on the conservative side.
Dr. Kerwin is on the record as projecting that with this kind of investment in research and development we could eliminate unemployment. How true, Mr. Speaker. We have the people, we have an intelligent people, we have a people willing to work, we have one and a half million unemployed, and we have the raw resources to put it all together. Yet we do not have a government to provide the climate to bring this about. The Prime Minister (Mr. Trudeau) is a graduate of the London School of Economics, an economist. Surely if he learned anything in his school years he could have put those three things together. You do not have to be a mathematical genius to figure out what the bottom line is, when just $93 million in seed money generates $1.8 billion in new economic activity. This is what we need, Mr. Speaker. That is an incredible return on investment.
Would an increase to 1.5 per cent-roughly an increase of $1.9 billion more-generate about 20 times as much or abom $38 billion in new product sales? Would an increase to 2 per cent-roughly a $3.6 billion increase-then generate 39 times as much or about $70 billion in new opportunities? Would an increase to 2.5 per cent-roughly a $5.2 billion increase in research and development investment-then generate 56 times as much new economic activity or more than $100 billion in
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economic activity? These are the facts. They cannot be disputed.
Why, then, the foot-dragging on the part of the government? That is why I used the word I did, which is a strong word, Mr. Speaker, when I started to speak, when I spoke of the ignorance of the minister. Why does he and the government not heed the advice of the National Research Council? Why does it not pay attention to the results achieved by the National Research Council's experiment in funding research and development projects, in view of the staggering results it has shown that can be achieved?
If we invested 1.5 per cent of GNP in R and D, that would be approximately $4.9 billion; 2 per cent would be approximately $6.6 billion in total spending on research and development and 2.5 per cent would be approximately $8.2 billion.
If every dollar invested returned $20 on the average, the gross return on total R and D investment at 2.5 per cent would top $160 billion. That is about half of our present gross national product.
One of the most important categories of small business in Canada, along with the petroleum industry, is farming. It is hardest hit in the cost-price squeeze. It is hardest hit by escalations in the cost of energy and farm materials, of which energy is a major component cost. Farmers are big users of energy and must pass on these price increases as a cost of production. As a result, the price increases show up finally at the check-out counter in the supermarket.
Net farm income is expected to be down by about 15 per cent in 1982. This means that the figures that have already been given to us by the hon. member for Cambridge and by the hon. member for Peterborough (Mr. Domm) regarding bankruptcies will show an increase this year. High interest rates are squeezing the farmer in Canada. High interest rates are aggravating the cost-price squeeze and the cash flow squeeze.
I have received your sign, Mr. Speaker, so I guess my time has expired. I could go on because this is a serious matter. I hope that hon. members opposite will listen to those of us who are trying to explain the seriousness of the situation to them as it relates to the small business community, and I hope that they will understand.


Mr. Norman Kelly (Parliamentary Secretary to President of the Treasury Board):: Mr. Speaker, before rising to speak I counted the number of members in the House and I am therefore tempted to call a quorum. Given the difficulties that an interjection of that sort can create, however, I decided to forgo this pleasure that afternoon.
I should like to say, Mr. Speaker, that I agree wholeheartedly with the concluding comments of the previous speaker. The situation in Canada is indeed serious. I believe that there is no one in the House or in the country who would disagree that our economy is experiencing very great difficulty. If there is anyone who would argue otherwise, it must be someone who

May 11, 1982
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does not have the eyes to perceive reality, the brain to understand it or the heart to respond to it.
In this debate it is important for us to realize that these difficulties are not peculiar to Canada. These difficulties, if not worldwide, are at least shared by most of the industrialized countries of the world. For we are living in a period of readjustment, one of those swing eras of the type we studied in the classroom of our youth; and we know that, in such periods, governments and peoples are forced to make choices. These will not be easy choices; they will be very hard ones. In fact, in almost all the newspapers and periodicals and all the information provided by the prognosticators on radio and television, the word that is most often used to describe the choice is "tough".
The federal and the provincial governments, then, will have to make some very tough choices in the next few years. I regret to say that, so far in the national debate on the economy by politicians, special interest and lobby groups, we have not been able to get past the rhetorical stage. That is unfortunate because rhetoric does not solve the problem; it does not point out the tough choices that have to be made; it does not indicate the degree to which we have to make sacrifices today in order to reap the rewards of the future.
There is, as well, an unfortunate preoccupation with the past in this debate. Every time a member of the opposition speaks he talks about the past-the past performance of the government or the past performance of the economy. 1 would not deny the right to that perspective but the point I make is that it is not conducive to finding solutions to our problems. In short, we have an unwarranted preoccupation with the past when we should be concerned about the future.
All too often we cast the debate in terms of personalities- whether we are for or against the Prime Minister (Mr. Trudeau) or whether we hate him or love him. What does that give us?
Finally, the rhetoric in this debate is characterized by wildly exaggerated and vague promises of one policy or another. Very little is focused and precise in the debate. That is what is so offensive about our national debate-it is vague and deliberately so, because politicians know that the decisions to be made will be tough ones and perhaps politically damaging. As a result, they like to stay away from clearly defined or clearly presented choices. It is always nice to couch arguments in a generalized fashion so that if things do not work out, no one can criticize you for being wrong.
Mr. Speaker, I should like to move the debate beyond the rhetorical stage. I do not want to talk about the past, I do not want to talk about personalities and I do not want to talk in a vague, general way about promises. In the peculiar naivete and innocence that only a backbencher can bring to a debate at times, I should like to suggest, as clearly as I can, the choices that the government should make in the months ahead.
Before doing so, I should like to preface my remarks by saying that these choices are not necessarily those of the management, they are not final and are subject to revision without prior notice.
The goals to which all of us want to move the Canadian economy, Mr. Speaker, are obvious. We want drastically reduced inflation, higher productivity, and far higher employment levels. However, we all have to realize that we will not achieve those goals if we do not collectively-governments, corporations and citizens-lower our demands on the system and concentrate on rebuilding that system. As I said earlier, all of us, in some fashion or other, will have to deny ourselves the pleasures of the present in anticipation of enjoying the rewards of the future. This will prove a very difficult task because there are very few among us who want to forgo the lifestyle we learned to enjoy through the flush years of the 1960s and 1970s. But I would argue that we must do it, and do it now. The sooner the better.
I think everyone in this room is familiar with the television ad for automotive filters where the service repairman leans into the camera and says, "You can pay me now or you can pay me later." I suggest that is the option which faces this government and the Canadian people; we either pay the price now or we pay it later. And I am suggesting we had better pay it now because the price for solving our inflation, unemployment and productivity problems, although steep, will be cheaper now than in the future.
Let me look at inflation and suggest ways in which this government can fight inflation in the immediate future, Mr. Speaker. First of all I suggest that this government should implement a freeze to cover all wages, salaries-and dividends, because no one should escape the cold. I would suggest the freeze should last for a minimum of six months. Second, in order to make it psychologically acceptable, or at least more palatable, I suggest the government should simultaneously roll back the salaries of Members of Parliament by an amount equivalent to the present inflation rate.


Thomas Gordon Towers: Mr. Speaker, would the hon. member accept a question right at this stage of his remarks?


Norman Kelly: Mr. Speaker, I do not wish to be contentious, but I would prefer the hon. member to delay his question until the end of my remarks. I have a lot to say and I would like to plow through as quickly as I can in order to cover the important subject which is before the House.
I was talking about rolling back hon. members' salaries equivalent to the present inflation rate. I would introduce a slight wrinkle to that rollback, Mr. Speaker. I suggest the money saved in that rollback should be paid back to members of the House at the rate of 1 percentage point for every 1 per cent drop in the inflation rate next year. As a result, members would have a very real and important stake in fighting inflation.
Third, after the freeze is lifted, the government should introduce guidelines which would eliminate the foreign sources of inflation. If inflation is 10 per cent, employees go to their employer and ask for at least a 10 per cent increase to keep up with inflation. However, studies indicate that roughly 40 per
May 11, 1982

cent of inflation is imported from abroad. While we may have some commitment to keep people as close to the increase of domestic inflation as possible, 1 do not think this or any government, or any employer, has an obligation to compensate for foreign inflation. There is only one way to eliminate foreign inflation, Mr. Speaker, and that is to become more productive. If we do not, if we keep placing demands on the system to compensate for the foreign portion of inflation, we will never break the inflationary spiral and we will never solve our inflationary problems.
The fourth thing I would suggest is that this government should abolish all the price support systems such as marketing boards which have been created-


David Orlikow: How about tariffs?


Norman Kelly: -over the last two decades. In saying that, Mr. Speaker, I do not want to suggest that I am abandoning the groups in our society for whom these price support systems were created. What I suggest we do for those people is to replace the price support systems with an income support system. I believe that if we can find the will, if we can exercise our judgment, the abolition of price support systems has the potential of decreasing inflation in this country by at least 2 per cent. That would make a valuable contribution to this war on inflation which everyone wants us to fight but for which no one wants to volunteer.
Fifth, Mr. Speaker, I would suggest a removal of all sales taxes. I have always found it passing strange that while all governments perceive inflation as the number one problem, they rarely perceive the role they have had in creating and sustaining that inflation. If you look at the prices that you pay for consumer goods today, the most remarkable thing about them is the degree to which government taxes form a substantial part of those prices. I would argue that any government which is serious about and committed to fighting inflation would abolish, or at least significantly reduce, the level of taxes it has imposed on the system, which in turn has resulted in the agonizingly higher prices.
Sixth, contrary to the prevailing advice I hear in the House, I would urge this government to make the dollar appreciate in value. Conventional wisdom argues that we should devalue the dollar in order to increase foreign sales. But I would argue that what we are trying to do through devaluation is to buy time, to buy our way out of an economy whose productivity is slowly but markedly slipping. We cannot afford, as we have over the last 20 years, to devalue the dollar continually and hope to buy our way out of our declining productivity. We cannot do it because we are forestalling the ultimate decision which has to be made on declining productivity. We cannot do it because devaluation also adds to inflation. For every three cent drop in the value of the dollar, you can add roughly one percentage point to the inflation rate we are all anxious to reduce if not eliminate. In other words, I would argue that, if we were really serious and committed as a government or as a nation to fighting inflation we would not devalue the dollar, in fact, you would appreciate it. I would offer as proof of my argument the
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evidence of those countries which have been most successful in resisting inflation. They are the countries which, through the 1970s have appreciated their currencies. They are the countries with strong currencies, currencies that will get even stronger in the 1980s. If we are going to join those countries, join them in the strength of our economies, we must join them with a strong currency. I would urge this government to explore the possibility of going against the tide of public opinion and appreciate our dollar rather than devalue it.
In an attempt to fight inflation, and as a result of all the preceding advice I have given this House and government, I would urge that everything be done to lower interest rates. If we do the things I have suggested, I believe we will create a climate that will allow the Governor of the Bank of Canada, by himself or at our request to lower interest rates. I do not know how far those interest rates would fall, whether by two points or ten, but by doing what I have suggested, we would have the opportunity at least of lowering interest rates. Everyone in this House understands very clearly the dimensions of the potential that is available to us in Canada if we can only bring down those usuriously high interest rates that plague us so persistently today.
I would like to move on now to the second issue, that of higher productivity. The key to higher productivity is investment, and the key to investment is savings. This government, in one way or another, has to devise a system which promotes enhanced saving in the years ahead. In order to do this I believe the tax system has to be revised. It will have to be revised in a way that will create generous incentives for individuals and corporations to save money for reinvestment in those industries targeted by the task force which submitted its report to this House last year.
I have to confess that, at this point, I could not tell you with precision what those incentives should be, although I think that one of them at least should be accelerated write-offs. They are imperative because most of the opportunities that have been selected by the task force and endorsed by this government are opportunities that are unusually capital intensive. So if we are going to realize those opportunities and if we are going to build those industries, then we must make available the huge capital flows necessary to get them started and to sustain them. And there is only one way to do that; which is to revise the tax system and to raise the necessary money.


The Acting Speaker (Mr. Blaker):: Order, please. I am sorry but I must interrupt the hon. member as his allotted time has expired. He may continue with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Norman Kelly: Mr. Speaker, I appreciate the generosity of my colleagues and I will attempt to get through the balance of my remarks as quickly as possible.

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We should also create generous research and development incentives. There should be incentives that are targeted to the most productive industries. Those industries, I think, would be in the field of high technology. I use the word targeted because I do not know whether we could introduce universal incentives. I do not know whether we can afford to introduce universal incentives or whether, based on our limited resources, we should direct the incentives to those groups which we think can make the most use of that money.
In my comments about savings and investment, I have been referring to the private sector. We must not forget the fact that there is a public sector involved in savings and investment. I think this government, as well as other governments, has the opportunity in the 1980s to save money for the purpose of investment. In order to do that, I would urge this government to review all of its expenditures with an eye to cutting them, freezing them or limiting them in some fashion or another. It is obvious that we cannot go on spending the money in the future the way we have spent it in the past.
You will notice, Mr. Speaker, that I have mentioned spending money in the way we have been spending it. I am not arguing that we limit our total expenditures but, rather that we should redirect the money we do spend. We should direct it away from wasteful, redundant or irrelevant programs and put it into programs that will permit this government to help build the industrial infrastructure that will complement the investment of the private sector in the 1980s.
What this government has to do is to take the money it is spending on many of its present programs, collect it and reinvest it in the building of an infrastructure that complements the decisions freely taken in the open marketplace. However, if this government does that, it will have to accept two consequences. First, it will have to accept an increased indebtedness. Second, in order to raise some new capital to pay for that infrastructure, in order to raise money to replace the money alienated through the tax incentives that I alluded earlier and in order to replace any of the sales taxes that were lost from its withdrawal in the marketplace, this government will be faced with the very difficult task of having to raise taxes income in the future. I do not think this government or any other government can get away from that.
In concluding this part of my argument, let me repeat that the government will have to implement, and the public will have to accept, higher income taxes in the near future.


The Acting Speaker (Mr. Blaker):: It being six o'clock, I do now leave the chair until 8 p.m. this evening.
At 6 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8.00 p.m.
The Acting Speaker (Mr. Blaker):: When the House rose at six o'clock, the hon. member for Scarborough Centre (Mr. Kelly) had completed his remarks. The Chair will now recognize the hon. member for Annapolis Valley-Hants (Mr. Nowlan).


Mr. Pat Nowlan (Annapolis Valley-Hants):: Mr. Speaker, ordinarily I am happy to participate in a debate such as the one on the motion of the hon. member for Cambridge (Mr. Speyer), but in a sense I am somewhat ambivalent about the happiness of participating along with my colleagues because of the situation faced by small business people as a result of the November 12 budget and the paperwork burden of government which smothers initiative and any real creative thought. Later in my remarks I will refer to a specific case in my riding of the mandatory implementation of metric, without any voluntary or optional provision, increasing the costs of small businesses.
Quite frankly, Canada has bountiful resources which in effect are squandered by governments of the land. I am not overjoyed tonight to be speaking on this subject, which is generally the economy but is specifically focused on small businesses, because the situation they face is not the happy one it should be. I suppose we could not have a debate which better illustrates the quandary in which this nation finds itself and which relates more to the mainstreams of the land. We are not talking about the metropolitan megaprojects, the debate of which has, quite properly, consumed much of the time of the House, or about corporate infighting or corporate take-overs of one giant by another; we are talking about small business people. Quite frankly, as a layman I sit back and wonder what productive dollar is really being made when one corporate giant takes over another corporate giant while using the tax laws to do it at a minimal cost. This has been done even though in many cases the cost to the consumer has not been justified.
During this debate we are discussing the small business people, be they men or women. I will say small business person to be completely ecumenical, or non-generic, but I think most small-business men and women like to have the gender added since it seems to stimulate activity on the rural main streets of Canada. In any event, we are talking about the benefits of the small businesses on the main streets of Canada while at the same time discussing the sickness of this present economic policy which has resulted in bankruptcies, not only to small business persons but the bankruptcy of any serious government policy which was intended to address some of the problems confronting small business persons on a daily basis. This debate is meaningful if we are to confront those problems, because there are many small and big businesses across Canada which are trying to keep afloat. Coupled with this problem is the glaring lack of any meaningful government policy or program to help these businesses stay solvent. These programs are especially necessary when these small businesses are faced with these unconscionable interest rates, which, in my opinion, are one of the major factors of inflation in this country.
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The political parties have stated their position on interest rates, but as far as I am concerned any government-including us if we were in power, as we should be-will not be able to come to grips with the problems of inflation if it just assumes that the inflationary cycle or the problems of small business persons will be resolved when we have interest rates of 18 per cent to 22 per cent.
When 1 was younger, those interest rates were thought to be unconscionable. Those were interest rates which were charged by high-flying loan companies or loan sharks. However these rates are now built into our economy on a daily basis, which results in a cash flow problem for business people who must constantly deal with interest rates. Unless we can resolve this problem-and not by government patchwork policies-we will never solve our crippling state of depression or recession which is afflicting this country.
If this debate focuses any attention or serves as a catalyst for action by members opposite it will have proven worthwhile for members to speak until termination of the debate at ten o'clock tonight.
If anyone thinks that small businesses comprise an insignificant part of our economy, they will be surprised to discover the collective effect they have across Canada. I am sure many members do not underestimate the impact of small business, but I was rather startled, after conducting some research into the matter, to discover that there are over 700,000 Canadians who earn a very significant part of their income through their entrepreneurial skills as small business people. This figure is based on the Revenue Canada definition of sales from $10,000 to $2 million, which is admittedly a rather wide definition. As well, 400,000 additional Canadians earn income through parttime employment from sales of less than $10,000. In total, that is over one million Canadians who earn income through small business.
It is as true about economists as it is about politicians that opinions vary depending on who you read or listen to, but I think most economists agree that small business entrepreneurs are really the linchpin of the whole Canadian economic fabric. During the many days of discussions on the oil and gas energy bills, my friend, the hon. member for Calgary Centre (Mr. Andre) described that industry, quite allegorically, as being the engine which would drive the economic future of Canada away from the depression or recession we are experiencing. I would suggest that long before oil and gas became so fundamental to the Canadian economy, it was the business person in both small and large businesses from coast to coast on the main streets who were and who are the engine of economic enterprise.
These small business people, who employ anywhere from 5 to 20 people, are also able to give jobs to young people during the summer to help them get through school. I feel extremely sorry for those students who will be coming out of school this summer only to find no opportunity, such as the opportunity I had when I was going to school, to earn extra money. I learned more during my summer employment than I learned in undergraduate university studies simply by being able to travel
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and work in small businesses in different parts of the country. Students now will not be able to earn money for their next years' tuition through working in small business. Since the collapse of the larger megaprojects they will not be able to find employment there either. It is unfortunate, because when working in a small business you gain an appreciation, you develop a personal interest and you become prepared to work hard and honestly while earning an income to further your education. Those opportunities do not exist for students this summer, especially since the collapse of the megaprojects which would have provided them with income and afforded them the opportunity to travel as students did in my day. As well, students will not have a chance to earn income from working in small businesses in their home town. This is a tragedy which is causing anguish to many young people in this day and age.
I suggest that small business accounts for two thirds of job creation because it is highly labour intensive. Small business deserves special programs because it has special needs. The fundamental difficulty facing small business today is, undoubtedly, interest rates.
Why in the name of decency, when small business persons are faced with loan sharks and usurious interest rates, should small business be confronted with this government's policy on metric conversion, which was implemented without fundamental debate in the House? Why should the government, by moving from the old weights and measures to the new metric system, add to the problems of the small business person? I am not talking about the large supermarkets, which can afford to convert from imperial-that odious word-but about the small business person who already has enough burdens. Incidentally, one of the reasons we may have converted to metric is that we still used this old, historic word "imperial".
When government members do not get away from Ottawa- which is one of the most introverted and unreal cities to live in-and do not visit their ridings, they do not find out that a small business person on the main street of their constituency may be prepared to accept many things, but when problems are piled one upon the other, they begin to wonder who is really looking after their interests. Certainly the imposition of the metric system with no option is an added cost to the small business person which should not be borne by him.
I could go on speaking much longer about the November 12 budget fiasco brought in by the Minister of Finance. Mr. Bulloch, in a telegram, which I believe he sent to all members, illustrated the highlights of what that budget would do and how adversely it would affect the small business person. In other words, in terms of small business in Canada, it cannot resort to the same excuse that the government so often uses, but I guess any government in power would try it, that is, to slough it off to international influences. The small business person, the entrepreneur of Canada on the main streets of Canada, deserves some policy and programs to help all entrepreneurs in Canada. An attempt should not be made to slough off his problems offshore, to blame them on the Arabs, the

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anchovies off Peru or the weather which affected the grain crop in Russia and all of the other excuses that we who have been in the House for the last few years have heard.
We should consider what Mr. Bulloch of the Canadian Federation of Independent Business said were the problems of the budget which would affect small business. Way back on November 18, just six days after the budget, he referred amongst other things, to the zeal to plug loopholes. We all know that this budget was a disguised tax deformity. The minister really said "tax reform". I am all prepared for tax reform, but let us debate tax reform so that we know what will happen. Let us not have tax deformity creeping into a budget here, as we had on November 12, and then having the minister recant, retreat and revise more than Napoleon. Napoleon would have been dizzy on the way back from Moscow if he had retreated, recanted and revised himself as much as the Minister of Finance (Mr. MacEachen) has done. Thirty-one times this minister has taken one step forward and two steps backward. MacEachen is the Scot from Cape Breton, from my province, and he sometimes does the highland fling. I do not mind his doing the highland fling by himself, but when he is doing it to the taxpayers of Canada, that is a different matter. The Prime Minister (Mr. Trudeau), pirouettes whenever he gets excited because of the Queen, executes pirouettes, as he did at Buckingham Palace and around Ottawa when the Queen left. He gets all excited and does his little pirouette. Well, that is fine for the Prime Minister. He has isolated status at the moment allowing him to pirouette whenever he wants and to pick up the photographs to show that he is a pretty vibrant individual. But the really interesting person who pirouettes is the Minister of Finance, by the name of MacEachen, the good Scot who has pirouetted more of a highland fling, not by himself but, rather, with the taxpayers of Canada, and the thirty-one step sambo that he has perpetrated on the Canadian public.
Bulloch, six days after the budget, said in a very restrained way, amongst other things, that this budget will close off access to the risk capital markets for new small business ventures and high growth medium-sized enterprises, which are the major source of new jobs. It will seriously inhibit instalment sales of any kind, i.e., consumer appliances or capital assets. It will restrict the cash flow for businesses facing excruciating pressures when financing capital expenditures at high interest rates. It will severely weaken the effective functioning of the marketplace by curtailing the ability of an owner to sell his business and restrict the number of potential buyers. It will increase the tax burden on investors in small corporations. It will discriminate unfairly against professionals who are unable to incorporate. It will restrict the ability of entrepreneurs to provide for their own retirement. It will massively increase professional fees for small businesses that must cope with more than 165 technical tax amendments. It will threaten estate planning for self-employed people, and it will create an intolerable administrative hassle for employers and employees taking any form of employee loan or advance.
Those are just some of the highlights, and how sad Bulloch's prophecy has come to be. The area I come from, the deep east, is well acquainted with adverse conditions, in a way. Quite frankly, plant closures and winter difficulty and hardship is not as foreign to us as it is to some of the places here in Ontario which have experienced pretty bountiful times, as have the areas of growth in the west with their oil, gas and tremendous mineral resources, areas where the expanding economy and progressive development has been tremendous. We in the deep east, having gone through ups and downs and having been exposed to difficult times, are a little more inured, but never have we seen bankruptcies increase as they have recently increased in my area, the Atlantic region. The bankruptcies in 1979, 1980 and 1981 bear testimony to the difficulty of the entrepreneur of Main Street in these provinces. The total number of bankruptcies in 1979 has gone from 1,043 to 1,457.1 gather that I cannot go into all the details, but 1 thank Your Honour for giving me a little hint that my allotted time, under the constrained rules of this debate, is almost over.
In Nova Scotia there were 607 bankruptcies in 1979. In 1980, there were 665. In 1981 there were 839. We do not even have the figures for 1982.
I want to tell a story which I hope will impress the gentlemen opposite. I will not go into all of the social concerns involved. We all know businessmen who have gone under. I hope that the hon. member, when he goes home to his riding, will meet some businessmen and small business people who have gone under. I am not saying it is all because of government, but I am saying to you, Mr. Speaker, that part of the reason is the unsurious, loan shark interest rates that this government, after five years, still pretends will solve the problem, but which have created part of the problem. There is no doubt about this, and this is how I will conclude, because I have been trying for three days to ask a question of the Minister of Consumer and Corporate Affairs (Mr. Ouellet) concerning something called metric.
A blind constituent of mine came into my office this weekend, led by his wife who can see. He told me that he had been visited by the inspector from the Department of Consumer and Corporate Affairs who told him that, unless he converts his little scale in his little grocery operation in the basement of his house by the end of June, which is the cut-off date for that area of Nova Scotia, not only will he be fined "X" hundred dollars for every day past the deadline for conversion, but that he will also, in time, be sent to jail. This is a true story. I am trying to get the eye of the Speaker to ask the Minister of Consumer and Corporate Affairs, without arguing the whole issue of metric, why, in the name of compassion and common sense, there can not be some exceptions and some flexibility to a program unilaterally imposed on all Canadians shown to a blind man. This man has never been on social welfare. He was not born blind, and he has lived through some tragic accidents. He is a father of three children who help him in the little store. I cannot even dignify the store by calling it a corner grocery store; it is a store on a hill in a rural part of my area, and the people there do not care whether measurements are imperial or
May II, 1982

metric. They believe in this individual. He just does not have the income to make that $3,000 conversion on his little scale from the carrots he grows and sells, for the potatoes he grows and sells and for the apples he grows and sells. He has not been a charge on the public purse in his life, and he told me very adamantly this weekend, "Patrick, if there is not some exception for a little"-I will not tell hon. members the word he used for his own operation, but one can imagine. It was a cellar operation. I was in the store. I drove 40 miles back in the hills to take a look at it. I could not believe it. It is not right for him to be told that by some inspector from Halifax, implementing a policy which we could not debate and which we do not have time to debate tonight. There must surely be some exception to this universal blanket.
Mr. Speaker, you have been kind, and I cannot continue now, but it was interesting today. Today the HUDAC people were in town. Again, to refer to small businesses and businesses which are going under in my area, businesses which are involved in the housing program and in the lumber trade, they involve McMasters and Sons and McCulloch Building Products, these are fine, established firms which have gone under. Why? It comes back to that refrain of interest rates. I hope that when the Minister of Finance comes back from Paris, he will come together with officials of the Treasury Board. Perhaps members of the Liberal caucus will go home to their ridings on the weekend, like the opposition "cauci" do, to meet their constituents. I say "cauci" advisedly, but it is a plural of the word caucus. Unless hon. members get away from Ottawa, and go back to the Main Streets from whence they came, they will not fully appreciate that there is a really serious economic problem out there which is affecting the entrepreneurs of this country. I hope the debate will stimulate a little action in a much needed area.


Some hon. Members:: Hear, hear!


Mr. Pierre  Gimai@: Well, Mr. Speaker, you seem to be doing my hon. colleagues on the opposite side a tremendous favour, because as soon as I get up to speak, all I can hear is applause from the other side. I must thank you, Mr. Speaker, for giving them this golden opportunity, and I hope they will appreciate what they are going to hear. But enough said about this. Being given the floor after the member for Annapolis Valley-Hants (Mr. Nowlan) reminds me of one occasion two years ago, when I also spoke after the hon. member, during the pre-build debate, and I must say it is always interesting to listen to what he has to say, and to speak after him in the House, because he is very vivid in his speech, has a good critical sense and is an excellent speaker. Unfortunately, he has very little to offer in the way of positive proposals, as I said before, and I say it again, Mr. Speaker. During his years on the opposition benches, the hon. member has made criticism into a fine art and demonstrates this eloquently every time he takes the floor in the House.
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However, when I was listening a few minutes ago, I was thinking that the name of the official opposition party is admirably suited to its members. How did they manage it? If that party had been named differently, it would have had to be rechristened the Conservative Party, because the more I listen to them, the more I realize that anything that smacks of innovation is discarded straight away. Last year, for instance, it was impossible to get them to agree to change the name of Dominion Day to Canada Day or Fete du Canada. Impossible-it was just too much for the Progressive Conservatives to take this tremendous step. So, we are still stuck with Dominion and Steinberg.
In his speech just now, the hon. member mentioned the multinationals which are often controlled by friends or supporters of the hon. members opposite, and when I hear about small businesses that are having trouble with the metric system, I wonder how our children, who are learning the metric system at school and nothing else, are going to deal with the world of their parents, namely ourselves, who learned a different system. If we do not make the effort some time to convert to the metric system so that we can help our children get ahead, what is going to happen? These children know that since chemistry has always been done in metric and most countries, including the U.S.S.R., and in fact, entire continents are using metric measurements, it is because in the future, everything is going to be done in metric.
To get back to the subject of this debate, which is the economy and small and medium-size businesses, I can say that there are a lot of small and medium-size businesses in my riding. They are extremely important for the economy of my region and are now experiencing some tremendous problems. It is true, Mr. Speaker, Where do those problems come from? They are due to various reasons. In the first place, high interest rates surely make life difficult for the small- and medium-size businesses. Working capital and operational charges are costlier, borrowing power is reduced especially as sales have decreased. Nevertheless, it remains that to survive at present, those companies must seek help from the various government levels, among which the government of Canada, which has several programs that I will not mention because the minister responsible for small- and medium-size businesses listed them this afternoon.
There are other problems, and I was pleased a while ago to hear the member for Annapolis Valley-Hants say that part of the problem lies at the national level. It is true. However, he said that the problem is also due to various factors, among which are economic conditions. However, in my area of Quebec, one factor is even more significant than elsewhere. You know, Mr. Speaker, that Quebecers are privileged. We have a government which has been trying for a few years to make us believe that we are different from everybody else.
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Moreover, there are some slight differences, let us admit it, among others: the Quebec deposit fund. Most Canadian provinces are integrated and Canadians belong and contribute to the Canada Pension Plan. In Quebec, we contribute to the Quebec Pension Fund, that is the province of Quebec collects a huge amount of several billion dollars which it collects from year to year from Quebecers and gives back to them when they retire. That enables the province to invest for various purposes in industry in every conceivable way as owner or shareholder on the real estate market. This brings me to tell you about a strange philosophy which has developed in Quebec. I mean especially the philosophy expounded for quite some time now by Minister Bernard Landry who is said to be one of the shining lights of Quebec's economic policy. Now, Mr. Landry has a vision of Quebec, or rather, as he sees it, there are two Quebecs: there is the Quebec of Montreal and vicinity, and then, there is the hinterland, or those areas we come from-


An hon. Member:: The Lac Saint-Jean area!


Mr. Pierre  Gimai@: Yes, Lac Saint-Jean, Lotbiniere; there are quite a few people there, those who supply lumber, those who supply hydropower, in short those people who supply quite a lot of things to the people of Montreal. Now, that is the vision Bernard Landry has of Quebec.


An hon. Member:: Do not forget La Beauce!


Mr. Gimaiei:: La Beauce also; it slipped my mind because 1 come from there, Mr. Speaker. Mr. Landry is telling us that Quebec is the Eden of small and medium businesses. 1 scratched my head and said: Yes, it is true; there are many small and medium businesses in Quebec. I have noticed that too, naturally, having been executive assistant to a federal minister, an MP and even an inspector for the Minimum Wage Commission; I visited small and medium-sized businesses, those that did not have collective agreements. I realized there were very many of them. I told myself: whatever else he may be, our minister for the economy is doing all right; he is aware there are many small and medium-sized businesses. Pretty good of him. he is aware of that. 1 then carried his reasoning a little further. Instead of telling myself there were many of them because Quebec is a real garden of Eden, I started wondering why there were so many of them. I looked around to see whom they were working for. In most cases, I came to the conclusion they were working for bigger businesses. So 1 told myself: I must go around the various regions. I looked around and what did I see? In the Saguenay-Lac-Saint-Jean: a garden of Eden for small businesses? What does this really mean? It means ALCAN, it means Consolidated Bathurst, it means Abitibi Price, it means Domtar, and Donohue and all the other big companies. On the North Shore, what does it mean? The Iron Ore Company, Quebec Cartier Mining, Quebec North Shore and so on and so forth. I said: Dear God, we will go up and see what goes on in Abitibi. In Abitibi, there were Noranda Mines and several other mining corporations
which have established themselves there. Would there be an area, the Gaspe region maybe, where there would be no large corporations? The first thing I saw when I looked at the Gaspe region was Abitibi Price, and a little further, it is the same thing again: Noranda Mines has set up shop also in Murdoch-ville. So, there are large corporations everywhere in this paradise of the small- and medium-sized businesses.
Then I went by way of La Beauce. La Beauce, that must be an Eden for upon checking, I found no large corporations. Then I wondered: to whom do these people sell their production? I turned around and not far from La Beauce, I found a community called Quebec City where there is the Quebec government, a really large corporation indeed. Then, it hit me. The people from La Beauce who are clever people must have said to themselves: We are not far from the Quebec government; and the federal government has several offices in Quebec City; surely these people must buy all sorts of things they need; why should we not sell them things we make here? Mr. Speaker, there came a point when I said to myself: Minister Landry, who after all is a Quebecer, must get only part of Quebec's economic picture, for without major corporations, his Eden of small- and medium-sized businesses would not exist. Then I decided to find out whether these people were really aware of the presence of major corporations in Quebec. 1 took a look back home. One must look in one's own garden first to find cucumbers and tomatoes. Then I realized that there is indeed a major corporation, ALCAN, apparently a multinational which is a former subsidiary of Alcoa and which has now become Aluminum Co. of Canada. Then, I realized that there is an ALCAN shareholder whose name is known throughout the world.
As you know, Mr. Speaker, all companies whose shares are listed on the stock exchange must reveal and make known the names of their shareholders who are holding over 5 per cent of their shares; well, I was quite surprised to learn that ALCAN has a shareholder who is holding 5.5 per cent of all its shares and that it is la Caisse de depot et de placement du Quebec, that is to say, the Government of Quebec. So, I said to myself: If Mr. Landry has 5.5 per cent of Alcan shares in his pockets, he must be aware that there are major corporations operating in Quebec. That was not the end of my discoveries. I learned also that the Societe de developpement industriel is holding 51 per cent of the Donohue Company, in Saint-Felicien. This is again a pretty big corporation and accounts for quite a number of large mills.
An lion. Member: It is in the Roberval riding.


Pierre J.J. Georges Adelard Gimaïel: Of course, it is again in the riding of Roberval, in my region. Then, I notice the presence of REXFOR and SDI here and there and everywhere, as well as in the steel industry. I then have to wonder what Mr. Landry means when he talks about the small business paradise. What I think, Mr. Speaker, is that Mr. Landry has just realized that there are

May 11, 1982

small- and medium-size businesses in Quebec because they are not having problems. Ele had not realized this before. I shall even go further and say that no provincial government had ever done anything to help small and medium-sized businesses. It has started only recently to do so with a few grants from the Quebec planning and development agency.
Since 1968, it is the government of Canada which has been providing constant assistance to small and medium-size businesses, either through DREE, the Department of Industry, Trade and Commerce or the Federal Business Development Bank or through investment or employment tax credits, manpower training programs or subsidies from the Department of Manpower and Immigration, or various other means such as the sales services of the Export Development Corporation or EDC. This is what the government of Canada has done for so many years and continues to do. On the other hand, if anyone wants to know what the Quebec government has done for my region, I shall tell him. What I find the most revolting is to have to sit here and listen to the prima donnas opposite blow their own trumpets and boast they are working for the welfare of the people. They should not forget that I come from an area where five PQ members were elected, Mr. Speaker. We recently had the visit of the French Prime Minister, Mr. Mauroy. We took him around to see the people in Chicoutimi. We wanted him to see our francophone region. I was glad about this because I have always been proud of the French character of our province.
Our region is perhaps the true focus of French culture in Canada and it will remain so all our life. We took the French Prime Minister around to meet the people. He shook hands with everyone. We fed him tourtiere and blueberry pie and gave him a hearty welcome. And then where did we take him to? To Becancourt. We took him to Becancourt to announce that Hydro-Quebec-but I must explain the situation differently. The major shareholder in ALCAN, which has its largest facilities in Saguenay-Lac-Saint-Jean because that area is the largest aluminum producer in the world, the most important shareholder in ALCAN took the French Prime Minister to Trois-Rivieres to announce to the people that Hydro-Quebec would sell so many kilowatts a year to Pechiney, a French aluminum company that is planning to open a plant in Becancourt. In fact, what this company will do is produce aluminum with electricity which probably comes from my own area; this will mean fewer jobs in my constituency in the ALCAN plants, which are now getting obsolescent.
This ALCAN shareholder made this announcement. What happens to poor Quebec in such a mess? It is easy to imagine. Mr. Speaker, I am speaking in my capacity as Member of Parliament for the constituency of Lac-Saint-Jean. There is in my riding a town called Alma where ALCAN had 1,200 employees five years ago. There are now only 600 left, Mr. Speaker. The problem is not that a few employees were laid off
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because of a depressed aluminum market. The extraction rooms are empty, all the machines have gone, everything has been removed. The plant looks like a big warehouse. One of the ALCAN shareholders twiddles his thumbs while ALCAN closes down in Alma and this same shareholder simply announces that he will sell electricity to another aluminum company so that it can open up a plant in Becancourt. I suppose that all this is simply so that ALCAN can close once and for all in Alma. This is the economic situation in which we must fight, we the regional representatives of Quebec, Mr. Speaker. And then, these people rise and preach nationalism, supernationalism, and say: "We are different!" However, when it is time to invest money in our regions, it is a different story. The best example I can give is the famous national park of the Upper Saguenay which the Canadian government wanted to create. I am sorry to always have to compete with the region of Trois-Rivieres, but such are the facts.
At the time, the Quebec government told the government of Canada: "You can invest $60 million in the National Park of La Mauricie, but you will not invest millions of dollars in the Saguenay-Lac-Saint-Jean area. That is incredible, Mr. Speaker. What are we doing that is so terrible in Lac Saint-Jean for those people to deny us our basic right to economic survival and to prevent the government representing all Canadians from investing in our region? What is it we are doing that is so wrong, Mr. Speaker? You know the situation is truly difficult. It is also true however that this year, exceptionally, the Canadian government will spend $2,200,000 in community development projects in my constituency under the Canada Works Program. It is also true that, exceptionally, $375,000 will be spent to provide work for 251 students.
Certainly I would like the province to do the same. But no way! They wipe out jobs. Do you know what the big question is in Quebec right now? They keep asking whether they should build the mast over the stadium or do away with 17,000 jobs. But this is not the way Quebecers are informed. Quebecers are told: We may build the mast, or then we may not. Unions are told: Accept pay reductions, or else we are going to fire 17,000 workers. Mr. Speaker, that is not the real question. The real question is: are we going to build the mast or fire 17,000 people?
We shall see where the Quebec government stands. Whether they are a socialist government, as they have been saying for so long, or a fascist government. If they are a fascist government, they are going to build the mast and fast, and fire 17,000 people. If, on the other hand, they are a socialist government, they will say: Maybe, if we keep those 17,000 people in their jobs, they will bring in enough taxes for the mast to be built. I do not want to push the argument too far, because often there is a lack of reasoning on economic matters. On constitutional or other matters, they are never at a loss, but when it comes to economics, do not ask too much in the way of ideas, because


Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, it is certainly a privilege to be able to speak on the motion presented by the hon. member for Cambridge (Mr. Speyer). I
have listened with interest to many of the speeches today. I was quite impressed with the speech of the hon. member for Scarborough Centre (Mr. Kelly) who spoke before dinner. I hope a good many of his Liberal colleagues will pay attention to his remarks, some of which will probably not be popular with them. In fact, one of his remarks will not be too popular on either side of the House.
The issue before us today deals with the plight of the Canadian business community, in particular small business. The word "small" is accurate but is very misleading at times. Taken individually, each business may be considered to be small, but as a group and through the impact of this group on the economy, the more appropriate word would be "large".
Let us consider these facts for a moment. Slightly more than 90 per cent of all businesses in Canada can be classed as small businesses. Firms with fewer than 100 employees and under $5 million in annual sales account for more than $40 billion in the Canadian economy and for 20 per cent of the gross national product. Small business employs 42 per cent of the private sector work force in Canada, or nearly nine million people. Small business contributes one third of the commercial and industrial output of our economy. Nearly 60 per cent of all new jobs created in the country this year were created by small business. Small in this instance is obviously large.
The problems being faced by small businesses in Canada today are equally large. According to figures issued by the Department of Consumer and Corporate Affairs, last year business bankruptcies in Canada rose by 22 per cent. Of some 8,055 tabulated bankruptcies, the majority were small businesses. This total does not include Firms that went into receivership or those failures where the owners just sold out their equity and closed shop.
There is an instance in my own village of Burks Falls of a business that had been established for a good number of years. It had a firm lease for ten years on the building it occupied at a reasonable rent. When the lease came up for renewal and there was obviously going to be a big increase in rent, the owner just sold the stock out and closed the doors. This excellent business location and store is now vacant. This is the sort of thing that is taking place in a great many communities across the country where the main streets now have two, or three, or sometimes more vacant premises.
A week or so ago the television news carried an item about two towns fairly close to Ottawa and showed pictures of the main streets with five or six stores closed down. That is a sizeable number in any town of 5,000 or 6,000 people.
The business community itself has set the rate of bankruptcies even higher than the figure I mentioned. Experts say that three to four times the number occur that is stated by the government. In fact, they say that last year an estimated
30,000	businesses went under. Those monitoring the activities of small business place the blame for this problem squarely on the doorstep of the government and on the government's high interest rate policy.
May 11, 1982

Some members who spoke previously mentioned the high interest rate policy of the government. A few years ago anyone charging today's interest rates would have been accused of loan sharking and would have gone to jail. 1 am well aware that a great many depositors in Canada are reaping the benefits of high interest rates, but by and large this is not good for the economy.
Small firms are almost unanimous in their contention that many of the now defunct businesses would have survived if interest rates had been lower. But the government will have no part of that argument. We have heard time and time again that the government is adamant in its belief that its policy on high interest rates is good for the nation.
A lot of good it has done the nation, Mr. Speaker. Efow good can it be for Canada when thousands of firms go belly up? How good can it be for Canada when millions of Canadians are unemployed? How good can it be for Canada when our national productivity is suffering beyond belief? How good can it be for Canada when our ability to compete in the international marketplace is put in jeopardy? Good for nothing, that is how good it is!
When large businesses get into trouble the government is quick to chase its tail in search of solutions. This inevitably means spending money, and then more money. But when small businesses tumble one by one, the government gives one of its infamous shrugs and looks the other way.
The government should realize by now that large businesses and industry depends very heavily on the small firms to supply specialized goods and services. Because of their size, small businesses can ensure quality control and the kind of detailed knowledge that is required by larger firms.
When small businesses fail, the impact is naturally felt by large business, and conversely, when large business fails or even reduces production, the effect on the smaller, support firms is obvious. When any business, large or small, ceases operations, the impact on the local and national community is horrendous.
We are all very well aware of the domino theory. A business shuts its doors and the owners and employees are out of work. These people, now having to resort to unemployment insurance benefits or social assistance, have no extra money to spend in the community. Other firms, including those that supplied the bankrupt business, soon begin to suffer set-backs and eventually have to lay off staff of their own. The cycle is predictable and deadly.
Not only does the government turn a blind eye to the situation of small business with respect to the economy, it adds to the problems in its own dealings with small business.
I see the Minister of Supply and Services (Mr. Blais) in the House tonight, Mr. Speaker, and I hope he is listening. I certainly commend his department for purchasing goods and services from small business, and I hope that trend grows. I see the minister shake his head the right way.


Mr. Blais:: Up and down!
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Stan Darling: May 11, 1982
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the trains stopped. They created the Canada Post Corporation, and our stamp cost nearly doubled and will undoubtedly go even higher. We are well aware that this has added greatly to the burden of small-business men because a great many of them use the mails. In fact, the mails are absolutely essential for the survival of a great many of them, and some have gone under. The government created a National Energy Program and our gasoline and home heating costs rose astronomically. At a time when there is a glut of oil and the price of gasoline is considerably less in the United States than it is here, and they do not have the supplies we do, it makes you stop and wonder. Of course, we are all well aware of the Alsands deal falling through, and of course the Alaska pipeline was pushed down the road for two years and maybe even more. What the legendary King Midas touched turned to gold, and what this government touches seems to turn to ashes.
It would not be half so maddening if those responsible were digging into their own pockets to pay for the mess they create, but not a thin dime of their own money is used. It all comes from the taxpayers of this nation. In their desperation to convince the beleaguered taxpayer that the money they collect is for the good of the country, they spend even more money, thousands of dollars every day, on propaganda. Or, as the government calls it, advocacy advertising. "Canada Works" proclaims a billboard; "It makes sense to me" is the advertising copy in the newspaper. I can assure this government that for those Canadians who still have a job, the government's economic policy makes no sense at all.
What has this government done to small business in the last year or less? It has dealt a crippling blow by raising postal rates 76 per cent, and some businesses have had to fold. There have also been changes in the budget restricting capital cost allowances. The dividend provision has been tightened up. The government has crippled the automobile industry, with many dealers going bankrupt as a result of restrictions on company car leasing, just to name one cause. Just last week one of the largest, if not the largest, automobile dealers in Ottawa went bankrupt. Insurance restrictions, which affect many small businessmen as well as many policyholders, have the whole country up in arms. I admit the minister did say he was taking a second look at that. Let us hope it is a good look and there will be a sensible decision to leave well enough alone in that particular case.
Then, Mr. Speaker, there is much talk about the Small Business Development Bond which was to be an absolute bonanza for the small businessman. It was going to help them out of the mess they find themselves in due to high interest rates. I give full marks for the fact that it was broadened to include individuals and partnerships rather than limited companies; that was a step in the right direction. However, for that one step forward, there were about ten steps backward when the new regulations were put in and the bond was no longer available to successful entrepreneurs who wanted to enlarge their operation and probably hire more people. No, the only one eligible now for the Small Business Development Bond is someone who lives in that mythical town of dire straits. Then, when they reach that particular point, they go to the bank and in only a very few cases will the bond be approved. If
there is any doubt at all in the minds of the bank, it is curtains for the businessman and he will be turned down. Those of us who are Members of Parliament, from all sides of the House, I am sure, have interceded on behalf of our constituents in similar circumstances. On several occasions I have talked to bank managers, and of course many of them were not too familiar with this bond. Bank managers in small towns did not know too much about it. We talked to some officials higher up who said, "Oh, yes, there is money there to help them but we are restricted because of this new clause that the Minister of Finance put in which says that a reasonably healthy business is not eligible for the bond." That, to me, is absolutely ridiculous.
Another thing which is a millstone around the neck of many small businessmen is this mandatory metric conversion program which is creating great hardship for individual merchants and entrepreneurs across the country. As was mentioned by the hon. member for Annapolis Valley-Hants (Mr. Nowlan), there was one particular case where if the businessman did not convert by the end of June, he was liable to a fine of up to $5,000 and a jail term of up to two years. This in a great, free, democratic country like Canada, Mr. Speaker, makes you wonder what kind of country we are living in. The Minister of Consumer and Corporate Affairs (Mr. Ouellet) said there were just a few crackpots across the country and members of the opposition who were stirring up a tempest in a teapot.
A few weeks ago a petition was brought in with 122,000 signatures on it, and the minister, in a weak moment, said he was going to write each one of those individually. I wonder what hours he is working day and night to do that, and how many of those 122,000 letters have gone out under his signature. He stated that categorically, and a good many of us have been telling our constituents to write to the minister at the House of Commons, no postage required. I hope he is inundated with mail. If the minister had used some common sense and left it up to individual companies and businessmen to decide for themselves whether they wanted to go metric, there would not be this hue and cry across the country. Thank you, Mr. Speaker.


Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, I am very pleased the hon. member for Cambridge (Mr. Speyer) has chosen this topic today. It is always interesting to note that the issues of main concern to Canadians are introduced by this side of the House and very seldom, if ever, from the opposite on the government side of the House. Therefore, I appreciate the opportunity which the hon. member for Cambridge has given to us so that we can speak about a very important sector of Canada, a sector of our economy that is absolutely crucial. The hon. member identified that the small business community of Canada is taking a particularly hard beating these days. Who are these small business persons? What is this small business community to which the hon. member from Cambridge refers? Of course, the small business community of
May 11, 1982

Canada refers to something like 940,000 small firms employing one, two, three and even up to 15 and more individuals, which represents about 42 per cent of the work force which is virtually Canadian-owned and controlled. They are comprised of the small shop down the street, the independent restauran-teur, the small manufacturing shop, the individual contractor, the little welding shop at the corner and the little pop store down the street. The people who run these businesses are our neighbours and our friends. They are the people who support the Boy Scouts, the Little League, the local artistic and theatre groups, the local symphonies and so on. These are the people who have a commitment to the community and to the country. They are the people who are providing 60 per cent of all the new jobs created in Canada, both in the good years and in the bad years. The large multinationals and the branch plants do not produce jobs like the small business Canadian-owned sector does. Research and development takes place in the Small-business sector. That is where creativity takes place in this country, and where research and development goes on into new areas, new products, and new types of marketing. By and large, the small business community is the mainstream of Canada. They are the people you see when you drive down the streets of large and small communities in urban and in rural areas. They are the people I like to refer to as the builders, or the present day frontiersmen. They are the people who are prepared to move out into new areas and to take risks and chances. Some people refer to this group as the entrepreneurial group. They are the ones with ideas who are prepared to risk their life savings, prepared to toil long hours to try a new idea, to try a new way of life, and to try to build and add to the Canadian economy.
What is happening to this group within our society today, the group I suspect that all of us know very well? 1 am sure there is not a person in Canada today that at one time or another has not looked forward to being a small business person or who has not dreamed about being a small business person. The small business persons are the fabric of Canadian society. They are the basis of the Canadian economy. What is happening to these people today? What is happening to this fabric of our economic society?
Primarily as a result of the policies of the government, two million Canadians are not working today. People are not purchasing many goods and services from the small business community. Full employment is the best thing that could happen to the small business community. Full employment allows everyone to purchase goods and services. It enables people to pay the prices which the small entrepreneur requires for his or her product or service. The best thing that could happen in this country for the small business sector is full and total employment, not having 2 million people unemployed, a figure that is growing daily.
Of course, the critical blow to the small business community is the punishing interest rates which this government has now perpetuated for seven years. In an effort to combat the other enemy of the small entrepreneur, and I am speaking about inflation, the government says, "Be patient because the high
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interest rate policy, given time, will result in a reduced inflation rate." But the question I must ask is, how long must we wait? This program was introduced in 1975. That was seven years ago. The inflation rate today is as high as it was when it was introduced. Interest rates have literally killed small businesses across the country.


Mr. Fulton:: Supported by Joe Clark.


Nelson Andrew Riis: It is an interesting point that my colleague from Skeena says that this was the policy which the Leader of the Opposition (Mr. Clark) said the other day in an interview with the press is the best thing they as well could come up with. But I can tell you it is not the best thing we can come up with. We say interest rates have to come down and they have to come down quickly. The sooner the better, not only for the small business sector but for the people of Canada.
Then, of course, there is the budget. The budget was supposed to do good things for small business. I remember the government mailing out 200,000 copies of a brochure which was meant to convince the small business sector the budget was good for them.


Charles Lapointe: There were 250,000 mailed out.


Nelson Andrew Riis: I stand corrected, there were 250,000 mailed out which tried to convince the small business community that this was the best thing that had happened in a long time, that this government was taking action, was concerned and was providing leadership for that sector of the economy. But nobody believed it. The best way to get the small business sector encouraged in this country is to provide sound economic leadership. You do not have to send out a brochure to try to convince people of all the good deeds. These people are intelligent. They know when good things are happening in the country on their behalf. Quite frankly, I think they were offended by the 250,000 pamphlets that were sent out as a result of access to the so-called security of the income tax lists of the country. Tne Government of Canada sent those out.


Charles Lapointe: How many returned the questionnaire?


Nelson Andrew Riis: We talk about some of the things that are happening to the small business sector. They are not very pleasant. I suppose the most difficult thing that has happened today is the fact that the small business sector is losing faith and confidence.
When you look at the 30 per cent increase in bankruptcies in the first quarter of 1982, that is 37 per cent over last year, which had an exceptionally high number. Therefore, we are talking about thousands of individuals who have experienced the pain of bankruptcy. For every person who experiences bankruptcy-and I am talking now about the first part of this year, which amounted to 3,651-there are many, many more who have experienced the agony of the receivership procedure, let alone thousands of small businessmen who have simply closed their doors and walked away from their dream, their vision of a future for themselves, their family and loved ones.

May 11, 1982
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This government has literally strangled the life out of the small business sector. It has dashed the hopes and the dreams and the future of these small business people. That is the kind of reason that encourages the government to send out pamphlets, trying to convince people that all is well.
The decay of the small business sector is occurring more rapidly each day. Who stands up for the small business sector? The New Democratic Party has had its members up on their feet as often as possible in this House and in committee trying to convince the Minister of Finance (Mr. MacEachen) and the Minister of State for Small Businesses and Tourism (Mr. Lapointe) that changes must be introduced quickly. I admit the Progressive Conservatives have risen in their places to speak out on behalf of small business as well. The Canadian Federation of Independent Business has done whatever it could to lobby against the insanity of the November 12 budget and the monetary policy of this government. The Canadian organization of small business has raised its voice in hearings across the country and at every opportunity in front of the Minister of Finance. The association of business and professional people of Canada has spoken out for its membership. That association has said "Abandon the budget, Mr. MacEachen. Abandon the budget before the small business sector in this country is essentially eliminated." I will have more to say about that in a moment.
But I think it is fair to ask what can be done. Often we are criticized on this side of the House for simply trotting out a list of problems and disappointments and concerns we have, without offering solutions. Let me suggest a number of solutions that would assist the small business community.
First, the government should introduce a program that will result in a reduced interest rate for a Canadian borrower. There is no recovery program that can be introduced that is worth anything in terms of any economic recovery without a reduction in those particular interest rates. I hope that when the Minister of Finance returns from his discussions with his colleagues in Europe he will have news for us. Also I hope he will have admitted that inflation is being fuelled by high interest rates and that the way to fight inflation is first to begin a process of reducing those rates.
The need for working capital is something of which the Minister of State for Small Businesses and Tourism is well aware is a difficulty. I encourage him to work with his colleagues to introduce changes to the Small Businesses Loans Act which would provide an opportunity for working capital, particularly in critical sectors that the Government of Canada could identify for support. I beg the Minister of State for Small Businesses to lobby his cabinet colleagues to bring the development component back into the Small Business Development Bond.
This was a tragedy which the Minister of Finance laid upon the small business community of Canada when he took development out of the small business bond and said, "Here is a welfare program for small businesses." When the development aspect of that particular program was removed, the
dreams and hopes of many small business people was also removed. The government should put development back into the small business bond.
Where is the small business financing review? We have now waited about two years. The minister of state has promised that it was about to come with recommendations on how to improve the situation for small businesses in the country. Again I urge the Minister of State for Small Businesses to provide the small business community of Canada with that review so that it will see what are some of the alternatives. I hope he asks for input from the small business community as soon as it is made public.
Also I ask the minister to co-operate with the Minister of Finance and to meet with the chartered banks of Canada so that they can do what they say they would like to do with the small business bond. This was to be a program to assist needy businesses and needy farmers. All of us as parliamentarians know that small business and farmers are simply unable to take advantage of the program. The banks are refusing to cooperate, with perhaps one exception of all banks operating in Canada. The ministers must approach those banks and say that it is mandatory for them to co-operate on this particular program.
Also I ask the minister to consider altering the Small Businesses Loans Act to provide emergency short-term borrowing opportunities for businesses having difficulty. There are some real emergencies out there. When we talk about thousands of bankruptcies in the first part of this year, let alone receiverships and closed businesses, there are some emergencies which must be dealt with quickly. I suspect the Minister of State for Small Businesses will be appearing before the House shortly, asking for an extension of the Small Businesses Loans Act for at least another year. Let us look at an amendment to that particular act to provide emergency capital for the small business sector.
What about the procurement policies of government? We are r.ot holding our breath any longer waiting for the megaprojects, but there are projects which are proceeding. Let us have effective procurement policies, which will assist the small business sector. The existing procurement policies do not necessarily assist the small business sector or Canadian manufacturers but often provide for the foreign manufacturer who has an outlet in Canada as a source into megaprojects. Of course this is something the government could change very quickly.
Let us reform the Federal Business Development Bank. One thing which puzzles the small business community is what assistance is available in this area and that area, if any. Of course, small business people are often shunted from one department to another, from one sector to another. It is very difficult for the small business person who is out there struggling from dawn until dusk to make a few dollars to try to keep his business going. He does not have days on end to spend running around from government department to government department trying to find out what programs are available.
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Therefore, the government should consider remodelling the Federal Business Development Bank to make it more sensitive to the needs of the small business community and perhaps to act as a clearing house for at least all federal government programs, if not federal, provincial and local government programs. It could be sort of a one-stop shopping centre for small business people looking for programs which might be able to assist them.


Charles Lapointe: I announced it this afternoon.


Nelson Andrew Riis: There is need for more venture capital. These are difficult times, but despite the difficult economic climate in the country, individuals and firms out there are expanding and trying new ideas in the telecommunications, transportation and exploration fields. They have difficulty obtaining much-needed venture capital or high-risk capital. Of course, this is where the government could play some role in providing assistance.
We found out today when inquiring into bank profits that some of the chartered banks of Canada have a significant portion of their capital lent out to only one company. In some cases it is as high as 30 per cent, 40 per cent, 50 per cent and even 75 per cent. There are some exceptions where 100 per cent of the capital in certain banks is lent to one business. We must ask how much money is available to small businessmen, farmers and persons seeking mortgages, if 75 per cent is lent out to one particular company. It is a very serious situation, something of which the Government of Canada should take notice and take steps to limit. The Inspector General of Banks indicated a guideline of 50 per cent to only one company, whereas in the American banking system the ceiling is 10 per cent to one company. This is the kind of situation at which we must look very carefully in order to provide an opportunity for funding and financing to the small business sector of the country.
Another area in which the government could play a much greater role is assisting the small business sector in marketing its products overseas. I understand the national trading corporation is now on the backburner and is unlikely to see the light of day. Perhaps the government could use that kind of model to provide an opportunity for the small business sector to market its goods and services in new and exciting areas. It is very difficult for the small businessman in Clearwater, British Columbia or in Chase, British Columbia to attempt to open up new markets in the Pacific Rim or to attempt to open up new potential sales in another part of Canada, which might be thousands of miles away. If there is some mechanism which the government could introduce to encourage the development of new marketing opportunities, it would certainly be an appreciated gesture in the small business community.
There are many areas upon which one could elaborate as to ways and means in which the federal government could assist the small business community. It could send out a signal to the community saying that it understands the role it plays and that it appreciates its role. The government could say, "Here are
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the ways in which we plan to assist and nurture you in developing and expanding your enterprises." But the government stands back and throws up every hurdle it can, trying to create an atmosphere of discouragement, disappointment, frustration and anger. This is not what the country requires. The small business community requires leadership to provide a sound and stable economy. That is the best news which the small business community could receive.


Mr. Paul E. McRae (Thunder Bay-Atikokan):: Mr. Speaker, this is the third occasion in perhaps a week when I have had an opportunity to speak on related subjects, in each case arising out of the suggestion of the Tory opposition that the government was inadequate in all its policies and almost always pointing to the budget as the single cause. I have heard very little in terms of any real suggestions from the Tory party except to get rid of the budget.
I have talked with many small business people who are very unhappy about certain provisions in the budget. Some people worry about some provisions; other people worry about other provisions. But I do not know of any small businessman who said to me that the budget is the real problem. The small businessman who is having real trouble is not in trouble because of the budget. He is in trouble because of interest rates and the general world economy. He rates this first, and he rates second the difficulty he is having with the Canadian banking community. Only as a third cause does he come down to the budget. Basically, if the small businessman is having trouble he is not paying taxes. If we see the budget as the main problem, how can we solve it when the small businessmen say that the budget is not the centre of the problem?
When the opposition was in power for nine months, it adopted, believed in and subscribed to a notion which was put forward by the large business community, the banking community, the Chamber of Commerce and others, that high interest rates were necessary in order to reduce inflation. Monetarism was the situation we were in and we had to stay with it.
I recall asking the hon. member for St. John's West (Mr. Crosbie), who was the minister of finance at that time, why our real interest rates in Canada, that is the prime rate minus the inflation rate, was 5 per cent or 6 per cent when the American interest rate was negative. He said that we need high interest rates because our inflation rate will go up. He said that in the House. 1 have not heard anyone in this party suggest in any fashion that high interest rates must come down even though the bankers are now suggesting this. For instance, the president of the Bank of Montreal stated that two weeks ago.
I have some difficulty understanding the general theme of this debate because it seems to deal with the problem at a rather superficial level by singling out the budget as the main problem. The opposition seems to suggest that if the budget is defeated all the problems would be solved. I cannot see that as an answer.

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The solution which was suggested by the NDP was that we could have lower interest rates by implementing a form of exchange control which would prevent money from leaving the country. I do not believe that is a feasible proposition.
I would like to comment on a proposal which should be carefully considered. It involves letting the dollar drop to 75 cents, which I think is essential and should be done. However, speaking in broader terms, I would like to discuss what I would perceive to be happening today. During the late sixties and particularly during the seventies we had learned to expect as almost normal an increase in growth rates in Canada by 5 per cent or 6 per cent, such as was happening in many other parts of the world. Although the growth rate was very high in that period Canadians and people in other countries of the western industrialized world accepted it as a normal occurrence. Subsequent events, such as the general energy situation with the long and short-term shortages, the cost of oil from OPEC nations and environmental problems, made this type of growth rate almost impossible, to the point that we cannot expect this growth rate to happen in the future. Now we can only expect moderate growth rate as a reasonable possibility over the next ten or 20 years.
I recall that during the mid 1960s, when I was a principal of a high school in Thunder Bay, we were experiencing a very large growth period. There were many students coming to us, which required the construction of more schools, and there was a constant demand for teachers. We were attempting to hire teachers regularly and it was a major problem to get qualified people in our schools. I remember that the school board indicated to me that it wanted to double the size of my school-which had approximately 1,200 people-in order to accommodate the students coming into the system. Even at that time I thought that small was beautiful and I strenuously objected to having my school enlarged. I attempted to convince the school board that I did not want the school to become any larger.
To my dismay, I found that the demography was such that we were very rapidly seeing a decrease in the number of students coming in. This caused me to reflect upon the situation. In 1970, the supply of pupils to high schools in Ontario suddenly dried up. The demand for teachers and the tremendous growth in the system no longer existed. We should have foreseen this possibility and dealt with it as a country, as a province, as a city and as a school. As was described in a book called "Limits to Growth", we were in a time when high schools in Ontario suddenly found that not only was there no increase in the number of students, the number had, in fact, started to diminish. Teachers were angry because they felt the state was out to get them. There were strikes and many other problems, which caused tension in the school between teachers and the community. This situation lasted from about two to four years. I came to this job in 1972, but this tension persisted until 1976. Suddenly it dawned on the teachers and others involved in the system that this was not a plot but was actually happening. The growth rate which they had grown to expect,
of a 7 per cent to 10 per cent increase in students per year, was no longer there.
I believe that the chagrin, tension and other reactions of people in my community and many other communities was totally avoidable. When I looked back at that situation I thought that I was fortunate in foreseeing the end of this demographic growth, albeit accidentally. I thought that there must be some other approach which could have been taken to alleviate the end of this growth era which would have been better than suddenly ceasing school construction or cutting teachers back when you were attempting to hire them six months previously. I figured that there was a much more sensible way to approach this problem.
I recall considering in the early 1970s such things as worksharing. For example, if we need fewer teachers, instead of firing them and cutting back we could have a certain number performing particular functions on a full-time basis and we could hire some teachers on a part-time basis and have a phase-out retirement plan at the same time.
What I was attempting to do was to understand the nature of this very massive change which occurred to the people in that community and many others. This is small part of the whole picture, but I submit that the entire problem we are facing today was predictable in 1976 when our Prime Minister (Mr. Trudeau) was ridiculed for suggesting that this was, in effect, what was going to happen, that there would be some very major changes in our social structures which would cause us to do many things which we would not be very happy about. There would be much chagrin and strife in our society. When the Prime Minister predicted this, he was almost booed out of the country because it was very disturbing to say that the free market system was not working.
It was unfortunate that that particular wording was used because everyone singled out that particular area. The House was in a great state of confusion because the Prime Minister has said that. We should have listened to what he said at that time because that is what is happening today. It is unfortunate that the factor which has slowed things down or has brought about much of this chagrin has been high interest rates. I can certainly sympathize with those people who saw monetarism as one approach to the problem. Of course, one of the problems of the modern era and one which we have to learn to live with is the fact that there are not simple answers and that macroeconomics do not work. It was formerly very effective in the sixties. One could say that the Keynesian theories work well. If they did not work perfectly, it was because we did not time them properly. But we can basically stimulate the economy by fiscal arrangements and some minor monetary arrangements. We can either slow it down or stimulate it. We are fairly effective at it.
As I say, the only reason we failed, or were not as effective as we could be at solving some problems, was that the timing was not right. But there was a workable system. However, these solutions are not working any more. We have stagflation,
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which is a contradiction in itself, and we have the use of the monetary system which creates more problems than it is worth. All of this is going on, but I maintain that we are in a new era and those solutions just do not work. That is why I do not understand why people are so critical in saying that the government must resign if it tries something which does not work. It is because there are no simple answers. We are living in a very difficult, very fragile, strife-torn era. It is not easy to govern at this point and we will have to move in several different directions.
I am suggesting that I do not like high interest rates because they are indiscriminate. They may not affect me because I happen to have a 25-year mortgage on my house, but someone else who has a five-year mortgage may, all of a sudden, find that his interest rate has risen from, say, 10 per cent to 17 per cent, 18 per cent or 19 per cent, doubling his mortgage payments and hitting him very hard. If something else happens, for instance, if he loses his job, then he could very well lose his home because he does not have sufficient equity. Therefore, there are some very massive problems affecting people, and they are indiscriminate.
In the period between 1970 and 1976, I would have liked to have seen an easing of the school problems so that they would not turn into a complete revolution. In 1976, the Prime Minister and others were ridiculed for their views as to how to ease these problems, but these views should have been considered by others.
In the two or three minutes left to me, I very strongly suggest that we should adopt the policy being followed by the Minister of Finance (Mr. MacEachen), which is to push very hard at the summit for some real relaxation in the U.S. interest rates. Of course, at the present time the American real interest rate is ridiculous. It is about 14 percentage points. Ours is about 6 per cent. This is one way that we must move. Certainly, what the Americans do is very important. However, I suggest the other way is to consider very seriously the study commissioned by the Financial Times and announced about three weeks ago. It requested Data Resources, Informetrica and the Conference Board to find out what would happen if the dollar were pegged all of a sudden at 75 per cent. The results were quite interesting. There were several approaches to their findings, but their basic conclusion could be summarized in the idea that somewhere along the line we would likely have a 12 per cent prime bank rate, we would likely create about 100,000 new jobs and we would likely have an increase of about 2 percentage points in inflation. I am not suggesting this is something we should do or that we should wing low if we do not have to.
We must put enough pressure on the U.S. government. When 1 refer to the U.S. government, I do not simply mean the Reagan government. I am referring to support from those other Republicans, and certainly the Democrats, who find Reaganomics to be an extremely unworkable system. I think we must put pressure on and support those people who are also moving in this direction in the United States, because the U.S. government is in very bad shape. There are some major things happening in the United States, particularly in the area of
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disarmament, and it is affecting that government. It is quite possible that the government will have to reduce its defence spending for many reasons, and one of them would be to reduce its deficit. Do not forget that when the U.S. deficit of $130 billion or $140 billion is compared to our deficit on the ratio of 10 to 1, it is really about twice as drastic because the American savings rate is about half the Canadian savings rate. That makes a very large difference when considering a deficit of $140 billion. Our savings rate over the decade has run about 10 per cent or 11 per cent, while the American rate has been about 5 per cent or 6 per cent. Therefore, a $140 billion deficit, even though it is only ten times our deficit, is significantly more dangerous to the U.S. economy than to our economy.
If we are not successful in the next month or two or three, and if President Reagan and his government refuse or make no effort to lower interest rates, and if the Federal Reserve Board does not move on the situation at all, then I suggest that we must try to move independently. I do not think we can do anything with exchange controls as the two economies are too closely related. We must let the dollar drop.
I think there are other things we must consider. It seems to me that it is very important in our society today that we carefully ease into this different period to which we are moving and that we ensure that the people in our society who are most harmed by high interest rates and other problems are protected. We as a government must be more solicitous toward these people. We must find ways to ensure that people can get work.
I strongly commend the efforts of the Minister of Employment and Immigration (Mr. Axworthy) who has embarked very seriously on a program of work-sharing. When it is not possible to create the jobs that our society would like or needs then it may very well be necessary to share the work available among a much larger group of people.
I could go a long way toward discussing work-sharing because I think work-sharing has much to do with productivity. Most areas in which there is work-sharing have shown great increases in productivity because people tend to be more productive over a shorter period of time. I gave a long speech on this in 1976 or 1977. To me, the work I had done indicated that this would be a very successful approach to the entire problem. I am saying that we must do some things which are quite different from the kinds of patterns we followed in the past. I am always disappointed that the New Democratic Party is not trying to look at some of these new features which must be considered as we change from a very large-growth society to a moderate-growth society.
Therefore, in closing, I would suggest that the debate in this House might well concentrate more on the massive changes which are occurring. We must consider how the people in the country and in the world can be brought into this new era with a minimum amount of discomfort.


Donald Alex Blenkarn: Mr. Speaker, I sometimes wonder why this government has a minister responsible for small business at all because it is clear from the

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actions of the government since it came back to office in 1980 that it believes in only one thing, that big is beautiful. The government operates like its mandarins do. Its mandarins understand big business because big business and big government play in the same kind of sandbox. They operate the same way. The concepts of big business are the same concepts as those of big governments. During the period 1980-1981, a disaster befell small business. Under the government's Canadian ownership program, its nationalist ownership scheme, the banks have been directed to finance massive take-overs of business through bank borrowing. Tonight 1 want to show some of the things that have happened in terms of bank borrowing which has starved small business of funds. It has caused home owners, fishermen, farmers, small business people generally to pay rates of interest described in this House tonight as totally usurious. At some point rates of interest have been 5'/z per cent above U.S. rates, rates that no business, small or large, can carry. Certainly small business, which does not have the resources of big business, has no possibility of carrying those rates of interest.


S (2150)
[Stage Direction]
In the period since October, 1979, the end of the bank year, bank loans of over $5 million amounted to $16.9 billion. Large loans today are $39.6 billion, an increase of well over 100 per cent. What happened to relatively small loans? According to the bank statements, in October, 1979 small business loans under $1 million, which we will call relatively small loans, were $16.9 billion. After three years, with inflation running at 10 and 12 per cent, those loans now amount to $20 billion.
The banking system has been directed by the Minister of Finance (Mr. MacEachen), who is responsible for the banking system under the Bank Act, to take over all foreign companies in the country and to finance huge movements of capital. Massive bank loans have been made to large corporations which would normally go out on the market and borrow money in the stock market. However, they have borrowed with bank financing, literally starving small business, and have bid up interest rates unconscionably. The federal government, which is responsible for banking, has allowed that to happen.
Large businesses have borrowed most of the $20 billion for Canadian businesses that Canadians now owe foreigners in foreign currency liabilities. The effect has been a disastrous run on our currency.
In order to maintain any sense of parity on the dollar, over the past year we have had to pay between 2 per cent and 5 per cent more than anybody in the United States, certainly higher interest rates than most other OECD countries.
This has been a deliberate policy, which was damaging to small business by a federal government that claims, as the minister claimed when he sent out a quarter million pamphlets on the budget to small business people, and he claims every time he sends out bumf with respect to the Federal Business Development Bank, economic development loans, grant programs and various other things he has in his quiver, to show he is there to help small business. He has been organizing the
financial affairs in this country in such a fashion as to starve small business of money and force up interest rates.
What is the purpose? It is because the mandarins like the mandarins. They like to look after their own type. Over the past two years they have used the credit system in this country to damage seriously those people who want to run a store, small factory, fish plant, trawler or a farm, those people on the main streets in Canada about whom the hon. member for Annapolis Valley-Hants (Mr. Nowlan) spoke.
We know how the system operates in favour of large corporations. There have been massive borrowings by Chrysler, Massey-Ferguson and other corporations which have got into trouble. In that kind of situation, the banks somehow all of a sudden, have a non-interest bearing loan. They come to the assistance of those companies and so does the government. Somehow, somewhere, they convert some of those loans into an equity of some kind. They do some kind of reorganization, something to protect those large loans. The government helps them. However, what does the government do for the small fellow who must close or be sold out under power of sale? What does the government do when the banker tells some people they must double their collateral, provide their wife's signature, and give a mortgage on their home or the bank will close them down? Are those loans put on hold? Are they put to the side? Are these classified as non-interest bearing loans? Are the loans negotiable? Not really. These small businessmen do not have the clout. We have a situation where the government has not taken its responsibility seriously with respect to interest rates and the way lending is carried out to ensure the total community has an opportunity with regard to the resources, savings and other things that should be available to it.
I was hoping to have more time to speak about the budget. The minister said he sent out a quarter million pamphlets saying how wonderful the budget was for small business. We know the answer, and we have known it ever since budget night, November 12.
A 12'/2 per cent tax was placed on dividends. Capital cost allowances were cut in half. A sale or exchange was a deemed sale or purchase for cash. Capital gains continued to be treated as a capital gain, even though most of the gain is inflationary. We saw what was done to the Small Business Development Bond. The program was gutted. No businessman I know of who did not already owe money to the bank has been able to take advantage of the new small business bail-out bond, the welfare bond authorized in that budget.
There has been no effort by this government since taking office to come to the aid of small business people and make capital more available, keep interest rates down and provide an incentive and an opportunity to grow and build.
This country was built on small business by people who were entrepreneurial. They went out and did things. They created. These people were imaginative. They worked 16 hours a day, seven days a week. They mortgaged their homes and borrowed from friends and relatives just to get an operation going. Many times they did not succeed. How could they succeed when the
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government deliberately organized the financial affairs of the country so that they have had it?
Mr. Deputy Speaker:: Order. It being ten o'clock p.m., it is my duty to inform the House that pursuant to Section 11 of Standing Order 58, proceedings on the motion have expired.



O (2200) PROCEEDINGS ON ADJOURNMENT MOTION

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

Ramon John Hnatyshyn: Mr. Speaker, I rise tonight to deal with an issue which I think has unfortunately put the office of Prime Minister (Mr. Trudeau) of our country into a very bad light indeed. One always hopes in political life, amongst people who are interested in the welfare of our country, that our Prime Minister will occupy a position in which he will give leadership in terms of matters of integrity, in terms of the kind of actions that are illustrated throughout his government and the party that supports him in the leadership of a government and the leadership of a country.
I am sorry, therefore, Mr. Speaker, to have to rise tonight in the adjournment debate to indicate my very grave dissatisfaction with the way in which the Prime Minister has responded to some very serious questions about political patronage, about cronyism, about the awarding of contracts to friends of the Prime Minister, as opposed to following the well-established rules for tendering, which should be followed by any government worth its salt. As a result, I think it is important for us to have a quick look at some of the background of this particular situation.
Hon. members will know that the matter of the design of the Washington embassy in the United States originated by the government establishing a selection board. That selection board consisted of seven members chaired by a retired and distinguished diplomat, Mr. A. Edgar Ritchie. There were two representatives of the Royal Architectural Institute, two representatives from the Department of Public Works and two representatives from the Department of External Affairs. About 2,000 firms were canvassed with respect to submissions to be made in connection with the design of this project; and 318 architectural firms responded. In the final analysis, 71 firms put in submissions.
I should point out, Mr. Speaker, that these firms spent considerable moneys in terms of submitting these proposals, on the basis that they would be processed through the selection
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panel and that there was some legitimacy to this whole process because it had been established by the government.
The information that we have is that the 71 firms in question spent some $10,000 each on their submissions. Of the 71 firms that made submissions at some considerable expense, 11 firms were finally selected by the selection panel. These 11 included Mr. Erickson.
In November, 1981, this group was invited and in fact visited Washington to discuss the plans for the new embassy and to observe the site. They were subsequently brought back to Ottawa for a discussion with the panel at extensive and additional expense. The information we have is that the minimum expense for those last firms was somewhere between $40,000 to $60,000 each. An average of $50,000 would give a total of $550,000. That, added to the $710,000 spent by the 71 firms orginally, means there was an expenditure of over $1.25 million dollars, in terms of the firms offering themselves for this particular important project.
After considerable discussion with the final 11, the panel reduced that number to four finalists. One of the four finalists was deemed to be outstanding. Zeidler Roberts of Toronto were judged by the panel to be outstanding, the other three firms being in the running but not in the same category.
The chairman, Mr. Ritchie, has stated with respect to Mr. Erickson: "Erickson was unlikely to do as good a job as the four finalists in this case." That was his considered opinion.


David P. Smith: Nonsense.


Ramon John Hnatyshyn: That was on the basis of expert opinion, expert advice that was received. We find now, Mr. Speaker, that the information we have now is that Mr. Erickson in fact knew some two years ago that he was going to get this job, notwithstanding the charade with respect to the selection process.
The fact of the matter is, Mr. Speaker, that we now have a very serious situation when the Prime Minister puts out a very misleading release in respect of the appointment of Mr. Erickson, in which he suggested that the selection panel had indicated that Mr. Erickson was somehow a selection of that panel-which was quite contrary to the fact.
What the Prime Minister is telling us now is that he alone is the expert in terms of choosing architectural expertise and design and that his opinion should prevail over that of the selection panel. If he was so dissatisfied with the conclusions of the selection panel, was he saying that it was incompetent? If he was not satisfied with its recommendations, why did he not refer the matter back to the panel for further consideration? He should have done that if it was the opinion of the government that none of the four finalists really qualified.
We have a situation where the fix was in before the panel had a chance to come to a decision. The tendering process was a charade. The Prime Minister was pork-barreling. Apparently

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there are new rules and unless there are compelling reasons to the contrary, favouritism prevails.
The people of Canada will not put up with this, Mr. Speaker. They have had enough of the Prime Minister and his extravagant ways, and now he is wasting public money on political patronage. I say that the time has come for the Prime Minister to accept the proposition of an independent investigation into the conflicting statements that have been made in this matter. If he refuses, then I say that indicates that he is afraid of the findings that an independent commission might make. If he has nothing to be afraid of then he should allow an independent investigation into this matter. I thought that anyone in this country who by deceit, falsehood or other fraudulent means defrauds any person, whether ascertained or not, of any property, money, valuables or securities was guilty of an offence. I thought that was still the law in this country.


David P. Smith: Mr. Speaker, I would urge the hon. member for Saskatoon West (Mr. Hnatyshyn) to read a recent article which appeared in Fortune magazine in which architects in North America were discussed. In that article Mr. Erickson was described as the foremost architect in North America. Any suggestion that he is not eminently qualified to carry out this assignment is pure and utter nonsense.
We live in a parliamentary democracy. One of the fundamental and basic premises of a parliamentary democracy is responsible government, and that means that the incumbent prime minister and ministers are responsible for what the government does.
It may well be that officials might decide to set up a panel which, as was done in this particular instance, will assess the technical competence of architects and suggest a number, all of whom would be qualified from a technical point of view, who are eligible to do the job. That is what was done in this case.
In the final analysis, as the Prime Minister has repeated again and again in the House, he and the cabinet take responsibility for the decision that was made.
It is correct that the bureaucrats, or whatever you want to call them, said that 11 architects were competent to do the job. Mr. Erickson's firm was amongst that number although it was not ranked first. The hon. member is quite correct about that.
As the Prime Minister (Mr. Trudeau) has said, we live in a parliamentary democracy in which the cabinet and the ministers take responsibility for the decisions they make. Mr. Erickson is the most honoured architect in Canada; in terms of awards he wins hands down. I think it is reasonable that a prestigious building on a prime location in Washington should have the best that we can produce.
Mr. Erickson has disputed the statements made in this morning's Globe and Mail. I think it is quite irresponsible for the hon. member to go off on a witch hunt based on that report.
We should all be proud that a greatly honoured architect has agreed to do this building. It was obviously a wise decision and one of which we will be proud for many years to come.


BANKRUPTCIES-POSITION OF PURCHASERS OF INSURANCE FROM COMPANIES PLACED IN RECEIVERSHIP. (B) REQUEST THAT PURCHASERS BE TREATED AS PREFERRED CREDITORS
Hon. Don Mazankowski (Vegreville):: Mr. Speaker, most people who hold insurance policies on their business premises, their homes, their cars and even their health and their life assume that in the event of a claim the policy will be valid, that the insurance company will be in business and that their claim will be paid.
Unfortunately, Mr. Speaker, that is not necessarily so because events over the past year reveal that insurance company failures can leave policyholders seriously exposed. In other words, policyholders who regularly pay their premiums and renew their insurance on a regular basis, who presume they are covered and expect their claim to be paid in the event one is made, are really in effect living under a false sense of security. In this context I addressed questions to the Minister of State for Finance (Mr. Bussieres) last Friday as reported at pages 17166 and 17167 of Hansard where I drew this to the attention of the minister. He indicated that he was aware of the situation and that certain actions on his part were going to take place. The reason I brought it to the attention of the minister is that I have a case which has been brought to my attention where a statement of claim has been filed and the policyholder has just been advised that because his insurance company is being liquidated there will not be sufficient funds left over to cover his claim. The insurance company involved is Pitts, and my constituent received a letter dated March 2, 1982, from the law firm of Milner & Steer. Before I quote from the letter, I would once again point out that while this is a small claim, it could be a very substantial amount. Nevertheless, the principle remains the same. Milner & Steer are solicitors for Pitts Insurance Company, and the letter says:
You may have recently heard that Pitts Insurance Company has been woundup, pursuant to a Court Order granted by the Supreme Court of Ontario at the request of the Federal Superintendent of Insurance. The Superintendent has been appointed as the Provisional Liquidator of Pitts, and the Clarkson Company Limited has been appointed to act as the agent of the Provisional Liquidator. In turn, The Clarkson Company Limited has retained the Toronto law firm of Goodman & Goodman to look after the legal aspects of the winding-up.
We have recently been advised by Goodman & Goodman that the assets of Pitts Insurance Company are insufficient to provide full coverage under the various policies of insurance. In this regard, we have been instructed to advise you that, in the event that Mr. Mapletoft's claim is successful, Pitts will not be in a position to pay 100 per cent of the claim. Accordingly, Beverly Crest Motor Inn Ltd. will be responsible for any deficiency.
That pretty well sums it up, Mr. Speaker. There are other companies which have gone bankrupt and rumours of more. The issue of solvency of insurance companies, and the effect upon the policyholder in the event of bankruptcy, is a matter
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which has been raised before the appropriate standing committee. Away back in December of 1981 the minister gave essentially the same answers to the committee that he did in the House. Really, the expected corrections or changes in the legislation are not anticipated to be brought forth until the fall. Basically, what he is doing here is waiting for recommendations from the Superintendent of Insurance. Through you, Mr. Speaker, I ask the parliamentary secretary, what about the losses faced by the policyholders? They bought an insurance policy in good faith and expected their insurance company to honour any legitimate claims. Why are policyholders being asked to settle their own claims?
In a matter where two companies went bankrupt, Pitts and Strathcona, there was an agreement by the insurance companies to establish a fund in the case of Strathcona so that all unsettled claims would be paid. Surely, Mr. Speaker, the government has a responsibility here to provide the kind of climate that will preserve the integrity of the insurance company business. Surely it is inappropriate for people who in good faith buy insurance policies to have nothing more than a worthless policy when they come to make a claim. People in business buy this protection and expect to have the security. The superintendent is charged with the responsibility of monitoring. When he deems there is financial trouble, he is supposed to recommend and take the necessary corrective action. But as I said before, in the case of Strathcona, a consortium of insurance companies agreed to honour all claims. However, that is not the case with Pitts. Why is there a double standard?
The minister and the superintendent have indicated that some changes will be made, such as amendments with regard to reserve margins of capital and security, insurance treaties, tighter controls in the case of re-insurance, and the general rating of financial standards. But that will not solve the problem we face now, I believe we face two problems now. They are the losses and the confidence of the insurance industry and insurance companies. What is needed as well is to give the superintendent more than simply an advisory and a monitoring role. As it now stands, he cannot act until it is too late. He also needs broader disciplinary powers beyond fining or winding up. There is considerable doubt that the superintendent reacted quickly or firmly enough in the case of Pitts and Strathcona. In my view he needs to be mandated to assist those failing companies vigorously. Confidence and security are vital to the insurance business, and the superintendent must have the power to ensure that stability and solvency exist. As a matter or principle, I think the minister should move very quickly to implement these changes without delay so that the integrity of the insurance system can be preserved and upheld. Immediate steps should be taken to save any losses that may accrue to those policyholders who now have claims that are not being settled.


Mr. Jim Peterson (Parliamentary Secretary to Minister of Justice and Minister of State for Social Development):: Mr. Speaker, I am pleased to respond to this question. As the hon.
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member is aware, we have a very strong record in the insurance industry in Canada. In the last 50 years we have had only three federally incorporated insurance companies that have experienced this type of financial difficulty. Unfortunately, in 1981 there were two. That is three companies in 50 years so I do not want the public to think that if they go to an insurance company and put their premiums there that they are at risk in suffering grievous harm. Our insurance industry, as I shall conclude later, is on a very sound financial footing. I think our record over the years indicates this.
The fact is, as the hon. member has pointed out, we have had two failures. In the case of Strathcona, friends of the company rallied around to make sure that the people who placed their money with that company were made whole. In terms of Pitts, it has been a different matter. Pitts has not been able to meet its obligations. But the remaining assets are going to be reserved for the policyholders. As we are aware, the provisional liquidator is still in the process of investigating what type of proceeds will go to those policyholders. The preliminary indications are that they will receive a substantial sum. But it would be inappropriate for us to guarantee or undertake immediate action on this particular matter until we have all the facts in hand. I can assure the hon. member that this question is under very active investigation and we hope to realize as much from the assets as is possible.
The reasons for the failure of these two companies in the past year relates to low premiums and very healthy competition in the market-maybe excessive competition-and also a record number of claims. Nevertheless, in spite of this climate which prevailed last year and which led to the bankruptcy of these two companies the industry as a whole, because of its investment income, had a profit. This year, in order to correct this measure, the companies are increasing premiums. The superintendent is still undertaking his investigation. This investigation will continue. We are still looking for concrete ways to help resolve these problems in the future. I can assure the hon. member and I can assure Canadians that this is a matter of great concern to us and we look forward to proposals on how we can proceed in the future.


THE JUDICIARY-STATEMENTS ON CONSTITUTION MADE BY BRITISH COLUMBIA SUPREME COURT JUSTICE. (B) JUDICIAL COUNCIL INQUIRY
Mr. Svend J. Robinson (Burnaby):: Mr. Speaker, on March 8, 1982, the Canadian Judicial Council ordered a formal investigation into certain complaints lodged by Federal Court Trial Justice George Addy about the conduct of Mr. Justice Thomas Berger, a respected judge of the British Columbia Supreme Court, a ten-year veteran of that court.
The basis of Mr. Justice Addy's complaints were certain statements which were made by Mr. Justice Berger, both in The Globe and Mail and in a speech at the University of Guelph which was subsequently reported in that journal. In those particular speeches Mr. Justice Berger was critical of the constitutional accord which had been arrived at between the provincial premiers and the first minister. Mr. Justice Addy's letter was addressed to the Judicial Council and was dated on

May 11, 1982
Adjournment Debate
November 18 and November 19. In that letter he indicated that in his view Mr. Justice Berger's conduct was, among other things, worse than sleeping with prostitutes or drunk driving.
Just a few days later the Prime Minister (Mr. Trudeau), speaking on a television program hosted by Mr. Jack Webster, stated, "I just regard this as the judiciary getting mixed into politics and I hope the judges will do something about it". Clearly the Prime Minister was urging the Canadian Judicial Council to take action on Mr. Justice Berger's comments. Mr. Justice Berger stated, "If he had wanted to do this, I wonder why he didn't support the bill when he was there and when it gave Quebec the veto and gave the Indians aboriginal rights; he didn't support us then." As I will show very shortly, that statement is patently false.
The two issues raised by Mr. Justice Berger transcend narrow partisan politics. First, with respect to the question of aboriginal rights, it was Mr. Justice Berger's view that the constitutional accord which had been arrived at failed in the promises that had been made to aboriginal peoples. He stated in his speech at the University of Guelph in November of last year:
The agreement reached in February this year by ail parties in the House of Commons, to entrench aboriginal rights and treaty rights in the new Constitution, has been repudiated by the Prime Minister and the premiers.
He went on to give some history and to say:
There was, at the end, not one of our Canadian statesmen willing to take a stand for the rights of the Indians, the Inuit and the Metis.
At the end of the article it read:
This is not the end of the story. The native peoples have not come this far to turn back now. But it is an abject and mean-spirited chapter. No one can rejoice that it was written in Canada.
He spoke as well in opposition to the removal of the veto power for the province of Quebec. On these fundamental questions in both instances ultimately the Prime Minister agreed that a mistake had been made. There was a restoration of aboriginal rights to the constitutional resolution, albeit a qualified restoration, and the Prime Minister has said publicly on a number of occasions since the signing of that package that he would support the restoration of the veto power for the province of Quebec.
We are not dealing with a narrow political issue in the everyday partisan sense. We are dealing with a fundamental fabric of the nation, the Constitution of the nation. Who better to speak out on these questions than Mr. Justice Berger himself, the respected author of the Berger report into the Mackenzie Valley pipeline. The Prime Minister is guilty of the worst sort of hypocrisy in attacking Mr. Justice Berger on this instance when he stood silently by in 1970, for example, when Mr. Justice Freedman supported his invocation of the War Measures Act or indeed when Mr. Justice Berger himself, in September of last year, supported the constitutional resolution as it then was, with its inclusion of aboriginal rights and its respect for the veto power of the province of Quebec.
This is nothing less than a judicial witch-hunt by the 27 most senior judges in Canada. In my view they should be ashamed of themselves for taking part in this rather sordid
spectacle. It is one of the most meanspirited and shabby chapters which has been written in the judicial history of Canada for some time. This is only the second inquiry in the history of the Judicial Council. I am sorry that the Canadian Bar Association has not seen fit to speak out on this important question and indeed that Mr. Justice Berger's fellow judges have all remained silent on it. We do not intend to remain silent on this important question or on this fundamental issue. I have called upon the Prime Minister and the Minister of Justice (Mr. Chretien) to make public all documents surrounding this serious allegation and as well to use his powers under Section 40 of the Judges Act to order that the hearing of this particular matter be held in public.
The Minister of Justice can attempt to evade responsibility by saying that the Judicial Council is the master of its own affairs, but under Section 40(6):
An inquiry or investigation under this section may be held in public or in private, unless the Minister of Justice of Canada requires that it be held in public.
I strongly urge the Minister of Justice to take that step and let the people of Canada see this judicial witch-hunt for exactly what it is.
In closing, I would like to quote from Judge Irving Kaufman of the United States Court of Appeals of the second circuit, a very respected American judge who dealt with this important issue in the New York Times in an article entitled "Judges Must Speak Out". He said:
In the final analysis, when the public interest requiring that judges share their special expertise is balanced against the risk of a seeming impropriety, the scales tip heavily in favour of expressing one's views.
The public may remain confident that judges will follow the advice they give to juries: A case must be judged on its own merits, not on one's personal predilections.
He goes on further to state:
Judges have the duty to speak on matters that affect the judicial system because the public interest cannot be served by silence. Silence is not always golden.
In this case, Mr. Justice Berger was speaking out with courage on a matter of fundamental importance to Canadians, particularly to minorities. Instead of being criticized for that, he should be commended.
[ Translation]


James Scott (Jim) Peterson: Madam Speaker, my colleague from the opposition already pre-judged the situation he has been referring to. The Canadian Judicial Council established by the Judges Act consists of the Chief Justice of Canada as Chairman and the Chief Justice, associate Chief Justice and Assistant Chief Justices of each Superior Court in Canada. That council may enquire into and investigate complaints or allegations made in respect of a judge. The Council decided on March 8 to investigate a complaint filed in November 1981 against Mr. Justice Thomas Berger. When the investigation is completed, the Council will
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submit a report on its conclusions to the Minister of Justice (Mr. Chretien).
It is of prime importance to know that the Council consists of the most competent justices in this country and that they took the decision to act on the complaint filed against the judge. I am informed that the investigation is the first one to stem from a complaint filed by a person other than the Minister of Justice. The Council has been meeting since 1971, and receives some 30 complaints every year.
It is also very important to know that the Chief Justices who sit on the Council are fully aware of the basic principles of justice and equity that must apply in such investigations. The Judges Act sets the major guidelines pertaining to such investigations and, in addition, the Council also established rules of procedure for the holding of such investigations. In view of the foregoing, the Minister of Justice concluded it would not be appropriate to require that the investigation on Justice Berger be held in public. It would be much better for the Council, which is responsible for promoting high standards of effectiveness and uniformity in the administration of justice
Adjournment Debate
within superior and county courts, to make all the important decisions that will lead to the conclusion of this inquiry.
Finally, Mr. Speaker, it would be improper to make remarks on the subject matter of the inquiry. The Council must be allowed to deliberate without any interference whatsoever. Everything must be done to ensure that the inquiry and the findings are based entirely on essential principles of Canadian law.


Svend Johannes Robinson: Make it public.


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands ajourned until 2.00 p.m. tomorrow afternoon.
At 10.30 p.m., the House adjourned, without question put, pursuant to Standing Order.

Wednesday, May 12, 1982