1982-07-05

ROUTINE PROCEEDINGS


Mr. Stan Darling (Parry Sound-Muskoka):: Madam Speaker, one of the growing list of fiascos from the recent tabling of the federal budget is that which involves a $3,000 grant to home buyers. Because of a rather astounding and serious oversight on the part of the Minister of Finance and his officials, the grant will apply only to those buying homes with insured mortgages which, under the National Housing Act must be paid by the buyer before purchase. In light of the fact that many home buyers will not be able to qualify for insured mortgages through NHA-approved lending institutions, and those that do, in addition to facing bureaucratic application-form delays, could be pre-paying up to $1,200, almost half the amount of the grant, I move, seconded by the hon. member for Prince Edward-Hastings (Mr. Ellis):
That the finance minister take immediate steps to see that the mortgage insurance restrictions are removed from these grants, and that the red tape delaying the approval and awarding of these grants be eliminated at once.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


POLITICAL PARTIES
Mr. Gordon Towers (Red Deer):: Madam Speaker, I rise to take umbrage at the remarks of Privy Councillor and "Grey Eminence" Jack Pickersgill, who stated on the program "Insight" that we have no poor people in Canada. Perhaps there are no "poor" in the circles he travels in, that is, Liberal circles-but then, again, Liberals are always travelling in circles. I therefore move, seconded by the hon. member for Peace River (Mr. Cooper):
That Canadians should know that
Liberal Jack Pickersgill says everything is like a rose,
Even though the emperor has no clothes.
All McKim's horses and all McKim's men Will never put poor "Pick" together again.


Some hon. Members:: Oh, oh!


Madam Speaker:: The hon. member for Cowichan-Malahat-The Islands.


FORESTRY
Mr. Jim Manly (Cowichan-Malahat-The Islands):: Madam Speaker, today when thousands of plywood and sawmill workers in British Columbia have been laid off, major forest companies plan to export prime peeler logs for processing in China. I move, therefore, seconded by the hon. member for Mission-Port Moody (Mr. Rose):
That this House condemns the export of unprocessed logs as a way of taking present and future jobs away from Canadians; further, that the House call upon the Government of British Columbia to develop stricter legislation prohibiting log exports; and that the House demand a proper housing program from the federal government to counteract the depression in the British Columbia lumber industry, caused by high interest rates.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Gordon Taylor (Bow River):: Madam Speaker, the national energy policy started Canada on the downhill road to disaster. Industries folded, rigs left the country, investment went elsewhere, and bankruptcies erupted. The November 12 budget was supposed to alleviate some of that distress, but it did the very opposite. It hastened bankruptcies and multiplied unemployment. Then came strike three, the June budget, and it put the icing on the cake for the destruction of Canada. Therefore I move, seconded by the hon. member for Fraser Valley East (Mr. Patterson):
18980

July 5, 1982
That this House demand the withdrawal of the November 12 budget and most of the June budget, or the immediate resignation of the minister.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE BUDGET-SUGGESTED RECONSIDERATION BY COLUMNIST-MOTION UNDER S O. 43
Mr. Mark Rose (Mission-Port Moody):: Madam Speaker, I too have a motion under Standing Order 43. In view of the fact that there were only two voices raised in support of last Monday's budget, namely, the Canadian Chamber of Commerce and that of columnist Richard Gwyn; and whereas the Chamber of Commerce has since recanted and now joins the majority of Canadians in opposing the budget, I move, seconded by the hon. member for Hamilton Mountain (Mr. Deans):
That this House urges Richard Gwyn, as the sole remaining pro-budget holdout, to reconsider his position.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AUTOMOTIVE INDUSTRY
Mr. Derek Blackburn (Brant):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of pressing and urgent necessity. Whereas 18,000 Canadian auto parts workers are on lay-off; whereas Canada is the only major industrial nation which has been unable or unwilling to force Japan into signing an auto and auto parts trade agreement; and whereas Japan is unwilling to arrive at a more equitable export policy with Canada with respect to automobile parts and units, I move, seconded by the hon. member for Hamilton Mountain (Mr. Deans):
That at the July 15 and 16 trade talks with Japan the Minister of International Trade insist that the Japanese agree to source 85 per cent of all automobile and truck parts in Canada, and that failing to arrive at such an agreement the minister inform his Japanese counterpart that Canada will reduce the number of Japanese vehicles allowed into Canada this year and that this quota will be accompanied by an additional surtax.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ENVIRONMENTAL AFFAIRS
Mr. Neil Young (Beaches):: Madam Speaker, I too rise under the provisions of Standing Order 43. I move, seconded by the hon. member for Skeena (Mr. Fulton):
That since scientists have discovered levels of the deadly chemical dioxin in human tissue, this House now directs the government to adopt immediate and minimum measures to protect the health of Canadians who rely on Lake Ontario and its vicinity for their water and food supply by reducing the maximum levels of dioxin contamination in fish from 20 parts per trillion to ten parts per trillion; that the government appoint Canada's full entitlement of commissioners to the International Joint Commission to indicate to the United States government that Canadians are seriously concerned about the water quality of our Great Lakes; and that the Standing Committee on Fisheries and Forestry be requested to establish a subcommittee to investigate the pollution of our Great Lakes by toxic chemical wastes and report its findings to the House as quickly as possible.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN ARMED FORCES
Mr. Terry Sargeant (Seikirk-Interlake):: Madam Speaker, I rise under the provisions of Standing Order 43. Whereas many armed forces personnel are already hard-pressed financially, with many of them eligible for and receiving provincial welfare, and whereas last week's budget introduced unfair controls on the salaries of those personnel, I move, seconded by the hon. member for Regina East (Mr. de Jong):
That this House calls for the resignation of the Minister of National Defence for not adequately protecting the interests of Canadian Armed Forces members.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
...


EMPLOYMENT
Mr. Svend J. Robinson (Burnaby):: Madam Speaker, I rise pursuant to the provisions of Standing Order 43. In view of the fact that the employment situation for students this summer in the lower mainland of British Columbia is the worst it has been for decades, and in view of the fact that thousands of
y
-O.-.

July 5, 1982

Burnaby students from high schools, Simon Fraser University, BC1T, and the Pacific Vocational Institute have tried in vain to find summer employment, I move, seconded by the hon. member for Regina East (Mr. de Jong):
That this House calls upon the Minister of Employment and Immigration to fund immediately a major summer job-creation program for post-secondary education students as well as high school students and, further, that the minister increase significantly the allocation for federal student aid and assistance, in view of the hardship faced by students this summer.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


EXTERNAL AFFAIRS
Miss Pauline Jewett (New Westminster-Coquitlam):: Madam Speaker, I move, seconded by the hon. member for Beaches (Mr. Young):
That this House express its congratulations to President elect Miguel de la Madrid Hurtado and extend wishes for continuing and strengthened good relations between Canada and Mexico and between Canadians and the Mexican people.


Madam Speaker:: Perhaps the House will want to applaud this motion.


Some hon. Members:: Hear, hear!


RAILWAYS
Mr. Stan J. Hovdebo (Prince Albert):: Madam Speaker, 1 rise under the provisions of Standing Order 43. Whereas the imposition of any upward change in the Crow rate will result in the reduction of grain production and a cut in income for the western Canadian farmer, I move, seconded by the hon. member for Dauphin (Mr. Lewycky):
That the government recognize the consensus of farmers-not agribusiness- and stop its ridiculous postering regarding the Crow rate and get on to improving the railway system to help the economy generally.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
Oral Questions


CANADA POST CORPORATION
[Stage Direction]
5.0.	43
Mr. Laverne Lewycky (Dauphin):: Madam Speaker, whereas Canada Post was established with the idea of improving services, whereas postal rates have increased by almost 100 per cent since January 1, 1982, and whereas Canada Post has cut back postal services by 50 per cent in some rural Manitoba areas, I move, seconded by the hon. member for Burnaby (Mr. Robinson):
That the minister responsible ask Michael Warren to restore services which have been reduced since January 1, 1982.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


MINES AND MINING
[Stage Direction]
5.0.	43
Mr. Jim Fulton (Skeena):: Madam Speaker, I too rise under the provisions of Standing Order 43. In view of the fact that last week the joint Standing Committee on Regulations and other Statutory Instruments unanimously upheld the censure of the Minister of Fisheries and Oceans (Mr. LeBlanc) for unusual and unexpected use of power in pushing through the Alice Arm tailing deposit regulations allowing dumping at
8,000	times above federal standards in the middle of the 1979 federal election, I move, seconded by the hon. member for Burnaby (Mr. Robinson):
That the House calls upon the Government of Canada to introduce a bill to deal with this matter and immediately convene a full public inquiry.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Mr. Pat Nowlan (Annapolis Valley-Hants):: Madam Speaker, my question is directed to the Minister of Finance, not

July 5, 1982
Oral Questions
necessarily because it is a week since his budget but because, in the presentation of that budget, the minister talked about the economic crisis affecting Canada and the need for restraint. What justification can the minister give and what leadership is shown by the government in considering a bail out of a trucking firm in Montreal with a loan guarantee to the tune of $30 to $50 million, when that will necessitate changes in the ITC regulations and may very well open the door for all service industries, not alone trucking firms, to seek such federal assistance?


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, I should like to tell the hon. member that no decision has been reached to provide assistance in this particular case. I take it from his statement and the tone of his question that he would be opposed to any such assistance or relief in this particular case. I will certainly take account of his representation before any final decision is made.


GOVERNMENT POSITION ON CREATING PRECEDENT
John Patrick (Pat) Nowlan: I thank the minister for the consideration of listening to a representation, Madam Speaker, but 1 asked a question. 1 would be much more interested in knowing what the minister thought about these fundamental changes in the ITC regulations which will open the door for applications for bailing out guarantees to all service industries and not manufacturing industries as is the present policy. If the minister feels there is help available for Maislin industries then, in effect, will every other service industry or trucking industry be knocking at his door?


Allan Joseph MacEachen: Yes, Madam Speaker, 1 believe that every precedent established usually incites further applications for assistance. On that proposition I have absolutely no difference with the hon. member. The content of his question is still speculative, however, because we have not reached any decision. There has been a request for assistance, but no decision has been reached. When a decision is reached the hon. member will be able to put his questions with more knowledge, and certainly I will be able to answer them with more knowledge. At the moment the matter is still undecided.


CANADIAN NATIONAL RAILWAYS
John Patrick (Pat) Nowlan: 1 have a supplementary question for the Minister of Transport, Madam Speaker. In view of the fact, and I think it is a fact, that one of the main reasons Maislin is in trouble is because of its U.S. operations and the fact that two thirds or more of its business is in the United States, can the Minister of Transport, who reports for the Canadian National Railways, please explain to
the House-and this would be another example of government leadership and responsibility-how in the world CN, a Crown corporation, could be involved in a three-year operating agreement with the Milwaukee Railroad Company which is now in receivership to the tune of $250 million, with the option, after that three-year agreement expires, of taking over the company and accepting its $250 million debt? At the same time, CN has reduced container service to Halifax, has become bogged down in the CAST operation of Montreal which is costing taxpayers money, and last summer used the deficit position of VIA Rail as a reason for the minister to cut service back by 20 per cent. What justification or rationalization is there for CN, a Crown corporation, to act in this way?


Hon. Jean-Luc Pepin (Minister of Transport):: Madam Speaker, the answer is terribly simple. As in the previous instance, that decision has not been made. What CN has with respect to the Milwaukee Railroad Company is an option to buy in three years' time. The purchase has not been made. My hon. friend, who is an expert in transportation, knows very well that CN is already in the United States with the Grand Trunk, for example, which makes an interesting contribution to the financial welfare of the company. There is a border between Canada and the U.S., but freight goes across that border and it is considered useful for CN to have these facilities in the United States.


TELECOMMUNICATIONS
Mr. Geoff Scott (Hamilton-Wentworth):: Madam Speaker, over the past few days consumers have learned of proposed rate increases by Bell Canada which would translate into a 25 per cent increase in home phone service, and another 20 per cent increase by CN/CP to send a telegram. I would ask the Minister of Finance whether his officials have examined these applications to learn whether they are justified in light of the 6 per cent inflation guidelines?


Allan Joseph MacEachen: Madam Speaker, the matter will go before the regulatory body and we will have to wait and see what the result of that hearing will be and what action is taken by that agency. In the budget statement we have issued a suggestion or direction to the regulatory agencies and government departments to justify any increases above 6 per cent. When the result of the hearing is known it will be possible for the cabinet or the government to review the situation to see whether in its view the increase has been justified.


ROLE OF MINISTER
Geoffrey Douglas Scott: Madam Speaker, if the government does not feel that a 20 per cent to 25 per
July 5, 1982

cent increase in the cost of sending a telegram or using a telephone comes under exceptional circumstances, in other words, if the government does not feel these increases are justified, how does the Minister of Finance propose to override the CRTC, the CTC, or any other regulatory agency of the government? Will he do it through an official directive, or will he bring a bill before this House to make sure these companies adhere to the 6 per cent inflation guideline?


Allan Joseph MacEachen: Madam Speaker, when the finding of the board or, in this case, commission, is made known, then that will be the occasion for the cabinet to review the conclusion on appeal. It seems to me it would be wrong at this stage to set aside the process established by Parliament. When that process is completed, then that will be the opportune time for the government to take its decision.


FINANCE
Mr. Ian Deans (Hamilton Mountain):: Madam Speaker, my question is also for the Minister of Finance. Having spent the better part of the last four days travelling the country I want to ask the minister a question which has been frequently asked of me. We have interest rates at a level which people cannot afford. We have inflation at a level which people cannot pay to meet. We therefore have unemployment at a level which, I think, is an all-time high in the modern history of this country, and productivity is down to a level which I believe is an alltime low.
People have asked me, and therefore I ask the minister, how can reducing the wages of people who, previous to the introduction of the budget, could not afford to buy the products being manufactured in Canada, help to get the country back on its feet?


Allan Joseph MacEachen: Madam Speaker, I thank the hon. member for the way he has formulated his question because he has seen the logical progression from high interest rates to high inflation to high unemployment. That is, in a sense, the logic I have been attempting to establish in the House of Commons.
I say to the hon. member that if we are to break what he has described as the source of our difficulty, namely, inflation, we will have to reduce our income demands. That is the logic of the budget statement. If all income demands-and I am putting the emphasis on all-were reduced to 6 per cent, then price increases would drop to 6 per cent. That would be the inevitable result, and we would then be well on the road to success in the battle against inflation to which he properly ascribes the high unemployment we have in the country at the present time.
Oral Questions


GOVERNMENT POSITION ON INTEREST RATES
Ian Deans: Madam Speaker, may I ask a supplementary question of the Minister of Finance? The minister will recall, I am sure, that during the period 1975 to 1978 when there were wage controls in this country, prices did not go down. In fact inflation rose at a level far faster than wages rose. I ask the minister again if he can explain the following to me.
If unemployment and low productivity are related directly to high interest rates, as the minister has admitted, and if it is true that people who did not have sufficient money to buy products prior to the introduction of the budget will not have any more money as a result of the budget and, therefore, will be in no better position to buy products, why did the government not tackle the root cause?
Why did the government not take steps to bring down interest rates and thereby serve the purchasing power of the people of Canada and the manufacturing sector in a beneficial way? That would have allowed the manufacturing sector to get back on its feet?


Allan Joseph MacEachen: Madam Speaker, the government did take the only durable step that can be taken to reduce interest rates. We are attempting to break the inflation psychosis in the country by talking about a 6 per cent world of income demands. That is the only way to reduce inflation and the only way to reduce interest rates. The hon. member has that logic in his mind, and he ought to interrelate all these factors because he has all the logic in his head to do it.


Ian Deans: Madam Speaker, this could well be a book written by Lewis Carroll.


PUBLIC SERVICE
Ian Deans: Madam Speaker, given that the shock troops in this battle for 6 per cent are the public service employees, may I ask the Minister of Finance why he thinks it appropriate, proper and morally defensible to act to remove from the bargaining table all matters relating to collective bargaining and to move unilaterally to reduce the wages of people who sat down in good faith and negotiated wage increases? Does the minister really believe that, in the Liberal tradition, this is a morally defensible thing to do?


Allan Joseph MacEachen: Yes, Madam Speaker, I think it is morally defensible-


Mr. Broadbent:: In the Liberal tradition?

July 5, 1982
Oral Questions


Allan Joseph MacEachen: -because it is in the national interest and it is absolutely imperative if we are to move out of this very serious critical economic situation that we face. At the present time in the country we have to take exceptional steps, and it is an exceptional step that will be recommended to Parliament by the President of the Treasury Board to reduce the income settlements of the Public Service to 6 per cent and then to 5 per cent. That is exceptional. 1 admit that to the hon. member. It is justified because of the exceptional circumstances that exist in this economy and in various economies in the world. If I wanted to go on to justify it, I would refer the hon. member to the experience of most of our economic partners where wage settlements in the public sector are distinctly lower than the rate of inflation.


Ian Deans: They are in Canada, too.


Allan Joseph MacEachen: They have been introduced for the very same reason that they are being introduced in Canada, and that is in order to get out of the 12 per cent world of recession and into a 6 per cent world of recovery. That is the exceptional justification for it.


CROWN CORPORATIONS
Mr. Albert Cooper (Peace River):: Madam Speaker, my question is for the President of the Treasury Board. He will know that farmers are losing their farms, workers are losing their jobs and their homes, and businessmen are losing their businesses because of high interest rates in Canada. How can the President of the Treasury Board justify employees of government-owned Crown corporations receiving mortgages at one half of the present market rate?


Hon. Donald J. Johnston (President of the Treasury Board):: I do not know of the particular circumstance to which the hon. member is referring. Employees of Crown corporations do not come under the jurisdiction of the Treasury Board in any event.


EXPORT DEVELOPMENT CORPORATION MORTGAGE PLAN
Albert Glen Cooper: Madam Speaker, in that case my supplementary question is directed to the Minister of Finance. Surely someone over there is responsible for this atrocious act. Will the Minister of Finance check into the fact that the Export Development Corporation of Canada is planning on offering mortgages to its employees at one half the present market rates which other Canadians have to pay on their homes?


Allan Joseph MacEachen: Yes, Madam Speaker. The minister to whom the corporation reports is prepared to answer.


An hon. Member:: Then answer it!


Hon. Ed Lumley (Minister of State (International Trade)):: Madam Speaker, I am not aware of the hon. member's claim, but I will check it out and get back to him tomorrow.


TREASURY BOARD
Hon. Walter Baker (Nepean-Carleton):: Madam Speaker, my question is directed to the President of the Treasury Board. It follows upon a remark just made by the Minister of Finance that it was in the national interest to limit the wage increases of public servants. If it is in the national interest to limit increases to public servants to 6 per cent in one year and 5 per cent in the following year, how can it be in the national interest for the minister to have signed a directive on last June 17 to increase the salaries of his political staff and the political staff of ministers-his colleagues and the minister-by 10 per cent? How can that be in the national interest?


Donald James Johnston: Madam Speaker, 1 have explained on a number of occasions that contracts and pay periods which came up for renewal prior to budget night were treated in a just and equitable fashion. In fact if the hon. member for Nepean-Carleton takes the trouble to read Bill C-124-


Some hon. Members:: Oh, oh!


Donald James Johnston: Are hon. members opposite interested in the answer to the question, or not?
If he takes the trouble to read Bill C-124, he will see that there are transitional provisions which provide for up to 9 per cent for any group that was open as at June 28 but whose contract would bridge that date. Ministerial staff received 10 per cent, which was very much in line with the general settlements being accorded across the system at that time, effective as of April 1. As I further explained, they go under the system just like everybody else. They will become subject to 6 per cent and 5 per cent increases just as the military will be, just as the RCMP will be, and just as all other groups which have been settled in the period before June 28 will be.


Walter David Baker: The minister may have forgotten that the people we are talking about are political exempt staff. They have been allowed a cushion now of 10 per cent, if that bill applies, for a period of time prior to the coming into force of the bill. This was made by a President of the Treasury Board who, during that period of time, was forecasting some sacrifices for other people in the public service that would start right now.


POSITION OF EXEMPT POLITICAL STAFF
Walter David Baker: Madam Speaker, why does the President of the Treasury Board not do the honourable thing? Rather than defending the indefensible
July 5, 1982

increases for political staff, the appointees of himself and his colleagues, why does he not do the honourable thing and roll them all back so that the exempt staff will stand in exactly the same position as public servants?


Donald James Johnston: Madam Speaker, the point 1 have been making to the hon. gentleman is that the exempt staff does stand in exactly the same position as the public service. He would have us say that because these members of exempt staff are appointed by individual ministers, somehow they should be made particular sacrificial lambs. 1 do not accept that position whatsoever. They are subject to exactly the same regime in exactly the same manner, and I judge that to be fair in the circumstances.


REQUEST THAT DIRECTIVE BE TABLED
Hon. Bill Jarvis (Perth):: Madam Speaker, my supplementary question is directed to the President of the Treasury Board. The sacrificial lambs about whom he is so concerned never went through any collective bargaining process or never had any collective agreement. His comparison with the public service, let alone with the private sector which they are now asking to restrain itself, is odious at best.
If the minister feels so strongly about these sacrificial lambs, will he do two things-first, will he table a directive which he signed on June 17 and, I suggest, knowing fairly well what was in the mind of the Minister of Finance at the time in terms of his plea to other Canadians? Second, would he table the salaries of his exempt staff and of that of his colleagues over the last year so that we can see what happened last March or April with respect to wage increase for those self-same people, at the same time that he is asking every Canadian, not only public servants, to restrain themselves to 6 per cent?


Donald James Johnston: Madam Speaker, if we must get into the area of being odious, I would suggest that that is a very odious question. The hon. member is especially suggesting that these people who work for ministers and in their staff offices-he was a minister himself; he knows how hard they work, the demands on their time and how important they are to the working of government-should not be entitled to an increase which was very much in line with the increases given to other groups during that period. I also point out that that increase was up to 10 per cent. It is up to the minister in question to determine within those ranges, as the member also knows, what the amount should actually be.
Then he said that they did not collectively bargain and therefore they should not get this special treatment. Well, would he say that with respect to the military? They do not collectively bargain, and they were given 11 per cent. Is he suggesting that they should be rolled back as well? What about the RCMP? They do not collectively bargain. Should they be rolled back as well?


Mr. Nielsen:: They do.
Oral Questions


Donald James Johnston: The fact is that all these groups are being treated in exactly the same fashion, namely, next year at the expiration of that initial pay period which applies to everybody they will receive up to 6 per cent and up to 5 per cent. That is what is provided for in the law and that strikes me as eminently fair.


William Herbert Jarvis: Madam Speaker, I was every bit as proud of my staff as I presume the minister might be of his. The difference is that the exempt staff were the beneficiaries of a sleezy, underhanded directive days before the budget. That is what it was. The minister was sneaking in a pay raise when he knew full well that everyone else would be restrained to 6 per cent.


Some hon. Members:: Shame!


REQUEST THAT INFORMATION ON SALARIES BE TABLED
William Herbert Jarvis: Madam Speaker, if the minister wants to protect the integrity of that exempt staff, why does he not table their salaries over the last year so that we in the House and the entire country can see exactly what has happened in terms of this minister's benevolence?


Donald James Johnston: Madam Speaker, 1 reject categorically that sleezy allegation. The fact is that the exempt staff pay period comes up for renewal as of April 1. My recollection is that the decision with respect to the 10 per cent was taken many weeks ago. The fact that it was notified to ministers on June 17 only, is completely irrelevant in the circumstances. 1 assure the hon. member that the ministers of the Treasury Board who established that 10 per cent did not do so with any knowledge of what the Minister of Finance would finally determine in his budget on June 28.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


HOUSING
Mr. D. M. Collenette (York East):: Madam Speaker, my question is directed to the Minister of Public Works who is responsible for housing policy. The Sunday edition of The Toronto Sun charged that the $3,000 home buyers' grant made available in the budget to first-time home buyers and to buyers of new housing will be reduced by some $600 to $1,200 under a technical requirement of the National Housing Act. Could the minister responsible for CMHC inform the House whether or not this is true?


Hon. Paul J. Cosgrove (Minister of Public Works):: Madam Speaker, I thank the hon. member for his question. It gives me an opportunity to point out to hon. members that the story in the Toronto media is inaccurate and untrue. The $3,000 grant

July 5, 1982
Oral Questions
which is available to any purchaser of a new home or to firsttime buyers of old homes will be available to anyone who qualifies under those circumstances. The report is one that is inaccurate. The $3,000 grant will stand, and it is effective as of the date the minister announced it.


AGRICULTURE
Stanley J. Hovdebo: Madam Speaker, my question is directed to the Minister of Agriculture. Since interprovincial marketing boards were set up to give farmers the assurance that the selling price of their products would cover the cost of production, and since the new budget intends to limit these return to the 6 per cent and 5 per cent formula of the Minister of Finance, while not controlling the input costs of energy, interest rates and other items, will the minister inform the House how he can impose this income and wage control upon farmers, given that there is no authorization in the enabling legislation to allow the minister to set prices arbitrarily?


Hon. E. F. Whelan (Minister of Agriculture):: Madam Speaker, every one of the regulated products but one that are under federal jurisdiction were under the suggested 6 per cent, which is something of which a lot of people are not aware. In Ontario, when they signed the contracts for approximately 15 products this year, there was only one over a 5 per cent increase. Some were as low as a 3.2 per cent increase. In some instances perhaps the marketing boards are ahead of us in controlling what we call inflation. I think they have given leadership, maybe even to government, but certainly they have provided leadership for many other people in our society in that they have agreed to take those kinds of increases early in the year. Some of those contracts were signed in March and April of this year by producer groups.
The Minister of Finance has also suggested that, under special circumstances, if increased costs take place, for example, the merits of an application can be considered if it needs to go above 6 per cent. However, if those input costs come down I cannot see any regulated price commodity or cost-pricing formula-I cannot see any of them asking for more than 6 per cent if the rest of society goes along with what we are suggesting. In most instances marketing boards have given that kind of leadership. All matters under the jurisdiction of the federal Minister of Agriculture have practically stayed under those ranges, except the industrial milk products.


Stanley J. Hovdebo: Madam Speaker, the minister is skirting the question by ignoring the principles. It sounds to me that what we are talking about is subversion of marketing boards.


LEGISLATIVE AUTHORITY
Stanley J. Hovdebo: Madam Speaker, under what legislative authority will the minister proceed with respect to these prices since these are all federal-provincial agreements? Will the minister be seeking provincial approval before proceeding, or will he implement the peace, order and good government clause in the Constitution, as the government did under the AIB legislation?


Eugene Whelan: Madam Speaker, again all the hon. member has to do is check the records which will show, for instance, that eggs were minus 4 per cent last year, not an increase, and other poultry products were lower than what we are suggesting even this year. Again, I do not know what the hon. member is talking about because we have no jurisdiction over some of the provincial marketing boards. Some of them are very strong, and they exist in every province across Canada. It would be up to the provinces to provide guidelines for them. We have been doing some checking and I should be able to release some figures, hopefully later today or tomorrow, to show exactly what some of them have done this year. I think it is to their credit that they have again provided that kind of leadership.
There is a misconception that many people have about marketing boards and the pricing formula that they follow. If input costs are down, they agree to take less. They do not agree to hold the status quo; they agree to go down in price. The only time that they increase prices to the consumers of Canada is if the input costs go up. They are very satisfied with that. Those farmers under programs such as those are the ones who are not going broke either. They run their own business, too.


FISHERIES
Hon. John A. Fraser (Vancouver South):: Madam Speaker, my question is directed to the Minister of Fisheries and Oceans. In the budget last week there was an amount of $400 million allocated to small business people, including fishermen. Completely apart from the Small Business Development Bond program, is any of that $400 million going to assist applicants who apply under the Small Business Development Bond? In other words, is the $400 million for other purposes and other applications, or is some of the money going to be used for those people who have to apply under the Small Business Development Bond program?


Hon. Romeo LeBlanc (Minister of Fisheries and Oceans):: Madam Speaker, a couple of weeks ago I had occasion to meet with fishermen on the west coast. They told me that the previous program of assistance to farmers and fishermen under the provisions of the small business bond had been very
July 5, 1982

helpful. As well, once the financial institutions understood what the intention was, that even unorganized and unincorporated fishermen should have access to it, they found it very helpful.
It is my hope that the new or additional measures announced by the Minister of Finance will be seen and interpreted by financial institutions in exactly the same way. Certainly those fishermen who attended the meeting spoke quite highly of the provisions that existed then, and that was before the budget.


John Allen Fraser: I am certain that the minister is very sincere in talking with fishermen about the Small Business Development Bond program. The fact of the matter is that of the $400 million that has been allocated and trumpeted as aid to fishermen, it clearly seems, on reading the budget documents, to apply only to new investment.


POSITION OF FISH PROCESSING PLANTS
John Allen Fraser: Madam Speaker, what happens to fishermen, fishing companies, or fish processing companies that cannot get relief from the banks with the Small Business Development Bond or from other lending institutions? Can those people apply to get a piece of the $400 million if they are not investing or making a new investment in plant equipment for capital projects? If they cannot, there is nothing new in the budget for fishermen.


Roméo LeBlanc: Madam Speaker, perhaps I did not understand the hon. member's question fully, for which I blame myself and not him. In the case of corporations and processors who do not meet the criteria of the small business bond legislation or regulations, they have access to the Fisheries Prices Support Board. I am aware that some of them have already presented their cases.
As I say, I can only judge by the experience I have seen. This was not an incidental conversation. It was in the process of consultation with the fisheries advisory council on the west coast where fishermen themselves volunteered-I did not ask them-that the previous program had been helpful and that they hoped that it would be continued. That is why I was personally pleased to hear the Minister of Finance express his support even for the unincorporated fishermen who are in some difficulty at the moment.


EXTERNAL AFFAIRS
Mr. Donald W. Munro (Esquimalt-Saanich):: Madam Speaker, my question is for the Secretary of State for External Affairs. I am sure that the minister is aware that the Government of Czechoslovakia has requested the accreditation of Mr. Oral Questions
Vincent Buzek as the new ambassador to Canada. Is he aware that prior to his appointment as ambassador to Canada his previous assignment was in association with Section A, subsection 4 of the main intelligence office of the Czech Ministry of the Interior? Is he also aware that that organization is mainly concerned with espionage in the Americas, including Canada, of course?
In these circumstances will the minister be prepared to grant accreditation or grant agrement for this ambassador?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, until this moment 1 was not personally aware of those facts. I do not know whether there is any knowledge of that in my department. I will certainly be pleased to consider the matter in light of the hon. member's comments.


NEGOTIATION OF BILATERAL AGREEMENT-QUESTION OF DUAL CITIZENSHIP
Donald W. Munro: Madam Speaker, in view of the fact that the outgoing ambassador from Czechoslovakia has mentioned that the conclusion of a bilateral agreement is very near completion, will the minister soon take an opportunity to brief the House on the progress of that agreement, particularly as it affects the dual accreditation problem which is causing a great deal of anxiety among those loyal Canadians of Czechoslovakian descent?


Mark R. MacGuigan: Madam Speaker, the double citizenship problem is one which has disturbed Canadians of Czechoslovakian ancestry, Canadians generally, and certainly the Canadian government, for a long time. Either the ambassador was incorrectly quoted or he was mistaken in the statement that the hon. member has quoted, which I have seen myself, but that is not the fact. In fact, although our government has been continuously pressing the Czech government on this we have no indication that they are prepared to accept our point of view. Unfortunately, there is no indication that this matter will be resolved in the near future.


REQUEST THAT RECEIVING OF CREDENTIALS BE POSTPONED
Donald W. Munro: Madam Speaker, is the minister prepared to withhold the agrement on the new ambassador until this matter of dual accreditation has been sorted out to the satisfaction of loyal Canadians of Czech origin?


Mark R. MacGuigan: No, Madam Speaker, I do not believe that would be a sensible policy. Surely if we have any hope of resolving this problem with the Czechoslovak government, it is not by cutting off avenues of communication.

July 5, 1982
Oral Questions FINANCE


APPOINTMENT OF WOMEN TO ADVISORY COMMITTEE
Hon. Flora MacDonald (Kingston and the Islands):: Madam Speaker, in his budget speech the Minister of Finance indicated that he would be setting up a committee of prominent Canadians drawn from the legal, financial and accounting communities to examine certain budget proposals. Since then he has indeed established a committee of prominent Canadians from these fields. Can he tell the House how many women are included in these appointments?


Allan Joseph MacEachen: Yes, Madam Speaker, I will be pleased to advise the hon. lady on that subject. The selection for the current members of the committee was based upon consultation with private sector organizations. Unfortunately, no woman was put forward as a suggested person. Since that time I have had consultations with my colleague, the minister responsible for the status of women. I am seeking her advice, and the advice of the advisory council for women, on whom might be added to this very important committee. I am proceeding to do that in co-operation with the minister and the agency.


TIMING OF APPOINTMENTS
Flora Isabel MacDonald: Madam Speaker, what an admission for the Minister of Finance to make in this House of Commons, that the appointment of women to any body, especially a body as important as this one, comes as an afterthought. That is always the way it is treated. Why were the representations of the minister responsible for women not put forward before the original appointments were made, and not after?


Allan Joseph MacEachen: Madam Speaker, I am very pleased to say that the matter has been attended to in a very timely way. I appreciate the hon. member's interest, but it is a bit lagged.


FOREIGN INVESTMENT REVIEW AGENCY
Mr. Lome Nystrom (Yorkton-Melville):: Madam Speaker, my question is for the Minister of Finance. In his budget of a week ago the minister announced some changes to FIRA. One of the changes was to increase the threshold for a review of a foreign take-over from $2 million and 100 employees to $5 million and 200 employees. What is the purpose of that change? Is it the intention to exempt any sector of the Canadian economy?


Allan Joseph MacEachen: Madam Speaker, the question should be directed to the minister responsible for FIRA or, in his absence, to the parliamentary secretary. However, I would say that the purpose of these changes generally was to make the operation of the agency more timely and efficient and to make it carry out the wishes of Parliament according to the law.


REQUEST THAT HIGH TECHNOLOGY INDUSTRIES BE EXEMPTED FROM CHANGES
Lorne Edmund Nystrom: Madam Speaker, the minister is no doubt aware that the hi-tech industry, for example, is perhaps the most dynamic and innovative industry in the country. Many of the firms are small, they are Canadian, and they have an exceptional growth rate. Can the minister explain how opening the door even further to foreign takeovers will help this sector of the Canadian economy? Can he advise whether he is considering exempting at least the hi-tech industry in this country from these changes under FIRA?


Edward C. Lumley: Madam Speaker, unfortunately my colleague, the Minister of Industry, Trade and Commerce, is not here today. As the Minister of Finance stated, the main reason behind this procedure is to streamline the process and not to deter any of these hi-tech industries as the hon. member mentioned.


VIA RAIL
Mr. Lome Greenaway (Cariboo-Chilcotin):: Madam Speaker, my question is for the Minister of Transport. It has to do with the VIA Rail cuts. The minister must be aware that the decision to cut passenger rail service between Vancouver and Jasper has had a terrible effect on the tourist trade in Jasper, and especially on Japanese people trying to get to Jasper. Is the minister willing to sit down with representatives of the Jasper business community to discuss ways and means of remedying this situation?


Jean-Luc Pepin: Yes, Madam Speaker.


ACCESS ROUTES TO JASPER
Lorne Everett Greenaway: Madam Speaker, is it true that the minister is planning to take his summer holidays in Jasper? If so, how does he propose to get there?


Jean-Luc Pepin: Madam Speaker, there are a number of ways of getting there. I would simply underline the fact that only 1.7 per cent of those who go to Jasper travel by train.
July 5, 1982


FINANCE
Gordon Edward Taylor: Madam Speaker, my question is directed to the Minister of Finance. Does the minister realize the unfairness of percentage cuts and percentage increases? Six per cent off a salary of $90,000, $100,000 or more does not lower the standard of living of that person or his family. However, 6 per cent off a salary of someone in a lower bracket takes bread out of the mouths of his children. Why does the minister not correct this by freezing the salaries of those in the high brackets, and leaving those in the lower brackets, those who are having difficulty making both ends meet, alone?


Allan Joseph MacEachen: Madam Speaker, there are a number of comments to be made in reply to the hon. member. First, we did make a proposal along the lines suggested by the hon. member to the first ministers' conference in February. It was not supported either by the first ministers' conference or by members of the House of Commons. Therefore, we did not proceed with that particular suggestion. I understand the hon. member's concern about the impact of any such limits on increases, indexation or salaries, and assure him that the quickest way to minimize the impact of any of these possibilities is to get the rate of inflation down to 6 per cent. That will remove most of the worry the hon. member has.


EXPENSE OF FIREWORKS ON NATIONAL HOLIDAY
Gordon Edward Taylor: Madam Speaker, is the minister suggesting that spending $4 million on firecrackers helped to bring down inflation? Would the minister not have had a much happier feeling down in his heart if he had spent some of that $4 million in helping to alleviate the poverty of women between 50 and 65 who do not receive anything from the government at this time? No answer?


Allan Joseph MacEachen: Yes, Madam Speaker, 1 would like to reply to the hon. member. I would tell him that, in the interest of restraint, the expenditures on the celebration of our national holiday were drastically reduced this year.


CANADIAN WHEAT BOARD
Mr. Jack Murta (Lisgar):: Madam Speaker, my question is directed to the Minister of Transport in his capacity of answering questions for the minister responsible for the Canadian Wheat Board. Is the minister aware of a situation in which the United States Secretary of Agriculture will be acting on proposals to implement an interest rate buy-down feature for grain sales to come under their public law 480 program for grain exports? This would mean that the United States could
Oral Questions
sell grain on world markets cheaper than other countries. In other words, it would sell grain more cheaply. Is the government aware of this move by the U.S. Department of Agriculture? If so, has it communicated Canada's concern over this problem? Ultimately a situation would develop in which there would not be any additional grain sold, and grain would be sold at a cheaper price. This would have a devastating effect on farmers not only in western Canada but all over Canada.


Jean-Luc Pepin: Madam Speaker, I must admit I was not aware of that. 1 will inform myself immediately and provide the hon. member with an answer.


PRIVY COUNCIL OFFICE
Mr. Bill Domm (Peterborough):: Madam Speaker, in light of the fact the holiday season is upon us, I would like to give the President of the Treasury Board an opportunity to confirm or deny a report in the Ottawa Citizen and The Toronto Sun that a secretary to the Privy Council office is enjoying four months on the Mediterranean Sea at a cost of $12,000 to the taxpayers, on top of a reported $75,000 salary?


Donald James Johnston: Madam Speaker, I did note an earlier report on this subject. I will look into the matter. I have not seen the report in the Ottawa Citizen or The Toronto Star so I am not in a position to discuss any numbers with the hon. member.


TREASURY BOARD
William Henry (Bill) Domm: Madam Speaker, I wonder if 1 might address my supplementary question to the same minister. Would he deny or confirm that some of the political staff of cabinet ministers not only received a 10 per cent salary increase on the eve of the new budget but also received a reported 10 per cent to 12 per cent increase early in April of this same year?


Donald James Johnston: Madam Speaker, the hon. member for Peterborough should know that each year there is an adjustment made to the wages of public employees and ministerial staff and also employees of members of this House. This is made by the Committee of Internal Economy. I reject the notion which has been put forward by the hon. member for Nepean-Carleton, that this was made on the eve of the budget.


An hon. Member:: June 17.

July 5, 1982
Petitions


Donald James Johnston: It may very well have been that I signed the letter of June 17, but the decision was made some time ago stipulating 10 per cent, which was at the low end of the amounts that had then been decided upon.


Mr. Clark:: Why don't you table the document?


Donald James Johnston: As to the other part of the allegation, that some ministerial staffs had received additional increases of 10 per cent, that would strike me as being most unusual. The wages are there and they cannot be exceeded, unless some particular minister comes to Treasury Board. 1 am certainly not aware that any ministers have come to the Board asking for increases of that magnitude.
I might explain how the system works, Madam Speaker. It is specifically designed to place standards across the system, fair standards with reasonable annual adjustments that can be made. This is as true of ministerial staff as it is anywhere else in the system.


REQUEST THAT DIRECTIVE AND SALARY INFORMATION BE TABLED
Charles Joseph Clark: Madam Speaker, my question is directed to the President of the Treasury Board. Would he not eliminate what he claims to be this confusion-certainly, there is controversy-by taking the simple expedient of tabling the order of June 17 and tabling also an indication of the salaries received by all the exempt staff, before and after June 17?


Donald James Johnston: Madam Speaker, what I would be prepared to do is- on the information 1 actually requested but do not have at hand at the moment-is to advise the hon. Leader of the Opposition as to when Treasury Board ministers actually made the decision to give a 10 per cent increase to ministerial exempt staff. I know the Right Hon. Leader of the Opposition would agree that it was a reasonable settlement at that time. It was a very reasonable proposal made to those hard-working exempt staff members. I recall that it is slightly less than the adjustments that were in fact made to employees of members of the House of Commons and their officers by the ministers of the Committee of Internal Economy.


PETITIONS
Madam Speaker:: I have the honour to inform the House that the Clerk of the House has laid upon the table reports of the Clerk of Petitions stating that he has examined the petitions presented by hon. members on Wednesday, June 30, 1982, and finds that they meet the requirements of the Standing Orders as to form.



ROUTINE PROCEEDINGS


Hon. Allan B. McKinnon (Victoria):: Madam Speaker, it is my duty and pleasure to present a petition signed last week by several thousand people in the city of Victoria. This petition is somewhat different from most petitions. It does not ask that an injustice be rectified.


Madam Speaker:: Order please. I am sorry, this object must be removed from the House. This does seem to me to be an exhibit.


Some hon. Members:: Oh, oh!


Madam Speaker:: It must be removed from the House. I have never seen a petition like that before. It can be taken to the back of the House, behind the curtain.


Allan Bruce McKinnon: Madam Speaker, I do not wish to upset the decorum of the House. This petition is in the form of a birthday card signed by several thousand people during the celebrations of our birthday. The petition is merely to ask Parliament to accept and pass on to all Canadians their good wishes for a happy birthday and a good 115th year in this wonderful country. And as in duty bound your petitioners will ever pray.


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. 2,286, 2,448 and 4,316.


Mr. Cossitt: 1.	(a) What are the terms and details of any agreement in existence between the government and the Ogdensburg Port and Bridge Authority with regard to the International Bridge east of Prescott in the constituency of Leeds-Grenville (b) does the authority own buildings occupied by Canada Customs and Immigration and, if so, is a rental fee paid and, if not, for what reason (c) is the government satisfied with the manner in which the authority has maintained the facilities and, if not, what are any inadequacies?
2.	(a) Has there been or is there a problem between the government and the authority with regard to lighting in the area where trucks are examined at night by Canada Customs and Immigration (b) is one of the light circuits out of operation and, if so, for how long has it not been operating and for what reason was it not fixed (c) did the authority on any occasion turn off all the lights to prevent Canada Customs and Immigration from examining trucks at night and was this done to force rent payments on the government?
July 5, 1982

3.	Are any negotiations going on between the government and the authority for the purpose of settling any differences and, if so, what is the status of such negotiations?


Mr. Claude Tessier (Parliamentary Secretary to Minister of National Revenue):: 1. (a) The existing agreements are: an act to incorporate Ogdensburg Bridge Authority Chapter 57 assented to 4 July 1952, and P.C. 1957-331, an agreement respecting financial matters, (b) Yes. No. It is departmental policy to have the operator of the revenue oriented border facility provide and maintain customs accommodation free of charge, (c) No. Repairs and/or alterations would be in order.
2.	(a) Yes there was a lighting problem which has been rectified, (b) No. One of the light circuits was out of operation and was repaired within three hours on March 21, 1981. (c) The authority did turn out lights once in an attempt to reduce operating costs.
3.	Yes. They are ongoing.


Mr. Cossitt: 1.	Was approximately half the lighting on the Prescott-Ogdensburg International Bridge turned off at any time during April, 1981, as well as half the lighting from the Canada Customs area to provincial highway 16 and, if so (a) was this turned off by the Ogdensburg Port and Bridge Authority (b) on what grounds?
2.	Did an accident occur on the bridge recently involving three cars which could be attributed to insufficient lighting and, if so, what are all the details?
3.	Has the government determined whether or not any action by United States interests is part of a campaign to harass the government into paying rent for Canada Customs and Canada Immigration buildings and were the buildings to be rent-free under the original agreement signed by parties on both sides of the border?
4.	Does the government propose to take any action concerning the situation?


Claude Tessier: 1. Yes part of the lighting on the bridge and at the end of the Canada Customs area to provincial highway 16 was turned off although the customs and immigration area was not affected, (a) Yes. (b) In an attempt to reduce operating costs.
2.	Yes, on April 23, and an investigation was conducted by the O.P.P.
3.	There is no evidence of a campaign to harass the Canadian government. The existing agreements make no specific provision for rent free buildings.
4.	No, since the lighting problems have been rectified by the Port and Bridge Authority.


Mr. Malone: 1.	For each year since 1978, by province and territory, how many Firearm Acquisition Certificates were issued for (a) long rifles (b) hand guns?
2.	How many persons who applied for acquisition certificates for (a) long rifles (b) hand guns were turned down and denied a certificate?
Order Paper Questions


Hon. Bob Kaplan (Solicitor General):: 1. The Firearms Acquisition Certificate (FAC) system came into effect on January 1, 1979. For 1979 and subsequent years up to and including 1981, national and provincial FAC statistics are recorded in the Annual Firearms Reports to the Solicitor General of Canada by the Commissioner of the RCMP. As these reports are tabled annually in Parliament by the Solicitor General, your attention is directed to page 9 of the 1979 Report tabled April 23, 1980, page 10 of the 1980 Report tabled March 25, 1981, page 10 of the 1981 Report tabled April 7, 1982.
2. The FAC statistics indicate the number of FAC's issued each year by province and territory and also indicate the number of FAC's which were refused. However, there is no breakdown of FAC's issued for handguns and those issued for long guns since FAC's are issued for any number and any type of firearm acquired during a five-year period.


David P. Smith: 1 would ask, Madam Speaker, that the remaining questions be allowed to stand.


Madam Speaker:: Shall the remaining questions be allowed to stand?


Walter David Baker: Madam Speaker, I want to draw the parliamentary secretary's attention to a series of questions on the Order Paper, beginning at number 4,188. These questions cover employees of the following agencies: de Havilland Aircraft of Canada, Limited; Air Canada; Canada Mortgage and Housing Corporation; Canadian Broadcasting Corporation; Canadian National Railways and its subsidiaries; Cape Breton Development Corporation; Eldorado Aviation Limited; Eldorado Nuclear Limited; Export Development Corporation, which was referred to today in question period; National Arts Centre Corporation; Petro-Canada; and Cana-dair Limited. The question in all of those cases relates to what occurred today, and that is why I raise it today. It is: Were the loans made, were loans made to any employee of the named corporation or its subsidiaries since March, 1980, and if so, in each case what is the name and title of the employee; on what date was the loan taken out; on what date is it due; what was the amount of the loan; what interest rate is being charged; and what was the purpose of the loan?
1 have not raised this before, but in view of what has occurred during the last few days in which the House has been sitting, there was a question raised specifically today about the Export Development Corporation which would seem to me to make the answers to these questions relevant and require some urgent consideration.
I want to ask the parliamentary secretary if he would speak to the appropriate officials in each of those corporations, all of them Crown corporations, to obtain the answers to those simple questions. They ought to be there in the minutes of those corporations somewhere.

July 5, 1982
The Budget-Mr. Blenkarn


David P. Smith: Madam Speaker, I will be more than happy to look into this matter on behalf of the hon. member for Nepean-Carleton.


Madam Speaker:: Shall the remaining questions be allowed to stand?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Wednesday, June 30, 1982, consideration of the motion of Mr. MacEachen that this House approves in general the budgetary policy of the government, and the amendment of Mr. Wilson (p. 18905).
Mr. Don Blenkarn (Mississauga South):: Madam Speaker, when the debate was adjourned on Wednesday last to have a vote on the amendment to the amendment by the New Democratic Party, 1 was speaking about a number of things concerning the thrust of this budget that we have before us.
Over the weekend I was asked by a number of people, and I certainly have been asked in this House and so have others by members opposite, what we would do if we were the government, the kinds of measures that we would take in a budget to restore confidence in Canada. Madam Speaker, the first thing, of course, that we would do would be to eliminate the iniquitous provisions of the November 12 budget.
That budget was designed to destroy confidence, to destroy the willingness of people to risk their money and to destroy their desire to invest in Canada and create in Canada. That budget, with its horrendously complicated and vicious disallowance of loans, its vicious disallowance of capital cost on equipment and its anti-entrepreneurial stance in terms of taxation, is the kind of thing which has damaged Canada dramatically over the last eight months. We would have eliminated the provisions set forth on November 12. This minister did not do that, but that is the first thing we would have done.
Second, we would have seriously altered or suspended the operation of the Foreign Investment Review Agency. This country is desperately short of capital. The minister has said in answers in the House that we have a high savings rate, but I point out that while we may have a high savings rate in relation to the United States, our personal savings rate is less than half that which exists in Great Britain and less than one-third of that which exists in Japan. Second, our high savings rate is eroded by our high inflation rate. It is all very well to say that Canadians save up to 13 per cent of their disposable income, but when we have an inflation rate of 12 per cent, that
saving does not amount to very much. It certainly does not amount to enough to create the renewal required in our industries and to develop our many resources. We need foreign investment in this country. We need it in the worst way, and anything we have in our laws which discourages investment in Canada is anti-Canadian and anti-jobs, and that is the type of thing a government of which I would like to be a part would eliminate.
Next, we would seriously change the national energy policy. That policy, with its PIP grants and with arrangements made on the shores of Dow's Lake to determine where an oil company might drill and what kind of allowance will be given for exploration or development work, is anti-business. It is the kind of thing that is the clearest possible kind of demonstration of government's overriding control of the business community and business decisions. The very concept of the national energy policy's allowing the take-over by government of exploration advantages gained by those who explore under a 25 per cent back-in arrangement is anti-business because it represents expropriation without compensation. When we have those types of provisions in our law, what we in effect are saying is that private property has no sanctity here in Canada, and what we are saying to those who would invest in Canada is that they had better be careful because the government will back in on them or expropriate them without compensation.
Next, we would seriously attack the question of government spending. Government spending this year has increased from roughly $75 billion in the 1981-82 fiscal year to an estimated $90 billion or more in this fiscal year, an increase of well over $15 billion. There has to be some limit on this spending. What we would do is create an all-party committee of Parliament to go over government expenditures with a fine-tooth-comb to priorize government expenditures. I suppose there is nothing a government does that really is bad in terms of expenditures. At least the money is transferred to people or activities. However, there would be priorities. We would look at the priorities and try to eliminate as much spending as possible. We cannot go on forever trying to spend ourselves rich. What we must do is take a look at where we are spending money. Do we really need to increase the budget of the Canadian Broadcasting Corporation? Do we really need to spend the money we are spending in foreign countries on foreign aid? Do we really need to spend the money we spend to promote exports, through the Export Development Corporation, to New York City, for example?
Are there a number of programs like CHIP, DIP and NIP which might be eliminated as being no longer absolutely required in this society at the present time? Can we not priorize government expenditures? I say we can, and I say a responsible House of Commons would have a committee which would go over expenditures working with the ministry to reduce government expenditures by 10 per cent. That would certainly eliminate a great many of the problems we have with
July 5, 1982

respect to the financial affairs of the country. If this country could reduce the amount it spends by 10 per cent, it presumably could reduce the amount it has to borrow by $9 billion. That would go a long way toward restoring confidence. While we continue to have a program of spend, spend, spend, we will not get anywhere. 1 say it is time we priorized our expenditures and seriously looked at expenditures to identify where we could eliminate or reduce government expenditures.
Next, we would make a direct attack on a whole series of alphabet soup programs this government has. We have alphabet soup programs in the fields of housing, enterprise development, foreign aid and culture. Indeed, we have alphabet soup programs in every field. We have agencies and groups. We have programs on programs. The book on ITC programs alone is nearly an inch think. We must look at these programs. What we are getting out of them is anyone's guess. One of the things a government interested in the enterprise system would do is quickly eliminate as many programs as possible and replace them with sensible tax incentives which would be broadly based and would enable the entrepreneur to use his imagination and not worry about a fancy application or detailed brief to some bureaucrat who must sit and read it and pass it on through his department until the program has lost its meaning and purpose.
One of the great problems with these programs is that they require applications and briefs. People are required to study them. Often the people studying them know very little, if anything, about the programs involved. They certainly do not know the detailed requirements which exist in the various parts of the country. Business people in the field know their problems and are prepared to attack them, but they cannot attack them sensibly or make our country grow sensibly if they are hamstrung and tied up by bureaucracy, by regulation and by controls. I say these are not necessary to make our country grow.
Next, we would have to do something about the serious shortage of capital in the country. Somewhere along the line we must do more to encourage saving. We must seriously examine the viability of the capital gains tax and the situation whereby we attempt to tax a second time around dividends of public corporations. Dividends are already taxed, or the income is already taxed, at the corporate level. When it is passed on to the shareholder, it is taxed again. It strikes me that there is no reason for this double taxation. The double taxation of dividends creates inordinate complications in the Income Tax Act and causes inordinate numbers of people to be working for Revenue Canada to analyse tax returns. It causes enormous problems for industry and business, and these duplications and costs should be eliminated if we are to obtain some productivity in the country.
Dealing with capital gains, I suggest to the government that this year would be an ideal time to eliminate the capital gains tax because this year is a year of capital losses. If the capital gains tax were removed, government revenue would probably increase.
The Budget-Mr. Cosgrove


The Acting Speaker (Mr. Ethier):: Order, please. The time allotted to the hon. member has expired. Nevertheless, he may continue if there is unanimous consent. Is there unanimous consent for the hon. member to continue?


Some hon. Members:: Agreed.


Donald Alex Blenkarn: I thank the House for its indulgence, Mr. Speaker, and I will only take one minute more. I was speaking about the capital gains tax. This is a year when there are likely to be very significant capital losses. Under the Income Tax Act capital losses can be written off against income to the extent of $2,000. With the number of capital losses taking place now, I suggest to the minister that he might be better off to eliminate the capital gains tax completely and, therefore, the entitlement to write off losses. In fact, there are no gains to be made this year, or any that there are will be inflationary gains. More likely, there are deflationary losses, as our economy is in a tail-spin at the moment. Indeed, if anything it is on a run to bankruptcy. We must do a number of things to get this country back on the road to recovery. We must return confidence to the business community, to the farm community and to the home owner. Unless we do that immediately we will be in very bad shape.
In the few minutes allotted to me I have atempted to set out some programs that should be considered. They did not appear in the budget. The budget is remiss in almost every possible detail.


Some hon. Members:: Hear, hear!


Paul James Cosgrove: Mr. Speaker, I am pleased to have this opportunity to express my complete support for the measures announced by the Minister of Finance (Mr. MacEachen), particulary the initiatives which relate to my direct concern for housing.
This budget is designed to renew security and confidence, to foster partnership between governments and the private sector and individual Canadians and to achieve economic revival and recovery. It is designed to forge a national purpose and resolve to seek solutions to economic problems and to create jobs immediately. Nowhere are these themes more important than in housing. Housing is the cutting edge and it can lead the way to economic recovery.
To achieve this it is necessary to create a climate in which individual Canadians feel secure and confident in their housing choices. Home owners want to know they can cope with mortgage renewals, renters want to feel assured about the supply of rental accommodation and prospective first-time home buyers want a longer-term security before purchasing a home. This government, in past actions and through specific measures introduced by the Minister of Finance last week, has dealt with these issues. I will set them out one by one.
The Canada mortgage renewal plan will now provide grants. There will be no more interest deferral. Through the commitment to produce 30,000 rental units, the Canada rental supply

July 5, 1982
The Budget-Mr. Cosgrove
plan is reaffirmed. The $3,000 grant to buyers of new homes and first-time home purchasers provides immediate stimulus. Combined with the proposal set out in the white paper regarding mortgage funds at less than going rates, it provides a longer-term security framework. The additional 2,500 nonprofit and co-op housing units on top of the existing program for 25,000 social housing units will ensure that households on low and moderate income are not forgotten. Finally, the extension of the Canada home renovation plan enables more home owners to improve and repair their homes and thus to remain in their homes.
These actions demonstrate the government's concern for existing home owners, first-time home buyers, renters and for getting the housing industry and jobs in construction going. Canadians see housing as central to their social and financial security. These measures help restore that security. Confidence is needed if first-time home buyers are to purchase a home. This confidence is provided through the two measures I have discussed.

The measures taken by the government with respect to housing will give Canadians an opportunity to show a national resolve to stimulate the housing industry. To be successful, these measures require a definite commitment by, and the cooperation of, other levels of government, industry and our lending institutions. We must, all of us, work together with a sense of national commitment and purpose to get the housing industry back on its feet and pave the way for economic recovery. This is no time to point the accusing finger. This is a time for action and co-operation.

I am confident that if we all work together we will succeed in this mission, but it is no small job. Some housing analysts have been predicting housing starts will be in the order of
110,000	to 125,000 this year. I would like to see starts this year reach the level of last year, approximating need. This is an ambitious target in the present circumstances and my work, that of my provincial colleagues, the industry and all Canadians concerned will be difficult, but I believe that if we work together we can achieve real progress.
There are substantial rewards for the economy and for individual Canadians in achieving this task. Federal housing actions will create 180,000 jobs, most of them over the next year. These jobs will be in rental construction, the construction of single family dwellings and the renovation of existing housing. They will reduce substantially the high level of unemployment in the residential construction industry. Jobs will be created in the production of building materials and in the manufacture and distribution of appliances and other household furnishings. We know the spin-off effects these initiatives and support have on housing. These benefits will flow to all regions and parts of this country.
The federal government is committed to getting housing going and to restoring security and confidence. The government, through this and the previous budget, has allocated $750 million for housing initiatives in a period of some eight months. This is in addition to the government's ongoing
support for social housing, for rehabilitation under the residential rehabilitation assistance program, for home insulation, and for support of native housing. These are new funds allocated to housing. It is also important that hon. members and the public understand that these funds do not represent the replacement of private funds with federal funds. These funds provide incentives to Canadians. They represent the government working with Canadians to create an environment, a partnership, for economic recovery and for renewed security and confidence in the housing market.
This partnership between the government and individual Canadians means that this stimulus of $750 million in the last eight months will result in some $3.7 billion worth of new housing activity in the private sector.
I want to take a few moments now to review our programs specifically. I am particularly pleased with the decision to provide a cash grant of $3,000 to all purchasers of new homes and to first-time buyers of existing housing. I would like to remind hon. members that this assistance applies to all types of homes-single detached and semi-detached houses, triplexes, duplexes, row housing and condominiums. I have indicated that we recognize that under the National Flousing Act certain steps will have to be taken to get the grants flowing. The corporation has indicated that they are available as of the date of the budget. The grant is available for all new houses started before the end of 1982, including houses which are already built but not occupied. In the case of first-time buyers purchasing existing housing, the grant will be available to the end of this year. New houses must be purchased before the end of 1983 to qualify for the grant.
This time-frame, Mr. Speaker, is designed to encourage builders who are prepared to build housing on speculation. That is, to begin construction without a commitment from a buyer. We believe that this encouragement should have the private sector moving, because it is supported not only from the federal government but from a number of provinces who in the last few months have moved with similar or parallel programs.
To ensure that the buyer's continued interest in the property is secure and serious, a minimum downpayment of 10 per cent of the purchase price is required over and above the $3,000 grant. The grant, incidentally, is tax free. It is expected that this plan alone will encourage the production of medium-priced housing and, for that reason, there will be a price limit of $100,000 for all areas except metro Toronto, Edmonton, Calgary, greater Vancouver and Victoria, where the limit is $150,000 because of the difference in price ranges.
I noticed, Mr. Speaker, that on the weekend the real estate industry, particularly in metro Toronto, have taken advantage of the annoucement of these plans. Along with the $5,000 interest-free grant, it means, for example, that for condominiums offered for sale at anywhere from $35,000 to $50,000, the
July 5, 1982

$8,000 off is a considerable stimulus to that particular area of the market. The grant is a straight-forward arrangement. It will allow home buyers to take advantage of both the federal and provincial plans as 1 have noted.
The $3,000 grant has to be seen alongside the longer security aspect of housing which the Minister of Finance addressed on Monday last. Of course, I am referring to the white paper on the tax incentive plan. It is a document entitled "Inflation and the Taxation of Personal Investment Income" dated June, 1982, tabled with the budget material. It is a plan to give tax incentives and at the same time allow interest rates at 3 per cent to 6 per cent lower to be available to certain sectors in the economy. The preface to the document says:
They would also ease the cost of financing for new home buyers and small businesses, farmers and fishermen and increase the attractiveness of equity investments by individual Canadians.
The $3,000 grant is intended to be a bridge until the committee reports and the legislation is before the House and enacted. However, I would draw members' attention as well to the last sentence in the introduction by the minister:
-any legislative provision limiting qualifying property by an effective date will include purchases made after the date of issuance of this paper.
So that we see hand in hand an immediate stimulus in the context of a longer term security introduced by the provisions of those intended changes in the income tax structure.
As hon. members are aware, the government has already demonstrated its concern for renters and for the availability of rental accommodation through measures which will increase the production of rental accommodation by some 30,000 units. As you know, Mr. Speaker, one third-10,000-of those units are designed to be offered on a rent-geared-to-income basis to serve Canadians of quite modest income. 1 am very pleased to say that the $350 million program has been advertised and responded to by the industry, and the first project under that program is being announced today. It is in the Ottawa market where vacancy rates are quite low. The project cost is in excess of $15 million and comprises 343 housing units. It will have federal assistance of slightly more than $2.4 million, a per unit assistance of $7,250. Hon. members will note that the federal assistance results in over $15 million in construction activity. Thus, the $350 million will be used to generate affordable accommodation in the tight rental market. That program is on its way and I am particularly pleased to see that it is starting in concert with budget announcements in support of other housing measures.
1 am very pleased to say that the response has been encouraging despite, of course, the slow take-up time. I would have preferred the program to start earlier, but I am confident that the Canadian rental supply plan, with the $350 million allocated in November, taken in conjunction with the $400 million announced Monday last by the minister, introduces a major stimulus to the economy at this time.
The 30,000 units to be assisted under the plan, of course, are in addition to those the government supports presently under the co-operative and non-profit housing program which similarly encourages the construction or acquisition of housing
The Budget-Mr. Cosgrove
intended mainly for people with limited incomes. As you know, Mr. Speaker, another provision of the budget on Monday last was to increase that 25,000 units to 27,500, and I know that will be good news to a number of organizations right across the country who have expressed interest in sponsoring these socially useful housing projects.
One of the most popular of the government's recent initiatives in housing has been the Canada home renovation plan, which is helping Canadians to stay in their homes and renovate their homes. It provides forgivable loans up to $3,000 to encourage owners to invest in the renovation and improvement of their properties; that is, on the expenditure of twice as much of their own funds. That program was supplemented by an additional $30 million which means, Mr. Speaker, that Canadians will be using $60 million of their savings to support the stimulus of this program announced by the minister.
The public response to the plan has, of course, been overwhelming in many communities. CMHC reports that although the program has been in effect just two months, the total loans approved or in progress amount to almost $8 million of the original $30 million allocated. I welcome the minister's announcement. It is an effective program directed to need, and at the same time it is putting savings to work and getting Canadians working.
I think all hon. members will welcome the changes announced by the Minister of Finance regarding the Canada mortgage renewal plan which offered a combination of grants and interest deferral guarantees for home owners facing renewal at interest rates much higher than the rate on their original mortgage. Members from all parties have complained that Canadians did not respond because they did not want to get into further interest-deferral guarantees. The minister has set aside an additional $50 million so that this program will be changed with the passage of the legislation, but effective to the date of the announcement, so that any family renewing after Monday last and paying over 30 per cent of their income for principal, interest and taxes will now qualify for a grant to meet the difference up to $3,000 annually. This amount as well is tax free. I believe it is quite evident that many Canadians do not consider the interest deferral as attractive, as has been suggested. I believe, Mr. Speaker, that with this change we will see a renewed interest in the plan and applications will be taken up.
As I said at the outset, this budget is important for the range of initiatives taken in the housing area generally, where we have a shared responsibility with the provinces and municipalities. It increases the security of home owners faced with mortgage renewal, as I have just described, and concerned about losing their homes. It faces the difficulties of Canadians looking to rent, and I have announced the first plan under the rental supply program where $350 million is going to work responding to the 2,500 applications by builders right across this country. In my view, the budget provisions restore the confidence of first-time buyers both in the short and long term.

July 5, 1982
The Budget-Mr. Clark
I have indicated that the $3,000 grant is intended to be an immediate stimulus, but in the context of the commitment of the government in the white paper it is to provide that framework of reduction in interest rates over the long haul, not only for home owners but, as the minister has indicated, for farmers, fishermen and small-business men. The budget provides confidence to the residential construction industry, to managers, to owners and to those people who invest and who are concerned about making starts, and stimulus is offered in cooperation, side by side, with some plans already announced in some provinces. In sum, it signals the government's concern and commitment to security for home owners and renters, to reasonable access to ownership and to the principle of the national government which is to work in co-operation with the provinces, municipalities, their agencies and with industry. We have as well considered representations from hundreds of Canadians received by members on both sides of the House over the past few months.
In summary, I want to indicate to hon. members that over the next few weeks I will be visiting my provincial counterparts and meeting with representatives of industry. We will be receiving briefs on the white paper, as the minister has indicated, on those areas of the tax incentive program that will bear on making housing more affordable and purchase more secure. I want to hear their comments on the white paper as well, so I can frame my responses to the minister. I want Canadians to know that this government gives high priority to getting the housing industry on its feet, to getting jobs going again and to boosting the housing industry in Canada. It will require not only these stimuli, not only this leadership and financial commitment of the national government, but the co-operation of all Canadians, my provincial counterparts, the provincial governments, the municipalities and industry.
This is the message of the budget. These are difficult times. Canadians are asked to respond together, and I am convinced that Canadians together can make it happen.


Charles Joseph Clark: Mr. Speaker, I will not detain the House by commenting on the remarks of the minister responsible for housing. He has made predictions before about the effectiveness of his program in case after case after case. He has seen those predictions proved wrong by the reality with which Canadians have to deal. We hope he is right this time. We expect him to be as right this time as he was last time, and we trust that when it is proved he has failed one more time he will take his courage in his hands and resign along with his government.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Most of us have been travelling the country for the last several months speaking to Canadians who are in acute difficulty who know, not as a matter of theory but as a matter of fact with which they have to live day after day after day, just how seriously their lives are undercut by the economic
policies being followed by this government. There had been some hope because of the persistent pressure mounted by this party in the House of Commons and elsewhere that we would get a new budget which would bring about a change in economic policy and some hope for Canadians. That was the hope. I could not help but remark the other day that the day after the budget was brought down on June 28 there was a chorus of criticism from across the country, informed criticism, people who knew that what was being proposed just would not work, and that criticism continued unabated. We have seen it in newspapers in this country and elsewhere. We have read it in the U.S. periodical Business Week which was quoted on the last sitting day by the President of the Treasury Board (Mr. Johnston). However, he neglected to quote from the most recent issue referring to this government's economic policies, which reports that the economic policies of this government have-
-brought Canada to the brink of economic disaster .. . The gross national product is shrinking, U.S. and Canadian investors are taking huge amounts of capital out of the country. Business is staggering under an unprecedented debt burden, and the Canadian dollar has fallen to an all-time low.
The article goes on as follows:
-many economists fear that companies' crippling debt load now eating up 66 per cent of corporate pre-tax cash flows will snuff out prospects for even a weak Canadian recovery this year, whether or not the U.S. economy revives.
The Wall Street Journal for June 30 has an editorial entitled succinctly "Poor Canada". It concludes:
The new budget is well designed to deepen Canada's stagflation.
We have read the same in Canadian newspapers. For instance:

Today, the Montreal newspaper La Presse printed an article by Mr. Yvan Guay, under the heading: "New Budget Puts Country into Recession."

And so it goes across the country. Every analyst and individual who has had the opportunity to consider the impact upon his or her life of this budget knows that it is a disaster waiting to happen to them. I see the Member of Parliament for Thunder Bay-Nipigon (Mr. Masters) shaking his head. I would be pleased if either myself or members of my party could go to Thunder Bay to debate the impact of the budget upon the citizens of that coummunity. We would do a fatality count of the number of businesses that have been driven into bankruptcy in the Thunder Bay region. We would do a fatality count of the number of old age pensioners who will see their benefits reduced because this government is asking the elderly to pay the price of this government's incompetence. We would talk to people who have been forced out of work and to abandon their hopes and dreams in that community. We would then recommend to them that if they want a change, they had better send to the House of Commons a Member of Parliament who puts his people's interests ahead of his party line. That is the only way to get a change in this country.

July 5, 1982

[ Translation]
Mr. Speaker, we are faced today with a very serious crisis in our economy. The statistics are known to everyone. One million two hundred and forty-one thousand Canadians are out of work. The Canadian dollar is worth 77.56 cents in terms of the U.S. dollar. Interest rates are at 16.58 per cent and rising. Every day, 1,200 Canadians are losing their jobs. The desperation these figures are causing is absolutely heartbreaking. The fear of losing one's job, tension rising in families, marriage breakups, violence and suicide, all as a result of economic pressures. The cost in human terms is something we would rather not think about. The statistics are merciless, but although they cannot be denied, they can be manipulated and one gets used to them. But, Mr. Speaker, we do not get used to alcoholism, we do not get used to suicide or battered wives or family breakups. All these phenomena tend to increase when financial conditions get worse, and unfortunately, that is what is happening in Canada today. When discussing economic policies that are putting Canadians out of work, we must also consider the human cost. That is the point I am trying to make. We are talking about policies that are driving people to alcoholism, policies that are causing family breakups and bringing Canadians to suicide. That is what we must remember when we are discussing what is happening to this country. That is what we must not forget when we say we have a duty to our fellow citizens, because we here in the House are the only institution in Canada that is able to compel the government to act. The worst part of this recession is that the Government of Canada, a majority government at that, has no plan at all to get Canada out of this situation. And the unforgivable sin is that once again, this government is trying to trick Canadians instead of providing honest leadership.

I want to deal for a moment with the question of trickery. Trickery is the trademark of this budget and trickery is the trademark of this government. Consider just a few items, Mr. Speaker. First, a 6 per cent freeze is imposed on every public servant. But 11 days before the freeze a special class, people who work for Liberal ministers, received a 10 per cent raise authorized by the President of the Treasury Board. The man who holds back public servants makes a special deal for his friends who work for Liberal ministers. That is one piece of trickery.
The budget claims $750 million will be spent on job creation. The clear implication is that there will be $750 million of new spending, and that is false. At best there will be $267 million in new spending to create jobs. At worst it will be only $117 million in new moneys allocated this year to job creation. The practice was followed in 1979 of stating in the budget-


Donald James Johnston: Mr. Speaker, I rise on a point of order. I think the Right Hon. Leader of the Opposition (Mr. Clark) might be interested in knowing that the Treasury Board
The Budget-Mr. Clark
decision to provide the 10 per cent wage guideline increase in fact was made on May 13.


Charles Joseph Clark: What the Leader of the Opposition is interested in knowing and what the people of Canada are interested in knowing is that 11 days before the budget came down, a budget which the President of the Treasury Board knew would be imposing limitations upon public servants, the President of the Treasury Board decided to go ahead with a proposal which would give a raise to his friends who worked for Liberal ministers. What the country is interested in knowing is that the double standard is alive and well within government. There is one standard for most of the public service; there is another sweeter and fatter standard for those people who work for Liberal ministers of the Crown. That is the reality.
The minister grins about it. Instead of grinning, I should like to have him table in the House of Commons the order of June 17 and also the salary levels of those exempt staff before and after June 17, so that we will know exactly what is the situation. That would be a means of dealing with the accusation of trickery which 1 make here, the accusation that the government in this instance, as in so many other ways, is trying to trick the people of Canada into thinking that it is doing something which it is not doing.
Before the President of the Treasury Board rose, 1 was recalling to the House the fact that in the budget of 1979 introduced by the hon. member for St. John's West (Mr. Crosbie) the practice was followed of stating in the budget the increase in unemployment insurance contributions. That was the practice in 1979. We knew the payments would go up so we told Canadians the truth. In this budget nothing is mentioned of the increase in unemployment insurance payments. The fact is that each employee in Canada will pay up to $142.50 per year more in unemployment insurance contributions; that is each working Canadian. In effect, that is a tax increase of another $142.50 for every working Canadian who contributes to unemployment insurance, but not a word of that was mentioned in the budget. In the honest budget of 1979 the increases were forecast. This budget which cannot be so characterized was silent on those increases.
Employers as a group-and it is not mentioned in the budget but it is there in the figures-will pay $1.2 billion more per year in their contributions to uenmployment insurance. That will drive some small businesses into bankruptcy; there is no question at all about that. It is a recipe for bankruptcy for some small businesses already on the ropes and ready to be knocked out of the ring. It is a secret tax of 52 per cent for employees and of 34 per cent for employers. The government admits that there will be increases but it refuses to say how much. This budget which is supposed to create confidence pretends that these increases are not there.
It might be fine for Liberal Members of Parliament to pretend that they are not there, but when Canadians pay $142.50 more next year for unemployment insurance benefits and when their employers risk going out of business because of this hidden tax increase which was smuggled into this tricky

July 5, 1982
The Budget-Mr. Clark
budget, they will know the high cost of having a government which cannot quite bring itself to be as truthful and as honest as the standards of this place and the country require.
I see the Prime Minister (Mr. Trudeau) in the Elouse. When the government was trying to justify having 1,200,000 senior citizens singled out to pay for the mistakes of the government, the Prime Minister said "6 per cent is what they will get; 6 per cent will be the CPI if we have co-operation". He knows that there will not be a reduction in CPI to 6 per cent. He knew it when he stood in his place; he knows it when he sits there now. He knows that the CPI will not be at 6 per cent and that the
1,200,000	senior citizens of the country will suffer from being singled out by the government.
And the deceit goes on. In housing there is a pretence of help with a one-time-only $3,000 grant. The average price of a Canadian home during the first quarter of 1982 was $75,578 across the country. Assuming an effective mortgage of $60,462, together with a builder buy-down of the mortgage to 17 per cent, the monthly payments on the house would equal $842. By applying a $3,000 one-time home buyer grant, the new home owner still faces payments on his home of $800 per month. The government will help buyers who can pay $800 per month. There are not very many of those in Canada, and there will not be very many Canadians who will be helped by this program.


Mr. Berger:: What about provincial grants?


Charles Joseph Clark: "What about provincial grants", I am asked by a Liberal Member of Parliament from Quebec who won and earned his way here by attacking Mr. Parizeau and Mr. Levesque. I am being asked why I do not come to the defence of Mr. Parizeau and Mr. Levesque here. The only thing I will say for them-

-at least the government of the province of Quebec, Mr. Parizeau and Premier Levesque are far more aware of the needs of their people than the Liberal federal government here, the government to which belong the Minister of Finance (Mr. MacEachen), the member for Laurier (Mr. Berger) and the Right Hon. Prime Minister.
As far as spending is concerned, this government claims that its expenditures-


Mr. Allmand:: What hypocrisy!


Charles Joseph Clark: I hear the hon. member for Notre-Dame-de-Grace-Lachine East (Mr. Allmand), a former minister, talking about hypocrisy. At least he does not share in the hypocrisy of his Privy Council colleagues in government because he has been thrown out of the government. I would hope that if he sat there his standards would be sufficiently high that he would not associate himself as a minister with a government which has brought in a budget so full of deceit, so full of trickery and so empty of any hope of economic recovery.
[ Translation]
I was talking about spending and restraint policies. As far as spending is concerned, this government claims that its expenditures have not increased more than 17 per cent, while in the national accounts, the government's own figures indicate an increase of 20 per cent. During the election campaign, the Liberals promised to keep the rate of government spending below the growth rate of the GNP. That is another promise they have broken, and now they are spending twice as fast as they promised to do during the campaign. As far as small businesses are concerned, the budget proudly announced a $400 million program to, and I quote:
-reduce interest costs for small businesses.
However, the program is restricted to new investment. To date, 4,500 businesses have gone bankrupt in the first five months of 1982. How many businessmen, how many farmers or fishermen, assuming they would be interested, are in a position to make new investments?

This budget is designed to deceive. It pretends to be doing things it is not doing. That pretence destroys confidence. Nobody trusts a trickster, and a budget so full of tricks and so full of deceptions is bound to destroy confidence which is key to any recovery.
Apart from trickery, what is in the budget? There is one important initiative-the introduction of restraint on public sector salaries. That is a field in which the government has lagged behind several Canadian provinces. We are relieved that it is beginning to accept that government spending is a major cause of current economic problems. As usual, its proposal is unjust. It pretends that life is as hard for a senior deputy minister as it is for a clerk or secretary, and it applies the same restraint across the board, except of course for the staff of ministers. But it is a step in the right direction toward the government admitting that its own practices affect the economy.
Beyond that, beyond imposing restraint on public servants, old age pensioners and families with children, what is the direction of this budget? What is its purpose? What philosophy or attitude inspires it? What is the government trying to do with this budget? I suggest that it is trying to do two things. First, it is trying to buy time for perhaps yet another budget in the fall or, if we can believe the President of the Treasury Board in his remarks last Wednesday and the parliamentary secretaries from Willowdale (Mr. Peterson) and Sudbury (Mr. Frith), to set the stage for wage and price controls in Canada. Apart from buying time, it is attempting to shift blame. The provinces have already been called in. No doubt big business will be called in and then the labour unions.
Anyone who has watched the confrontation tactics of this government for more than a decade will know that it is looking for someone to blame, someone to fight with, some scapegoat
July 5, 1982

to become its target and its excuse. The one area of unquestionable expertise in this government is setting up a straw man and attacking it. I would imagine that organized labour has been chosen for that role. The government wants to divert attention from its own failings and therefore it is looking for a fight with the unions. I hope that the leaders of organized labour will be wise enough not to be drawn into that trap.
Beyond buying time and shifting blame, what is the theme, the thrust, of this budget? Is it to restore confidence? With a $20 billion deficit and a hatful of tricks, is that the purpose? Is it to practise equity-that equity which was so much the siren song of the budget of last November; equity in a budget which increases taxes except for the rich; equity which singles out the elderly to pay for the government's mistakes; equity which imposes the same standard of restraint on a poor secretary in the public service as it does on a wealthy deputy minister? There is no equity in this budget.
Is its purpose to stimulate investment and thus create jobs? Obviously not when the government keeps in place the National Energy Program which has driven away billions of dollars of investment and when it offers small business, farmers, fishermen and the construction industry incentives which most of them cannot use.
The sad conclusion is that there is no purpose to this budget. There is no economic direction. This document is a short-term political response to an acute political problem. Since Liberal MPs just could not go home this summer with the government doing nothing, we have a camouflaged budget to make it appear as though the government is acting and then the subtle promise of another change in the fall.
We will see how comfortable Liberal MPs are this summer while defending a $20 billion deficit. We will see how comfortable they are defending a hidden 54 per cent increase in UIC contributions. We will see how comfortable they are this summer defending a $1.3 billion tax increase. We will see how comfortable they are defending a special plan to victimize old age pensioners. We will see how comfortable they are defending a special pay increase for the staff who work for Liberal ministers.
There is another remarkable feature of this budget, and that is the revelation that the June 28 budget did not belong to the Minister of Finance alone. It had a co-author, a co-conspirator so far unindicted. John Turner helped to write this budget. The Prime Minister smiles.


Mr. McDermid:: He likes that.


Charles Joseph Clark: John Turner helped to write it and the Prime Minister leaked the fact that John Turner helped to write it.


Some hon. Members:: Hear, hear!


William Warren Allmand: You should be ashamed of yourself.


Charles Joseph Clark: We have the hon. member for Notre-Dame-de-Grace-Lachine East speaking again. I do not know if he is complaining that he was not consulted on the writing of the budget or if he is complaining about the fact that his friend,
The Budget-Mr. Clark
John Turner, is an unindicted co-conspirator in the preparation of this budget.
I must say that the Minister of Finance could not have chosen a more appropriate co-conspirator than the Hon. John Turner, because the spending policies that were begun by John Turner created much of the economic mess that we face today. It is entirely appropriate that we have a Turner-MacEachen budget because John Turner, along with the Prime Minister, the Minister of Finance and the Minister of Energy, Mines and Resources (Mr. Lalonde), are the four horsemen of the economic apocalypse that we face in this country today.
An interesting tradition has been started. Years from now, in this tradition, when the roof of the Washington embassy leaks we will get Arthur Erickson to get the bucket. But I want to congratulate the Minister of Finance on persuading John Turner to carry the can for an economic crisis that he did so much to create.


Some hon. Members:: Hear, hear!


Mr. Cousineau:: Those are John Crosbie's jokes.


Charles Joseph Clark: We just heard the Liberal party's jokes.
The reality is that a large number of Canada's economic problems were created right here in Canada and they can be solved right here at home in Canada. We can have economic recovery in Canada, but first we must put our own house in order. When the co-author of the budget, Mr. Turner, was minister of finance for four years, federal government spending rose by 108 per cent. That was in the 1970s. However, many of those spending programs became a continuing drain on governments. They created a situation where the cost of interest on public debt this year will equal $700 for every woman, every man and every child in this country and will equal $1,800 per taxpayer. That is the cost of interest on the public debt alone. We cannot afford that. We cannot afford the attitude expressed by the President of the Treasury Board last Wednesday at page 18965 of Hansard, when he said:
The essential attack on the federal deficit and on provincial deficits can only come when people contribute more out of their incomes to reducing them.
That comes from the minister charged with government restraint. He believes that the only way to cut the deficit is to force taxpayers to pay more. There, in a sentence, is what is wrong with this government. It expects others to act-the taxpayers, the Americans, the unions and the old age pensioners. That from the minister responsible for restraint, the minister who stopped the privatization program that would have cut government spending, the minister who stopped the introduction of sunset laws, the minister who stopped the legislation to control Crown corporations, if in fact he had any influence over legislation which comes under his jurisdiction. I quote again:
The essential attack on the federal deficit and on provincial deficits can only come when people contribute more out of their incomes to reducing them.
That is the quote. That is nonsense. The essential attack on the federal deficit must come from the Government of Canada

July 5, 1982
The Budget-Mr. Clark
cutting its spending, cutting its appetite and changing its attitude.
If the government does not want to start cutting expenditures, let Parliament start doing it. The Minister of Finance has set up a committee of outsiders to consider some of the measures he has announced, but measures he cannot produce, for this budget. Of course, that work should have been done by Parliament.


John Horton McDermid: That will save a lot of money.


Charles Joseph Clark: As one of my colleagues says, it will save a lot of money by bringing in these people, paying their per diem expenses and whatever else is involved. That will save a lot of money. That work should have been done by Parliament. Among other advantages, as pointed out by my colleague for Kingston and the Islands (Miss MacDonald) during question period today, it would have allowed some women to take part in the process. The Minister of Finance discovered ten days after the budget that women constitute 52 per cent of the population of Canada. Before that, he had not deigned to allow one single woman to serve on this committee that he established. That eloquently indicates this government's position on the status of women.
In addition to recognizing the very existence of the majority of the Canadian population, a parliamentary committee would have acted with more authority than a group of advisers. However, that is behind us and it has been done. The minister preferred to go outside to bring in a group of men he could meet with in some dark room. Incidentally, I presume that women will be required to enter these committee meetings through the back door. The minister will probably not allow them to walk in through the front door as equals. He has indicated his chauvinism to such a degree that I imagine he will require them to go through the back door-once he finally finds a woman who is prepared to serve on the committee. However, the minister has made that decision and it is behind us. The minister went outside Parliament to do Parliament's work.
There is still a major job for Parliament to perform. It is a function that was proposed in this House some weeks ago by my colleague from Mississauga South (Mr. Blenkarn). He proposed, and we propose again today, that the government establish immediately an all-party committee of Parliament to go through the government spending estimates again, not with an eye to the traditional approval, but to find areas where we can save on spending that does not need to be imposed upon Canadians, to identify programs we do not need, inefficiencies we cannot afford and expensive practices that are out of date.
That committee of Parliament, with the authority of Parliament could recommend where spending could be cut. It can prove to the government that restraint is a better answer to deficits than taxing the people. That can be done. It takes nothing more than a simple reference by the President of the Privy Council (Mr. Pinard). The committee could work all
summer. Certainly the members of our party would be prepared to work all summer. I would hope that the members of the New Democratic Party would do that, starting with what we learned in the examination of the estimates. Perhaps the NDP does not want to serve on a committee that works this summer. They had some difficulty showing up for a vote on their own motion the other night. Perhaps they would have difficulty showing up to undertake their responsibilities on that kind of committee.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: I take it that the contributions from the members of the NDP indicate they want to be dissociate from the rest of their party and indicate their willingness to work through the summer even if others of their colleagues do not. I will take it as that.
The point on this serious proposal is that a committee of this kind can work effectively and can work all summer. The need to do it was made abundantly clear in that abortive and frustrating exercise we all went through some two weeks ago when parliamentarians stood up in robot-like fashion and approved estimates that very few of us would want to take responsibility for in the public eye. That was a farce. We all know it was a farce. We know that Parliament and parliamentary control of public spending has become a farce. That is a reform for another time, something we hope will be reformed by the committee looking into it.
This is an urgent problem, a problem of trying to identify areas where we can save the taxpayers of Canada money right now and cut spending right now. Let us look at some of those things we know about. For example, we know that the Government of Canada spent $110,000 on a metric cooking lesson for Madam Benoit and Bruno Gerussi to help them carry out the propagandizing of metric in the country. Did we really need that $110,000 cooking lesson?
We know that each year the Government of Canada spends half a million dollars to buy briefcases that are given free to public servants, $500,000 so that public servants can have free briefcases. On the day that the post office became a Crown corporation, the Government of Canada, practising its usual restraint, spent $300,000 for free coffee, doughnuts and souvenir envelopes. That was to celebrate getting rid of the post office, or at least putting it into Crown corporation form.
We know there was a payment of between $365 million and $486 million too much for the purchase of Petrofina shares. We know about the JetStars that are used to carry ministers who will not talk to each other, one minister per JetStar to Winnipeg.
We know about the number of consultants employed by this government at extravagant cost. The federal government today has an information and advertising budget of $235 million. By the way, that is the largest advertising budget in Canada. More important, that $235 million which this government spends on propaganda is 17 times the total cost of government in the first year of confederation.
July 5, 1982

Those are just some of the areas where we know that savings could exist. That is just the tip of the iceberg. What we want to do is let the House of Commons do its job. The House of Commons should be allowed to go after not simply the tip but the whole iceberg. If we could cut seriously into that iceberg, we could save the taxpayers of this country millions, perhaps hundreds of millions, of dollars.
If we did that, we would not have to go to the old age pensioner and say to them that because the Prime Minister will not let Parliament do its work and cut savings, they will have to pay for it. They have to pay for giving Bruno Gerussi a cooking lesson in metric. We would not have to do that if Parliament was allowed to look into the spending carried out by this government, to find areas where we can cut back, so that instead of raising taxes for Canadians in order to reduce deficits, government spending could be cut on those programs on which the government has no business or no right to be spending money.
A profound difference in attitude separates the parties in this House. It is evident in the means that we choose to reduce the deficit. The government believes in taxing people more; we believe in cutting government spending, that is a symbol of a deeper difference about the role of government and the role of the state. Everybody accepts the responsibility of government to help the needy, the elderly and others. I should qualify that: everyone did accept that until the Liberal government singled out old age pensioners to pay for their mistakes.
The difference arises over the question of whether governments or people best encourage the growth and the freedom that have been characteristic of Canada. There has been with this government a steady movement toward control by the state. It is evident in the massive propaganda budgets which other free countries do not consider necessary to persuade their citizens but which has made the Government of Canada the largest propagandist in the land.
It is clear in the National Energy Program where state control has a higher priority than energy production and where the government has become a predator in the marketplace. It is evident in the attitude toward investment, frightening foreigners with F1RA and changing policies on IAACs, capital cost allowances and savings plans which would encourage individual Canadians to invest.
This government has adopted a deliberate anti-investment attitude. It used to pretend it was nationalist. The accurate word today is unemployment. Those policies have driven billions of dollars out of Canada and have cost thousands of Canadians jobs they would otherwise be working at.
Two weeks ago I gave the House several examples of the direct job loss in Canada because of measures in the November budget. I will not repeat all those figures. However, as an example, I want to remind the House that the provision on capital cost allowances alone has not been changed since the November budget. If we accept the estimate put forward by Walter Gordon's Canadian Institute for Economic Policy that $1 million in direct investment creates 40 to 50 jobs, and if we
The Budget-Mr. Clark
take the lower figure, the 40 jobs, then the government's decision to allow only one half of the capital cost allowance results in the loss of 44,000 jobs in Canada. Forty-four thousands jobs are lost because the government wants more more money and leaves less money for Canadians to be put to work. Those 44,000 Canadians could be working and paying taxes. They want to work. Instead, because of Liberal government policies they are forced to be out of work and to collect unemployment insurance. That is an economic waste. It is a tragic human waste. We cannot stand more of it in this country.
Those are only some of the costs. The anti-investment, antijob attitude of the Liberal policy also drives up interest rates. The National Energy Program is causing money to flood out of this country. Interest rates are used to bring that money back. If we had a pro-investment attitude in Canada, interest rates would be three or four points lower than they are today.
Projects that might be started in Canada are held back because the government's attitude creates a cloud of uncertainty. That affects large investors. It also affects individuals who have to make decisions such as buying a house, buying a car or starting a small enterprise. This country was built on taking risks, but no one takes risks in this atmosphere. It is interesting to note that when the uncertainty clears a little bit, Canadians will spend some of the money they have been saving. Canadians will buy.
I ask the House to consider what began as a fiasco. Consider the question of the Iraqi cars. Last month those cars went on sale at $6,500 each with a two or three-year guarantee. I spoke to a dealer in one city in Ontario who was allotted 200 cars for his dealership and 130 for his dealership in another city. Those 330 cars were sold out within 48 hours. What is interesting is that 95 per cent of the buyers paid in cash. That was the case with virtually every other dealer in the country. There were
12,000	cars put up in this country where risks are not taken because of this government. But in a circumstance where there is a good deal and a guarantee of two or three years, 12,000 Canadians went out and bought them in 48 hours-and 95 per cent of them paid cash. That means that they have cash waiting there to invest. They have cash waiting to put into the creation of jobs, but they will not put it into the creation of jobs in this country because they are afraid of what this government will do. That is an inexcusable situation in a country like ours.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: The message from all of this is clear. Canadians are saving furiously. Why are they saving furiously? Because they have not got the foggiest idea what is going to happen to them in the future. There is nothing above them but a great black cloud of uncertainty about what this government is going to do next to gouge them. What old age pensioner would have thought, on the night of June 27, that he or she was going to be singled out for a special attack by the Liberal government? No

July 5, 1982
The Budget-Mr. Clark
one knows who is going to be attacked next by this government. Consequently, people who have money are holding it; they are not letting it go to work for Canada. They are not letting it go to work for themselves. This government's attitude is driving Canadians away from the creation of the kind of wealth and job opportunities that are not only key to this country but are at the core of our growth and our development as a nation.
Canadians do not know whether they are going to keep their jobs or lose them. As they look down the street, almost every Canadian has a neighbour somewhere on his or her street who has lost a job. When you are in that situation, you worry whether you are going to be next. Those people do not know whether they will have to renew their mortgages at much higher rates.
Even with all those uncertainties, there are two circumstances under which Canadians will spend some of their savings. The first is an exceptionally good deal, as whith the Iraqi cars. The second is an improved economic outlook and some degree of certainty that removes their fears for their future personal security.
There will not be many Iraqi deals. We cannot count on them to stimulate the economy

although it is interesting that in this regard, by refusing a contract, the government of Iraq has probably done more to stimulate investment in this country than the Government of Canada has. We cannot count on that. What we have to do is remove the uncertainty that hangs like a pall over every individual Canadian with money to invest. As long as Canadians who arc working and have money continue to save at such a high rate, the demand that results from consumer spending and risk investment will be soft. We will not be getting the jobs, we will not be getting the growth, we will not be getting the recovery we require.
The only answer is a set of economic policies that will restore confidence in the future of the Canadian economy. Those will cause increased spending by individuals, by companies, and that spending in turn will stimulate demand and increase production. But you do not create confidence with $20 billion deficits. You do not create confidence with a commitment to the continuation of the National Energy Program. You do not create confidence with a budget that tries to trick people.
What this country needs, and what it needed on June 28. is a new budget. What the country also needs is a new minister. What the country needs most of all, as suggested in the amendment, is a new government.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: What a new government should do in quick, summary form is, first, to follow policies that encourage investment positively, investment by Canadians and by others, to make this again a country where people can count on their investment being respected, where they can count on being free from knocks on the door in the middle of the night, or expropriation by legislation-such as the Prime Minister is smiling about now and such as he has introduced. We need to establish that climate of confidence to encourage positively investment in Canada by Canadians and others.
Second, we have to develop encouragement by incentives which cause individuals to make their own decisions to invest. There is a choice for government. Two mechanisms are open to them. They can use grants which give control to the government; or they can use incentives which leaves liberty to individuals. We have had too much control by governments, too much of grants which are susceptible to that kind of control. We need to move again to a system that creates the incentives that will allow individual Canadians and others to make the decisions that will cause the nation to grow.
Third, when a government introduces new economic policies, it has to indicate very clearly that those policies are going to be there to stay. We cannot have a situation such as we had with the June 28 budget, where everything is under review; where they propose programs that might or might not be introduced. We have to have some degree of constancy, some degree of certainty, in the programs that are introduced by government.
Fourth, there has to be a restoration of the movement towards serious restraint in government that was a feature of the government of 1979 and 1980. There has to be a return, for example, to sunset laws that will require agencies when they have been established to prove their continued viability, their continued need to exist.
There needs to be some opportunity for committees in this House of Commons to hold to account groups like the Canadian Broadcasting Corporation, groups like the Export Development Corporation, others who function now, spending or committing millions of dollars of Canadian money without any effective control-no control by their board, no control by ministers, no control by the House of Commons, simply a licence to spend. That kind of thing cannot be allowed to continue. That kind of thing needs to be changed, and it can be changed in a way that is entirely consistent with our parliamentary traditions and that protects the nature of those agencies.
Again, we have to have a new government that emphasizes productive expenditures by government in growth fields, in fields like research and development. I believe the minister responsible for science and technology is due to speak next. I will be interested in his explaining why the government has reduced the target of the gross national product from the target established in 1979-80 to a much lower target. We should be investing much more now in productive fields like research and development, science and technology, which create jobs and give us a cutting edge for the future.
We should also be investing more money in long-term job creation, to allow men and women, particularly younger, but not exclusively younger, men and women, who want to play a full role in the modern work force, the opportunity to play that kind of role. We should also be creating a system of incentives to encourage individuals to invest in this country.
A new government that is trying to recreate confidence in the country should replace the National Energy Program with a program that will encourage Canadian companies to find oil and gas in this country, not simply to aggrandize, to expand,
July 5, 1982

the role of the state without increasing our capacity to become self-sufficient in energy.
Fundamentally, what we need of a new government in Canada is a recognition that we can solve in Canada economic problems that are caused in Canada. We need a government that will encourage individual initiative and that sense of adventure and risk that have always been key to this country.
Finally, we need a government that will establish an atmosphere of confidence and of trust so that Canada will regain the reputation we once enjoyed as a place where investment was respected, where the word of the government was respected, where the desire to work and to create was not only respected but encouraged.
Those things need to happen if we are going to pull this country out of the economic decline in which we are sliding. This government cannot do it. The only way it can be done is for the amendment before the House to be carried, for this government to lose the vote of confidence. The Prime Minister is in the House. If the Prime Minister is so confident about his economic policy, his and John Turner's, he should take those economic policies to the country. If he believes that his policies are correct, let him ask the people who are affected by them. Let him call a general election.
I hope that if he is not willing to do that, there will be at least enough of his former supporters in the backbenches who will recognize that the country is more important than their party, who will recognize that this nation needs recovery which it cannot get from this government.


John Edward Broadbent: Mr. Speaker, never since the Great Depression have the people of this nation required a deeper, more profound and imaginative change in economic policy than precisely at this moment in our history. At the same time, never have I listened to a speech which was so systematic in its criticism of a government but which rested, in terms of its own fundamental analysis, on the same set of assumptions as those of the government party.


Some hon. Members:: Hear, hear!


John Edward Broadbent: I will deal with that in a minute.
1 do not want at this point to repeat a number of the truly alarming statistics about unemployment levels, about inflation levels and about people who are losing their homes. I do not want to repeat the pessimistic analysis provided by the OECD and the gloomy figures on the current level of the Canadian dollar. I will not repeat them. I will not do so because they are pretty well known. Day after day in the newspapers of Canada and day after day in all forms of news media the people of our nation are confronted with these figures. I will not repeat them, but that is not because they are not important. It is a basic task of politicians and political parties to see the relationships between these figures and to look for certain patterns in terms of analysis and in terms of a prescription for what might be done about them.
The Budget-Mr. Broadbent
I want to say today that it is very important for us not to become jaded by these figures and not to become overwhelmed by the data because we see them day after day. That is a very easy tendency, and it is also very easy for us as politicians to become cynical, to say that because we see this unpleasant factual information hour after hour and day after day, there really is nothing that can be done and to use the data in a cynical fashion. Once there is the slightest impulse among politicians to see these figures in a cynical fashion, we should resign as Members of Parliament, because if there is one group of people in a free society which has the moral obligation not to become cynical, it is the people who are elected to do the government business of the nation.
Part of what stops me from being cynical, I suppose, in the face of this morass of figures is our actual confrontation with people who are the real entities behind the statistics. I have heard unemployment figures in the last couple of days. Two weekends ago I met a middle-aged man in the constituency of the hon. member for Vancouver-Kingsway (Mr. Waddell). That middle-aged man has two children and his wife is pregnant with a third. He was profoundly unhappy. For the first time in his life he was unemployed and saw his unemployment insurance benefits running out. He did not know what he was going to do. I thought he was on the verge of tears when he spoke to me, one man to another. When I hear these figures, I think also of other parts of Canada.

The unemployed fail to understand why a wealthy province like theirs is now experiencing such a high rate of unemployment, to the extent that in the manufacturing sector alone,
50,000	jobs have been lost since September. Unemployed Quebecers fail to understand why this is happening in a province as wealthy as Quebec.

In relation to mortgage problems, I am reminded of two weeks ago today when I met with people in my own constituency who had problems. Among them was a woman in her fifties who had two children and a mother to support. This woman was employed, and at a good salary for a working person in Canada. Her husband was killed a year ago and she came to see me about her home. For her it was not a residence, it was not a house, it was a home, and she described it in that way. She was concerned because her mortgage was coming up for renewal this month and she was to pay $200 more. To use her words, she was going to lose her home and her kids' home unless something was done, and done soon.
The point is that all these problems must always be remembered in terms of the personalities involved. They must be remembered in terms of the men, women and children out there in our country from one coast to the other who are experiencing real difficulty. These are men and women of emotion and frustration and, increasingly I regret to say, men and women who are experiencing fear about the future for themselves and particularly their children in this land of ours.

July 5, 1982
The Budget-Mr. Broadbent
It is the context in 1982-not 1932-that we must assess the budget presented by the government.
I think there are three useful ways of looking at a budget. The first is to look at it in terms of its technical information, its own analysis of the economy, its own forecast for growth, its own predictions about inflation and also in terms of the technical prescriptions prescribed by the Minister of Finance (Mr. MacEachen) to deal with economic problems in the coming year.
Second, the budget should be looked at in terms of fairness or equity toward the problems faced by the people of Canada at this point in our history. Does the budget address those problems not only with some technical competence but also, in terms of its urgings upon the people of Canada, with a sense of fairness about the distribution of burdens in dealing with our problems?
The third way of looking at the budget is a little deeper and different from the first two, as important as they are. What does the budget, a financial statement, say about the government's understanding of the Canadian economy and, beyond that, Canadian society at a particular point? A budget does that either directly and explicitly or indirectly. It is very important that we understand budgets in that context. Where does the government want us to go? That is the relevant question one should pose at some time in looking at a budget. What does it want us as a people to do?
I want to discuss each of these points. First, in terms of the technical detail, what are the relevant facts in the budget as I, my colleagues and our financial critic who spoke so well the other day see them? First, we see that taxes are going up by $1.3 billion for all Canadians. We see that pensions and family allowances will be going down, in their net effect, by some $360 million. We see particularly that wages in the public sector will be held at 6 per cent in the coming year and 5 per cent after that in terms of increases. If we include the armed services in that, as we should, that will take some $1 billion out of the economy.
Then, as the Leader of the Opposition (Mr. Clark) mentioned in his speech this afternoon, in terms of budgetary analysis at this time we must include changes in the unemployment insurance fund. We note that every employed Canadian will pay somewhere in the neighbourhood of $140 more in the coming year as a result of drain on the unemployment insurance fund.
If we add all these together-taxes going up, pensions and family allowances going down, wage controls in the public sector and increased premiums for unemployment insurance- what we will see in the coming year, in the face of the most serious unemployment level in this land in the past 50 years, is the taking out of the economy of some $4 billion.
What is the result now? What are the implications of this program, first, for the so-called crusade that the President of the Treasury Board (Mr. Johnston) spoke about the other day and about which the Minister of Finance talked as well when he presented the budget? They spoke about the "crusade"
against inflation. Was there anything in the budget that dealt with the most serious price increases that have affected the Canadian economy in the past 12 months and will continue to affect it, namely, interest rates and energy costs? There was not a thing, Mr. Speaker. Those prices are not going to be controlled and they are not going to be changed. Nothing is to be done about general interest rate levels, which are so pernicious in their effect on the economy. Indeed, as the Prime Minister (Mr. Trudeau) indicated in the House the other day, no attempt will be made to renegotiate or delay the energy price increase of another 30 per cent in the coming year. No attempt is to be made at this particularly difficult time in our history to talk in a co-operative and serious way with the producing provinces to see if we can delay the impact of these monumental price increases which are yet to come in the energy field. Nothing was done seriously about prices in the budget.
Where is this crusade-to use the wonderful word of the President of the Treasury Board-to have its focus? We know it is going to be on wages. 1 think it is relevant to ask whether an approach on wages in the past, in terms of government policy, had any impact. From 1975 to 1978, when the government was at least claiming to be dealing with prices, what was the result? The A1B program at that time was described as being aimed at bringing down the level of inflation by 4 per cent by the third year. Instead of going down by 4 per cent, the rate of inflation actually went up by 1.5 per cent to 9 per cent. It was successful in holding down the wages of ordinary men and women, however. The Conference Board estimated that there was a drop of some 8 per cent in wages compared to what there would have been had the controls program brought in by the Prime Minister at that time not been imposed.
Surely it is a relevant question from a technical point of view for anyone who wants to understand inflation, from the humane point of view or from the point of view of concern for moral justice, to ask why with this past record, the government is bringing in a program that singles out public sector employees for such controls.
The answer to that question was revealed in a secret cabinet document to which I had access last year and which I released to the public of Canada. In that document there was an analysis of the causes of inflation and of what the government might consider as options. The document said that the "main advantage"-and those are the words used in the document- is that the government would be seen to be doing something. Not that the program would be effective, or not that inflation would be brought into line-because they knew from the experience of 1975 to 1978 that it did not have an effect on prices-but the single merit underlined in that document was that such a program would demonstrate to the people of Canada that the government was at least doing something.
I think that when you make victims of men and women, in this case in the public sector, simply to save political face, then
July 5, 1982

the only way to describe such action is to say that it is despicable, and I say that without hesitation, Mr. Speaker.


Some hon. Members:: Elear, hear!


John Edward Broadbent: The reality is that in Canada in 1982 we do not have wage-generated inflation. The reality is that the Minister of Finance admitted that himself some months ago. The reality is that the so-called crusade and symbolic leadership is just the opposite of leadership; it is a cynical public relations exercise of the worst kind-the kind that first makes scapegoats of employees in the public sector and then sets up as future scapegoats every working person in this country. I repeat, Mr. Speaker, it is despicable.


Some hon. Members:: Hear, hear!


John Edward Broadbent: This unfairness is compounded when you consider that not only are wages to be controlled, but that with this partial deindexing of family allowances and pensions, the same ordinary people are going to be hit twice.
It should be noted, however, that there is an interesting hypocrisy to be found in the budget. Investors will now be better off because the Liberals accepted a Tory ide^t. While the Liberals are busy taking away indexation provisions from the average taxpayer, they are simultaneously introducing new indexation benefits for investors that the Conservative Party, as its finance critic said some time ago, first advocated.
I think that is a perfect example of what has come to be known as supply side economics, which operates on the interesting moral precept, that in order to get the rich to work harder you have to give them more money, and in order to get the average Canadian to work harder you have to give him less money. Anyone who believes that would believe anything.
How does this budget stand up, Mr. Speaker? Over all, in terms of fairness and equity it is clear that it fails considerably, certainly from the point of view of distribution of burden. Obviously, also, it will not bring down the rate of inflation to 6 per cent. I repeat, in the experience from 1975 to 1978 at least there was some alleged attempt, in a comprehensive package, to control prices as well as wages, but in this budget there is not the slightest suggestion that determined action will be taken against any other group than wage earners. I say that there is not an intelligent person in the House of Commons or a member of the cabinet-and members of the cabinet are not stupid; they may do stupid things but they are not stupid, not even the Minister of Finance who is sitting opposite at the moment-who seriously believes that inflation will be brought down to 6 per cent by the end of this year. They claim to believe it, but it is a bogus argument.
I should like to deal with a different matter and that is one which the President of the Treasury Board dealt with in his speech at considerable length and which the Minister of Finance has dealt with time and time again. It is our so-called international position.
Are we as a nation going to remain internationally competitive? The great justification for this wage control approach that is at the core of this budget is that it is going to make us
The Budget-Mr. Broadbent
internationally competitive; that it is required for that reason. In this, Canadian workers are once again being made the scapegoat for the failures of Canadian governments and, to put it bluntly, for the major sectors of Canadian industry. In fact, perhaps the most serious failure of this budget is that it does not face directly the very real problems of Canadian industry in the tough, competitive international world.
What the budget does in this regard is to place the completely wrong emphasis on wages and salaries. That is an extremely serious mistake because it focuses on the wrong target and ignores what ought to be stressed. In this context 1 urge the minister, who is sitting opposite this afternoon looking rather bemused in some kind of metaphysical mist, to read an article written by two interesting people, R. H. Hayes and W. J. Abernathy. The minister will be interested to note that it does not appear in a socialist publication or a progressive liberal publication, if that is not a contradition in terms these days. This article, Mr. Speaker, appeared very recently in the Harvard Business Review and is called "Managing our way to economic decline". I urge the Minister of Finance, the Tory finance critic and his leader to read that article because it makes an extremely serious argument, one that I understand is now at last being taken up in American business circles. Perhaps their Canadian counterparts will soon take it up and hopefully the government will pay some attention to it. It diagnoses the problems of North American industry, but are they due to wage increases, government regulations, all the cliches I have just heard from the Leader of the Opposition and repeated in a different form by the minister himself in recent weeks? No. What it says-and I say it applies with much more relevance to the Canadian economy than to the American economy-is that the central failure of North American business is that for many years now it has wrongly put the emphasis on short-run profits and has insisted, as a fundamental part of its operation, on short-run cost reduction. That is to say, keeping wages down instead of emphasizing, as the authors point out, the necessity of looking at the long term, the necessity of doing more research and development and putting emphasis on quality products. Most specifically and relevantly to this budget is the authors' argument that northern European labour costs are now the highest in the world and this has not hindered them from becoming extremely competitive in the modern international atmosphere. The key, positive point that they make is that the Europeans and Japanese plan for the long run, put much greater emphasis on research and development, and, contrary to the methodology of the Conservative Party on my right and the practice of the Liberals across the way, both Japan and northern Europe have much more intervention in their economies by government than we have here in Canada or in the U.S.
1 want to say in that context, Mr. Speaker-


Donald Alex Blenkarn: More government intervention!

July 5, 1982
The Budget-Mr. Broadbent


John Edward Broadbent: Exactly. 1 want to say in that context that I listened to the Leader of the Opposition making his criticism of that hopeless gang across the way for the cruelty they have inflicted on the people of Canada, but I must say that he trotted out every old Conservative cliche that I have heard in this House for the past 14 years. The single important virtue of Ronald Reagan, Mr. Speaker, is that he at least was an honest Conservative.
We heard from the Leader of the Opposition the cliche about the need for less planning and government involvement. We heard him say that we need to have less of what he called control by government. In particular, there had to be less government spending. Well, I say to him that his own members have been demanding more government spending on pensions, more government intervention in housing, in fisheries and other areas, and I repeat: at least Ronald Reagan is honest. He wanted a cutback in government involvement and activity, but he laid it on the line about what programs he was prepared to cut. That honesty I can respect even though I disagree with it.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, the point I want to make about the serious problems of Canadian industry which should have been but were not addressed in this budget is that this government had made not only an unfair policy decision as it affects wage earners in this country, but a tremendously erroneous judgment about what is really at the heart of the malaise in Canadian industry. This budget completely lacks an industrial or manufacturing strategy, one that puts its emphasis where it ought to be, namely on the crucial need for Canadian governments and businesses to co-operate in more planning, not less. That is the real need of the Canadian economy and we should have had it firmly expressed in this budget.
Having said that, I also want to say something about the short-run effect of taking so much money out of the Canadian economy. I mentioned earlier that the net effect of tax increases, pension and family allowance reductions, control of wages in the public sector and the coming increases in unemployment insurance premiums is that it is going to take over $4 billion out of the economy. This, precisely at a time when stimulus is needed. It will not mean more jobs, it will mean less jobs. Instead of learning from the errors of the 1930s, the Liberals are repeating them. Instead of stimulating the economy this summer by a tax cut, we are mindlessly increasing taxes. Instead of improving upon the recession by creating more jobs, the Liberals are going to deepen it. In that context, Mr. Speaker, instead of clinging to office this government should resign.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, we desperately need more jobs now for the men and women who would rather be working, paying taxes, and producing goods and services than collecting
unemployment insurance or welfare. We in the New Democratic Party say that now is the time to stimulate the economy, not shackle it. Now is the time to provide hope and confidence, not by false statements, silly cliches or contradictory policies of the kind we are getting from the Conservatives, but by describing the situation honestly and distributing the burden fairly.
We say in the immediate sense that what we need is a lowering of taxes now. We need a further expansion of housing programs. We do need and could have lower interest rates if the Minister of Finance would exercise his authority and tel! Governor Bouey to bring them down. We do need a serious attempt by the Prime Minister or the Minister of Energy, Mines and Resources (Mr. Lalonde) to negotiate with the producing provinces a delay of the increase in the price of oil which came on the first of this month and the consequent and equivalent price increase of natural gas which will come-


The Acting Speaker (Mr. Ethier):: I regret to interrupt the hon. gentleman but the time allotted to him has expired. However, he may continue with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Ethier):: Before I recognize the hon. member, it is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Esquimalt-Saanich (Mr. Munro)-Airports-Costs of Dorval. (b) Position of airlines; the hon. member for York North (Mr. Gamble)-The Economy-Foreign exchange controls- government position-request that special committee examine estimates; the hon. member for New Westminster-Coquitlam (Miss Jewett)-Canadian Radio-Television and Telecommunication Commission-Rate increases granted to British Columbia Telephone company, (b) Effect of company lay-offs on unemployment insurance fund.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. MacEachen that this House approves in general the budgetary
July 5, 1982
[Stage Direction]
policy of the government, and the amendment of Mr. Wilson (p. 18905).
John Edward Broadbent: Mr. Speaker, 1 will not abuse the generosity of the members of the House by taking much more time. I have said we need more stimulus now, and I do not hesitate to say that at this particular point in our history. We should learn from the 1930s instead of repeating those errors. That is what we should be doing.
Having made three or four short-run proposals, I want to conclude by saying that the most damning criticism of this government at this point in our history, when other nations are taking their industrial development with greater seriousness and paying it greater attention, is that this government, this collection of individuals who call themselves a government, is totally indifferent to the need for planning a modern industrial nation.
What the New Democratic Party says, with more emphasis on this point than on any other, is that this was the time for us to have levelled with the people of Canada; that this was the time for the trade unions and the business community to have been called in. We ought to have said: "Yes, we will expect something of you. We will expect equivalent sacrifice, if you like, but in return we will give you a commitment over the next two, three, four or five years-because putting our house in order is not going to be done overnight-to rid ourselves of this old notion of continuing to be some kind of resource hinterland for the rest of the world, that instead with more government planning, not less, with co-operation of governments, the private sector and the trade union movement we will at long last do some serious planning and create in this country a manufacturing nation of the first order."
That can be done, Mr. Speaker. It ought to be done. The first step to be taken to bring it about is to get rid of the Liberal Party and the Liberal government. The next step is to elect the NDP.


William Warren Allmand: Mr. Speaker, would the hon. member accept a question?


John Edward Broadbent: Absolutely, Mr. Speaker.


William Warren Allmand: Mr. Speaker, the hon. member in his remarks said on several occasions that the government through its budget is taking considerable sums of money out of the economy. I believe he said that on the night of the budget as well. Could the hon. member explain to the House how he calculates that the government is taking considerable sums of money out of the economy? As I read the budget, every cent that is saved by putting limits on salaries, and so on, is going back into the economy in the form of job creation, housing and so on. As I read the budget, every cent that is saved in one place is going directly back into the economy in other places. Could the hon. member explain how he calculates that money is being taken out of the economy as if it were to reduce the deficit, which is not the case?
The Budget-Mr. Roberts


John Edward Broadbent: Mr. Speaker, I respect the hon. member, but I would also respectfully say in this context that he really has become a Liberal backbencher and been taken in by the old shell game of the cabinet. I would be glad to explain in detail to the hon. member, but I do not want to make another speech at this point the way as I did on budget night. What he says in fact is simply not the case.


Hon. John Roberts (Minister of the Environment and Minister of State for Science and Technology):: Mr. Speaker, the budget which was brought down by the Minister of Finance (Mr. MacEachen) is realistic, responsible and tough.


Donald Alex Blenkarn: There is nothing for R and D.


John (Moody) Roberts: The hon. gentleman says there is nothing for R and D. That clearly indicates how little he has studied the budget. If he waits in the House, I will reply to that point a little later in my speech.
This budget is realistic because it concentrates action on those areas where the federal government's action can have the most impact on our economic situation. It is not an abdication but an acceptance of responsibility, to say that Canadian policy changes in themselves cannot change, alter or correct all of the world's economic problems. Canada as a major trading nation obviously is going to continue to receive the impact within our economy of economic events that take place outside. However, there are things that we can do to respond to Canada's economic problems, and those things this budget does do. It concentrates particularly-and there are clear indications that this is important-on counteracting those factors which lead to cost-push inflation, that is the increasing wage rates in the economy. This is one area where the position taken by the leader of the New Democratic Party (Mr. Broadbent) and that of the government differ. The NDP does not appear to believe that wage rate increases taking place in the Canadian economy, particularly in comparison with that of our major competitor, the United States, are not a factor in the inflationary struggle that we face. Quite clearly, we on this side of the House believe that they are. The government has acted within its powers to respond to those wage rate pressures by bringing those wages in the public service under a capping control.
At a time when wage settlements in Canada are outpacing those in the United States by a factor of 100 per cent, it is quite evident that if the Canadian economy is to be ready to respond and take advantage of a potential upturn in the world economy, we must do something to bring wage rate pressures in the Canadian economy under some control.
The New Democratic Party does not feel that is a problem. We on this side of the House clearly do. I know members in this House generally have been crossing the country talking to people and I can say from my own conversations with a variety of people in industry, labour and banking and from conversations with my constituents that wage rate problems are a fundamental factor of importance in the Canadian economy.

July 5, 1982
The Budget-Mr. Roberts
This budget is realistic because it does tackle pressures of cost-push inflation. It does so in a way that does not undermine the restraint program, the monetary and fiscal restraint that we believe is necessary and which if not held would lead to a stoking up of the economy in ways which would be highly inflationary. It is a budget which does emphasize the need for improving the investment climate. It provides in the registered investment shareholders plan and in the incentives for indexed deposit certificates which will encourage investment in the Canadian economy. It concentrates, as my colleague, the minister responsible for housing, indicated to the House earlier this afternoon, an effort on the construction and on the housing side, important not only in terms of meeting housing needs in this country, but important in terms of giving relatively quick stimulation to construction. The budget does focus a relief or a cushioning of some of the impact of higher interest rates in those key areas of the economy where they are most strongly felt.
It is a realistic budget. It takes into account the real world in which Canada must operate. It is a responsible budget. It does not indulge in cloud-cuckoo-land fantasies that there is a quick fix. The budget recognizes the need for restraint. It does make efforts to move us toward new job creation, but in a way which will not increase the deficit. It is concerned, yes, but not panicked by the deficit figures which are projected, because we realize the level of savings in Canada is sufficiently high to finance that deficit and that that deficit flows from a set of temporary factors. It is not, as the United States government deficit is, a consequence of taxation cutbacks and taxation increases in military spending. The Canadian deficit flows from the automatic exercise of stabilizers in the Canadian economy which respond to the recession we are in and which will be overcome as we move out of that recession. Our deficit has not been built in in a relatively permanent way as the United States deficit appears to be.
In talking about a responsible budget, I would like for a few moments to remark upon the arguments presented to us this afternoon by the opposition parties. First, I would like to congratulate the leader of the New Democratic Party on what I think was an earnest and honest speech. There were points in it with which I could not agree, but it seemed to me that the leader of the New Democratic Party did outline, and fairly clearly, major divergences of attitude.
As I said earlier, we do believe the wage pressures which exist at the present time in the Canadian economy are an important factor in the cost-push inflation syndrome. We believe that it is important, through example on our part, that we try and get those wage pressures under control and that other players in the economy, provincial governments and the private sector, respond to the lead that we have given in order that these wage increases which potentially will price us out of international competition will be brought down to reasonable levels. We clearly disagree with the interpretation of the leader of the New Democratic Party in that area.
I listened for some indication in his speech of what alternatives he would suggest. He indicated that he thought we should move quickly to much lower interest rates and that we should engage to a much greater degree in consumer stimulation than we have. What he did not discuss at all-and I hope he will subsequently find the time to do it in a speech here or elsewhere-is how, if we follow that policy, we will be able to avoid the extraordinary, harmful consequences which a similar policy has had within the French economy. The French tried that tack. The result was just recently a second devaluation of almost 6 per cent, an inflation level of 14 per cent and 18 per cent wage increases. The result of what many economists have described as a blown fuse in their economy. Yes, he argued for much greater consumer stimulation, he argued for much lower interest rates, but he did not explain how we would avoid the consequences that a similar policy has clearly had in other economies.
Also he lamented that there was a need to bring forward a clear development and economic planning strategy at this time. What he completely neglected-and perhaps it was because he was unaware of it-was that last November we brought forward an economic development strategy, a document which outlined exactly how we believe those needs should be tackled in the Canadian economy. We have been discussing that strategy publicly and we have been implementing and following the direction which it has charted. It would have been useful in a positive sense this afternoon if he would have given us some indication of those areas of the strategy which he accepts and rejects, and the reasons for doing so.
It is more difficult for me to comment charitably on the speech presented by the Leader of the Opposition (Mr. Clark). Of course, he said-and I suppose it is not an objectionable sentiment-that we should all put people ahead of the party line. That is particularly understandable in his own case because as far as I can discover there is no party line on the Conservative side to follow. The function of an opposition is not just to oppose or criticize. It is also to propose alternatives and to bring forward some views, some strategy or some approach which it believes would be preferable to the path being pursued by government. That, singularly, the Leader of the Opposition failed to do.
I think it was last May 4 that he lamented he had not been able to find an alternative approach to that of the government, that there was not a better solution. Clearly he has not found one since May. There was almost nothing in his remarks which constituted a constructive endorsement of an alternative policy. He did not have a policy on May 4. He still does not have one.
Perhaps I could ask some questions. Does the Leader of the Opposition think that it is courageous to attack suicide? Does he think it is fearless to be against high inflation rates? Does he think it is brave to be opposed to inflation? Does he think he is being forthright when he attacks unemployment? Is the Pope in favour of peace? It takes much more than rhetoric and indignation, feigned or real, to constitute an economic policy.
July 5, 1982

A policy is not what the Leader of the Opposition came forward with today. He is opposed to higher unemployment insurance payments and to cutting indexation. He wants stimulative tax cuts for holders of capital. He is opposed to tax increases for others. Of course, with all that he wants lower deficits. That is supposed to be a policy. He wants more private sector consultation. Then when we bring forward proposals for the registered investment shareholder plan and deposit certificates, he opposes further consultation because of delays in implementation. He wants both more consultation and at the same time immediate implementation. He opposes lower interest rates and then votes in favour of lower interest rates. He opposes FIRA and then he voted for the strengthening of FIRA just the other night in the House of Commons. That is supposed to be policy. What it is quite clearly, to use his own language, is trickery and deceit.
The Leader of the Opposition spoke in the House today for 45 minutes, and in 42 minutes he used rhetoric and attack. He talked about the past, indignation feigned or real, but in his 45 minutes-and I am being charitable now-he used only three to bring forward proposals which he would make. What were his great proposals? What was the policy of the Conservative Party as he expressed it? First, a parliamentary committee to study the estimates again. Second, the encouragement of investment incentives. Nowhere in his speech was there a recognition that the government brought forward proposals to encourage investment incentives. There was no discussion, favourable or otherwise, of those suggestions. There was no proposal as to how they could be improved. There was no suggestion as to whether they might not work. There was no suggestion of alternatives, but a simple suggestion in 45 minutes of his speech that we ought to consider what indeed we considered and what the Minister of Finance brought forward for consideration in the House.
Third, he suggested that we should place greater emphasis upon research and development, apparently unaware that the performance in research and development in the country has shown great improvement over the past two years. There has been an increase from just over .9 per cent of the GNP to now well over 1.2 per cent of GNP devoted to research and development. We are not only well on but are above the track for increasing research and development expenditures which his government charted. There have been increases in the private sector in research and development expenditures of an average 25 per cent per year, exactly because the Liberal government brought forward incentives which encouraged a tremendous increase in the research and development field. Of 45 minutes, less than three were devoted to positive suggestions; those simply slapdashedly stated, not analysed. That was his performance today.
I suggest he has done a real disservice, not only to the House but to the country, in not speaking seriously in terms of analysis, as I must say the leader of the New Democratic Party did, and by not seriously coming forward with some indication of what a Progressive Conservative alternative would be. That he did not do. He cannot complain that he did not have time to do it. We endured 45 minutes of ranting and raving, and all we got were wild charges of deceit and trickery. To have the
The Budget-Mr. Roberts
Leader of the Opposition accuse us of trickery after that speech matches the chutzpah of my Jewish constituent who wanted to be treated as an orphan after he had assassinated his parents.
I should say one other thing. When he went through his analysis of all the things he would like to do, such as decreasing the deficit while of course cutting back taxes and increasing a variety of our expenditures, he went on to complain that the real problem had been that we as a government had not seriously tackled the problems of government expenditure. He has been a member of government, if only briefly, and I suspect that he is aware of the facts. Certainly he should know them. The Public Service of Canada has increased over the past 20 years. It has increased on the average each year by 1.3 per cent. The annual growth of the population over that same period on the average has been 1.5 per cent. Over the past 20 years the growth of the public service has not kept pace with the growth of the population, even though public services have to grow to serve the needs of the population. In the years since 1978, indeed, the growth of the public service has declined at a rate even lower than that. It was a German politician of not great repute who developed the tactic of the big lie. The Leader of the Opposition has developed the tactic of the big panic and attacks rather mythical problems and exaggerates.
He talked about the need to get government expenditures under control. He should know that expenditure by the federal government on goods, services and fixed capital has been roughly constant over the last 20 years or so; indeed, in most recent years it has been declining. It is just over 20 per cent of gross national product. It is quite clear that it has not been extraordinary increases in government programs or government expenditures which have caused economic problems in Canada.
I do not ask him to accept my comments on that. I would just refer him briefly to the June report of the Investment Dealers' Association of Canada in which they provide figures which indicate the relatively static level of federal government expenditures as a proportion of the GNP. It concludes by saying:
Government spending on goods and services has become a less important portion of Canadian aggregate demand. In recent years governments have been making serious and successful efforts to reduce growth in their spending.
What we heard today, when there was an opportunity and a need not only for serious analysis but for a presentation for the alternative view from the Leader of the Official Opposition, was 42 minutes of high school sarcasm and three minutes of non-constructive suggestions.
I said there were three characteristics of this budget. It was realistic, responsible and tough. These were characteristics which were certainly not shown in the speech by the Leader of the Opposition. The budget is tough because it recognizes, admits and communicates to the public of Canada that there are no quick fixes for the Canadian economic situation.

July 5, 1982
The Budget-Mr. Roberts


John Horton McDermid: John Turner said that in 1970.


John (Moody) Roberts: It does not attempt to evade responsibility. It admits that the standard of living in Canada will be lowered temporarily and argues that the burden of that lower standard of living should be shared within the country.
Nothing was more ignominious in a pretty ignominious speech by the Leader of the Opposition than his attempt to frighten-I do not know if that was his deliberate intention but it certainly would be the effect of taking his remarks seriously-old age pensioners and those who are greatly in need in our economy by his accusation of what the impact of this budget would be on their situation. I say that, Mr. Speaker, because it is the poor, those who are not as well-off and those who are on fixed incomes, who have the strongest vested interest in seeing the policies brought forward by this budget work. It is they who will most benefit if and when we bring the push for inflation within our economy under control.


Some hon. Members:: Hear, hear!


John (Moody) Roberts: There has been no recognition on his part that those receiving the guaranteed income supplement, which is virtually half of the old age pensioners, will not have any capping placed on the inflationary adaptation of their pensions, that they will receive what they would have received as an old age pensioner and they would have received as a guaranteed income supplement receiver as if this budget had never been brought forward. Those who will have their incomes capped are those who are not receiving the guaranteed income supplement and those who are not in as great need as those at the lower level in our society.
It is true that this budget does increase taxes. It is designed to stimulate job creation and to help those who are in need, not by increasing our deficit but by increased taxes, so that those who do have income can help with their taxes to create jobs for those who are not so fortunate in our society. The employed will pay more on their unemployment insurance premiums and they will do so because they will be indirectly assisting those who are not fortunate enough to be employed to receive their benefits.
This is a tough budget because it recognizes that we will face the unpleasant fact of high interest rates so long as United States interest rates are high and that unfortunately there is not, as the NDP would like us to believe, a method by which we can lower our interest rates startingly below those in the United States in a quick move to resolve our problems in that manner.
The budget does say that we should cushion the impact of those high interest rates on those who need cushioning the most; those who receive the guaranteed income supplement and those receiving the child tax credit. The budget does say that we should assist farmers, fishermen, small-business men and house purchasers who are those most in need of some relief from high interest rates. However, it accomplishes this in a way which is responsible and realistic. It recognizes that we cannot cushion and insulate everyone in our economy.
I said that this is a realistic budget. It takes into account the real world in which we live. It is a responsible budget. It does not go haring after the impossible, simplistic, dramatic but counterproductive solutions. It is responsible because it recognizes the need to maintain restraint. It is responsible because it does move toward job creation through the construction proposals and it encourages increased investment through the rather inventive and imaginative proposals brought forward for the registered investment shareholders plan and the deposit certificates. It is a tough budget because it recognizes the difficulty of our situation.
It is also a Liberal budget. It is Liberal because it does not just stand aside, as the Conservatives sometimes seem to want us to do, and say: "Let us leave it to the private sector." We acknowledge and recognize that we have responsibilities and an active role to play. We have focused on the cost-push factors which lead to inflation. I suggest it is interesting that both the private sector and certainly the provincial governments as well have reacted to this budget much more responsibly than the members of the official opposition. This Liberal budget recognizes the need to create jobs and investment in Canada by finding new instruments to encourage that investment.
It is not a Tory budget. It is not one which adopts a hands-off policy. It is one that says the government has a responsibility to create a positive and constructive context which will support private sector growth because it recognizes that private sector growth is the motor of the economy.
This is also why it is not a New Democratic Party budget. It does not believe we should abandon restraint programs. It does not believe we should avoid the problems which are posed by galloping wage increases in the Canadian economy. It does recognize the need for the private sector to work with us to generate growth within the economy. It does reinforce the direction which was charted in the economy development strategy a year ago.
It is a difficult budget, one which avoids the excesses which I believe have been presented by both parties on the other side of the House. It is a policy excess on the part of the New Democratic Party and simply a rhetorical excess on the part of the Conservatives. It is a Liberal budget. It is tough, responsible, realistic and deserves the support of the members of the House.


Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, it is a privilege to take part in this leaders' day debate when the leaders are present or have been for part of the time. I am also pleased to hear from the party spokesmen some of the philosophies behind their policies. The hon. member for St. Paul's (Mr. Roberts) who just spoke for approximately 30 minutes spent about three minutes in defence of the budget and used the rest of his time to attack the Leader of the Opposition (Mr. Clark). We sat and endured it.


John Horton McDermid: Talk about being hypocritical. He read the polls in his riding.
July 5, 1982


Francis Alvin George Hamilton: The only defence I will offer in support of the Leader of the Opposition is that he was only telling the House what the people of Canada are saying to him. That is who the government should be listening to. That is all I will say about that matter.
I believe the leader of the New Democratic Party (Mr. Broadbent) gave an honest speech. He wired himself thoroughly to intervention in the business affairs of this country. He knows that he is doing so. He is cutting off any chance he has to get the labour vote and he realizes that while doing that he is attempting to maintain the alliance with the government side with its tendency toward intervention.
I suggest that this debate has been worth while. I am more interested, however, in putting on the record the efforts that have been made in the House over the last number of years to put an alternative policy before the people of Canada that is distinctly Canadian, practical, economic and is fitted to today's situation. In other words, I want so speak about the budget in perspective. Over the past number of years we have had in intellectual circles, particularly among economists and businessmen, a debate on the theories of Lord Keynes. That debate reached its peak around the fifties. Many of our senior civil servants became great devotees of this pattern that was going to solve all our problems. I think of men like that very fine gentleman, Bob Bryce. I can think of the deputy minister of finance 35 years ago.
Second, we have had a debate among the economists mostly about the theory of monetarism. There has been a great deal of argument backward and forward. We have seen this theory accepted not only in Canada but in the United States, in Great Britain and in most countries in Europe.
Third, we have had a number of debates of a sundry nature of such things as the Phillips curve where you have to balance off unemployment against inflation. That is all we heard from the civil service 25 years ago. The only persons we hear talking about it today are members of the government who keep going back to their schoolbook knowledge gained 25 or 30 years ago.
We have had a certain amount of debate on Galbraith. He is the humorist who poses as an economist. This is the intellectual level which the upwardly mobile people in our civil service have reached. These men like Galbraith are just bad smells in a mist. They are here, they are there, they are every place, and you cannot put your hand on them.
In the last ten years there has been a series of debates in the United States on what I call, and I think it is the correct phrase, the Mundell-Laffer hypothesis. Mundell is a Canadian and Laffer is an American. All these fellows preached was a common sense approach in economics based on quantitative analysis. If in analysing what was happening in the various industrial countries of the world we saw that what the policy was resulting in was exactly the opposite of what it was intended to do, then common sense would suggest we go the other way.
The Budget-Mr. A. Hamilton
About two or three weeks ago the financial spokesman for the New Democratic Party asked a question in this House. In my judgment, it was probably the most thoughtful question I have heard in this House in two or three years. He asked, in view of the fact that all of the policies the minister is carrying out or talking about are proven failures, would the minister not consider it wise to do just the opposite? At least it would not be any worse than what is happening to us now. That is an Irishman's way of saying, "If I cannot get the cork out, I will push it in." It makes sense. That is exactly what we have been debating here these last two or three years.
We have all the quantitative evidence in the world that certain things that are considered truths under Keynes and the theories of Keynes have become the religion of the guiding lights behind this government. When you have the evidence that these things are not working, commonsense demands you go the opposite way. That is all Reaganomics is, just go the opposite way to what you have been doing.
When I hear condemnations in this House about frightening away the business people, I simply say we should look two or three years down the road. On July 1 of this year the first major move of Reaganomics went into effect in the United States. They reduced their taxes across the board by 10 per cent. In this budget our government increased them 5 per cent, again going the wrong way.
Either on the last sitting day of the House or earlier today, I heard the Minister of Finance (Mr. MacEachen) say something that is pure Keynesian. He said in effect that inflation is caused by too much demand for too few goods, demand-pull. He does not realize that one third of our industry is working under a very limited capacity. To put it another way, only two thirds of our industry is being utilized today. The minister fails to recognize that 1.5 million people are either unemployed or partially employed.
We cannot have a demand-pull situation when the factories are full of goods and the mines are overwhelmed with their inventory. Demand-pull is pure Keynesian. Keynes did not know anything about cost-push, yet I heard the Minister of the Environment, the hon. member for St. Paul's mention cost-push. This budget increased the cost-push. Cost are those things that add to the price. The biggest thing used to be the cost of government. In the last two or three years, it has been overtaken by tremendous bursts in the cost of interest. The number one enemy in the last three years has been the cost of interest, then the cost of government, then such things as land costs, and the question of the money supply or monetary theory. Fifth place on the list is labour costs. All this budget does is take advantage of the popular opinion across this country.
It says the first guys that should be clobbered are the public servants. They have seen the example of the other provinces doing it, so they ask themselves, why not do it here. It does not get at the number one, number two or number three basic big costs of cost-push inflation.
We could get this debate on to a high level if the government listened carefully to some of the ideas that have been
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July 5, 1982
The Budget-Mr. A. Hamilton
presented. I am not going to go through them. 1 have been pleading for years to get the debate up to reality. Let us face the fact that the quantitative evidence shows the paradigm or pattern of Keynesian economics has never applied to Canada because it is such a big country. It is not applying to any country. It is not working.
Let us debate the fact that three years ago, in 1979, a budget was introduced by the hon. member for St. John's West (Mr. Crosbie). It had a tax increase of 18 cents on diesel and gasoline with a tax credit for the person who drove a car. That was the first budget in the history of the western world that tried to get at the budget deficit by decreasing taxes. That has never been pointed out in the House by anyone with the exception of myself.
Across the world it caused tremendous ripples. As I said two or three years ago, in the spring of 1980 The Public Interest, which is probably the most profound and widespread intellectual magazine in the world, put out a special issue entitled "Economic Theory and Policy in Disarray". One of the main articles in that magazine was headed "The dissolution of the Keynesian consensus" by James W. Dean. Let me read six sentences to the House:
On December 13, 1979, the Government of Canada fell. For just six months the Conservatives had governed with a parliamentary minority, and they were defeated on a vote of no onfidence. The issue was their first budget-a budget that rejected Keynesian economic policies, replacing them with radically different recommendations. Unemployment and slow growth were to be fought not by increasing the federal deficit but by reducing it.
This is not a new philosophy. It was tried in a pragmatic way by Mellon, the Secretary of the Treasury under several Presidents of the United States in the 1920s. It was tried by Kennedy from 1962 to 1964. Instead of having a big budget deficit, by reducing the tax he got a surplus, because the demand factor was such at that time that everybody bought the goods, created new wealth and provided enough tax to give him a surplus.
It goes on to say, about the Conservative turnabout:
Their turnabout mirrored that of much of the economics profession throughout the English-speaking world. It was the decade's last dramatic reflection of a dissolving Keynesian consensus. This paper traces how that dissolution came about.
I am not going to read the whole thing but what I have said should be enough to show that the Crosbie budget of 1979, with just six or seven small tax, decreases as a way of balancing the budget-it could not balance it in one year-was a small but important start.
Then the budget we got in 1980 stopped that. I remember my criticism of the first budget of the present Minister of Finance. I said he zigged when he should have zagged.
Then there was that disastrous budget of November 12, in which they went in a completely opposite way to what they had done over the previous ten years. They are creating a whole series of incentives for people to save money and they call them loopholes. That has put the country in a complete panic and in a paralysis. This frightened the government so much that it
even had to recess the House in order to reconsider the budget. They took the brave, stout stand that they were not going to give in. But they gave in in the last part of June, and now they have brought down this budget of June 28.
Instead of learning from the series of mistakes that they made in 1980 and 1981, and heading the wrong way, they added to the costs by increasing the taxes, with no evidence of restraint. In other words, it was a wrong-way budget, but it has served one good purpose. It forced the government members to think.
It is no accident that in this debate minister after minister has got up on the government side trying to defend this budget. They know what the intellectuals think of it, they know what the businessmen think of it, they know what the common people think of it. So they brought in this new budget, in the hope that it would paper over what they thought were the mistakes of November 12. They did withdraw some of the things they did in the November 12 budget. But this is not an economic budget. It is not an accounting budget, it is simply a high tax budget.
They are doing exactly the opposite to what they should be doing. They are still working on the assumption that when you are short of money you tax for it. The truth is that if you want more money, you should lower the taxes, and you will get more money and get the country growing in the process.
I think I have said enough, Mr. Speaker, on the perspective, I think I have said enough on the Crosbie budget. I did not think it went far enough in tax reductions, but at least it was a start. I think I have said enough, if I may use the common phrase for the last three budgets, on the MacEachen budgets. In one case he zigged when he should have zagged; in the other case he brought on national panic and paralysis; and this one can only be described as a budget that brought on stupefaction. Even the Conservative Party members are stupefied. The Conservative Party is stupefied at the immensity of the ignorance that is coming out from the other side of the House. I used to blame this mostly on the mandarins, but I know that the mandarins do stick into the budget certain things which are a contradiction of what we hear, from the floor of the House from the minister.
I never thought that I would hear, in the question period today, the minister talking about a demand-pull type of inflation. He could not spend any more money because there would be more demand-pull and therefore higher prices and more inflation. The hon. member for St. Paul's is right. What we should be looking at is the cost-push. Every time you add to the costs, you force people into the recession, which is now changing into a depression.
We have gone so far into the hole that it is doubtful whether any government could get out of it quickly. So I think the action program has to be, not a single act, or what they call in the modern days of drugs as a single "fix". But there are some things that can be done. They would not hurt the balance of ways and means of the budget or increase the deficit and bring the taxes in, in a year or so.
July 5, 1982

These things can be considered seriously. They are not political. I think that members of all parties can support them. Let us take the sensitive subject of monetary policy as a starting point. 1 think that government, to start with, could first just ask the Governor of the Bank of Canada to be silent on the weekly bank rate. This is nothing but far-seeing psychology to convince bankers to raise rates. No one borrows from the Bank of Canada, so why bother announcing the bank rate each week? Just doing that is a negative thing. My suggestion would not cost anything, but it would take a little pressure off the banks which think they have to follow the central bank.
Second, I suggest that the dollar should be allowed to continue to float. Think of all the billions of dollars we have had to expend in this floating crap game. Banks have many more billions of dollars than we have. No country in the world can compete with the five or six hundred billion dollar available from your Eurodollars and other dollars and will look around for a situation where they can make a dollar quickly. That is all we are trying to do, with the bank interfering with the value of our dollar. We are putting a few pennies into a gambling game when the other fellow has got billions; but these few pennies amount to several billion dollars which we have to borrow at 17 per cent, 18 per cent or 19 per cent, adding to our costs. Let the dollar float. Let the world economy come to our assistance in a natural economic way; and do not put us under the control of the American banking system.
Third, let us work out a money supply formula based on reality. Reality is not just the M-l figures that give the amount in the cash accounts in the banks or the amount of currency. Reality is the combination of money in circulation and the velocity with which it moves. A simple way to discover the velocity is just to do what the banks do; a weekly checkup on the cash flow will tell you how fast money is moving. Because if the money is moving twice as fast as it moved the week before, that has the same effect as doubling the money supply. That, of course, is very important in establishing the inflationary impact, in a quantitative sense, on the supply of money.
You do not have to get into a quarrel with the Governor of the Bank of Canada, you do not have to ask that he be dismissed; just ask him to lay off what he does not know anything about.
On this money supply formula, he knows all about velocity. Let us see if he cannot work out some sort of formula that will give him some indication of when to push forward and when to pull back. He still has all the power under the reserve sections of the Bank of Canada Act.
On the monetary point, these three proposals do not solve very much, they simply ease the restrictions of making adjustments that we have to make in the next year or so.
The next point is on fiscal policy. We have all sorts of ways on the fiscal side-and the government is using some of these in the present budget-of affecting our economic situation. Parliament has amended the Farm Credit Act so that the Farm Credit Corporation does not have to borrow from the
The Budget-Mr. A. Hamilton
consolidated revenue fund but can borrow money and get money by any means. It is in the act. All it has to do is get the permission of the Minister of Finance, but he has not given that permission yet. He is saying, "You have to do it my way", which is to pour public money into a subsidy to reduce interest rates three or four points for those who are in financial straits. The whole industry wants lower interest rates. That is its biggest cost factor. The Export Development Act has been amended in this House, with the support of all parties, to give the corporation the same power to raise money by any means. There is all sorts of money available not only from Canadians at half interest rates-they will provide it-but it is also available in the European market at half interest rates. We can get all the billions we want at 6 per cent to 9 per cent, and we do not need to worry about the exchange value fluctuating. We can cope with that; there is an insurance process already in effect now at Swiss banks. Why was the same power not given to the Canada Mortgage and Housing Corporation? I asked my Liberal friends. We proposed this in the House a year ago. We proposed this to the minister in debate, but he turned it down because he thought the Minister of Finance did not want him to support this type of thing. Why should the people who want houses not have access to money at half interest rates when it is not costing the government anything? Farmers have been given this right. Exporters have been given this right. Why should this not also be done for the small businessman through the Small Business Development Bond?
I would like to go on with more suggestions, and I am watching the clock carefully. I would like to see the Small Business Development Bond restored immediately, and let us get rid of those phrases "financial difficulties" and "in dire straits". It should be for everybody.
Second, I would like to see the saving techniques mentioned in the House over the last two years restored and put back into the Canadian budget. We could do that very simply, and it would not cost the government anything. Let hon. members not give me the argument about tax expenditures. We do not get any taxes if there is no business. We do not lose anything on nothing.
Then I would like to see action on that Conservative proposal of a few years ago, mortgage interest deductibility and property tax deductibility. Every year we could give that poor devil trying to buy his own home a $2,500 to $3,000 deduction from his costs. Let us compare that with the proposal of the government to hand out government money, which is borrowed at 18 per cent or 19 per cent, for one year only. These are proposals which can be demonstrated to produce a potential income to the government. They wipe out all costs and produce a profit. What is the matter with making money through sensible business management on the part of the government?
In winding up my speech I would like to suggest that there are a thousand individual, innovative programs the government could put into place without any cost to the government. In fact, the government would make a lot of money out of them.

July 5, 1982
The Budget-Mr. A. Hamilton
These ideas are not new. Some of them were proposed in the Standing Committee on Finance, Trade and Economic Affairs three years ago. One is to allow lending organizations to lend money to people buying homes at 6 per cent. Who would lend money at 6 per cent? Everybody would, if we put in one little sweetener, and that sweetener is that if a person sold his house within ten years for a capital gain, half that capital gain would go to the lender. Let us just figure that out and see how quickly we could get our 6 per cent money. The government is not even into that. All it says is "legalize the contractual arrangement." This would not cost the taxpayer anything. It would not cost the government anything. It is not a new idea. I apply the same principle to business.
Second, in connection with businesses, instead of borrowing money, they should be asked to give an interest in their businesses to lenders in lieu of borrowing. Big companies are forced to do it now. They call it turning from bonds over to equity. How quickly we would get money for small business if we accepted the Stanfield proposal of years ago! Money would flow to small business very quickly if a person could invest $5,000 in a small business and take his returns out as part of the profits, instead of having a fixed interest rate. The same thing applies to the share proposal. If we are worried about unemployment and if companies are worrying about not being able to pay increased wages to keep up with inflation, let them pay extra wages in the form of shares or an interest in their businesses. Hundreds of people are doing it, and they give evidence about how it works all the time. The hon. member for Calgary South (Mr. Thomson) told the House several months ago that he did that in his businesses.
1 could go on and list many things, but the following is the one I put forward above all things. In all capital intensive enterprises in any country, once interest rates go above 6 per cent, the interest payments become the major cost of running a business. At a 10 per cent level with a long pay-out, 75 per cent of the cost of a business is the payment of interest. Someone said in the House today that at the present time nearly two thirds of the cash flow of all our corporations in Canada-based on the frist quarter-is used to pay interest. Just think what the case would be for new business. That 75 per cent is the minimum. With interest rates now at 15 per cent to 20 per cent it is impossible to do anything. Such projects as the pipeline, heavy oil, tar sands and a national power grid from one end of Canada to the other-all of which we should have had 20 years ago-would become good investment opportunities. It has been pointed out by the hon. member for Mississauga South (Mr. Blenkarn) and others that Canadians do not act.


The Acting Speaker (Mr. Ethier):: Order, please. I regret to interrupt the hon. gentleman, but his allotted time has expired. Nevertheless, he may continue if there is unanimous consent. Is there unanimous consent for the hon. member to continue?


Some hon. Members:: Agreed.


Francis Alvin George Hamilton: Thank you very much, Mr. Speaker. I was planning to wind up at six o'clock.
I am simply pointing out that all these things which were such a shock to us last winter could be corrected in a matter of months, not by way of big handouts but simply by our saying, "Let's finance them by getting rid of that interest cost". Or, as they say in the trade, "Get rid of your front end loading costs" so that businesses are not loaded down with 75 per cent or 80 per cent of their costs being interest. All of a sudden these things which are uneconomic would become economic, and the government, without spending any money, could get many megaprojects going as fast as we could get the manpower allocated to them.
I thank hon. members very much for listening to me. I have made that proposal in the House for 25 years, and I am still trying. No one argues the economics with me. Some years ago the then minister of energy, mines and resources, the Hon. Donald Macdonald, looked at that proposal with his officials and said, "Yes, it is practical". The then minister of finance, Mr. Turner, said, "Yes". His officials looked at it and said it was all right. Why do we not do it? Now that we are shaken up a bit by the stupid following of wrong-way policies for the last number of years, we are finally forced to think. Let us change that thinking into action. There is not a thing I have proposed today which would cost anybody anything. What I have proposed would just make money for everyone.
I would also like-


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


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
Mr. Ron Irwin (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, St. Augustine once wrote:
A nation is an association of reasonable beings united in a peaceful sharing of the things they cherish, therefore to determine the quality of a nation, you must consider what those things are.
Because a budget is so important to a nation, it follows that in framing a budget we should first establish what things we cherish and how they shall be peacefully shared.
The process leaves us with a series of questions that must be answered before the budget can be hammered out. How do we control inflation? How do we treat the unemployed? How can we alleviate some of the unemployment? How can we get our tradesmen working? How can we conquer high interest? How can we help manufacturers, farmers and fishermen? How much tax is permissible?
July 5, 1982

The use of tax moneys as a catalyst must be clearly defined and understood. For instance, we do not foster the building of homes in a vacuum. We do so because in our nation it is important that our tradesmen work and our people are properly accommodated.
In this budget we have tried to outline those things that we cherish and how they are to be shared. We have decided that we must set an example, and consequently we have said that next year there will only be a 6 per cent increase in salaries for Members of Parliament and civil servants, numbering 500,000 people, and a 5 per cent increase the year after. We could easily have said, and it probably would have been politically popular, that we were cutting back on the civil service. In hard times it is always acceptable to cut back on the civil service. We could have laid off 10 per cent or 15 per cent or even 20 per cent of these employees, but would that have been sharing?
I do not think so.
1 note that last weekend Governor William Milliken of the state of Michigan went even further than the Canadian government. Michigan's 11,500 unionized secretaries and clerks have agreed to an undisclosed wage cut and a freeze at the new level for the next 16 months. We have proposed a salary increase of 6 per cent, but in Michigan unionized civil servants are saying that they do not even want an increase; that they will take less than they are receiving now as long as they have job security.
Some provinces such as Nova Scotia are following the federal leadership, and some provinces even took the initiative before the federal budget proposals. Members on this side of the House are deeply concerned about the impact on fishermen, small business, farmers and home owners.
We are in hard times, Mr. Speaker; no one disputes that. Within his limited resources, the Minister of Finance (Mr. MacEachen) provided a budget which has reacted to our concerns.
1 will say one thing about the economic downturn, Mr. Speaker. Each member of this House, from all parties, has learned a lot about budgets and economics and I am sure that each has gone through this budget with a fine-tooth-comb.
1 think the minister knew this, and even though there was a great deal of criticism from hon. members opposite about where the funds are allocated, certainly there can be little criticism about how they are allocated and about the clarity with which this is set out in the budget document. The budget is concise, direct and to the point, and the minister is to be congratulated.
These are hard economic times. I do not want to go back to the election of the Liberal government or to the tenure of the Conservative government. These hard times go back to 1973 and are directly related to the Middle East oil price increase which occurred at that time. Even in 1979 we had been forewarned of 1981 and 1982. In that year the Economic Council of Canada pointed out that the United States economy was expanding too fast. There was excess demand, insufficient savings, high consumer spending, high levels of borrowing, and
The Budget-Mr. Irwin
a large U.S. federal deficit. In 1981 President Carter noted that the Middle East price drain would take $40 billion out of the U.S. economy because of the increase in OPEC prices.
These are difficult times and government alone cannot solve them, Mr. Speaker. Roy Phillips, President of the Canadian Manufacturers' Association, has indicated that the role of government is to provide a supportive environment but that the task of turning things around must come from the private sector and that the private sector must not abdicate its responsibility. Mr. Phillips' words do not constitute an excuse for government to abdicate its responsibility. To amplify what he said, I think we must be more cognizant of the responsibility of government. I do not intend to go over every detail of the budget but in a general way I should like to look at some of the proposals contained in it.
I have dealt with the 6 per cent and 5 per cent increases to public servants. T here is one important thing that many members have overlooked, and that is the fact that these increases apply to regulatory boards, in some instances regulating the price of food, communications such as Bell Telephone, and transportation. They are not to be departed from except in exceptional circumstances.
We have tried to buffer senior citizens, so there will be no change in the GIS which will keep up with inflation and there will be no change in veterans' pensions. The child tax credit has been increased. Small business will be able to get loans at 4 per cent less interest than they can now, farmers at 4 per cent less, and fishermen at 4 per cent less. We have indexed term deposits. In other words, you pay tax only on the interest which exceeds inflation on a special type of term deposit. This money will be pooled, $3 billion of it, and provided to new home buyers. One hon. member says we have not done it yet. Let us get on with the budget, pass it tonight and do it. We will provide a fund of $1.4 billion for direct job creation. There will be a $3,000 grant for new home buyers and first time buyers. There will be 100,000 purchasers.


Ian Deans: You know that housing prices went up by $3,000 the day you announced it.


Ron Irwin: We will allocate an additional $30 million for a home renovation program. We will provide more low income and non-profit housing. I see hon. members are getting restless; the truth bothers them. We will provide new rules for the Canada mortgage renewal plan under which you do not have to defer your interest to the end as under the old criteria.
There is one particular aspect of the budget process which I find very discouraging. Perhaps it is the role of a vocal opposition, but they have cast a lot of darkness and very little light on the issues. Perhaps that is how democracy works. If the government proposes A, B and C, the NDP comes back and says yes, but you did not do E, F and G. If we do E, F and G, the Conservatives come back and say yes, but you did not do

July 5, 1982
The Budget-Mr. Irwin
X, Y and Z. And on, and on, and on. The opposition reminds me of some people I had back in my riding who deal in the gold market. They look for bad news. They will get up in the morning and say, "Oh, there is a war in Iran. Great, the gold market is going up." "There is a war in Lebanon. Great, the gold market is going up." "There are so many bankruptcies. Great, the gold market is going up." "There are so many suicides. Great, the gold market is going up." That is exactly what I hear from that Greek chorus opposite who spend most of their time wailing; unloved, unwanted and usually unnecessary. That may be the role of the opposition, but certainly it is not the role of a constructive democracy in difficult times. Let me deal first with the Progressive Conservatives.


Ian Deans: Oh, please don't. You have dealt with them, that is enough.


Ron Irwin: Only because there are more of them. One writer spoke about the hon. member for Etobicoke Centre (Mr. Wilson), the finance critic of the official opposition. He said:
Mr. Wilson talks enthusiastically of 'a program of restraint to reduce the size of the burden of the federal government on the economy' and he talks of going through all government expenditures. But after he finishes with advertising, which he suggests might be up to $250 million of a $76 billion total spending package, Mr. Wilson becomes less specific, sounding more like a nibbler than a slasher.
How true. On November 12, 1981, the hon. member for Etobicoke Centre said:
The small business community which enjoyed the Small Business Development Bond over about a two-year period now will have it taken away.
So we changed it, but the hon. member is still not happy. He wanted more for the farming community. Do you remember that? We allocated from our meagre resources-we are into deficit financing-an additional $100 million. The hon. member is still not happy. He wants $500 million, but he does not tell us where we are going to get it, and he wants us to spend less. Do you remember his famous 22 per cent speech? We have extensively augmented our rental housing program in this budget. The hon. member said in November that our program was only minimal. Will he be satisfied with the new budget? Probably not, because he says that we need 220,000 units, not 15,000. But he does not say where we are to get the money. At the same time he bemoans the 22 per cent and the deficit. He now talks about excessive government intervention and red tape. That is when he is not talking about his former days in the stock exchange, which he talks about a great deal. My grandfather came to this country at the turn of the century and worked in a steel mill. He died in that steel mill in an industrial accident. His widow received no help from the government. There were no safety regulations, but there are now. There are more inspectors now, there is now a more humane monetary approach to widows. These things cost money and they are government intervention. My mother was in an automobile accident and was paralyzed for 17 years. There was no government hospitalization plan, no aid for doctors or prescriptions. Today we have all that, and this is government intervention.
The Environmental Fund, an international non-profit organization, recently ranked the world's 150 nations based on
three factors: infant mortality, life expectancy and literacy, which is basically what? How well we are doing in the social sciences, health care and educational facilities. Of those 150 nations, Canada ranked seventh, ahead of the United States, Finland, New Zealand and the United Kingdom. Most of our federal tax moneys are spent on social services, health and education. So what would the hon. member for Etobicoke Centre cut? What social services? What education and health costs?
The Leader of the NDP, the hon. member for Oshawa (Mr. Broadbent), wants us to help renters and home owners with a massive increase in funding for the housing sector. We propose $3,000 grants, and what did he do? Immediately after the budget he went out and gave a news conference. You all saw it. What did he say? He said, "Well, that is not good enough. All that will do will be to make sellers raise the price". In November he was saying "do it", and last week he was saying it will make sellers raise the price. That hon. member will probably never be happy and I will tell you why, because when he is on the same wave length as we Liberals-and periodically he is- it makes him feel uncomfortable.


An hon. Member:: Darn right.


Ron Irwin: Darn right. I should be thankful for small mercies, because this uneasiness is a hopeful sign. To their credit, Mr. Speaker, the NDP has been consistent on FIRA. In November FIRA was forcefully defended by the former hon. member for Broadview-Greenwood-now looking for a provincial riding somewhere in Ontario-and the hon. member for Kamloops-Shuswap (Mr. Riis). Moreover, the leader of the NDP, reaffirms his party's support of FIRA in "Trufax", a publication of the Better Business Bureau. There has been much criticism of FIRA, but that is basically because people are looking for a scapegoat, people who do not understand economic forces, foreign domination or just do not give a damn. We have backed away slightly from FIRA by loosening up the rules, but as a party we must never abandon the principles upon which FIRA was established. May I remind the House that these principles were adopted by an all-party committee of this House in 1970. How soon we forget. Why did a concept such as FIRA receive all-party support at one time? Well, between 1948 and 1968 approximately 87 per cent of Canada's foreign capital requirements came from the United States. This resulted in 57 per cent of our manufacturing and 60 per cent of our mining industries being foreign controlled. Approximately 80 per cent of that portion was controlled by U.S. companies. Specific industries where American control was particularly high were: motor vehicles and parts, 96 per cent; industrial electrical equipment, 90 per cent; small electrical appliances, 82 per cent; rubber products, 85 per cent; and synthetic textiles, 72 per cent. There has been some improvement in the intervening years but not a significant one.
C. W. Gonick wrote:
Today, for example, between one-quarter and one-third of the goods produced in Canada are exported to the United States. These are mostly resource-based products-pulp and paper, nickel, iron ore, lead, zinc, and the like. Canadian jobs, profits, and prosperity in general are heavily dependent on the growth of
July 5, 1982

U.S. markets for these products. It is well known that Canada has never prospered in the face of a depression in the U.S. economy, has never been able to stabilize its prices in the face of American inflation, and has never been able to eliminate unemployment in the face of a downturn in the U.S. economy.
FIR A is a scapegoat because it is highly visible, but it is not in Canada's best interest to run scared at continued foreign domination of our economy this time. The opposition wants a made-in-Canada interest policy, a made-in-Canada job policy and a made-in-Canada trade policy. I suggest the opposition had better look to the decision process and call for decisions on Parliament Hill and not on Wall Street.
The government must act as a buffer in these hard times. I was a mayor one time. One cuts back on spending in bad times and spends in good times. I say that when good times come back we should start cutting back on our spending and pay some of our deficit. Now is not the time to cut back.
On the other hand, we cannot spend our way out of a recession. There must be some prudence. There must be some middle of the road. France found this out very forcefully. It tried to ignore inflation and economic principles, but it wound up with a 14 per cent inflation rate, and just recently it has had to devalue the franc and implement a four-month wage and price freeze. New Zealand has frozen prices, income and rents for the next 12 months. There is a time when reality must be faced and the reality now is that the pie is only so big and the pieces must fit the whole.


Mr. Siddon:: Where were you two years ago?


Mr. Gustafson:: Where were you ten years ago?


Ron Irwin: Ten years ago I was out fighting Conservatives. Two years ago I was out fighting Conservatives, and today I am out fighting Conservatives.


Thomas Edward Siddon: You are still wrong.


Ron Irwin: If you want to go back 25 years ago, I was fighting Conservatives. They sit here today talking about the poor widows. You should have heard the Leader of the Opposition (Mr. Clark), Mr. Speaker, talking about suicides. You should have heard him talk about the widows. The Tories forget that it was this party that brought in welfare legislation for widows, for children, for the unemployed and for the immigrants. I remember that and I remind hon. members of that.


William Henry (Bill) Domm: How much is the deficit?


Mr. Clarke:: Now you are talking a different way.


Ron Irwin: We have tried to accommodate the life insurance companies. They seem satisfied with the new legislation. We have tried to accommodate HUDAC. As a matter of fact, the president of HUDAC, Mr. Cyril Morgan, now feels that HUDAC was listened to as far as the implementation of some policies that have helped his sector, which is housing; are concerned. He feels that he was listened to when he brought
The Budget-Mr. Irwin
criticism to this government in November. He has some praise for this budget.
We have tried to listen. We have tried to accommodate. Only time and the economy will tell if we are right.
Let me turn now to the national energy policy. In the oil and gas sector as a result of the national energy proposals there will be 50 per cent Canadian ownership by 1990. That is not straggering. I cannot think of a country in the world that has less than that. In Canada we seem to feel that the thing to do is to give away our resources as soon as we discover them. Because of public misperception of this goal usually fostered and inflamed by the Official Opposition, we have decided to slow down the process. The minister has indicated that we are ahead of our schedule and that therefore we can do that.
At the same time, as a reminder to members of this House of Commons, I refer to a recent article written by Mr. David Crane, in which he says that the ten most important foreign-controlled oil companies operating in Canada invested $2.5 billion by the end of 1970 and in the same period received dividends of $4 billion. They also hold 80 per cent of equity ownership in Canadian subsidiaries worth $40 billion, which is not bad for a $2.5 billion investment.


Ian Deans: Which party was in power when that happened?


Ron Irwin: These companies have expanded from this base into marketing lead holdings, uranium, manufacturing, copper, coal and the building industry.


Ian Deans: You have been in government for most of the time, and that is why we are in such a mess.


Ron Irwin: If the hon. member would just stay quiet for a few minutes, he will have a better understanding of resources.


Ian Deans: I have a good understanding. I do understand, that is the trouble.


Ron Irwin: The hon. member for York-Peel (Mr. Stevens) says "Drop PetroCan." I say, never.


Ian Deans: You guys act like you just took over.


Ron Irwin: Foreign investment in oil and gas has been welcomed by editorial writers and by people throughout Canada for almost four decades. Just check the editorials. For four decades everybody in this country welcomed foreign investment. We treated foreign companies well. They had a fair return, and they have no complaint about this country.
I return to what the hon. member for St. John's West (Mr. Crosbie) said, a one-time Liberal. That is the one good thing in his favour. He was a one-time Liberal.


Mr. Lewis:: We will make you a one-time wonder.


Ron Irwin: The hon. member for St. John's West was a onetime minister of finance and a one-time financial critic. What is he now? He is a leadership contender, a man in the lockup, I understand, who still thinks he is minister of finance.

July 5, 1982
The Budget-Mr. Irwin


Douglas Grinslade Lewis: It would be nice to have one.


Ron Irwin: I thought he is a man who has a certain amount of experience and that I could listen to him. I came to listen to him. But what did he do? He spent precious time in this House personally attacking the Minister of Finance of this party for almost 40 minutes without saying anything. The only flourish he had is that he ended by quoting from the poem "The Ancient Mariner". 1 say that the only bird in this House is a duck. It is a dead duck and it is sitting opposite.


Some hon. Members:: Oh, oh!


Ron Irwin: The Leader of the Official Opposition spoke today. This proves just how much I suffer because I came and listened. The Leader of the Opposition spoke again about using the provinces as scapegoats, that we are once again using them as scapegoats. Remember the argument used concerning the Charter of Rights? It was scapegoats. He has one argument and he goes with it. It does not matter whether we are talking dollars or rights. It is one argument. I suggest the Leader of the Opposition read the British North America Act, and perhaps the Constitution as well. He will find that the provinces do have significant powers. He will also find out that the provinces spend 75 per cent of the tax revenues in Canada. We spend only 25 per cent. When the Leader of the Opposition says that basically we are drawing them in, certainly we are drawing them in. It is their responsibility. It is everyone's responsibility to cure these economic hard times.
Today the Conservatives said, resign. Today the New Democratic Party said, resign.


William Henry (Bill) Domm: We are unanimous.


Ron Irwin: How would we govern? We could be governed by the party on my right, which would govern on wishful thinking. We could be governed by the party on my left, which would govern by platitudes. No, we will not resign. Our party has a tradition of hanging tough in hard times. Our party has a tradition of keeping this country together, a tradition of fine social legislation. Every good piece of legislation in this House was brought in by a Liberal government. Hon. members should not forget that. We have a tradition of scope.


Some hon. Members:: Hear, hear!


Ron Irwin: Our party is the party of Laurier, King, Pearson-


An hon. Member:: And conscription.


Ron Irwin: This Prime Minister (Mr. Trudeau) intends to lead-


William Henry (Bill) Domm: Forever.


Ron Irwin: -not like the party on my right that intends to go for a free ride to see what will happen, and not like the party on my left that shows up here every Monday afternoon asking, "What happened?"


Douglas Grinslade Lewis: We have never seen a socialist quit yet.


Ron Irwin: We accept these challenges, Mr. Speaker. We are not going to walk way from them. That is what the people expect of us. These are difficult times and this is a difficult budget. But if we pull together, chart our course, stick to our bearings and get on with other things we will reach our destination.
I will end the way I started with what St. Augustine said. He said this:
A nation is an association of reasonable beings united in a peaceful sharing of the things they cherish,-
I do not think he had the House of Commons in mind when he said that. He continued:
-therefore to determine the quality of a nation, you must consider what those things are.
Let us decide, let us share. After all the partisanship has passed, I know that it would have been the hope of each and every member of the House of Commons-and if it were not, he or she would not have run in the first place-that our country prosper once again. Let us get on with the job.


Some hon. Members:: Hear, hear!


Douglas Grinslade Lewis: Mr. Speaker, finally, after
7.5	months of drift, indecision, confusion and chaos, the Minister of Finance (Mr. MacEachen) has once again addressed himself to the nation's economy. Due to the crisis in confidence which the last budget created, Canadians knew that a new budget was necessary. Asking this same minister to bring in a budget is tantamount to asking the captain of the Titanic to chart another cruise through the icebergs.
Before commenting directly upon the budget, I wish to draw the attention of the House to the sorry economic record of the present Liberal government. Business bankruptcies have soared as a result of the Liberal high interest rate policy. In the first five months of 1982, 4,500 businesses closed their doors; that is a 55 per cent increase from 1980. Farm bankruptcies increased 111 per cent and unemployment has reached 10.2 per cent. Over 1.2 million Canadians are out of work. That calculation is based upon the number of Canadians who have recorded their willingness to work. Thousands more have given up because the Liberal government has destroyed their will even to register as being available for work. Inflation, which the Prime Minister (Mr. Trudeau) wrestled to the ground years ago, has come back. It is an every day occurrence at 11.8 per cent. In the United States, under an administration which the government loves to deride, inflation has been wrestled to 6.7 per cent. One of the main reasons for the huge gap is the cost of energy. The Liberal Party, which rode into power on the sole promise that it would not increase the price of gasoline 18 cents per gallon, now finds that the price of gasoline has risen 86 cents per gallon and federal taxes are 42 cents of that increase. Those were the things the constituents of Simcoe North told me they were concerned about during
July 5, 1982

the last three or four days. The nicest thing about coming to Ottawa from Simcoe North is returning after watching these monkeys day in and day out.
In December, 1981, the Minister of Finance projected a deficit of $10.5 billion. Seven months later he shocked Canadians and the world with a deficit of $19.6 billion. In any business a vice-president of finance who made a 100 per cent error in projections would be fired summarily, but he remains bland and confused as ever, smiling as he answers questions, while all around him Canadians are losing their jobs, homes, farms and businesses. This deficit will cause untold hardship for Canadians. Interest rates will be forced higher as the Government of Canada competes in capital markets for funds to finance the deficit and approximately $25 million worth of Canada Savings Bonds which mature this fall. The investors who supply those funds will not be impressed by a government which operates on such a high deficit and cannot forecast its financial situation with more accuracy. The high interest rate policy of the Liberal Party is killing Canadians. Home owners are giving up when they are faced with 20 per cent mortgage interest rates, farmers are quitting and going bankrupt for the same reason, small businesses are being forced to the wall.
The measures announced in the budget, with which I will deal later, will not deal with these problems. While thousands of Canadians are faced with foreclosures or are forced out of their homes by power sale proceedings, the Liberal government adopts the old diversionary tactic of offering grants to new home owners or to people buying new homes. While thousands of Canadians are going bankrupt, the Liberal government offers interest assistance to small businesses which will expand as long as they are in financial difficulty. The Liberal depression has caused Canadians to cut back on the purchases of appliances, furniture, cars and homes. As a result, those sectors of the economy are in a slump. In order to purchase those items, Canadians need more disposable income. It is therefore a strange time to increase taxes, but that is exactly what the Minister of Finance did in the budget.
As a result of the proposal by the Progressive Conservatives in 1972, personal income tax exemptions were adjusted annually to take into account inflation. This meant that Canadians would not find that inflation was pushing them into higher taxation brackets and higher taxes. It also prevented governments from benefiting from inflation and collecting more revenue. That is income tax exemption indexing.
In the past Liberals have threatened to abandon this principle of fairness. In fact, in November the Minister of Finance invoked the old hocus-pocus to claim that by maintaining indexing he had in fact reduced taxes for Canadians. No one was fooled then, and they are not fooled now. The 6 per cent limit on the indexing of personal income tax exemptions is a tax increase. It is about time the Minister of Finance admitted the truth. The honourable thing for him to do, if he felt in honesty that he needed a tax increase, would have been to maintain the indexing on exemptions and increase taxes, but once again the Minister of Finance abandoned the straightforward course and adopted the devious route known to all
The Budget-Mr. Lewis
Liberals. It is no wonder the Liberal Party faces a crisis of confidence in the country.
The most unacceptable measure in the budget was the decision of the Liberal Party to fight inflation on the backs of the elderly. Up until the recent decision by the Liberal Minister of Finance, old age pensions kept up to inflation because they were indexed accordingly. The Liberals have abandoned that principle of fairness and equity. The Liberals have decreed that every Canadian receiving an old age pension will fall behind the rest of society. Our senior citizens who have given our country so much will be given a double whammy by the Liberals-once by the deindexing of old age pensions exemptions and once by the deindexing of personal exemptions for income tax purposes.
But days before increasing the taxes on senior citizens through the de-indexing of old age pensions and the deindexing of personal exemptions, the Liberal government looked after its own. On June 17 the Liberals allowed pay increases of nearly 10 per cent for ministerial aides and the political staff of cabinet ministers. This is the government which piously preaches restraint, fairness, equity and untruth, and rushes through this increase for its private staff.
We have 1.2 million Canadians out of work. We have thousands more who have left the work force, utterly discouraged by the failures of the Liberal government. The measures in the budget to address this problem are another Liberal fraud. The Minister of Finance boasts of a $750 million expenditure. Most of that is represented by recycled previous programs. In fact, only $200 million is new funding. But with the misplaced pride of a minister who uses the term "I am announcing, I am announcing", three times within the space of 60 seconds, Canadians are advised that $300 million will be used-I want the House to focus on these words-to create permanent private sector jobs through levered investment incentives. Who in the world knows what that means? The same bureaucrats and the minister who destroyed incentives in the November budget are now going to give us levered investment incentives. That fancy wording comes from a finance minister who stood in the House on Monday night last and made this comment as reported at page 18882 of Hansard, and the same comment is in the printed budget papers-at first I thought it was a typographical error-where he said:
Let me sum up by listing the items on both sides of the balance-
Every businessman in the country, and everyone who knows anything about balance sheets always says "balance sheet". However, here is the Minister of Finance and the bureaucrats who can just talk about balance. He does not even understand that it is a balance sheet which has two sides. This is the man who is leading us economically.
If the Liberal government desires to take tangible steps in the creation of employment for Canadians, it will get out of the job-creation business and out of the levered investment incentives and concentrate on funding training and retraining.


Mr. Kelly:: We did.

July 5, 1982
The Budget-Mr. Lewis


Douglas Grinslade Lewis: Sure you did. Two people came to my office in Midland a week ago seeking funding to enable them to take the registered nursing assistant course for 29 weeks commencing in September. They do not want those fancy words. They do not want these short-term projects. They want assistance while they retrain themselves. They do not want any levered investment incentives. They want legitimate assistance so they can obtain a job. They do not want the smoke and mirrors of the Minister of Finance and the Minister of Employment and Immigration (Mr. Axworthy).
At the same time that we are discussing jobs I would point out that I was shocked on the weekend to hear some civil servant telling me that a job means something that is created for two months. A job is employment that is created for at least one year.
While we are dealing with job creation, we witnessed a further fancy dance by the Minister of Finance when he dealt with unemployment insurance. You will recall how he said, "I am announcing." In the fine print of the budget an increase in unemployment insurance premiums was announced. There was no mention of that or no "I am announcing". The Minister of Finance and the Liberal Party proposes to implement a 52 per cent increase in unemployment insurance premiums for employees and 34 per cent for employers before the end of the year, but there was no announcement. I find that passing strange. Here we have a man who is so proud of announcements, yet he would not announce the increase in taxes. However, we elicited that information from him during question period.
Canada used to be a country in which there was plenty of adequate housing. This housing was available either by renting or by purchasing accommodation. The rents were reasonable and the apartments were available. Houses were being built and sold. We had a strong, viable industry which employed thousands of Canadians. Well, the Liberals have changed all that. The Liberal high interest policy is discouraging construction of apartments, and new home construction is almost nonexistent.
It is too expensive to buy and carry a home. A family income of $45,000 is required in order to maintain the average Canadian home listed in the Toronto Real Estate Board figures. As a result, housing starts have plummeted. After 1976 there were 273,000 housing starts in Canada. In 1981, after a lot of Liberal hard work, they got it down to 178,000. In 1982, with a lot more effort from the minister in charge of housing (Mr. Cosgrove) the Liberals are predicting 148,000 starts.
The housing industry is in the dire straits that the Prime Minister talks about. The unemployment rate in the construction industry is 19 per cent. How does the Liberal government address the problem? The same experts who brought in AHOP have come up with a new plan. It consists of grants for first time home owners and purchasers of new homes. It is predicted that it will help 8,000 people, not the 100,000 to whom the previous speaker referred.
The Progressive Conservative Party speaks for all home owners, not just the people who want to buy a home. There are tens of thousands of Canadians who have worked hard to own a home and are scared stiff that they will not be able to afford to keep it.
I was recently in a bank where a former client of mine approached me to ask if I was still practising law. He was dressed in mechanics overalls. He had his small son with him. I told him that I no longer practised law but that my partners would look after him. He said, "Mr. Lewis, 1 cannot meet my new mortgage payments. I will have to sell my home." Those are the Canadians whom we should be helping. They worked hard to buy homes without the benefit of grants. The Progressive Conservatives mortgage interest and realty tax credit plan would have meant $125 a month, $1,500 a year, to that family as a credit against today's horrendously high Liberal interest rates. It probably would have helped that family to keep their home.
Is it not interesting that the Liberals with a $20 billion deficit and a 42-cent tax increase on gasoline cannot afford to help the Canadian home owners? How they laughed at us when we suggested a $10 billion deficit and an 18-cent tax on gasoline! And yet we would have helped Canadian home owners.
Earlier today we saw one more attempt by the Minister of Housing to apologize for the dire straits that the housing industry is in. He went through program after program. Jobs, cheques and applications flowed from his mouth like a gentle rain from heaven as it has for the past few years. We have had the same nonsense from the same nonsensical minister for two years. While interest rates stayed unacceptably high, vacancy rates shrank and housing starts plummeted. If we were to listen to the Minister of Housing, every Canadian would have to move once a week just to move into all the new homes he has built. There would not be anyone working in anything else but the housing industry because he has employed so many Canadians. He has done all that while everything else has gone for a bath.
I would like to make a suggestion to the minister of housing. One Sunday I was at the opening of the Orillia Royal Canadian Legion building complex for senior citizens. I suggest to the minister of housing that, wherever possible when the government is dealing with social housing, that it be linked with the Royal Canadian Legion. I make that suggestion because that complex was planned and organized, as was the first phase, by Branch 34 of the Royal Canadian Legion under the chairmanship of my good friend, Ed Broomfield and his hard-working board of directors. Both phases were set up by the Legion and run by it with no problems and no civil servants. It all goes on smoothly. The Legions from all across Canada are run in a businesslike manner. They served Canada in the time of war and they have continued to serve Canada since the war. They perform a useful service to Canadians through social housing programs.


Mr. Fisher:: Who paid for it? You would have ended that program.
July 5, 1982


Douglas Grinslade Lewis: We are going to end you.
The federal government has dealt with small business in the budget. It is proposing to allocate $400 million in order to reduce interest costs by up to 4 per cent for two years on borrowing by small business to finance new investments and research and development. -The criteria which were set forth in the budget papers are confusing. We really do not know whether or not a business must be going broke in order to receive assistance.
When will the Minister of Finance, the bureaucrats and the Liberal Party understand that a small business facing bankruptcy may not necessarily want to expand. Small businesses may not want to build a new building and fill it with machinery, equipment and staff in the hope that business will come in. That is how the Minister of Finance is running the country. We would all be bankrupt if we did that.
It is easy to become a small-business man under the Liberal government. You just buy a big one and wait. However, we will be saved because the Minister of Finance made a number of proposals in his budget in which he intended to refer these items to an ad hoc committee of prominent Canadians; individuals from the financial and accounting and economic community. I have no quarrel with the people who were named to the committee as I understand it at the present time. However, how could the Minister of Finance and the Liberal Party, with the very outspoken minister responsible for the status of women who claims to be doing such a great job, announce the membership of that committee without including one woman? Not one woman was named as a representative. There is no excuse for that error. The 52 per cent of our population that are women contain many highly qualified financial, accounting and economic experts. They should be represented on the committee. If the hon. member for Kingston and The Islands (Miss MacDonald)-


Norman Kelly: Why?


Flora Isabel MacDonald: The hon. member for Scarborough Centre (Mr. Kelly) says why. He wants to know why.


Norman Kelly: There is nothing automatic about it.


Mr. Deputy Speaker:: The hon. member for Simcoe North (Mr. Lewis) has the floor.


Douglas Grinslade Lewis: I suggest there are many competent women who can sit on that committee. Marie Josie Drouin, from Montreal, Gertrude Mulcahy, the director of research of the Canadian Institute of Chartered Accountants, and Dian Cohen, a noted economist whom the Grits did not want in the lockup because she will not support the party line. More than one prominent Canadian was missed but mentioned later.
Canadians were amused to learn that the Minister of Finance consulted ex-finance minister John Turner during the preparation of the budget. The question is who should be more annoyed that this fact has been made public, the present Minister of Finance or the ex-minister? There is no question
The Budget-Mr. Lewis
that both the finance minister and the Prime Minister have heard the footsteps of John Turner up and down Bay Street and across the nation for several months. It is no wonder they wanted to have him included in this latest fiasco. Misery loves company.
I want to go on record with respect to the ex-finance minister. The Liberal government faces certain defeat in the next federal election as a result of its repeated failures since February, 1980. Nothing would made that defeat more convincing and more sure than to have the Liberal Party led by John Turner.
In Simcoe North John Turner is known as a Bay Street lawyer who quit. In the midst of the 1975 provincial election campaign, he resigned as finance minister of this Liberal government, and who wouldn't, to make a six-figure income on Bay Street. John Turner is no saviour of the Liberal Party or Canada.
This Minister of Finance has called for restraint. At the same time as they pound their chests and brag about increasing taxes on senior citizens, federal expenditures are rising; $62 billion for 1980-81, $75 billion for 1981-82 and $91 billion for 1982-83. That is restraint. They did not dare go beyond 1982-83.
At the same time as they restrain wages and salaries, they sit stupefied while Bell Canada applies to the CRTC for a 25 per cent increase in home telephone rates and a 35 per cent increase in business telephone rates. CN/CP say they will raise the minimum rate for a telegram by 20 per cent. That is how they operate. There is evidence to suggest that they do not know how to restrain prices within their federal jurisdiction. It was a last-minute addition to the budget. The regulatory agencies which are independent still have not heard from the Minister of Finance and the cabinet as to how they are going to restrain prices to the 6 per cent of the finance minister. There is no directive. What kind of operation is that?
The Liberal government has created a crisis in confidence. Canadians no longer believe that the Liberal Party and its bureaucrats have the ability or the desire to come to grips with the economic problems facing Canada. They have watched failure after failure and have seen promise after promise disintegrate in the same manner as the November budget.
How can Canadians have confidence in a government which predicted a $10 billion deficit in November and seven months later revised it to $20 billion? There have been 36 major and minor changes made on seven different occasions. Business, labour, farmers and fishermen, as well as home owners, have been driven to distraction by the indecision of this government.
In a recent discussion with the media in my riding it has been suggested that a coalition of the three political parties be formed. I personally reject that for several reasons. A coalition government is the same as a partnership or marriage. It must be based on trust. Who trusts the Liberal Party?
Our proposals for economic recovery are well known. The Liberals have none. The Progressive Conservative Party has

July 5, 1982
The Budget-Mr. Breau
the trust of the Canadian people. We would be foolish to destroy our credibility through association with the Liberal Party. We have seen what it has done to the New Democratic Party.
Who wants to be associated with the Member of Parliament for York East (Mr. Collenette) who says, "Canadians have a cry-baby attitude, particularly in the Toronto area?" Who wants to be associated with the hon. member for Sudbury (Mr. Frith) who says, "People who expect the government to pull the country out of this mess are asking too much?" The Liberals like to pretend there are no alternatives to this disastrous course which is leading this country to economic ruin, but those alternatives do exist. I want to bring them to the attention of this House once again.
The Progressive Conservative mortgage interest and realty tax plan would have meant up to $1,500 for every Canadian family in 1982 as a reduction of mortgage interest and realty taxes. That plan would be implemented now if it had not been for the NDP.
The Small Business Development Bond criteria should be changed back to what they were when the Progressive Conservative Party introduced the concept in 1979. There should be once-in-a-lifetime interest relief to small business. The November 1981 budget should be withdrawn. The National Energy Program should be revamped. Government spending must be reduced to control the deficit and reduce interest rates.
In closing let me say that if the Liberal government does not want to follow a sensible plan of action, it should resign and make way for a government that will do something about Canada's economy, namely, the Progressive Conservative Party.


Mr. Herb Breau (Gloucester):: Mr. Speaker, I am very happy to take part in this debate this evening. It is a very important debate on a budget that was brought forward last week by the Minister of Finance (Mr. MacEachen). It is a very responsible budget, a very realistic budget, a budget that attempts to deal seriously with the problems of this country and problems faced in the economy.
It is normal to hear the opposition continue to spread gloom and doom. It is normal to hear that from the Progressive Conservative Party. I mention this because it is important that those Canadians who listen to the debates in the House of Commons be reminded of how hypocritical these people are. They are the ultimate in hypocrisy. I just heard one of their members, the member for Simcoe North (Mr. Lewis) go on for about half an hour, talking about the problems of the country, the problems with the economy. Then he talked about the alternatives. I tried to jot down what the alternatives were.


Douglas Grinslade Lewis: 1 will speak slower for you next time.


Herb Breau: I would like to have people here this evening to share with me what his great program was. 1 noted, that he said he would do away with the direct job-creation programs. Never mind that there are hundreds of thousands of Canadians in poorer communities, in rural areas, where unemployment is high-


An hon. Member:: Why?


Herb Breau: -who benefit from these programs. The Tory party, if the member from Sincoe North had anything to say about it, and I am afraid he really would, would do away with these programs.
The second thing that he bragged about was the famous Tory program-that fortunately died in December, 1979-to institute the deductibility of mortgage interest and real property taxes. Mr. Speaker, that was an unjust program when they brought it forward, when they tried to put it into law, and it would be even more unjust today. That is so, first of all, because by permitting the deduction of interest for mortgages and real property taxes, whom would they help? They would help the people who have the higher mortgages. Therefore, that means the more expensive homes.


John Horton McDermid: Nonsense. That is not true at all.


Herb Breau: That is really the position of the Tory party. Everyone knows that, as it happened in the United States, whenever there would be a mortgage interest deductibility program, people would mortgage their homes as high as they could.


Some hon. Members:: Oh, oh!


Herb Breau: They do not like to hear the truth over there, they do not like to hear the facts about their phony programs to help the Canadian people. As to real property taxes, they would permit the deductibility of real property taxes, the member for Simcoe North says. Now, look at the facts. Where are the real property taxes the highest in the country? They are the highest in the larger cities, that is where they are high. It is in Ottawa, Toronto, Vancouver. Has anyone in the Tory party asked his Atlantic members how high real property taxes are in Atlantic Canada? They are very low. What they would be doing Mr. Speaker, is to use the federal treasury to help the rich areas of the country.
Mr. McDermid Read the legislation.


Herb Breau: I did read the legislation, very carefully. I spoke against it in 1979. I voted against it in 1979. I would still vote against it. If you want to come to my constituency to debate it, you are all welcome. Mr. Speaker, on their mortgage interest deductibility in real property taxes, the Canadian people will not be fooled by that. It is a program to help the rich, to use the federal treasury, which the poorer areas of the country need, to help the most expensive areas of the country where real property taxes are high and where you have the most expensive homes.


Some hon. Members:: Oh, oh!
July 5, 1982


Herb Breau: If a person has a million dollar home, he would be a fool not to go to the bank and get a mortgage for $200,000.


An hon. Member:: 


Herb Breau: He would get the interest deducted and reinvest his money somewhere else. That is the kind of policy that you get from the Tory party.


John Horton McDermid: You can do that now.


Herb Breau: The member says we can do that now. Mr. Speaker, if they are doing it now, there is no incentive for them to do that now, there is no profit in their doing it now, because they cannot deduct the expense of mortgage interest, that the Tories would like them to do.
The Liberal approach, Mr. Speaker, is to use the federal treasury, to use the resources of the country, to help the people.


John Horton McDermid: Will the hon. member accept a question?


Herb Breau: I will accept a question from the hon. member, later.
The Liberal approach, Mr. Speaker, is to use the resources of the federal treasury on a selective basis to help the sectors, the people and the regions of the country that need assistance the most.


Mr. Reid (St. Catharines):: A 10 per cent pay raise.


Herb Breau: The other day I was in the House and I listened very carefully to the speech of the member for York Peel (Mr. Stevens). I remember quite well when that member became President of the Treasury Board and what happened, what he tried to put forward. I remember the budget of 1979 of the Tories. I remember the months before the budget of 1979. The cancellation of the Canada Works program was one of the first things they did. The second thing they did was the cancellation of the Fishing Vessels Subsidy Program-stamped out. Social housing was going to go down the drain.


Mr. Kempling:: Which budget are you talking about? That was two years ago.


Herb Breau: That was two years ago, the member for Burlington (Mr. Kempling) says. Yes, it was two years ago. But the Canadian people have long memories. There are people in this House who are going to tell the Canadian people how hypocritical you can be. On the one hand, on the same day that the member for York-Peel was speaking-


William James Kempling: Let us go to the people now.


Herb Breau: -the member for Kingston and the Islands (Miss MacDonald) was up, crying tears for people on fixed incomes.


Flora Isabel MacDonald: That is more than you would do.
The Budget-Mr. Breau


Herb Breau: She said, "You are going to reduce indexation." Yes, I would for sure. I do not question the hon. member's sincerity. There are a few Tories on the other side who really feel what it is that the Canadian people need, that the needy people need. The problem with the member for Kingston and the Islands and some others is obviously that they have no influence with their party. That is their problem.


Flora Isabel MacDonald: That is why you are not a minister.


William James Kempling: That is why you never made it to the cabinet.


Herb Breau: The former President of the Treasury Board told us last Wednesday what the policy of the Tory party was. He said that this $19.6 billion deficit is a strangler, that it should be reduced, that it should be slashed. Why? Because, he said, the market did not like it, there are people obviously in Bay Street who do not like it. Where are you going to slash it, Mr. Speaker, so as to make any kind of difference? Suppose that you slashed it to zero or to $5 billion, or slashed it to $10 billion? If you slashed it to $10 billion, which programs are you going to cut out-so that the member for Kingston and The Islands will not cry for people on fixed incomes?


Flora Isabel MacDonald: I have not noticed anyone over there crying.


Herb Breau: The fact of the matter is that this rhetoric about high deficit, about their caring about people, is a lot of hypocrisy. When they get the reins of power they will try. The first thing they will try to do is reduce the influence of the government.
This budget is a budget that provides leadership in the economy, a budget that says that where the federal government has an influence, and direct power to act immediately in the area of wages, it will act. It will limit increases in wages to the public service to 6 per cent in the first year and to 5 per cent in the second year.
Mr. Speaker, for many people who are receiving social benefits, such as family allowances, old age security, public service pensions and so forth, indexing will be limited, as is the case for personal exemptions under the income tax system, to 6 per cent and then to 5 per cent for the second year. The government is proposing this measure, Mr. Speaker, because it is absolutely necessary to convince Canadians and the country's social and economic agents that it can be done, and that the government truly wants to bring inflation down to 6 per cent, and in order to do so, all Canadians are being asked to make a collective sacrifice.
The Liberal Party's philosophy consists in protecting our country's and our society's resources in order to help those who are most in need of government assistance. Since family allowances have been limited to an increase of 6 per cent, child

July 5, 1982
The Budget-Mr. Breau
tax credits will be increased by $50 as of 1982, to compensate for the resulting loss of income to low-income Canadians. This means they would suffer no loss of income as a result of the indexing ceiling on family allowances. Similarly, since old age security pensions will also be subject to a ceiling of 6 per cent, people receiving the guaranteed income supplement and therefore having no other income, will benefit from full indexation, because, although all Canadians are being asked to make sacrifices, the Liberal Party does not want the burden to fall heaviest on low-income groups. That is why people receiving the supplement will benefit from full indexation of both the supplement and the basic old age security pension.
Therefore, when the Progressive Conservative and NDP members are speading stories in the House, in the media and among the public that the government is penalizing pensioners and those whose only income is the supplement and the old age security pension, what they are saying is absolutely false, Mr. Speaker.


An hon. Member:: Irresponsible!


Herb Breau: People who receive the supplement-and I say this again because it is very important-senior citizens who are retired and whose only income is the supplement, should understand that their supplement and their basic old age security pension will not be affected. They will benefit from full indexation on January 1st and every three months, as before. Mr. Speaker, the budget contains other measures that are very important. Interest rates are high and have been for about two years. It started in 1979, then there was a slight drop in 1980. Afterwards, rates rose and dropped again in 1981, but they are rising again now. We have high interest rates because the American government has opted for a policy whose objective is to bring back all those American dollars that were financing world business. It is a fact that the American dollar has been financing a large part of the industrialized world for some time. The Americans have decided to bring back those dollars. In addition, in the U.S. budget for 1983 which has been brought before Congress, the deficit, with the approval of Congress, will be over $100 billion. Those are the two major causes of high interest rates in North America today.
Obviously, since Canada is experiencing the same inflationary pressures as the United States, there is the same incentive to keep interest rates high, because when inflation is running at 10 per cent, for instance, it is understandable that people want a higher rate of return than that on their savings, because if they agreed to a lower rate, they would be losing on their investment. The Canadian government cannot resolve this problem alone. And if we decide not to follow the monetary policy being applied by the Americans, the cost to Canada will be very high.
And the cost would be a drop in the value of our dollar even beyond that experienced during the past month. Consequently, since the government was aware that interest rates would
remain high, partly because of unacceptably high levels of inflation in Canada and partly because of the monetary and fiscal situation in North America, it opted for bringing in permanent, structural changes to help the groups that are suffering the most from these high interest rates. These groups include first of all, owners of heavily mortgaged homes, a second group includes small businesses and also farmers and fishermen, in other words, people who are productive and are self-employed. The government is proposing to provide direct, tax-free cash grants of $3,000 to all first-time purchasers of new or existing homes. Small businesses wishing to expand or to purchase depreciable property will benefit from an immediate 4 per cent reduction in the rate of interest payable to the bank, which will be in the form of a cheque, a cash payment from the federal government, until this permanent policy, this structural change in the interest rate which I mentioned earlier, has become a part of our system.
The Minister of Finance has proposed a new plan for stimulating investment in residential and commercial construction, which will protect the investor from the effects of inflation. However, since the Minister of Finance wishes to ensure that the concept or philosophy behind his proposal and also the mechanism and the legal means for implementing it are accepted and understood and in order to benefit from the experience of people in the private sector, he has formed a committee of experts that is to report to him by September 30, with a view to setting up a program which, in the long term, will reduce interest rates for residential construction, small businesses, farmers and fishermen from 3 to 6 percentage points.

The proposal of the Minister of Finance to have a system of term deposits which will be insulated from inflation has not yet been understood by the public. The opposition, of course, is not interested in making sure the public really appreciates this because hon. members opposite realize how appealing and popular it will be.
While the system will be complex in its application, it is a scheme to create a new indexed term certificate which would pay the investors tax-free interest on that part of the interest which only reflects inflation. Funds accumulated in this way would be directed to purchasers of new homes and to small businesses, farmers and fishermen investing in new plant and equipment.
There will also be a new registered shareholder investment plan whereby the investor puts his money into a fund which buys publicly-traded common shares in Canadian companies. The important aspect of this is that the capital gains on the shares would be taxable at half rate as before, but only to the extent they exceed the inflation rate.
Because the Minister of Finance wants to have the knowledge and the wisdom of people in the investment community, and also because he wants this very appealing and innovative
July 5, 1982

approach to be well applied to make sure that the mechanics- if I can use that technocratic word-of the system will be smooth, he has instituted a committee of experts which will report to him by September 30. Today he said that he wants this report as early as possible, but September 30 is the latest date, so that he can attempt to implement these measures in this calendar year. These are measures that the government is taking to help Canadians immediately.
Earlier I said that the Conservatives say on the one hand that the deficit is too high and on the other they propose new spending initiatives every day. When we propose to limit the indexation of some very expensive social programs-all instituted by a Liberal government-some members opposite try to play both sides of the fence while those who have power in that party-whenever they take power-say that there should be a tighter fiscal framework, that the deficit should be reduced, and that borrowing should be reduced because the stock market does not like the government to borrow too much. These members tried to play both sides of the fence. They know that ordinary Canadians need assistance from the government. They know that some regions of the country need attention from the federal government. When that party was in power in 1979, we saw how they tried to slash programs that were essential in some regions of the country.
At this point I should like to deal with an aspect of the economy and public policy which bothers me, Mr. Speaker. I am disturbed when I hear some members of the public and of the Conservative Party talk about the negative effects of the Foreign Investment Review Agency. They say that investment in Canada has decreased because of FIRA; that we should do away with FIRA or that FIRA is a bad thing. It may be a good thing or a bad thing, Mr. Speaker, I will let history decide that, but I know on which side of the issue I stand.
Let us look at the facts of the situation. When it is said that because of FIRA there is no new investment in Canada, attention should be paid to how much new capital was coming into the country before FIRA was established. When the doors were wide open, there were no screening mechanisms that would make sure that Canadians had a chance to bid on the procurement of foreign-owned companies that had their head offices elsewhere. How much new capital was coming into the country at that time? In 1970 only 8 per cent of total business fixed investment was new foreign capital in the country; in 1971 only 7.6 per cent and in 1972, 4.7 per cent. There was no FIRA at that time.
What happened was that foreign owned companies, particularly American companies-because they had a larger market in the United States, because they were larger organizations, because they were modelled on the branch plant economy- would come to Canada, take over a Canadian company and make it into another branch plant. In most cases they were coming to Canada and borrowing money from Canadian banks in order to take over Canadian companies or to start new ones. In 1970 there was 8 per cent new direct investment; in 1971,
The Budget-Mr. Breau
7.6	per cent; in 1972, 4.7 per cent; in 1973 5.1 per cent and in 1974 4.2 per cent. The idea that, if FIRA were disbanded, all of a sudden there would be new investment coming to Canada, is not true. Instead, American companies, in particular, would continue to come to Canada, buy companies with money borrowed from our banks, probably because they could convince the banks in those days that they had better management expertise or probably because of the volume of business they had in the United States.
One of the things that FIRA does is assure that, with a new corporation or with a take-over, Canadians will have a chance to bid on the procurement of the company. Formerly a lot of American concerns in particular, would come to Canada and not even give Canadians a chance to bid on Canadian companies. Surely we cannot accept that.
When people talk about the horrors of FIRA I wish they would look at the facts and see how much new investment was coming to Canada as a percentage of Canadian business investment in those days. The figure was not impressive. Foreigners were using their management expertise to convince our banks that they were better than Canadians so that they could borrow Canadian savings from Canadian banks.

Mr. Speaker, in concluding, I wish to emphasize that the government is determined to move this country from the world of 12 per cent inflation to the world of 6 per cent. To achieve this, we shall all have to make sacrifices. The federal government is acting immediately in an area over which it has direct jurisdiction, namely, the federal public service including federal members, senators and ministers, whose salaries will be increased by only 6 per cent instead of 11 per cent, and by 5 per cent the second year. In the federal public service the same rules will apply. The government also expects the private sector, which since August, September or October, when inflationary pressures started to be felt in Canada, has been telling the government to show some leadership, to show that it is capable of reducing inflation. I hope that these ladies and gentlemen will understand the government's message and realize that the government means what it says. I hope the private sector will follow the government's lead and reduce wage increases to more sensible levels. Of course 1 expect the New Democratic Party and the unions to protest loudly that it is unfair to set a 6 per cent ceiling on salary increases in the federal public service.
We should, perhaps, remember that the vast majority of federal employees, I would say 90 per cent, have complete job security. Whether the economy is in good shape or bad, these people keep their jobs. It is a different story for people working in the private sector. There, people are laid off-1 agree that in some cases, it is for a very short period, but in many cases, these are permanent lay-offs, Mr. Speaker. The New Democratic Party will always say it is unfair. Of course, but whom does the New Democratic Party represent? It represents the big unions. It wants people in the public service and in the

July 5, 1982
The Budget-Mr. Breau
private sector who have strong unions to go on having extravagant wage increases of 10, 11, 12 and 13 per cent, and others working in the private sector who are losing their jobs and have to live on unemployment insurance for part of the year, to be satisfied with no increase at all, in some cases. And that is what is happening in the real world today. So, Mr. Speaker, when the New Democratic Party talks about social and economic justice, we must not forget the people it represents. In Ontario for instance, it supports the United Auto Workers, a union that is claiming that despite the fact that there have been wage reductions or ceilings on wage increases in the automotive industry in the United States, in Canada they are not prepared to make such concessions. These people will continue to negotiate for 10, 12, 13, 14 or 15 per cent. Who is going to pay the shot, Mr. Speaker? People working elsewhere in the private sector, who, in some cases, are not unionized and have to live on unemployment benefits for part of the year. They will have to work to pay the wages of people who have jobs-1 do not begrudge them that-just because they have big unions and work in safe industries. In fact, they work 35 or 37 hours a week and would scream at working 40 hours, while other Canadians have to pay for their wage increases. So, Mr. Speaker, the federal government must lead the way in this respect, and that is what the government has proposed to do in last week's budget. That is why this budget deserves the support of Canadians and of the House.


John Horton McDermid: Mr. Speaker, the hon. member said he would entertain a question at the end of his speech, and he is nodding his head affirmatively.
I know he is an honourable gentleman and would not want to mislead the House. He talked about borrowing money on your mortgage and increasing it to $200,000 to get the deductibility under our plan, and then investing it somewhere else. Well, you can do that now and write off the interest up to whatever the amount of the investment is. The Minister of Finance (Mr. MacEachen) has changed that to $10,000 of interest, and it comes into effect on January 1, 1983. Does he not admit that that already can happen, that people can borrow on their mortgages, invest the proceeds and write off all the interest?


Herb Breau: Mr. Speaker, the hon. member obviously did not understand my argument. I did not mislead the House nor did I intend to. The record will show that what I said was if you have a mortgage interest and real property taxes deductibility scheme in the system, that would be an incentive to home owners, particularly the richest ones with the most expensive homes in the most expensive areas of the country, to go out and borrow money and deduct that from their ordinary income and invest it elsewhere.


John Horton McDermid: They can do that now.


Herb Breau: You cannot do that now unless you are doing it for investment purposes only, Mr. Speaker, and you cannot do
it on your ordinary mortgage. The Conservative scheme would permit the deductibility of real property taxes and mortgage interest and would be an incentive for people to use that money, not for investment but maybe to go on a trip around the world or perhaps buy some property in Florida. So, Mr. Speaker, the Conservative scheme was designed to help rich people in rich areas of the country.


The Acting Speaker (Mr. Blaker):: Does the hon. member for Kamloops-Shuswap (Mr. Riis) rise on a point of order?


Mr. Riis:: Mr. Speaker, without intending to cut into my hon. friend's time, would the previous speaker entertain a very short question?


Herb Breau: Yes.


Nelson Andrew Riis: The hon. member during his speech indicated the equity and fairness in the government's guidelines for public service wage settlements. Was my understanding correct that he said he considered it to be fair that a person making $15,000 a year was going to have his or her increase limited to 6 per cent, and similarly the people making $60,000 a year and up were also going to be limited to a 6 per cent increase? Is that what he was referring to as being fair and equitable?


Herb Breau: Mr. Speaker, I did not use only the figures that the hon. member did, but I said that the system the government had designed was a fair one because in order to start being selective about what increase you would give at what level, as we did with the Anti-Inflation Board-which the hon. member's party opposed in any event-but for this kind of system which applies to the federal public service only and is not intended to be a comprehensive wage and price control program, where there is no Anti-Inflation Board to look at every contract that is negotiated, I say that this is a fair system. I would rather that all government programs and all government initiatives be applied more equitably. Equity is a good and laudable objective, but this kind of program was designed to be administered very simply. It is simply an extension of contract at a given time, and in order to be selective, as the hon. member says, in order to achieve more fairness, it would have meant a bureaucracy such as we had with the Anti-Inflation Board, which would be undesirable.


Jack Burnett Murta: Mr. Speaker, surely what we are debating here this evening, as we have been since the budget and as we will be for the next few days, is more than a question of a budget per se. Rather, it is the whole question of a crisis of confidence that the Canadian people have in this government. It is this total lack of confidence which Canadians feel because the government cannot do anything toward achieving a reasonable solution to the problem of interest rates, or the falling dollar. I have never seen anything in my constituency which has unsettled Canadians as much as seeing and hearing daily about the state of our dollar. While not everyone understands the reason for it, it certainly has had a tremendously destabilizing effect on the confidence of Canadians in our institutions. It was a restoration of confidence, Mr. Speaker, as
July 5, 1982

much as anything else, that most Canadians, along with us on this side of the House, were looking for and hoping for last Monday night. Obviously that has not occurred. Canadians just do not think this Liberal government is managing the economy the way it should. Economists do not think so and most writers of newspaper editorials do not think so.
It is this crisis of confidence, Mr. Speaker, that we should be addressing this evening in our debate because it has the greatest potential to do damage to this country. If Canadians generally start to lose faith in their government, they really have no other place to turn to, and this is what is happening at the present time. We see this crisis of confidence and the fact that it was not addressed in any way in the budget, and we also see little things starting to seep out of the government, the cabinet and the bureaucracy which heighten this crisis. Small things in terms of dollars, but large things in terms of the destabilizing effect they have on the public's view of their politicians. As has been noted before, things like the 10 per cent increase given to political assistants of cabinet ministers shortly before the cabinet brought down its budget limiting pay increases to 6 per cent and 5 per cent. This is the kind of thing which has a damaging effect on the fabric of this country, and it is the kind of thing which people are going to remember for a long time. They feel the government has been hypocritical and is maintaining a double standard. That has had as damaging an effect on ordinary Canadians as anything 1 can think of.
Certainly, Mr. Speaker, other countries are in trouble. But if you look at the figures, Canada is suffering more than most, and certainly more than it should. We have a fantastically tremendous potential, and it is literally going down the drain because there is absolutely no economic direction from the present government.
We have a great potential and we are not using it in any way, shape or form in the way we should. Personally I think, and more people are thinking this way, that the government has set Canadians up for wage and price controls this fall. In my opinion, there is absolutely no doubt that this is what we will have. The scenario is there. The government has indicated to the public sector, a sector that it can control if it wants to, that it is imposing limits on the public service. The fact that labour unions do not appear to go along with the government will give the government leverage to return in the fall and bring in wage and price controls.
I think literally we will have the worst of all possible worlds if the scenario I have painted takes place. We are beginning very slowly to see the American economy starting to come out of its prolonged recession. Housing starts last month were up just a little, but they were up. Automobile sales were up just a little, but they too were up. There is some indication that items such as copper, which is used extensively, in cars and homes, is starting to increase in price in terms of building its own base-price mechanism on the commodity exchanges. But I fear that we will find ourselves-because the government has no idea where it is going and has no economic direction-in a situation this fall that while the American economy starts to move up
The Budget-Mr. Murta
and move out of the recessionary period, we on the other hand will find ourselves locked into wage and price controls that will be totally unacceptable.
Traditionally this country has been approximately six to nine months behind the American economy. It is the structure of the economy and the proximity we have in terms of the amount of trade we have with the United States, and they with us, that has put us in that general category. At the present time, we are about 18 months to two years behind the United States with regard to an economic upturn. I am worried that as the American economy comes out of its recession late this fall Canada will go into a wage and price control situation and that when we finally come out of this wage and price control period we will be in such a poor competitive position because the economies of central Canada will literally be in a shambles. The only thing we will have to export in any great amount will be our agricultural products, specifically and primarily grain from western Canada. That is a very bleak scenario. However,
I am almost assured that it will take place. I think it will be disastrous for the country. It will be the wrong direction for us to go, but nevertheless it will be something that all Canadians will have to learn to live with in the future.
What are we looking at presently? What are we looking at in terms of the economy? What are we looking at in terms of a fiscal overview? We have heard lots of charges and counter charges in the debate on the budget over the last few days. Revenue projections for this year have fallen from the November forecast, and these are the government's own projections, of $65 billion to $58.6 billion. The expenditure projections have increased from $75.5 billion to $78.1 billion. As a consequence, the projected deficit has jumped from $10.5 billion to $19.6 billion, or just about $20 billion. Those figures have risen in the space of just seven months. These are the projections which the government made at that time.
The projected financial requirements have jumped from $6.6 billion to an astounding $17.1 billion. The worrisome part is that this $19.6 billion deficit is only an estimate. It is based on the fact that the third and fourth quarter figures, which usually fall, will pick up. I do not think this will happen. 1 would like to see it happen, but there is absolutely no indication that it will. That is why I believe the concept or the scenario of wage and price controls will, unfortunately, become a self-fulfilling prophecy. The deficit will probably be in the neighbourhood of $25.1 billion rather than the $19.6 billion that we have been told will be the case according to the present budget.
Over the past number of months we have seen the Prime Minister (Mr. Trudeau) and the Minister of Finance (Mr. MacEachen) castigating the United States for the size of its deficit, the handling of its economy and the fact that most of what is happening to us is the fault of the United States. If, however, you take into consideration the size of the projected U.S. deficit of approximately $100 billion and you also take into consideration that the United States economy is about ten

July 5, 1982
The Budget-Mr. Murta
times larger than the Canadian economy, and if you project that on top of what we have as a deficit of about $20 billion, and if the Prime Minister, the Minister of Finance and Liberal cabinet ministers were running the U.S. economy, they would be looking at a deficit of $200 billion plus.


Mr. Regan:: Mr. Speaker, would the hon. member permit a question?


Jack Burnett Murta: Yes, Mr. Speaker, I will at the end of my remarks.
Because the United States economy is some ten times larger than our economy we would be looking on a per capita basis at a budget deficit of $200 billion if we were operating the American economy. This deficit will have one immediate dramatic effect. It will drive up interest rates. It is another question in terms of a crisis in confidence. Canadians saw interest rates reach all-time highs this past winter. We have seen interest rates drop. They did not drop as much as we had hoped they would but they have eased somewhat. In my opinion, we are about to see interest rates move up again because of the borrowing that will have to take place. This borrowing will have to take place not only because of the Canadian deficit but also because of the U.S. deficit. The demand for money in the marketplace is fuelled basically by governments going to borrow. This borrowing will have a tremendous effect in terms of pushing up interest rates at a time when most Canadians are keeping their fingers crossed hoping that interest rates will ease and drop. We have truly a very bleak picture for our economy. Admittedly, it is bleak for other countries, but in comparison it is probably worse for Canada than for any other country in the world. That is evidenced by the kind of confidence that outside investors have had in this country, for instance, the way the market has discounted the dollar against other currencies and a number of other things that have happened.
We are in for a very long, dark and dismal economic situation at the present time. The budget projections for the economy-and these are the minister's own projections for this fiscal year-indicated in November, a few months ago, that in 1982 the real growth in the economy would be approximately 2.2 per cent and that employment would grow approximately 1.6 per cent. We were told that the unemployment rate would be about 7.8 per cent and that inflation would rise to 11.7 per cent. In less than seven months the Minister of Finance returned and told us that we would have a drop in the real GNP of about 2 per cent, almost exactly what he forecast, the worst record of any OECD country, and that the unemployment rate would be 10 per cent. He also indicated that despite the oil glut and lower than expected food prices, inflation would remain at approximately 11 per cent. In the November budget, inflation in the United States was projected at 8.7 per cent, and it ran at 7.2 per cent in the first five months and at
6.7	per cent in May, compared with 11.8 per cent in Canada. This is one of the main reasons we are seeing our dollar drop, and it will be another reason for seeing interest rate increases.
We are not in the same league with most other major producing and exporting countries of the world.
The projected negative growth rate in the economy of minus 2 per cent is the worst since 1946, so no wonder Canadians do not have confidence in the government, in the Prime Minister, and in the Minister of Finance who really do not know the direction in which they are heading.
If one looks at the over-all budget, there are winners and losers as there are in any budget. I suppose the winners, if one wants to call them that, would be low-income couples with children and single parents who would have been receiving the refundable energy tax credit for two years. They will benefit from the $50 increase per child in the child tax credit, but this will be partially offset by the indexing of family allowances and income tax brackets. With somewhere between $12,000 and $15,000 of earned income, even these people end up being net losers.
Another winner would be small businesses which are able to finance scientific research and the purchase of depreciable property. They would benefit from the rebate of up to 4 per cent on interest rates, but basically it is a partial restoration of the Small Business Development Bond that was gutted by the Minister of Finance in his November budget.
Farmers on the verge of bankruptcy can also obtain loans and partial interest rate rebates to help them survive, but most of this money comes from funds which would have gone to farmers in positions to expand production. Even with the small business development bond concept, we will not find at this time many takers.
If one expands one's business, to whom will one sell it? Canadians do not have the confidence right now to purchase appliances, cars or homes. If they have money or any surplus in their disposable income, most of it will go into savings because they are not sure and are concerned about where we are going.
Basically that ends the short list of beneficiaries in this budget. The losers include virtually every taxpayer-all married taxpayers without children and all married taxpayers with children earning more than $12,000 per year. These people will pay more as a result of the partial deindexation of the income tax system. This will mean $1.7 billion in additional personal income taxes to the federal and provincial governments in the remainder of 1982-83 and in 1983-84. That takes in a lot of Canadians, virtually all Canadians.
Another loser will be old age pensioners who are ineligible to receive the guaranteed income supplement. As an example, single people with total incomes above $8,500 per year and married couples with total incomes above $14,300 per year will receive $80 less per person or $160 per couple in 1983-84 because of the 6 per cent cap on indexing in 1983 and the 5 per cent cap in 1984.
They may also have to pay more income tax because of the partial deindexing of the income tax system. Meanwhile
July 5, 1982

upper-income earners, people who earn more than $30,000 per year, continue to enjoy the full benefits of reductions in marginal tax rates in the November 12, 1981, budget. All high-income earners and employers will also likely be hit with a substantial increase in unemployment insurance premium rates. Low-wage federal public sector employees will also be losers. They will be subjected to the same restraints as those in the upper income ranges who will retain the benefits of the November reductions in marginal tax breaks.
Who else will lose? One group is the native people because the spending of government in this regard will be reduced by some $80 million over the next two years. This is spending by government on economic development for native people. It will mean higher social costs in years ahead to meet the needs of this group, perhaps the most economically disadvantaged in the country. While it appears we are saving $40 million a year on one hand, the cost could very well be much greater than that in the next two years.
The huge increase in borrowing requirements will translate into further downward pressure on the dollar and further upward pressure on interest rates. This will mean higher prices and delayed recovery, hurting both consumers and the unemployed. Virtually everyone in the country loses because of the budget. The people who could be considered winners are not really winners because they do not have the confidence they should have in the Minister of Finance, in the Prime Minister and in cabinet.
To sum up, the budget contains no measures to provide job creation or to stimulate lagging consumer demands. There are absolutely no projections in terms of unemployment or what we are to expect in coming months. There are no projections in terms of wages. The budget provides no projections in terms of investment. There are absolutely no economic indicators for 1983 to give Canadians, money markets, stock markets and investors some indication as to where we are going.
The budget is also sadly lacking in that it does not instil confidence in Canadians. Until that takes place we will find ourselves wandering aimlessly as a country, a country which at one time was viewed as one of the centrepins of economic stability with a good standard of living, a country which in the last few months and years has come under a cloud of suspicion as more and more people ask whether Canadians know what they are trying to do, whether they know the economic direction in which they are going, or whether the government really cares. That is the saddest part about the budget. It indicates to all Canadians that the government really does not care.


Some hon. Members:: Hear, hear!


The Acting Speaker (Mr. Blaker):: The Chair will recognize the hon. member for Trinity (Miss Nicholson), but I also note that it is ten o'clock. Possibly the intent of the hon. member is to ensure that she will be recognized the following day. Whatever may be the case, it is ten o'clock and 1 will wait to hear from the hon. member for Trinity.
Adjournment Debate


Miss Nicholson:: Mr. Speaker, 1 would be pleased to call it ten o'clock and to continue tomorrow.


MESSAGE FROM THE SENATE
The Acting Speaker (Mr. Blaker):: I have the honour to inform the House that a message has been received from the Senate informing the House that the Senate has passed Bill C-115, an act to establish a national program for occupational training, without amendment.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Donald W. Munro: Mr. Speaker, on May 28, at page 17869 of Hansard, I asked the Minister of Transport (Mr. Pepin) a number of questions relating to the rumours that were then circulating about a transfer of domestic air traffic from Dorval to Mirabel. This question had already been broached in the House by my colleague for Central Nova (Mr. MacKay) as well as other members who also raised this very matter.
The matter of concern on both sides of the House was a proposal to shift from a self-operating and self-supporting airport which was actually making money-Dorval-to one which is limping and had been limping along for a number of years. The obvious intent was to spread the blessings somewhat-perhaps not blessings-which may be making them both run into the red, being one of the problems.
There is not enough time to go into the history of Mirabel this evening. I think perhaps you know about it as well as I do, Mr. Speaker, so I will not go into the history. However, some of the related matters are of considerable interest.
One of the questions I put to the minister on that occasion was whether any of the domestic airlines had literally asked to be moved from Dorval to Mirabel. The answer to the question was no, there were none. Not one domestic airline had asked for the privilege of moving from a well operated airport which had all the communications with the rest of Canada very well organized. Not one operating firm asked to be moved to the other airport.

July 5, 1982
Adjournment Debate
At about that time there was an article in the Gazette following a press conference given by the Minister of Transport. I believe he was in Montreal at a ceremony connected with the port of Montreal at that time.
The press had asked him a few questions about Mirabel. Ele then outlined that there seemed to him to be only two alternatives. One was to transfer all Dorval flights to Mirabel except for flights within Quebec and flights to Toronto; presumably to and from, but I am not sure about that. The newspapers only say "to". I wonder if it is clear to everyone what this would mean. It would mean that all internal flights in the province of Quebec would go to Dorval and that flights to and from Toronto would go to Dorval. All other flights headed for Montreal and area would land at Mirabel. 1 do not know whether you have had any experience with Mirabel in landing from overseas flights, for example. I certainly have.
We were delayed on departure from the other side of the ocean and I suspected, because of the forecast arrival time, that when we arrived there would not be any transportation. We were to arrive at approximately 11.30 or twelve o'clock at night. I sent a note to the captain of the aircraft and asked if he would be kind enough when he was in voice contact with Mirabel to arrange for a bus to be waiting to take those of us who were bound for Ottawa from Mirabel back to Ottawa. This was a chartered flight. Happily I did that. When we arrived at Mirabel, there was not a single transport vehicle in sight; not a taxi, not a bus. The parking lot was empty as well. We could not even have stolen an automobile on that occasion. The bus was waiting. The bus driver was not too sure how to get to Ottawa, except by going to Montreal and then on to Ottawa. He could have cut across country, but he was not familiar with that route, and maybe he did not want to cut across country at that time of night. There were eight, ten or twelve of us on that flight who wanted to come to Ottawa. That was two years ago. To this day I do not know how the people got to Montreal. They may still be trying to get to Montreal by their thumbs.
I see, Mr. Speaker, you are signalling that there is a time problem. I can appreciate that.
I made a suggestion as to how to avoid involving the Canadian people in expenses of that sort. The minister strikes me as being very much like Mr. Micawber, the eternal optimist who thinks that something is bound to show up. In his press conference he said it might be possible the resulting increases from Mirabel would bury the issue. He was hoping that the decision could be delayed, primarily because the government was waiting for an upturn in the economy. This is where the "Mr. Micawber" aspect of the minister comes in. The minister might even conform to the G. K. Chesterton definition of Mr. Micawber when he said:
-the preposterous and sublime victory of the human spirit over circumstances.
He felt 'that perhaps the human spirit was great enough, perhaps a little bit like the Minister of Finance (Mr. Mac-Eachen). It is catching because they sit across the aisle from
one another. He feels that circumstances will improve matters and it will then be feasible to move the traffic from Dorval to Mirabel.
I would draw your attention, Mr. Speaker, to the fact that Mirabel stands as the forty-seventh airport in Canada as far as traffic is concerned, while Dorval is in the neighbourhood of fifteenth. It has maintained that position over the last three or four years. By comparison, Vancouver is second or third, and Victoria is twelfth or fourteenth. Victoria still does not have radar.
I suggested to the minister that rather than transferring the traffic and incurring another debt, he might use the funds he was planning to use for the transfer to instal radar at Victoria international airport. The thirteenth or fourteenth airport in Canada could then enjoy the benefits of that facility.


The Acting Speaker (Mr. Blaker):: Despite the fact that we have gone well beyond the hon. member's allotted time, I think it is incumbent upon the Chair to suggest that there may be a conflict for the Chair in regard to this subject matter. My interest in the remarks of the hon. member for Esquimalt-Saanich (Mr. Munro) should perhaps be explained in that way.


Mr. Jesse P. Flis (Parliamentary Secretary to Minister of Transport):: I guess, Mr. Speaker, that explains why you allowed the hon. member to go a full ten minutes instead of the normal seven.


The Acting Speaker (Mr. Blaker):: Order. The hon. member is not correct. If he will notice the time, the hon. member for Esquimalt-Saanich began at 10.01 and completed his remarks at 10.08.


Jesse Philip Flis: Mr. Speaker, I accept the correction. The point the minister made in his answer to the hon. member's question is quite clear. It is very difficult to calculate the economic costs of the proposed transfer of flights from Dorval to Mirabel. Nonetheless the minister committed himself to making public the cost benefit study done by his department when he announces the cabinet's decision on the future of Montreal airport. As the hon. member knows, the minister has now submitted his views to his cabinet colleagues and he expects a decision to be made in the next few weeks.
As to the possibility of installing radar at Victoria airport, using funds not spent at Mirabel, two points should be made here to the hon. member. The first is that radar is already scheduled for installation at Victoria.


Donald W. Munro: When?


Jesse Philip Flis: As the hon. member is aware, from correspondence with the minister, and I hope he reads his correspondence, Victoria is specifically identified in the department's plans for radar modernization. Until radar is installed, Victoria is adequately covered from Vancouver, and through a dedicated advisory service at Victoria.
July 5, 1982

The second point I would like to strees is that it is wrong to assume that a pot of money will suddenly become available if the government decides not to transfer flights from Dorval to Mirabel. On the contrary, should the decision be taken to make the transfer, one of the major considerations will be where to find the necessary funds. There is an almost unlimited demand on the limited funds available for airport improvement across the country.
The opposition deplores the great deficit, but, when it comes to a local project of interest in an individual member's riding, there is always great enthusiasm for more spending. The hon. member might recall the expenditure at Victoria airport last year on an instrument landing system amounting to a total of $1,644,600. That was spent right in his own riding, Mr. Speaker. Let us not hear specifically from that member, deploring the great deficit while at the same time wanting millions and billions for his riding.


THE ECONOMY-FOREIGN EXCHANGE CONTROLS- GOVERNMENT POSITION-REQUEST THAT SPECIAL COMMITTEE EXAMINE ESTIMATES
Mr. John Gamble (York North):: Mr. Speaker, on June 21 1 had an opportunity to put two questions to the Minister of Transport (Mr. Pepin), Acting Prime Minister in the absence of the Minister of Finance (Mr. MacEachen) and the Prime Minister (Mr. Trudeau). One question was with respect to any potential intention of the Government of Canada to impose foreign exchange controls. Another question related to an examination of the estimates by a special committee of the House.
In response to the first question, which I thought had some significance, the minister suggested that 1 discuss the matter in the debate which was to follow that day. The fact of the matter is that the question was raised because of an unsatisfactory response by the Prime Minister to a similarly worded question by the hon. member for the Yukon (Mr. Nielsen) a week earlier.
Since the date of that initial question and the unsatisfactory response, Mr. Speaker, the Canadian dollar has been consistently bombarded and reduced substantially in level of value vis-a-vis the American dollar, to the extent that it dropped below where it was earlier today. That decline has not been substantially remedied. I would have thought that any Prime Minister, or Minister of the Crown acting as Prime Minister for the day, would have relished the opportunity to dispel any concept that this country had become a banana republic, imposing foreign exchange controls where its own financial control had gone completely awry. That opportunity was not taken, much to my dismay and, I am convinced, to the dismay of many Canadians who might have feared that their opportunity to convert Canadian dollars into other currencies would come to an end very shortly.
In any event, since that time the minister has introduced his budget. Once again, fortunately, there was no provision for foreign exchange controls therein. If we wish to protect the value of the dollar, surely it is incumbent upon government to indicate in a very clear and unequivocal fashion to the general
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public that it has not sunk to the level of those states which have lost control of their financial affairs.
The second question I asked was a legitimate question, designed to take from this House and submit to a committee of the House the opportunity to examine the estimates. You and I know, Mr. Speaker, that there are members on the government side, just as there are members on this side, who are personally aware of waste and extravagance in government expenditures with which they would very much like to deal in an effective manner. They cannot deal with them in an effective manner in this House; they could have in a committee. Not only are there specific illustrations of waste but there are also circumstances in which, with prudence, expenditures of government may in fact be cut. I would have hoped that process might have got underway.
A multitude of substantial expenditures were approved in the budget of November, 1981, and again confirmed in the most recent budget, which, in my view, are the last vestiges of the days of wine and roses of this government. To spend $1,724 billion on foreign aid, and in the current budget to proclaim that these expenditures should increase by some $36 million- that appears at page 16 of the budget papers filed by the Minister of Finance-is reprehensible, having regard to the fact that those same budget papers make provision for the reduction in old age security payments of $5 million this year and $100 million to our senior citizens next year.
Because of this country's economic circumstances the time has come for the government to recognize that its primary obligation is to the people of Canada. If there are in fact excess funds available, those funds should be allocated to Canadians. We can no longer enjoy the luxury of spending our money in a foolish and reprehensible fashion. The Canadian public is aware of the circumstances which face them daily when they lose their businesses, their homes and their farms. If funds are available, and the government makes up its mind as to what funds are available, I think the funds should be used within Canada.
A closer examination of a variety of projects might be undertaken, but we are denied that opportunity because the government is fearful that if it refers such matters to a standing committee of the House for examination, the committee would produce a report which would be meaningful and result in the reduction of expenditures.
If the government really intends that people should lower their expectations, 1 submit it is the obligation of the government to do the same. It should not increase taxes; it should not increase expenditures; it should lower its own expectations. The public learns better from example than from exhortation, and that example has not been provided.


Douglas Glenn Fisher: Mr. Speaker, it is a great pleasure for me once again to be able to say that the

July 5, 1982
Adjournment Debate
government has no intention of bringing in foreign exchange controls. We do not intend to adopt that kind of magical solution in any of our economic approaches to Canada's current difficulties. In fact, in our budget we have stressed that we want to take a disciplined, long-term approach to Canada's inflation problems.
If we look at page 3 of the budget papers, we discover what has been happening to currencies all over the world between 1979 and June 24, 1982. In that period the Canadian dollar declined against the American dollar by 7.8 per cent, but other currencies declined against the American dollar as well. Let me give some examples.
The British pound declined 9.6 per cent; German money declined 9.5 per cent; the Japanese yen declined 13.9 per cent; the franc declined 16.7 per cent; and the Swiss franc declined 15 per cent. Currencies all over the world have declined in value against the American dollar. In fact, Canada's currency declined the least during that period.
Why is this decline going on at all? First, it is happening because Americans have come to grips with their domestic inflation, and there is less erosion of money inside their country. Capital from all over the world is attracted by that characteristic. Second, the United States has continued a policy of very high interest rates, and that acts as a second magnet. We ask Canadians to realize that exchange controls and other magical answers will not respond to that. We need the long-term discipline underlined in the budget to battle inflation and to bring down our own interest rates.


CANADIAN RADIO-TELEVISION AND TELECOMMUNICATION COMMISSION-RATE INCREASES GRANTED TO BRITISH COLUMBIA TELEPHONE COMPANY. (B) EFFECT OF COMPANY LAY-OFFS ON UNEMPLOYMENT INSURANCE FUND
Pauline Jewett: Mr. Speaker, I want to raise the question of B.C. Tel and its flaunting of both the unemployment insurance program and the CRTC. On June 30 I requested that the government, through the Minister of Communications (Mr. Fox), instruct the CRTC to withdraw a substantial portion of the rate increases granted to B.C. Tel over the past two years. I asked this because B.C. Tel is planning to lay off over 2,000 employees throughout B.C. for up to six months. This will allow its services to customers to deteriorate even more seriously than they have already.
The CRTC has always made as a condition of rate increases the improvement of service to customers. I must criticize the CRTC repeatedly. For example, not very long ago I pointed out to the CRTC that it was taking this company over 30 days to meet the demand for new installations. But the service has not improved, Mr. Speaker, and now it will worsen even further as a result of the lay-offs.
B.C. Tel flaunts the CRTC and makes a mockery of it. It knows that the 2,000 employees are essential if it is to fulfil the charge that the CRTC has made upon it. It has admitted this, but as long as it can get rate increases, why should it worry? It flaunts the CRTC's instructions to improve service and it has been doing so for years. I call upon the government, through
the Minister of Communications, to roll back the rate increases to B.C. Tel and I hope to hear that this is exactly what the government is going to do.
The B.C. Tel profit picture bears examination. At the very moment it announces this mammoth lay-off, it declares a dividend to its shareholders of approximately $13 million. Its total dividend payout for 1982 will be about $23.8 million, yet it claims that due to "economic conditions'' it must lay off workers and deprive consumers of service.
It is odd that in the July 26 issue of The Financial Post Jack Shriner is quoted as saying, at the Pemberton Securities seminar, that only four B.C. companies are in good health and one of these is B.C. Tel. Yet a rate increase of 15 per cent has just been granted to B.C. Tel and service will become even worse as it short-changes consumers and lays off workers to the tune of a saving in wages of approximately $30 million.
My second question in this regard was directed to the Minister of Employment and Immigration (Mr. Axworthy), who should be concerned about the whole caper since it is an assault on the UIC as well as on the CRTC.
The other day in the House the minister said that both employers and employees contribute to UIC, so the federal government has no responsibility if it is being abused. What absolute nonsense. The government is always very concerned if an individual abuses the UIC. It is always checking individuals to see if they are abusing the UIC. But a private company can lay off 2,000 or more workers for up to six months and the government says it has no concern. Apparently this is not regarded as an abuse of UIC. The government's only concern is with abuses by individuals, not possible abuses by private companies.
Apparently in the minister's mind, what is good for B.C. Tel is good for Canada. 1 think it is time the minister woke up to the possibility that by the unnecessary lay-off of workers, private industry is not only depriving consumers of services but is actually abusing the unemployment insurance program.
I hope to have answers to these two questions tonight. Why have rate increases granted by the CRTC over the past two years not been substantially reduced, since B.C. Tel is constantly flouting the CRTC, and why has the Minister of Employment and Immigration not been concerned about the possible abuse caused by this deliberate and unnecessary layoff of employees at B.C. Tel?
There is a third question I have not yet raised and did not raise in the House. Perhaps the parliamentary secretary cannot reply to it tonight, but in case he has looked into the matter perhaps he could also tell the House whether or not in his view the Canada Labour Code has been circumvented with this minimal six-week notice of lay-off which B.C. Tel gave its employees. Is six weeks the correct length of time or should it not, under the Canada Labour Code, have been substantially longer than that?
July 5, 1982


Mr. Jack Masters (Parliamentary Secretary to Minister of Communications):: Mr. Speaker, the question posed by the hon. member raises two issues: the relationship between the level of service quality and rate increases approved by the CRTC; second, B.C. Tel's recent announcement regarding the lay-off of some 2,200 employees.
As you may know, service quality has been a central issue in the last several rate case-proceedings. Since the CRTC took over the job of regulating the telephone companies, it has spent considerable time and effort to develop suitable service level objectives for all of the carriers it regulates. The commission has been very persistent in encouraging B.C. Tel to improve its performance where necessary to meet these new objectives.
In its decision 81-3 in January, 1981, the commission stated that the approved rates were "predicated upon the expectation that adequate service quality will be available to subscribers while those rates were in effect and that the minimum acceptable level of service quality will have been achieved by the fourth quarter of 1981."
In its next rate decision, 82-5, issued in May, 1982, the CRTC again addressed the issue of service quality. The commission noted that while certain service standards had improved, others had not been met. In considering what action to take regarding rate increases, the commission noted that the company suffered a considerable work stoppage as a result of a strike by the TWU and that this may have delayed some expected improvements. However, since the company has not attained the required level of service quality, the commission granted lower rate increases than would otherwise have been the case.


Pauline Jewett: Fifteen per cent.


John Gerald (Jack) Masters: It is clear, then, that the commission in its very recent decision has already held down rate increases as an incentive to improve levels of service quality. I believe that this
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action by the CRTC is just and reasonable both to the company and its subscribers, and provides the appropriate incentive to company management to work toward raising service quality to levels set by the commission.
With respect to the issue of the proposed lay-offs by B.C. Tel, I must say it is indeed unfortunate that this situation has developed. Certain business sectors, particularly in B.C., are heavily dependent on the U.S. market, and the downturn in these sectors has now severely affected B.C. Telephone as its revenues have suffered a sharp and continuing decline, particularly in the long distance and local service areas. Growth generally has been very slow, but in May the total number of telephones actually declined. Fewer long distance calls were made in May, 1982, than in May of the previous year. This is the first time this has happened since the end of World War II. My understanding is that there is less work for B.C. Tel employees to perform and there are significantly less revenues coming in.


Pauline Jewett: That is not true.


John Gerald (Jack) Masters: Company management has explored a number of alternatives in an effort to deal with this situation and maintain the financial stability of the company. As a result, a work-sharing proposal was put forward to all employees, both management and union. The proposal, involving a reduction in the work day, was accepted by management employees but rejected by the TWU. It is now an issue between the company and the union and I sincerely hope it will be resolved to the mutual benefit of all involved.


The Acting Speaker (Mr. Blaker):: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at two o'clock in the afternoon.
At 10.29 p.m. the House adjourned, without question put, pursuant to Standing Order.

Tuesday, July 6, 1982