1982-03-19

ROUTINE PROCEEDINGS


Mr. Tom McMillan (Hillsborough):: Figures released today by Statistics Canada reveal that Charlottetown and Summer-side, Prince Edward Island, suffered the highest cost of living increase in the entire Atlantic region in February, 1982, compared to the same month last year. I therefore move, seconded by the hon. member for Malpeque (Mr. Gass):
That the Department of Finance investigate the factors that have caused P.E.I. to have such an alarmingly high rate of inflation, which in recent years has consistently been among the worst in the country.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


HUMAN RIGHTS
Hon. Flora MacDonald (Kingston and the Islands):: Madam Speaker, given that this House passed a motion on June 23, 1978, concerning the sentencing of the Soviet dissident, Ida Nudel, and given that her release from Siberian exile is slated for March 20 of this year, I move, seconded by the hon. member for Eglinton-Lawrence (Mr. de Corneille):
That in light of Ida Nuclei's anticipated release from Siberian exile, on March 20, 1982, the House of Commons urge Soviet authorities to make arrangements so that Ida Nudel can be released directly from exile in Siberia to join her only living relative, her sister in Israel.


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


Some hon. Members:: Agreed.


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


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. Bill Blaikie (Winnipeg-Birds Hill):: Madam Speaker, the Minister of Finance (Mr. MacEachen) intends to table his equalization and Established Programs Financing proposals today. This is both a unilateral and a grossly precipitous action given that the provinces first heard of the latest equalization proposals only at the recent first ministers' meeting. On top of this the Minister of Finance seems to be stubbornly going ahead with the cutbacks in health care and post-secondary education. Therefore I move, seconded by the hon. member for Hamilton Mountain (Mr. Deans):
That this House instruct the Liberal Party to reconsider its abandonment of co-operative federalism, get a new leader who believes in it, and extend the present fiscal arrangements until such time as the federal-provincial process has been given a chance to work on this issue.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


EXTERNAL AFFAIRS
Mr. Maurice Dupras (Labelle):: Merci, madame le President. March 21 is the day on which the people of Afghanistan have traditionally celebrated the beginning of a new year. As that date approaches, we recall that Afghanistan was invaded by Soviet forces in December, 1979, an invasion condemned by the Government of Canada as a breach of the principles of the United Nations charter and a violation of the sovereignty, territorial integrity and independence of a United Nations member.
The House of Commons continues to be deeply distressed by the suffering and hardship which the Afghanistan people are experiencing under foreign occupation, including the bombing of innocent civilian populations, the destruction of the homes and the means of livelihood of these people. Therefore, I move, seconded by the hon. member for Saskatoon East (Mr. Ogle):

March 19, 1982
That this House, associating itself with the actions of other legislative bodies in the free world to draw attention to the continued defiance by the Soviet Union of the wishes of the international community, declare its intention to designate March 21, 1982, as Afghanistan Day, and that this designation express the determination of this House that continued international efforts must lead to the withdrawal of Soviet troops and the establishment of a fully independent and non-aligned Afghanistan, free from outside interference.


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


Some hon. Members:: Agreed.


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


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. Mel Gass (Malpeque):: Madam Speaker, across Canada thousands of merchants are struggling to keep their doors open. This dictatorial government is forcing conversion from imperial to metric scales, at the cost of $8,000 per scale, a cost which the consumer will end up paying. Therefore I move, seconded by the hon. member for Hillsborough (Mr. McMillan):
That this House condemn the government for driving storekeepers out of business by imposing compulsory metric conversion, and that it immediately respond by making all metric conversion voluntary, as legislated by the House.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE ECONOMY
Mr. Chuck Cook (North Vancouver-Burnaby):: Madam Speaker, I rise under the provisions of Standing Order 43 on behalf of every constituent of North Vancouver-Burnaby and, indeed, every consumer in Canada. The consumer price index for the month of February has now been released and shows that the cost of food has risen from 295.4 to 301.2. The cost of housing has increased from a figure of 242.5 to 244.6, and the over-all increase in what it costs any Canadian to live has now risen from 249.7 to 252.7. On an annual basis this is 11 per cent higher than last year. Therefore I move, seconded by the hon. member for Ontario (Mr. Fennell):
That the House condemn the government for its ineffectual, useless and totally inadequate programs which have allowed the continually creeping cancer of higher prices to destroy Canadian purchasing power and security.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

[ Translation]


UNEMPLOYMENT
[Stage Direction]
QUEBEC-PRATT & WHITNEY-REQUEST FOR AGREEMENT ON SHARING OF WORK-MOTION UNDER S.O. 43
Mr. Lome Nystrom (Yorkton-Melville):: Madam Speaker, I rise on a matter of urgent and pressing necessity, under the provisions of Standing Order 43.
Whereas some days ago, several hundred employees were laid off at Pratt & Whitney in Longueuil and the union is supporting the principle of work sharing in order to help the employees in question, I move, seconded by the hon. member for Kamloops-Shuswap (Mr. Riis):
That the Minister of Labour approach the directors of the company with a view to negotiating a work-sharing agreement with the union.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AGRICULTURE
Mr. Doug Neil (Moose Jaw):: Madam Speaker, in view of the concern being expressed by the livestock industry regarding the cost recovery program of the Department of Agriculture which would levy a charge for grading carcasses effective April 1, and that such a move could destroy our national grading system, I move, seconded by the hon. member for Malpeque (Mr. Gass):
That the government delay implementation of the cost recovery program and refer the matter to the Standing Committee on Agriculture for study.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
March 19, 1982


THE LATE ALBERT ROUSSEAU, QUEBEC ARTIST EXPRESSION OF CONDOLENCE TO MRS. OLIVETTE ROUSSEAU- MOTION UNDER S.O. 43
Mr. Leopold Corriveau (Frontenac):: Madam Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43, and I ask the unanimous consent of the House in order to pay a last tribute to a great Canadian and a great artist. I am referring to Mr. Albert Rousseau, a Quebec painter who died yesterday in St. Etienne de Levis at the age of 73. 1 therefore move, seconded by the hon. member for Megantic-Compton-Stanstead (Mr. Tessier):
That this House salutes today the great talent of Albert Rousseau, a Quebec artist, and sends its most sincere condolences to Mrs. Olivette Rousseau and her family and thanks for a last time Mr. Rousseau for his contribution as an artist, as a Canadian and as a Quebecer.
In his own way, he was a distinguished Canadian, and I feel this should be recognized by the House, on behalf of all members and of the Government of Canada.


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


Some hon. Members:: Agreed.


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


Some hon. Members:: Agreed.
Motion adopted.



ORAL QUESTION PERIOD


Hon. Michael Wilson (Etobicoke Centre):: Madam Speaker, my question is for the Minister of Finance. The 1.2 per cent increase in the consumer price index announced this morning is one more nail in the coffin of the November 12, 1981, budget. The budget has done nothing for Canadians who are suffering from the effects of lay-offs and the high cost of living. Unemployment has increased since the budget was brought down, and the broadest indication of economic performance and economic mismanagement of the government is the value of the Canadian dollar, which has dropped almost to an all-time low in the period since the budget. When will the minister listen to Canadians and bring in changes to the budget to deal with these problems? When will the minister
Oral Questions
show Canadians that he means business about fighting inflation?


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, the hon. member might have been influenced by the debate yesterday on parliamentary procedure to try to develop a question that is more in accordance with the rules of the House. If the hon. member wants to make a speech each time he gets up to ask a question-


Mr. Crosbie:: Answer the question.


Allan Joseph MacEachen: -then, of course, he will get a speech in return. If he wants to ask questions, then he will get answers to them.


Mr. Nielsen:: That will be new.


Allan Joseph MacEachen: The hon. member asked two specific questions, the first about changes to the budget. The hon. member may not have been in the House yesterday but I answered that question which was asked by another hon. member, and he can refer to Hansard to get the answer. As to his second question, the government is deadly serious-


Erik Nielsen: Deadly is right.


Allan Joseph MacEachen: -about its determination to bring down inflation. It has set out a monetary policy and a fiscal policy that are geared to bring down inflation. But it is extraordinary that most of the questions asked by the opposition are intended either to undermine the current stance of fiscal policy or to undermine the current stance of monetary policy, both of which are intended to have some effect on the inflationary forces.


INTRODUCTION OF BUDGET LEGISLATION
Michael Holcombe Wilson: Madam Speaker, we have heard words on that subject for about ten years now. What Canadians are looking for is action from the minister.


Allan Joseph MacEachen: How about a question instead of a speech?


Michael Holcombe Wilson: We had a comment yesterday from the Solicitor General who very astutely observed that the budget was a disaster and it was seriously flawed.


Allan Joseph MacEachen: Never mind the speeches.


Michael Holcombe Wilson: Let me give the minister a very simple and direct question. The minister could have brought in his budget legislation two and a half weeks ago. The government did not have to provoke the opposition with the energy security act. Why did the minister not bring in budget legislation two and a half weeks ago before introducing the energy security act? When is the minister proposing to bring in that legislation so that this House can get around to dealing with the problems in the economy?

March 19, 1982
Oral Questions


Allan Joseph MacEachen: Madam Speaker, the hon. member knows that there are some urgent pieces of legislation before the House-


Michael Holcombe Wilson: Like the budget.


Allan Joseph MacEachen: -including the energy security program. On March 2 we gave notice of the fiscal arrangements bill, which is greatly urgent. It is urgent because the present legislation expires at the end of March.
We have lost more than two weeks because of the strike of the official opposition.


Flora Isabel MacDonald: That is not right.


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: Today we are giving first reading to that bill that has been delayed more than two weeks by reason of the attitude of the Leader of the Opposition. I regard that as urgent, more urgent than any other bill emanating from the budget, and I would proceed with that before any other particular bill.


Mr. McDermid:: The budget was delivered on November 12. Where have you been?


TIMING OF INTRODUCTION
Michael Holcombe Wilson: Madam Speaker, I think the minister has been around this House long enough to know that it takes two to tango. The minister has to provide some answers for us on this side of the House. He is looking for specific questions, and I will give him one. When is he going to bring in the budget legislation?
Now, before he answers that question, let me pose my supplementary.


Some hon. Members:: Oh, oh!


Michael Holcombe Wilson: Today's consumer price index maintains the very wide gap of four per cent between the U.S. and Canadian inflation rates. That shows that Canadian industry is becoming more and more uncompetitive, resulting last year in a $23 billion capital outflow through the trade deficit.


Some hon. Members:: Order, order!


Michael Holcombe Wilson: And 200,000 jobs have been exported to the United States.


Some hon. Members:: Order, order!


Michael Holcombe Wilson: I would ask the minister when is he going to start to deal with that problem of an outflow of capital as a result of the trade deficit. And don't forget the first question I asked.


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: Madam Speaker, the hon. member has asked when am I going to bring in budget legislation. I gather that he understands that the fiscal arrangements bill emanates from the budget.


Michael Holcombe Wilson: The tax legislation?


Allan Joseph MacEachen: Government policy on fiscal arrangements was laid out in the budget, and the budget bill will be given first reading today. I hope hon. members opposite will give it speedy passage so that the current legislation will not expire and equalization payments to the provinces will not terminate because of the strike the opposition perpetrated on the House of Commons for more than two weeks.


An hon. Member:: With pay.


Allan Joseph MacEachen: The Ways and Means motions, Madam Speaker, emanating from the budget are known to the hon. member; a draft bill will be presented as soon as possible.


Michael Holcombe Wilson: When?


Allan Joseph MacEachen: Not soon; as soon as possible. Not within the next month. When it comes forward-


Michael Holcombe Wilson: Not within the next month?


An hon. Member:: What, next year?


Allan Joseph MacEachen: Madam Speaker, we are proceeding in the normal way.


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: The budget draft legislation will be presented and hon. members will have ample opportunity to deal with it, but in the meantime they ought to deal with the urgent legislation we have before the House and not ask for those items which will come later.


THE ECONOMY
John Carnell Crosbie: Madam Speaker, the minister is positively twitchy. The Canadian people would like to see him on a permanent strike to give them some relief.
Cost of living figures, Madam Speaker, show that over the last year there has been an increase of 11.6 per cent, and that the higher costs are in food, housing and clothing, right where the ordinary person gets it in the neck.
There are three million Canadians living in poverty; they are the people who have been undermined, the 639,000 families and 826,000 single people. When is the minister going to try a new tack? His budget has not brought down the cost of living. The budget came down four months ago and the cost of living
March 19, 1982

is going up-food, housing and clothing. When will he take some new steps, or will he step aside and let someone else try?


An hon. Member:: Bring on Kaplan.


Allan Joseph MacEachen: Madam Speaker, I welcome the hon. member back from his sojourn abroad, and 1 welcome his questions which, as usual, are much more penetrating than those of his successor which we heard this morning.


Mr. Nowlan:: It does not make any difference; the answers are as dull.


Allan Joseph MacEachen: And much more to the point. I should tell the hon. member it is true that the cost of living for the past month has gone up. The main cause of the increase in that period was the dramatic and sharp rise in the price of food, especially for fruits and vegetables, which rose by 8.8 per cent-


An hon. Member:: What about housing, Allan?


Allan Joseph MacEachen: -and 18 per cent for fresh vegetables alone. I think the hon. member ought to know that this is a temporary situation which is beyond anyone's control and is mainly because of the weather situation in the producing areas of the United States.


REQUEST THAT MINISTER RESIGN
John Carnell Crosbie: Madam Speaker, my supplementary question is directed to the Minister of Finance. Nothing can penetrate the minister's mind, apparently, because nothing can inspire him to action.
The minister said on September 9, 1980, 18 months ago in Halifax, that it was to create jobs, improve living standards and promote greater equity that he took on the position of Minister of Finance. However, all that has happened in the last 18 months is that living standards have gone down, equity has disappeared and we have the largest amount of unemployment in our history. Having failed in all those objectives that he boasted about in September of 1980, will he now resign and hand his portfolio over to someone else who will make a new effort, or does he stick by his statement of November, 1980, that Canadians will have to accept a lower standard of living and adjust to high energy prices? How can he continue in the face of his failure to meet those objectives he boasted about in Halifax just a year and a half ago?


Allan Joseph MacEachen: Well, Madam Speaker, I will give give up when-


Some hon. Members:: Yea, yea!


Allan Joseph MacEachen: I will give up-


Mr. Stevens:: We want Kaplan! Bring on Kaplan!
Oral Questions


Allan Joseph MacEachen: I will give up my present portfolio when I have lost the confidence of the House.


John Carnell Crosbie: You have! You have!


Allan Joseph MacEachen: The fact of the matter-


Flora Isabel MacDonald: You have lost Robert Kaplan's.


Mr. Hnatyshyn:: How about the cabinet?


Mr. Huntington:: You are only there at the grace of the trained seals, Allan.


Madam Speaker:: Order, please.


Allan Joseph MacEachen: Madam Speaker, the fact is that the budget policies have been before the House three times since the budget. Hon. members of the opposition have raised nonconfidence motions three times. The budget has been sustained. I have been to bat three times. 1 have scored home runs.


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: The only time the hon. member was at bat, he struck out, and we had an election.


Some hon. Members:: Hear, hear!


NEGOTIATIONS ON IMPORTATION OF JAPANESE MANUFACTURED CARS
Lorne Edmund Nystrom: My question, Madam Speaker, is directed to the Deputy Prime Minister. I hope he will give us some very straight answers to some very serious questions.


Erik Nielsen: You have a hope.


Lorne Edmund Nystrom: On February 24, in response to questions I put to the Minister of State for International Trade, he said he was confident of negotiating a reduction in Japanese cars imported into this country. This morning we heard some very disturbing news reports on Radio-Canada which stated that the minister has failed to negotiate a reduction in Japanese cars coming into Canada. Are these reports accurate? If they are, can he provide the House with more details?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, it is true that the negotiations to this point have not gone as well as we would have wished. We have not attained our objectives in those negotiations. The meetings will be continuing, not between ministers at this point but, rather, between officials. Certainly, in any event, this is a lengthy process in which we try to impress strongly and clearly on the Japanese our needs with respect to the automotive market.

March 19, 1982
Oral Questions


QUERY RESPECTING SANCTIONS AND QUOTAS
Lorne Edmund Nystrom: The minister, Madam Speaker, has admitted incredible failure after the government was so confident that it could negotiate a satisfactory agreement. The minister of State for International Trade was also quoted this morning as saying that he is considering recommending certain sanctions against Japan on this issue.
I would like to ask the minister can he tell the House what sanctions the government is considering. Is the government, for example, considering that we introduce in this country a Canadian content rule similar to that of Australia, where 85 per cent of the value of foreign cars must be sourced in that country? Is the minister also considering the imposition of quotas on the importation of Japanese cars, such as recommended by the United Auto Workers in a telex that he will be receiving within a few minutes?


Mark R. MacGuigan: Madam Speaker, it would certainly be premature to speak of any sanctions. As I mentioned in my previous answer, the negotiations are continuing. What my colleague, the Minister of State for International Trade, said in Tokyo was that all our options remain open.


METRIC CONVERSION
Thomas Michael McMillan: Madam Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. This past year the economy of Prince Edward Island has been devastated by the government's high interest rate policy. Two of our oldest department stores, Holman's and Moore & McLeod's, were forced either to go out of business or to take extraordinary measures to stay in business. Given that the federal government is forcing Prince Edward Island to convert to metric by June 30, businesses are compelled to take very expensive steps to do so. Will the minister consider postponing the metric conversion in Prince Edward Island at least until P.E.I. survives the current recession?


Hon. Andre Ouellet (Minister of Consumer and Corporate Affairs):: Madam Speaker, I do not think the hon. member's allegations are justified. Although a number of businesses in the province of Prince Edward Island may be having some problems, I feel the hon. member is exaggerating, to say the least, if he thinks that metric conversion can jeopardize the survival of a business in his province. There must be other reasons.


EFFECT OF CONVERSION
Thomas Michael McMillan: Madam Speaker, the minister says that I am exaggerating, so I have this supplementary question. How can the minister justify forcing metric on Prince Edward Island, or in fact on any province, at a time when the retail sector is experiencing record high interest rates, a 77 per cent increase in postal rates, and depressed consumer demand? Does he not agree that forced metric conversion at this time will drive many retail businesses that are marginal out of business?

Hon. Andre Ouellet (Minister of Consumer and Corporate
Affairs): Madam Speaker, the hon. member is apparently against metric conversion, but he should realize that the first piece of legislation in this area was passed in Parliament under Sir John A. Macdonald in 1871, that former Prime Minister John Diefenbaker, when he was Prime Minister, created a task force for the implementation of metric conversion, that the former Leader of the Progressive Conservative Party, Mr. Stanfield, approved proposals for metric conversion made in Parliament in the early seventies, and that in 1976, all Conservative members of this House voted in favour of legislating metric conversion.


EXTERNAL AFFAIRS
Mr. Benno Friesen (Surrey-White Rock-North Delta):: Madam Speaker, my question is directed to the Secretary of State for External Affairs. Why is it necessary for Canadians applying for Canadian passports to register their place of birth?


Mark R. MacGuigan: Madam Speaker, if I understand the import of the hon. member's question as to the registration of the place of birth, 1 think he is asking why we have the various kinds of entries that we have in the information we seek from passport applicants. The reason is that there is a relative standardization all over the world as to the matters of information that are sought, and if we did not have our passports in the same form it could be that Canadian passport holders would experience some difficulties in some countries. Indeed, there is a general international movement toward even greater standardization in passports.


REQUEST THAT APPLICATION FORM BE REDESIGNED
Benno Friesen: Madam Speaker, the minister will know that the only countries that benefit from this information are the eastern bloc countries, which consider Canadians who are born in an
March 19, 1982

eastern bloc country still to be citizens of that country and consider it a criminal offence for people to leave that country. As a result, those Canadian citizens who are visiting their homelands are always under the threat of arrest. I wonder if the minister would consider redesigning the application form and the information required in order to protect Canadian citizens visiting their homelands that are eastern bloc countries. Secondly, would he consider taking to cabinet a proposal to withdraw the provision in the Citizenship Act that gives Canadians dual citizenship, because that again threatens those Canadians visiting eastern bloc countries which happen to be their former homelands?


Mark R. MacGuigan: Madam Speaker, my friend, the Secretary of State, can enlighten the hon. member further about the citizenship provisions.
We have given a great deal of consideration to the very real problem that the hon. member mentions. It is true that Canadian citizens who are travelling in an eastern European country do have some added difficulties as a result of the fact that the passport draws explicitly to the notice of the border authorities that they were born in that country. But the real problem stems not from that but from the fact, in any event, by the law of those countries they would be deemed to be citizens and the officials there would have other ways of finding this out.
In fact, given the growing standardization that I spoke of, and the need for this information in this form across the world, it is not just for the benefit of those countries, as the hon. member alleged in his preamble; it is really for the benefit of all Canadian citizens travelling abroad that they have the kind of information in their passports which is required to gain an easy admission to the countries they are visiting. So this is a case in which some Canadian citizens may be put at some disadvantage in a situation where others receive an advantage. We are doing our best in other ways to try to deal with the situation of those Canadians who may be disadvantaged.


EFFECT OF DROP IN WORLD OIL PRICES
Mr. Maurice Foster (Algoma):: Madam Speaker, my question is directed to the Minister of Energy, Mines and Resources. In view of the world oil glut and the press reports today that the price set by the Organization of Petroleum Exporting Countries, OPEC, will drop to some $20 U.S. by the end of the year, can the minister assure the House and Canadians generally that the planned oil price increases for this year will be suspended if the world oil price drops or if the Canadian price reaches 75 per cent of that world price?


Hon. Marc Lalonde (Minister of Energy, Mines and Resources):: Madam Speaker, I would like to reassure the hon. member in that regard, that the Alberta-Canada agreement, as well as the agreement with the province of Saskatchewan,
Oral Questions
provide very specifically that at no time will the price for Canadian conventional oil exceed 75 per cent of the international price, whatever that price may be. There is no danger that the price of old oil in Canada will exceed 75 per cent of the world price.


HOUSING
Mr. Edward Broadbent (Oshawa):: Madam Speaker, I have a question for the imaginative minister responsible for housing. The cost of living figures released today show that the cost of home ownership is up a dramatic and alarming 17 per cent. In the present year there will be 635,000 Canadian families renewing their mortgages. Since the bill introduced by the government to deal with housing will provide assistance for fewer than 5 per cent of these families, when is the government going to get serious about the problems faced by the vast majority of home owners and bring in a new program that will be effective?


Hon. Paul J. Cosgrove (Minister of Public Works):: Madam Speaker, on November 12, the budget introduced by the Minister of Finance of the Government of Canada indicated its priority in response to the housing conditions of Canadians and allocated an additional $350 million toward solving some of the problems faced by Canadians looking at mortgage renewal, and to those Canadians looking for rental accommodation, especially to those young Canadians with young families seeking to establish their first residence. That bill was tabled in this House before Christmas of last year. Indeed, I sought the co-operation of the housing critic of the New Democratic Party in the month of January, during the recess of this House, for support of expenditure of those funds to bring relief to those Canadians facing mortgage renewals and looking for new accommodation.
This government had to introduce time limits on debate in this House during the month of February in order to proceed to the committee stage, the next stage to put this legislation into place. The committee is dealing with it now. I would ask that the leader of the New Democratic Party consider not only the relief that would be brought to Canadians looking for rental accommodation and to Canadians looking for jobs in the construction of that much needed rental accommodation. I would ask that he reconsider his party's obstruction of those provisions and reconsider the good that could be done for many Canadians across this country by speedy passage of that bill.


REQUEST FOR INTRODUCTION OF NATIONAL MORTGAGE ASSISTANCE PROGRAM
John Edward Broadbent: Madam Speaker, the minister would be a joke if he were not pathetic. The question

March 19, 1982
Oral Questions
pertains to the reality that there are 635,000 families renewing mortgages this year. I pointed out to the minister that the government's measures will only deal with 5 per cent of those. Canadians who have homes have the right to maintain those homes without unfair burdens put on them by the banks and mortgages people.
Since the minister has turned down the suggestion that the law should be changed to make the banks put up money at reasonable mortgages levels, will he at least duplicate what was announced in Saskatchewan yesterday, which is a major program that will ensure financial assistance on a monthly basis and bring down monthly payments very significantly for every family in that province whose income is $35,000 or less? Why does the minister not make that a national program for Canadians?


Paul James Cosgrove: Madam Speaker, as the leader of the New Democratic Party began his questioning this morning by reference to the cost of living index and the rise attributable to the cost of housing, for the benefit of the members of the House I should indicate that the increase for the last month as compared to the previous month was in fact a downturn. The increase for last month was only .9 per cent, down from the increase in the previous month. It is apparent that there has been an improvement in the market and in the cost of housing to Canadians generally.
He also referred to legislation introduced in some of the provinces following upon the leadership of this government in the budget addressed to assisting Canadians with mortgage renewal problems. I draw the hon. member's attention to the fact that the legislation in the province of Manitoba, for example, followed the design of this government's legislation, which stated that Canadians faced with those problems should first direct a percentage of their own income toward solving their housing needs, and that is the 30 per cent rule. That legislation was followed by the province of Manitoba. It is a good step. We think that Canadians should first apply a given percentage of their own resources toward their shelter costs and, second, for those who cannot meet those needs the government should offer help.


REQUEST THAT FEDERAL GOVERNMENT MATCH PROVINCIAL PROGRAMS
John Edward Broadbent: Madam Speaker, 1 hope the minister will be factual now. The figures I referred to were year-over-year increases which the minister knows are up 16.9 per cent for the cost of home ownership. That is the first point. Second, will he agree that the percentage of the budget allocated by a relatively poor province like Manitoba to dealing with the housing crisis makes this government look like the pettiest of pikers when it comes to dealing with it? Will he also agree that the program introduced by the government of Saskatchewan is aimed at providing assistance to the vast majority of Canadians in that province who ought to get housing assistance, whereas this government is only going to assist 5 per cent? Why does the Government of Canada not at
least match on a national basis what the New Democratic Party is doing in Saskatchewan and Manitoba?


Paul James Cosgrove: Madam Speaker, when the legislation and the budget provisions which brought in the Canada mortgage renewal plan and the Canada rental plan were made known, I took the opportunity of speaking with all of my counterparts in housing in all of the provinces during the two-week period following the release of the budget. I am very pleased that some provinces, including the province of Saskatchewan, have followed the lead of the federal government in, for example, putting up $350 million toward solving the problems of Canadians with mortgage renewals, and a much needed stimulus to the rental supply. What is more pressing and obviously missing in the response of the leader of the NDP is the need for construction and jobs in this country. There are 70,000 jobs going wanting because of the lack of co-operation of the leader of the NDP and his party with regard to our legislation.


FINANCE
Mr. John Bosley (Don Valley West):: Madam Speaker, I have a question for the Minister of Finance. My question is quite simple, and I hope the answer will be simple. Does the minister believe that it is reasonable to describe the rent which those who have saved to buy a home no longer have to pay, as imputed income? Will he now indicate that the concept of the idea itself is totally wrong, and that he has told his departmental staff to eliminate this item in future lists of income as yet untaxed by government?


Allan Joseph MacEachen: Madam Speaker, the hon. member has asked me to eliminate that concept from the tax expenditure documents that are normally prepared. I will give consideration to that. I think that concept was first included, in the interests of knowledge, in the budget papers put forth by my predecessor in 1979, and they have been continued-that is the question of eliminating the concept from the papers. That can be considered.
What is more important is to clear up the very damaging, dangerous and unfounded allegations which have been made, that it is the intention, has been the intention, or has been considered or will be considered by the government to tax imputed income derived from home ownership. That is absolutely false. It has never been considered by me. I have absolutely no intention of considering it. I want the home owners who have been frightened by irresponsible propaganda which has been circulated by the Dominion Life Assurance Company to know that, and to disregard the blatant, unfounded propaganda put out by that company.


Some hon. Members:: Hear, hear!
March 19, 1982


REQUEST FOR MINISTERIAL REASSURANCE
John William Bosley: Madam Speaker, I asked my question for a simple reason. I will put the question again. The Minister of Finance knows fulls well that the 1979 budget listed for the first time the departmental views. In the minister's 1981 budget when he said he accepted the whole idea of the $4.5 billion his department believes ought to be taxed, that home owners somehow get a benefit by not paying any rent, the minister implied for the first time that he will tax it. Having said to home owners he will not tax them, will the minister make it this much clearer to home owners by saying that the whole idea of imputing an income to a home owner, having saved all his life to buy a home, because he no longer pays rent, is morally wrong? Will he say that clearly today to those home owners he has scared?


Allan Joseph MacEachen: Madam Speaker, I reject entirely the suggestion that in any way that fear has been aroused by me in this case. The fear commenced with an irresponsible letter sent out by a high officer in the Dominion Life Insurance Company. That is when the concern developed. I have attempted to allay the concern by stating categorically that the government never had any intention, does not presently entertain any intention, nor will it entertain an intention in the future to tax imputed rent. That is the end of the matter as far as I am concerned.


INTERNAL ECONOMY COMMISSION
Hon. Walter Baker (Nepean-Carleton):: Madam Speaker, I have a question for the President of the Treasury Board in his capacity as a member of the Commissioners of Internal Economy. The President of the Treasury Board knows that the government has said it will not freeze the salaries of federal public servants. Can we have an assurance that it is not the intention of the Commissioners of Internal Economy to freeze the salaries of the people who serve the House of Commons and that they will be treated in the same way with respect to salaries as are federal public servants?


Hon. Donald J. Johnston (President of the Treasury Board):: The question of freezing the salaries of people who work on the Hill, as Madam Speaker well knows, has never been considered by the Commissioners of Internal Economy.


COMPOSITION OF COMMISSION-REQUEST FOR EXPANSION OF MEMBERSHIP
Walter David Baker: Madam Speaker, my supplementary question is directed to my friend, the government House leader. With respect to the composition of the Commission of Internal Economy, is the government giving any consideration to expanding and changing the membership
Oral Questions
of the board of the Commission of Internal Economy to include privy councillors drawn from the opposition? If the government has not considered that thus far, would it take a look at this proposal as a way of improving or assisting the administration of the House of Commons, since the administration of the House of Commons is really the business of all members of the House of Commons?


Hon. Yvon Pinard (President of the Privy Council):: Madam Speaker, if my hon. colleague could elaborate a little more on his suggestion and perhaps put it in writing, I would be prepared to take it into consideration and see how it would improve services to members and other aspects of our parliamentary life. I would surely welcome such ideas, but I would like to understand better what the hon. member has in mind. I would like to be able to see how things could be improved. I think so far the Commissioners of Internal Economy have done a wonderful job to improve services to hon. members on both sides of the House. If the hon. member has better ideas, I am surely willing to consider them.


CANADA POST
Mr. Bud Bradley (Haldimand-Norfolk):: Madam Speaker, my question is directed to the minister responsible for the Canada Post Corporation. The minister will be aware that the president of the corporation has expressed some reservations about the possibility of meeting the deadline for self-sufficiency of the corporation. I wonder if the minister could tell the House whether the government is considering changing the deadline for self-sufficiency imposed on the Canada Post Corporation.


André Ouellet: Madam Speaker, I think the hon. member misunderstood what was said by the president of the Canada Post Corporation. I believe he is referring to a media report that apparently claimed the president had no intention of following the objectives set by the government, and 1 understand that when the president appeared before a parliamentary committee, he was able to clarify this matter. There is no conflict as far as I know.


POSTAL RATES
T.A. Bud Bradley: Madam Speaker, not only did the president of the Canada Post Corporation say he had some reservations about meeting the guideline, but other members of the corporation have also expressed that concern. Since the government is not anticipating any amendment to the program and to the deadline set, obviously the corporation would be left with two alternatives, to reduce

March 19, 1982
Oral Questions
service or to increase postal rates. Since the corporation has already announced increases in services, one can only anticipate another increase in postal rates. I wonder if the minister could tell the House whether the people of Canada should anticipate another increase in postal rates in 1982 or early 1983.
[ Translation]


André Ouellet: Madam Speaker, I think the hon. member is being very speculative. I personally have had no such information from the president of the corporation. In any case, the decision whether or not to increase the price of postage stamps now rests with the board of directors of the Canada Post Corporation, and I feel it is much too early to speculate on this one way or another. I think the hon. member is making a mountain out of a hypothetical molehill.


ENVIRONMENTAL AFFAIRS
Mr. Ian Deans (Hamilton Mountain):: Madam Speaker, my question is directed to the Minister of the Environment. I am sure the Minister of the Environment is aware of my concern about recent rail problems and the spill of hazardous materials into the environment. It has now become apparent that that is only a small part of a major problem, the balance of it being that on the highways of this country there quite clearly are vehicles travelling which are unsafe. We are now told that there has been, on average, one major spill of hazardous material every ten days. What action does the Minister of the Environment propose to take to protect the environment from spills which take place as a result of common carriers not being adequately inspected?


Hon. John Roberts (Minister of the Environment and Minister of State for Science and Technology):: Madam Speaker, there are, through the amendments made to the Transportation of Dangerous Goods Act, regulations which are being formulated in conjunction with the provinces. I am not sure whether the hon. member is referring to transportation which goes beyond provincial or, indeed, international boundaries, or whether he is discussing simply local transportation within a province or region. If the latter is the case, it would be primarily a provincial concern. If he is concerned about interprovincial transit, there are discussions going on with the provinces with the objective of formulating regulations.


REQUEST THAT MINISTER PROMOTE SAFETY MEASURES
Ian Deans: Madam Speaker, I know the minister is well aware that I do not care very much where the hazardous material comes from. My only concern is
protection of the environment and protection of the public of Canada.
What specific measures will the minister put forward to the cabinet now that would allow, in the first instance, the province of Ontario to proceed with the regulations it has in place which would require common carriers travelling on the roads of this province to meet certain safety requirements, and what further steps will he take to guarantee that there will be no further delay in the implementation of adequate safety measures to protect both the environment of Canada and the people of Canada from unnecessary spillage of hazardous materials which results from inadequate inspection of common carriers, whether rail or road?
Hon. John Roberts (Minister of the Environment and Minister of State for Science and Technology: Madam Speaker, I am sure the hon. gentleman is concerned about safety and hazards to Canadian citizens, and that is a view which is no doubt shared by all hon. members on this side, indeed by all hon. members in the House. 1 just finished telling the hon. member that, in so far as our jurisdictional responsibilities are concerned, we are moving to meet them. In so far as provincial responsibilities are concerned we are having discussion with the provinces to see that they are met.


FISHERIES
Mr. Lloyd R. Crouse (South Shore):: Madam Speaker, I wish to direct my question to the patient Minister of Fisheries and Oceans. In view of the deplorable depressed state of Atlantic Canada's fishing industry I would like to ask the minister when did he last make representations to Washington in the hope of reopening the potential $15 million American swordfish market to Canadians.


Hon. Romeo LeBlanc (Minister of Fisheries and Oceans):: Madam Speaker, I do not remember the exact date, but certainly within the past year we have tried again to get the U.S. Food and Drug administration to have a second look at this question, or a third or fourth look. I am afraid 1 cannot report much progress.


REQUEST THAT FURTHER TALKS BE HELD WITH UNITED STATES AUTHORITIES
Lloyd Roseville Crouse: Madam Speaker, in my opinion the action taken by Washington of banning swordfish imports is obviously a non-tariff barrier in restraint of trade, since swordfish is available today in practically every state in the United States. Therefore, will the minister discuss this matter with the new United States ambassador to Canada, Mr. Robinson, and will he take this matter up with Washington as well and bring back a report of his findings to this House?
March 19, 1982


Roméo LeBlanc: Madam Speaker, I am not an expert in GATT or trade matters. I know it is under the heading of health that the United States administration-and not just this one but previous ones-has gone along with this ban on Canadian swordfish. I will certainly take up with my colleague, the Minister of Trade, the approach suggested by the hon. member. It may have some merit.


FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS AMOUNT OF TRANSFERS TO PROVINCES
Mr. Hal Herbert (Vaudreuil):: Madam Speaker, my question is directed to the President of the Treasury Board. Last week I received from the Minister of Finance a confirmation that fiscal transfer payments to the province of Quebec for the equalization program alone during the current fiscal year had increased by some $400 million, from $1.7 billion to $2.1 billion, yet in the news release of the President of the Treasury Board yesterday he shows supplementaries totalling $276 million for fiscal transfer payments, of which $124 million is for the Canada Assistance Plan. I wonder if the President of the Treasury Board can explain this major discrepancy in transfers to the provinces during this current fiscal year.


Donald James Johnston: Madam Speaker, the news release which I issued yesterday accompanied the tabling of Supplementary Estimates (E), the final supplementary estimates for the current fiscal year. They reflect the numbers to which the hon. member for Vaudreuil refers, namely, $152 million in fiscal transfer payments due to a revision of fiscal equalization payments, and $124 million under the Canada Assistance Plan. They do not take into account what might have been included in prior supplementary estimates which have been tabled.


REFLECTIONS ON RECENT EVENTS
Erik Nielsen: Madam Speaker, before asking the question on House business, on behalf of my colleagues I should like to associate this party with your remarks of yesterday when you said that we have all come through a trying period. Without being specific, I would like to say that a few of us in this House are still going through a trying period. On behalf of my party I would like to express, as you did yesterday, our appreciation for the work of the officials and employees of the House who put in long hours during the last couple of weeks.
Also on behalf of my colleagues, I would like to say that we support the attitude taken by the Chair during these weeks. It
Business of the House
was essential, for the neutrality of the Chair, to remain totally apart from the struggle between the parties. We feel that you did this, although I must confess that I was a little puzzled by some of the remarks attributed to you in TV transcripts, especially those referring to the possibility of motions appealing a Speaker's ruling, which were abandoned by the House 17 years ago. But, as I say, we felt your attitude was appropriate and along with everyone else we were happy to see the issue put aside and Parliament back to work.
For this reason we were surprised when the Chair decided to make extended comment on this very sensitive situation yesterday. I again speak on behalf of my colleagues when I say that we felt those comments were very broad in exploring the many procedural questions relating to the ringing of the bells, but we are not convinced these questions can be raised in a neutral way if no reference is made to the issue of the omnibus bill which caused our protest in the first instance.
We felt, and continue to feel, that extraordinary intrusions into the rights the opposition exercises on behalf of Canadians, require extraordinary measures of defence. We feel it is very unlikely that a government would borrow this tactic, as you feared, because the government is equipped with a guillotine rule, a closure rule, supply guillotines, and a myriad of other rules which make life easy for governments and difficult for oppositions.
We were completely at ease with the idea of defending our strategy in partisan debate against all comers. However, we hope that if the use of the bells in this case is to be the subject of comment from outside the arena of partisan combat, then the use of omnibus bills will in future also cause the Chair to raise questions, review precedents, and consider its course of action with very great care under new circumstances.


BUSINESS OF THE HOUSE
Erik Nielsen: May I ask the government House leader what the business of the House will be for Monday? The Minister of Finance appears to have disposed of that already but I should like confirmation from the President of the Privy Council.


Yvon Pinard: Madam Speaker, what the Minister of Finance said was that among the budget bills, fiscal arrangements had high priority and I agree with him. I know that my hon. colleague is trying very hard to allow us to change the order of the day on Monday. What we agreed upon was to negotiate in good faith for six days, which will expire only at three o'clock on Monday. I hope that as a result of those negotiations we will be able to replace Bill C-94 with the bill that will be introduced in a few minutes, but for the time being the order of business for Monday is Bill C-94, the bill on energy security.

March 19, 1982
Business of the House


Ian Deans: Madam Speaker, before I ask a question 1 wonder if I might say on behalf of the New Democratic Party that I want to thank members of the staff of the House of Commons for the way in which they conducted themselves during the impasse. They had to put up with circumstances that, quite frankly, are out of the ordinary-circumstances which I hope they will never have to face again. I am thinking particularly of those who were required to be on call or on duty almost around the clock.
I also want to commend the Chair for the way in which the Speaker handled the dispute. From my point of view, and expressing the concern of my colleagues, it was handled exactly the way it should have been. Whatever criticisms were levelled at the Chair were wrong, in my judgment. I want to make it clear that the Chair enjoyed and continues to enjoy the support of this caucus.
I should like to ask the government House leader whether it might be possible between now and Monday to see a more extended statement with regard to what we might be going to deal with over the next week or week and a half, so that we may begin to make plans for dealing both with the results of our negotiations and also with such things as the remaining allotted day.


Yvon Pinard: Madam Speaker, as my colleague knows very well, we will have an opportunity to talk to each other during the remainder of the day. I am sure he will understand that I will be in a better position to be more precise later today or tomorrow or, if need be, on Sunday. I hope to be in a position to be more specific about the business for the whole of next week and about when the last allotted day will be held. This will obviously be known before Monday.


Ian Deans: Madam Speaker, on another related matter, I wonder if the government House leader might be in a position to tell the House his intentions with regard to the question of parliamentary reform. Yesterday there was a very interesting and worth-while debate during which suggestions were made from all sides of the House that could well lead to some immediate discussion about how reforms might be implemented and what reforms might be considered. I wonder if the government House leader might consider telling us today, or whenever he is ready to make a further announcement, whether we might have some structure that would enable us to proceed with actual reform rather than just continuing with the discussion on reform.


Yvon Pinard: Madam Speaker, if the hon. member had been in the House yesterday during my speech he would have noticed that I started it with a tear because he was away. I would like him to read what I said.
I will have an opportunity to talk to my colleague later, but it is clear that I intend to go on with the process that I started immediately after the Christmas adjournment when Parliament resumed. At the level of House leaders I will try to look into changes that would not be controversial and that could be implemented in the very, very short term and that would reflect the recommendations made in the past by the Standing
Committee on Procedure and Organization. I intend to go on with that process as soon as we have settled the matter of the national energy bill. Depending on the result of our negotiations, I will be in a better position to look into means that the government could use to modernize the institution and render it more efficient and more human.


John Edward Broadbent: Madam Speaker, I should like to ask the government House leader a related question. I appreciate what he has said about his intention of pursuing immediately certain matters that could be found to be agreeable to all parties and which could be implemented.
In the debate 1 suggested on behalf of my colleagues that the matter could be referred to the committee that was proposed in the motion of the official opposition or that a special committee could be set up. I am sure it does not matter which committee as long as some committee functions between now and the summer recess. It could work on a number of proposals that could be implemented on a trial basis during the period between when we come back in the fall and December. I think that what the government has proposed is compatible with my suggestion.
I should like to go further and suggest that what I have proposed is desirable; that is, that we do not just act now on certain matters that we could all agree to immediately-those matters may be limited in number-but that we also get under way the serious project of reform with a view to having some of those ideas implemented by next fall. Would the government entertain that approach?


Yvon Pinard: Madam Speaker, I think it would be wiser to wait a few days to see how things evolve before making a reference to a standing committee or a special committee on the broad subject of parliamentary reform. I think it is more urgent than that. In 1975 and 1976 the Standing Committee on Procedure and Organization studied for many months many aspects of the rules and came up with some very sound proposals. I think it would be a waste of time to ask the same committee to review again the same question. There are some non-controversial changes which could be permitted now. Once we have agreed on that, I think we could make an intelligent reference to either the Standing Committee on Procedure and Organization or to an independent committee which could report to the Standing Committee on Procedure and Organization within a reasonable length of time.
All those options are open. I would not like to be interpreted as closing the door to any of the proposals of the hon. leader of the NDP, but the first step is the level of House leaders, not in a year but very soon, to see what are the best options to use to ensure that the desired changes be made to make Parliament more real.


Walter David Baker: Opposition and the leader of the New Democratic Party indicated that if the government chose to make a reference of an agreeable form, which could be discussed by House leaders, on the question of parliamentary reform and renewal to the Standing Committee on Procedure and Organization, it would be done without a long debate. This was not a representation by House leaders but by party leaders; I repeat that to my hon. friend.
There are reports extant-the last one was 1976-which could be part of a reference. There is the position paper which was filed by me; however, my friend described it as incomplete. There may be other proposals which my hon. friend could bring together, but the point is that in two years the committee has not met and it is not yet even organized. Would the government House leader not consider arranging next week, while these discussions are continuing, the organization of the committee so that its membership can be confirmed and the members themselves can begin to think about the process? It is inevitable that it should be done. It is in the best interests of Parliament that movement be made very, very quickly. 1 put that to the government House leader in a firm but kind way, hoping that the answer will be in the affirmative.


Yvon Pinard: Madam Speaker, the hon. member mentioned that the committee has not sat for two years.


Walter David Baker: It has not been organized.


Yvon Pinard: The organization of the committee would require only a few hours; that is not the problem.


Walter David Baker: Let us get on with it.


Yvon Pinard: The decision must be made on whether it will be the Standing Committee on Procedure and Organization. It all depends on what kind of good faith will be shown toward the non-controversial changes which will be implemented in the short term. If we choose the route of an independent committee composed of former Members of Parliament-


Arthur Ronald Huntington: Ridiculous.


Yvon Pinard: This decision has not been made. My hon. colleague referred me to part of the speech made yesterday by his leader. I refer him to part of my speech yesterday on the same subject. If last year my hon. colleague was expecting us to organize a committee to look into parliamentary reform while his party was hijacking Parliament during the constitutional debate, I think he was being unrealistic. He was not realistic, either, when he talked about organizing such a committee last fall while they were crying for us to deal with the budget and the economy. But we started the process immediately after the Christmas adjournment; it is ongoing. I think it is about time there were signs of good faith, and quite frankly I expect that those signs will be shown very shortly.
In conclusion, let me remind the hon. member that we had a very serious and important experience last year when we put some six to seven parliamentary task forces into effect. They
Petitions
did a very good job. They had the participation of hon. members from all regions of the country and on both sides of the House. They reported with very reasonable deadlines on major issues in the country. This experiment of the Liberal government could be used for improving the rules in the future.


John Patrick (Pat) Nowlan: You do not improve the rules unless you improve the tone or the temper of this place.


Walter David Baker: Madam Speaker, 1 will not respond to that. I am interested in making the observation that perhaps it is the best indication of the necessity of getting down to the business of looking at the House of Commons. I ask my hon. friend whether or not proposals have been put to the government with respect to parliamentary reform. If so, when were they put? Have they been accepted as yet and, if not, is the government intending to table those proposals at some time within a reasonable period of time?


Yvon Pinard: Madam Speaker, in so far as we are concerned, it is very clear that parliamentary reform is most important. My colleague is asking questions on how it will be done and when it will be done. I think I answered those questions very clearly in my speech yesterday; I made very constructive and precise suggestions. Therefore, all he has to do is read my speech and listen to the answers I have given today. He will realize that we are very serious and that all we want is for the opposition to show some good faith; then we will achieve parliamentary reform much faster than if it plays political games.



ROUTINE PROCEEDINGS


Charles Henry (Chuck) Cook: Madam Speaker, as a member of the House, it is my duty to present a petition on behalf of the members of the North Vancouver Chamber of Commerce. The purpose of the petition signed by 114 concerned chamber members is to indicate to the government that the highly regressive effects of the November 12 budget, combined with the government's stubborn adherence to its high interest rate policy, are forcing a housing crisis in the Vancouver lower mainland.
The nature of the petition is to demand that the government reconsider its budget and its high interest rate policy, in order to remedy the zero vacancy rate and minimal housing construction in the Vancouver lower mainland. The petitioners hope that, in Madam Speaker's examination of the petition, you find the petition in order, sense the urgency and desperation of their plea, and use the discretionary power vested in

March 19, 1982
Order Paper Questions
your office to allow discussion and referral to committee at the earliest possible moment.


FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS AND ESTABLISHED PROGRAMS FINANCING ACT, 1977 MEASURE TO AMEND
Allan Joseph MacEachen: for leave to introduce Bill C-97, to amend the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, 1977, and to provide for payments to certain provinces.


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

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. David Smith (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 1,793, 1,894, 3,184, 3,364 and 3,764.


Mr. Cossitt: On his current trip to the Middle East, did the Prime Minister spend a night in a desert encampment and (a) did he wear clothing of a local nature (b) did he dance with an Arab sheik and, if so, for what reasons and specifically, was it to impress Arab sheiks in order to obtain a larger supply of oil for Canada?


David P. Smith: See Beauchesne's Parliamentary Rules and Forms, Fourth Edition, Citation 171(b).


Mr. Friesen: Since September 1, 1980, were discussions held between the Prime Minister and the hon. member for Oshawa and/or their representatives and, if so, was there discussion of (a) provincial management of natural resources on (i) renewable (ii) non-renewable resources (b) provincial ownership of natural resources (c) provincial control of levels of oil production (d) a Fair Prices Commission (e) the partial or complete introduction of a system of proportional representation in Canada (f) provincial concurrent jurisdiction of international trade (g) the right of the provinces to offshore mineral resources (h) the candidacy of Mr. Ralph Goodale, executive assistant to the minister responsible for the Canadian Wheat Board in the provincial byelection in Estevan, Saskatchewan (i) a federal appointment for Saskatchewan attorney general, Mr. Roy Romanow?


David P. Smith: See Beauchesne's Parliamentary Rules and Forms, fourth edition, Citation 171(ee).


Mr. Cossitt: As of March 31 and September 30 of each year since 1968, what was the total number employed by the government and how many were (a) employed by Crown corporations and other agencies (b) members of the Armed Forces (c) public servants under Treasury Board control?


David P. Smith: I am informed by Statistics Canada and Treasury Board as follows:
Statistics Canada reports that the total number of persons employed by the government and the breakdowns by (a) government enterprises and (b) Armed Forces are shown in the list below (as of March 31 and September 30, since 1968).
Federal Government Employment
Year	March 31	September 30	(a)	(b)	(a)	(b)Federal	Members	Federal	MembersGovernment	of the Armed	Government	of the ArmedTotal	Enterprises	Forces	Total	Enterprises	Forces1968	369,354'	126,595	[DOT][DOT]	379,265'	131,999	1969	470,545	125,562	99,348	483,755	132,919	98,7081970	472,434	122,638	93,817	470,077	129,720	91,4711971	474,020	122,498	88,805	489,980	128.482	87,9011972	490,086	119,669	85,117	501,148	128,433	83,6611973	505,768	125,093	82,022	514,004	131,373	82,5141974	526,274	132,194	81,851	534,373	140,511	80,6321975	535,766	133,936	80,225	546,391	136,690	79,8681976	547,170	130,077	79,900	557,344	137,099	80,4611977	562,107	130,350	80,643	572,591	143,936	81,1361978	583,567	140,590	81,032	582,725	148,526	81,0831979	579,500	150,040	81,035	578,065	159,596	81,040
March 19, 1982

Order Paper Questions
Federal Government Employment
Year	March 31	September 30	(a)	(b)	(a)	(b)Total	Federal Government Enterprises -	Members of the Armed Forces	Total	Federal Government Enterprises	Members of the Armed Forces1980 1981	575,660 579,516	153,402 146,475	80,822 82,175	586,042	162,269 not yet available	81,035
Other employees included in total are those of the House of Commons, RCMP, etc.
1 excludes members of the Armed Forces, data not available for 1968.
" figures not available.
Note: Data on "Crown corporations and other agencies" are not available as such. The data provided are in accordance with financial management system concepts whereby an "enterprise" displays the following characteristics:
(i)	a majority of its ownership must be vested in government;
(ii)	management of its affairs must be relatively independent;
(iii)	its primary role must be to provide goods and/or services to other than government:
(iv)	the prices it sets for these goods and/or services must reflect the costs of providing them;
(v)	the acquisition by consumers of the goods and/or services must be voluntary.
Treasury Board reports that for the purposes of this reply, public servants under Treasury Board control have been defined as all categories of employment (continuous and term or casual) working in departments and agencies for which Treasury Board is the employer (Public Service Staff Relations Act, Schedule I, Part I). Unfortunately, monthly data by this system of classification is not available for the requested dates prior to September 1974. This employment information includes the Post Office Department since the change in status to a Crown corporation did not occur until October, 1981.
Number of Employees under Treasury Board Control
	March	September
1974	-	267,4611975	273,359	278,8331976	286,009	295,4351977	309,129	304,0321978	317,487	316,4281979	301,599	299,2701980	294,226	293,9941981	301,108	307,083


Mr. Kushner: 1.	During 1981, was there a superintendent of customs operations at the port of Carway, Alberta and the port of Chief Mountain, Alberta and, if so (a) what was his/her name, position title or rank and annual salary (b) what were his/her duties and responsibilities?
2.	(a) On what date did the superintendent's responsibilities commence and how many days did he/she spend at each port of entry (b) on what date did his/her duties cease?
3.	Did the superintendent file any claims with the Department of National Revenue for the reimbursement of expenses and, if so, what were the amounts claimed and what was the total value of the cheques issued for (a) accommodation expenses (b) meals (c) travelling expenses (d) automobile mileage, including the total number of miles claimed and the amount per mile (e) miscellaneous expenses?
4.	According to which departmental procedure was the superintendent selected for the position and (a) what were the criteria for the selection process (b) what were the names and positions of the individuals within the department who were involved in the procedure (c) how many candidates were considered (d) on what date did the individuals involved meet, how many times did they meet and, in each case, at what location?


Hon. William Rompkey (Minister of National Revenue):: 1.
During the summer of 1981, there was a superintendent of Canada Customs at Chief Mountain and Carway, Alberta. Chief Mountain is a seasonal port which is closed from September to May, while Carway is open all year with summer and winter hours.
(a)	Name: Joseph Gryszczuk Title: Customs Superintendent Group/Level: PM-2
Salary Range: $21,413-$24,124
(b)	The major responsibilities and/or duties of this position are to:
Direct, supervise, counsel, and train staff at Chief Mountain and Carway;
Review day to day operations, procedures and contentious problems at these customs ports;
Direct, motivate and supervise staff in the administration of legislation pertaining to highway and pleasure craft operations;
Develop an efficient working unit and effective enforcement program;
Co-ordinate the activities of the two customs ports and communicate local requirements to management.
2.	(a) Superintendent Gryszczuk commenced duties on May 17, 1981 and as a general rule would spend a couple of hours each day at Chief Mountain. The remainder of his day was devoted to responsibilities at Carway which handles by far the greater volume of international traffic.

March 19, 1982
Order Paper Questions
(b)	Superintendent Gryszczuk terminated his assignment at these ports on September 14, 1981.
3.	For that period of time Superintendent Gryszczuk was on assignment at Carway and Chief Mountain, reimbursement was provided for the following expenses:
(a)	None.
(b)	$1,027.15.
(c)	$1,112.60.
(d)	Total automobile mileage, 5,943. This was reimbursed at the rate of 23c. per mile for 3,528 miles with the remainder at 9c. per mile.
(e)	$221.85.
4.	The superintendent assigned to the customs ports of Carway and Chief Mountain is selected on a rotational basis each summer from all superintendents on strenght at the port of Coutts, Alberta. This is a regional or local staffing practice rather than a departmental procedure. During the winter, the customs officer at Carway reports to Coutts.
(a)	In order to be considered, one must already be a qualified PM-2 superintendent prepared to spend the summer in travel status.
(b)	A Mr. Ray Hagel, the area superintendent is responsible for appointments to the position on a rotational basis.
(c)	As referred to in (a) all qualified PM-2 superintendents are considered; however, the actual appointment is made from that staff on a rotational basis.
(d)	In view of the staffing practice utilized to designate the seasonal superintendent, there is no requirement for a formal meeting or interview prior to the assignment. For briefing purposes, however, the area superintendent and designated staff member may meet to discuss responsibilities as well as problem areas.


Mr. Cossitt: 1.	What are the names of all the countries with which Canada has any reciprocal agreement on the sharing of income tax information?
2.	Are negotiations under way to increase the number of countries and, if so, which countries are involved?


Bill Rompkey: 1.
The list below is of the countries with which Canada has ratified a treaty. All of these treaties contain a reciprocal "Exchange of Information" clause.
2. The list also includes those countries with which Canada is presently negotiating or renegotiating new treaties.
Tax Treaties
Treaties Ratified
Under Negotiation or Renegotiation and not signed
Australia
Austria
Barbados
Belgium
Denmark
Dominican Republic
Finland
France
Germany, Fed. Rep. of
Argentina (N)* Bangladesh (N) Brazil (N) Cameroon (N) Cyprus (N) Denmark (R)* Egypt (N) Finland (R) Grenada (N)
Treaties Ratified	Tax Treaties Under Negotiation or Renegotiation and not signed
Indonesia	Guyana (N)
Ireland	India (N)
Israel	Ireland (R)
Italy	Ivory Coast (N)
Jamaica	Kenya (N)
Japan	Leeward & Windward Islands (N)
Malaysia	Malta (N)
Morocco	Mexico (N)
Netherlands	Netherlands (R)
New Zealand	Netherlands Antilles (N)
Norway	Nigeria (N)
Pakistan	Norway (R)
Philippines	Poland (N)
Romania	Portugal (N)
Singapore	Senegal (N)
South Africa	Sri Lanka (N)
South Korea	Sweden (R)
Spain	Trinidad and Tobago (R)
Sweden	Thailand (N)
Switzerland	Tunisia (N)
Trinidad and Tobago	USSR (N)
United Kingdom	Yugoslavia (N)
United States	Zambia (N)
Under Negotiation	*Note: N - new
Signed but not ratified	R = renegotiation
Liberia (N)	**Antigua
United States (R)	Belize
West Germany (R)	Dominica
[English]	Montserrat St. Kitts-Nevis-Anguilla St. Lucia St. Vincent


Madam Speaker:: The questions enumerated by the parliamentary secretary have been answered.


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


Sinclair McKnight Stevens: Madam Speaker, I rise on a point of order to ask the parliamentary secretary whether he has any explanation to give the House as to why he is refusing to answer question No. 2,042, which was asked on January 29, 1981. That is the question dealing with the total cost of the Prime Minister's (Mr. Trudeau) December-January world tour of that year and what percentage of that total cost was paid for by the poor unfortunate taxpayers of Canada. Has the parliamentary secretary any possible explanation today why this question has not been answered?


David P. Smith: Madam Speaker, the government is not refusing to answer any question. As of today we have answered 2,923 questions in this session alone. A question very similar to that concerning another trip made by the Prime Minister was recently answered. The preparation of the answer to this particular question is under way and I will make inquiries on behalf of the hon. member.


Mr. Fulton:: Madam Speaker, would the Parliamentary Secretary to the President of the Privy Council, Mr. Smith comment on motions Nos. 62, 63 and 64 listed under Notices of Motions for Production of Papers. I have discussed this matter with the parliamentary secretary before. Would he confirm what he mentioned to me earlier in the week, that the Department of the Environment is prepared to have its memo-
March 19, 1982

randa from within those notices produced but that it is the Department of Fisheries and Oceans which is holding up the production of a whole lot of those papers?


David P. Smith: Madam Speaker, I am endeavouring to accommodate the hon. member. I hope we will be able to produce those papers quite shortly.


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


Some hon. Members:: Agreed.


Madam Speaker:: Orders of the day.


Ian Deans: Madam Speaker, before we proceed to orders of the day, I have had the opportunity to consult with the hon. member for EIumboldt-Lake Centre (Mr. Althouse) and the hon. member for Kamloops-Shuswap (Mr. Riis). Both members are agreeable to having the motion in the name of the hon. member for Kamloops-Shuswap called today, if you find that appropriate, Madam Speaker.



GOVERNMENT ORDERS


Mr. Nelson A. Riis (Kamloops-Shuswap) moved:: That in view of the fact the Bank of Canada's high interest rate policy has been a major factor leading to unacceptably high levels of unemployment, unacceptably high levels of bankruptcy and unprecedented low levels of consumer and investor confidence, this House calls upon the Government to demand that the Bank of Canada reduce interest rates and to introduce a New Employment Option for Canada in an effort to reverse the current recessionary trend.
He said: Mr. Speaker, today is apt to be a very important day for Canada. Earlier today the consumer price index was announced. We learned that inflation was up over last month 0.2 of a percentage point. It was up over the same period last year by 1.2 per cent. I am sure this news was not necessarily expected either by the Minister of Finance (Mr. MacEachen) or by the people of Canada. We had been given to believe that the recessionary trend had been slowed, that it is now being reversed and that the consumer price index would likely show a reduction today. But that is not the case.
On top of that, a few minutes from now the Bank of Canada will be making public its annual report. In essence, it will be a Xerox copy of last year's report indicating that after seven years of monetary policy the Bank of Canada feels it appropriate to continue giving it a try for another year to see if the present policy is adequate enough to reduce the inflationary trend.
The government's monetarist policy is supported by its fiscal policy as outlined in the budget introduced on November 12, 1981. I want to say that we in the New Democratic Party feel that the monetarist and fiscal policies of the government are
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inappropriate, are inadequate, are heartless and cruel; that the monetarist and fiscal policies attempt to fight inflation on the backs of those Canadians who can least protect themselves, such as those on fixed incomes, the 1.8 million unemployed, the elderly, single parents and the like.
I think this begs the question: Why does the government have these policies? Why does the government continue with a policy of high interest rates and the type of fiscal policy that it has? I might add that the monetary policy is supported by the Progressive Conservative Party, its previous finance critic, and the leader of the Progressive Conservative Party is on record on a number of occasions as saying that his party supports the high interest rate policy, that it is the appropriate policy to combat inflation. Why, then, do the Progressive Conservative Party and the Liberal Party pursue this particular policy? The Liberals and the Conservatives have allowed the structure of our economy to become dependent on and vulnerable to the American economy.
The real problem Canada faces today is the fact that our economy is so closely tied to that of the United States. The important thing that we as members of this House must now begin to appreciate like never before is that the present monetarist and fiscal policies essentially exacerbate the particular structural problem of our vulnerability to U.S. economic trends.
Our present monetary and fiscal policies increase the level of foreign ownership in our economy. These policies do not reduce the amount of foreign ownership in Canada. All we have to do is to look at the backing away from the FIRA proposals on the part of the government, with the support and encouragement of the Progressive Conservatives.
The present monetarist policy hurts Canadian companies having to compete with offshore companies. An interesting example of this was pointed out a few days ago by one of my colleagues. He told us that a foreign company could build a ship in Canada, and is allowed a 20 per cent subsidy to do so by the federal government. But if a Canadian company wants to build a ship here, it is allowed only a 9 per cent subsidy. In other words, we are quite willing to provide greater subsidies to foreign companies for them to build ships in Canada.
Our monetary policy increases foreign competition in our country. All we have to do is look at the nature of our branch plant economy and the fact that branch plants tend to source their parts, components and services from their parent companies. That situation is worsening as a result of present monetary policy. Our present fiscal and monetary policies certainly reduce the level of research and development in this country. These policies increase our indebtedness to foreigners. In 1980 alone, the net outflow in dividends and interest payments to foreigners totalled $5.5 billion. That is a considerable amount of money being drained out of this country on an annual basis which does very little to improve the balance of payments situation in Canada.

March 19, 1982
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Our monetary policy and our fiscal policy create a more unequal distribution of wealth in this country. It is no secret to members of Parliament that in spite of government rhetoric over the years that redistribution of wealth was proceeding, the data available indicates the situation is exactly the same today as it was a decade ago.
In summary, the government's present monetary policy enhances foreign domination of our economy, which then calls for higher interest rate policies, resulting in more foreign domination and a call for more monetary policy. We are in a vicious circle, a Catch-22 situation. We are on a treadmill, as my leader has indicated on a number of occasions. It is difficult to get off this treadmill while pursuing present monetary policy because we are slowly painting ourselves into an economic corner.
I think it is fair to say that the cure which the government proposes to fight inflation-the high interest rate policy-is making the problem worse. The cure has now become the problem. The high interest rate policy is inflationary on its own. Let us consider for a moment the disastrous situation attached to the present interest rate policy. The recent task force of the Progressive Conservatives which went across the country heard from people from one end of Canada to the other, and it was very clear that there was virtually unanimous condemnation of the high interest rate policy of the government. From virtually every sector of the economy the message was clear, concise and the same: the present high interest rate policy is inappropriate and harmful.
The high interest rate policy goes a great way toward explaining the fact that this country now has in real terms 1,800,000 people out of work, and that figure grows daily. We have business bankruptcies up 22 per cent and growing. Farm bankruptcies are up 54 per cent and growing. In February alone 2,403 Canadians declared personal bankruptcy. This does not include the businesses in receivership or those which simply close the doors and walk away from a hopeless situation. It does not include farmers who sell out before the banks foreclose, or livestock operators who liquidate at fire sale prices. It also does not include the number of people who have lost their homes because of high mortgage interest rates.
This monetary policy, Mr. Speaker, is causing economic and social scars which will take years, perhaps decades, to remove. Worst of all, of course, is the fact that the so-called cure has done more to reduce the level of consumer and investor confidence in this country than probably anything the government could do, with the exception of the November 12 budget. That level of confidence is at an historic low. I think some of my most disappointing moments are when I speak to students and I hear young people in elementary and secondary schools saying they have virtually lost hope of finding a reasonable job. Their parents, having worked in a mine or factory for ten or 15 years, are now unemployed. These young people are losing hope in the future, something which has never before happened in this country. The one thing that set Canada apart from
almost every other country in the world was the fact that a person here would know that the future would be or could be better than the present. The reason we have millions of people lined up wishing to become citizens of Canada is the hope and optimism which has generally prevailed here. That, Mr. Speaker, is no longer happening today.
Why, Mr. Speaker, are we following this particular course of action on inflation? The Minister of Finance has told us time and time again that it is important to fight inflation. No one in this House would disagree. He says the way to fight inflation is to continue with this monetary policy. We have been on this track for seven years and we are going to continue. However, I suspect there is a more appropriate way to fight inflation, Mr. Speaker. You can do it really in two ways. One way is that which the government is now doing, I suspect with the support of the Conservatives, of strangling the life out of our economy. They are very successful in that. Unfortunately, the evidence indicates that it is not having a very serious impact on the rate of inflation.
There is another way, Mr. Speaker, to begin to reduce the consumer price index which haunts us this morning, and that is through increased productivity. If there is a country anywhere in the world today with the capacity and ability to increase its productivity seriously, it is Canada. Other countries do not necessarily have that option at their disposal. They must presumably continue with a monetary policy such as the Americans have, or that other countries have tried. However, Canada does not need to be locked into that one approach only, and increased productivity is certainly a much more positive option, one which is open to us.
It is disappointing to hear reports that our manufacturing capacity is now operating in the 75 per cent range. I think it is fair to ask what can be done. It is easy to identify the problems, but what are some of the solutions? Well, I suspect at the top of the list is the need to stabilize interest rates. If there is one thing which confuses and disappoints investors, domestic and foreign, it is the fact that our interest rates are on a rollercoaster. We play interest rate roulette every Thursday and cannot predict beyond seven days what the rate is going to be.


An hon. Member:: See-saw.


Nelson Andrew Riis: It is the old see-saw approach. What businessman or investor wants to expand or start something new in the face of this uncertainty? The one thing an investor in a country looks for is stability. He wants to know with some precision what is going to happen a few months or years down the road. The one thing he does not need is an interest rate policy which allows the rates to fluctuate every seven days. So the first thing that must be done, Mr. Speaker, is to stabilize interest rates.
The second thing, of course, is the need to reduce interest rates. Now, I know we in the New Democratic Party have been criticized for what people have called a rather simple approach-that somehow reducing interest rates will solve the problems. We have never said that. We feel it is appropriate and necessary that they be reduced to, we suggest, at least 1
March 19, 1982

per cent above the rate of inflation, but that it be part of an over-all and comprehensive strategy. That is simply one component of the attack on inflation. This, of course, would be done not only to help the many Canadians suffering from high interest rates, but lower interest rates would be more compatible with an industrial strategy for Canada. They would give us more options and more opportunities within our economic framework to begin to remove ourselves from a dependency on the United States. In other words, the long-term solution is a lowering of interest rates. The present policy is a short-run and gimmicky solution. An effective economic development program will not occur with interest rates at their current or higher levels. When you consider who the quick-fix and gimmicky people are, well, we are looking at them across the way.


David P. Smith: No, they are over there.


Nelson Andrew Riis: Our leader has clearly indicated a new employment opportunity for Canadians which would lead directly to job creation. It includes the lowering of interest rates, but only as one component of that program. There are many other points. 1 could talk about the housing program which would put people back to work in the forest, construction and service industries. I could talk about the proposed tax cut for low and middle-income Canadians which would help stimulate the economy. I will not deal with some of these as they are now well known. However, I want to focus on perhaps the most important one, that is, ways and means of assisting the manufacturing sector of Canada.
The Liberal Party, again with the support of the Progressive Conservatives, or with the real urging and encouragement of the Progressive Conservatives, feels that the way out of our economic malaise or dilemma is the megaprojects, resource exploitation, the exploitation of non-renewable resources. I must say that while they will provide some temporary relief in terms of an over-all economic program, we feel that this is not the step into the future. We feel that this is simply more of the same. As a matter of fact, it is a kind of thinking which existed in this country back in the nineteenth century, where we were again exporting raw materials, furs, squared timber and fish. It is that same kind of mentality. Surely this is not the way we will deal with the economic challenges facing the country in the 1980s, by simply exploiting, at a faster and more thorough rate, our natural resources which are non-renewable: oil, natural gas and coal.
We feel that the way to long-term job security and stability and the development of a sound economic base in our country is to develop and strengthen the manufacturing sector of our economy. We should not only strengthen it because this is where the jobs are created, but because here is where one of the major problems exists in our balance of payments.


Arthur Ronald Huntington: Tell us how.
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Nelson Andrew Riis: There is a $21 billion deficit in our manufacturing balance of payment.


Arthur Ronald Huntington: Tell us how you are going to do it!


Nelson Andrew Riis: I will tell you; just be patient. There is a $21 billion deficit in our manufacturing balance of payments. That is $1,000 that we import more than we export for every single man, woman and child in this country. It amounts to $1,000 today but it is growing. Back in 1970, the deficit amounted to $2.5 billion. Today, it is $21 billion and growing. One can rest assured that the present monetary and fiscal policies will worsen this situation.


Arthur Ronald Huntington: Tell us what year this is.


Nelson Andrew Riis: A profound crisis faces us in the manufacturing sector and it appears that it is being ignored by the government. It is being ignored by the enthusiastic endorsement of the megaprojects given by the Progressive Conservative Party.


Arthur Ronald Huntington: Tell us how you will fix it!


Lorne Edmund Nystrom: Tories defend Liberals again!


Nelson Andrew Riis: If this $21 billion deficit were to be eliminated, 200,000 jobs would be created for the Canadian people.


Arthur Ronald Huntington: With what?


Nelson Andrew Riis: I will tell hon. members that this would be good news for people in my part of the country, one of the most prosperous parts of the country, which now experiences unemployment rates in excess of 20 per cent.


Arthur Ronald Huntington: Why?


Mr. Benjamin:: Because of free enterprise.


Nelson Andrew Riis: The hon. member to my right asks why. It is because of the present economic structure of our country, because of the present monetary policy of this government and because of the present fiscal policy.


Lorne Edmund Nystrom: MacEachenomics!


Nelson Andrew Riis: I hope that is enough reason. What can we do in terms of turning around this deficit?


Mr. Evans:: What about mining? Shut that down, too?


Nelson Andrew Riis: One of the obvious things to do would be to focus on certain key areas of the economy and establish production agreements in key sectors with the multinationals. Production, whether aimed at the export or the domestic market, must equal the sales in this country. The multinationals must increase their production in Canada and their sourcing of parts and components from Canadian producers. In other words, if the multinationals want to make profits in Canada, then they must provide jobs in Canada. It is not an unreasonable request. Look at what the other western industrialized nations require of foreign investors. They require exactly the same thing. It is not as though we are asking for something new or different. We are simply asking that the Canadian government deal with foreign investors like all the other governments of the western

March 19, 1982
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industrialized nation essentially do. We can do the same, for example, in certain sectors such as the transportation area, the auto industry, the telecommunications industry and the aerospace industry.
Let me speak for only a moment or two in my remaining time about the mining industry. In my own constituency, as well as in neighbouring constituencies in central British Columbia, we are about to experience an historic event. Cominco will temporarily lay off 7,000 workers in the next few weeks.


Leslie Gordon Benjamin: There is the CPR again.


Nelson Andrew Riis: Within the next few weeks, 7,000 workers will be temporarily laid off for the first time in our history. In my own neighbouring area, the Highland Valley, some of the major copper-producing mines in Canada are planning similar temporary lay-offs. Hundreds and hundreds of men will be laid off in the next few weeks. When one looks at the mining sector, it is interesting to note that Canada is the third largest mining producer in the world, yet we import a major portion of our mining equipment and supplies. For example, 15 years ago half of the equipment used in underground mining was imported from beyond the Canadian border. Today, not half is imported but, rather, 75 per cent of mining equipment used underground is imported. That is the kind of progress we have made in the last 15 years.


Arthur Ronald Huntington: Why is that?


Nelson Andrew Riis: If the hon. member has a question, perhaps I can answer him later, if he wants me to articulate my response in a more clearly defined way.


Lorne Edmund Nystrom: Branch plant economy.


Nelson Andrew Riis: If we are able to take the initiative and reduce the deficit, when it comes to mining equipment imports we could create in excess of 13,000 jobs in this country just in this one sector alone. Again, I would ask the question as to how much mining equipment a country like Sweden imports, another mining leader in the world. Quite unlike our country, one can rest assured that the imports in Sweden are non-existent when compared with our own.
I think it becomes very clear, as we look at the structure of our economy, that major structural changes are required. At the moment, we have two approaches to economic development which are historic in nature. One is the exploitation and the export of natural resources. This is becoming more and more difficult with the passage of time, as we must now compete with other resource-exporting countries which quite often, because of a number of factors, are able to export more competitively. The other area, of course, is manufacturing. We have always had a weak manufacturing sector as a result of the branch plant economy which has been encouraged and nurtured over the years by the Progressive Conservative and Liberal governments.


Walter David Baker: Oh, come off it!


Nelson Andrew Riis: We have a weak manufacturing sector which is becoming weaker.


Arthur Ronald Huntington: Deliberately misleading!


Leslie Gordon Benjamin: Do you want to withdraw that now or later?


Nelson Andrew Riis: We do not succeed in either of these two alternatives. The challenge before us is to link our potential comparative advantage in the secondary, tertiary and quaternary sectors with our historically comparative advantage in the resource sector. It is this link, this marriage, which must now begin to take place. We are not adequately bridging this particular gap by rushing ahead and putting all our hopes into the megaproject option. This linkage between these two sectors is now perhaps more important than it has ever been. It is time we started building on our strengths and that we know our strengths. All of us in this chamber could very quickly identify the half dozen areas we should be building on, but we find that we are not building on any of them; rather, we are building on areas with a long-shot option, such as the megaprojects. We must begin to combat inflation, not with the present monetary policy, but with a program of intervention which will result in increased productivity in this country.


Arthur Ronald Huntington: What is this program of intervention?


Nelson Andrew Riis: Canada has this opportunity which virtually no other nation in the world has. It is one that we must now begin quickly to develop and exploit. This will occur if the government has the courage to admit that the monetary policy now being pursued has been a failure and that, after seven years, it has not wrestled inflation to the ground. We have an opportunity that other countries do not have and the time is not too late to act. In fact, we can act now and take advantage of this opportunity. We should see it as an opportunity as opposed to a problem. Then the long road to confidence building in this country will begin.


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: Mr. Speaker, I read the motion of the New Democratic Party and I listened to the comments made by the hon. member from Kamloops-Shuswap (Mr. Riis), and I feel that, in a sense, the wording of the motion says it all. It illustrates very clearly that the New Democratic Party does not understand the nature of the problem facing the country. The motion attributes all our problems to high interest rates which, in their view, lead to all sorts of other evils. In the wording of the motion there is absolutely no reference to the underlying cause of high interest rates and high unemployment. There is absolutely no reference whatsoever to inflation. The hon. member in his speech did, I must admit, as I listened intently, make a passing reference to inflation and stated that it could be solved by increasing productivity.
All of us understand the importance of productivity, but the hon. member's single-minded reliance on productivity
March 19, 1982

increases as a solution to inflation reminds us all rather dramatically of the supply side of economics that is being promoted as a single way of solving our problems. It is not that simple. If the New Democratic Party motion had said that high inflation is the factor leading to high interest rates and to high unemployment, then it would make much more sense. As long as the members of the New Democratic Party believe that the underlying root of our problem is high interest rates, then they will never be able to offer any solution. They fail to understand that high interest rates are the symptom of underlying inflation, not only in the Canadian economy but in the economy of the United States and of the industrialized countries of the world.
I have noticed for months now that the New Democratic Party has really very little concern for inflation.


Lorne Edmund Nystrom: Come on!


Allan Joseph MacEachen: They have no deep understanding of the dangers of inflation. They offer no solution, no policy options to combat, reduce or contain high prices and inflation. Mr. Speaker, their policy options, if adopted, would lead ultimately to even higher prices and more inflation, and then even higher interest rates, and then to even fewer jobs. That is the procession which they are advocating.
1 know it is very easy and admittedly popular to denounce high interest rates. Who likes high interest rates?


Lorne Edmund Nystrom: Allan MacEachen.


Allan Joseph MacEachen: We all dislike them. But if we are going to get rid of high interest rates, we are not going to get rid of them by directing that the Bank of Canada arbitrarily reduce interest rates. That is the worst possible solution, if the intention is to reduce inflation and high interest rates. There might result some short-term advantage by flooding this system with money and pressing down interest rates, but there would be a resurgence of inflation, not only in reality but in expectations, and ultimately there would be higher interest rates.
That is why I find the approach of the New Democratic Party always puzzling. I know they want more jobs, as we do; I know that they want more growth, as we do; but why do they follow this wrong-headed policy that they advocate and that no industrialized country in the world would adopt as being reasonably acceptable?
The hon. member mentioned France. I was going to mention France. I have a certain interest in the affections of the member for Oshawa (Mr. Broadbent) because from time to time he refers to Helmut Schmidt and then recently, since the election of President Mitterrand, he refers to him. They all belong to the international socialist club.
When it comes to implementation of fiscal and monetary policy, tell me how the monetary and fiscal policy of West Germany differs in kind, or how the monetary and fiscal policy of Mr. Delors, the finance minister of France, differs in kind. The hon. member needs only to look today at the report in The
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Globe and Mail as to what has happened in France. There they were forced to raise their key lending rate from 15.7 per cent to 18 per cent. That is the key lending rate, which will be followed by other short-term rates. Why? Because they are subject to the same influence that Canada encounters. And they have responded how? By increasing their short-term interest rates from 15.7 per cent to 18 per cent.
The hon. members opposite, in presenting this proposal, are really out of step even with their pals whom they join in the international socialist club, who understand the reality that inflation is deep-seated, it is dug in. It is going to take one very determined effort to get inflation out of our system, it is going to be very painful, and it is not going to be easy.
There are no overnight and easy solutions. If there were, we would adopt them and we would follow an easy, rather than a difficult and painful policy of reducing inflation, if there were easy policies that could be adopted. The New Democratic Party consistently, in their questions, in their policy speeches, have shoved inflation to one side and have gone off to advocate all sorts of policies which, if adopted, would add to inflation and therby permit a resurgence of interest rates to even higher levels. That is my basic objection to the New Democratic Party approach.


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: Mr. Speaker, I do not underestimate the seriousness of high prices in Canada and the effects that high prices have on consumers. When I realize, as I do today, that the purchasing power of the consumer dollar, compared to 1971, stands at 40 cents, then I am deepened in my resolve to do what is necessary to bring down inflation and high prices.


Mr. Deputy Speaker:: Order, please! It being one o'clock, I do now leave the chair until two o'clock.
At one o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
Mr. Deputy Speaker:: When the House rose at one o'clock, the Minister of Finance (Mr. MacEachen) had the floor. The hon. member for Etobicoke Centre (Mr. Wilson).


Michael Holcombe Wilson: Mr. Speaker, I am rather interested to see on an NDP opposition day that we have a large gap in the House. I do not know where the hon. members are, but we look forward to having them read our remarks in Hansard.


Ian Deans: The largest gap is between your ears.


Michael Holcombe Wilson: The NDP House leader is getting a little surly these days.

March 19, 1982
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During the remarks the NDP finance critic made on his motion, he said that we should not return to the policies followed in the nineteenth century of exporting our nonrenewable resources, such as fish, furs and squared timber. I would like to refer the hon. member to one of the more basic laws of economics. It is known as the law of procreation. I am delighted to see that the member is with us today. I would like to refer to the law of procreation. It is when two little fishes get together and produce another fish. Fish, furs and lumber are renewable resources.
I wish to refer to the NDP motion because parts of it are very accurate. I read from the Order Paper:
In view of the fact that the Bank of Canada's high interest rate policy has been a major factor leading to unacceptably high levels of unemployment, unacceptably high levels of bankruptcy, and unprecedented low levels of consumer and investor confidence-
I agree with that part.
-this House calls upon the government to demand that the Bank of Canada reduce interest rates-
And to introduce new policies.
The gist of that motion is that the Bank of Canada is at fault. I ask the hon. member to reconsider that motion because his plea should not be to the Bank of Canada. His plea should be to the Minister of Finance (Mr. MacEachen). That is where the problem lies. That is the answer the NDP should be looking for.
There is no question that in this country we must have lower interest rates. We must have an interest rate policy which allows companies to grow and does not burden individual Canadians with the tremendously high interest rates we have today.
Many members have come into contact with individuals who have had to renew their mortgages and must find an additional $200, $300 or $400 a month and sometimes more in a pretty strained personal budget. This is forcing them to disrupt their budget to find the money for their mortgage renewal. It is one of the basic reasons the economy is as slow as it is today. When individuals have to find that money, they must take it from somewhere else, and they take it from current spending.
Many Canadians will have to renew their mortgages within the next two, three or four months. They are beginning to cut back on their spending and set money aside. That is one reason the retail sector in our economy is as weak as it is. There just is not enough money to go around. There is not enough to pay those high interest rates and also buy the normal goods they would buy from the stores today.
The small business community is now enduring probably the worst period in 20, 30 or 40 years. Many companies are just hanging by threads. I am sorry the Minister of Finance did not refer at more length to his own budget, because in that budget the Minister of Finance removed the small business development bond and replaced it with a small business bail-out bond. He took away one of the few sources of strength and one of the few sources of support for the small business community in this period of high interest rates. The program of last year, the
small business development bond, cost the government, in terms of the support the bond provided, about $150 million. The new program, the Small Business Bond-no longer the small business development bond-costs the government some $10 million. All that additional burden must now be borne by the small business community which must pay high interest rates.
We are in a vicious circle. Farmers and fishermen are caught up in the same circle. Many of them have had to go bankrupt, and the inadequate responses in the budget have increased the number of bankruptcies in the past couple of months. We have a poor economy. The problem is compounded by the high interest rates we have today. This leads to more bankruptcies, which leads to a poorer economy. Yet interest rates stay as high as they are. There has to be a reason, and I will come to that reason in a few minutes.
The New Democratic Party quite rightly observes that there are two ways to fight inflation. The NDP points out that one of those ways is to strangle the economy, and that is what this government is doing.


Nelson Andrew Riis: Shame.


Michael Holcombe Wilson: It is strangling the economy and squeezing the life blood out of the economy by taking more money from the economy by means of incredible tax increases. In a time of recession 31 per cent is the rate of increase of revenues in this current fiscal year, and next year revenues will increase by 50 per cent. That is taken right out of the hide of the economy. In addition to that the government is imposing a high interest rate policy.
The second approach to which the New Democratic Party referred is to improve productivity. Members of the New Democratic Party are correct on this, and I am glad they have finally understood the importance of productivity, because they have not been speaking that way in recent years. Up until now they have not understood. Having listened to the policies the Finance critic for the New Democratic Party has been espousing, I do not think members of the New Democratic Party understand how to translate the word "productivity" into practice, but that would truly bring about less inflation in this country. There is no question that productivity is the right idea, but the approach of the NDP just would not work.
Members of the New Democratic Party are looking for the quick fix. They are looking for the easy solution. They are looking for the nostrum which will solve all the problems, and it sounds good, but it just does not work.
They have talked in the past-and I heard the finance critic on the news this morning-about the policy they propose of suddenly dropping rates for mortgages to 12 per cent. Their policy is to wave the wand and say to the banks that they must pay for that out of their high earnings. They are saying the rate must be dropped immediately to 12 per cent. However, what happens when that wand is waved? What happens to the mortgage market? The mortgage market is not the property of the banks only. There are credit unions, caisses populaires,
March 19, 1982

trust companies, pension funds and insurance companies. It is a very broad market. The major player in that market is the banks, but they have only about 30 per cent or 35 per cent of that market. What happens when that major player drops its rate from 17 per cent or 18 per cent down to 12 per cent? If the other players want to stay in that market, they have to meet that rate. What happens when a credit union, which is paying 15 per cent or 16 per cent on the savings it attracts from different people in the economy, lends money out at 12 per cent because the NDP waved the wand and said the rate will be 12 per cent? I have asked representatives of some credit unions about this. 1 have asked representatives of trust companies. They have said they must either go broke or get right out of that market. I have asked representatives of pension funds and life insurance companies this question, and they have said they cannot ask pensioners and widows and orphans who need these life insurance funds to subsidize the market. I was told the government should be doing that. These institutions would pull out of that market.
The NDP approach just would not work because we would lose much of the savings which go into the mortgage market. There would be less savings available for mortgages to create jobs in the housing industry. For a long time members of the New Democratic Party have been saying we must create jobs in the housing industry and that they would do it their way, but that way just would not work.


Nelson Andrew Riis: What are you going to do?


Michael Holcombe Wilson: It is cruel of them to hold out these easy solutions.


Mr. Peterson:: What about yours?


Michael Holcombe Wilson: Members of the New Democratic Party have the "quick fix" solution which will make people feel they have the answer, but 1 think the finance critic knows he does not have the answer.


James Scott (Jim) Peterson: You have none.


Nelson Andrew Riis: What is your answer?


Michael Holcombe Wilson: That is why he is making a lot of noise now. That is why he does not like to hear me say this.


Nelson Andrew Riis: I want to hear what your answer is, Mike.


Michael Holcombe Wilson: Like all the policies of the New Democratic Party, this one would not work and, if anything, would lead to more spending and more regulation, and more regulation and more spending would lead to more inflation. That would be the result of the New Democratic Party policies.


Nelson Andrew Riis: What is the budget in Saskatchewan like, by the
way?


Mr. McKenzie:: The NDP wants exchange controls.


Michael Holcombe Wilson: Let us look at a prime example. The Minister of Finance touched on this in his remarks. The socialists were
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elected in France last year. They had the great socialist dream. They were going to turn things around and prove to the rest of the world that they had the right answers. What has happend? Let me give a few examples. Inflation in France is 14 per cent. Unemployment has increased a full 21 per cent this year over last year.


David P. Smith: Right.


Michael Holcombe Wilson: The private sector in that country is sagging, with the result that the government has moved in with huge spending programs. These will require a lot of government borrowing, which will squeeze out the private sector even further. How is the private sector responding to this? It is being scared out of the country. It is being frightened away. The money is going to Switerland, Germany and the States. Then the government there slapped on exchange controls because the value of the French franc dropped about 10 per cent. That is the result of socialist policies and the socialist dream.


Nelson Andrew Riis: What is your answer, Mike?


Michael Holcombe Wilson: If we examine some of the policies France has been following, we see a very good comparison with what another member of Socialist International, the Canadian Liberal government, has been following.


David P. Smith: Rubbish.


Michael Holcombe Wilson: We have seen the same kinds of policies and run-away government spending.


Mr. Chenier:: Shame on you.


Michael Holcombe Wilson: We have seen the high unemployment and the high interest rates France has. That is the sort of thing we have been following in this country.


James Scott (Jim) Peterson: You don't know anything.


Michael Holcombe Wilson: The socialist dream has not come true in Canada, it has not come true in France and it will not come true in any other countries of the world.


Nelson Andrew Riis: What is your answer, Mike?


Michael Holcombe Wilson: That is the nature of socialist policies.


Jacques Raymond (Ray) Chénier: Give us some answers.


Michael Holcombe Wilson: I can see that the two members of Socialist International do not like to hear what we have to say.


David P. Smith: Rubbish.


Michael Holcombe Wilson: I would like to remind hon. members opposite and members of the little red rump to my left that it is the motion of hon. members to my left that we are debating. I am pointing out the shortcomings of that motion, and I do not think they like to hear them.


Nelson Andrew Riis: You have no solutions.

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Michael Holcombe Wilson: I do not think they like what they hear.


Nelson Andrew Riis: You have a lot of criticism, but we notice you don't have solutions.


Michael Holcombe Wilson: 1 recommend to the New Democratic Party and the other member of Socialist International, the Liberal government, that they watch closely what happens in France because that is where they will find their answers. That is where they will find the answers to the socialist dream.
The finance critic for the New Democratic Party made a lot of loose statements today about how to get more productivity, how to get more investment, how to reduce unemployment. But none of his statements hung together. They were all part of the "quick fix" solution that party pulls out of the sky which says "This is the way it will be." When people study those solutions they will know they do not hold water. It is immoral and cruel for that party to play this charade on Canadians who are suffering so deeply from the emotional strees and physical hardship caused by high unemployment levels and high interest rates today.
Let us consider what is happening in this country today and see why the problem is not that of the Bank of Canada but the problem of the Government of Canada. The problem has been brought about by the Government of Canada, Mr. Speaker. I would ask hon. members opposite why since the middle of last summer there has been a shortfall in the monetary aggregate, where money supply in this country today is at its lowest level since August, 1980? I would remind hon. members that money supply is the life-blood of the economy. If there is no money the economy does not grow; if there is growth in the money supply, the economy grows. Today the money supply is at the lowest level it has been since August, 1980.
Why has that happened, Mr. Speaker? Why has the government followed a policy of allowing the Bank of Canada to keep the money supply as low as it is today? Why do we have a policy which has interest rates so much higher in this country than they are in the United States?
The hon. member for Kamloops-Shuswap (Mr. Riis) referred to an outflow of capital, interest and dividends amounting to about $5.5 billion. I should like him to turn his attention to another outflow of capital, Mr. Speaker, the outflow of moneys that individual Canadians and Canadian companies have built up over the years and which they are now taking out of the country. We have to ask why that money is being taken out of the country. Why do they feel it is put to better use in other countries of the world like the United States, Australia, the Far East and Europe? The capital outflow in the last 18 months amounts to about six times the rate it was throughout the whole of the 1970s. It has not stopped. The Canadian dollar is still under pressure; it is still bumping along at the lowest level it has been for the past 40 or 50 years. There is a reason for that, Mr. Speaker, and I shall deal with it in a minute.
The government has been forced to maintain the dollar even at that low level through a high interest rate policy which is creating hardship for Canadians all across the country, not just for those who have some money and wonder where to put it. Canadians who are looking for a job or those who have to roll over a mortgage are all affected. The interest rate policy in this country today is not a monetary policy, it is a foreign exchange policy. It is helping to draw in capital from other countries to replace the valuable capital that is leaving the country for other reasons.
I refer to this as our triangular policy trap. The first side of the triangle is a policy which says that we must maintain the level of the dollar at between 82 cents and 85 cents U.S. The second side of the triangle says that we are going to scare money out of the country through the anti-investment policies of the budget, through the restrictive attitude toward foreign investment and the confiscation elements of the national energy policy. On the third side of the triangle is the high interest rate policy which says that any time the Canadian dollar goes below 82 cents U.S. we should jack up interest rates so that it will not go down any further.
We cannot have all three policies, Mr. Speaker. We cannot have a policy which forces money out of the country and also have low interest rates if we want to maintain the level of the Canadian dollar. That just does not work. Members of the government and members of the New Democratic Party just have not learned that simple fact of economics. Something must break if that policy triangle is in place. In this party we believe it is important that the second side of the triangle in the Canadian policy trap be changed. We must alter those policies that are frightening money out of the country. Before we get to the interest rate side of the argument, let us look at what is happening today.


Mr. Deputy Speaker:: Order, please. I regret to interrupt the hon. member but the time allotted to him has expired. He may continue with the unanimous consent of the House.


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: There appears to be unanimous consent.


Michael Holcombe Wilson: Mr. Speaker, do I have 20 minutes or 30 minutes?


Mr. Deputy Speaker:: According to the rule the mover of the motion has 30 minutes and the member speaking immediately in response thereto has 30 minutes as well. All other hon. members have 20 minutes.


Some hon. Members:: Take five.


Michael Holcombe Wilson: Mr. Speaker, I appreciate the generosity of hon. members opposite and I shall try to be more gentle with them in the next five minutes.


Leslie Gordon Benjamin: You will be forever.
March 19, 1982


Michael Holcombe Wilson: The hon. member who just said that I will be forever is the last in the House who should say that.
The type of money that has been frightened away by these policies is aggressive money, Mr. Speaker, the entrepreneurial money, the capital that creates jobs and has made the country grow. The money coming in is seeking a home with high interest rates, a high return on a bank account or government bond-something that is reasonably safe. It is not creative money; it is passive money. It is what I call widows and orphans' money. We are losing the money that built this country and in return we are getting money looking for a high interest rate which will leave immediately interest rates fall.
We are losing the money that creates jobs and that is bad at a time when 1,100,000 people are unemployed. The approach that the Conservative Party has espoused for some time is that we should shift policies in this country in order to attract that money back. Let me remind you, Mr. Speaker, that the money going out is not all foreign money going home; it is Canadian money that does not like what is happening in the country.
We must reverse some of the disastrous parts of the National Energy Program and some of the disastrous elements of the budget as well as changing some elements of the Foreign Investment Review Agency which is frightening money away. In this party we have always said that we should have that screening agency, but there is a means of administering it that will allow foreigners to feel welcome here and make them want to invest in the country. We should help them understand the policy objectives of the country so that they will invest here. We should encourage them because that will create a better country for all. That is the direction we should go today. We should create a healthy environment to encourage the private enterprise sector of the economy. We should have a positive Government of Canada policy and not the massive intervention and regulation that has been the hallmark of the government's policy and which would be increased substantially if the suggestions made today by the New Democratic Party were in force.
The New Democratic Party does not understand the subject, Mr. Speaker. That has been made clear in the statements made today by its finance critic. The Liberal government has shown by its policies that it does not understand. Many of the problems we are facing today stem from policies which have been followed for the last ten or 15 years. These have led us to high unemployment, high interest rates, and a record outflow of capital. This is what must be changed.


David P. Smith: Mr. Speaker, I am happy to participate in this debate.


John William Bosley: Stand up.


David P. Smith: I see the hon. member for Don Valley West (Mr. Bosley) still has his lungs. I am pleased to participate in the debate on the NDP motion. At first I thought I might hear some solutions and wind up enlightened, but I regret to say that after listening to the NDP today I have not heard any
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enlightenment or solutions. The most perceptive, succinct and to-the-point comments we have heard today have been those of the Minister of Finance (Mr. MacEachen).
The NDP motion criticizes the high interest rate situation in Canada, leading to high levels of unemployment and bankruptcy and low levels of consumer and investor confidence. Members of that party approach the situation with a magic wand. They seem to think they can push a button and solve all the problems-the quick fix approach. But when it came to solutions, we heard a few mutterings about increased productivity and that was about all. We did not hear any analysis or prognosis of the real problem in the country-inflation.
After listening to the comments of the hon. member for Kamloops-Shuswap (Mr. Riis) today, one is left with the impression that every morning the Minister of Finance and the Governor of the Bank of Canada have a bowl of nails and say to each other, "What mean things can we do to the Canadian public today?" That is the impression with which one is left. If one listens, one arrives at the conclusion that members of the NDP do not like high interest rates. Is that not enlightening? I have not met anyone who likes high interest rates, except perhaps a few very wealthy people who have a lot of money to lend.
What were the solutions? We heard a bit about increasing productivity, but we did not really hear what the hon. member meant by it. Did he mean that the same number of workers should produce more goods which they cannot sell? I do not really know what he meant. Without hearing a little more about what he had in mind, I do not see any solutions there. At no point did he address the problems which would result if in fact the government were to tell the Bank of Canada to lower artificially interest rates in the country. It would be nice, but does the hon. member think such a policy would do Canadians a favour?
It seems to me that he forgot one basic principle: in order for someone to borrow money, someone has to lend it. As a general rule people want to lend money where they can obtain the highest rate of return. The hon. member seemed to forget the fact that human nature, being what it is, would probably result in people sending their money out of the country if they could obtain a higher rate of return somewhere else. Did he talk about that? No, he did not. Does he think that it would not happen? Does he think, if interest rates are five percentage points higher in the United States than in Canada, that Canadians will not send their money out of the country?


Leslie Gordon Benjamin: Don't let them.


David P. Smith: The hon. member for Regina West (Mr. Benjamin) will have an opportunity to speak, and I will not interrupt him. Does the hon. member for Kamloops-Shuswap honestly think, if Canadians can obtain a 5 per cent higher rate in the United States, that they will not send their money there? What happens when money starts flowing out of the country? Did he address that problem? No, he did not address it. Would there be a drop in the value of the dollar?

March 19, 1982
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Nelson Andrew Riis: What about the people who invest in Japan?


David P. Smith: I did not interrupt the hon. member.


Leslie Gordon Benjamin: Who cares?


David P. Smith: Now they say "Who cares?" What would happen to the inflation rate in Canada if we had to pay a much higher price for the goods we import? Statistically it is a fact that every time we lose three points on the United States dollar, inflation rises 1 per cent in Canada. What happens if there is a drop of about eight or nine cents in the value of the Canadian dollar? We would immediately be faced with a 15 per cent or higher annual inflation rate. Does the hon. member think that would be doing a favour to Canadians on fixed incomes? Did he address that? No, he did not, because as usual the NDP approaches the situation in a naive manner; with the magic wand and the push-button approach, they have the answers!
Of course, there is one way to stop Canadians from taking money out of the country to obtain higher interest rates somewhere else. We could put on exchange controls. Is the hon. member advocating that? Is his party advocating that? I am not really sure that I heard that. I listened carefully to what the hon. member for Kamloops-Shuswap said, but I do not recall his specifically saying that. Of course, if we are to have exchange controls, we would have to hire an army of public servants to administer them.


Leslie Gordon Benjamin: No!


David P. Smith: Would they be administered equitably and fairly? I fully anticipate that within a day or two someone in an NDP constituency would be pleading on behalf of someone whose mother had arthritis, needed to live in Arizona, and wanted to take money out, after having worked hard in Canada to save it to buy a house there. Of course, the Governor of the Bank of Canada and the Minister of Finance, after having had their regular daily bowl of nails, would say, "Oh, no, we will not allow that".
The simple fact of the matter is that there is not an easy way to impose exchange controls which would treat Canadians fairly. Do they want to remove Canada from being one of the major western industrial countries, one of the group of seven, and to sink us down to the tier of second-rate countries with no confidence in their currencies who in order to keep money in their countries have put on exchange controls? Is that the route they want to go? It sounds as if it is, but that is not the route the government wants to take. Once exchange controls are announced, a further drop in the dollar results; everyone is scared off from bringing money into the country if they think they will not be able to get it out. Did hon. members address that problem? They did not even talk about it.
What if we kept money in the country by somehow subsidizing interest rates? The hon. member did not even talk about it, but I am sure we can all figure out what it will do to the deficit. If anyone thinks that is the solution, I suggest it is not. Members of the NDP said that we should have lower interest
rates. They said we should not worry about money leaving the country, the increased cost of imports, exchange controls or the inflationary spiral. In addition, of course, we have the NDP policy of spend, spend, spend; abandon caution on the deficit; let the dollar sink to a very low level. We never have to worry about who will pay for it when NDP members are talking.


Leslie Gordon Benjamin: Rubbish!


David P. Smith: The Liberal government believes in a balanced approach. We believe the primary target we must address is inflation. It was one of the main targets of the last budget.


Arthur Ronald Huntington: Then why don't you start doing it?


David P. Smith: Another target was to reduce the deficit. When we do that anyway and revenues are increased we immediately hear a great hue and cry from the Tories opposite who seem to think that it should be done without any pain to anyone.
What about the Tories? At least when members of the NDP are talking we get a consistent message-"Do not worry, spend all you want; do not worry about who will pay for it; stop worrying about the dropping dollar and the deficit-spend, spend, spend"! With the Tories we never really know. One day we have the hon. member for York-Peel (Mr. Stevens) rising and, when the slasher gets going, we hear a real, honest, genuine blue Tory saying, "Cut spending, do not spend any more"! But as soon as the government does anything to reduce spending in a reasonable and conscientious way, such as eliminating some very costly VIA Rail routes, they object to it. The Tories want you to reduce spending, but actually they do not want you to do it. They want you to do it in theory but not in practice. Therefore, when we make a move, as we did on some of the very costly and inefficient VIA Rail routes, the Tories yell and scream. When we suggest that the post office should operate on a user-pay basis and we increase the postal rates, these same people yell and scream. They say "You have to reduce spending. You have to reduce the deficit, but don't actually do it. We want to talk theory but not specifics." When we say that we are not going to be able to maintain the same level of transfer payments, boy, do all the flares go out then! All the crying towels come out for the provinces.


Walter David Baker: And the grenades start flying.


David P. Smith: The Tories want to talk theory but they do not want to be specific. The next day you can have the red Tories on their feet and you will hear a completely different story. Maybe the hon. member for Rosedale (Mr. Crombie) will speak or perhaps the hon. member for Kingston and the Islands (Miss MacDonald). The message then is spend, spend, spend! You need a score card to tell whether or not their members have a blue shirt on, a green shirt, or whatever colour it is they wear. The red Tories say "Let us spend more on pensions. Let us give more money to the provinces. Let us
March 19, 1982

spend more money on direct job creation, and do not worry about who will pay the bills."
What have we heard today? I must admit that I was waiting in anticipation to see whether the hon. member for Etobicoke Centre (Mr. Wilson) would have on his red shirt today or whether he would have on his blue shirt. For a moment, when he started talking about the money supply, 1 thought he had on an old Social Credit shirt. But I kept listening and I heard a speech that was very heavy on diagnosis, but when it came to prescribing any surgery, 1 heard nothing.


Mr. Fennell:: You don't listen to us anyway.


David P. Smith: It wasn't too long ago that the hon. member for Etobicoke Centre spoke to the Canadian Club. He basically agreed with the government's policy on restraint. You have to go through the speech quite closely to find out that the hon. member was not differing with the position of the Minister of Finance in his policy of restraint, but he could not quite bring himself to say something complimentary about the minister. The bottom line was that the hon. member was talking restraint, and I suggest that is really what we heard here today.
Coming back to the NDP motion, which is really what we are dealing with, 1 submit we have a motion that is perhaps well intentioned, I will give them that. I think the hon. member for Kamloops-Shuswap is well intentioned. But I say this, and I say it very kindly; the motion was naive and simplistic. The hon. member did not address any of the following problems: money leaving the country; exchange controls; the dropping dollar and the loss of confidence in the currency of this country. None of those things seems to bother the NDP.
What does this government do when it looks at the problems that face the country? I suggest this government and this party believe in a balanced approach. We do not belong to Socialist International, contrary to what my hon. friend from Etobicoke Centre suggests. This party and this government believe in social justice but within a free enterprise system. We on this side of the House believe in the work ethic. We on this side of the House believe in incentive. But we are also the party of the government of this country that has brought in the social programs of which we are proud. We on this side of the House believe in unemployment insurance. We believe in old age pensions. We believe in medicare. We believe in universal programs. That, I suggest, is what really boils down to a social justice fabric within a free enterprise system. We have a balanced approach. We are trying to fight inflation on the one hand, while on the other hand we have programs that address themselves to those who are truly in need. Take mortgage rates, for example.


Walter David Baker: You take them.


David P. Smith: What has happened? We brought in a bill several weeks ago-


Thomas Scott Fennell: Big deal!
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David P. Smith: -that would provide money for those in dire straits whose interest rates constituted more than 30 per cent of the entire family income. What happened? We heard eight days of debate on second reading from the other side, only to have members opposite vote for it.


An hon. Member:: Do more.


David P. Smith: How did we get the vote? We had to use time allocation to get it and then they voted for second reading. That is unbelievable. Has that bill gone through yet? Of course not, because hon. members opposite have been on strike for the last couple of weeks and we have not been able to move it along.


Thomas Scott Fennell: You cancelled the committees.


David P. Smith: What about those people who live on farms and need to have more money put into the farm credit bill that we are trying to get through? Can we deal with that? We have not been able to deal with that because hon. members opposite have been away.
Another example of a balanced approach is the job retraining programs which the Minister of Employment and Immigration (Mr. Axworthy) recently announced. I think all of these things indicate what I would suggest amounts to a balanced approach by a government that wants to fight inflation, but, on the other hand, one which is able to come up with programs to help those who are in dire straits, such as those who are having problems renewing mortgages.
Those are the things we need to hear in this House. We need a useful debate. A useful debate would put a little more emphasis on solutions. What we have had from the other side today is diagnosis; when it comes down to prescribing surgery, we heard a few mutterings about increasing production. I suggest the most responsible, perceptive and honest statement that has been made in this House today was made by the Minister of Finance. I support him fully, and that is why I am happy to stand up and participate in this debate.


Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, one thing we should do is congratulate the New Democratic Party for introducing this motion. At least it got the House into discussing something of great concern to the country. I will go further and congratulate the hon. member for Kamloops-Shuswap (Mr. Riis) for coming out with what I believe to be two truths. One is that inflation is the interest rate. Interest rates are a large component part of the whole. That is a truth that has to be stated in this House over and over again because we have some nitwits in the Department of Finance and in the Bank of Canada who actually believe that interest rates are a tool of monetary policy. There is no such thing.
The second truth the hon. member mentioned was the concept of productivity. Sure enough, he did not go into details, but he is on the right track. Whenever there is a large number of unemployed and unused plant capacity and you spend money to put people to work, you fight inflation. I will
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not go into that in detail but I think the hon. member deserves those few remarks.
On the other hand, by his remarks he opened himself up to attack by the Minister of Finance (Mr. MacEachen) when he said that he did not understand the system. The Minister of Finance did not go any further, but at least it indicates that the speech of the hon. member for Kamloops-Shuswap (Mr. Riis) had got through into the hides of the government benches. Naturally there are differences between the parties on many things. But if we can agree in this House that interest rates are the chief issue of the day because people instinctively know they are the one thing that is bringing this economy down and is the biggest component of inflation, we would come a long way in concentrating our efforts on fighting inflation. Inflation is interest rates, and vice versa. It is all the same thing.
Let me cite a few figures. In 1979, the PC caucus got their prime minister to refer the subject of interest rates to the Standing Committee on Finance, Trade and Economic Affairs, whereby that committee could question the Governor of the Bank of Canada and the Minister of Finance and make them produce figures to show whether their policies were right or whether they had evidence that their policies were working. When these so-called knowledgeable men, including the Governor of the Bank of Canada, could not produce evidence that their policies were working from 1975 on, interest rates did not move upwards for four months until we elected a subservient government which bowed its head to these men of great wisdom. And interest rates have risen and stayed high ever since. When the people have a chance to speak to their elected representatives, the "unwashed" who do not know too much about all the ins and outs of this fine theory, we get sound input which has more common sense than you can get from all the experts.
I said a moment ago that we have to take a look at the figures. I have put them on the record many times. It used to be that we considered inflationary forces to arise mostly from government expenditures, and it was for many years quantitatively the main pressure on prices to move upwards. However, today interest rates lead the race many times over. At any given moment over $500 billion are out under fixed rates, and if you use an average interest rate of 15 per cent, then there is an additional $75 billion annual cost to the economy to carry this interest load. That means that prices rise. The cost to government of servicing our debt is upwards of $13 billion a year. So you can see that interest rates are a much bigger factor in the forcing up of prices.
I do not have the figure on the rise in land costs in the last five years, but I know it is huge. Nor do I have the figure on labour costs, except I know that in the last couple of years they have tended not to grow as fast as inflation. So I would say in all fairness, using the quantitative approach rather than the subjective slogans we are using, that we can say with some conviction that we are right when we say interest rates are the
biggest part of the inflationary pressures today in Canada. If you want to fight inflation, the first target has to be interest rates, and that is why I think the House should pay credit to the NDP for bringing in this motion. It gives us a chance to discuss it.
Now, as for the Bank of Canada, I join with the hon. member for Etobicoke Centre (Mr. Wilson) in saying do not try to pin the tail of this donkey on to the Governor of the Bank of Canada. He is able, sincere and wants desperately to be a good central banker, but he is going through a period of great change in economic theory. Economists have admitted that they do not know where they have been, where they are or where they are going. All these fellows are naturally feeling for what the right thing is, and in the meantime they try to hang on to the obsolete dictums they have and then they get into trouble. But the hon. member for Etobocoke Centre was right when he said the heart of this belief in a high interest rate policy lies right in the Department of Finance and that is why the former parliamentary secretary to the Minister of Finance knows exactly where the trouble lies. He has got up here and poured out his credibility while trying to say the Department of Finance speaks for God and is always perfect and right. Back off, my friend!


David P. Smith: Wilson agrees with it.


Francis Alvin George Hamilton: What the Governor of the Bank of Canada should do is stop this weekly bank rate announcement. It is nonsense. No one borrows from the bank, so why should he set a bank rate? It is just a psychological indication of what the bank governor thinks the interest rate should be. But he knows, and you can read it in all his statements, that he is mainly concerned with trying to stabilize the value of our dollar by the use of interest rates. It is not concern over the money supply, it is an attempt to stabilize the exchange rate.
Secondly, the bank should stop interfering as much as it does with the exchange rate. Concentrating on the exchange rate is not solid management of the currency.


David P. Smith: Look at our reserves, they have not changed for years.


Francis Alvin George Hamilton: It is being done by the use of the interest rate technique.
Thirdly, the bank should stick to its primary business, which I think members of all parties would support, and that is, it should control the money supply, hold it in tune with the growth of the economy. If the central bank withdrew from this silly fiddling around with interest rates and concentrated instead on their main function, that of controlling the money supply, I think they would get themselves out of the firing line and we could concentrate our fire on those people in the Department of Finance who take such rigid stands which are not proven necessary by the facts.
Many countries of the world have the same problems as those facing Canada today, and they are wondering what they
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can do. If you look back over history, Mr. Speaker, you will find that the one country more than any other which is wondering out loud what they should do is the United States. You would never know that from reading the Canadian press or listening to Canadian radio or television. That is because they know, as do we in this House, that we are all pretty stupid when it comes to discussing monetary and fiscal matters. They do not want to get up and make asses of themselves, as we have to in this House by talking about things we do not know too much about. However, we have a duty to talk about them, so I say that we better take a look at possible solutions. I direct these remarks to the new parliamentary secretary because he wants possible solutions to think about, and 1 am going to give him one.
A long time ago in this House there was a member of the CCF party called Colin Cameron. He is no longer with us, but he did address this problem about 20 years ago and suggested that with growing world trade all countries would have to broaden the base of their reserves. He made the suggestion, which I think was unique and worth while, that we should add to our reserves the special drawing rights of the World Bank to give us a broader base in order to withstand the raids on our currency. In memory of this ex-colleague of ours, I want to bring that subject up again. If our purpose is to stabilize world exchange rates, not only should we consider adding the SDRs to our reserves along with the strong currencies of Japan, Switzerland, West Germany and perhaps still the United States, but I think we should take a look at an old idea and see if it would not be worth while here in Canada. I am referring to the present debate in the United States over whether they should make the American dollar convertible into gold, as it was 50 years ago. All western nations agreed to get off the Gold Standard back in the 1930s. Now that we are all under such great pressure with the instability of our currency, maybe the debate going on in the United States should be brought to the Canadian arena. I would like to know what the effect, would be in Canada of making the Canadian dollar convertible to gold, particularly since the Americans are converting their currency. I would like to know what it does to stabilize the dollar. I would like to know what it does to reduce and stabilize interest rates. I can tell what is likely to happen; but I also have a deep conviction that I do not know for sure. However, maybe if we talked it out publicly, and maybe if we all made ourselves look a little silly and stupid, we would serve our country well by having that debate.
I am not necessarily recommending that we debate it here in the House. As we will obviously need witnesses, it would be a very difficult place to discuss monetary and fiscal policy. I would think that it should probably be discussed in a special committee with two or three parties, because that is probably all we could find who would have the time and the will to go through this detailed examination. However, we could bring in the experts, the top officials from the Department of Finance. They are not evil men. We could bring in the Governor of the Bank of Canada, as he is not an evil man. We could question him and bring these matters forward. I am sure, as we found
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out in the committee three years ago, that these men will respond and give us a little more information on which we can base our judgment. I would like to know all these things before the emergency is upon us if the Americans convert in May or June.
Therefore, what I have said is only one point in the scenario on how we could put forward some alternatives to the government besides following this horrible, harmful policy of high interest rates. That does not mean that we can forget the fiscal side. On the fiscal side, as the House knows, we will be working with the suggestions from the Conservative benches made last year concerning the various pieces of legislation, trying to apply them so that we can get around the harmful effects of this interest rate policy followed by the Bank of Canada and the Department of Finance. We want the Farm Credit Corporation to be effective. Thank heavens some civil servants stuck a clause in the amendment to the Farm Credit Act, Bill C-88, which allows the Farm Credit Corporation to borrow money from sources other than the Consolidated Revenue Fund. This means it can go to private individuals. This section states it can borrow money by any means, and "any means" opens up whole new vistas. Maybe the Farm Credit Corporation can be set up almost as a bank or credit union as a way of borrowing money at 7 per cent or 8 per cent from the public and lending it out at the same rates. Everyone knows how it is done. It is done through the small business development bond program to make money. It is done through the income averaging technique, and there are others. In the debate, on the housing bill, Bill C-89, I proposed that we should do in the housing field what we have done, on second reading and in committee, in the Farm Credit Corporation; that is, to give home owners equality with the farmers. I would like to apply that by restoring the real principle of the small business development bond to small business. 1 would like to provide that for export businesses. Large companies can look after themselves by the equity route. However, we in the House have some responsibility on the fiscal side to back up what the governor is doing. I do not necessarily want to tell the Governor of the Bank of Canada that he must arbitrarily lower his rates unless I know a little more about what will happen and how he will do it. However, while he and we are trying to make up our minds on that, there is no reason why we cannot go forward on the fiscal side. Therefore, in conclusion, my advice is very simple. I am advising the Governor of the Bank of Canada to quit fooling around with interest rates as a monetary tool, to look on money as simply a commodity, and to let the market decide what the interest rate will be. 1 have a suspicion it will be a lot lower.
Then, on the fiscal side, my second conclusion is that we should get busy and do something in this House. We should understand what we are doing for farmers, small businessmen, exporters, and those who live in city homes. I would like to add the mining industries and all the other production industries as well. If we work together on this, step by step, I think we will be serving our country well. But, above all, as of this particular

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moment, I most strongly recommend that we begin openly to debate, and also encourage the media openly to debate, what we will do about this world exchange situation and whether we should consider making our Canadian dollar convertible to gold, along with special drawing rights.


Some hon. Members:: Hear, hear!


Mr. David Berger (Parliamentary Secretary to Minister of State (Small Businesses and Tourism)):: Mr. Speaker, it gives me great pleasure to participate in the debate this afternoon on the important matter of interest rates and economic policy. It is important to get across to the Canadian public the message that the government is doing something, contrary to the impressions created by hon. members of the opposition. As the Parliamentary Secretary to the Minister of State for Small Businesses, I would like to outline briefly some of the efforts that the government is undertaking to help small businesses in this country. First of all, it is important to note that Canada's one million small businesses represent 97 per cent of the total number of firms in the country. They provide 42 per cent of jobs in the private sector employment and 30 per cent of the contribution of business to GNP, and are a key to regional growth innovation. They are also 97 per cent Canadian owned.
I would like to enumerate some of the measures of the government which are geared to small business: first, there is the Small Businesses Loans Act which provides a federal guarantee to financial institutions in respect of small business loans toward the purchase or reconstruction of business facilities and equipment. As Your Honour is probably aware, the loans under this program are fixed at 1 per cent above the prime rate and are therefore not fixed at two, three or four points above the prime rate, a circumstance which small businesses must often face. Second, there is the small business bond program which was a measure proposed in the November 12 budget. This program enables small businesses in severe financial difficulty to reduce their interest expense by up to 50 per cent. It is a successor to the small business development bond announced in 1979. In my province of Quebec, Quebec firms accounted for some 12 per cent by volume of the loans issued under this program, and 11 per cent of all such bonds were issued to the end of 1981.
Mr. Speaker, there has been much criticism of this program, saying that the banks have been reluctant to lend under it or that businesses are unaware of the program. I would like to point out that under the initial program, in which close to $2 billion of loans were let out, some 13 per cent, or $260 million, was lent to businesses that were in financial difficulty. This meant that the program in its initial form worked, and it worked for the benefit of businesses that were in financial difficulty.
That money is provided in the budget and therefore it is perhaps a matter for businesses to acquaint themselves with this program and require that their bankers exercise the imagination necessary to extend loans under this program.
Earlier today I had the opportunity of participating in a radio program in Montreal, by telephone. One of the guests at this program was the representative of the Canadian Federation of Independent Businesses of Quebec. He indicated that a survey of his members showed that some 40 per cent were unaware of this particular program. Mr. Speaker, that might indicate that some work would have to be done in informing their members. I think that organization, the CFIB, could play an important role in informing their members about the program and ensuring that the program does work.
I indicated also that the government would obviously be interested in listening to any suggestions that they might have to make as to how we can make that particular program more effective.
Mr. Speaker, another program that is of aid to small and medium-sized businesses is the enterprise development program. This is designed to assist firms, including small and medium-sized businesses, undertaking relatively high risk innovation or adjustment projects that can be expected to yield attractive rates of return on the total investment. That, because of the high risk nature, takes a number of years to show results.
Under this particular program, in the year 1980-81, some 304 projects were accepted in Quebec, or 43.4 per cent of the total number of projects under that program, for an authorized total amount of $73 million or 22.3 per cent of the loans or the grants authorized under that particular program.
I would also like to mention the Federal Business Development Bank, which provides financial and management services almost exclusively to small businesses and particularly those who do not have other sources of financing available to them on reasonable terms and conditions. This kind of financing includes loans, loan guarantees, and equity financing. The Federal Business Development Bank in 1981, again for the province of Quebec, has authorized loans totalling $113 million to some 1,253 businesses. It has undertaken in 1981 13 equity investments for a total of $4,304,000.
Mr. Speaker, there is another program which 1 would like to mention, the program for export market development. In 198081 Quebec firms received almost 28 per cent of PEMD assistance, that is some $4.8 million. There were 477 applications approved in the province of Quebec.
I would like also to mention another program, one of the Department of Regional Economic Expansion, that of industrial and development assistance. A substantial provision of federal assistance for regional development comes under this program, RIDA, and subsidiary units.


Arthur Ronald Huntington: Mr. Speaker, on a point of order, I have been called to order many times by your good self in this House for not speaking to the point. I am wondering if the parliamentary secretary would tell us what these printed and well known government programs have to do with the debate that is on here today.
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David Berger: Mr. Speaker, I would be glad to do so. The motion refers to employment. It refers to a "new employment option" for Canada, and I think it is totally fitting therefore to mention a number of programs the government has put into place to increase employment or to generate employment in Canada and particularly, as 1 mentioned earlier, in my province of Quebec.
1 also would like to mention the Canadian Industrial Renewal Board, which was set up by the government last year as a complement to the textile and clothing policy. That program was announced last June 19. The objective of this policy is to try to continue the efforts of the government to ensure that the textile and clothing sector will become as competitive as possible in world markets.
The government has announced the reallocation of more than $250 million over five years to this effect. This new program will assist the modernization of viable firms-and I would like to stress the words "viable firms"-in the textile and clothing industries, establish new employment in communities affected by the closure of plants, and help displaced workers take advantage of new job opportunities that might be created.
Parallel to this adjustment program, the government committed itself to renegotiating protection measures for the textile and clothing industry to give them time to restructure.
I would like also to remind members of the House that the Prime Minister (Mr. Trudeau) on October 26 of last year announced the formation of this board to be chaired by Mr. Paul Desmarais, president of Power Corporation. This agency, with headquarters in Montreal, has been in operation for approximately five or six months only and has reached the stage where it is going to be extending loans in the very near future and grants to companies that wish to modernize.
Another initiative of the government is the industrial labour adjustment program, ILAP. Recently we debated in this House a bill designed to provide pre-retirement benefits for people in certain designated sectors, such as the clothing and textile areas, light appliances, and in certain designated communities across the country. This bill was given third reading several weeks ago. This bill will provide retirement benefits to workers between the ages of 55 and 65 equivalent to benefits under the Unemployment Insurance Act. It will permit workers in these industries to take early retirement. Industries undergoing particularly difficult times will be able to restructure. It will permit the government to establish new industries with as little difficulty as possible for the more elderly people.
After outlining some of the initiatives the government is undertaking to help Canadian industry, I wish to address the matter of interest rates. As everyone knows, high interest rates have created problems for businesses and individuals, not only in Canada but in many other countries. We must ask ourselves what is the problem. Is the problem interest rates or inflation,
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as the Minister of Finance (Mr. MacEachen), the Department of Finance and the Bank of Canada have indicated?
Several months ago the former parliamentary secretary to the Minister of Finance circulated a study by the Federal Reserve Bank of St. Louis, which had been done in November 1981, entitled "What really happened to interest rates, the longer run analysis". Very conclusive evidence is introduced in this study to show that interest rates in the period from 1967 to 1980 were related to the rate of inflation. It stated quite unequivocally that the rise in the average rate of inflation fully explains the average increases in these nominal interest rates. I suppose many similar studies have been done which have explained this connection.
Anyone with any kind of logic should know that if the rate of inflation is 11 per cent or 12 per cent, no one would lend money at an amount less that the rate of inflation. Anyone would want a return of 1 per cent, 2 per cent or 3 per cent on top of the rate of inflation. Therefore, it is evident that the way to bring down interest rates is to reduce the rate of inflation.
The Minister of Finance has been much criticized by members of the opposition and other critics who would like to see an easy solution to this problem. He received some support earlier this week. I wonder whether members opposite paid any attention to that.
At a speech given earlier in Toronto this week, Jacques de Larosiere, managing director of the International Monetary Fund, came out with a vehement defence in support of the government's monetary and fiscal policies. On point after point de Larosiere supported the policy of the Government of Canada.
In the March 16 edition of the Montreal Gazette, there is a column by Jack McArthur, who is not known to be a great defender of the government's policies. He noted that stagflation, high inflation and economic stagnation, is rampant throughout the world. He said this:
In other words, Canada can't escape it by itself, however frantically it shuffles policies. It was a reminder that not all problems can be blamed on a single government.
That is quite an admission. Our friends opposite and our friends in Quebec have the tendency of blaming all the problems in the world on a single government. When you see the admission of a journalist that not all problems can be blamed on a single government in this country, it is almost overwhelming.


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


Arthur Ronald Huntington: Mr. Speaker, I will begin by congratulating the New Democratic Party on having brought this motion forward on the second day. i will follow that opening remark by saying I do not agree with the impact of the motion. I just agree with the principle of it. The approach to it is abhorrent and it goes in the wrong direction.
One of the troubles I have as I enter this debate is that we in the political arena are always trying to score points. Politics takes precedence and priority over the addressing of solutions to the dilemma we face, particularly in the western democratic

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industrialized countries. We are always after the political point. We never get together to debate resolutions.
Last fall I had the opportunity to attend a western world conference in the United Kingdom at which the problems facing the western world as a result of low growth expectations were debated. I found myself among some very learned people from the world of economics. However, they were using the conference as a debating society to score points one against the other, getting a long way away from addressing the fundamental issue.
Interest rates do everything the NDP say they do. They are a dilemma that we must face in our free society. Are the causes of interest rates not the political system, the political rhetoric and the promises given to the public in order to maintain and sustain political power? The cause of the inflation factor we are dealing with today is the attitude that governments have encouraged to develop in the land as we move from cradle to grave care in a welfare state. Inflation developed as a result of the wealth and high anticipation levels that were created as we came out of the post-war boom. Everyone wanted a big fridge, a big car, a television set in the bedroom, and these amenities were something to which we thought we were entitled. People worked hard and extra long hours in order to save enough to buy a piece of property and have a higher than average standard of living. However, once that happens, a great levelling starts to take place in the form of social taxation policies. We saw that come into being in Canada with the white paper in 1969, and then in 1971-72 we moved into a socialized taxation policy and dilemma which has delivered us to the dilemma of this hour and day in Canada.
At one time we had the third highest standard of living in the world. Today we are coasting down past and through the thirteenth place. We have allowed nations like Japan and Germany, with their work ethics, frugality and the old fashioned qualities which we at one time had in this land, to surpass us in standard of living and the ability to create work and to serve the markets of the world.
We have moved into a taxation system which wants to structure, wants to control and wants to deliver all power to the bureaucrats. The bureaucrats today feel that even those tax points which have been delivered at large into the community, the wealth-creating community, are theirs. We even have the dangerous concept, showing through government literature and the papers it presents to the House, of tax on an imputed rent basis.
We then come through this taxation experiment from 1972 until November 12, 1981, in which we see a budget finally submitted that is going to cross all the "t's" and dot all the "i's" and put the periods on that social experiment to which we have been trying to adjust.
November 12 let the Canadian innovator, the Canadian entrepreneur, the Canadian manager, the Canadian wealth-creator and the explorer, know that we were finally at the point of being a totally controlled economy and that we had gone way beyond the 50-50 private sector-public sector mix
which had been the rhetoric of the last decade. It destroyed the decision-making base of Canada, and it has removed any incentive for a person to create or manage a payroll in Canada unless he is part of a Crown corporation or a multinational corporation which is large enough to move and sway with the shocks which keep coming through the Liberal government's monetary and fiscal policy that is with us in Canada today.
One of the forces most damaging to the inflation factor we are dealing with today has been the nationalization program of this government. The nationalization program, or Canadiani-zation program, has put, I would say, at least $20 billion of demand and call on our foreign exchange reserve account. When we start to increase a nationalization program in the energy sector, which has yet to produce one new barrel of oil- as a matter of fact, there is negative delivery of our exploration potential-and when we start to get into that kind of situation, we are indeed in trouble. All of the savings, the energy and the tax resource of this land are now being delivered to the principle of ownership, when creating jobs and work and development is what we in Canada really need, for we have denied a whole generation coming out of our schools the right to dignity and to self-reliance and the right to work as a result of these nationalization and socialization policies which were finally delivered upon us on November 12, 1981.
How are we going to back out of this dilemma? We have heard all kinds of calls from the government side for our answers. We are not the government. The government is in place with all the resources, all the expertise and all the muscle and might of the Government of Canada to come up with the answers. Hon. members opposite have delivered their idea of what the answers should be. The New Democratic Party supports them in much of what they have been doing because the NDP essentially is seeking the same goals the Liberal government is seeking. Those are centralization of control over all the resources and assets of this country and the acquisition of as much of the means of producing goods and services as the government can acquire, and it is the rate of that acquisition that is delivering us almost into a depression today. When we have one and a quarter million people of a work force as small as Canada's out of work and when we couple that with the percentage of people who are out of work in Europe, we are delivering ourselves into an extremely serious political situation.
Is there a way out? I think there is, but we will have to do some new thinking. We will have to get it through the process of debate, and we will have to apply our minds to it.
In offering a couple of solutions I am not speaking for my party, I am speaking as an individual member of the House. I think there are a couple of things we can do to address the dilemma we have today.
First, the interest rate dilemma of the people of Canada and the Governor of the Bank of Canada is due to the movement of the liquid flows of capital from this country to other countries seeking a higher interest rate haven. However, as a result of the nationalization programs of the Liberal government since
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February of 1980 we have created an unbelievable demand call on our foreign exchange reserves. This works against the acquisition of shares from foreign owners and against the acquisition of resource companies which were at work in creating payrolls in this country. When we buy that foreign ownership, we do ourselves a disservice and we place upon ourselves a tremendous demand for our dollar to fall and for our interest rates to climb in order to maintain a balance in the international account. As a result of that program, we have created in the last two years some $20 billion of demand on that international reserve account.
How can we quiet down the liquidity as capital moves from one country to the other through that account? I would say we do not have to put on foreign exchange controls. There is a very simple way to do it. We had in place a 15 per cent withholding tax on interest paid to foreign account owners. If we want to take the liquidity off that movement and give ourselves some relief in terms of interest rates, I think we should look seriously at applying that withholding tax again and increasing it probably to the 30 per cent range for anything less than a 60-month call at point of inception. In that way I think we probably could take a very large percentage of the liquidity of call and the demand of call off that international reserve account, and we would find we could then start to move our interest rates downward.
I do not think we can realistically move our interest rates in this country below the inflation rate, although there are some economists and one or two of the more progressive thinkers in the world of international banking who say it is possible, as has been done in Switzerland, actually to manage our own domestic interest rate if we do control and protect our monetary system.
We in this country have prostituted our monetary system. We have printed more money than the growth of the economy called for and, as a result, we have weakened the purchasing power of our medium of exchange. I go back to my early schooling-and that is a long way back-and I still remember the warning in those days. We were warned-at least I was warned in school-that the fiat money system is something which will not work over the long term because political forces in a democracy cannot be trusted. I am not blaming the Liberal government entirely for this. I just think it is the bidding game we have on the attitudes and minds of the Canadian public which causes politicians to promise more than the work force of the nation can truly afford. When we do that, we weaken our monetary system, to the point now where I have heard the call again, and 1 am surprised to hear it from my colleague, the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton). He is calling again for a fine metal or a gold standard measure in order to return our medium of exchange to some form of honest measurement rather than let it remain at the whim of the politician serving and bidding and catering to the unrealistic anticipation levels of Canadians at large. It is this attitude and expectation level we have to address, and I think the monetarist policies are addressing that because the expectation levels are coming down to the very
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dangerous level where even the right to private property, home and building is being attacked.
I will probably be booed and jeered by members on the Liberal side for saying that the November 12 budget is a deliberately designed attack on the individual's right to own property in the Canadian system. I consider that to be a very serious thing. It is a resolution which is being brought about mainly because there is no sense of outrage in the country and very little of it in the House, except for what happened two weeks ago. It is that lack of outrage that has taken us away from the standard of excellence which we used to meet with such great pride.
I listened to the Minister of Finance (Mr. MacEachen) say for two years that we could solve the problem of inflation in this country through increased productivity. Mr. Speaker, productivity cannot be increased under the present taxation system.


An hon. Member:: Oh, oh!


Arthur Ronald Huntington: Mr. Speaker, the hon. member should open his mind; it is absolutely locked. Productivity cannot be improved in this land nor can we address the $20 billion deficit in our international trading account in fully manufactured goods, under the present taxation system. My party knows my views on this subject and does not necessarily support what I am about to say.
As the hon. member for Ottawa Centre (Mr. Evans) the former parliamentary secretary to the Minister of Finance, knows, the Ottawa Board of Trade financed a research project under an economist, Mr. John Ferguson, who at least was creative. He found that we cannot move ahead in this country and address the world competitive marketplace and deliver our Canadian productive system into that marketplace by continuing to tax profits.
This country needs $1,400 billion of capital between now and the turn of the century if it is not to go back to the wigwam. Sometimes it seems that is where we are headed. If we are to move ahead as an industrial society and address our distribution problems, then we must generate our own capital rather than borrowing from other countries. We will have to stop this excessive taxation of profits and stop legislating a taxation and fiscal policy that is a disincentive to those who have the ability to create and manage payrolls.
Because there are no incentives in this country today, people are inclined to sit on their money and draw high interest. Those who are prepared to risk their money on innovation, to risk capitalizing ventures and modernizing ventures in the marketplace, face too much government regulation and too much trouble. In my own business I have been waiting for nine months for the Department of Industry, Trade and Commerce to agree or disagree with five items so that we can move ahead to cause growth and increase productivity, while reducing the wages cost in our program. We are delivering ourselves to that kind of dilemma because the bureaucracy will not be able to

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handle the decisions that have to be made on a daily and hourly basis across the land.
If profits are not taxed, there must be a tax on something. If we were to turn our minds to the taxation of net costs in the industrial sector, we would find that all of a sudden the government would deliver an incentive to remove all the waste and fluff from the productive system. I plead with the House to get a study group together to look into this kind of approach to taxation. It might even create a labour shortage, Mr. Speaker. I can foresee that within the next four or five years there could be a shortage of labour in the country if costs were taxed. This would make us competitive in the marketplace. I do not want this to be confused with the value added tax that exists in Europe. I do not think we should follow that route because it means the taxation of costs and profits. We should start out fresh. That would give us an advantage over all the other industrialized nations of the world.
We could then start doing the things that we want to do- reduce government deficits and control the economy. I should like to see the managers in government receive an incentive for reducing their costs. If we could do this, we would develop a feeling of wellbeing and begin to achieve the standards of excellence which would again give us a standing in the world marketplace.
In all sincerity, Mr. Speaker, I believe we will go down the chute as long as we leave the existing taxation base in place. If we want total government control over all means of producing goods and services, then all we need to do is to let the November 12 budget go through. It would be a victory for those who have been working all their lives to make Canada a socialist state.
1 want to warn the people of Canada, however, that the egalitarian way is not the Canadian way and it is not the magic that has attracted so many people from other nations to this once great country. There is a way out, Mr. Speaker. We can have these debates and play games of trying to appeal to small business and a lot of other things, but if there is a true desire to resolve our problems with interest rates we should give an incentive to reduce the outflow of capital and we should stop the nonsense of taxing profits at a time when we need unlimited capital, if we are to own our own country. We could then bring our dollar back closer to par. If we could reduce the cost of production, we would control marketplaces all over the world.
That is my plea and my appeal to the NDP, to the government and to my colleagues in this debate on the opposition motion, Mr. Speaker.


Some hon. Members:: Hear, hear!


John Leslie Evans: Mr. Speaker, it is a pleasure for me to speak on this motion proposed by the New Democratic Party. I have serious difficulty with the motion, as you might expect, because I think it indicates a degree of naivete about how the economy operates, how the motivating forces in our society are causing events to happen, growth to occur, jobs to be created, the standard of living to rise and prosperity to move forward in this country. It is a naivete that does not understand the causes of inflation nor the debilitating
effects of inflation on investment, which, after all, is the engine of economic growth and job creation. It does not understand the historical causes of the problems we face today, nor does it understand what is possible in a world economy.
There are some very serious and far-reaching problems with the proposals put forward in the motion, Mr. Speaker. The problem of interest rates faces almost all western industrialized countries. Earlier in the debate we heard the Minister of Finance (Mr. MacEachen) speak about the situation in France. The French government thought it had some innovative and creative ideas about how it could divorce itself from the world economy but instead, the French franc took a serious battering in the money markets and interest rates have had to be raised by more than 2.5 per cent over a short period.
We are a world economy, Mr. Speaker; we are an integrated world economic system. We have to face that reality. We cannot divorce ourselves from it as a trading nation. This country is probably the most heavily dependent on foreign trade of any nation in the world. We are great traders and we are a great trading nation. We know that 30 per cent of our gross national product comes from international trade and 25 per cent of the gross national product is represented by trade with the United States alone. We should certainly look at ways to diversify trade. In 1976 the Prime Minister (Mr. Trudeau) put forward a proposal which was roundly condemned and soundly damned by hon. members opposite. It was called the "third option". It was an attempt to divorce or diversify ourselves over time from a heavy dependence upon the United States as a major trading partner, and to move more into a trading relationship with Europe and the Pacific rim countries. It would be a great boon to British Columbia if we tried to improve our trading position with other countries in the world. We were told that it could not be done and that we were turning our backs on our traditional trading partner. It seems to me that we missed an opportunity, but the opportunity is still there. We can diversify our trading patterns, and we should be moving in that direction. The Minister of State for International Trade (Mr. Lumley) is travelling all over the world trying to improve our trading position with other countries so that we can sell more Canadian goods and services.
We must look at the question of interest rates which are debilitating and tearing apart our economic fabric. We must deal with the entire cause of high interest rates. We cannot deal with our economic difficulties by looking at the symptoms of the difficulties. We must go to the heart of the problem. The heart of the problem has been referred to repeatedly both inside and outside the House by everyone who knows anything about what they are talking. The root cause of the problem is inflation. If we do not bring down inflation, we will not solve the problems of unemployment, low productivity and slow economic growth. Inflation is beneath all those problems. It shortens time horizons so that people do not make long-term investment decisions and do not offer five year- mortgages. We
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have seen it happen. All one has to do is to open one's eyes and look at the historical situation-what happened in the last five years and what the government is trying to do right now. It is trying to bring down inflation.
The proposal put forward today by the NDP flies in the face of reality. We will not have low interest rates because someone says, "Tomorrow there will be low interest rates." The world does not work that way.


Nelson Andrew Riis: Who says that?


John Leslie Evans: We will not have low interest rates by decree. I hear the hon. member for Kamloops-Shuswap (Mr. Riis) asking, "Who says that?" In part, the opposition motion reads:
-this House calls upon the government to demand that the Bank of Canada reduce interest rates-
It reads "demand"-do it, wave the wand, that is how it is done! The world does not work that way. One thing hon. members in the corner seem to forget is that there are more savers than borrowers in society. Contrary to what they believe, there are more people who save money than who borrow it. Every time we hear cries from the corner, they are "subsidize borrowers". Do they know whom they are asking to subsidize those borrowers? They are asking little people who are saving for retirement, for example the lady who is now saving slowly but surely to accumulate enough money to live decently in retirement. Those are the people who will subsidize the borrowers.
The marketplace sets interest rates worldwide.


Nelson Andrew Riis: It is the Bank of Canada.


John Leslie Evans: I hear the hon. member for Kamloops-Shuswap referring to the illogical jump which would be taken by someone who thinks there is a magic wand solution to the problem of high interest rates.


Nelson Andrew Riis: Governor Bouey sets interest rates.


John Leslie Evans: Governor Bouey does not set interest rates any more than the hon. member or I do. The market sets interest rates. It is what the public demands to be paid on their savings. It is what people who are saving money or putting money aside are demanding in the form of a rate of return for not consuming today and saving to consume some time in the future.
I believe the hon. member for La Prairie (Mr. Deniger) indicated earlier that many studies of this nature were conducted. They looked at the relationship between money supply growth, inflation and interest rates. No economist in this country or in other countries questions the fact that a rising money supply at a rate higher than the growth rate or the real output of the economy is what causes inflation over the long term. There are arguments concerning the effect of slowing or increasing the rate of money growth on reducing or increasing inflation and the lags in the system, but no one argues the facts that if the money supply is allowed to grow too fast, the result is inflation or, if it is allowed to grow slower, inflation will be beaten. The only questions are how long it will take and how
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much output loss and unemployment will result in the process of slowing down inflation.
There can be no doubt that if we slow down the growth rate in the money supply, we slow down the rate of price increase. Also there can be no doubt that if, at the same time as we are trying to slow down the growth rate in the money supply to remove inflation from the system, we run bigger and bigger federal deficits, the output loss and unemployment will be higher than otherwise. That is the logic of the policy of fiscal restraint applied at the same time as the policy of monetary restraint. We can remove inflation from the system faster and with less pain if we follow fiscal restraint at the same time as we follow monetary restraint. In other words, if we are restraining the growth of government spending at the same time as we are restraining the increase in the money supply and the available purchasing power, inflation can be wrung out of the system. These are the facts-monetary restraint coupled with fiscal restraint.
The budget which was brought down in November implements fiscal restraints to complement monetary restraint. We must reduce inflation. We must follow responsible, realistic, workable policies which will reduce inflation. By doing so, we will change confidence levels in society. This will mean that there will be greater confidence, which will lead to renewed investment, which will lead to faster economic growth, which will lead to higher levels of productivity, which will lead to higher wages and higher levels of employment. This is the manner in which the system must operate. We must start with the fundamentals and work from them in order to achieve the objective we want. We cannot start with the objectives and attempt to find policies out of the blue, such as the ones suggested by the New Democratic Party, to move us somehow from a difficult situation to the desired result overnight with the snap of a finger or a wave of a wand.
Basically, it is dishonest to build up in Canadians expectations and hopes day after day. The leader of the NDP repeatedly indicates that his party has a five-part solution. He says that if we do those five things, our problems will disappear overnight. It is dishonest and cruel because it builds expectations. Members of the NDP indicate that if they were in government they would solve all the problems-Canadians would be back on easy street, with prosperity around the corner, money coming out their ears, and mortgage rates at 2 per cent. Time and time again we hear the pie in the sky of the NDP. It is absolute nonsense. We have to deal with difficult problems and difficult economic challenges by applying realistic and sometimes difficult solutions. It is not an easy free lunch worid, and the sooner that group in the corner over there gets it straight that there is no such thing as a free lunch, the sooner we will be able to come to grips with our real problems and get ourselves back on track again. That is the reality.


Nelson Andrew Riis: Check the budget in Saskatchewan.


John Leslie Evans: I hear talk about the budget in Saskatchewan.

March 19, 1982
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Nelson Andrew Riis: It is balanced.


John Leslie Evans: It is balanced with resource revenues that only two provinces in this country have. That budget is balanced with those resource revenues. That is where the revenue is coming from, and it is coming out of every other province's pocket and balancing the budget in Saskatchewan. Isn't that wonderful? But what about Prince Edward Island, Nova Scotia, New Brunswick, Newfoundland, Quebec, Ontario and Manitoba?


An hon. Member:: Conservative governments.


Mr. Althouse:: Most of the money does not come from oil in Saskatchewan. Check the record.


John Leslie Evans: It is amazing to live in naivete.


Michael Holcombe Wilson: You should know it well.


Arthur Ronald Huntington: You are part of it.


John Leslie Evans: One of the real problems which we faced at the time of the last budget-and we have to go back a period of time to look at the history underlying our problems and those of western governments, the United States, Britain, Germany and France, on which I think the hon. member for Capilano (Mr. Huntington) put his finger-is the way the tax system operates, the kind of burden that taxation puts on creativity, growth and productivity in our society, the United States society and western European society, because what it is doing is pulling things down.


Michael Holcombe Wilson: What about the 31 per cent tax increase?


John Leslie Evans: Look at what happened during the late 1960s and early 1970s. That is when the United States tried to finance a war by printing money instead of increasing taxes.


Michael Holcombe Wilson: What are you financing with the 31 per cent increase?


John Leslie Evans: That is precisely what happened in that period. Inflationary pressure built up in the United States and in Canada. At the same time, because we did not have an indexed tax system at that time-the United States still does not have one-increasing inflation and incomes that went up nominally with inflation but greater and greater pressures on the economy and the effective tax burden on Canadians went up. In 1967 the effective tax burden on Canadians was about 6 per cent. It went from 6 per cent to 16 per cent over a three-year period from 1967 to 1971, and perhaps 1972. A massive increase in tax burden took place. Governments here and elsewhere, knowing there was a serious problem, that inflation was growing and was starting to get out of control, took action to try to stop inflation and at the same time tried to offset the negative effects of taxation that were perceived to be too high. It was perceived not only by governments but by people. Investment was falling off. People were becoming displeased with the idea of paying higher and higher taxes.
From 1973-1974 on, we did many things. We had tax cuts year after year, budget after budget. We had cuts in taxation.
We had indexation. We had all kinds of incentives put in the system. We had incentives to save and incentives to invest. That was the standard approach used by all western countries to try to overcome these fundamental problems of heavy taxation, inflation and reduced incentives. We found during that period, the last six, seven or eight years, both here and elsewhere, that the kinds of incentives we used were not producing benefits to Canadians, who were, after all, picking up the tax burden for government services in some other way if not being paid by those who were taking advantage of legitimate incentives, but the economic benefits coming back to the taxpayers, to society, from those incentives were less than the cost. Any businessman-and there are businessmen on this side and on the other side of the House-would be loath to invest dollars year after year in a venture where the returns were less than the dollar coming back, in other words, getting back less as the investor. Here the investor is a taxpayer. No one in his right mind would do that. Why does the opposition think that the government should go on year after year doing that? What the budget did was to take a fundamentally new tack, a new approach. It was to remove some of those incentives that were not working, achieving benefits, or giving back results. They were to be offset by reducing tax rates.
I have heard from the other side that this is a socialistic budget. What socialist has ever cut marginal tax rates? Socialists turn things around and raise marginal tax rates. They do not cut marginal tax rates. What socialist would cut marginal tax rates? That is anti-business.
In our society we have an extremely effective indexing system in all areas except in the capital and the corporate sector. The people who are really hammered by inflation are those in the corporate sector and the capital sector. If this were anti-business, why would the government care at all about inflation? Most people are not indexed against inflation. The capital sector is not. The sector that invests is not. That is why inflation is important if we are going to have growth, job creation and a good future in this country.


Lorne Edmund Nystrom: Mr. Speaker, it is unfortunate that the hon. member for Ottawa Centre (Mr. Evans) had to be so negative in his tone. When he talked about the Saskatchewan budget being balanced because of resource revenue, I want to remind him that during the 1940s and 1950s when our province was very poor, Tommy Douglas had a balanced budget most of the time. It is also very unfortunate that the hon. member for Ottawa Centre said-and I think I have his words written down correctly-that we have a balanced budget because the money in Saskatchewan comes out of the pockets of every other province in this country. It is that kind of negative statement that creates a feeling of disunity and a feeling of negativism across the country toward the federal government and the party across the way. I just wish that the hon. member across the way could be as thoughtful and as positive and offer as much optimism in his speech as
March 19, 1982

did the hon. member for Kamloops-Shuswap (Mr. Riis), and as did the hon. member for Qu'Appelle-Moose Mountain (Mr. Elamilton), a Progressive Conservative member. If more Members of Parliament would do that instead of playing little partisan games, then perhaps the respect of the people of Canada for this institution would be much higher.


Some hon. Members:: Hear, hear!


Lorne Edmund Nystrom: This afternoon I want to raise a couple of important issues that I believe should be changed. We should be taking a close look at them. We all know about the structural problems that we have. The hon. member for Kamloops-Shuswap and others have mentioned the 8 per cent unemployment rate, the 11.5 per cent inflation, rate and the very high interest rates. Structurally, we have an economy that is based on a branch plant mentality. We have branch plants of foreign-based transnational corporations in Canada that are basically producing many of the goods and services that we have.
If Samuel de Champlain were alive today, I suppose he would be very happy because back in 1608 when he established the first colonies in Quebec they were established to ship beaver pelts and furs to France from Canada. I suppose he would be very happy to know that we have graduated from beaver pelts to gas, oil, timber and coal. However, we are still exporting raw materials basically unfinished and importing finished goods from other parts of the world.
We have no leadership. We have no vision. We have Liberal members across the way criticizing us because we are talking about some hope and some optimism. We have an economy that is basically a tag-along-economy, tagging along with the United States and other parts of the world, literally shadowing the United States. In 1980, we began to see the consequences of this when we saw our unemployment rise and we witnessed $5.5 billion flowing out of Canada in dividends and profits to shareholders in other parts of the world. What I suggest, Mr. Speaker, is that we need a new Canada, we need a new vision of what we can do in this country. We have to give people some hope that we can rebuild and restructure our country in the way that the Japanese, the French and the Germans did after World War II when those countries were totally and absolutely destroyed. They rose from the ruins to build great industrial states which are stronger in terms of their economy today than Canada, the greatest country in the world in terms of resources, of educated people, and of the future. We are falling further and further behind. I think it is time our nation became a nation. It is time that Canada became Canadian. It is time we asserted our sovereignty, Canadianized our economy and put Canadians in control of their own destiny. It is time we allowed ordinary working people to make decisions over their own lives.
Because of time limitations, Mr. Speaker, I only want to refer today to one area where I think we need some really fundamental structural changes, the area of trade. I do so for
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the fundamental reason that about 30 per cent of our GNP is tied to trade. That means an awful lot in terms of the national economy and in terms of jobs, and in western Canada, where both I and the hon. member for Kamloops-Shuswap come from it is even higher than 30 per cent.
We have in this country, Mr. Speaker, a very small domestic market. Indeed, of the seven greatest trading nations in the world, we have the smallest domestic market. Since that is so, we must be a trading nation and we must become more competitive and more specialized in what we are doing. If you look at what has happened over the last few years in Canada, I would suggest to the House that 1 think we have become the boy scouts of international trade. As a result, we have become the doormat for many countries around the world. Look at what the Japanese said to the Minister of State for Trade (Mr. Lumley) in Tokyo just yesterday when he went there confident of negotiating a new deal under which we would restrict, to a certain degree, the importing of Japanese cars and we would have a new arrangment worked out. The Japanese have said no, and the minister's mission to Japan was a total failure.
In 1969, Mr. Speaker, Canada had 6 per cent of world trade; we now have 3.9 per cent. In 1972 we had 4 per cent of world trade in manufacturing; in 1979 we had 2.8 per cent. We had a deficit in 1970 in finished products of $2.5 billion; in 1981 it was $21 billion. My friend, the hon. member for Kamloops-Shuswap, referred to mining equipment and machinery. In 1980 our deficit there was $5.7 billion. In 1980 we had a deficit in automobiles, trucks, parts and aircraft of $4.2 billion. These statistics tell us that something is fundamentally wrong. I want to be very honest and say it is not exclusively the fault of the federal government. The government is the leader, the supreme court of the land, and I think it has to be number one in terms of responsibility. However, this also reflects on provincial governments, on our business community, indeed on our nation as a whole. Therefore, I think we will have to make sure that trade becomes a bigger priority in our country if we are to survive.
As 1 said, Mr. Speaker, 30 per cent of our GNP is tied to trade. That is evenly split between goods and services. If you look at some of the other leading nations of the world, you will find that they are much less dependent on trade. The United States and Japan depend on trade for only about 10 per cent or 15 per cent of their GNP at most. This is why I am concerned about the growing wave of protectionism in our world, because if that happens, as it did in the 1930s, we will be hit harder than almost any other country because we trade more than almost any other country. In addition, more of our trade is with the industrial world. In fact, less than 10 per cent of our trade is with the developing world. We trade very little with the Bangladeshs or Chinas of the world. We trade mainly with the United States, the European Common Market and Japan. However, the European Common Market, for example, has about 20 per cent of its trade with the developing world, the United States has more than one third and the Japanese have about one half. So what happens when the industrial giants start becoming more protectionist? What happens when the

March 19, 1982
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United States says that they have to protect their own producers, their own auto workers, their steelworkers, and their aircraft workers? Well, because we trade into that market, we will be the first nation to suffer the consequences of having an undiversified economy, one that is not owned and controlled by Canadians. We are going to be the first ones hurt.
So, Mr. Speaker, I say the time has come where we must make some pretty significant structural changes. We must say to Canadians that we can do better; we can do as the Japanese, Germans and French did after the Second World War. We can build a country to put Canadians to work, a country which will have enough money, security and productivity to clothe, house and provide good medical care for all of its citizens. We could build that future on our great resource base if we only processed and refined more of those resources before they leave this country and, Mr. Speaker, we can do that. We could build that great country of Canada if we started doing more manufacturing and processing in this country.


Michael Holcombe Wilson: You bring a tear to my eye.


Lorne Edmund Nystrom: We have an interjection here from the official finance critic of the Conservative Party. I am not sure if he was on the special committee on the National Trading Corporation or not-


Michael Holcombe Wilson: Not me.


Lorne Edmund Nystrom: -But there was a special committee and this is what they had to say about manufacturing:
Your committee believes there is a potential for exporting roughly $10-14 billion worth of additional manufactured goods and capital projects, a figure that could mean increasing our exports by 15 per cent over present levels. Eight to twelve billion dollars worth of potential appears to lie with exporters who can be pushed to improve their export performance and with companies not now exporting who can be encouraged to become exporters. A further $1.5 billion to $2.5 billion in potential exports exists in the world market for capital projects. Canadian industry has the expertise and the experience to tackle larger capital projects in telecommunications, transportation, energy, pulp and paper, mining and civil works, such as highways and bridges.
That report, Mr. Speaker, says we can increase our manufacturing exports by some $10 billion to $14 billion with a little imagination and courage. 1 believe we should put our minds to doing just that. However, this afternoon, instead, we have the Minister of Finance (Mr. MacEachen) using his entire time in the House to attack and poke fun at my friend, the hon. member for Kamloops-Shuswap, for having the courage to come before this House and talk with an air of optimism and hope for the 1980s and 1990s. No wonder Canadians find this institution to be less and less relevant all the time.
1 want to mention just one other problem in the area of trade which our country is going to have to address very quickly, and that is the whole area of high technology, the technological revolution. It is a revolution. I want to say to my fellow hon. members that it is here on us now. It is a massive revolution, and it will revolutionize the world. It is important that this House take a look at what is happening and make sure that that revolution becomes a people's revolution, and
that we as Canadians control the computers, the robots and the microchips so that they not control us. It is important that we realize what is happening in the world because it is moving very quickly. When 1 look around us, I see that as a nation we are putting less money and research into development than the Italians and only slightly more than the Egyptians or people in Iceland or Ireland. Last year, for example, the federal government put some $93 million into high technology. The Japanese put about $2 billion into high technology.
In this country we have immensely high unemployment, yet we have a crying shortage of labour in specialized trade. To show this need I can take one into any part of Canada, including my province, where there is a shortage of specialized workers. Here in Ottawa one can go into the riding of the hon. member for Nepean-Carleton (Mr. Baker) and see some of the computer shops and industries where there is a crying need for people with skills.


Walter David Baker: Hear, hear!


Lorne Edmund Nystrom: However, in this country we are putting very few people into the technical schools and into electrical engineering colleges. Japan has five times our population. In 1981, they had 40 times as many people in electrical engineering schools. Therefore, what will happen? In ten or 20 years, who will build the hardware? Who will build the computers? Who will build the modern airplanes and farm machinery which require the new technology? Will it be the Japanese or will it be Canadians? Will it be the Americans, the French or the Canadians? I think the evidence is there that we are missing a boat. The Japanese, with half the population of the Americans, now have twice as many robots as the Americans. People in the industry say that by 1990 there will be a deficit of some $10 billion in computers alone in this country. With evidence like this, we will have to show some leadership in this House to ensure that we realize that this revolution is here, that we as Canadians will control it, that workers in our plants are being affected, such as people in the textile and footwear industry in Spadina who are involved in decision-making as to how this new technology will affect them.
We must be concerned about safety in the work place. We must discover whether there is low-level radiation is some cases, or whether some new video machines are dangerous to the health or difficult on the eyes. We have a lot of unanswered questions. It is very important that this government set up a task force or a committee of this House, or perhaps assign some more specific tasks to the minister responsible for technology in order to come up with some really leading and forward-looking suggestions in the whole area of high technology. Then in the future, when we have all of this technology which we will not be able to stop as it is here and coming, it will be humane, it will be there for people, it will help them. It will provide us all with more wealth, productivity and free time that we can use for the general good of our nation as a whole.
March 19, 1982

The other point I make is that I hope in the future we do not make the mistakes of the past. In the past we thought we could get along with a branch plant economy, that the General Motors of the world, the Exxons of the world, the General Electrics of the world, could establish a few plants in Canada and produce a few goods. However, I hope that as we move into something brand new and different, we as Canadians can have the initiative, the courage and the conviction to establish those industries in our country and to do those things ourselves. We are already good in a number of areas. We are good in telecommunications. For example, we participated in the construction of the space shuttle. We are good in many other areas. We should take the expertise we have, put some more funds into the area, and decide to really be one of the world leaders in this brand new and exciting era. At the same time, we should make sure that we involve the ordinary working people who produce the goods and services in some of the decision-making. In this country we have had much talk and rhetoric for years about political democracy. I think that as we enter this new era it becomes even more important that we start talking and devising plans for economic and industrial democracy so that the ordinary worker, farmer and small businessman has some real input over the direction of his life.
I have only a few minutes left in which to speak, but I believe these are some of the fundamental things we will have to consider in the area of trade. That is not the only area. We must look at many other areas. I hope this Parliament can become more relevant by discussing some of these matters in the future. I hope we can spend less time on name-calling and games-playing back and forth across the floor of the House. If we do that, perhaps we can build a better nation in this country and keep our country together, because more and more Canadians are losing faith in us and in this very nation. This last month in western Canada, for the first time in our history, we had the election of a separatist to the legislature of a province, the province of Alberta. I want to say that I do not think we should over-react. 1 do not think the press should over-react. However, on the other hand, it is very important that we understand that that separatist was elected because people are fundamentally unhappy with the lack of leadership and vision in this country. I hope we can learn from that that there are options.
There are alternatives. There is a new vision and a new way. I think that the people of Canada are looking at this institution to provide that leadership. We had better do it before it is too late and this country disintegrates.


Some hon. Members:: Hear, hear!


Mr. Douglas Fisher (Parliamentary Secretary to the Deputy Prime Minister and Minister of Finance):: Mr. Speaker, this is my very first occasion to enter a debate as a parliamentary secretary. I would like to say immediately to the hon. member for Kamloops-Shuswap (Mr. Riis) that I appreciate his motion. I think he has given us a very crucial question. 1 am indeed honoured to be able to take part in this discussion.
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The main point I want to make today is that I believe inflation is the worst disease we have in our economy, and we must concentrate on combatting that disease. The hon. member for Yorkton-Melville (Mr. Nystrom) made a very powerful and emotional statement right at the beginning of his speech in describing the fears of many of our fellow Canadians that our country is falling behind. I say in all honesty that I found the presentations given, both by the hon. member for Yorkton-Melville and by the hon. member for Kamloops-Shuswap, missed the point. We will indeed begin to fall behind if we do not exercise the kind of tough decision-making and selfrestraint which our times call for. The very fears to which the hon. member for Yorkton-Melville referred will be selffulfilling if we follow the course of action he laid out. I believe a clear example of this was given by one of my own constituents who came to see me at a mortgage meeting last fall. My constituents wanted to know why mortgage rates were so high. They complained about that fact. One particular constituent told me that she thought her life would be better as she got older and that it would not get harder. In a way, she was echoing the statement of the hon. member for Yorkton-Melville. She indicated to me that her family has a very high take-home pay. They have a camper truck and they take extensive vacations. They had a very big mortgage, and her husband had recently taken a bath on the stock market. In her judgment, the answer to those difficulties was to lower mortgage rates.
I understand the sentiment that she expressed to me. I understand her desire to have as much as she can and to maintain her living standard as high as she can. But in fact she was unwilling to go through a very simple economic exercise. In her life she simply had to start making a list of her priorities, instead of going after everything that she wants at once. The budget speech says exactly this, right at the beginning of page one, in somewhat less specific or less personal language. I think it is worth quoting here, because it puts the whole problem into perspective. It says:
We are confronted by severe inflation and extremely high interest rates. Inflation and interest rates at their present levels are bringing economic growth to a standstill and creating grave inequities among Canadians. The impact of high interest rates on home owners, small businesses and farmers is visible and damaging. But high interest rates flow from high inflation and there can be no deep and lasting relief until inflation can be reduced. We cannot hope to insulate ourselves from interest rate policies in other countries unless our inflation rate is lower than theirs.
There is a growing conviction around the world that growth cannot be sustained if inflation is not sharply diminished. That is a very tough question, a very tough challenge, but it is one that we have to meet today.
Turn the coin over. What happens if we begin to do some of the things that were suggested to us in the debate today, if we begin to loosen up, if we ease back from our policy of restraint? Very simply, we will have more money chasing around the country, we will have more inflation, and that

March 19, 1982
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inflation will simply add, as the budget points out, to the very problem that we are attempting to solve.
Further on in the budget speech, at page 9, the minister said:
Such a retreat ... would damage our prospects for sustained economic growth in the future. I have been urged by some to worry less about inflation and minister to unemployment and growth. There arc siren qualities to these entreaties that could well lead us onto the rocks.
Mr. Speaker, in my riding there seems to be a misunderstanding about the connection between some of these forces that work in the country. 1 would like to answer some of those misunderstandings. I would like to answer really three or four simple questions from my constituents. They ask me why we cannot lower the dollar. They ask why we cannot have a 75 per cent dollar; if we are stuck with the influence of American rates, why do we not set our rates free and let our dollar drop. Other constituents say that inflation is not important to them, that it is interest rates that are causing them harm, not inflation. There are other constituents again who, like the NDP, are arguing that we should beef up our economy again, put a real emphasis on growth, and get going.
Mr. Speaker, as you well know, our interest rates are tied both to the American interest rates and to our own rate of inflation. We know that if American rates drop drastically and our inflation does not drop, then our interest rates will stay up. We will be keeping them up all on our own. At the same time, if we are able to reduce our inflation, we will have at least some greater ammunition to fight with, if American rates stay high or go even higher. These are true facts, but they both point to the simple fact that Canada is part of a larger world, that that larger world is experiencing great trouble from inflation and high interest rates, and that we ourselves are experiencing that trouble as well.
The C.D. Howe Research Institute brought this fact out in its Policy Review and Outlook, 1982, saying:
Inflation must be lowered in the short term. Failure to do so, in light of lower U.S. inflation, will result in a rapid loss of international competitiveness of Canadian exports . . . Lowering inflation is also a necessary precondition to ensuring robust economic growth in the longer term.
Mr. Tom Shoyama wrote, in the Policy Options magazine, Volume 3, March-April, an interesting article which I recommend to the NDP, entitled "The Economics of Gradual Improvement". He points out there:
Clearly the overriding and most intractable problem has been the stubbornly high, persistent and seemingly uncontrollable rate of general price inflation.
Further on in the article, he says:
-there is no doubt that they (interest rates) reflect the persistently high rates of inflation, and the entrenched expectations of continued inflation.
A little further on again he says:
-the recent peaks (of interest rates) have represented quite unprecedented real rates. But the question is how and why it is that there remain borrowers both willing and able to pay these rates . .. The answer clearly lies in the psychology of a deeply entrenched inflation . ..
I think that the member for Ottawa Centre (Mr. Evans) brought to our attention the most important fact, that we in this government have to defend the right not only of borrowers but of savers. We have to defend the rights of the whole economy. Why? We must remember that in this economy our interest rates will always sit above inflation. Over a short time
we will find them below inflation, but in the long run borrowers will always pay a profit to lenders, borrowers will always pay an interest rate above the cost of living. Money must earn a profit, as the hon. member from Ottawa Centre pointed out. Money must have a rate of return above the cost of living.
Mr. Speaker, in my riding mortgages a few years ago were available for less than 12 per cent. It is common now to find mortgages that are being renewed from a 10 per cent rate up to 16 per cent, 17 per cent, 18 per cent. When those very low rates were made a few years ago, the lenders very quickly discovered that they were losing money, that they were locked into five-year mortgages at 10 per cent-and the cost of living went past that rate. Not only did it stay even with the mortgages but it went past them. In effect, therefore, the home owner was getting a real break from the lender. Today that point has turned over. The lender has learned his lesson from that. Today mortgages are available, only for a much shorter term. I understand that there is only one bank now that offers five-year mortgages. They are not only shorter, but they are much more expensive. People renewing their mortgages are finding that they are going from a situation where they had a profit at the expense of the lender to a situation, a more traditional one, where the lender again is earning a return on his money. It is obviously in the interest of both the lender and the borrower, it is obviously in both their interests, to get the rate down. The lender will still make a proper and traditional profit, the borrower will have his money available at a much cheaper rate. Both of them will profit if the rate comes down; and the rate will come down only if the cost of living comes down, if the inflation rate comes down.
The second part of this issue is the great influence of American rates on our own experience. Of course, recently, American rates have been very, very volatile. The hon. member for Etobicoke Centre (Mr. Wilson) indicated that he thought that American rates were lower than ours. In fact, American rates are much higher. The prime rate in both countries is 16.5 per cent, but in our country the real rate of interest is around 4.5 to 5 per cent, whereas in the United States the real rate of interest is 6 per cent. There is no sign that American rates are going to relax. There is every sign that these rates are going to react on ours and that lenders will be influenced by the high level of U.S. rates.
Our friends in the NDP indicated earlier that they thought that exchange rates would work. The hon. member for Don Valley East (Mr. Smith) made a very telling point when he told the story about a mother living in Arizona wanting more money out of someone in Canada so that the NDP member would soon be coming to the government asking for an exception on behalf of his mother. That is exactly what would happen politically. Economically though, such a scheme simply would not work.
I refer anyone who is interested in a somewhat impartial way in this to read the article "Can we have made-in-Canada
March 19, 1982

interest rates?" by R. B. Bryce in the February 1982 Choice Magazine. Mr. Bryce points out:
Canada has a highly developed capital market, open to capital markets elsewhere in the world without any, serious restraints ... it is particularly closely related to the huge and open capital market in the United States.
If we were to set up exchange controls as some so quickly and easily suggest, the leaks and sieves would become obvious immediately. It is simply too easy for Canadian investors and lenders to go into the United States and take advantage of rates there. We have seen it time and again over the past two years. Whenever our own rates fall slightly lower than the American rate, pressure begins to develop on the Canadian dollar. We must never make the mistake of assuming, as Mr Bryce points out, that exchange controls can be offered in an easy or flippant fashion. The country is simply too integrated with the general North American capital market.
The other answer that many people put forward to answer this close interdependence in the American market is to let our dollar drop, in effect to devaluate our dollar. As I pointed out, people in my riding have asked, why not let the dollar go down to 75 cents, why hold it at 80 cents? There is no magic in the 82-cent figure or 80 or 85. There is equally no magic in the 75 cent number. People who put that idea forward with such great ease forget there is no guarantee that the Canadian dollar would stop once it hit the desired target of 75 cents. If we then found that out, how would we get it to stop as it continued to drop?
People also forget when they put forward this option that when the Canadian dollar is at 82 cents, it has already gone through this kind of devaluation. We experienced that over the past few years. The supposed benefits we were to experience with our exports are already in place. What we now have to do is to take advantage of those benefits and at the same time stop looking for excuses and stop trying to get another round of devaluation. Instead, we must look at our own economy and solve some of the problems in it.
Some of those solutions are here and in place. I refer my friend from Kamloops-Shuswap to the statement by the Prime Minister (Mr. Trudeau) to the first ministers' conference on February 4. On page 5 of the document which I obtained from his office, he says:
Experience both here and elsewhere has shown us that you cannot have real, long-term economic development, or generate lasting employment, unless you are first prepared to deal with the problems like inflation which stand in their way.
I want to emphasize the next point made by the Prime Minister:
There is no avoiding the requirements of self-discipline.
That is the point in our economy today, not the search for quick answers such as a lower dollar or exchange controls or some other externally applied solution. Today we heard some of the answers put forward by the NDP. They were well thought out. The difference I have with them is in timing. We are not going to change our economy in the basic structural way that they indicate quickly enough to be able to answer the immediate problems of home owners or businessmen in my
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riding or in theirs. Indeed,, it becomes somewhat of a self delusion to look only at those answers. By looking at them, we begin to see magic solutions instead of the kind of self-discipline that the Prime Minister has described.
If we are going to attack inflation, we will follow the kind of answers given to us by my predecessor, the hon. member for Ottawa Centre in his earlier speech. I welcome the kind of advice we have heard from the NDP on this matter, that we must continue to look for ways to cushion the most vulnerable people without destroying that sense of self-discipline and that sense of creating economic priorities. We need to create those priorities. We also need to find ways to protect the most vulnerable people.
We again saw a difference between their party and ours today when the leader of the New Democratic Party (Mr. Broadbent) asked the Minister of Housing (Mr. Cosgrove) what he would do about current mortgage rates. The leader of the NDP wanted a policy that would apply to everyone. The Minister of Housing repeatedly stressed to him the importance of targeting, setting priorities and helping the most vulnerable.
The Minister of Housing is right. We should provide a sensitive program to help people genuinely in need and not give in to the temptation to provide a universal mortgage program. We heard from the hon. member for Laurier (Mr. Berger) today.


The Acting Speaker (Mr. Ethier):: Order, please. 1 regret to interrupt the hon. member, but his allotted time has expired. Nevertheless, he may continue if there is unanimous consent.


Some hon. Members:: Agreed.


Douglas Glenn Fisher: I just want to make a couple of quick points. We heard from the hon. member for Laurier today about some of the activities being carried out to help small businesses and to assist in job creation. Those are important points. They too target through programs like I LAP, or some of the efforts undertaken in the forestry industry and so on. Those are targeted, not universal projects. Today the country cannot afford vast, universal projects.
We are looking for the middle of the road. We are looking for long-term strength, self-discipline and creating confidence to show we are genuinely serious in our fights against inflation.
As the hon. member for Ottawa Centre said, we need both monetary and fiscal restraint. We need solid answers and selfdiscipline rather than the sort of magic we heard about earlier. Moving though those magic ideas are, they are no longer appropriate in a tough world where we cannot have everything, where we must make a list and set priorities.


Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, in the very few minutes remaining to me, I want to congratulate the new Parliamentary Secretary to the Minister of Finance (Mr. Fisher) on his excellent maiden speech in that capacity. He has a very difficult job. I certainly would not want the job of supporting the present Minister of Finance (Mr. MacEachen). In all likelihood he is going to end up burned out, washed up,

March 19, 1982
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just like the hon. member for Ottawa Centre (Mr. Evans) whom he so recently replaced.
To get back to the motion before us today, 1 have read it through with some interest. It is divided into two parts. The first part concerns itself with interest rates, and the second concerns itself with what is billed as a new employment option. I do not really know what that is supposed to mean. 1 suspect it is one of those terms such as "the just society," "made-in-Canada oil prices," "blended oil prices," or something like "the national energy policy."


Victor Fredrich (Vic) Althouse: "Short-term pain for long-term gain".


Dave Nickerson: It is a handy little catch phrase, and hon. members can go around the country giving speeches and saying, "What we want is a new employment option". However, they are not really obliged to say what that means. We all remember "the just society" and what happened to that. We remember "blended oil prices" and what that really meant. We remember the "made-in-Canada oil prices." What that really means is that we are moving up to 75 per cent of the world price. It is a catch phrase which does not mean anything. I hope that at some time our socialist friends will explain exactly what they mean and what the implications will be for Canadians. I doubt very much if they ever will-and I hope they do not-but in the very unlikely event the NDP is ever saddled with forming a government, Canadians will want to know in detail beforehand what members of the New Democratic Party mean. And Canadians do not want to get caught in a new "blended oil price".
Getting back to the main topic today, that of interest rates, in the past few days two differing views as to what should be done about interest rates have been explained to us. One view is that of the Liberal Party, and the second is that of the New Democratic Party. The New Democratic Party's suggestions have been criticized this afternoon by the former parliamentary secretary to the Minister of Finance as being naive. I think I would go even further than that and describe them as childish in their simplicity. The idea is that the Minister of Finance can pick up the telephone and tell the Governor of the Bank of Canada to reduce interest rates, and that will have solved the problem. Perhaps great speeches on this subject can be made in Saskatoon or Regina, but it is not really a viable option. We must consider the consequences.


Nelson Andrew Riis: What is your option?


Dave Nickerson: I am going to get around to what my option
is.


Nelson Andrew Riis: You have only seven minutes left.


Dave Nickerson: I will tell the hon. member what my option is, but let me first deal with the consequences of doing this, unless it is thought all the way through. Money will end up
being drained from the country. That will be the first consequence, unless something else can be done at the same time. Exchange controls would have to be imposed.


Nelson Andrew Riis: Is that the best you guys can do?


Dave Nickerson: The people of Canada would have to be told they cannot go to Disneyland for their holidays.


Nelson Andrew Riis: Offer a solution.


Dave Nickerson: There is no point in saying that if we are going to have exchange controls we can put the burden on the banks and big companies. That would not work either. It is the little guy who would be saddled with exchange controls, if we were to take the naive and simplistic view of the NDP.


Nelson Andrew Riis: Six minutes left.


Dave Nickerson: On the other hand we have the Liberal presentation. What the Liberals do is to throw up their hands in disgust and say there is nothing they can do about this, it is a worldwide problem, it is caused by the United States of America, it is in every other country of the world, there is nothing they can do about it and all they can do is keep our interest rates several percentage points higher than those of other countries in order to attract money into this country.
I do not think either of those views make a great deal of sense. It is true that Canada is tied into the international finance system and that we do not have a fantastic amount of leeway. We cannot have interest rates of 2.5 per cent or 3 per cent in this country when they are 15 per cent in the United States. We cannot go that far but, in my opinion, if we play our cards right there is a fair amount of leeway. We can have reduced rates in this country. We have seen them in Switzerland and Japan, and we could have them without recourse to exchange controls.


Nelson Andrew Riis: How?


Dave Nickerson: As one of the hon. members who spoke previously said, we probably cannot reduce interest rates significantly below the rate of inflation. That would be unfair to lenders, especially in view of the high tax rates on interest in effect today. However, we have to make Canada a good place to invest.


Nelson Andrew Riis: How do you do that?


Dave Nickerson: We have to make people want to put money into Canada, whether they be Canadian citizens or citizens of other countries.


Nelson Andrew Riis: That is your preference, isn't it, citizens of other countries?


Dave Nickerson: If people wanted to put money into Canada and if Canadians wanted to invest in their own country-and if they could do that with confidence, which they certainly cannot do right now-that would automatically bring interest rates down. It is a matter of supply and demand. If people are to put money in, there will have to be lower interest rates than
March 19, 1982

those in effect at present. People would accept such rates. Right now we have to accept excessively high interest rates in Canada in order to attract money which does not really want to come here but would really rather go some place else.


Nelson Andrew Riis: Do you support high interest rates?


Dave Nickerson: There are many, many Canadians who do not invest in their own country because of a lack of confidence. They lack confidence for good reason, and they prefer to send their money abroad. That is what many people are doing, and that is why we have to have high interest rates. We have to have them to keep money here.


Nelson Andrew Riis: That is what you advocate, right? You advocate high interest rates and the continuation of the policy?


Dave Nickerson: 1 wish the gentleman to my left would not keep making unnecessary remarks, because he knows full well-


Nelson Andrew Riis: Three minutes left.


Dave Nickerson: -that the policy of the Conservative Party is to maintain relatively low interest rates. He saw that when we were in office. The highest interest rate during our term was 14 per cent, and look what we have now.


Nelson Andrew Riis: You raised them four times in nine months.


Dave Nickerson: Another thing we can do to decrease interest rates for the farmer in this country who has to borrow, and for the home owner who has to renew his mortgage, is to decrease the amount of government borrowing.


John Leslie Evans: Hear, hear!


Dave Nickerson: How can the home owner compete for limited funds with the Government of Canada or the government of a province? He cannot. The Government of Canada
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obviously has an A-l credit rating. It is borrowing money at interest rates lower than those generally obtainable on the market, and a person who has to renew his mortgage obviously has to compete against the government and bid higher for the limited funds available. The soundness of government borrowing also has an influence on rates government has to pay and, as a consequence, the rates other people, businesses and home owners have to pay.
We can see that the majority of funds borrowed by governments in Canada-because it is not just the federal government which is to blame-are used for current account purposes. it is used for paying interest on existing debt. They are not being used for the purposes of building capital assets in the country, and when a lender sees that that is the use to which his funds are being put, he will have certain reservations about the ability of the borrower to pay back that money at some point in time. The risk factor is increased, so the rate of interest is increased, and the rate for those people who are in competition with the government for the borrowing of funds also increases.


The Acting Speaker (Mr. Ethier):: Order, please. It being 5 p.m., it is my duty to inform the House that pursuant to Standing Order 58(11) proceedings on the motion have expired.

Therefore, the House stands adjourned until Monday at two o'clock p.m., pursuant to Standing Order 2(1).
At 5 p.m. the House adjourned, without question put, pursuant to Standing Order.

Monday, March 22, 1982