1982-02-02

ROUTINE PROCEEDINGS


Mr. Bill Domm (Peterborough):: Madam Speaker, the Government of Canada has finally found over $600 million to loan to people in dire straits. The Export Development Corporation is entering into an agreement with the Soviet Union to help finance a huge sour gas megaproject at Astrakhan. The EDC is providing loan financing of $637.5 million at the unconscionable rate of 10 per cent. This means that the project will be interest subsidized, by Canadian people, to the amount of $198.5 million. Therefore 1 move, seconded by the hon. member for Portage-Marquette (Mr. Mayer):
That at a time when Amoco and Chevron have pulled out of our own Alsands project, and when our major NATO allies have levied trade sanctions against the Soviet Union for its military imperialism, this House recommends an immediate review of this deal with the Communists by the Standing Committee on Finance, Trade and Economic Affairs, and that the terms of the so-called "Friendship Treaty" signed in the early seventies between Canada and Russia be likewise reviewed.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


EXTERNAL AFFAIRS
Mr. Joe Reid (St. Catharines):: Madam Speaker, martial law in Poland is not bringing about the social and economic goals that were set out at the time of the imposition of martial law. On the contrary, Poland's economy remains precarious and such social and democratic progress as was made in 1980 and 1981 has now been annulled. I therefore move, seconded by the hon. member for Erie (Mr. Fretz):
That this House do now instruct the Prime Minister to set aside academic discussion of this issue and outrightly condemn martial law in Poland and work
with our NATO allies to impose meaningful sanctions against the present regime in Poland.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Don Blenkarn (Mississauga South):: Madam Speaker, the government's intention to tax, as an employee benefit, supplemental health plan contributions made by employers on behalf of employees is creating a great deal of concern both to employees and employers, in that regulations or detail as to how the benefit is to be taxed and charged as an employee tax deduction from weekly or monthly pay packets has not been estimated. I therefore move, seconded by the hon. member for Portage-Marquette (Mr. Mayer):
That the Minister of National Revenue forthwith issue a detailed bulletin indicating to employers how they are to deduct taxes from employees for this alleged benefit so that employees will be able to pay their income tax as income is earned, and not face owing the minister huge amounts of tax when they file their returns for 1982.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CROWN CORPORATIONS
Mr. Rod Murphy (Churchill):: Madam Speaker, I also rise under the provisions of Standing Order 43. Whereas the heads of nine Crown corporations, including Michael Warren of Canada Post, Claude Taylor of Air Canada, and other top executives have been granted retroactive wage increases by the federal cabinet of up to 12.3 per cent; whereas government officials have been condemning increases of a similar percentage for average Canadians and have been advocating wage controls for public service employees and encouraging similar

February 2, 1982
5.0.	43
action for private sector wages; and whereas people earning $100,000 plus can easily afford to go without such large increases while workers at the bottom of the scale are struggling to pay for the high cost of food, shelter and energy costs, I move, seconded by the hon. member for Beaches (Mr. Young):
That the government exercise fiscal responsibility and immediately withdraw the order which increases upper level salaries at the expense of the taxpayer.


Some hon. Members:: Hear, hear!


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PENSIONS
Mr. Dan McKenzie (Winnipeg-Assiniboine):: Madam Speaker, as a result of a week's questioning by the Conservative Party, the Minister of Veterans Affairs (Mr. Campbell) has finally cleared the air by issuing a press release which retracts the government's previous position on adding veterans pension benefits to calculable level income for tax purposes. I move, seconded by the hon. member for Grey-Simcoe (Mr. Mitges);
That this House now call on the Minister of Finance to issue immediately a statement outlining which pensions and other social assistance benefits will and will not be exempted from Resolution 53 of this tax-all budget.


Some hon. Members:: Hear, hear!


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AGRICULTURE
Mr. Charles Mayer (Portage-Marquette):: Madam Speaker, the Canadian beef industry is suffering extremely depressed prices which are causing many farmers to cut back or cease production altogether. Because of the lack of federal involvement all the major beef producing provinces, except Manitoba, are now involved in beef stabilization programs. I move, seconded by the hon. member for Medicine Hat (Mr. Hargrave):
That the Minister of Agriculture stop talking about farm leaders being gutless, and show that he is not totally useless himself by announcing a national
stabilization program for beef that involves the federal and provincial governments, as well as the producers, in order to prevent the further balkanization of the Canadian beef industry.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CROWN CORPORATIONS
Mr. Lome Greenaway (Cariboo-Chilcotin):: Madam Speaker, in an interview published yesterday in Le Devoir, the Minister of Finance (Mr. MacEachen) announced that he had made "heroic efforts" to hold down government spending and that it was now up to Canadian workers to moderate their pay demands. However, it was announced in this morning's Toronto Globe and Mail that the heads of ten Crown corporations as well as four top executives were receiving retroactive pay increases of up to 12.5 per cent. Among those receiving performance-based increases is Michael Warren of Canada Post, even though he has just had the job for five months. In light of this blatant hypocrisy, I move, seconded by the hon. member for Capilano (Mr. Huntington):
That the cabinet immediately revoke these increases as a concrete example of government restraint for Canadian workers.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


EXTERNAL AFFAIRS
Mr. Terry Sargeant (Selkirk-Interlake):: Madam Speaker, whereas in an interview with the Toronto-based newspaper Contrast, a member of this House stated that after a recent trip to South Africa, paid for by that country's racist government, he thought South Africa's blacks were still too primitive for self-rule, uncivilized, lacking in morals, having terrible problems with alcohol and absenteeism and unable to keep up with the whites intellectually; whereas he praised the remarkable job done by the South African government, and whereas he feels that the Canadian government should consider similar measures as those used by the South Africans, for Canadian Indians, I move, seconded by the hon. member for Nunatsiaq (Mr. Ittinuar):

February 2, 1982

That this House establish a scholarship fund for remedial courses in race relations, humanity, morals, Christianity and native studies for the member for Winnipeg-Assiniboine.


NATIONAL ENERGY PROGRAM
Mr. Thomas Siddon (Richmond-South Delta):: Madam Speaker, given that the Minister of Energy, Mines and Resources (Mr. Lalonde) is now bragging about his attempts to woo investors from Kuwait, Saudi Arabia and France, to invest their oil profits in Canada in order, quoting the minister, "to create jobs and perk up the economy", yet for many months he has encouraged and applauded the flight of investment capital out of Canada, as in the decision of French-owned Elf-Aquitaine to sell their entire Canadian holdings to the Canada Development Corporation because, in their words, "the climate for investment is better in the United States than in Canada", I move, seconded by the hon. member for Port-age-Marquette (Mr. Mayer):
That the Minister of Energy, Mines and Resources be banned from this House for his blatant hypocrisy and scurrilous deceit of the Canadian people by advocating Canadian ownership out of one side of his mouth and foreign investment by France and OPEC nations out of the opposite side.


Madam Speaker:: Is there unanimous consent for this motion?
Oral Questions SEARCH AND RESCUE


SUGGESTED STATIONING OF SUPER TUG ON EAST COAST-MOTION UNDER S.O. 43
Mr. Howard Crosby (Halifax West):: Madam Speaker, I rise under Standing Order 43. Recent marine accidents on the Atlantic coast of Canada underline the need for a special tugboat capable of taking in tow ships like the Euro Princess, supertankers, and other very large vessels, to prevent marine disasters. Accordingly I move, seconded by the hon. member for Fundy-Royal (Mr. Corbett):
That this House direct the Minister of Transport to make available on the Canadian east coast a super tug that can rescue vessels in distress to prevent the loss of human life and environmental damage.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD

['-who was not prepared to take a position on the matter at the time because he was only recently appointed. All those present, including Mr. Romanow, asked me to take under consideration a number of their concerns. Obviously, Madam Speaker, if the attorneys general of the provinces, who are responsible for the administration of justice within their provinces, ask us to take into account a number of concerns they have with our bill, any responsible government would wish to do so.', 'February 2, 1982\nOrder Paper Questions']
Some hon. Members:: Agreed.


Some hon. Members:: No.



Mr. Ian Waddell (Vancouver-Kingsway):: Madam Speaker, I rise under Standing Order 43. Whereas Amoco and Chevron, two of the seven partners, have apparently withdrawn from the Alsands megaproject, and Shell, the main partner, is still unsatisfied with the proposed rate of return, I move, seconded by the hon. member for Humboldt-Lake Centre (Mr. Althouse):
That the Government of Canada not panic into a bad deal, that it should refuse to provide loan guarantees and a 20 per cent rate of return to private companies, and that instead Ottawa and the government of Alberta should together operate the project as a public utility. We do have cheaper alternatives. Therefore, we can either do it ourselves, thus ensuring that all the benefits go to the people of Canada, or we can pursue the alternatives, but we should not be blackmailed.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FUTURE OF ALSANDS PROJECT
Mr. Harvie Andre (Calgary Centre):: Madam Speaker, my question is for the Minister of Energy, Mines and Resources. It arises out of the announcement yesterday that Amoco and Chevron are withdrawing from the Alsands consortium. In April of 1980 this project was all ready to go, needing only government approval. Some 20 months later, after a national energy policy promising self-sufficiency by 1990, this project which is so vital to self-sufficiency is falling apart. Yet, according to press reports, the minister is neither surprised nor concerned.
Will the minister explain to the House whether this withdrawal of Amoco and Chevron is part of some grand plan, and can he explain this plan to the House? If not, could he tell the House what he is doing to get this project back on track and under way as soon as possible?


Hon. Marc Lalonde (Minister of Energy, Mines and Resources):: Madam Speaker, in the last few weeks there have been discussions between the government of Alberta, the Government of Canada, and the partners in the Alsands project. The two governments have put forward an offer which we find fair and sufficient. However, it was recognized at the time of those discussions that obviously both governments could not necessarily make an offer that would meet the demands of the weakest partner in such a consortium.
We were trying to put forward an offer that would be satisfactory for the whole project. There is a limit to how much

February 2, 1982
Oral Questions
the Canadian people should be asked to pay for this particular project. In that sense we are not surprised that those two companies have decided to withdraw from the consortium, and we are confident that the consortium will proceed, either through enlarged participation by the existing partners, or through new partners joining the consortium.
These discussions will carry on. It is my understanding that the consortium is supposed to meet shortly and review the situation among the remaining partners. We will see what they decide.


REQUEST FOR MINISTERIAL ASSURANCE
Harvie Andre: Madam Speaker, this project is not only vital to self-sufficiency, it is absolutely vital to Canada's economic development. Indeed, the Economic Council of Canada described the energy megaprojects as the only good thing the Canadian economy has going for it in the 1980s.
This two-year delay has already cost Canada untold billions of dollars and untold thousands of jobs. Sponsors indicate that unless an affirmative decision to go ahead is given by April they will have lost another construction season, another full year's delay.
In the interests of the billions of dollars that are being lost, and in the interests of the thousands of jobs which could be created by this project, will the Minister not commit to the House his assurance that this project will get under way as soon as possible so that another year is not lost while people walk the unemployment lines?


Marc Lalonde: Madam Speaker, both the government of Alberta and the Government of Canada have agreed on a proposal that we found fair.


Mr. Crosbie:: It is not good enough.


Marc Lalonde: It is up to the companies concerned to react, and we are awaiting their reaction at the present time. There is nothing the two governments can do now except to see what the private companies concerned will do.
Once again, I am sure that the hon. member would not be recommending a policy which would imply giving into any demand by those companies. There is a limit to what the taxpayers of Canada will be asked to contribute. It is up to the Government of Canada and the government of Alberta to protect the consumer and the Canadian people.


Mr. Clark:: Some protection.


NECESSITY FOR COMMITMENT
Harvie Andre: Madam Speaker, who in the government is concerned about the thousands of Canadians who are unemployed because this project is delayed and held up?


Some hon. Members:: Hear, hear!


Harvie Andre: Who in the government is concerned about the billions of dollars being lost? It is all well and good for the minister to stand in his place and say that he has to assure the people of Canada that he is doing the best job possible. The fact of the matter is that the people putting up the money are withdrawing, and this is costing the Canadian economy in general, and manufacturing and construction in particular, a fortune. It is affecting our balance of payments and interest rates.
Will the minister not make a commitment to the House to ensure that this vital project goes ahead? If he does not, we must start examining ways in which we will be able to control the social unrest in this country which will have a million unemployed throughout the entire 1980s?


Marc Lalonde: Madam Speaker, I would repeat that for several months already it had been foreseen that some members of the consortium would not proceed with the project.


John Carnell Crosbie: Why did you not act?


Marc Lalonde: There is a limit to what we will ask the taxpayers of Canada to contribute and the governments of Alberta and Canada have taken a common position in this. We are both confident that the project will proceed. The consortium is to meet again in the next few weeks, and we will see what is the conclusion of those discussions.
As far as we are concerned, we are confident that the project will proceed on the basis of the generous offer which has been made by the two governments. However, there is a limit to what any particular company should be asking from the Canadian taxpayer.


GOVERNMENT TREATMENT OF INVESTORS
Mr. Jack Shields (Athabasca):: Madam Speaker, my question is directed to the same minister. I suggest that there are also limits to what a government can do to an investing company in Canada.
The minister must surely realize that one of the reasons Amoco and Chevron have withdrawn from the Alsands consortium is the treatment by this government of Syncrude, Suncor, and the oil industry in general, with its national energy policy, broken promises, and retroactivity. He must realize that investor confidence in Canada is at an all-time low.
What assurance has the minister given to the Arabs and the French that this government can be trusted not to treat their investment in Canada any differently from the way it has treated other investment in the energy sector in Canada?


Marc Lalonde: Madam Speaker, as far as Suncor is concerned, it has been extremely happy with arrangements made and the treatment it has received under the National Energy Program

February 2, 1982
and the agreement we arrived at with the government of Alberta last year. I refer my hon. friend to the record of statements made by company officials at the time of the agreement. They were quite happy with the arrangement.
As far as Syncrude is concerned, I am also happy to inform my hon. friend that Syncrude has indicated that it is satisfied with the arrangement contained in the Canada-Alberta agreement in relation to financing and the price for its particular product. Therefore, I fail to see upon what my hon. friend is basing his question when he refers to Suncor or Syncrude. Both those companies are quite happy with their investments in this country. They feel they have made very good investments, and they are proceeding with their projects, so I think the introduction to the hon. member's question is completely without foundation.


POSSIBILITY OF INVESTMENT BY MIDDLE EAST AND FRENCH SOURCES
Jack Wendele Shields: Yes, Madam Speaker, Syncrude is so happy with its agreement and with the way it is being treated by this government that it has cancelled the second train of its project.
Is the reason the minister seems so unconcerned about the withdrawal of Chevron and Amoco from the Alsands consortium that he has commitments now in his pocket which he brought back from the Middle East? Are the Arabs now going to invest in the development of the oil sands? Are the French going to develop the oil sands? If so, can the minister explain to the House why French and Middle East investment in Canada's energy security is better or more desirable than American investment in our energy sector?


Marc Lalonde: Madam Speaker, there are clear rules in this country in relation to foreign investment, particularly in the energy field. We have said that between now and the end of this decade we want the oil and gas industry to be at least 50 per cent Canadian owned. We have taken clear steps in that direction. In the last year the result has been a reduction of foreign investment by 6 per cent. However, that being said, there is still room for foreign investment in this country from whatever country is interested in investing here, whether it be the United States, European countries, or other countries, but they will be subject to the rules decided by the people of Canada and the Government of Canada in the interests of the people of Canada.


Some hon. Members:: Hear, hear!


Marc Lalonde: Whether money comes from France, the United States, an OPEC nation or any other nation, provided the investor abides by the rules established by the government of this country for the protection of Canadians and to ensure that the industry will be controlled by Canadians, that investment will be welcome.
Oral Questions EXTERNAL AFFAIRS


EL SALVADOR-EFFECT OF TERRORISM ON POSSIBILITY OF HOLDING DEMOCRATIC ELECTIONS
Mr. Edward Broadbent (Oshawa):: Madam Speaker, my question is directed to the Secretary of State for External Affairs and concerns the government's stated commitment to the view that democratic elections in El Salvador are now possible. The question arises from news at the weekend that government troops went into a suburb of San Salvador and murdered some 20 youths as a demonstration of terrorist tactics. Amongst the youths were a number of pre-adolescents.
Considering this most recent barbaric act, and considering that all-party delegations from Canada's parliament that have looked into the situation do not believe that democratic elections are possible in this circumstance, is the minister now prepared to change government policy and acknowledge that terrorism is no foundation for democratic elections and that peaceful negotiations, leading to the abolition of violence, are an essential condition at this time, before elections?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, these were terrible events that took place over the weekend in El Salvador. We condemn them, as we have condemned all such events. We have asked the government of El Salvador for an explanation. As the hon. member knows, there was some dispute about the facts. We would like to ascertain who is responsible. The events speak for themselves; they are too horrible to contemplate.
With respect to the question of elections in El Salvador, if we are speaking in the ideal, and we certainly would prefer to do so, as would the hon. member, we would want to see much better conditions for elections in El Salvador. In fact, through our initiative we tried to change the conditions that prevail in that country. We were turned down by the rebel forces very clearly in their response, and somewhat more ambiguously by the government which said the rebels would not accept it so it would not work. In any event, we did not succeed in changing the course of events in that country. We are seriously considering whether, in the circumstances, we should in any way participate in the election campaign in that country through observers or in any other fashion.


SUPPLYING OF ARMS BY THE UNITED STATES
John Edward Broadbent: Madam Speaker, the minister knows and certainly the Presidents of Mexico and France, and most other western European nations which have involved themselves know, that those he describes as rebels are in fact prepared to have a negotiated settlement. It is the junta that is turning down negotiations, not the so-called rebel forces.
I should like to ask a related question. Yesterday we learned that the United States government has made a decision to increase its military involvement in El Salvador rather signifi-

February 2, 1982
Oral Questions
cantly. This can have no other effect than to further prop up the junta which was responsible for the murders on the weekend. Just the other day I received a copy of a letter from the Prime Minister in which he said, and 1 quote:
On the supply of arms to Guatemala and El Salvador . .. we have frequently expressed our opposition and have done so vigorously . . .
On behalf of the vast majority of Canadians who want to see a peaceful solution to the terrible situation in El Salvador, will the minister now implement what the prime minister committed himself to, and condemn the recent increase in the supply of arms by the United States to El Salvador?


Mark R. MacGuigan: Madam Speaker, the hon. member invoked the positions of Mexico and France. I am sure he knows that those positions were very strongly rejected by the Organization of American States by a very heavy vote. We prefer to be guided in our foreign policy by the kind of information we receive from the countries and regions such as Venezuela, which I recently visited.
The hon. member knows that while he claims the rebels may want to negotiate a settlement, the one thing they feel they cannot accept is an election. We wonder why that should be the case, Madam Speaker.
In any event, to come to the heart of the hon. member's question, we will certainly indicate again to the United States our opposition to the supply of arms from any source to either side in El Salvador.


John Carnell Crosbie: Don't blink when you are doing it.


EXTERNAL AFFAIRS
John Carnell Crosbie: Madam Speaker, my question is also directed to the Secretary of State for External Affairs. The Prime Minister appointed Miss McDou-gall to do a study of our foreign service because of the dissatisfaction prevalent in it. Last December her report was made public. She found a crisis of identity, of confidence, in the ranks of the foreign service that required positive counteraction. She found a profound malaise and a communication gap between posts and headquarters, and a failure of management.
To date neither the Prime Minister nor the Secretary of State for External Affairs have made any statement on the report, even when the Prime Minister announced the reorganization of January 12. What is the response of the government to these startling findings? What action will be taken to carry out the recommendations? Will the foreign service be restored to proper management? Will its personnel be given the conditions under which they can perform to their capabilities? This
is the service for which the minister is responsible. What is he doing about this devastating indictment of the management of External Affairs?


Mark R. MacGuigan: Madam Speaker, the McDougall report was commissioned by the Prime Minister. It will be the Prime Minister who makes any statements in direct response to it.


Some hon. Members:: Oh, oh!


Mark R. MacGuigan: I can tell the hon. member that the large-scale reorganization announced recently which affects my department is indeed a partial response to those recommendations, and that there is an interdepartmental committee which is working very actively to deal with all details of the report. But it is important to recognize, as I stated in the House before, that Miss McDougall, in presenting her report, said that it was in effect a minority report-it detailed the bad and not the good-and that over-all morale in the department was high and efficiency was very great.


Miss MacDonald:: What do you mean by "a minority report"?


REQUEST THAT REPORT BE REFERRED TO STANDING COMMITTEE
John Carnell Crosbie: Madam Speaker, the Prime Minister said that there was dissatisfaction in the ranks of the foreign service, and Miss McDougall confirmed it. The minister's department is reported to suffer from a failure of management and these people are characterized as demoralized, mistrustful and frustrated. This is the minister's department, not the Prime Minister's department.
The minister is responsible day by day for this department. When will the minister act to change these findings? Will he agree that this report be referred to the House of Commons Standing Committee on External Affairs and National Defence as Miss McDougall recommended, so that we can monitor his progress in carrying out the recommendations? Does he agree with that? Will he give our External Affairs people a chance to perform as they have the ability to perform, given proper leadership and management? When will he do that? When will he take this indictment seriously? Never mind the Prime Minister; if he is too busy to do anything, the minister must do it.


Mark R. MacGuigan: Madam Speaker, perhaps I may help the hon. member with a simple distinction. The Prime Minister is responsible for the report. I am responsible for the department. I am very happy to answer any questions on the department, but as to referring the report to a parliamentary committee, that would be for the Prime Minister to decide.
The hon. member knows that there are many chances in a parliamentary committee to ask questions about the report, especially about the morale of the department. Nobody denies
February 2, 1982

that there are some problems in the morale of the foreign service. As the hon. member said, that was the point of the report, but the author of the report said that despite the fact there are problems, the over-all morale was good.


EXTERNAL AFFAIRS
Mr. Bob Ogle (Saskatoon East):: Madam Speaker, my question is supplementary to the one asked by the hon. member for Oshawa; and it is also directed to the Secretary of State for External Affairs. I am frustrated with the government's position on the El Salvador question. Last week members of the House visited refugee camps in Costa Rica, and our committee recommendations were given in December.


Some hon. Members:: Question! Question!


Robert Joseph Ogle: Our recommendations given in December were confirmed by our experience of the last two weeks in that part of the world. I plead with the minister. Will he seriously look at the recommendations which we gave in December and reconsider the Canadian position on that seriously troubled part of the world?


Mark R. MacGuigan: Madam Speaker, I hope the hon. member knows that we take very seriously his views and the views of other Members of Parliament. We do not have to reconsider our policy because it has been to keep the situation under constant review. We are not pleased about the situation in El Salvador. We are not pleased about the prospects of having the kind of election we would like to see happen. Because of that we are considering whether or not we should give the election which will take place there the moral support we might give by participating in it. If the hon. member was in Latin America last week with the committee, he knows that the foreign minister of the neighbouring democracy, Costa Rica, urged the committee to give all possible support to the election in El Salvador. He is in a pretty good position to give advice to the world as well.



Mr. Donald W. Munro (Esquimalt-Saanich):: Madam Speaker, my question is supplementary to the one asked by the hon. member for St. John's West, and it is also directed to the Secretary of State for External Affairs. I suppose we can assume that the minister has read the McDougall report, in particular Recommendation No. 44. For the benefit of the House, it reads as follows:
Oral Questions
Concrete steps be taken to correct the widely held view that those in positions of power consider the activities and the product of the foreign service as largely irrelevant to federal government or Canadian objectives.
I wonder whether the minister is aware of that. Does he consider that the steps announced by the Prime Minister on January 12 are, in effect, in the Prime Minister's mind or in the minister's mind, an answer to that particular criticism?


Mark R. MacGuigan: Madam Speaker, I assure the hon. member that indeed that kind of consideration was very much in the government's mind in the reorganization which took place. If there was any doubt about the relevance of External Affairs, it was certainly answered by the change, which had at least two effects. Making External Affairs in its new broad sense an economic department as well as a political department in a direct way, gives it a larger role in the Canadian scene and also enables it to represent a wider range of Canadian interests abroad. Of course the people who represent us in the department are the first to understand the significance of the change.


ROLEOF MINISTER
Donald W. Munro: Madam Speaker, the minister will recall that on January 12 the Prime Minister said that he was creating a triumvirate of equals- himself, the minister who was formerly responsible for DREE, and the minister responsible for international trade-this trice-phalous monster. I am not sure whether the Secretary of State for External Affairs understands what role he plays in that hierarchy. Could the minister expand on his particular role in that grouping? The Prime Minister said that he asked the former minister for DREE "specifically to take on as an assignment the development of a strategy of our relations with foreign countries." What role does the Secretary of State for External Affairs play in this particular hierarchy?


Mark R. MacGuigan: Madam Speaker, the hon. member should read the whole of what the Prime Minister said or, if he has read it, he should quote the whole of it. I am very pleased to be associated with two outstanding colleagues in this responsibility.


John Carnell Crosbie: You need them.


Mark R. MacGuigan: I assure the hon. member and the House that the concerns of the Minister of State for External Relations are primarily in the area of francophone, cultural and humanitarian affairs. If the hon. member will read and quote the whole of what the Prime Minister said, I think he will find the answer to his own question.


Mr. Epp:: What do you do?


Mr. La Salle:: Nothing.


Mark R. MacGuigan: I have the same role that I had previously, and it embraces the department.

February 2, 1982
Oral Questions


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


AGRICULTURE
Mr. Arnold Malone (Crowfoot):: Madam Speaker, I welcome the Minister of Agriculture back from Crowfoot; I hope he appreciates his task. My question directed to him is with respect to a speech he made in Peterborough last Friday wherein he was quoted as saying that "the world's need for food will make Canada a world power by the turn of the century." In view of the fact that we presently import 40 per cent of our winter food dollar, that other than grain Canada is a net importer of food, and that Canada is losing 200,000 acres per decade of good, prime agricultural land, how can the minister, who has taken no initiative in terms of the preservation of agricultural farmland in Canada-and all our land could be gone by the year 2014-make a statement that we will be a world power in food, when the only source of food other than water could be destroyed early in the next century?


Hon. E. F. Whelan (Minister of Agriculture):: Madam Speaker, 1 cannot understand how one can be so pessimistic after coming from the first ministers' meeting and listening to the premier of his province being so optimistic about the future of the great province of Alberta.
Land is a resource that belongs to the provinces. They have control of it. We know through our research and technology that land can be preserved and conserved in a manner whereby the productivity of this land can increase three quarters by the year 2000. It must do that. I would suggest to the hon. member that, if he wants to do something, he could go to the station at Lacombe or the substation at Vegreville; he could go to Lethbridge or to Swift Current and talk to some of the people there who are also concerned about the land. We have the technology and the scientific knowledge needed to make the land productive and stay productive as long as we want it to do so.


Mr. Nielsen:: The land is strong.


Eugene Whelan: We are optimistic. I do not think there is another country in the world that has the potential for agricultural development that we have here in Canada.


Some hon. Members:: Hear, hear!


LAND CLASSIFICATION MAPPING SYSTEM
Arnold John Malone: Madam Speaker, that answer would turn the minister's hat green. I would like to
point out to the minister that the Premier of Alberta is optimistic because he is a Conservative.


Some hon. Members:: Hear, hear!


Arnold John Malone: Bearing in mind that we are presently losing between 30 and 40 acres of agricultural land in Ontario per hour, and over the last few years the province of Alberta has lost 60,000 acres per year, why is it that for 20 years the minister's department has not come forward with a classification mapping system? The minister's department has embarked on it. Without that mapping system a land-use policy system cannot exist, and the government is dilly-dallying and toying around. That classification is not ready, and it is essential and incumbent if we are to have a land utilization policy across the nation. When will the system be ready?


Eugene Whelan: Madam Speaker, the hon. member talks about the land and how much is being lost. Is the hon. member recommending that the land, as a resource, be turned over to the federal authorities so we can manage it?


Some hon. Members:: No.


Eugene Whelan: Is that what he is suggesting?


Some hon. Members:: No.


Eugene Whelan: The land is under provincial government management right now, and the hon. member should know that. When the hon. member talks about land use and how much land we are losing through industrial and urban encroachment, that is strictly a provincial responsibility. It is not under federal authority to tell the provinces what to do with the land and what they cannot do. We can recommend. We have done that.
The hon. member talked about the land-use maps and the maps that we have for soils in Canada. Our maps are one of the most complete sets of maps there are. I would ask the hon. member to compare ours with any other nation in the world.
The agri-food policy that we have presented for the next 20 years, to feed six billion people by the year 2000, shows that there is land that we can work and develop with the help of our researchers. In northern Ontario and Quebec there are 24 million acres that will provide forage for livestock, and vegetable oil seed such as canola seeds that will provide protein for Canadians and many other millions of people all over the world.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!
February 2, 1982


NUCLEAR ENERGY
Mr. Mark Rose (Mission-Port Moody):: Madam Speaker, my question is for the Minister of Energy, Mines and Resources. According to recent reports in La Presse and The Globe and Mail, the cabinet's economic development committee has been the green light to yet another massive bailout to Canada's nuclear industry. This bailout involves massive financing subsidies for potential foreign buyers. It will also involve a subsidy program here in Canada designed to entice the provinces into building reactors to export electricity to the United States.
The February 1 deadline for bids on the Mexican reactor deal has now passed, and whatever our offer to the Mexicans happens to be, it must have been tendered. At a time when Canadians are being asked to spend 20 per cent on mortgages, does our sales pitch include concessional financing at or near 7.5 per cent to 8 per cent as our competitors are bidding on the same reactor deal?
Flon. Marc Lalonde (Minister of Energy, Mines and Resources): Madam Speaker, first of all I would like to assure the hon. member that the figures he is mentioning at best are very much hypothetical. We do not know what our competitors are proposing as concessional financing. We do not intend to tell our competitors what our offer is. This is a competition with several other countries in order to get the contract that will create several tens of thousands of jobs and, man-years for Canadians, over the next few years. This is a very important contract. It means jobs for Canadians. We intend to try to meet the competition. The exact financing arrangements will be known if and when Canada gets the contract in question.
As far as the particular concessional financing is concerned, I remind my hon. friend that there is a general rule for exports from Canada of all kinds of products ranging from automobiles to locomotives and various other kinds of manufactured products. In order to ensure that Canadians are going to sell goods abroad and create jobs in this country, we have to make arrangements to meet the competition. There is nothing special with Candu reactors compared to any other product that we are selling abroad. Our job is to sell Canadian goods abroad and we are going to take the means to do it.


JUSTIFICATION FOR DOMESTIC POLICY
Mark Willson Rose: Madam Speaker, it is very interesting that every time a question relating to the nuclear industry is raised it is always shrouded in secrecy. The public has a right to know about the billions we have already spent and the billions we intend to give away to foreign competitors on what I call the nuclear-electrical lunacy in which we are involved.


Some hon. Members:: Hear, hear!


Mark Willson Rose: I think it is about time people did know about those things. As far as job creation is concerned, the minister
Oral Questions
knows that it takes $22,000 to create a job in manufacturing. It takes about $173,000, or eight times that much to create one job in the nuclear field or in the electrical utilities area in Canada. Why are we not moving in that direction?
Finally, how can the minister justify a policy to locate Candu reactors throughout Canada with all their attendent risks as well as all of the unsolved problems in the matter of waste disposal, and subsidize the building of these reactors so that Canada takes all the risks with respect to possible accidents and the U.S. gets all the power benefits?
Hon. Marc Lalonde (Minister of Energy, Mines and
Resources): Madam Speaker, 1 am afraid the lunacy is in the hon. member's mind.


Some hon. Members:: Oh, oh!


John Carnell Crosbie: Mad Marc.


Marc Lalonde: Whether it is in the sale of cars, the sale of locomotives, the sale of Candu reactors or the sale of any other product manufactured in this country, we are engaged in tough competition on world markets with other countries. Before bids are opened and contracts awarded, it would be stupid to announce what our proposal is. This is the infancy of the art. For my hon. friend to make such statements that this matter is shrouded in secrecy is a lot of nonsense. It is standard business practice around the world, and I suggest the hon. member go back to square one.


HAZARDOUS SUBSTANCES
Mr. Jean-Guy Dubois (Lotbiniere):: Madam Speaker, my question is directed to the Minister of Consumer and Corporate Affairs and concerns urea formaldehyde foam. In view of the program announced by the federal government before the Christmas holidays, I should like to know whether the minister has continued his discussions with the provinces, and more specifically with Quebec, regarding this problem and also whether discussions have continued with the manufacturers. Regarding the extension of the time limit for UFFI victims who want to take legal action against the government or other agencies, has the Government of Canada taken the position that it will extend the time limit for any legal action?
Hon. Andre Ouellet (Minister of Consumer and Corporate
Affairs): Madam Speaker, regarding the first part of the hon. member's question, I am very pleased to be able to confirm that our discussions with the provinces and with the industry itself are continuing. Unfortunately, results are not as good as we would have wished. As for the time limit, I can inform the hon. member that, first of all, any payment made to the owner

February 2, 1982
Oral Questions
of a home with UFFI will not deprive that person of legal recourse against the governments in question, and second, as far as the time limit is concerned, I can assure him that the legislation to be passed by the Quebec National Assembly will have the same consequences for both the Canadian and the Quebec governments.


AIRPORTS
Roch La Salle: Madam Speaker, my question is directed to the Minister of Transport. For a long time people have been talking about Mirabel, its economic situation and the need for a study in order to transfer certain services from Dorval to Mirabel, and it seems that last week, 33 local mayors met to make a clear recommendation to the minister regarding the transfer of commercial flights from Dorval to Mirabel. After all this time and all these studies, can the minister tell us what answer he is going to give the mayors, after consultation?


Hon. Jean-Luc Pepin (Minister of Transport):: Madam Speaker, first I should like to point out that 33 mayors may be in favour of the action described but there are thirty-three on the other side who are against. This is one of those very local North-South conflicts.
In any case, Madam Speaker, I can inform the hon. member that we are past the study stage, since I am now busy trying to get a consensus among some of my colleagues, and I intend to go before cabinet quite soon in order to obtain an opinion from my colleagues, which will then be discussed with the parties concerned. That is as far as we are right now. 1 shall try to get this consensus as quickly as possible.


REQUEST FOR DECISION ON NORDAIR CASE
Roch La Salle: Madam Speaker, I have a supplementary question for the minister. Since the first group of 33 mayors indicated that they wanted to meet him, could the minister tell us whether he intends to invite the 33 others, and so organize a meeting of all the mayors concerned by this development-I suppose the minister would like to see Mirabel more productive than it is now-and, with leave, I would also ask the minister-this will not take much longer-whether he has forgotten or lost the Nordair file?


Jean-Luc Pepin: Madam Speaker, I shall attempt to explain to the hon. member what I was trying to say. I am now trying to get a consensus among the members of this side of the House, and more specifically, the cabinet members. I feel this is important if 1 am subsequently to have discussions with the parties concerned. If I do so on the basis of my own personal opinions, I think it would be a waste of time, since I will not necessarily be able to sell my own position to my colleagues. Regarding Nordair, and 1 have said this often enough, this summer we had an offer that was accepted by the majority of the people who are directly concerned, and at the last minute, the government of Quebec decided to intervene and put up $15 million in order to influence the deal. In other words, we had reached an agreement that was economically sound but was not acceptable politically to the government of Quebec.


PENSIONS
A. Daniel McKenzie: Madame Speaker, my question is for the Minister of National Health and Welfare. Last night the Minister of Veterans Affairs stated veterans pensions are to be exempt from Resolution 53 of the budget which makes certain pensions taxable. Can the minister inform the House if she has been as successful as the Minister of Veterans Affairs in having pensions from her department exempted?


Hon. Monique Begin (Minister of National Health and Welfare):: Madam Speaker, perhaps the hon. member could be more explicit. 1 am sorry but I quite fail to understand what he means.


REQUEST THAT INFORMATION BE PROVIDED
A. Daniel McKenzie: Madam
Speaker, that answer indicates we have a very serious problem. The Minister of Veterans Affairs has informed himself on which pensions will be affected by Resolution 53. Certain pensions payable by her department will now be taxable under this resolution. If the minister is not familiar with this, will she please find out and advise the House which pensions from her department are now going to be taxable?


Monique Bégin: Yes, Madam Speaker.
February 2, 1982


CONSTRUCTION OF PETROSAR VACUUM DISTILLATION UNIT
Hon. Bud Cullen (Sarnia-Lambton):: Madam Speaker, my question is for the Minister of Energy, Mines and Resources. Given the announcement this morning by Petrosar that it will attempt to meet both the federal and Alberta governments' requirements to upgrade residual fuel oil by construction of a vacuum distillation unit only, and not the larger units initially indicated, is the minister satisfied that Petrosar can meet their commitments with this unit and, if not, will he agree to meet personally with Petrosar and Polysar officials to help with the ultimate solution?
Hon. Marc Lalonde (Minister of Energy, Mines and
Resources): Madam Speaker, extensive discussions took place over a year ago with Petrosar in order to arrive at an arrangement which would very substantially reduce the production of heavy oil at their refinery. They gave a commitment at that time to take certain steps to achieve this objective. My officials are now in touch with them in order to check whether the new approach they are proposing will enable them to meet their commitments.
I want to assure my hon. friend that we are following this case very, very carefully and, if necessary, I will meet with Petrosar officials, but in the meantime consultations are currently taking place and we want to make sure Petrosar will live up to its commitments.
Oral Questions
concerns they raised. Following this expression of concern, there was an initial meeting of the officials of the Privy Council, who are helping me with the formulation and preparation of this bill, with officials of the provinces.
Another conference of provincial attorneys general is scheduled shortly-I believe for February 8 and 9 or 9 and 10-and if I understood correctly, a report on the entire question of freedom of information will be made at that conference. Following the conference, I shall be reporting to my cabinet colleagues on the position taken by the provinces, and the decision will be made at that time.


OBJECTIONS BY PROVINCIAL ATTORNEYS GENERAL
Mr. Svend J. Robinson (Burnaby):: Madam Speaker, the minister knows very well that the objections raised by some, not all, of the provincial attorneys general, were first raised over a year ago. They were repeated in a letter signed by Roy McMurtry in June, and again at an attorneys general conference in October.
Why is the minister now all of a sudden deciding that these objections are serious enough possibly to kill the bill? Is it not a fact that this is just a phony excuse to keep the doors of government shut and effectively kill this legislation in this session?


FREEDOM OF INFORMATION
Svend Johannes Robinson: Madam Speaker, my question is for the Minister of Communications responsible for freedom of information legislation. Several days ago he was quoted as saying it was no longer a government priority that this long overdue legislation, promised in the Speech from the Throne and essential in a democratic society, be passed in this session of Parliament.
In view of the fact that the Justice and Legal Affairs Committee had nearly completed clause by clause study of the bill when the minister refused to appear further, will he now assure the House that this important bill, substantially amended after strong criticism by many witnesses, will indeed come back to that committee before the end of the current session, or will he allow the bureaucrats to triumph and let the bill die?
[ Translation]


Hon. Francis Fox (Minister of Communications):: The hon. member knows that I cannot answer his question with a yes or no at this time.
At the unanimous request of the attorneys general of the provinces, Madam Speaker, we have decided to consider the


Francis Fox: Madam Speaker, I would just like to remind the hon. member that it is the Attorney General of Saskatchewan, Mr. Romanow, who is of the same political persuasion as the hon. member, who wrote to me on behalf of all the attorneys general of the provinces bringing their concerns to my attention. Following that letter, at their request, I appeared in front of a meeting of the provincial attorneys general, and all those present-


Svend Johannes Robinson: Not Manitoba.


Francis Fox: -with the sole exception of the Attorney General of Manitoba-


Ian Gardiner Waddell: Why not?


Francis Fox: -who was not prepared to take a position on the matter at the time because he was only recently appointed. All those present, including Mr. Romanow, asked me to take under consideration a number of their concerns. Obviously, Madam Speaker, if the attorneys general of the provinces, who are responsible for the administration of justice within their provinces, ask us to take into account a number of concerns they have with our bill, any responsible government would wish to do so.

February 2, 1982
Order Paper Questions



ROUTINE PROCEEDINGS


[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. David Smith (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 2,375, 3,049, 3,053, 3,489, 3,545 and 3,663.


Mr. Cossitt: 1.	Is the Core funding program for native associations presently under evaluation and, if so, were a number of consulting firms asked to bid on an evaluation study?
2.	Did one consulting firm submit a proposal considered the best by four independent assessors and, if so, was the amount of the bid $95,000 and, if not, what was the amount?
3.	Did the Department of the Secretary of State subsequently receive pressure to alter the terms of reference after the bids were received and to award the contract to another firm in the amount of approximately $139,000?
4.	Were the terms of reference altered and, if so (a) for what reason were competitive bids called (b) were political considerations involved and, if so, what were they (c) what was the justification for a larger expenditure of taxpayer funds than may have been necessary?
5.	Were there irregularities in the bidding process and, if so, were they made known to the Treasury Board or to responsible financial comptrollers in the department and, if not, for what reason?
6.	(a) Was a $139,000 bid received from Hickling-Johnson (b) did the government give final approval to the bid and, if not, will the matter be investigated before it proceeds further?
7.	What was the name and address of each bidder and the amount involved?


Hon. Gerald Regan (Secretary of State):: 1. Yes. Six invitations to bid on an evaluation study were issued.
2.	One of the four valid tenders received was recommended as most cost effective during a first review carried out by a team of three independent assessors. See reply to parts 6 and 7.
3.	No. An advisory committee to the evaluation study, which included representatives from the three national native organizations, recommended that non-Core funded associations should also be part of the study sample. Although the tender call had not included non-Core funded associations the possibility of an expanded study sample was discussed at the bidders' conference. One Firm included non-Core funded associations in their proposed sample. See reply to parts 6 and 7.
4.	No. (a), (b) and (c) Not applicable.
5.	There were no irregularities in the bidding process. The contractor selection process yielded two incompatible recommendations. One Firm, with the lowest dollar bid, was recommended by a technical review committee. Another firm, with a higher bid and an enlarged study sample, was recommended by the advisory committee. The department was not prepared
to ignore the advice of the advisory committee; nor could it ignore the technically acceptable lower bid. In view of the situation and the passage of time, the decision was not to proceed with a contract for the full study at this time.
6 and 7. The disclosure of information contained in bids which have not resulted in a contract would prejudice the competitive position of the companies and therefore the requested information regarding name, address and amount involved in each bid is not provided.


Mr. McKenzie: 1.	With reference to section 10.6 of the 1980 Report of the Auditor General (a) what is the exact relocation schedule and is the schedule progressing as planned (b) for each phase of the relocation, how many persons are involved?
2.	(a) What is the retraining schedule for the 80 per cent of new employees required to fill the positions of those unwilling to relocate to Charlottetown (b) is the Department of Veterans Affairs currently hiring people who are guaranteeing that they will relocate (c) what percentage of those presently being hired are guaranteeing that they will relocate?
3.	What is the total updated cost of relocation, including physical construction, relocation of personnel and the aggregate costs of retaining staff?
4.	What is the percentage and what is the make-up of the departmental personnel that will remain in Ottawa?
5.	(a) Which records will go to Charlottetown (b) is there adequate means of record communication between Charlottetown and Ottawa?
6.	(a) What percentage of departmental record-keeping is computerized (b) what percentage of the record computerization is made up by (i) Canadian Pension Commission (ii) Pension Review Board (iii) Entitlement Board (iv) Pension Advocate Bureau records (c) are these computer systems being expanded or reduced in scope and use (d) what are the future plans of the department with respect to computerization (e) is it felt that computerization enhances or detracts from the Department's efficiency and effectiveness?


Hon. W. Bennett Campbell (Minister of Veterans Affairs):: 1.	(a) and (b) Yes.
Total
1979	1980	1981	1982	1983	1979-1983Department of Veterans Affairs	27	109	164	163	45	508Canadian Pension Commission	0	0	0	0	210	210Bureau of Pensions Advocates	0	0	0	0	23	23Pension Review Board	0	0	0	0	22	22War Veterans Allowance Board	0	33	0	0	0	3327	M2	164	163	300	7962.	(a) Training begins upon appointment for a period based on the experience, knowledge, skills and abilities that the successful candidate possesses.(b)	Yes.(c)	100 per cent-where willingness to relocate is stated as a condition of employment.3.	$35,814,500 (excluding construction-1980 dollars). $16,500,000 (Department of Public Works construction costs-1979 dollars).4.	4 per cent to 5 per cent consisting of a senior executive in charge of national capital operations which include a
February 2, 1982

secretariat, a correspondence section, a public affairs section, support staff for a deputy minister's NCR office.
5.	(a) All active pension case files (veterans), all active subject files as well as the closed volumes which have a high rate of retrieval.
(b) Yes.
6.	(a) The preparation of client cheques and related statistics has been completely computerized and operated on behalf of Veterans Affairs by the Department of Supply and Services.
41.3	per cent of these relate to WVA/CWA benefits (93,298 recipients as at October 31, 1981) and 58.7 per cent of these relate to CPC benefits (132,401 clients as at October 31, 1981).
Computerized Client Database Records contain information on 100 per cent of clients.
(b)	(i) There are 132,401 pensioners out of a total of 225,699 individuals in the Database.
(ii)	Pension Review Board-Nil. However, the Pension Review Board has access to the basic data held on pensioners.
(iii)	Entitlement Boards-There are computerized records on all the "current" files which represent client cases under active consideration; computerized records are held on all the current year's completed action file, and on all the previous five years' completed actions. Information reports derived from these records are available for use by the staff of the Canadian Pension Commission.
(iv)	Bureau of Pensions Advocates-100 per cent of clients who have approached an advocate or representative for advice, counselling, or preparation of pension applications or modification.
(c)	An extensive program is under way to replace and expand the existing computer programs in Veterans Affairs. Up-to-date technology is being applied in this process. The end result will be that Veterans Affairs staff will be able to use computer systems directly through the use of terminals in support of their work.
(d)	The plans of the department in the area of computerization include:
Systems that support War Veterans Allowances, Civilian War Allowances established in all district and regional offices of the Veterans Services program.
Systems that support File Registry Operations established in field and head office registries.
An extended system for payment and accounting of disability pensions to replace the existing payment system.
The development of an extended system for the Canadian Pension Commission to assist in the monitoring and control of all its client related activities.
The development of extensions to the Personnel Management Information System to provide access and update capability to Veterans Affairs field units.
Order Paper Questions
(e)	Computerization is an essential component of Veterans Affairs' long-range program of management and operational improvement and modernization. It will play a significant role in improving the department's efficiency and effectiveness.


Mr. McKenzie: With reference to section 10.28 of the 1980 Report of the Auditor General (a) is the Department of Veterans Affairs preparing to include performance and organizational information and more extensive statements describing expenditures and transfer payments for its next annual report (b) what indices is the department considering for use to measure performance other than those it already uses?


W. Bennett Campbell: (a) The annual report presents extensive information on the organization. It also includes detailed information (with charts) on transfer payments. Performance information is not presented in the annual report and will not be included in our next annual report.
However, the portfolio is participating in the reform of the main estimates for 1982/83. This document will include extensive information on transfer payments and expenditures in the organization. Information on performance will be integral to that report.
(b) For efficiency indices the department is considering outputs such as War Veterans Allowance applications processed, maintenance of War Veterans Allowance accounts, cases handled by counsellors, and payment of suppliers' invoices for health treatment.


Mr. McKinnon: 1.	Did the Department of National Defence hold a summary trial of Private Alan Tremblay and, if so, what was the (a) charge (b) sentence?
2.	Was Corporal Hoffman tried by the department and, if so (a) was it a summary trial or a court martial (b) what was the (i) charge (ii) sentence?


Hon. J. Gilles Lamontagne (Minister of National Defence):: 1. Details surrounding a summary trial cannot be made public without the express consent of the party involved, in accordance with subsection 52(2) of the Human Rights Act.
2. Yes.
(a)	Corporal WJR Hoffman was tried by court martial on June 1, 1981.
(b)	(i) four charges under section 120 of the National Defence Act: "Trafficking in a substance held out by him to be a narcotic, contrary to section 4(1) of the Narcotic Control Act"; and one charge under section 120 of the National Defence Act: "possession of a narcotic contrary to section 3(1) of the Narcotic Control Act".
(ii) he was found guilty on all charges and was sentenced to: two years less one day imprisonment, dismissal from Her Majesty's service and reduction in rank to the rank of private. He appealed the severity of the sentence and as a result of that

February 2, 1982
CNCP Telecommunications
Other (Quebec-Telephone; Telebec Ltee;
Northern Telephone Limited;
AT & T Long Lines; New York Telephone and C & P Telephone)
Total
($000)


Mr. Cossitt: 
Mr. Cossitt: 1.	With reference to the answer to question No. 3,142 which states in part that the cost of government long distance telephone calls during 1980-8! over and above those made on regular government-leased lines was $26,325,000, what was the total cost to the government of all telephone operations for the period of time involved and, of this amount, what figure applies to all lines leased by the government?
2.	What are the names of all telephone companies from whom the government leases lines and what was the amount paid to each company for the period of time involved?


Mr. Jack Masters (Parliamentary Secretary to Minister of Communications):: In so far as the Department of Communications is concerned, the reply to the above question is as follows:
1.	As reported in the Annual Review of Telecommunications in the Government of Canada, 1980/81, total operational telecommunications expenditures for voice intercity and local telephone services for the period of time involved was $117,832,000.
Of this amount, the total federal government expenditure for leased lines is not uniquely identified by the financial coding system and is, therefore, not available. The coding system provides for the identification of this expenditure item at individual departmental levels only.
2.	As noted above, this information is not available at the aggregate level for the government. The following information lists the names of telephone companies from which the government telecommunications agency leases lines and the amounts paid to them by the agency for the period of time involved.
Trans-Canada Telephone Systems. GTA receives summary billings from TCTS, for lines leased from the following Companies:
($000)
Bell Canada
British Columbia Telephone Company Maritime Telegraph & Telephone Company Ltd Manitoba Telephone System New Brunswick Telephone Co. Ltd Alberta Government Telephones Newfoundland Telephone Company Ltd Island Telephone Company Ltd Saskatchewan Telecommunications Terra Nova Telephone Company Edmonton Telephones


[Stage Direction]
1.	Is the government aware that a position as a deputy director of security for the Parliament Buildings has been advertised and that the duties consist in part of "investigation of criminal offences within the House"?
2.	Did the Solicitor General or any department make a recommendation to any person connected with the House of Commons for the hiring of such a staff member and, if so, what are the "criminal offences" within the House that are envisaged?
3.	Is it government policy that such reflections on Members of Parliament and their staffs be made?
Hon. Yvon Pinard (President of the Privy Council):: 1, 2
and 3. Except for the most senior positions in the House of Commons establishment, all appointments are the responsibility of the Speaker. Any questions about advertising or filling such positions must be directed to the Speaker.


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


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


Mr. McKinnon:: Madam Speaker, I am very pleased that the parliamentary secretary has been able to get the answer to a very difficult question, No. 3,489, on my behalf. That question was put on the Order Paper on November 26.
1 am curious why I have never received an answer to a very simple question I put on the Order Paper on June 1. It simply asks: "What was the increase in real terms in the Department of National Defence's expenditures, including statutory costs and expressed in percentages, for each fiscal year, 1970-71 to 1979-80?" If we had a more knowledgeable Minister of National Defence I would be prepared to ask it as an oral question. It is so simple that it should be answered in ten minutes. I would like to know why it has taken some seven months.


David P. Smith: Madam Speaker, I will make inquiries on behalf of the hon. member.


Mr. Paproski:: How about, 2,214?


Madam Speaker:: Shall the remaining questions stand?


Some hon. Members:: Agreed.

Total TCTS
February 2, 1982



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Monday, February 1, consideration of the motion of Mr. Whelan that Bill C-88, respecting loans to farmers, be read the second time and referred to the Standing Committee on Agriculture.
Mr. Murray Cardiff (Huron-Bruce):: Mr. Speaker, I am very pleased to continue my speech on Bill C-88, which I was not able to conclude when we adjourned at ten o'clock last night, dealing with changes to the Farm Credit Corporation.
Last year, for example, the Farm Credit Corporation received $12 million in capital and could therefore borrow and lend out some $300 million. This present bill would raise the authorized capital of the Farm Credit Corporation by $75 million, but on the basis of past experience, the corporation can expect to get only about $12 million to $15 million of that in the coming year; that is, enough to allow it to borrow and re-lend from $300 million to $375 million. This is far short of what farmers need now and in the coming year, but it is also far short of what this legislation seems in theory to be making available.
It would be a great advantage if the government were to concentrate its efforts on helping the Farm Credit Corporation get ready to borrow privately, so that the government could grant more of the authorized capital in the coming year and do less of the authorized lending. One solution is precisely the plan the Minister of Agriculture (Mr. Whelan) is now toying with, namely, allowing retiring farmers to place their money with the Farm Credit Corporation at low rates and avoid tax of the type introduced in the November budget which is designed in such a way as to cripple the retirement plans which many have been making for the last few years. All of this could and should be discussed in committee. What is important is to see that the Farm Credit Corporation is helped to utilize the new capital authorization now being proposed for it, rather than hindered by the government, as it has been in recent years.
There are other features of this legislation which appear to be of a routine nature and which seem welcome on the surface. One such feature is a loosening of the definition of farming which should allow the corporation more flexibility in dealing with the changing face of Canadian agriculture and husbandry, rather than tying it to models from the past. The dropping of present age restrictions is another feature which seems welcome, and certainly it is in line with the will of the House as expressed in the Charter of Rights and Freedoms which we so recently adopted. It is to be hoped that the Farm Credit Corporation will adopt this change, not only in form but also in spirit. There are other changes in this bill which are of a more technical nature, such as changes in the size of the board and its quorum, and turning over some matters to regulations,
Farm Loans
which should prove worthwhile, but which should certainly receive some scrutiny from the committee as it examines this bill.
One of the main problems which will have to be confronted in effecting this legislation is the problem of ensuring that the Farm Credit Corporation can borrow private funds at a low enough rate to allow it to lend at an acceptable rate. In this connection, it is interesting to note recent press reports indicating that the Farm Credit Corporation has been approached with an offer of private money at rates much lower than the prevailing commercial lending rates in Canada. According to the press reports, however, the Farm Credit Corporation does not know the source of the funds being offered. Speculation, therefore, suggests various possibilities, including the possibility that the funds being offered are from illegal sources, such as the proceeds from the international drug trade or other organized crime activities. Rather than see the Farm Credit Corporation accept money from such anonymous sources, perhaps the Minister of Agriculture will prevail upon the Minister of Finance (Mr. MacEachen) to adopt the suggestion he aired last week, that retiring farmers might have their own kind of registered retirement savings plan by lending to the Farm Credit Corporation at reduced rates and with a corresponding tax reduction. This is not any sort of obnoxious tax expenditure on the part of the government, as the Minister of Finance seems to think all money is when other people have it, but, rather, a recognition that the capitalization of agriculture, if we are to see the survival of the family farm in Canada, is a special case, just as the non-taxation of capital gains on a principal residence is a special case associated with the socially desirable goal of seeing people own their own houses.
Certainly there is no advantage in allowing the Farm Credit Corporation to borrow privately if it must borrow at the outrageously high rates caused by the government's high interest rate policy. There must be a means worked out whereby the Farm Credit Corporation is not entirely dependent on the public treasury for its borrowing, yet can borrow at a low enough rate that its clients, Canada's food producers, can afford to reborrow from it at manageable rates. This, it seems to me, is an issue which must be faced and which the committee examination must deal with squarely.
There are other matters which I was hoping to see in this bill, Mr. Speaker, but which are not mentioned at all. For example, up until now there have been many cases where the Farm Credit Corporation has refused to treat the spouses of farmers as they would treat other partners in assessing loan applications, even though in a great many cases both spouses work full time or what many industrial workers would consider to be much more than full time. I asked the head of the Farm Credit Corporation about this last spring, and I would like to remind the House of his response. He said:
We are preparing right now to send a demand-and this is a decision of the cabinet for regulation-to abolish entirely this regulation we have right now.
In other words, the Farm Credit Corporation seems prepared to treat men and women equally in this matter, as partners. Apparently the government is not, for we find no

February 2, 1982
Farm Loans
proposed change here, even though we in all parties supported the granting of equality to both men and women when we recently voted on the Charter of Rights and Freedoms. It is interesting to recall how slow the cabinet was to accept that principle of equality, and now to see that they have not acted to give it legislative effect in this case now before us.
Another matter which I would have liked to see addressed is foreign takeovers of Canadian farms with Farm Credit Corporation mortgages. We live in a riding in western Ontario, and we know that a large percentage of our prime agricultural lands are being purchased, not only by foreign buyers, but also by absentee buyers. We know that we cannot compete with some of the rates which are being offered for some of the foreign money which is being brought into this country. We know that we are competing against money which has been earned in industrial areas of other countries. We would like to see people come to this country to set up residency, taking their place beside us, if they want to be producers of agricultural products. However, it is a different matter when foreigners buy our prime lands, very often leasing those lands out to the farmers who have farmed those lands for a number of years with as low as a 5 per cent return on their investment. There is simply no possible way that our young farmers, even with the help of the Farm Credit Corporation, can handle such purchases or compete against this type of buyer.
When selling farms, we want to be able to sell to the highest bidder. This is one area that should be addressed. 1 realize that jurisdiction over property is a provincial matter. However, I would feel bad if we did not include in this bill something to restrict FCC capital being used to facilitate a foreign purchaser who has no intention of residing in this country.
Last spring I asked the chairman of the Farm Credit Corporation about this matter. I quote from his answer at that time:
Right now the act says that we can incorporate in the mortgage a covenant saying that our borrower will not sell his farm without our permission. However, in the act as it is, it does not say that if he does not do that we can call the loan. It seems to be the logical thing to do, but it does not say it in the act.
When we were contemplating making amendments to our act this is one of the amendments that we wished to bring in, stating that in the case where he does that without our permission we can call in the loan. That would be one correction.
Right now, we have an internal policy by which we will not accept an assumption if the chap is not a Canadian citizen or a permanent resident. We will also refuse persons related to the business of real estate; we will refuse companies who do not meet our criteria for being principally occupied in agriculture; and finally, examine all cases where the person involved will not use the property for farming purposes.
This is as far as we have gone recently in the administration of that. We are getting ready to publish an internal policy on this .... The trouble with a policy of that sort is that we never know if it will stand up in court. In certain provinces, it would be pretty hard because of provincial legislation. However, so far, all the cases we have refused have not been challenged; so we still do not know.
It is my hope and intention when this bill goes to committee to introduce an amendment to include recognition of the spouse as a partner in a farming operation and to introduce an
amendment pertaining to the transfer of Farm Credit Corporation mortgages to non-residents of Canada.
Here is an area where farm credit is expected to see some legislative action. In examining this bill in committee we will want to know how far it goes toward giving adequate legislative backing to the policy. If there is any danger of a challenge to the policy in court, let us be clear in giving a legislative answer so that the courts will have certainty in denying such challenges.


Mr. Laverne Lewycky (Dauphin):: Mr. Speaker, it gives me great pleasure to speak on Bill C-88 this afternoon. The constituency of Dauphin is a farming community. The farmers are not only involved in livestock and grain, but a very large number are involved in mixed farming. Of course, the family farm is still a reality for many people in my constituency. Farming is carried on in most parts of my constituency, in the north, Swan River Valley, around Dauphin, in the south, and the east in my constituency in the Alonsa, Plumas, or Amaranth area. There is a large area of potential for grain marketing and grain development. Because there is this large number of people in my constituency who are affected by this bill, I am pleased to speak on it this afternoon.
I am interested in the fact that there is mention of changes for Indian bands involved in farming. Of the seven Indian reserves in my constituency, a couple are expanding their farming operations. They are interested in the changes this bill may provide. Unlike many rural areas, I have a couple of Hutterite colonies who have expressed their concern about the Farm Credit Corporation.
I welcome this opportunity to speak. My colleagues, the hon. member for Humboldt-Lake Centre (Mr. Althouse) and the hon. member for Selkirk-Interlake (Mr. Sargeant) stated that in some ways the bill does not present the solution because it does not look at the real problems farmers face today.
There is no over-all agricultural or transportation policy which the Liberals are following at this time that this FCC bill can fit into. It is interesting to note with regard to transportation that in today's Globe and Mail, it is reported that Saskatchewan Liberals under the leadership of Ralph Goodale are starting to make noises about coming out in favour of the Crowsnest Pass agreement. They know if they stick with what the Minister of Transport (Mr. Pepin) is trying to abolish, they will not survive a provincial election in Saskatchewan.
The government is not dealing with some of the over-all, basic problems in this FCC bill. One point underlined earlier by the hon. member for Humboldt-Lake Centre is so poignant to this issue that I should emphasize it. On January 28, the hon. member stated:
This particular bill, this move to attempt to free up more funds through the Farm Credit Corporation, will assist; but I hope that the government and the minister will focus more attention on doing something about the real problem, the farm income problem, and will get on with programs for improved marketing and better stabilization which will bring us better net farm incomes.
My constituents involved in farming know that costs have gone up considerably over the past number of years. Input costs have grown. At the same time the amount of money they
February 2, 1982

receive has been decreasing. They are caught in the cost-price squeeze. As a result many are forced to apply to the FCC. They need credit in order to maintain a viable farming operation. If the government was following a food policy and if the farmers were getting a fair return, there would be no need to worry about farm credit.
It is interesting to note from statistics that interest rates have become the number one cost for farmers. According to the projected figures for 1981, farmers will be faced with interest on indebtedness to the tune of $2,168 billion. That is a huge amount that the farmers of Canada are being forced to absorb as part of their operation. In my province, the projected figure spent by farmers on interest for 1981 is $201.9 million. This problem is faced by the farmers in my constituency. I am glad to see that there will be some loosening up on the part of the government with regard to the Farm Credit Corporation.
When we examine the whole matter of credit and how financial institutions are involved in farm credit, it is rather interesting to see how the minister over the years has been singing a different song. As early as October 25, 1977, when the minister was speaking to the Canadian Bankers' Association at the fifth agricultural credit conference at the Chateau Laurier in Ottawa, he was taking off his hat-I suppose it was that green hat the minister wears even when he comes to my constituency-and saying: "I take off my hat to the banks and other interested financial organizations who are starting to get involved in long-term agricultural lending programs, because I welcome progress and this is progress." 1 see that he has obviously been walking on the road to Damascus, because in his speech on January 28 he does bring in a more realistic view of banks. I am happy to see that he is putting his finger on where part of the problem lies.


Ian Gardiner Waddell: He wants it both ways.


Laverne Lewycky: It is interesting to read what he said on January 28 as reported in Hansard at page 14419:
One need only look at the record of the banks over the last five years as to how they have handled, or maybe I should say mishandled, farm loans to know the answer to that question. I think hon. members from rural constituencies will agree when I say farmers need a supply of long-term credit from an agency which recognizes the needs of farmers and knows how to lend money responsibly in rural Canada, particularly to the agricultural sector.
I would have to say amen to that, because the farmers in my constituency certainly know what that means.
The minister goes on to make a few other very important statements, which I can relate to very much from first-hand experience of farmers who have come to my constituency office. The minister referred to the fact that many lenders, the banks, have shown neither mercy nor consideration to the food suppliers in this country by abruptly foreclosing mortgages and calling in demand notes. I think he has correctly underlined the problem when he says that there are farmers who understood they were getting a long-term mortgage note, and then all of a sudden they get a note from the lending institu-
Farm Loans
tion indicating to them that this note is not really a long-term loan but has become a demand notice.
Farmers in my area as well as other areas have experienced many problems just getting the credit which is required to operate, especially with the downturn in the economy. For this reason, I would like to underline some of the statements the New Democratic Party has made with regard to interest rates. Last October my colleague, the hon. member for Broadview-Greenwood (Mr. Rae) was relating the fact that the federal government was abdicating its responsibility by allowing the long reach of the banks to extend too far into the farming community, and I know that this is a problem which we are experiencing.


An hon. Member:: Who is the minister?


Laverne Lewycky: My colleague asks who the minister is. He is part of the government.
At that time, the hon. member for Broadview-Greenwood said that he wanted the FCC to become more of a farmers' bank and not simply an institution which picks up the leftovers of the private sector. I would reiterate that statement because I think it is important to emphasize the financial needs of farmers and what their relationship should be to the FCC, rather than having to rely on the banks which charge high interest rates and which quite often turn those mortgages into short-term demand notices.
In the minister's speech, which I read very carefully, he talked about the fact that he had to wait for a long time before this bill was introduced. It is disappointing that he waited five years to introduce this bill because after close examination it is evident that the bill is so general that it could have been brought in five years ago. I know the minister counters by giving a history of all the changes and all the previous bills which he introduced and the different bills which died on the Order Paper. I find it amazing that with all that amount of work, study, preparation and tabling, we should have had to wait so long for so little. There are quite a few clouds that have been promising rain in this bill but we have not had the showers of blessings or the rain that has been promised by the minister.


An hon. Member:: Just sleet.


Laverne Lewycky: Something which is quite disturbing about the Farm Credit Corporation is the decline in the amount of credit which the FCC has been providing to farmers. If we examine the figures for 1975, more than 70 per cent of all the long-term credit provided to farmers was provided by the Farm Credit Corporation. By 1980, however, this had dropped to approximately 25 per cent of the long-term credit being provided.
I think this is somewhat inconsistent with the assessment of the banks that the minister made. He indicated that part of the problem which the farmers face today is a result of the way the banks have mishandled the farmers' money. To then give the banks an increased share of long-term credit is very

February 2, 1982
Farm Loans
inconsistent to me. It is no wonder that I have been faced by a number of constituents who have complained that they cannot get Farm Credit Corporation loans. This is because the proportion of help that has been given by the FCC has been declining rapidly over the last five years.
If we want to have a stable food supply and ensure that farmers stay in production, they must be provided with the opportunity to borrow money at a rate which allows them to stay in business. As my colleagues have pointed out and as I suggest again to the minister, he should take heed of what organizations such as the Canadian Federation of Agriculture has said with regard to interest rates. In October of 1981, the executive secretary of the Canadian Federation of Agriculture said in an interview: "It is an undesirable change; no farmer can get a return of 16.75 per cent on their investment". He was referring to the fact that the loans of the Farm Credit Corporation would now be 16.75 per cent because the Minister of Agriculture (Mr. Whelan) had not been able to convince cabinet to retain the loans at 14 per cent. I wish the minister had been more authoritative and able to do more arm twisting of his cabinet colleagues to impress upon them the importance of our entire agricultural sector.
In the amendments brought about by Bill C-88, the minister mentions new sources of future funding, the fact that this bill would enable the FCC to borrow in the financial markets. He introduces a measure which would enable retiring farmers to contribute to a pool which would have additional funding for the FCC. Again, this bill is not specific and the minister should have talked to the Minister of Finance (Mr. Mac-Eachen) before he brought down his budget on November 12, so that perhaps the income-averaging annuity contracts could have been replaced by a measure such as this and farmers who were retiring might have been able to contribute toward the self-sufficiency of farming by contributing some of their own retirement savings plans under this proposal that the minister has been underlining.
We welcome some of the loosening up we see in these new amendments because of the higher costs of machinery and the higher costs of building. We welcome the fact that applicants will benefit from the higher upper limits on amounts which can be borrowed. It is interesting that this bill provides maximum amounts of loans which will henceforth be prescribed by regulation rather than statute. It is good that the minister has proposed an increase for people who are single farmer applicants from a maximum limit of $200,000 to $300,000; and for more than one applicant the upward limit on Farm Credit Corporation loans is increased from $400,000 to $500,000. It is good that we are moving in the direction of recognizing the increased costs farmers are forced to pay.
I am also very pleased that under these Farm Credit Corporation amendments there will be some authority to disburse up to 30 per cent of a loan based on acceptable security while registration of a mortgage and other security arrangements are
being made. This should prove somewhat helpful to farmers who will be borrowing from the Farm Credit Corporation.
It is also good to see that the age limit for people borrowing money from the Farm Credit Corporation is being deleted. I must commend the work done by my colleague the hon. member for Selkirk-Interlake in applying pressure on the government to remove the age limit. The age limit for borrowing was 35 and under. People will now be allowed to work off the land for up to five years before engaging in full-time farming, if that is their situation. I know the hon. member for Selkirk-Interlake outlined some of the things he did in relation to appealing to the Human Rights Commission to see that this age discrimination at the Farm Credit Corporation ceased. I am very happy to see this being done. In my constituency there have been people who have wanted to borrow money from the Farm Credit Corporation, but they have not found the Farm Credit Corporation to be as helpful as they would have liked.
When we are dealing with this Farm Credit Corporation bill later on in committee, I hope we will be able to bring in even better amendments which would assist farmers. While we are doing this I hope we will also remember that we must deal with the basic problem farmers are facing in all our rural constituencies, and that is the problem of farm net income. While necessary, in some ways the credit measures we are looking at are not the real solution to the problems farmers are facing. So I urge the government to take a closer look at some of the basic problems of farmers in relation to stabilization and marketing so that the farmer might continue to play a vital role in our Canadian economy and be able to continue farming and provide us with the food supplies we need.
Those are some of my concerns relating to Bill C-88 as it is before us at the present time.


Mr. Gaston Gourde (Levis):: Mr. Speaker, it is with great pleasure that I rise to speak on a subject as important as Bill C-88, an act respecting loans to farmers, which is now before the House. I feel that the bill constitutes a source of assistance and motivation for our Canadian farmers.
The riding of Levis, which I have been proudly representing since May 4 of last year, consists largely of farmers, especially in the southern part of the riding which includes farms that are the envy of many farmers in Quebec. I am very pleased to be able to discuss this bill, especially since Canadian and Quebec farmers have been seriously affected by the economic situation during the past months and weeks, just like industry and business. First, I should like to refer to the throne speech of April 14, 1980, and I quote:
Food and agriculture are going to be increasingly important to the Canadian economy in the 1980s. To further strengthen the industry, my government plans to create a Canadian Agricultural Export Corporation to expand markets for Canadian producers. A meat import act will be introduced to protect both consumers and producers.
The present government has indeed kept the promises made in the throne speech from which I have just quoted. In fact,
February 2, 1982

the legislation on meat imports was passed by the House on December 11, 1981.
As for the Canadian Agricultural Exports Corporation known as Canagrex, the bill is now before the House and it should not take more than a few days before the corporation is established. Canagrex will very substantially serve the interests of Canadian farmers by helping them discover and expand important export markets for Canadian agricultural products. In his budget speech on November 12, 1981, the Minister of Finance (Mr. MacEachen) announced special measures to help farmers who are unable to keep their business going because of the present interest rates. These farmers will be able to obtain loans at a rate of 11.75 per cent, which is 5 per cent less than the usual rate charged by the Farm Credit Corporation. The minister also announced that $50 million would go to the FCC to finance additional loans and reduce interest rates for our Canadian and Quebec farmers. The minister also said that farmers would now be eligible for the Small Business Development Bond program. However, our farmers need more assistance than these measures are able to provide, and that is why today the House is debating legislation that will make the Farm Credit Corporation more accessible to farmers. Perhaps a few statistics would be useful concerning the Farm Credit Corporation or at least some figures on agriculture in Quebec. Six per cent of Canadian farmland is located in Quebec, and 13.5 per cent of farm income is earned by Quebecers. The fact that 20 per cent to 23 per cent of the total budget of Agriculture Canada, including the Dairy Commission, is spent in Quebec is ample proof of the Canadian presence in Quebec agriculture. This is according to figures published late in 1980. In dollars and cents, it is about $160 million per year. I think it is always useful to have a few figures on hand, because there are always people who claim the Government of Canada, the present Liberal government, is doing absolutely nothing for agriculture in Quebec. Now I think that quite the opposite is true and that those statistics show it beyond doubt.
1 also noted that several members opposite have supported the substance of the bill now under consideration. I am, therefore, pleased to agree with them. With respect to this bill, I would like to point out some interesting new provisions, knowing that the Farm Credit Corporation was set up 22 years ago and that it has lent over $5 billion to some 160,000 Canadian farmers including a great majority of Quebecers. Almost 74,000 loans are now in effect, of which 4,328 have been granted during the financial year 1981-82. In mid-January of the current financial year, the total amount lent to farmers reached $426.9 million with average costs largely exceeding $98,000. One of the important amendments proposed is to allow the Farm Credit Corporation to seek other Financing sources than strictly government sources. In fact, this means that the Farm Credit Corporation will be able to
Farm Loans
borrow on independent financial markets instead of always having to beg from the government.
Another very important change proposed in this bill is that the ceiling for loans will now be set by regulation instead of being provided in the act, which prevents the minister from having to introduce a new bill each time the loan limit has to be changed. In view of the lengthy procedure which must be followed to amend legislation, I believe it will be to the advantage of Canadian and Quebec farmers if the act allows our Minister of Agriculture (Mr. Whelan), who is doing an exceptional job, to proceed by regulation instead of waiting weeks and months before being able to introduce a bill.
The loan limits now provided in the act until this bill comes into effect are set at $200,000 for a single applicant and at $400,000 for several eligible applicants, companies or corporations. One would have to be blind not to know that costs are increasing very rapidly today, and that is why the Minister of Agriculture announced in his statement last week that he wished to raise the limit immediately to $300,000 for a single applicant and to $500,000 for several applicants. I think we should commend this change because it will allow our government to act much more quickly in the future.
Another change which will benefit greatly those who borrow from the Farm Credit Corporation is the fact that they will be able to obtain on the provision of satisfactory security an advance of up to 30 per cent on their loan before their mortgage is registered. Having worked for quite some time in a closely related field, I think that anyone who has drawn up mortgage papers knows that because of extended delays, farmers often had to arrange for short-term financing on the private market before obtaining their loan. The bill, therefore, includes a new provision which will allow the Farm Credit Corporation to pay 30 per cent of the amount of a loan on the provision of satisfactory security, even though such security might not be as sound as a mortgage as such.
Of course, the second part of the bill empowers the Corporation to reduce by 5 per cent the interest rates for loans granted under the special farming financial assistance program, which was announced in the budget of last November 12, as everyone will recall. As the Minister of Agriculture has indicated, the Farm Credit Corporation had already granted 89 loans under this special program as of January 28, 1982. All in all, the FCC has made available some $11 billion, each loan with an average value of $124,000. With these amendments, the corporation will remain, as in the past, one of the most significant factors which has made it possible for Canadian farmers to increase their productivity and effectiveness over the past few decades. As a matter of fact, the corporation has made available over 60 per cent-I think this figure is quite important, because we hear so many rumours, at least in the province of Quebec, concerning financial assistance to farmers-the corpo-

February 2, 1982
Farm Loans
ration, I mean the Farm Credit Corporation, has made available over 60 per cent of all the long-term farm credit over the past few years. The rest was made available through provincial organizations, banking institutions, credit unions, caisses populates and private lenders.
Since 1973, the funds available for long-term farm credit have been increasing by as much as 20 per cent every year. It increased from $655 million in 1975 to $1.9 billion in 1980, and it is expected to keep on increasing. It becomes, therefore, more and more urgent to provide the Farm Credit Corporation with an adequate and stable source of funds. The FCC's role has always been to help young farmers and, in fact, the majority of approved loans have gone to farmers under 35, whose share has remained relatively constant at 70 per cent during the last three years. Up to now, loans were mainly used to purchase additional land or new farming units. However, the number of loans granted to consolidate debts has increased significantly because of the spectacular rise in interest rates. The percentage of such loans rose from 24.8 per cent on March 31, 1980, to 27.1 per cent on September 30, 1981. On this subject I should like to quote Mr. Marcel Mailloux of the Farm Producers' Union in an article published in La Terre de chez nous of December 10, 1981. I prefer to quote Mr. Mailloux directly to let him make this point:
When we met here last year, the bank rate was 12.8 per cent. Six months later, it was over 21 per cent, at a level no one would have believed possible a year ago.
The extremely high level of interest rates during the past year has had and continues to have a serious impact on many farming operations. In 1980, Quebec farmers paid $154 million in interest to various financial institutions, their second largest expenditure after feed purchases.
Why do farmers have such large interest payments? The reason is simple and you know it as well as I do: Interest payments reflect the increasing productivity of our agricultural industry.
From Mr. Mailloux's words it is clear that one of the industry's main problems-and it shares this with other sectors-is interest rates. Although we have excellent legislation providing for access to credit, until we make it possible for farmers to repay their loans, they will move steadily closer to bankruptcy. I feel it would be useful to set up a special program to help Canadian farmers by, for instance-and there often have been recommendations to that effect-setting a ceiling of, let us say, 40 per cent on interest rates for Canadian farmers. Naturally, farmers would benefit from any drop in interest rates on the same grounds as people in business or industry.
According to a study made by Mrs. Louise St-Pierre, agricultural producers have taken a different approach to financing, allegedly because many of them were facing new problems created by soaring interest rates which forced them to refinance their debts over longer terms. Mrs. St-Pierre was referring to a recent survey conducted by the Farm Credit Corporation whose statistics revealed that the over-all indebtedness of Canadian farmers now stands at $17.64 billion as
compared with an estimated value of $15.10 billion in 1979. However, it would seem that the rising long-term indebtedness over the past year is due mainly to debt consolidation rather than to new investments. This information is contained in a report published by the Farm Credit Corporation Research Division.
Mr. Speaker, I conclude by saying that I will gladly support the bill now before the House, assured as I am that this measure is only one step on the part of the Liberal government in its effort to provide further assistance to Canadian farmers. In light of the recent statistics and the results achieved after 15 or 20 consecutive years of Liberal administration, there is no doubt whatsoever that the farming community will be ever better served by this government. I hope that all spokesmen for the agricultural sector, whether they belong to the provincial government, the Agricultural Producers' Union or the farming community, will work hand in hand with the federal government, because I am sure that is the road to success. I would suggest that no one stands to gain anything by attacking, threatening or insulting the various levels of government, and I remain convinced that we can rightfully expect that co-operation will stand the agricultural community in good stead.


Mr. Blaine A. Thacker (Lethbridge-Foothills):: Mr. Speaker, it is a pleasure to rise to speak on second reading of Bill C-88. I suppose it is difficult to object in principle to more money being made available to the Farm Credit Corporation and also to its being given the privilege of going to private sources to raise money. I note that the increased borrowing capacity of some $5.6 billion is good for farmers. There is no doubt that the farming community needs access to this money at the present time. Also there is no doubt as to the importance of agriculture. I am sure we all agree that when everything else is said and done, the bottom line is that any society which ignores its farming community and allows its soil to be depleted, to go to rack and ruin, is headed for trouble.
Tomorrow we will debate the Canagrex bill. It strikes me that this type of bill in a sense deceives Canadians as to the true situation in the country, because the implication is left that Canada is an exporter of food. In actual fact, when we take out western grain exports, Canada is a massive importer of food of all categories. Yet the government is setting up a corporation allegedly to export the various categories of food of which we are a massive importer.


Eugene Whelan: Is it not all one country?


Blaine Allen Thacker: The point is whether Canadians will have enough food to eat. The Minister of Agriculture (Mr. Whelan) is setting up an export corporation.


Eugene Whelan: If we took out the dairy, pork and beef industries, just imagine what we would have to import!
February 2, 1982


Mr. Deputy Speaker:: Order, please. The hon. member for Lethbridge-Foothills (Mr. Thacker) has the floor.


Eugene Whelan: What a ridiculous statement! It is similar to the earlier one of the hon. member for Crowfoot (Mr. Malone).


Blaine Allen Thacker: The hon. member for Levis (Mr. Gourde) referred to the great Minister of Agriculture and the great accomplishments of the Liberal government over the past 15 years. He should realize that 15 years ago Canada had a balanced budget and did not have a national debt. He should look at where the Liberals have taken us.
For example, we could look at what has happened in other countries, such as Poland. Once it was a massive exporter of food, and then it became continuously more and more involved with government. The government started to take over the agricultural infrastructure. It started to set up state export and import corporations. Now the people of Poland are lining up for food. We should not think that that cannot happen here. We import $1 billion worth of food per year because of government policies.
Why are we debating an increase in loans made by the Farm Credit Corporation? It is because of massively high interest rates. Why are there massively high interest rates? It is because of the deficit. We did not have a deficit when the government first took office; there were balanced budgets in the country. Then there was the great Liberal deceit of the Canadian people. There were various tremendously popular programs with low capitalist taxes. The government could maintain low taxes because it borrowed the difference. In the first year it was $1 billion, no problem; then it was $5 billion, no problem; then it was $25 billion, and it started to become a problem. Members of the opposition then said to Canadians, "We are getting ourselves into a jam." But the Liberals offered great programs with low taxes and borrowed the difference, until today when the national net debt is some $90 billion.
The interest cost to service this debt is so massive that the government cannot step in and do the things it should. For example, the automotive industry requires help, but the government has no money because 25 cents of every tax dollar goes to service the debt. Not only does the massive debt and the interest on it stop and block government flexibility, but it concentrates wealth into the hands of a very few Canadians, the people with real wealth. In a generation it will be just like Third World countries-massively rich people and massively poor people. This is what governments can do, and this is what the Liberal government can be fairly and honestly criticized for.
What does the Minister of Agriculture say to this? He said that all western nations are suffering inflation and that, therefore, we are no worse than others. This is absolutely incorrect. When the Minister of Agriculture took office, Canada had a standard of living which was second to all other western industrialized nations; now it is No. 13. What kind of a record is that? It is the record of the Minister of Agriculture and of
Farm Loans
the government. Canada's resources go far beyond those of Germany and Japan, yet those countries have much higher standards of living. The reason is that their governments have been honest. When they propose programs, they propose taxing regimes so that people can genuinely decide.


Eugene Whelan: Their debt loads are bigger than ours, compared with resources.


Blaine Allen Thacker: The minister thinks that if we have resources we can borrow. Within his own life and his own business he would never borrow sufficient to bring his debt load up to his equity load, yet this is exactly what the government thinks Canadians should do. When the minister is dealing with other people's money, trust and responsibility, he is prepared to take them into debt. He would not do it in his own farming operation because he is a good farmer, and he should not do it for Canadians, either.


Mr. Taylor:: Right on!


Eugene Whelan: I would not do it any differently for Canadians. We are running a good ship.


Gordon Edward Taylor: There are a lot of leaks in your ship.


Blaine Allen Thacker: The Titanic was a good ship too, but it hit the "rocks".


Eugene Whelan: But we have a good captain on this ship and a good crew, I should add.


Gordon Edward Taylor: Your navigator is blind in both eyes.


Blaine Allen Thacker: The Minister of Agriculture seems to think that the Liberal Party has a good captain. I have the feeling that many people of Polish descent have some questions about that. If he is a good captain, I am certainly worried about some of the first mates.
There are other reasons why Bill C-88 has to be amended. Of course farmers require more money because of government policies. But we should never look at any bill in isolation. We must look at it as broad government policy. What do we find? On the one hand, there is the offer to farmers of a few more dollars by the FCC, which only take them deeper into debt. On the other hand, the government is abolishing via its budget provisions the income-averaging annuity program and the capital gains forward reserve. The government is not changing the valuation date to 1974, as was promised in the government's election campaign.
The effect of those policies will impose a far greater burden on the farming community. This little band-aid affair is giving them a few extra dollars and taking them deeper into debt. Why does the government not abolish capital gains? There is no need to keep that going in view of the very small percentage of Canadian land that is bona fide agricultural land. Food is too important a product to have bona fide agricultural land taxed. Why does the government not abolish the roll-over
80108- 17

February 2, 1982
Farm Loans
provisions? Why not let one generation pass it on to the next generation without any capital gains tax at all? The government alludes to that in the roll-over provisions. As I have explained to the Minister of Agriculture in earlier speeches, and I am prepared to sit down with him to show him on paper, the roll-over is an amazing trap, that within one generation, or two at most, we will have all of our agricultural land nationalized. Many farmers believe that is the exact role of the government. I rather doubt it is the intention of the Minister of Agriculture, but I can show him that will be the result because the roll-over provision is merely a trap for future generations.
Why does the government not accept the Canadian Cattlemen's Association's suggestions? They are perfectly well thought out and logical. I refer to the income-averaging trust account. The beauty of that vehicle is that it would allow farmers in the good years to put a little bit of money away in a special agricultural fund, perhaps managed by the Farm Credit Corporation, and in the bad years the farmers could then withdraw that money.
If we look at the country as a whole, when there are bad times in the west the east is probably experiencing good times. The eastern farmers would be pouring money into this fund and the western farmers could be taking it out. And vice versa with good times in the west and bad times in the east. A system like that would do more for national unity than anything else.
Farmers would be more than delighted to put their money into this special fund when they retire and be able to get the average income out of it in the future. The way it is now, if a man or a woman sells his or her farmland, the person is not entitled under the budget provision of the government now to buy an income-averaging annuity. Instead, all of the capital gains tax must be brought into income in the year of sale and in future years the person applies for a tax rebate. That is an incredible situation. In short, the government is saying that when you die everything belongs to the government and you can apply for future tax credits in the event you sell. But what happens to the man who sells this year and then dies next year? Is his estate entitled to apply for some sort of tax rebate, or is that money, all of the tax on the capital gain, lost? That question has never been answered. I wonder why the minister does not face that.
We also have the Minister of Agriculture blaming the banks. He waxes eloquent that the banks have led farmers into a trap. The proper response to that again is that government has led people into a trap. Who would have guessed, even the smartest banker or the smartest farmer, that the combination of government policies would drive interest rates up to 21 per cent? Who would have believed that a government would ever have been so stupid as to get people into that kind of a jam? Yet that is what we face in this country. Again, it goes back to governments getting into deficits, those deficits building up and lack of government flexibility. Ultimately governments have to face reality. Even the Fiberal government has to realize that you cannot circle around a $90 billion net debt.
You might as well have started at the beginning and used Keynesian economics around a balanced budget. During bad times, of course, the government would borrow to help out certain sectors. But during good times it is incumbent upon governments to pay those debts back, and out of surplus revenues you get back to a balanced budget.
I have many questions to ask when this bill gets to committee. Other members have elaborated on certain sections. I wish to speak only to Section 16.2(2) which requires farmers to file a plan of operations with the Farm Credit Corporation. I am anxious to question witnesses as to how far an amendment of that plan is possible and how often farmers must report.
I note Section 35 provides that loans will not be granted unless the farm is an economic unit. What is an economic unit? Who will make that decision? What type of ministerial authority will there be as to whether there will be any political repercussions one way or the other? What differences will there be in describing a plan for different provinces? What is an economic unit in Alberta as compared to an economic unit in Ontario? More than anything else, I will be looking for some direction as to what is the remedy in the event a farmer does not honour his plan. Will the government then be just like the banks and call the note? Will there be a clause in the mortgage to provide that if one deviates from the plan the government can foreclose on the mortgage? If so, who will make that decision? There are many uncertainties which I hope the Minister of Agriculture will do something about, because they can lead to the grossest of abuse.
1 notice under Section 17.1 and Subsection 19(4) that the statutory amounts will now be set by regulation rather than as before, which was by statute. As the minister himself pointed out, we have made many amendments to this legislation in past years, but I wonder why it is now felt that statutory amounts should be governed by regulation? By doing that we, as Members of Parliament, will be giving up our responsibility to look at that bill and make constructive criticism of it. Instead we will be passing off that responsibility to a bureaucracy. Without doubt, individually bureaucrats are well inten-tioned. But as a collective group they become subject to a system, rules and regulations producing results exactly opposite to those which anyone would say are common sense and reasonable.
The minister will have to answer why this change to regulation is being proposed. In my opinion, this provision should be left in the statute, in order that we as Members of Parliament, who are elected to review these things and with the obligation to do so, will in fact do so. Again, this change is capable of the grossest political subterfuge.
There will be amendments at report stage, I am sure. There will be amendments at third reading and I look forward to that.


Mr. Vince Dantzer (Okanagan North):: Mr. Speaker, I am pleased to speak at this stage on Bill C-88. As the member representing Okanagan North, I might say that farming in our community is perhaps more varied than anywhere else in
February 2, 1982

Canada. Everyone knows that the Okanagan produces the best fruit in Canada and that it is the best fruit growing area.
Hon. members may not know that we also have grain farms, forage farms and tree farms. We produce some of the best grapes and make some of the best wine in this country. We even have nut farms. I can assure this House, however, that we are not talking about the kind of nuts produced in other parts of Canada; I am talking about the kind of nuts we eat. This bill is very important to the people of Okanagan North and to all Canadians. I am very glad to see that with this bill and with the Canagrex legislation, which will be discussed tomorrow, the government has finally started something positive. I would be the first to commend the government for doing that. The minister has said in bringing this bill before the House that Canadian agriculture must be assured of a constant and sufficient supply of long-term credit if it is to meet the goals set for its agri-food strategy.
I have looked far and wide for any strategy, and I mean good strategy from this government in the agricultural industry, whether its produce is for home use or export. I will have something more to say about that later on. The bill itself is positive. It seeks to encourage and assist the production of agriculture. Together with Canagrex, this bill will help to rationalize the export of food from this country. It broadens the scope of the Farm Credit Corporation. Capital is increased from $150 million to $225 million, which given the 25 times roll-over, allows for about a $5.6 billion line of credit. Furthermore, it allows the corporation to go to the private market. While it is not perfect, I would endorse the comments of the hon. member for Huron-Bruce (Mr. Cardiff)-and I hope this matter will be brought up again in committee-that there should be a regulation that only resident farmers are entitled to borrow money under the act.
The hon. member mentioned foreigners buying land in Canada. I realize that must be controlled at the provincial level but certainly in the Okanagan it is a big problem. We have foreigners paying very high prices for very good land, because it is a nice place to live. However, they do not live on the land; therefore its productivity is down.
Now, I said earlier that this is the first positive thing this government has done in two years. I have sat here for just over two years and seen nothing but negative and punitive legislation. In fact, there was a time when I thought the government's whole purpose was to savage Canadians. First of all, we had the energy crisis and this government's energy policy. All it succeeded in doing was to ruin what at one time was a very good industry in western Canada, Mr. Speaker. The drilling and associated service industry has virtually disappeared because of this government's policies. That really hurt western Canadians.
The second bit of legislation in another direction was also negative. The government made it impossible for most people to communicate by mail because of the high cost of postage. It stopped most of the rail passenger activity in western Canada,
Farm Loans
and altogether had a very negative impact on transportation and communications.
The third attack on the country was the too high interest rates. They have affected everyone, and most certainly the farm population. When I was home over the holidays I spent a lot of time talking to farmers and business people, and high interest rates was the main topic of conversation. One farmer in particular said he was in danger of losing his farm. He reminded me of the Farmers' Creditors Arrangement Act and asked me to see if it was still in effect. Now, there are perhaps many in this House not old enough to remember the thirties; you might, Mr. Speaker, and I do, but it was a very, very difficult time for farmers, not only because of a lack of markets but because of failed crops, bad weather and dust storms. In fact, we used to call them the dirty thirties.
However, it was the Bennett government at that time, a Conservative government, which brought in an act that made it possible for farmers on the verge of bankruptcy to come to terms with their creditors, and if they could not the courts were empowered to force an agreement on the farmers and their creditors. This farmer said that he saved his land at that time because of the Farmers' Creditors Arrangement Act. He has farmed that land for 40 years because of that act; he has been productive, and I am sure his story can be repeated many times in western Canada.
This farmer asked me, why can we not do something like that now? Well, I think that is the kind of forward-looking legislation that this government should be bringing forth. Hopefully they will; hopefully Bill C-88 and the Canagrex bill mark a change in the government's direction. Certainly in the past 15 years it has not shown any real strategy for agriculture. Everyone, Mr. Speaker, who has spoken to this bill has emphasized the need to protect the farming operation because, over the long term, I think most Canadians will agree it is absolutely essential.
I want to talk now about what has happened to Canada in relation to the farming community, agricultural production and exports in general, because both these bills address that question. I read recently an article in the January, 1979 issue of the Chelsea Journal which identified the result of this government's failure to have a national policy of agricultural production and export. It said that as a nation we can produce our own breakfast, but we must send out for lunch and dinner. That is a very apt way of saying we have failed. We can produce only our breakfast; if we want lunch or dinner we have to go outside the country and buy it.
By the year 2000 Canada will be a net importer of every food with the exception of grains, oilseed, milk and eggs. We will be making our breakfast but nothing else. That is a sad commentary on a country which was once a great agricultural producer. The article goes on to say that Canada is an underdeveloped country where agricultural trade is concerned. That was a surprise to me, Mr. Speaker. I had not heard the word "underdeveloped" in relation to Canada for a long, long time.

February 2, 1982
Farm Loans
This article then goes on to prove it. First of all, the pattern of agricultural trade in an underdeveloped country shows certain characteristics. First of all, they specialize only in one or two major exported crops. They mentioned Brazil with coffee at 33 per cent and sugar at 21 per cent of its export trade. Tanzania has 31 per cent of its trade in coffee. The Philippines exports of sugar represent 33 per cent of its total trade. Seventy-eight per cent of the Dominican Republic's trade is in sugar. Does Canada fit this pattern? Of course it does. Forty per cent of our trade is solely in wheat, a raw product.
The article goes on to say that as a result of this fact we are subject to wild fluctuations in export prices. That also marks an underdeveloped country. It points out that Brazil earned $1.1 billion from the sale of sugar in 1975, but only $421 million in 1972. Canada earned $2 billion from the sale of wheat in 1975, but only $687 million in 1970.
Another characteristic of an underdeveloped country is that most of its food is exported in the unprocessed, crude form. As a result, you lose jobs in the processing industry.
Another characteristic is that farmers are forced off the land, mostly by the large agri-business corporations. We have not yet reached Brazil's stage where some 6.3 million farmers have left the land, but we have seen the beginning of the trend. There were 381,000 fewer farmers in Canada in 1976 than in 1951. The farming population is down to 5.1 per cent of the population, compared to 16.8 per cent only a few short years ago.
Now, Mr. Speaker, I am perfectly aware that you need an economic unit in order to farm. I have lived in Saskatchewan and have seen where a farmer starved on a quarter section. Later on he starved on a half section, and barely made a living on three quarters of a section a few years later. There are now much larger economic units and I agree with that. There had to be some rationalization of the whole system. But it does not mean that you have to rationalize him out of existence. I think it is a well-known fact that farm land is more productive in the hands of a family farm unit than under any other system. Certainly much more so than the large agri-businesses which are now demanding great quantities of land.
1 was very glad to see that at least Prince Edward Island is attempting to put a stop to this. Some time ago the Irving Corporation wanted to add another 6,000 acres to their existing holdings, which would have given them about 10,000 acres on that small island. The government there indicated that perhaps they will put a limit of 3,000 acres on what any one person or corporation can own. I agree with that; I think farming is essential to our way of life.
Canada is certainly an underdeveloped country in relation to its food exports and is in great danger of using most of its arable land for cash crops. Again, I do not think we will ever become like some countries, such as Brazil or Mexico. As a result of large corporations taking a great deal of the land and using it for cash crops, the benefit to the citizens of those
countries does not match the actual return from the sale of cash crops. An article with which I agree states that today in Brazil the sugar workers are provided with less nutrients than were the slaves back in 1880. That is not a good story.
I think the statistics tell the story in Canada. In 1948 crude food exports amounted to 50 per cent of our total food exports. In 1980 our crude production was four fifths of our total food exports. I think that is unreasonable. In this country we are seeing a greater dependency on processed foods, most of which are imported. As a result, the number of jobs we have lost has become a national scandal. We now have a deficit in 11 of the 12 major fabricated food groups, when as late as 1967 the majority were in a trade surplus position.
In my own constituency we have a good example of what has happened in Canada. At one time we grew and processed tomatoes. Our production of canned tomatoes and ketchup was a very viable business. Today, not one single can of tomatoes or one bit of tomato ketchup is being produced in the Okanagan Valley. That is true of many articles. We are told that if this process continues, the tomato industry in Canada will eventually suffer a loss of some 2,365 jobs. It would not be so bad if the tomatoes imported from these large corporations in the United States and Mexico were any good, but they are designed to be picked up by machinery and not to be eaten. Most of these tomatoes could be used in baseball games and they would not suffer at all.
I think that if the Minister of Agriculture (Mr. Whelan) has a strategy, he had better look to that problem very quickly, because we certainly have the wherewithal and the means in this country to produce the kinds of foods we need. It is entirely up to us. to this government and to future governments, because this government has only a couple of years more in which to do anything. First of all, what the government must do is to ensure a self-reliant food industry. Canadian farmers and workers should grow and process food in Canada which is of the required quantity and quality. That is the first step. Second, we should ensure that our workers and farmers have sufficient incomes to purchase the food and articles they need. We have the technical know-how. All we need is some direction in policy toward which the people of this country can work, and a commitment toward lowering the interest rates.
At the moment, as a result of the high interest rate policy, all the capital formation in farming has gone to the United States. And why should it not? We are told that because of this government's policy, 25 per cent of foreign investment in the United States comes from Canada. I think it is a shame when we have the technical know-how. All we need is some financial encouragement, and I hope that it will be forthcoming from the government. As I said earlier, the government is beginning to show signs of some enlightenment. I hope it will continue with this positive attitude and work toward an ever-increasing and productive farm industry.


Mr. G. M. Gurbin (Bruce-Grey):: Mr. Speaker, as a Conservative I am glad to be able to enter the debate on Bill C-88.


An hon. Member:: You are sure, now?
February 2, 1982

1457."!


Some hon. Members:: Hear, hear!


Gary Michael Gurbin: At this time, I am particularly pleased that the Minister of Agriculture (Mr. Whelan) is in the House so that I can address several important points which I think should be included when we are looking at farm financing. I will come to those points as quickly as I can, while he is still here.
We have all awaited the changes the minister has promised in the Farm Credit Corporation for many months, particularly as the farm situation has deteriorated. The minister said many times, and I can only concur, that the problem is in the red meat industry. One of the things the minister knows well, and 1 think it is evident to all of us, particularly from comments made by all opposition parties, is that the farm community is now in a cost-price squeeze. It is in a vice which has been grabbing and squeezing it to death. It is something which can be approached from many sides, although there are some critical factors. The financial arrangements through which farmers must work comprise one of those critical factors.
1 have recently finished a survey in my constituency. We sent out approximately 1,300 questionnaires at almost the same time the Minister of Agriculture sent out questionnaires. We did this, first of all, to ensure that our area was properly understood in the context of this broader survey, because we face some special problems. I will return to that survey in a few moments, after I refer to the changes which will be made to the Farm Credit Corporation.
I would like to make reference to the capital formation of the Farm Credit Corporation. One of the things which seems unclear among the proposed changes is exactly what will happen within that capital formation part. At this point in time we know that we have a capital limit of $150 million. We know that if the request for an additional $14 million were to be granted this year, we will have gone over that limit. We are now at $143 million, and this bill would change the upper limit of capital to $225 million. The trick is that the Farm Credit Corporation can loan 25 times the amount of its capital. The Farm Credit Corporation is requesting that the government consider giving it $14 million. If one multiplies that by 25, that will mean a $350 million increase in the borrowing capacity of the Farm Credit Corporation this year. That is clearly inadequate to meet the needs of agriculture right now, and it is something which should certainly be expanded by several millions of dollars at the capital side. I know the minister knows that, and that is something we need in a hurry if we are to address the problems presently sitting in the agricultural community.
The other side to that capital formation is that the 25 factor could also be changed, so that instead of only providing another $14 million times 25, equalling $350 million, the factor could be changed, for instance, to 30 times the capital, allowing an expansion of borrowing capacity to the Farm Credit Corporation which would directly address most of the requirements of agriculture. That would work well, and there is no reason why it cannot be done.
Farm Loans
We must also consider the source of this borrowed money. The minister has suggested that the Farm Credit Corporation could borrow from sources other than the government in order to satisfy its requirements. One of the dangers, of course, that this bill has presented is that if the total borrowing limits are still the same, we will not really have accomplished a heck of a lot. If the government reduces its commitment and allows the Farm Credit Corporation to borrow from other sources, then the government will be off the hook as far as providing funds is concerned. However, we will really not have done anything to increase the amount of available capital within the Farm Credit Corporation. Therefore, what we really want to ensure is that the government maintains its commitment while allowing expansion of capital from private sources, if possible.
We must ensure that interest rates applying to funds borrowed from private sources are not too high. I read the minister's speech and certainly it is not clear in the bill how this could be accomplished. There was an indication by the hon. member for Huron-Bruce (Mr. Cardiff) that people were suggesting that money could be borrowed at very low interest rates. I think this must be seen before we can believe it, because the money which is presently available through private sources will certainly be lent at the best return it can get. I know that the minister, even in private conversations, has discussed the available opportunities for borrowing large amounts of money at lower rates. Before anyone can have any confidence that this will happen, we must have a much clearer indication and the confidence that the Farm Credit Corporation will indeed be able to provide money at interest rates which are much less than the current 16.75 per cent.
From all of the discussions which have taken place lately in the farm community, we know that an acceptable interest rate must fall somewhere around 12 per cent, as agriculture simply cannot bear interest rates at much above that level. 1 think the minister will agree with that. The question concerns the bottom line for the composite Farm Credit Corporation rate after we are done with this bill.
1 will not spend time on the agri-bond concept because 1 would like to move on the other areas. However, the idea of farmers lending into the Farm Credit Corporation and getting a special tax consideration is not too far removed from the small business bond concept. It is a good idea and should be promoted vigorously. I hope we get a chance to discuss this in committee.
Other important items in this bill include the removal of the 35-year age limit. These are items that could easily be supported. This should have been done a long time ago. The hon. member for Huron-Bruce looked for a guarantee that spouses be considered. That may be accomplished in part by the improvement in the loan limits from $200,000 to $300,000 on up to $500,000 for multiple-person operations. 1 hope the understanding is there if the wording is not.
The points I want to make go back to the realities of where the financial situation is in agriculture today, particularly in

February 2, 1982
Farm Loans
those areas where there are a few options, at least in the short term, for those involved in the red meat industry.
In the survey we have just finished compiling, 1,600 questionnaires were sent out. There were 473 people who responded. We found that 10.1 per cent of all farmers have their farms for sale-and this is dairy and all types of agricultural industries-in the whole of Bruce County. The important point is that in the red meat industry, those who have any type of beef or pork, an additional 30 per cent are considering selling their farms. That says something for the industry.
We have a number of other matters that have been tabulated, including land equities which have fallen, particularly if you include the inflation factor. These things could be expected. There are important matters in terms of marketing boards. 1 intend to share these with the minister in a written way as soon as I have them all put together.
The critical factor is that the extra $50 million available for farm credit will not solve the problem. It helps in areas where the FCC feels it can make a loan because there is a viable operation. It will obviously only help for a year or two, will be reviewed, and there will again be the same problem. It looks at one area incompletely, but at least it is addressing it.
There is another area which, as the minister knows, has been discussed in a number of forums in the past several months. This is the area where people are now without equity. They could be called technically bankrupt. They are in a situation which continues to deteriorate. There is no answer. Some of these people might be criticized for being poor managers.
In his speech, the minister indicated his understanding of the fact that there needed to be a certain size operation in order to be competitive and productive in a way that the farmer could earn a living. The farm size grew as people were expanding their operation. They were doing things right, but they were caught in a squeeze because of changes in energy prices. A lot of farmers were concerned about that when the Conservative Party was in power. They are caught just as badly now, if not worse. They will have to spend $4.50 an acre more over the next year. All of these things coming together have left these people in a situation which has to be looked at in a serious way.
There have been a number of suggestions. There are three basic solutions to this problem. One is akin to the farmers and creditors act introduced in the thirties. It is something that nobody likes to consider seriously if they do not have to, but it is a humane way of looking at the situation that exists today.
Something else that has been suggested with some historic precedent, as far as ARDA is concerned and what it does, is a kind of land banking. I read some of the comments about what happened in Saskatchewan. In order to address the problem, some answer that includes land banking and government ownership in the land for at least an interim period might be considered.
Finally, what could be considered, and would not be an awful lot different in terms of legislation or the way the minister and his department look at the situation, would be an
instance where a farmer was able to negotiate a settlement on his own behalf with a particular financial institution, and that institution writes off some of the amount. I know of one case where the bank is prepared to write off $800,000. In spite of the fact this person has been a good manager and is respected in the community, he is in a situation now where he cannot go anywhere else to raise the money to resolve the situation. He cannot get the kind of support that would give confidence to another financial institution. The same financial institution that would negotiate the settlement is clearly not in the position where it wants to refinance this man. Therefore, that kind of negotiation would serve the purposes of the bank. It would certainly serve the purposes of individual farmers involved in this area. It could be supported by the government either through the Farm Credit Corporation or by government guarantees, either with or without the co-operation of the provincial government. It could answer one of the last problems remaining to be solved.
We are working through some of these matters, including marketing, which the minister knows is important, the longer-term financing of lower rates that he knows is important, and the rationalization of the whole red meat industry and whether that will be a specialty product in the future.
Others have mentioned many other points; I will not go into them. I look forward to speaking at committee stage of this bill in an attempt to understand what the minister has in mind. We know that the regulatory aspects of this bill have been expanded. I find it confusing when I read some of the minister's remarks in years gone by with regard to the amount of discretionary power which civil servants have and now see him giving them more power. I guess there is good news and bad news about that. If it speeds up the process and avoids legislative delay, that is good. However, I wonder whether he is going to change his mind about some of those things we talked about before.
I end my remarks with the hope that the minister will address that one area in agriculture that has been missed, to the detriment of the individual farmer who deserves his integrity and degree of dignity as he is trying to go through a painful readjustment, but one which will serve well the interests of the minister, his department and all Canadians.


Arthur Jacob (Jake) Epp: Mr. Speaker, in rising to give some views on the bill before us to amend the Farm Credit Corporation legislation, one which would increase the loan capacity by $50 million and increase the borrowing capacity to $5.6 billion, the question that has to be asked very quickly is, can this bill be supported? The answer to that is yes. The second question is, will the bill do the job which the minister says it will? I think the answer to that is, at best, a qualified yes. I say at best.
All of us in the House, especially those of us who come from rural constituencies, believe that this is not only a rural Canadian problem but a Canadian problem. I think it is
February 2, 1982

important that Canadians in urban areas as well understand, at least in part, what is happening on the farm front.
The minister loves to say that we have the best farmers and the best agriculture in the world, and he would like us to believe that this is true for one reason-because he also feels that the best agriculture minister is resident in this country. That is debatable.
I also believe that, as Canadians, we are fortunate to have people who have the potential to be among the best farmers in the world. I believe many of them are. What farmers are facing today is the prospect that as their costs are rising, their farm incomes are projected to go down. When one studies the Canadian economy, it becomes a very frightening projection for the 1982 crop year.
The Outlook conference which was held just before the end of the year is generally a conference that tries to put forward an optimistic view of the agricultural community for the next year. There is realism but, generally speaking, Outlook conferences try to provide an optimistic view. While that stamp of optimism was attempted to be made in the last conference, every participant knew that the farm economy was facing lower returns and higher costs. The question that is before us today is not merely of a $50 million increase in money available to FCC. What is before us is the viability of the farm community.
The Minister of Agriculture (Mr. Whelan) knows that while 1 might be a critical person in the House from time to time, 1 also attempt to give some views in the hope that we can help Canadians. This is especially true today as we address the farm question. I say to the minister with frankness and honesty that, joking aside, I know he has made serious attempts to improve the condition of the Canadian farmer and the economy in which he has to function. However, I think if he were honest as well-as I know he tends to be-he would have to admit that he is not getting the support he needs within the cabinet. There may be many of his colleagues who give him verbal support, but the fact is-he has almost said so himself in the myriad speeches that flow across our desks-that within the Canadian cabinet, especially this one but generally within the Canadian government structure, the prominence that agriculture once enjoyed has been greatly reduced.


Jack Sydney George (Bud) Cullen: 1 disagree.


Arthur Jacob (Jake) Epp: It has been largely reduced. All one has to do is to see how the cabinet is made up compared to the cabinets of the thirties, forties and fifties. In those years there was a much higher rural input than today.


Jack Sydney George (Bud) Cullen: We have quality today.


Arthur Jacob (Jake) Epp: I am being interrupted by the hon. member for Sarnia (Mr. Cullen). He says they have quality today. Yes, they have quality, but I would tell you, Mr. Speaker, that Canadians are rejecting that quality day after day. We expect more. My point is that the cabinets of the past had a much
Farm Loans
larger rural component. Today there is a heavy weighting toward an urban component.
All of us have sat in committees and participated in their deliberations. Some of us have sat in the cabinet room. It is obvious that, no matter what the good intentions are, if the majority of ministers are from one group, the cabinet will tend to make decisions which are in the interests of that group. This will result in the cabinet holding up legislation or not passing it as quickly as possible because of a lack of stress from the majority of cabinet ministers. If the minister were to assess his situation today, he must at least agree in part that this is what is happening in the Canadian governmental structure. This is also true with provincial governments.
I do believe that there is a preponderance of members in the federal government who have an urban mind-set without at least in part understanding what is happening on the rural front.
We see today a deep concern in the farm community about the future in 1982. The first thing that farmers have to face is high input costs. Loans were traditionally made to farmers for one purpose, the purchase of land, buildings and machinery. That was the largest amount, not only in dollar value but in the number of loans that were made. Although this still applies today, there is a new component. It is a feature which we have begun using, and that is line of credit. Today farmers not only have mortgages, they must go to financial institutions to obtain an additional line of credit in order to operate. In other words, they must pay the mortgage and machinery costs as well as pay that line of credit. This line of credit generally runs from year to year and is settled before the next crop year starts. With lower farm incomes and higher interest rates, the ability to pay that line of credit becomes very difficult for farmers.
My hon. friend from Bruce-Grey (Mr. Gurbin), who has just finished speaking, has many constituents engaged in the operation of feed lots and who operate on a yearly basis. They obtain a loan as a line of credit in order to finish cattle for sale at the end of the year. Then they pay back their line of credit with the hope of having some money left over to clothe themselves and pay off their mortgage. That is how farming operates today.
One day during the Christmas break-it was about minus 31 on one of our more balmy days in Manitoba this winter-1 was driving down the highway listening to the CBC farm report on the radio. I heard a statement which quoted the FCC as saying that farmers were moving toward becoming millionaires. I looked out at the farms I was passing and, yes, the farmers' equity is higher, but almost invariably their indebtedness has kept pace or even increased with their equity. Statements such as the one I heard bring total misunderstanding between rural and urban Canadians. The urban Canadian automatically says; "There are those farmers who are worth half a million dollars and what am I trying to do? I am trying to pay off my house mortgage." That is a completely erroneous concept of what is happening.

February 2, 1982
Farm Loans


Eugene Whelan: The reporter did not write the whole story or you would have had a better understanding.


Arthur Jacob (Jake) Epp: You also run the CBC.


An hon. Member:: We wonder.


Mr. Deputy Speaker:: I should remind the hon. member to address his remarks to the Chair.


Arthur Jacob (Jake) Epp: I appreciate that admonition and I am sure the Chair did not direct it to the Minister of Agriculture.
Seriously, what I am saying is that there must be more understanding throughout Canada of what is happening on the farm front. There are many farmers in our constituencies today who have loans they had been hoping they would be able to dispose of within a 12-month period. They are now carrying those loans for two and three years. They have not been able to pay them off, and without lower interest rates, no matter how good a farmer might be, no matter how good a manager he might be and no matter how long his farm has been in his family, he will not survive. He cannot survive under the present conditions, and no matter how good a job the Minister of Agriculture might feel he is doing, those are the realities farmers face today.
I am not even referring to young farmers who have mortgages over their ears they are trying to pay. I am talking about farmers who are in good equity positions, who have been farming for a number of years and who thought their equity was building so that they would have something for their retirement. Suddenly they are selling off equity to pay for credit they need for their operations.
Some people will tell those of us who are participating in this debate that if we are in favour of this bill we should send it to the committee; but it is important that we use the opportunity of this debate in the House to show Canadians what is actually happening to farmers. People see on their television screens at night the news that some farmers are irritated. They are going to their banks and taking action farmers are not in the habit of taking. They are not doing this because they enjoy taking those actions. They are taking those actions because they are being driven to it. This is serious. This is very serious in terms of the future of the Canadian farmer, and I suggest none of us would be protected from the whirlwind which would be unleashed if Canadian farmers could not operate any longer.
There might be some in this House who will say that as an opposition member all I am trying to do is create a straw man I can knock down. No, that is not what I am trying to do. I spoke to farmers during the Christmas break. I spoke to people who have been in business for 30 and 40 years. They have two fears. "How can I put my crop in next year and be able to pay for it?" Second, "Will I have enough retirement income at the end of my working life so that somebody else can continue farming and I can live in dignity?" Those are the two questions they are asking.
When we look at the whole question of farm borrowings or the need for cash flow or financial resources, it is not traditional to look only at land, buildings and machinery. We must also look at lines of credit.
On the matter of high interest rates, I attended the federal-provincial conference this morning. Perhaps the Prime Minister (Mr. Trudeau) felt he did not have too many friends around that table. The premiers have varying political stripes, but what they were saying were the same things people were saying to the Conservative Party's committee on the budget and the economy as it toured the country during the Christmas break. The first issue to which people referred was not the budget. That was second. The first issue to which they referred was the issue of high interest rates. The budget compounded the problem.
What was said this morning? I will not read in detail what was said this morning. The meeting went on for a long time. The Chair would not give me the amount of time I would need to read everything in detail, but the Premier of Alberta said that what we need for a national economic recovery strategy is, first, a made-in-Canada interest rate policy. The Premier of Saskatchewan, obviously of a different political stripe from that of the Premier of Alberta, said that we need the immediate adoption of a made-in-Canada monetary policy of lower and stable interest rates. Just to encourage the Minister of Agriculture further, the Premier of Saskatchewan also said that the introduction of effective national stabilization programs for Canadian beef and hog producers is needed.
Hon. members might think that the Premier of Ontario is the premier of a province which is highly urbanized.


Eugene Whelan: He did not even mention farmers.


Arthur Jacob (Jake) Epp: If the minister wants to speak-although it has been difficult to listen to him in the past-I am sure we would allow him to be heard again. The Premier of Ontario said we cannot follow the narrow pursuit of American interest rates.
What did the Premier of Prince Edward Island say? Oh, we can say that there are only 110,000 people in Prince Edward Island, but those people are Canadians and agriculture is vital to that province. A former premier of that province sits here, and I do not have to convince him of that. The Premier of Prince Edward Island said:
Farmers, like all businessmen across the country, are facing the real hardship of high interest rates. Most provinces, except ours, have the fiscal flexibility to subsidize interest to the farmer. We suggest as an alternative to varying degrees of provincial support, that the federal government, through the Farm Credit Corporation, alleviate this burden by providing credit at more reasonable interest rates to our primary producers. This policy would allow our farm community a more equitable opportunity to compete.
That is what the Premier of Prince Edward Island said, and that is what is being said across the street. It is being said in this House but, more importantly, it is being said on every main street in rural Canada. It is being said in every coffee shop.


An hon. Member:: And in beer parlours.


Arthur Jacob (Jake) Epp: My friend at the back says it is being said in beer parlours as well. Perhaps that is the only solace people are getting these days.
I grant that an easy solution to the high interest rate problem is simply to reduce rates, but that would not be in keeping with reality. The problem is that the Canadian government has been into the international bond market to such a degree and for so long that it is now caught on the horns of a dilemma brought about by itself. How can the government expect interest rates to drop substantially if it is into the international bond market at a rate of 25 per cent annually over its revenues? That is what we have been seeing. Oh, yes, it was very easy for a time to advance all kinds of programs and say to Canadians, "Look, we are doing this for you". However, the government has never reminded the people of who is paying for the programs and how much more they will cost in the future. I am for those programs too, but I want to see them as a natural outgrowth of more economic activity. Today we are looking at our economic pie and cutting it up in such a way that some people get a little more and others a little less. The only way to help Canadians is by allowing Canadians to increase the size of the pie.
On the one hand we are into the international bond market to a large extent, but what did the government do in relation to the new issue of Canada Savings Bonds? The new rate offered Canadians was 19.75 per cent. How can Canadians expect interest rates to drop when any Canadian can go into a bank and buy $15,000 in Canada Savings Bonds, leave them in the bank for one year and get a return of 19.75 per cent? Does anyone in his right mind really believe that is the way to reduce interest rates?
Those are the realities. We can indulge in all kinds of rhetoric and political philosophy, but the fact remains that if we are into the bond market to the extent we have been for the last 15 years and are now trying to finance in Canadian dollars at 19.75 per cent, and if that is what the government is paying for money, we cannot expect the Canadian farmer who is worried about credit to enjoy interest rates which are substantially lower. It cannot be done. That is the tragedy that results from this government's administration in relation to Canadian farmers.
Hon. members and the minister will recall the questions that were asked about the proposed FCC loan rate. 1 would have liked to be a fly on the wall of the cabinet room when the minister argued for a lower interest rate. But what was it when he announced it? It was 16.75 per cent, Mr. Speaker. Canadian farmers cannot afford a line of credit at 16.75 per cent. Is that supposed to help?


Eugene Whelan: It is 6 per cent below the banks.


Arthur Jacob (Jake) Epp: Yes, and it is 1.75 per cent above my credit union. There are financial institutions-


Eugene Whelan: Yours is one in a hundred.
Farm Loans


Arthur Jacob (Jake) Epp: Mr. Speaker, the minister says that the credit union where I have a mortgage and where farmers have lines of credit is one in a hundred. If that is the case, I suggest that he go to the credit unions, ask them how it is done and then follow their advice.


Eugene Whelan: Don't lecture me on credit unions. I have been a member of them for a long time.


Arthur Jacob (Jake) Epp: The fact remains that 16.75 per cent, no matter what the bank rate is, is too high.


Eugene Whelan: Your minister raised it 2 per cent a year before.


Arthur Jacob (Jake) Epp: That is too high for Canadian farmers. Some might say that we cannot afford to subsidize interest rates for young Canadian farmers at this time, but I do not accept that.
I would accept it if this government were consistent, but I have in front of me information on a deal that the Minister of Finance (Mr. MacEachen) has worked out with the Soviet Union for a natural gas project for $637 million. How much money are we dealing with today for Canadian farmers? Just $50 million. Yet we are dealing with a loan of $637 million to be advanced to the Soviet Union. And at what per cent?


Gerald Augustine Regan: Why?


Arthur Jacob (Jake) Epp: And at what rate, I ask the Secretary of State (Mr. Regan), when he asks why? At 10 per cent, Mr. Speaker. And for how many years? For 12 years. I ask the minister, if that is the kind of deal these fellows in this new Department of External Affairs who deal with imports and exports are getting for us, why he was so weak in cabinet that now he has to tell Canadian farmers they have to pay 16.75 per cent, but that the Soviet Union can be advanced money at 10 per cent. How weak is the minister?


Eugene Whelan: That is because we are exporting some financed at much lower rates than that to the Soviet Union.


Arthur Jacob (Jake) Epp: That does not make me feel any better.


Eugene Whelan: I didn't believe it would.


Arthur Jacob (Jake) Epp: If Canada cannot afford to subsidize farming- and by that I mean giving the farmers the loans they need- how can we afford to subsidize the Soviet Union and its citizens for the next 12 years? I wonder how many young farmers would be willing to accept a loan from the FCC today at 10 per cent for the next 12 years! How long do you think the line-up would be? Yet we are saying to the Soviet Union, "Yes, Soviet Union, we will do it for you". We see the Prime Minister going off to this location and to that location, handing out money here and handing out money there.


Eugene Whelan: We gave $3 million to your corn growers in Manitoba interest free. Potato growers get money interest free too.

February 2, 1982
Farm Loans


Arthur Jacob (Jake) Epp: Canadian farmers come to us and ask why they cannot get at least as good a deal from the Canadian government as it is willing to give others. That is all they are asking.


Gerald Augustine Regan: You are a demagogue, Jake.


Arthur Jacob (Jake) Epp: I might be a demagogue but this is what farmers are asking and it is my responsibility to tell the government about it, so you had better listen as well.


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


Arthur Jacob (Jake) Epp: What about the budget and its relationship to the Small Business Development Bond? I find it interesting-


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


Mr. Deputy Speaker:: Order, please. The hon. Secretary of State rises to ask the hon. member's permission to put a question. Will the hon. member accept a question?


Arthur Jacob (Jake) Epp: Yes, Mr. Speaker, 1 will accept a question when I am through.
What about the Small Business Development Bond? The idea of that bond was laughed at by this government yet in the last two years it is the only new idea that it has brought forward. However, it has emasculated it to such a degree that the banks do not want to handle it.
If we did a survey of members of this House on the difficulties they have had with constituents asking for their help to get a Small Business Development Bond, I dare say every one would have had that experience.
As a result of the last budget farmers can now get a Small Business Development Bond but they have to show that they are in trouble, that they are almost broke, that they are in danger of foreclosure. Then they can ask the bank for a Small Business Development Bond. Considering the history of the Small Business Development Bond, how many banks will deliver?
Let us consider the budget provision regarding lAACs and RRSPs. How many members were confronted by farmers during the Christmas break who said, "I have an IAAC", or "I want to buy an IAAC", or "I want to save for my retirement"? The government now says, "Oh, yes, we want agriculture to advance, but we are going to make sure that the government gets the first call on your resources." Many members have had such experiences.
Where was the Minister of Agriculture when the budget was being drafted? Where was he when income-averaging annuity contracts were discussed? What was he doing to protect the Canadian farmer when the budget was being discussed or ideas were being advanced to be included in it?


Eugene Whelan: Where were you when Crosbie did his?


Arthur Jacob (Jake) Epp: Mr. Speaker, that budget was not taxation; that budget was confiscation. There is a big difference. We all
criticize taxation and argue about the rate because none of us wants to pay tax. There is quite a difference between payment of taxes, however, and the confiscation of property on which taxes have been paid over the years. TThere is a great difference.
As I remember the constitutional debate, if I feel any chagrin it is about property rights. In one way or another the idea of property rights-that a person may own something after he or she has worked for it-is being eroded. It is being chipped away; it is being chiselled away.
I am sure many other members have had the experience of people coming to them with this question: "Why is it, when I want to retire, the government insists on taxing me first when I have worked all these years in order that I might live in dignity in the sunset years of my life?" That question is not being answered by the Minister of Finance or by the Minister of Agriculture.
I should like to say something about the administration of the FCC. I notice that there are some officials in the gallery who I presume are from FCC, and I think it is important that they understand what we hear about the administration. I must say that in general terms I think it is valuable and that I think the administration is excellent. The officials are often confronted by people who are in difficulty, people who need a loan and obviously the need has to be assessed in a very rational way. But I want to tell them that farmers do not come to them in a master-servant relationship. Perhaps there is a defence mechanism involved on the part of officials of the FCC but we often hear the complaint from farmers that they feel it is due to the good graces of the person across the desk that they receive the loan. That person's job is one of administration, not to make that Canadian farmer feel that if he gets anything he should be very thankful to the person sitting across the desk.
In the whole question of administration the Catch 22 situation arises time after time. A young farmer comes into the FCC looking for a loan. He is told that he can obtain a loan if he has enough equity, and the farmer says, "My dear friend, I would not be here if I had the equity; I could go to a different financial institution." Very often banks are willing to take risks on the potential of a young farmer, on the potential of his land, on the potential of his management ability, or on the potential of his willingness and that of his wife and family to work. Often banks and credit unions are much more willing to take a risk than the FCC.
Another matter of administration was brought to my attention recently. I do not know how it will be resolved, but I have written to the minister in the past few days about it. I am referring to the situation where a farmer obtains a loan and goes into a local place of business, such as a lumberyard or a farm supply dealer, and shows his line of credit. He says that he wants to build a facility or a barn with the proceeds of his loan. He starts building his barn and because there is a line of credit through the FCC, the supplier advances the materials.
February 2, 1982

But suddenly the barn is not quite complete and FCC demands that it be completed. Now the supplier is in a Catch 22 situation. He either advances more supplies in order to get his money, because FCC will not advance it to the farmer, or he stops the project right there. I know a lumber dealer who advanced materials and $7,000 is outstanding, but the person who received the FCC loan left the province-he walked away, so to speak. Obviously the FCC has the first mortgage, and in order to protect himself, the lumber dealer took a second mortgage on which I do not think he will ever realize any return. Not only does FCC have a responsibility to farmers, it must modernize its administrative system, particularly concerning the manner in which supplies are received and building materials are purchased by some people with FCC loans.
If there is hope in the country, I believe there is hope because of agriculture. I have been somewhat critical of the minister today because the farmers with whom I have spoken have been extremely critical of the minister over the last few months. What they have been saying is: "Would you tell them in the House of Commons that first there must be a recognition, not in words but in action, that agriculture is extremely important for Canada's future." Perhaps that sounds prosaic, that everyone understands and agrees with it, but this is not so.
Today we hear much about an industrial strategy, which is valid and important, but the development of farming and a method of meeting the problems and challenges of farming should be as much a part of the industrial strategy as rebuilding, for instance, industries in central Canada to make them more competitive. When there is a lay-off in farming, it affects a farmer, his wife and his family and their future and dreams. When someone who works for Massey-Ferguson is laid off, we hear about the numbers. Both are tragic, but there must be a recognition that farming is important. We should not only give it lip service. It must become part of the national strategy. Also we must do a better job of selling. Today I often hear the word "marketing". 1 am not against marketing boards, but I want to see hard-nosed people out in the marketplace selling Canadian agricultural products. We are not doing an adequate job in that regard.
1 should like to refer to the example of the first shipments of canola to Japan. Yes, the Canadian government was interested but it did not know what to do. I know a farmer who said, "Look, 1 will do it". He filled containers and said that he would clean it in Canada. The Japanese had a certain standard, they thought it could only be done in Japan. When the farmer delivered the canola to Japan, cleaned in Canada, it had a lower dockage rate than the best cleaning facilities in Japan. This is what Canadian farmers are capable of doing. We must get out there and sell.
1 should like to refer to another example in the time remaining; that is, the Canadian Egg Marketing Agency. Over 50 per cent of all eggs produced in Manitoba are produced by a number of farmers in my riding. Over the last few weeks I have been trying to obtain, through CEMA, permission to purchase eggs through an international contact in excess of
11,000	cases per week. The average farmer produces 100 cases
Farm Loans
per week, so one can imagine how much I am talking about. I cannot obtain that. I have talked with farmers in British Columbia and in Manitoba, and they have said, "Give us the opportunity and we will produce those eggs." When marketing becomes more important than selling, we run into trouble. This is what has happened.
I am for marketing. We need good marketing, but we also need hard-nosed selling. We also must be able to assure Canadian farmers that they will retain their assets. If we do not assure young Canadians who want to become involved in farming that the assets will be theirs first, that they will be their pension plans, that the Government of Canada will not confiscate through capital gains and change the rules in the middle, as we saw with the budget, we will not attract young Canadians into farming.
Those of us who grew up on farms-and perhaps tragically were not able to continue that life-say that farming has a great future, but we must allow farmers to do what they do best-farm. We should not interfere, but we should encourage.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: The hon. member for Hillsborough (Mr. McMillan)-Federal-Provincial Fiscal Arrangements-Calculation of provincial revenues.
(b)	Request that Minister review formula; the hon. member for Portage-Marquette (Mr. Mayer)-Agriculture-Government aid to producers, (b) Application of lower interest rates.
(c)	Short-term credit; the hon. member for Halifax West (Mr. Crosby)-The Budget-Provisions affecting pensioners, (b) Taxpayer statistics, (c) Minister's budgetary statements.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Whelan that Bill C-88, respecting loans to farmers, be read the second time and referred to the Standing Committee on Agriculture.
Mr. Bud Bradley (Haldimand-Norfolk):: Mr. Speaker, I welcome this opportunity to speak today on Bill C-88, respect-

February 2, 1982
Farm Loans
ing the loans of the Farm Credit Corporation to farmers. Improvements in food production in Canada should be our number one priority. I am sure we are all aware that farmers are one of the major pillars of the economy of the country. During this time of economic disparity, inflation and rising costs of production, they need a strengthened role of Farm Credit Corporation. Proper legislation for the corporation is crucial to the farm community and to Canada as a whole. I am pleased to see this legislation brought before the House; I am pleased to see the amendments proposed by the Minister of Agriculture (Mr. Whelan).
Although I have many concerns about a number of amendments, in general I feel that they will afford the corporation more flexibility and a greater opportunity to assist agriculture. There have been problems with the Farm Credit Corporation in the past, but those problems are mainly through interpretation of the act and because of a lack of funding for the corporation itself. I hope they can be clarified with these amendments.
One cannot find fault with the individuals in the field. The staff of the corporation is very thorough and helpful, but it is tremendously hindered by not having the necessary funds to do the job. One only has to talk to Farm Credit Corporation staff throughout the country to see that it has a feeling of concern for agriculture. But it just does not have the funds to do something about its concerns. Hopefully we in this chamber can overcome this.
[DOT] (W20)
1 notice that the amendments are going to increase the board of directors from a complement of five to a complement of seven members. I have mixed feelings about that. I suppose I cannot see anything really wrong with increasing the board of directors to seven because it affords us more heads to think things out. But I hope, Mr. Speaker, that the increase from five members to seven is not used to offer more jobs to political patronage persons within the Liberal Party. I am sure the minister will assure us that this will not take place. I have that faith in the minister and in his concern for agriculture.
I have some concerns about other things like patronage, but 1 also have a concern about creating corporations that are top heavy. I would sooner see the funds that may be placed in expanding the board of directors put out into the field and provided to the farmers instead of to develop a larger Crown corporation. Something of this nature is one issue that we can thrash out in committee.
Competition is stiffening in the agriculture community, both here in Canada and abroad. It is essential and necessary that farmers receive assistance, be it financial to make major investments in new technology and new machinery, or to assist them in selling their produce not only domestically but on the export market. That is one of the reasons we are also debating the Canagrex legislation this week here in the chamber.
In order to keep abreast of this technology, farmers are going to have to maintain high production. They are going to have to expand to a scale that is going to be able to afford
them the opportunity to take advantage of modern agricultural methods. These modern methods, of course, are extremely costly and, therefore, funds must be made available to the agricultural sector.
The Canadian Federation of Agriculture stated recently that the Farm Credit Corporation is disgracefully inadequate to the quest of farmers for real help. The $50 million provided in the budget, of which $45 million will be allowed to be loaned to farmers, will in fact provide approximately $100,000 per farm. The average appears to be somewhere between $90,000 to $100,000 in loans. But is $100,000 enough? We see now that we are raising the ceiling to $200,000. I am in agreement with that amendment. A farmer needs at least $200,000 to start a farm operation these days. Consequently that loan will only assist 225 farmers. We had hoped when we were in the government, for that all too short a period, that farm credit would be increased over a period of years by some $500 million. That is a more realistic figure and one we should consider in our deliberations in committee.
We are looking at situations now where some farms are worth in excess of $1 million. How does a young fellow today buy a million dollar farm? We do not have too many young people in Canada with a million dollars floating around in their pockets. Certainly there are some who have possibly worked with their fathers, built up little nest eggs of about $50,000, maybe even a little more. Say a young farmer puts his $50,000 down on his dream and then approaches the Farm Credit Corporation, and hopefully he can obtain the maximum loan of $200,000. That provides him with $250,000 toward that million dollar farm. But there is still that other $750,000 to make up. This young fellow, I suppose, if he has sufficient backing from his parents, could go to another lending institution and borrow that money. Or possibly the person from whom he is buying the farm can take back a second mortgage of some $750,000.
That is an awfully large step for a young fellow to take these days, especially when one considers the interest rates required for second mortgages. But it is also a very large step for the person who is selling that farm. What is that farmer who is selling the farm going to do when he gets $250,000 cash for his farm, then takes back a $750,000 mortgage? If we read the budget of November 12 brought before this House by the Minister of Finance (Mr. MacEachen), we see the answers.
That is just one of the reasons why we have to take a long look at farm credit and farm financing in Canada. As we witness more and more farmers leaving agriculture, either by choice or by bankruptcy, it is evident that there is currently little attraction for new would-be farmers. Even if the funding is available, the rate of interest is phenomenal. My hon. friend who preceded me mentioned that the current interest rate is
16.75	per cent if one qualifies. This rate of interest is not only disheartening to a young farmer wanting to get into agriculture, but also to the successful farmer who may want to expand his operation.
We do not have to look very far to see what the problems are in agriculture or to see what problems there are within the
February 2, 1982

industry. We have a very good barometer on the agricultural industry, namely, the farm implement dealers and the farm equipment manufacturers of this country. If we look at the farm equipment manufacturers and the farm implement dealers of Canada, we can see from that barometer that there is a tremendous problem in the agricultural industry. It is one that this government must address, and address immediately if we are to see agriculture survive and thus prevent more bankruptcies in the agricultural community.
When the Minister of Agriculture tabled the legislation in this House last week, he pointed out that the Farm Credit Corporation will be allowed to obtain additional funds from sources other than the Government of Canada. I feel this is a tremendous move, a move that will add more flexibility to the corporation and a move that has tremendous potential for funding, if addressed in the proper manner. These proposed changes to the act will provide authority to borrow some of the funds from private sources, although this tends to be opposite apparently from what the minister was reported to have said only two years ago, when he indicated that he would not allow farm credit to borrow from private enterprise because he feared the privatization of the Farm Credit Corporation. Nevertheless, I applaud the minister's change of mind. 1 applaud him for his forward thinking that agriculture should not only be in the public market but also in the private market when it comes to funding of this nature. By utilizing the two, and by having the corporation keep control of the interest rates, I feel that tremendous assistance can be afforded to those looking for financing.
Let us hope that we can look closely at this privatization, and look closely at the bonds and the debenture markets the corporation is going to enter. Possibly we could afford some opportunity in this plan similar to that offered banks in the Small Business Development Bond situation. Possibly we could entice farmers who are selling their farms to invest their money in the Farm Credit Corporation as a retirement fund.
The budget does allow some investment of $10,000 into Crown corporations by farmers with a tax deduction. Possibly we could afford them the opportunity of investment and allow them to write off all, or at least most, of the interest from all investments by agriculture in agriculture. Possibly we could also afford the same opportunity to major corporations or organizations that wish to invest in the Farm Credit Corporation. This could afford our corporation a tremendous influx of funds, Mr. Speaker, which could allow us to lend money in return to the farmers at a much lower interest rate.
It is also interesting to note, Mr. Speaker, that as the seasons change so do the promises of the Liberal government. This government during the election campaign said that it, too, would offer a once-in-a-lifetime exemption of capital gains for farmers, and that it would advance "V" day to 1974. What happened instead is history now, Mr. Speaker. Instead of allowing the capital gains exemption for retiring farmers and advancing V-Day to 1974 as promised, the Liberals, with the assistance of the finance minister, brought in a budget which will tax the farmer's retirement stake and give him nothing but
Farm Loans
a slap in the face for a lifetime of work on the farm. The people of rural Canada need changes, such as the capital gains exemption, Mr. Speaker, if they are going to retire with dignity and pass along their farmland. Surely a farmer who wants to sell his farm on the basis of part payment over a number of years should be allowed to do so. It is sensible; surely it should be permitted.
So often a farmer hands down a working farm to his son or daughter to carry on the family business. We urge the minister to reconsider this once-in-a-lifetime capital gains exemption on the sale of farmland. I am sure this tax has been a major factor in the decline in the number of Canadian farms and farmers because it has increased land prices, Mr. Speaker. They have to add the cost of the tax to the selling price and thus push it out of reach of a lot of people who have the dream of entering farming. It also encourages the centralization of farms into the hands of the wealthy or corporate buyer since they are the ones with the cash available.
This type of action, Mr. Speaker, brings out a whole new concept and concern that 1 have. The recent budget has made it extremely difficult for a farmer to sell his farm and for a purchaser to buy it. Cash money is required, and the capital gains tax is detrimental. If we think back and consider that this government would not allow the right to property in the bill of rights of our Constitution, and then think of the Canagrex bill which will allow that corporation the right to purchase and hold land, we can only hope we are not seeing a trend toward government-owned farms, Mr. Speaker. We do not need a federal land bank. I hope those in default to the FCC- some 7 per cent at present 1 understand will not have their farms picked up by Canagrex and run as government farms. 1 hope and I trust the Minister of Agriculture will ensure that this government does not move this country toward government-owned and run agricultural enterprises.


Some hon. Members:: Hear, hear!


T.A. Bud Bradley: Changes made in this budget regarding income-averaging annuity contracts have, in effect, frozen land sales for this generation. By eliminating the IAACs and the capital gains reserve, this government has forcefully and tragically penalized the Canadian farmer's retirement income. Until there is some change in the capital gains tax, until there is some change in the ability of individuals to use the capital from their farms in a way which will protect them from the exorbitant taxation at the time of sale, this generation will have to maintain control of the land. As a result, agriculture will not prosper as it would if people were allowed to retire from their farms and let the younger people carry on in their place. Why should a farmer be taxed on his farm all his life, Mr. Speaker, and then be dealt a heavier blow when he tries to sell it?
High start-up costs discourage many from entering farming. Therefore, I believe the government should focus attention on

February 2, 1982
Farm Loans
incentives to encourage people to start in farming and have the land remain in farming if at all possible. These incentives could be introduced through the Farm Credit Corporation. That corporation brings a strong national influence in the field of credit. In areas that do not have provincial programs, Mr. Speaker, the FCC is almost the only source of funds for young people who wish to get into farming. However, it falls short of providing sufficient help.
No industry is more important than agriculture in Canada, Mr. Speaker. It produces our food, and the family farm has been the major factor in that production. If we do not make sure that production continues, then we can expect to run into even more severe difficulties in future than we are facing today in agriculture.
Credit is important, Mr. Speaker, but net income is more important. We have a situation today where farmers are restricted in the amount they can charge for their produce, and yet there is no restriction on their overhead. There is no restriction on the increased costs of machinery, equipment, labour, energy, fertilizer or seed, Mr. Speaker. All of these have escalated so sharply that a constant depletion of farmers' income has occurred. For the past ten years, farm income has remained relatively the same, but the overhead has moved upward at a tremendous rate. The farmer's cash flow has suffered drastically.
Most certainly we should be looking at the availability of credit to the farmer, but we should be looking further. We should be looking at the squeeze on the farmer because of the tremendous changes in the cost-price situation in agriculture today. Canadian farmers are only looking for a decent return on their investment. Unlike many other business sectors of Canada, agriculture exists almost entirely as small family farm businesses. All the bank lending to agriculture may appear to be long term in the sense that it is done on the security of a mortgage with a long amortization. However, the mortgage is, typically, called for adjustment of interest rates at intervals as frequent as a year, or possibly there may be a floating rate. A farmer cannot plan five years ahead on his cost of production if he has to be continually concerned about interest rates.
However, I do not wish to dwell on this subject, Mr. Speaker. It is well known, I am sure, to all of us here. Hopefully, Mr. Speaker, we will be able to look at this bill as having the potential to do other things. We need clarification not only of the FCC, but also of the Small Business Development Bond. There is a tremendous conflict between the two. We have the FCC being forced to tell farmers that they cannot qualify for a loan until they have been turned down by another lending institution. So they tell them to check with the bank about qualifying for a Small Business Development Bond. The farmer goes to the bank and is told they do not yet have the regulations on the bond, or else he is told he must be turned down by another lending institution before qualifying for the bond. It is a vicious circle, Mr. Speaker. It is time consuming, confusing and, in too many cases, futile. We should put our heads together and make sure the FCC, the Small Business
Development Bond program and the banks are in step as to what assistance is to be afforded to the agricultural community in an orderly manner.
I feel, Mr. Speaker, that Bill C-88 and the amendments have come three years too late. There is no short-term relief; funds have run out. Two hundred and sixty-one Canadian farms have been forced into bankruptcy, not to mention the hundreds more forced out through foreclosure and forced sale. Not only is further funding necessary, Mr. Speaker, but an over-all strategy to encourage and support our farmers is required. Bill C-88 is ineffective without proper funding. It cannot solve the immediate problems of underfunding as it stands. Further government action is desperately needed. The bill could be an important and worth-while measure if the government gave a firm commitment that its direct funding to the FCC will not be cut back. The promised $50 million is insufficient; we must ensure immediately that that figure is increased.
I am not opposed to these amendments as presented Mr. Speaker. I am happy to see the age limit of 35 being lifted under which borrowers can phase into farming over a five-year period. I am happy to see the $50 million increase even if I do feel it is a small amount compared to what is required. I am pleased to see the increased flexibility being worked into the corporation. I am very pleased that we are allowing private funding of the corporation, hoping, as I pointed out, the interest paid will not be taxable. I am pleased to see the borrowing ceiling brought up to $200,000, Mr. Speaker. Farms are now in the area of $900,000 to $1 million or more, and the ceiling must be raised.
As I pointed out, I also have suggestions pertaining to the Farm Credit Corporation and agriculture in general. I would suggest that we sit down and clarify the Farm Credit Corporation versus the Small Business Development Bond program and the bank loan issue. I hope that in committee we will investigate the possibility of allowing the private sector to invest in the Farm Credit Corporation and write off the interest, and thus allow the Farm Credit Corporation interest rate to be brought down to a reasonable, low level which would be stimulative to the industry.
I hope we can look at the possibility of increasing the funds given to the Farm Credit Corporation, not by $50 million as proposed but, hopefully, by some $500 million, even if it must be phased in over two or three years. I suggest that we look at an increase in the amounts available for lending when we start looking at farms which are worth $1 million or more. We must keep abreast of inflation in the industry.
I hope the minister will give serious consideration to giving the capital gains exemption, at least once in a lifetime, to a bona fide farmer, which would allow him some dignity in retirement and would help keep the farm costs down.
I hope we can address the energy rebate program and give agriculture some assistance with the energy used in food production. Hopefully, we can look at the interest deductibility
February 2, 1982

possibilities in agriculture and, above all, I suggest we do everything we can to lower interest rates in agriculture.
As I pointed out earlier, farmers are unique. They cannot increase the price of their goods as the price of the production increases because governments and all other institutions do everything in their power to keep the cost of food low to the consumers in this country in order to keep the cost of living and inflation down. However, the farmers are being faced with tremendous increases in cost in order to produce these goods. They do not want a handout. They do not want to become partners with the government, but they do need assistance.
I feel that it is time that we in this House sat down with those farmers or their representatives to figure out the best methods. I feel that it is time the Government of Canada gave farmers a fair shake.


Some hon. Members:: Hear, hear!


Mr. Doug Neil (Moose Jaw):: Mr. Speaker, I welcome the opportunity to participate in the debate this afternoon on the changes to the Farm Credit Corporation. I support the bill, generally, but I am looking forward to the time it is referred to committee so that we in the official opposition can make some constructive recommendations to the bill. I would like to make a few comments on some of the sections contained in the bill.
Clause 3 provides for an increase in the number of members on the board of the Farm Credit Corporation from five to seven. 1 would certainly like to hear an explanation from the minister as to the reason he finds that increase necessary, other than to give some Liberal in the backwoods an opportunity to sit on the board and feed at the public trough.
Over the years, the Farm Credit Corporation has done an excellent job for the farmer. For this reason, I hope that increasing the board will not result in any real changes in its operation. However, we are certainly entitled to an explanation by the minister.
My party and I support the increase in the capitalization from $150 million to $225 million. This increase in funding is certainly necessary because during the last year or two it has become more and more difficult for borrowers to go to the Farm Credit Corporation and find available funds. In many instances, when an application is made, the people who are administering the fund say to the borrower, "We would like to help you but, unfortunately, we simply do not have the money." If a young farmer, or any farmer for that matter, has a deal pending with respect to the purchase of farmland, he is certainly in need of the money within a reasonable time. If he is told by the Farm Credit Corporation that it will take six weeks, two months, three months or four months before he can get the money, he will not be able to proceed with the deal.
I think one of the real problems today is with respect to the interest rates. One should consider the present interest rate of
16.75	per cent, which is presently charged by the Farm Credit Corporation, along with the current price of land. It is not unusual, in my region at least, for a farm to sell at a minimum of $1,000 an acre. If one relates an interest rate of 16.75 per
Farm Loans
cent to $1,000 per acre of land, that means that the interest payable annually is approximately $167.50.
As it happens in most instances, farmers nowadays, because of climatic conditions and other factors, farm on a two-year rotation basis. They summer-fallow one year and they crop in the alternate year. Therefore, one has a situation where half of one's land is in crop each year. In other words, one acre of land must support the interest on two acres. If one relates 16.75 per cent interest to two acres of land at $1,000 an acre, one finds that this amounts to some $335 per acre. At $6 per bushel of wheat, it will require a crop of something more than 50 bushels to the acre simply to pay the interest alone, and that is without paying anything on the capital or paying one's taxes or input costs. The input costs have been rising year by year. The prices of fertilizer, sprays and farm machinery go up, but this is really something over which we have no control.
However, I would suggest to Your Honour and to hon. members of the House that interest rates are something we in the House can do something about. I would like to put forward a proposal which 1 think is important. The Minister of Agriculture (Mr. Whelan) has spoken about bringing interest rates down, but he has never brought forward any proposals. It was rather interesting to read an article in The Toronto Sun of January 31, 1982, entitled "Taxpayers Underwrite 10 per cent Loan to Soviets". If one reads that, one finds that the taxpayer of Canada will be subsidizing the Soviet government on a loan that EDC is making to that country. I will read one paragraph which states:
The Trudeau government has been working on a deal in which the benefits of a $198.5 million-


Mr. Cousineau:: Order!


Mr. Deputy Speaker:: Order, please. The hon. member for Gatineau (Mr. Cousineau) rises on a point of order.


René Cousineau: I wonder if the hon. member who is now speaking could respect the customs of the House by not referring to the Prime Minister (Mr. Trudeau) by his family name but by his title, please.


Arthur Jacob (Jake) Epp: Mr. Speaker, he is quoting!


Douglas Charles Neil: Mr. Speaker, I was quoting from an article.


René Cousineau: Order!


Mr. Deputy Speaker:: Order, please. The hon. member for Moose Jaw (Mr. Neil) has the floor.


Arthur Jacob (Jake) Epp: He was quoting.


René Cousineau: Doesn't make any difference, Jake.


Douglas Charles Neil: The article states:
The Trudeau government has been working on a deal in which the benefits of a $198.5 million Canadian taxpayers* 'subsidy' would go to the Soviet Union.
The Sun has learned that the federal government's Export Development Corporation has been planning to borrow money for a Soviet project at 16 per cent interest. They would then loan it at only 10 per cent interest to finance Canadian companies who are negotiating to build a $750 million portion of a

February 2, 1982
Farm Loans
new natural gas project in the Soviet Union's Astrakhan area, on the delta of the Volga River near the Caspian sea.
The article goes on to state:
The Soviet government would be the main financial benefactor in the EDC loan because the low interest rate would be passed on to it in the form of much lower contract bids by the Canadian companies.
Mr. Speaker, we can lend money to the Soviet Union at 10 per cent, yet we charge our farmers 16.75 per cent.
However, I would say to Your Honour that there is something we can do about interest rates without subsidizing, and it is fairly simple. I note that Clause 8 of the bill with which we are dealing today widens the area in which the Farm Credit Corporation can obtain funds. It reads as follows:
The corporation may, with the approval of the Minister of Finance, borrow money by any means, including issuing and selling bonds, debentures, notes and other evidences of indebtedness of the corporation.
That gives pretty wide powers to the Farm Credit Corporation when it comes to raising funds. In the November 22 budget, certain changes were made by the Minister of Finance (Mr. MacEachen) which make it almost an impossibility for a farmer when selling out to pass the land on to his son or daughter unless he can get cash for the sale. He is faced with the payment of capital gains upfront for the simple reason that the income-averaging certificates have been eliminated. He is faced with a tax on the sale of his inventory and his farm machinery.
Before the November 22 budget, the farmer was in a position where he could buy income-averaging certificates, sell on time and use the reserve system. These benefits enabled him to sell, pass on his land, and yet have sufficient money to enable him to retire. With the November 22 budget, this has been taken away. The retiring farmer is now faced with an almost impossible tax burden.
I suggest there is a way to deal with this act which would enable the Farm Credit Corporation to borrow money at reasonable rates. At the same time it would give relief to those farmers selling their farmland, inventory, machinery and retiring. It can be called an agri-bond, debenture, or farmer's retirement investment fund. I suggest that the Minister of Agriculture bring in an amendment to this bill. If it is not legal for him to do that, he can recommend to the Minister of Finance that he bring in changes to the Income Tax Act which would allow a retiring farmer to take that portion of the sale price which is a capital gain and lend it to the Farm Credit Corporation, either by way of debenture, agri-bond or a retirement fund.
The Farm Credit Corporation would pay to that retiring farmer an interest rate of, for example, 8 per cent. If the retiring farmer allowed those funds to remain in the hands of the corporation for, example, for Five years, he would have no capital gains tax to pay. I am sure retiring farmers would welcome such a scheme. I submit it would not cost the Government of Canada any money. The corporation would get money at 8 per cent, which would be taxable in the hands of
the farmer. It could lend it at 9 per cent by way of mortgage under the Farm Credit Corporation Act. That 1 per cent should cover administrative costs. The farmer would have 8 per cent investment income which he could use for his retirement.
The same could apply to the sale of inventory for farm machinery. The farmer could invest it in the Farm Credit Corporation in the same manner. The tax would be waived, the Farm Credit Corporation would have money at a low interest rate and so would the farmer. What better system could there be? The farmers would be building a fund to help farmers. It would not cost the taxpayer any money and would enable the family farm to be passed on from generation to generation.
As the situation now stands with the present budget provisions, it will be virtually impossible for a farmer to pass on the family farm to his son or daughter. It will be impossible because of the tax burden on a farmer wishing to sell his land, even for cash, and to retire comfortably. In most cases, the only retirement fund that a farmer has is what he can realize from the sale of his farm, inventory and farm machinery when he reaches retirement age.
I put this proposition to the Prime Minister (Mr. Trudeau) several months ago. In response he said that it was an interesting proposition and that he would pass it on to the Minister of Agriculture. I have not heard a thing from the Minister of Agriculture.
There is nothing in the bill or in the speeches of the minister to indicate that he was listening or that he is concerned about the retiring farmer. The procedure I have proposed is a method by which cheap money will be available to the Farm Credit Corporation and to the borrower. I hope when this bill is being considered in committee the Minister of Agriculture will discuss an amendment of this nature. We on this side of the House have been discussing it for some time and will be bringing in a joint amendment of some kind to put forward this proposal.
My time is almost up. In closing I should like to say that, generally speaking, I am supportive of this bill. I hope that when the bill goes to committee the minister will listen and that we can make some constructive amendments in a manner that will be beneficial not only to the farm population but to the Government of Canada in the form of reduced interest rates. If the minister's interests are with the farmers, he will listen to us and give consideration to our recommendations.


Mr. Schellenberger:: Mr. Speaker, I see there are only a couple of minutes left. I leave it to your discretion as to whether we should call it six o'clock before I get into the meat of my speech.


Mr. Deputy Speaker:: Order, please! It being six o'clock, I do now leave the chair until 8 p.m.
At 6 p.m. the House took recess.
February 2, 1982



COMMONS DEBATES AFTER RECESS

[Stage Direction]
The House resumed at 8 p.m.
The Acting Speaker (Mr. Blaker):: Order, please. When the House rose at six o'clock, the hon. member for Wetaskiwin (Mr. Schellenberger) had the floor.


Stanley Kenneth Schellenberger: Mr. Speaker, in rising to speak on Bill C-88, I would like to make a few remarks regarding farm credit and some of the problems that I see with capital and credit requirements of farmers today.
During the Christmas recess I had an opportunity, as did most hon. members, to speak with people in our constituencies about the problems that they would like us to deal with in this session. 1 must say that there is a very pessimistic attitude among farmers in central Alberta. The balance sheet will simply not balance as they sit down to make their calculations for the 1982 crop year. This is particularly true for those involved in the cereal grain, oilseed and red meat industries.
Today, many farmers are borrowing against their assests, their land and machinery, to keep the farm going. They are taking a line of credit, a working capital loan, in order to put the crop in. With these very high interest rates, the amount of money they take in at the end of the year is simply not sufficient to meet the interest and principal payments they have to make. For many farmers today, if they have one crop failure they are bankrupt.
This was not the case when my father was farming. I can recall being on my family farm in 1955 and 1956 when we were hailed out. We did not even have crop insurance at that time. In 1957 we had a crop and then in 1958 we were hailed out again. But the farm did not go under. In those days farmers had sufficient capital on hand, built up in the bank, to meet a crop failure. Of course, there were not the high interest rates and input costs. We did not have to fertilize our crops or spray herbicides. If we did, it was only for spot requirements.
As a result of the advice given to the agriculture industry and the almost mandatory requirement today of enlarging your farm in order to stay in business, the interest rates and huge input costs which must be spent to put in a crop, if there is one crop failure, all that investment and work is for nothing because the farmer cannot obtain another line of credit for working capital for his next crop year to meet the problems of nature which may result in crop failure.
As I travelled through my constituency, during the Christmas recess I noticed that the farmers who face serious difficulty fell into two categories. One is the farmer who has recently taken over the family farm or who has started a farming operation and has faced these extraordinarily high interest rates in the last couple of years. The second group-which was surprising to me although maybe it should not have been-was the farmers with very large farming operations. They have very large working capital loans and are now finding the interest rates of 20 per cent are causing them great difficulty if the yields are not what they should be or if they have trouble
Farm Loans
marketing their crop. These are the two groups of farmers having the most difficulty balancing their budgets today.
Some years ago the advice from the Department of Agriculture and our agriculture representatives to many farmers-and there were many more then than there are today-was that they should get larger operations. This was the coming thing. This was the way to continue in the agri-business, farming. They did that, many because they had no choice. They could not manage any more on 100 acres, 200 acres or 300 acres. In order to continue, they had to have larger operations. They became more efficient, obtained larger equipment and produced more volume.
When that was becoming a problem, the advice then was that they would have to become even more efficient and that the way to become even more efficient was to obtain larger equipment and to make more use of farm research. Researchers in our agriculture stations have great talent and are providing farmers with some excellent opportunities to become more efficient, but we can reach limits in that respect. Farmers were told to use more herbicides and more fertilizers and to use their tractors less. Such things as zero tilling have come into application. This was the way farmers could stay in business. That worked and is still working for some farmers, but with the economic situation as it is now the government has put out a paper to the agricultural community entitled "How to Survive Hard Times". Many farmers would say they have experienced hard times many times in their years of farming, but now there is a paper out on the prairies called "How to Survive Hard Times". I wish I had brought it with me. It contains about seven or eight recommendations which are really something to read. As I remember it, one was to sell some unproductive land. Another was to raise hogs in unused buildings. Another was to work at part-time jobs. The paper went on and on listing these types of things.


Douglas Charles Neil: Get rid of the Liberal government.


Stanley Kenneth Schellenberger: Yes. As my colleague says, one recommendation might be to get rid of the Liberal government. That might have helped farmers through hard times. Many farmers in my constituency have been forced to get part-time jobs to keep their farms operating. Then the tax man comes along and says they can write off only $2,500 of capital they accrue in off-farm income. They can then write off half of the next $5,000, and that is it. The benefit realized from working hard on an off-farm job to use the capital obtained to keep a farm operating ends at $5,000, and that is simply not enough for many facing high interest costs.
As I see it, at the present time we are facing two very desperate problems which must be dealt with immediately. One problem is high interest rates, and the other-and we have been facing it for some time and perhaps not using our intelligence enough or using the ideas which are coming forward-is how to deal with inadequate prices and markets for the produce we are producing most efficiently. The farm

February 2, 1982
Farm Loans
index is rising far, far faster than the consumer price index. This is also true in the United States and, if we were to look at the statistics we have, I am sure we would find that it is true also in Argentina, Australia and all those countries competing with us in the markets for grain sales.
Interest rates were not dealt with in the budget recently presented. They are not being dealt with in this farm credit bill. They are not being dealt with in the Canagrex bill. The first ministers are presently having a conference and, to their credit, they are attempting to bring forward ideas on how we can deal with this economic dilemma.
Every day in the House hon. members rise seeking solutions to this very desperate problem which faces not just the agricultural industry but many other industries. Many members who have spoken in the House about this bill have presented ideas and possible solutions to the credit and interest rate problems we are facing today in agriculture and other industries. It is time the government widened its viewpoint, opened its arms and its glass houses of intelligence and used some of the ideas which are being presented in this House and by many farm organizations across this land. We must seek advice and use it.
Hon. members speak in this House not just to criticize. Of course, sometimes an essential function of members of this House is to criticize legislation, but many times hon. members bring forward not only their own ideas but also the ideas they are able to gather as they travel in their constituencies. Many of us represent hundreds of thousands of people, and there are ideas out there which we bring to the House and into committees. As we face these kinds of dilemmas, it is time the minister and the government opened their arms to these suggestions, looked at them honestly and dealt with them. They should not be thrown aside just because they do not come from the department or the glass houses across the street, from where all intelligent material emanates!
I have been reading Hansard and listening to some of the speeches. The hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton) brought forward an excellent idea yesterday, and it deserves some study. That idea has to do with the use of the Small Business Development Bond whereby individuals could lend to the Farm Credit Corporation and not pay tax on the interest money accruing from such loans. That idea is worth some study.
The hon. member for Moose Jaw (Mr. Neil) made an excellent suggestion just a few hours ago. He suggested that farmers could receive money at rates of about 8 per cent. He referred to a farmers" retirement investment fund which would allow farmers to invest their capital gains in farm credit at 8 per cent for five years; I think that is what he said. They would not pay any capital gains tax if they left their money there for five years, and the government could lend it out at a very reasonable rate. If the government is going to the money market to borrow money for farm credit, I am sure the government will pay prime and perhaps prime plus for the money. Under my colleague's proposal, we would have a pool of capital which could be put to work at a rate much lower than that.
I heard the hon. member for Haldimand-Norfolk (Mr. Bradley) make some excellent proposals. I made some suggestions back in 1975. I looked them up to see if they still make any sense. I put forward a private member's motion at that time on behalf of young, starting farmers who were having difficulty. I proposed that there be partial non-repayment of loans, where young farmers meet some performance standards, and a maximum 5 per cent interest rate. Things have changed substantially since then, but we all remember the days when interest rates were set, and they could not go above a certain level. Oh, we long for those days again! I proposed that there be deferred interest during an initial period because when a farmer is starting up with a very high loan rate on land and equipment, his greatest difficulties generally are in his first years, and he spends all his money just paying interest and does not get to the principal for some time. 1 proposed open-ended loans so that if a farmer intends to increase his operation, he need not pay the costs time and time again to set up loans.
Sure, things have changed since 1975, but many ideas are enunciated in this House and in committee every day this House is in session, and very, very few of them are put into legislation. Often a minister brings a bill into the House and says it is at the final stage. He says it is in its final form. Oh, yes, he tells us we will have an opportunity to debate but that he is not looking for any ideas. He just wants to get his legislation through and, as long as he has the support of his party's members, away he goes.
Hon. members have said they will support this bill. It makes some changes that will be beneficial to the agricultural community. But is it good enough? Can we pack our tents and go home saying that with this bill on farm credit and with the bill on Canagrex, we have solved the farming problem? I believe that is not good enough. I say to the minister that the bill provides the opportunity for him to deal with some of the excellent suggestions put forward by the House and by farm organizations.
Clause 8 of the bill which refers to Section 13.(1) of the act reads as follows:
The Corporation may, with the approval of the Minister of Finance, borrow money by any means-
I suppose the government does not trust the Minister of Agriculture (Mr. Whelan) and that is why provision is made for the Minister of Finance (Mr. MacEachen) to approve. He is to make sure that the thumb is put on the Minister of Agriculture. I am sure that members from other agricultural areas, as well as this minister, can convince the Minister of Finance that improvements are needed in the area of capital requirements for farmers. This gives him latitude to accept such ideas.
In committee, amendments to clarify this clause in the bill will be put forward and the excellent suggestion offered by farm organizations will be considered and perhaps drafted into amendments. We ought to give such suggestions close study,
February 2, 1982

and in this area we hope to receive the co-operation of the minister.
Clause 3 of the bill deals with the increase in the number of board members. Many hon. members are suspicious of this provision, and I suspect there is some depth to that criticism. If the number of members is to be increased, perhaps the government will seek out individuals who can deal with the dilemma of capital requirements in this country and make suggestions to the minister. As many hon. members have pointed out, the board members do not really operate the day to day affairs of the corporation but are there to advise it. We will wait to see how this provision is used.
Another provision is for an increase in the capital requirement. Anyone who has dealt with the Farm Credit Corporation knows that it generally runs out of funds half way into the Fiscal year and that many important loans that should be dealt with are put aside simply because there is not enough money.
Clause 10 of the bill sets the maximum repayment period at 30 years. As many of us who have gone to a bank to take out a line of credit have found, there is not much difference in the payment on a 20-year loan, a 25-year loan or a 30-year loan. It often amounts to only a few hundred dollars. Sometimes, with a borderline operation, there may be the need for an extra five years in the repayment period.
Clause 11 allows the Farm Credit Corporation an advance of up to 30 per cent of the principal amount of the loan immediately. Many farmers find that, even when a loan is approved, it takes weeks to get the cash and, as a result, many pending deals are jeopardized. I think the suggestion is a good one.
Clause 13 provides that money lent to Indian bands be set by regulation. 1 agree with that.
Obviously, Mr. Speaker, we are going to support this bill, but I would like to consider some suggestions put forward by people outside the House and outside the farm organizations. Perhaps we should consider what other countries are doing.
In the brief time that I had to prepare this speech, 1 examined the U.S. credit system and found some very interesting things that 1 think should be considered in committee.
The United States has a number of systems, one of which is the Federal Land Bank Association. This is farm-owned and its purpose is to provide farmers with long-term credit for land at interest rates of 10.5 per cent to 13 per cent. The interest rate floats with outstanding bonds in the bond market, and the repayment period is 40 years. A similar type of organization would be very attractive in Canada.
In the United States there is an organization called the Production Credit Association. Today it has floating rates of 15 per cent to 17 per cent, with a maximum repayment period of ten years. As well, 5 per cent to 10 per cent of the loan can be withheld to purchase what is called class B stock, with no dividends. If the stock is held for two years with no further borrowing, it becomes class A stock and pays dividends. This can be used for any farm-related expense. I think it is an excellent idea.
Farm Loans
There is also something called the Farmer's Home Administration which was established in 1946 for farm and rural housing development. It provides short-term loans of up to
SI00,000	for seven years, long-term loans of up to $200,000 for 40 years and provides for an emergency loan of $500,000 for from seven to 40 years, in the event of natural disasters. The interest rate on that loan is set at Five per cent. I am sure that many hon. members can point to natural disasters in their constituencies where the insurance held by farmers was not adequate to put them back into operation. So this last idea seems like an excellent one and I think we should consider it.
The Americans also have the Commodity Credit Corporation. This is not a major source of funds but it is available for the use of farmers.
I have shown that there are good ideas in other countries, Mr. Speaker, and I think if we examined the situation in still more countries such as Australia, we would find excellent systems that we could study to see if they would help with the very serious economic problems that face the farm industry.
I do not intend to put all the statistics regarding high input costs on the record again, Mr. Speaker, nor do I intend to speak about the low prices that farmers receive for livestock, cereal and oilseed. All these statistics have been placed on the record and are common knowledge.
Farmers need leadership; indeed, they are desperate for leadership that will adopt ideas to assist them in the coming decade. Many agricultural experts feel that there is a bright future for farmers and, indeed, we are optimistic. Each year there are some 80 million more people in the world so there is a need to provide food for them. We are one of the very few countries with the capacity to do that. We must get on with the job, however.
We already have the Western Development Fund. Although the amount of the fund was set at $4 billion in the beginning, it has decreased in the last few months. However, in the next five years the federal government will receive as much as $50 billion from western oil. Surely some of that money could be reinvested to provide transportation systems, proper credit and some of the ingredients that are essential in order to buoy up the very important agricultural sector of this country which brings in many billions of dollars in foreign currency.
If we do not deal with the dilemma of transportation, then within a few years we will find that quotas are imposed on the rail lines to western ports. With the Crow rate in place, it is easy to see which commodity would be at the end of the line! It would be grain. We have to deal with that problem and it is essential that we begin now. Markets which pay the proper price for our agricultural products must be found. This matter was debated when the House dealt with Canagrex. Canada has failed miserably in this area over the last number of years. In my opinion there must be some co-ordination among the various sellers of grain in the world. Canada, United States, Australia and Argentina are competing with one another. We compete so well that we sell our products below the cost of production to farmers. I assume we are not doing farmers any favours. Why can we not get together? Some of us have taken

February 2, 1982
Farm Loans
the initiative to meet our colleagues in the parliaments of those nations to talk about this matter, because our ministries and public servants have failed in the past. Farmers want us to get together and not sell products below the cost of production to subsidize our Soviet friends as they build up billions of dollars of arms or to subsidize our Japanese friends who purchase our wheat for $6 and sell it to their people for $12 so that they do not compete with their own farmers. There are countries that require food and can afford to pay. The countries with the capacity to produce should be seeking more of those funds. I am not suggesting that those funds should go strictly to farmers. If there is some surplus or a reasonable profit over the cost of production, we may be able to establish a food bank to assist countries which do not have the capital to pay; perhaps they could buy some of our surpluses.
I do not have time to present my many ideas, but I will have that opportunity in committee. The Farm Credit Corporation has served our farmers admirably over a number of years. It ought to be assisted now so that it can continue to serve them. This bill will begin that process. Hopefully other ideas will be placed in the bill in committee and before third reading debate so that we can better serve Canadian farmers.


Some hon. Members:: Hear, hear!


Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, Bill C-88 respecting loans to farmers has been needed for a considerable amount of time. We will discuss it in a fairly detailed manner in committee. We will be discussing matters which are important to farmers, such as basic rates and the availability of funds.
1 was most interested in hearing the Minister of Agriculture (Mr. Whelan) talk about the banks when he introduced the bill on January 28. He was most critical of the banks in his remarks. Also 1 was most grateful that the hon. member for Humboldt-Lake Centre (Mr. Althouse) corrected the minister's remarks by quoting the minister's words of four years earlier. In 1977 the minister was more than willing to do business with banks. On October 25, 1977, he said:
I take my hat off to banks and other interested financial organizations who are starting to get involved in long-term agricultural lending programs because I welcome progress. And this is progress.
On January 28, 1982, the minister said:
As I have said outside this House, I am extremely disappointed in the way in which most of the banks, but not all of them, have handled the demand for farm credit.
The minister went from boom to bust with the private sector in less than five years. We should let that be a warning to the messiahs in the House who always find salvation in the private sector.
Some of us have longer memories and are not as trusting. Some of us will always wonder why the minister was so trusting back in 1977. The record of banks respecting longterm financing for agriculture in the 1930s was not one of glory. The experiences of foreclosures and abandonment of
farms across the prairies led to a permanent divorce between farmers on the prairies and their banks. Farmers would not go to banks for credit back in the 1930s because they had continuously lost their land as a result of very small loans. One result of the divorce was the growth of credit unions, particularly in my home province of Saskatchewan. Another was the departure of banks from long-term farm financing until 1977.
As I have indicated before, the Minister of Agriculture was quick to welcome back the banks in 1977. Now he must tell the House that because banks were not really providing longterm financing, they have not really returned at all. This matter is worth pursuing in some detail. Most of us are aware of the greatly increased dollar amounts required for farm credit. According to the 1981 annual report of the Farm Credit Corporation, the amount of long-term credit granted in 1979 was $1.75 billion, up from $1.1 billion in 1978. These are the latest figures, but the amount for last year was probably considerably higher. Of that amount of long-term credit in 1979, the banks granted $371.6 million or 21 per cent of the total. This is a substantial amount when it is considered that in years prior to 1977 banks were not in that field at all.
According to the minister, these preliminary figures may require substantial revision. I wonder why. The minister told us that the banks were not in the long-term credit field. Long-term credit is defined as financing for more than a ten-year term. Also, most of us presume that long-term credit means credit at a fixed interest rate, but "not so", the minister told us. Banks have now turned their so-called long-term financing into demand notes. Farmers are faced with a choice of floating rates of Financing or no financing at all. It is kind of a Hobson's choice of which most farmers and 1 want no part. But it is a situation which farmers must confront because, as the Minister of Agriculture admitted in the House, the actions of the banks are perfectly legal under the Bank Act. Instead of having long-term credit at a rate for which they can plan, farmers have been facing extremely variable and high interest rates up to 24 per cent. It is of little value for the minister to rail against the banks publicly when other remedies are at hand.
The government of Saskatchewan made its intentions clear to the banks when it introduced its home owners protection act. That bill was so clear-cut that in the Saskatchewan legislature members of the party to my right reversed their position and supported the bill when it came to a vote. The banks did not like it, but just about everybody else did.
In 1944 the government of Saskatchewan passed the farm protection act, which has stood ever since. 1 mention that legislation as a reminder to the minister that legislative action is an alternative, and I suggest that he look at it and use it. Failing a legislative alternative, we must look again at the sources of long-term credit. This field has been overwhelmingly dominated by the federal government in the absence of other lending institutions.
February 2, 1982

In 1978, the federal Farm Credit Corporation accounted for
68.3	per cent of all long-term credit outstanding in Canada. Provincial governments were a distant second at 15.1 per cent and the banks were third at 6.6 per cent. The banks are getting out of this area once again.
As the minister noted in his speech, the growth in demand for credit is increasing at a rate of 20 per cent annually. The minister also said that the Farm Credit Corporation has been held back by federal restraint despite the extremely good repayment record of the farming community.
The minister held out in his speech the possibility of retiring farmers being able to invest in a fund with the Farm Credit Corporation with proceeds from the sale of their farms. He suggested further that tax concessions could be attached to bonds being sold by the Farm Credit Corporation in the future. These are possibilities which the minister raises. But there is nothing in the bill to indicate they will be implemented. Indeed, I would like a suitably unvarnished opinion from the Department of Finance and the Treasury Board on the likelihood that Canada should get into the tax-free bond market.
I would suggest the minister try another area. I think he should ask for provincial investment in the Farm Credit Corporation. Agriculture is a shared jurisdiction. Farmers routinely borrow from federal and provincial sources. Yet the Farm Credit Corporation dominates the long-term credit field. The Farm Credit Corporation has offices and counsellors across Canada. They have an appreciation of long-term capital needs and markets. Provincial investment could avoid duplication in this area.
In this bill we have been asked to address a shortage of capital for the Farm Credit Corporation. There is little indication in this bill that the funds being provided will prove to be adequate for anything but the short term. If the government has already reached $143 million of its $150 million ceiling, then I do not believe it will take long to reach this new ceiling of $225 million.
The minister's own paper on agri-food strategy mentioned long-term financing as a major constraint against the development of food production in Canada. Given the present economic policies being followed by this government, I can see no great hope of stimulating the kind of production which the minister hopes can be sold on world markets.
If the minister seriously believes that the banks which have caused him so much personal grief among his farming constituents in recent months can be counted on as a major participant in the expansion of Canadian agriculture, he should think again.
Bill C-88 is meant to provide long term Financing to agriculture. There is a great need for relief of the crisis in agriculture that is upon us. Indeed, one of the provisions of this bill is to include retroactively the $50 million in emergency farm financing which was granted in the budget. All of us know that the $50 million was too little and too late. The amount will help perhaps 300 young and beginning farmers who are in
Farm Loans
difficulty with the high interest rates. The minister's own figures show an average loan of $124,000. In other words, we can say that $50 million will go to 363 farmers.
That is a start, and we can commend the Farm Credit Corporation staff for moving quickly to help those farmers who are in distress. But other farmers who do not Fit the criteria, also in distress, are supposed to use small business bonds as Financing. That in itself is a very big issue. We have heard a great deal from people who have been waiting for action on the Small Business Development Bond program since it was introduced in the November budget speech and made a vehicle for farmer relief.
The banks have been waiting for eligibility clarification. The farmers and the fishermen have just been waiting. Now that the eligibility problems have been resolved, there is fear that the rules applied by the banks will be so rigorous that few loans will be made.
While in my constituency last weekend, I was told that not one farmer has received a small business loan since November 12. The fear that the banks will apply such rigorous rules that few loans will be made is also the fear of the Canadian Federation of Agriculture.
Other fears are being expressed as well. Some people in the financial community believe that once a person convinces a bank that his financial situation is dire enough to qualify for the bond, the bank will immediately conclude that the applicant is a poor risk and will refuse to help. I am told that is exactly what is happening. Bankers do not generally believe high interest rates are the root of financial difficulties in Canada. They prefer instead to point to inadequate capital management problems and the present poor economic conditions.
Late last fall 1 surveyed my constituents concerning the effect of high interest rates. I heard a good deal about the difficulties people are facing in the renewal of mortgages. The average increase was about $280 a month. I also heard from farmers, one of whom told me that his interest payments have increased 100 per cent in the last year. Another one told me his monthly payments have increased $5,000 a month in the last three years. 1 asked him what he could cut back to keep his farm in operation, and he told me the only thing he could cut was his throat. That is my definition of dire straits, when there is nothing else you can do, and that is why I wonder how the bankers can say with a straight face that high interest rates are not the principal difficulty facing Canadian agriculture at this moment.
With this in mind I would like to dwell for a moment on the income problems facing Canadian farmers. If their expenses continue to rise dramatically, then all of us must give particular attention to raising farm incomes. If I might be allowed to use a current example which was used in a different context by the hon. member for Wetaskiwin (Mr. Schellenberger), it does little good to calculate the abolition of the Crowsnest freight rate, as economist Carl Snavely has done, on the basis of a 50

February 2, 1982
Farm Loans
per cent return on investment to Canadian Pacific. This rate compares most favourably to the 7 per cent return on investment to farmers.
Similarly, we find that a movement of the compensatory rate would absolutely wipe out Manitoba's net farm income. In 1980 Manitoba's farm income would have declined 156 per cent to a net of minus $30 million by the use of compensatory freight rates. That would be the consequences of the policy put forward by this government, a government which is actively encouraging farmers to grow more grain to meet the export targets it has set. No wonder my colleague, the hon. member for Regina West (Mr. Benjamin), called this a plan which could be topped only by one other government, namely, the military government of Poland.
I mention these examples to underline the income problems of farmers. I see little future for farming in Canada, given the lack of direction and concern of this government, if net farm incomes continue to decline. Taking inflation into consideration, a decline from $3.5 billion in 1974 to $3.3 billion in 1980 is a very large one. That is a decline in both relative and absolute terms, one that is fuelled by the monetarist policies of this government. The projected 20 per cent decline in 1982 is a further indication of a deepening crisis in Canadian agriculture. All the borrowing in the world will not be a sufficient answer to those farmers with incomes inadequate to meet their greatly increased obligations. If you cannot show a profit, it does not make sense to continue borrowing to cover your losses.
I say this, Mr. Speaker, in order to underline to the minister that we on this side of the House do not see the amendments to the Farm Credit Act as any kind of solution to the problems in agriculture. Rather, we believe that proper application of economic principles which will support farmers is the only way we can keep them in the business of providing food to the world, which is what they want to do. It is up to us to assist them in every possible way. This bill is a bandaid which will not stop the bleeding. The minister had better come up with more and better plans if he hopes to save the industry for the farmers.


Mr. W. C. Scott (Victoria-Haliburton):: Mr. Speaker, I want to join my colleagues in welcoming this bill. We all know the agricultural community needs something, we do not think this is enough, but we will probably have to accept it for what it is worth in the hope we can get more and better understanding of the farming community in the future.
Now, the government went out and bought money last fall at 19'/2 per cent. It dried up all the working capital for the business community in Canada. It bribed the people into lending their money, which the banks turned around and loaned out. It was the people's money, that is right, and now we are left with a double dilemma: mismanagement and no money.
There are few things which indicate more clearly that this government has a rather peculiar method of establishing priorities. The federal government's advertising budget last fall
got a whopping $225 million, while it can only add a measly $50 million to the woefully inadequate Farm Credit Corporation budget. All of us here from rural ridings know the FCC always runs out of money several months before the end of the year. If the government must advertise, it would have made much more sense to allot the $50 million for that, and the $225 million to the FCC.
Last fall's budget lowered the interest rate of FCC loans to 1134 per cent, but only for farmers on the verge of bankruptcy. This would allow most if not all marginal farmers across the country to become financially viable, and help them stave off bankruptcy two or three years down the road.
Farmers are by tradition a proud and self-sufficient breed of people. What we have here is a situation where the FCC has money in one pocket for certain farmers and money in another pocket for others. The FCC offers farm loans at 16% per cent, and if that proves too great a burden to a farmer, then all he has to do is to go to his FCC office cap in hand and plead for a loan at the lower rate in order to avoid bankruptcy, as I mentioned a moment ago. It is a pretty weird economic policy, and it is cruel and insensitive. We have a similar situation with regard to small business and the Small Business Development Bond. Today it is known as the small business bond. With great fanfare, it was announced last fall that the Small Business Development Bond plan would be extended for another year. However, it was stated in the next paragraph that this would apply only to businesses and farmers in dire straits facing bankruptcy. It is high interest rates which are forcing most bankruptcies in the first place.
We have a Minister of State for Small Businesses and Tourism (Mr. Lapointe), we have a Minister of Agriculture (Mr. Whelan), and we have a Minister of State for International Trade (Mr. Lumley). Do these ministers have so little clout in cabinet that they cannot convince their cabinet colleagues that farmers and small business people should have access to favourable rates of interest as a matter of right and not as a matter of second choice? Why should farmers and business people be burdened with higher interest rates and be given access to lower rates only if they can prove they are facing imminent bankruptcy? At the same time the Bank of Canada interest rate was coming down, the rate for a Farm Credit Corporation loan was raised from 14 per cent to 16.75 per cent in the budget last fall. If the new interest rates threatened to break the backs of the farmers, the Farm Credit Corporation will grant them loans of 5 per cent. It is no wonder that farmers across the country scratch their heads and wonder what strange and idiotic government policies will emerge tomorrow. The same might be said for thousands of business people across the country.
I think we are all aware that within recent months there was a price war on food commodities which was generated by large chain stores competing with gimmicks for the customers' dollar. According to an article printed in the Farm and Country magazine on January 19, 1982, a recent survey
February 2, 1982

conducted by the Ontario Federation of Agriculture suggests that farmers have borne about 25 per cent of the over-all cost reductions consumers have enjoyed during the recent Ontario supermarket price war. The Ontario Federation of Agriculture food basket survey found that by November 11, three weeks into the price war, average supermarket prices for specific products dropped $2.61 or 6.1 per cent. The farm gate equivalent value for those products in the basket dropped 65 cents. Hence, the results suggest the percentage of savings was taken from farm products, as the Ontario Federation of Agriculture explained in a news release. The largest dip came in the red meat component. Its retail price dropped $1.47 a pound while the farm gate equivalent fell 83 cents.
I also think it should be brought to the attention of the House that in 1979 the cost of fuel to the farmer to work his land, from planting to the elevator, was $7.00 per acre. In 1980, this figure rose to $10 per acre. In 1981, the cost of fuel to the farmer increased to $15.50 per acre.
Diesel fuel in 1979-80 was approximately 40 cents per gallon. Today, it is $1.39 per gallon. Fertilizer costs to the farmer will increase this year from 10 per cent to 12 per cent. Farmers will be forced to cut back on the amount of fertilizer they use. Production will decrease. World food supply increased by only 2 per cent over the past several years, while the world requirements have increased by 3 per cent to 4 per cent. It is interesting to me that in the fall of 1979, the Liberals were worried about high interest rates when they sat in opposition. The present Minister of Regional Industrial Expansion (Mr. Gray) speaking before the Commons Finance Committee on October 30, 1979, had this to say with regard to interest rates at that time:
-your high interest rate policy would slow down the economy: it will mean the loss of thousands of jobs; it will mean increases in the cost of living. It will probably bring the housing and construction industry to a halt, with thousands of jobs being lost in those sectors.
Then he went on to ask the government, "What are you going to do about it?" Then, in the Toronto Star, on February 10, 1980, the present Prime Minister (Mr. Trudeau) was quoted as making the following promise during his election campaign. He said that the government would "manage the economy in such a way that interest rates would in fact come down - because the economy would be administered in a sounder way."
On December 13, the Liberals and New Democratic Party joined forces to defeat the Progressive Conservative budget in the House.


An hon. Member:: The people of Canada did.


Mr. Hnatyshyn:: It is hard for you to remember this, but listen.


William C. Scott: I want to read this for the benefit of the two parties sitting side by side, the Liberals and the NDP. The Liberal budget motion, as amended by the NDP, reads:
Farm Loans
-this House condemns the government for its budget which will place an unfair and unnecessary burden of higher gasoline prices, higher fuel oil prices, and higher taxes on middle and lower-income Canadians-


An hon. Member:: Look ahead, guys!


Mr. Kempling:: Same old gang, all socialists under the skin!


Mr. Evans:: Don't get upset. They've come as far into the future as 1979. That's big progress!


William C. Scott: It states further:
-and this House unreservedly condemns the government for its outright betrayal of its election promises to lower interest rates, to cut taxes, and to stimulate the growth of the Canadian economy, without a mandate from the Canadian people for such a reversal.
We came back under a new government, and we had great expectations; but interest rates are higher now than they were at any time then. They have doubled and tripled. I received a letter from one of my farming constituents asking me about this situation. The constituent wrote:
Dear Mr. Scott,
I'm writing to you in desperation, hoping to save our farming business before the bank takes everything we have worked for in the last 20 years. There is no way we can stay in business with the high interest rates and low beef prices, also if we turn to cash crop it's no better. Our only hope for survival is to sell, but there are so many farms for sale it's going to take a while-
It will take a while to sell their farm. He continues:
-while our interest rates keep putting us in debt further. You have probably heard this from many other other beef farmers. I'm hoping you could talk to Mr. Whelan (Agriculture minister). Or what about Lome Henderson (provincial agriculture)? Even Mr. Trudeau who is responsible for the high bank interest rates-
It is the government which promised us so much. We are all important people, no matter what some would have us believe. The letter goes on to state:
But we are an important part of civilization. Who can live without food? 1 understand the Quebec farmers are not in dire straits, like the farmers in Ontario (pork and beef). They are subsidized by the Quebec government.
A copy of my constituent's 1980 income tax return was enclosed for my perusal.


An hon. Member:: That's a big word, isn't it?


William C. Scott: Yes, it is a big word, that is right. These are some of the things we all faced during our recess from Parliament. We probably should have been here, attending to the nation's business. This is probably why we were not here. People today, not only the farmers, but also all we home owners, are facing conditions which they were never facing before. These conditions have been caused by a government which probably has not faced up to the situations affecting our Canadian people. The Canadian people deserve more than this. The small business community has promised to assist farmers, such as the farmer I just quoted, and I will not divulge the name. He was told to go to his bank manager, which he did. His bank manager in turn took him to the head office in Toronto, but there was no help forthcoming. This man, along with many other people, is supposed to receive help from the Small Business Development Bond. A few moments ago, the hon. member for Prince Albert (Mr. Hovdebo) asked

February 2, 1982
Farm Loans
who has received help from the Small Business Development Bond. Has the farmer received anything? He has not received anything that I know of.
I have been told that the Farm Credit Corporation encourages the farmer to apply at his bank for a Small Business Development Bond even though it really does not exist. The farmers are being given the runaround by the Department of Agriculture in this slack economy. That is why the people are so unhappy with the present government and make no bones about it. We must do better.
I was interested in the remarks made yesterday by the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton). He made many helpful suggestions. The government would do well to pay heed to his advice.
There are other ways to help the farmer which this government is neglecting. The government probably does not want to take advice from anyone. It must forget about that and do something for the farmer and the small-business men who today are facing trials and difficulties which they find impossible to surmount on their own.
I plead with the Minister of Agriculture to get more than $50 million for the farmers across Canada. Our farmers need a long-range program. They need to know where to set their sights. They want to be protected from being taken advantage of by the large chains and corporations which peddle their products in order to bring people into the chain stores. We find that in every segment of agriculture today. I beg the minister to approach his colleagues in order to obtain more assistance for the farmer.
Not long ago we heard of an industry being granted $300 million to create 400 jobs in eastern Canada. I am not jealous of that. However, in the last budget only $50 million was allotted to the Farm Credit Corporation when there are 330,000 people employed in farming. Therefore, it does not make much sense to give $300 million to employ 400.
It has been stated that there are probably more federal civil servants today than there are farmers. The farm community is begging for guidance and assistance. I beg the minister to do something for this depressed industry which we depend on so much. If we lose this industry, we may never regain it. This is why we support this bill. It is not that great, but it is something. We look for more before too long.


Mr. Tousignant:: Mr. Speaker, I would ask the hon. member to provide us with the name of the person who wrote the letter he just read. If he cannot give his constituent an intelligent answer, perhaps we can.


William C. Scott: I will not provide the name of my constituent. I have it here, but I do not have his permission to give it.


Mr. Robert Daudlin (Essex-Kent):: Mr. Speaker, I am pleased that hon. members opposite have indicated almost to a man that they support Bill C-88 and recognize the significant
contribution that the Farm Credit Corporation has made to Canadian agriculture and the Canadian economy during the last 22 years. In total, the Farm Credit Corporation has made some 147,500 loans to farmers, totalling about $5.1 billion. This bill will allow the corporation to assist even more farmers in order to make agriculture a more stable and viable industry.
I know that some members are still concerned with certain aspects of this legislation and the Farm Credit Corporation's operations in general. I will therefore take this opportunity to address some of the concerns that have been expressed throughout this debate.
The hon. member for Kindersley-Lloydminster (Mr. McKnight) mentioned last Thursday that the Farm Credit Corporation's arrears rate is low at 7 per cent. Based on this he suggested that the corporation may not be taking enough risks. Many farmers in my constituency who have had or have sought access to farm credit would take issue with his position. Many who have been turned down, notwithstanding that they are successful farmers who have equity in their land that could be used as well as additional farm credit farms, find that the risks being taken by the corporation are quite high. When you look at the program which gives loans to applicants under 35 years of age, it is difficult to argue that the Farm Credit Corporation is not taking enough risks with these beginning or young farmers.
Statistics show that in 1981 the average total assets of Farm Credit Corporation borrowers after a farm credit loan of about $100,000 were $375,000 compared to a Canadian farm average of $518,700. At the same time, Farm Credit Corporation farm debts averaged $185,000 compared to the national average of $78,000.
Farm Credit Corporation farmers have assets which are 72 per cent of the national average, yet they are carrying about 2.4 times more debt than the national average. Also, farm credit borrowers have a net worth which averaged 50 per cent when compared to a national average of 85 per cent. These statistics undoubtedly indicate that the Farm Credit Corporation is taking risks. In my view and in the view of many of my constituents, the risk factor is already high enough and should not be increased by a substantial amount.
It must also be recognized that the Farm Credit Corporation provides a program of advisory services in addition to credit. Through this program, qualified Farm Credit credit advisers provide financial counselling and assist farmers in monitoring their progress. In this way many problems are detected at early stages of their development and can therefore be more easily resolved. The Farm Credit Corporation must be given credit for keeping its level of arrears at very favourable levels through this program.
The hon. member also suggested that a subsidy for short and intermediate-term credit should be considered as well. I remind the hon. member that when the Farm Improvement Loans Act was last amended, it was indicated that the issues related to intermediate-term credit would be studied by the departmental officials. This study is now in process with
February 2, 1982

consultation taking place with provincial government officials as well as representatives of other financial institutions.
Once the study is completed, the government will be considering its role in the extension of intermediate-term credit in Canada. In the interim, the facilities of the special farm financial assistance program with an interest rebate, as well as those of the Small Business Bond Program, are intended to consolidate debt, including short and intermediate-term debt. Debt consolidation through these facilities will result in lower credit costs to many farmers and will place their debt commitments within their cash flows.
Many members have expressed opinions to the effect that the 1981 November budget did not provide enough funding for the Farm Credit Corporation to help farmers facing bankruptcy. Once again, I must insist that the $50 million provided in the November 12, 1981, budget be assessed in the context of the total budget package. The $50 million must be considered in conjunction with the expansion of the availability of small business bond financing to unincorporated farmers in financial difficulties. The special farm financial assistance program is designed for farmers in financial distress who are unable to obtain adequate assistance through the Small Business Development Bond. The FCC is co-operating with financial institutions which are making small business bond loans to ensure that as many farmers as possible can be assisted through a small business bond, a special FCC loan, or both. When the $50 million is considered in this context, the budget of November 12, 1981, is assisting many more farmers in Financial difficulty than the $50 million would, at first glance, suggest. Furthermore, the proposed legislation is intended to enhance the FCC's funding flexibility so that it can more adequately meet the needs of farmers. In this way, the FCC could help to avoid situations such as those which have occurred during the last two years when farmers have faced unusual financial difficulties.
It was suggested by the hon. member for Qu'Appelle-Moose Mountain (Mr. Flamilton) that the FCC is a lender of last resort. This is not the case at all. The FCC extends credit mainly to those young, beginning and small expanding farmers who are unable to meet the repayment and security requirements of commercial lending institutions. It is these farmers who, with the favourable terms and conditions of FCC loans, are able to establish units to become the commercial farm operators of tomorrow.
At this point I would digress to indicate that when I first came to the Flouse in 1974, I sat with the agricultural committee and had the privilege of chairing that committee when amendments were being brought forward to the farm credit bills at that time. It was heralded with great glee and great approval that we, in fact, would be proceeding with the kind of legislation that concentrated the efforts of the Farm Credit Corporation on the young farmer so that we could be providing the sort of assistance that would put the risk with the young farmers and induce younger people in Canada to go into
Farm Loans
farming than was then the case. I think it has been borne out that this has taken place and that there has been rather substantial success enjoyed as a result of the principle embodied in that legislation.
Lenders of last resort would charge these farmers an interest rate that is much higher because they consider these farmers as risky investments. The FCC lends to these farmers at favourable interest rates and has a collection policy which recognizes the cyclical nature of farm incomes and an advisory services program to monitor the farmer's performance. This assists in recognizing problems in early stages of their development, making the probability of success of these borrowers very high.
With the proposed legislative changes, the FCC's flexibility would allow the corporation to assist more farmers to become efficient food producers. This will allow the farming community to continue to provide adequate levels of high quality food at reasonable prices for domestic consumption and export. This thrust is certainly compatible with the thrust of the initial legislation in 1959.
The hon. member for Bow River (Mr. Taylor) suggested that the Alberta Fleritage Trust Fund could be used as a source of funds for young farmers in Alberta. The proposed amendments enabling the Farm Credit Corporation to borrow on the financial markets does not exclude the Alberta Heritage Trust Fund as a possible source of funding. Indeed, I am advised that FCC officials have had preliminary discussions on this possibility as well as others in the past year.
The hon. member mentioned as well that retiring farmers should be given an incentive to provide financial assistance for beginning farmers. Also, several suggestions were made to establish a system by which retiring farmers could invest the proceeds of their farm sale into FCC.
The possibility of an agri-bond with preferred tax treatment, or a bond similar to the small business bond, was suggested. This is not an idea which comes solely from the hon. member for Bow River. Indeed, I would advise the House that at the most recent meeting in my constituency of our particular party in Ontario, we were successful in having a resolution passed by the party in Ontario suggesting a very similar idea of the agri-bond, affording the opportunity for the diversion of capital gains by means of purchasing an agri-bond which would provide a form of reduced level of income to the person buying the bond. At the same time, it would provide a source of funding for farm credit. I would be most interested if perhaps I myself and the hon. member for Bow River could pursue this issue at the committee stage of this bill to determine whether or not something could be done in that vein.
The proposed legislation would establish the basic authority for the Farm Credit Corporation to do precisely what I have just discussed, and FCC officials are studying possibilities such as farmers' retirement investment plans, income-averaging annuity contracts, agri-bonds, investment certificates, farmers' mortgage guarantees, and others. Other hon. members have requested that the FCC offer loans with interest rates which

February 2, 1982
Farm Loans
are renewable with the amortization period, especially during periods when interest rates are fluctuating.
At present, the FCC provides long-term farm credit fixed interest rates for periods of up to 30 years. This has been an important stabilizing factor for farmers with FCC loans. Although farm input costs and incomes have fluctuated greatly in the past, the farmer always knew what the FCC payment would be and thus could make budget projections on this basis.
However, by obtaining funds from the financial markets, the FCC would likely be able to offer loans both at fixed interest rates and at rates which are renewable within the loan amortization period. Although market conditions will prescribe the period for which interest rates can be fixed, it is the FCC's objective to offer loans, 1 am told, at favourable interest rates fixed for as long a period as possible. This is an important factor in a sector of our economy which is already faced with many unpredictable variables such as weather, disease and the like.
One question often raised by hon. members of the opposition was, "What will the FCC interest rates be with financial market borrowing?" If the FCC borrows funds from the financial markets, it must be recognized that it would be doing so as an agent of Her Majesty. This would allow the FCC to borrow funds at an interest rate comparable to that of the Government of Canada. This favourable cost of funds, combined with the Corporation's variable administrative expenses and its low level of losses, will result in lending rates to farmers which will be below those offered by the commercial institutions.
Furthermore, if a system is established to encourage retiring farmers to invest in the FCC through an agri-bond or other such instrument, and if preferential tax treatment is given to such investors, it would keep the FCC's lending rate at favourable levels.
It must be recognized that funds are often available at reasonable costs in the international markets. When this is the case, the FCC will undoubtedly pursue borrowing from this market to keep its costs of money at a low level.
Also, the FCC will continue to obtain a major portion of its funding from the Consolidated Revenue Fund. All these factors, when considered, will contribute significantly to minimizing FCC's cost of funds and maintaining its lending rate to farmers at reasonable levels.
Several hon. members wondered why the number of members on the FCC Board has been increased from five to seven. Since 1959, the scope and complexity of the Farm Credit Corporation has increased. Lending money to farmers in the current environment requires the development and implementation of accommodating lending policies. With the expansion of the sources of FCC funding, the operation of the Corporation will become more complex. The Corporation could derive many benefits from diverse expertise on its board. Members from the commercial financial sector, the investment community or other areas of expertise would be most useful in providing additional leadership for the Corporation.
Questions have been raised about the level of funding which would come from the CRF and from the financial markets.
In the next few weeks, I am advised that the cabinet will be reviewing issues associated with the total level of funding required by the FCC. It is then that the government will be able to indicate how much assistance can be provided through the farm credit lending program.
It would be unrealistic to incorporate annual levels of funding into any legislation as this would minimize the flexibility that the proposed legislation is to provide to the FCC.
In summary, I wish to emphasize that through the extension of long-term credit, the Farm Credit Corporation has provided a unique and valuable service to Canadian farmers and has ensured that the tradition of the family farm is and shall be maintained. The amendments to the act will allow the corporation to extend even better service to Canadian farmers by providing it with a larger source of funds through the ability to borrow on the financial markets and by increasing its flexibility to make and administer loans more efficiently and effectively.
I am pleased that the members of the opposition are supporting Bill C-88 and 1 look forward to discussing this bill in detail at the standing committee meetings. I would urge hon. members to take a look at what has been said to date and to consider factors which yet remain to be said, and to consider as well the possibility of advancing this bill to the committee stage so we can consider together approving, amending and pushing forward this bill to answer the demands and concerns that farmers across this nation are expressing to us.


Mr. Bert Hargrave (Medicine Hat):: Mr. Speaker, I am very pleased to make a short contribution to this debate. Loans to farmers have been a long-standing debatable point, and I think in the aftermath of the new budget this subject is all the more real and very, very important to the viability of farmers. Perhaps it is the difference between being able to carry on or not. It is a very important topic.
At this point in the debate our official opposition party's support for this bill is quite apparent, and I will not dwell at length on its principal features. Because of the obvious economic situation which is so apparent in our total agricultural economy-particularly because of continued high interest rates and the continuing lack of adequate long-term lending facilities-let me say very simply that there is a recognized need for the Farm Credit Corporation to be permitted to borrow additional funds from public money markets. 1 do not think there is too much question about that statement. 1 think we all agree on that.
In addition, I am very pleased to see the provision for the removal of the 35-year age limit for beginning farmer loans under which borrowers can phase in to farming over a five-year period. That is a provision which I think we could have brought in many years ago, and I am glad to see it brought in at this time.
February 2, 1982

The only other specific aspect about the bill about which I have some concern is proposed Subsection 3(1). It is very short, and I will just read it as follows:
There shall be a corporation to be called the Farm Credit Corporation consisting of seven members, each of whom shall be appointed by the governor in council to hold office during pleasure for a term not exceeding ten years.
Is such stilted phrasing really necessary? I ask that question very sincerely. "During pleasure" to me sounds as if an appropriate or prospective member might be reluctant to perform under such a job description. I single that out because I really question whether the legal advisers of the framers of this bill used appropriate words there. That is why I have singled it out.
I think it was last night that the Parliamentary Secretary to the Minister of State for Small Businesses and Tourism (Mr. Ferguson) pointed out, in his contribution to this debate, that the Farm Credit Corporation was originally intended only as a lender of last resort and that the legislation was changed, in his own words, as needed to alter this earlier provision.
I have some personal views on this matter of whether the federal government through any agency, but particularly through the Farm Credit Corporation, should indeed become involved in making loans to farmers in open and public competition with other lending agencies. In other words, I am saying there was some merit-and I think very much merit-in using the original concept of a lender of last resort. Too often I have seen evidence in southern Alberta and southwestern Saskatchewan of the Farm Credit Corporation's stressing the term "economic unit" too much in assessing an application for funds from the FCC. Too often the FCC has encouraged, especially young farmers, to borrow excessively. If a young farmer wished to borrow to buy a quarter section, the FCC suggested that to make an economic unit, perhaps the young farmer should finance a half section or even more, against, I am sure, the better judgment of that person's father, if he was born and raised on a farm. I have seen evidence of this many times, especially where a young farmer makes application for an FCC loan and is turned down because, in the opinion of a representative of the FCC, he did not have an economic unit and perhaps should borrow for a bigger quantity of land.
I think this has had negative results over the years. Borrowers got into real trouble, especially over the last few years and most especially in 1981 when interest rates were at 20 per cent or, in many cases, considerably higher. I need not draw pictures of that one. Hon. members know what happens to young farmers making annual payments when interest rates get that high. However, perhaps the most serious end result of this program is that there was a definite tendency, as a result of this program of easy money coming from the federal government, toward overinflated land values. There is no doubt in my mind that in western Canada farmland values increased too rapidly. This is easy to say now when, due to a combination of inflation and the current budget, land values have ceased to increase. In fact, in some areas they are beginning to drop back. That is a clear indication of problems
Farm Loans
associated not only with an overgenerous supply of lending money but also with the current budget.
I must say too that there is a clear association between the fall-off in farm values and the cancellation of income-averaging annuities. Hon. members all know that it was the traditional method adopted by a farmer selling out to his son or to a third party and establishing his own pension for the balance of his life for him and his wife. I think the cancellation of that practice by the budget contributes to a situation in which now over a huge area in the west there are no farm or ranch sales at all. We are going through a difficult period. People who want to retire, and especially those who decide for other reasons to sell their farms or ranches, are so uncertain about the ambiguity of the new budget that they feel that the proper course is to do nothing and to wait for further clarification of some of these provisions.
The one which bothers most of them is the forward-averaging provision in the budget. This one is exceedingly difficult to understand. In spite of the fact that the policy branch of the Department of Finance has come out with a model attempting to explain how that forward averaging will work, there is still a sense of distrust and bitterness because of the abrupt cancellation of the well accepted and traditional method of setting up income-averaging annuities for the retirement of farmers and ranchers.
This leads me to another comment I would like to make which concerns the concept of establishing an income-averaging trust proposal. Some hon. members will remember this idea. It was proposed two or three years ago, or perhaps even earlier, by the Canadian Cattlemen's Association as a means of allowing individual cattle producers to set up their own stabilization program on an individual basis. It was just a common sense proposal which allowed producers to use the good years in the cattle business to pay for the bad years. When producers had a good year and sold their cattle at above average traditional prices, they could invest their money in personal trusts without paying taxes on them until they had a bad year, and then they would withdraw funds and pay their taxes in the year they used those funds. I call this a good, common sense arrangement.
This proposal has been placed before the policy branch of the Department of Finance, so officials are well aware of it as is the Minister of Agriculture (Mr. Whelan). In view of the problems we are having at present with the forward-averaging concept that was proposed in the budget and the cancellation of the income-averaging annuity, perhaps it is high time that we looked at a concept which would allow the farmer, the rancher, or anyone in any branch of agriculture to set up a private stabilization fund. I propose this in all sincerity, Mr. Speaker, and I think we should look into it.
Another concept that has been suggested is the use of the same funds, from the broad area of agriculture, by the Farm Credit Corporation. There would be distinct advantages in this. For every farmer that has to borrow capital, generally

February 2, 1982
Farm Loans
speaking there are perhaps three or four or even five times as many older, affluent farmers who have gone through the process of building up their operation and who now have some money to invest. They may put it in a term deposit these days when interest rates are so high, but I think they would be very pleased to see their money go into a special Farm Credit Corporation fund knowing that it would help younger farmers to borrow money at more attractive interest rates. I think that suggestion could be adopted with very good results.
I should like to comment on two meetings of cattlemen which occurred recently, Mr. Speaker, one of which I attended last week and one about which 1 heard a great deal. The Minister of Agriculture knows about both of them. I was not able to attend the meeting held in Hanna where the minister was the guest speaker at night. This meeting commenced at 8.30 in the morning and approximately 500 people, mostly cattlemen, attended. It was well organized by a couple of district agriculturalists and people in the Hanna community. Able spokesmen from different areas of the cattle industry addressed it. One was my old friend, whom the minister knows, from the University of Saskatchewan, Professor Red Williams. The Minister of Agriculture for Alberta, Dallas Schmidt and a number of other highly qualified people, were also on the program.
Even though the minister did not arrive until toward the end of the meeting, I am sure he knows about it. His able representative Jim Lockhart in Alberta was there and I am sure has given him a full report of the meeting and of the atmosphere that prevailed. The feeling that came through was that the cattle industry in Alberta was not ready for the minister's solution, which is to blame all our troubles on the marketing system. That is nonsense, Mr. Speaker. That message came through the meeting over and over again.
The other meeting, the annual meeting of the Western Stock Growers Association, was held in Red Deer and lasted three days. That association has been meeting in annual convention for well over 80 years. The main subject of debate at that meeting, which did not draw such a big crowd, was stabilization of the industry. The day before the convention started, the board of directors put together a resolution which said rather bluntly that cattlemen in Alberta wanted no part of any stabilization program for the industry that included taxpayers' money from any government. That was a very hard line position to take. I contributed my personal comments to the debate and said that in my opinion, partly because of the very critical situation in Ontario, the federal stabilization legislation that is on the books should be used in the crisis in the cattle industry.
The minister has heard me say in the House that three participants should be involved in this-the federal government using its own legislation, the governments of the cattle provinces which essentially are B.Ct, Alberta, Saskatchewan, Manitoba and Ontario, and there is even some interest from the maritimes, and the cattle producers themselves. I suggested that it is still possible to make a stabilization pay-out for 1981 under that legislation. Within a week or two we should
know what the average market price was for last year. The minister has discretionary powers in this respect. If 90 per cent will not do it, then 95 per cent might. That is what the minister said during an opposition day debate in the House. In fact, he has even gone higher with a precedent for it. 1 followed that suggestion by saying that the participation of cattlemen would take many months to come about. But surely that is the logical solution.
I appreciate that the minister is here tonight and is listening to my remarks. Once again I would ask him to give some consideration to the larger picture, to the long-range solution of the crisis in the cattle industry today. In my opinion, it is the worst in 30 years. Perhaps a worse situation occurred in February, 1952, when foot and mouth disease broke out around Regina. Overnight, the United States government placed a total embargo on cattle going to the United States. Prices for fed cattle, feeder cattle and everything dropped by half.
That is some of the background of the first go-around on the marketing board debate which only occurred in western Canada. It was promoted in Manitoba by Mr. Jake Schultz, in Saskatchewan by Joe Phelps and in Alberta by Roy Marler and a poultryman called Mr. Kappler. At that time there was a great debate going on because of unsatisfactory cattle prices. It is interesting that the governments of the day, federal or provincial, were not involved.
I remind the minister of this bit of history and ask him to look again at the crisis that exists in the cattle industry today. Let us work to find a different solution than bringing in a board with supply-management powers.


Some hon. Members:: Hear, hear!


Mr. Jack Murta (Lisgar):: Mr. Speaker, I have a little less than ten minutes in which to close this debate. I should like to begin by saying that I am deeply concerned about the state of agriculture in this country. Most hon. members in the House and most people in my constituency know of my interest in agriculture over the years. I come from the agricultural area of southern Manitoba and I have been actively involved in a farm operation. At the present time agriculture is faced with one of the worst crises and most difficult situations in a long time. We see a great deal of balkanization in the country between provinces, in some places between commodity groups and even between sectors within those commodity groups. We have a system of top-loading in which provinces literally compete with each other in terms of attracting particular parts of the agricultural industry. The effect of top-loading is that income in some cases does not come from the marketplace where it should, but comes from provincial governments which, in most cases, are willing and able to finance and support the various agricultural programs within their own provinces. This is very disconcerting for a country with our potential, not only to supply food for ourselves but to make agriculture the number one export earner. Our transportation system is slowly grinding to a halt, literally, and we are not able to ship the amount of grain to our ports that we should be. To top it all off, the
February 2, 1982

marketing system in a good many cases is controlled. It is very rigid, and too often it does not allow new young farmers with new ideas into the business.
In terms of Canadian agriculture as far as the world is concerned, the main product we export at the present time is grain. We are a net importer of many agricultural commodities. Certainly this demonstrates the difficulty with which agriculture is faced. If it were not for grain and oilseed products, the country would be a net importer of most agricultural products and, in effect, we would end up with a deficit. The danger is that Canadian agriculture will lose its competitive advantage in world markets.
The problem lies in many, many areas, but part of the problem lies with the government and with the Minister of Agriculture (Mr. Whelan) who has been the minister for a long time. There is no imagination in terms of attracting new people to the agricultural industry, of devising a food strategy or of providing direction for agriculture. At the present time the only display of imagination is the Minister of Agriculture trotting around the country, attempting to obtain support for a beef marketing board which the majority of Canadian producers do not want. It is the kind of wasted energy we see, wasted energy looking inward at how to solve our problem or how to quarter up the market within the country, without paying any attention to servicing a large export market. It boils down to lost opportunities for Canadian farmers and for the tremendous number of people who service agriculture. Service is by far the largest component of any economy, that is the service sector surrounding agriculture and the food industry. It boils down to lost opportunities for all these particular areas.
We are not aggressive enough. Any of us who have had the opportunity or the privilege of travelling outside the country and talking to people in other lands have heard that Canadians are not aggressive enough. Most often we take a back seat to the United States. There should be no reason for this. Part of the leadership falls on the shoulders of the Minister of Agriculture, and that leadership is not forthcoming.
We should be looking at a new dynamic vision of agriculture in the west, and we are not doing it. There is absolutely no question in most people's minds that the decade of the seventies was the decade of oil. The decade of the eighties, and probably the decade of the nineties, will be decades of agriculture, food and water, but we are not addressing the problems at the present time. Infrastructure must be in place, but it is not in place at the present time to provide a springboard from which to set the direction and the parameters for what must be a new and dynamic direction as far as agriculture is concerned, especially in western Canada.
1 say this because 1 know western Canadian agriculture, but there should be an infrastructure in place for agriculture in the maritimes, Quebec and Ontario. We must be more forwardlooking, but obviously we are not. Because of this, we will suffer as a country. We must ensure the movement of agricul-
Adjournment Debate
tural products for the decade of the eighties and into the decade of the nineties. This is something we are not addressing as an industry. Some commodity groups are attempting to address it but the industry is not, primarily because there is no agricultural strategy which allows such an input and provides a structure for that type of direction.
If we are to have dynamic agriculture over the next number of years, there must be less government involvement. The private sector is really the engine which fuels this great industry. It must be allowed the freedom to operate, but that is not the case at the present time. There must be aggressive marketing by private agricultural firms in Canada. This is not happening at the present time because the federal government seems intent on imposing itself in too many areas of the agricultural sector. The private sector must be the main engine or the main driving force behind a new dynamic agriculture.
The amendments concerning the Farm Credit Corporation which we have been debating are strictly band-aid measures. They are really meant to cover up a very serious problem which we are not addressing, the problem of farm income. Rather than addressing it, we are putting band-aids on the particular problem. Until a clear direction is established, we cannot become what we must be, that is, a great agricultural exporting nation which can provide for its farmers and can provide desperately-needed outside money for its gross national product as well as a healthy sector for secondary manufacturing and agriculture. Until we do this, we will not realize the potential of our country.


Some hon. Members:: Hear, hear!


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the Standing Committee on Agriculture.

[Stage Direction]
A motion to adjourn the House under Standing Order 40 deemed to have been moved.
[Stage Direction]
February 2, 1982
Adjournment Debate

Mr. Tom McMillan (Hillsborough):: Mr. Speaker, during Oral Question Period on January 29, I put two questions to the Minister of Finance (Mr. MacEachen). In my first question I wanted the minister to confirm or deny a front-page, Toronto Star story which reported revised Department of Finance calculations that provincial revenues for health, post-secondary education and other vital services will be slashed on a net basis by $4.5 billion over the next five years. That estimate is twice the size of the reduction projected in the minister's budget of November 12.
In reply to my first question, the minister claimed not to have seen the Toronto Star article to which I had referred and declined to comment on the figures contained in it. But he said that the proposals in his budget would significantly improve the fiscal position of provinces during the course of the next five years. These were the words he more or less used. I am appalled that the minister would hold to the position that his budget will not reduce provincial revenues but will actually increase them. The minister is either deceiving himself or is misleading the people of Canada about the true impact of his proposals. My own assessment conforms with that of syndicated columnist Richard Gwyn who wrote the following in The Ottawa Citizen just before Christmas:
MacEachen doesn't know what he's doing.
Certainly in the area of fiscal transfers, the minister has already admitted to making a multimillion-dollar error in calculating the impact of his budget on provincial revenues.
On budget night, November 12, 1981, the minister stated that the net cutbacks in federal grants for such services as medicare and post-secondary education would be $1.9 billion. The ink had hardly dried on the budget documents when the minister was compelled to confess on November 23, just 11 days later, that the Department of Finance had underestimated the net cutbacks by $660 million. Accordingly, the relevant projection was revised upwards to $2.6 billion. Now we discover after a colossal mistake has already been made and admitted, that the real loss in provincial revenues will be nearly twice that amount, that is twice the revised figure of $2.6 billion. The provinces will receive $4.5 billion less than they would have received under the current formula.
The government's fiscal plans are as fraught with potential catastrophe as they are the product of sheer incompetence. Not in the last half century have we seen a more shoddy exercise in public policymaking in this country.
What we have here is a government hellbent on starving the provinces of revenue badly needed to provide essential services to their people at a time when we have the worst and the deepest recession since the great depression of the 1930s.
If allowed to go unchecked, those cuts will force many parts of Canada to live with a substantially reduced quality of health care and education. The provinces will be strong-armed into
compromising the quality the range and the availability of health services, all the way from elective surgery to hospital beds to highly trained medical and nursing staffs. The universities, for their part, will be forced both to cut or truncate important academic and training programs and to hike tuition fees.
As a maritimer, I am shattered by the implications of what the government is intending to do. The large and wealthy provinces, like Alberta and Ontario, may well be able to absorb the extra costs of medicare and higher education. But the smaller and less advantaged provinces, such as my own, Prince Edward Island, would be crippled under the weight of the added burden. The consequence will be a return to the era when the level of essential services varied widely and wildly from province to province depending on the tax resources of the place in question. Gone will be the practice which we in Canada have come to take for granted of providing a basic level of social services all the way from the Atlantic to the Pacific, regardless of a province's size or its access to tax revenue.
The November 12 budget may well mark the end of the concept that all Canadians, no matter where they live, should have access to a minimum level of social services funded by both levels of government in a spirit of partnership and co-operation. That a fellow maritimer in the person of the Minister of Finance should be the man to herald the new era brings great sorrow to my heart.


John Leslie Evans: Mr. Speaker, the Toronto Star article to which the hon. member's question refers, indicates a $4.5 billion cutback in transfers to the provinces. It is not my intention to engage in debate over these numbers. However, a net reduction in federal transfers to provinces under EPF of about $4.5 billion over the coming five years would be consistent with the long-standing position taken by the Minister of Finance (Mr. MacEachen).
In his October, 1980, budget the minister indicated that the federal government expected to achieve net savings in the social affairs envelope beginning in 1982-83. The budget noted these savings were expected to include reductions in federal transfers to provinces in areas coming under provincial jurisdiction. In response to a question in the House on February 25, 1981, the minister further indicated that he would like to achieve savings of $500 million in 1982-83, and $1 billion in 1983-84 in respect of transfers to provinces within the social affairs envelope.
In terms of the budget, the $1 billion saving in 1983-84 is to be on a continuing basis and therefore represents about $4.5 billion over five years. This reduction was never hidden or obscured in public statements. Indeed, the minister stated this in his November, 1981 budget paper entitled "Fiscal Arrangements in the Eighties-Proposals of the Government of Canada."
February 2, 1982

However, in actual fact, the reduction in federal transfers under the proposed fiscal arrangements will be significantly less than $4.5 billion. Over five years the elimination of compensation for the 1972 revenue guarantee represents some $5.3 billion. Taken together with the proposal to make EPF contributions equal per capita, the total adjustment is $5.9 billion. However, the budget tax changes will significantly increase provincial income tax revenues, thereby offsetting some of the reduction in these transfers. Provincial revenues would increase by about $2.7 billion due to these tax rate changes, and the net effect of the fiscal arrangements proposals and the budget tax changes will account for only $3.3 billion, Mr. Speaker.
More generally, however, 1 would draw the House's attention to the increased revenues provinces will receive as a result of the federal government's fiscal arrangements proposals and budget changes. In 1981-82 they are estimated to be $15.2 billion, while in 1986-87 at the end of the five-year period they will be $26.5 billion, an annual rate of growth of about 12 per cent, which provides a stable and generous source of revenues to the provinces in the years ahead.
1 should add that under the old arrangement the province of Prince Edward Island received $600 million over the past five years, whereas in the coming five years the province will receive $1.1 billion, Mr. Speaker.


AGRICULTURE-GOVERNMENT AID TO PRODUCERS. (B) APPLICATION OF LOWER INTEREST RATES. (C) SHORT-TERM CREDIT
Charles James Mayer: Mr. Speaker, I rise this evening to refer to a question 1 raised with the Prime Minister (Mr. Trudeau) back on June 18. It related to the problems that farmers were and are still having with interest rates. By way of background I think it needs to be said, and said again so that people understand, that farm finance is a very important part of not only farmers' activities, but the total economy, because without a productive agricultural sector the whole system suffers and we end up spending more of our efforts and disposable income on food.
I tried to point out at the time to the Prime Minister that there were some alternate methods available which could in fact lower the cost of short-term financing to farmers, and I sent a note to him after question period asking him if he would like to see a study done by a Calgary group of consultants pointing out the differences in some of the farm financing that Americans have available to them as opposed to what we have here in Canada.
It is not that we want to ape the Americans or anything like that, but the point is that they are our closest neighbours and therefore our closest competitors, and unless our agriculture remains competitive with them we will find ourselves in a very serious situation very quickly. I pointed out the problem I guess some eight months ago and it has not changed very significantly. We find farmers going out of production because of the uncertainties associated with interest rates and the economy. This is not so much uncertainty arising from market or climatic conditions as uncertainty concerning interest rates.
Adjournment Debate
In many cases, to point out the seriousness of the problem, interest rates are the largest single expense of many farmers today. It is a larger expense than seed, repair, or fuel expenses, and it is larger than wages. In my community today, I am aware of many cases where it is the largest single expense of farmers, so it is a very serious matter. I would again urge the government to take a look at some of the areas available to farmers to help in lowering interest costs. Without this, we will lose production. Many people fail to see, as I fail to see, how raising interest rates and chasing people out of business will help the inflation rate. Inevitably, that leads to a rise in the cost of food and, again, causes a rise in inflation.
I think the government has an obligation, not only to the farming community, but also to the total economy, particularly to consumers, to take a look at some of these suggestions. I would very quickly like to suggest three areas in which the government can do something.
First, the government should attempt to establish a fixed rate of financing for farmers for a production period, whether it be a six-month period for feeding livestock or a six-month to nine-month period for producing a crop. I have spoken to enough bankers and producers to know that it would be useful to have a one-year fixed period on mortgages for houses. Admittedly, this would not do anything toward lowering the cost of interest, but it would at least take away uncertainty. Then, if a producer wanted to go on a budget for a certain production period he would know that his interest rates were pegged. There would not be situations, such as we have had in the past, where people would buy cattle at 12 per cent or 13 per cent but would then be paying 20 per cent or 22 per cent before they were finished feeding those cattle. That kind of budgeting causes very serious problems for people because they do not know what the interest rate will be. Therefore, if we could fix the interest rate for the production period it would be of assistance to the farming community. I think the government could show some leadership in that area.
The second point I would like to make this evening is that the small business bond, as it is now called, has been the cheapest way for the government to create jobs. This has been pointed out to me in conversations I have had with several people from different organizations. It has been cheaper than the cost of creating jobs through programs such as DREE or the Canada Community Development Program. The Small Business Development Bond would greatly assist farmers. We have heard the Minister of Finance (Mr. MacEachen) say that the banks should bleed a little, and the Minister of Agriculture (Mr. Whelan) has said that the banks are scandalous and should be sued because of their lending practices.
The criteria for qualification under the Small Business Development Bond should be relaxed, and we welcome the relaxation in the budget which will make it available to unincorporated businesses and small farmers. However, we also regret the provision which puts a Financial difficulty constraint so that loans are only given to people in financial difficulty. However, that is another concept which could be

February 2, 1982
Adjournment Debate
expanded and would be of great usefulness in farm financing in the short run.
The last suggestion I would like to make to the government is something to which I made reference in my letter to the Prime Minister dated July 6. I received a reply on September 1 from the Minister of Finance. I made these four suggestions in that letter: the establishment of production credit associations, banker acceptance financing, the establishment of local or smaller central banks, and the development of federal land banks.
Specifically, I would like to refer very briefly to what is known in the States as production credit associations. As I understand, they were set up early in the century and were initially established through a certain amount of funding by the federal government. One could not borrow unless one had a share, and agreed to leave in a certain amount of money. Once the loan was repaid, one still had to leave in one's equity for a period of two years with no accrued interest. However, if one did not borrow from the production credit association for a period of two years, one's equity was then changed so that one could earn interest on it.
Over a period of years all the equity has been paid back to the federal government in the United States and those associations now operate on their own. At the time when this study was carried out, in the early part of 1981, financing was available to farmers and cattlemen in Colorado at rates of about 16 per cent, while the comparable interest rate in Canada would have been in the 22 per cent to 23 per cent range.
Perhaps this is something which would not immediately help our farmers. It would be one step the government could take to at least give some hope to producers that something is coming down the road to encourage them to stay in business. They would know the government cared enough about them to look at some of these credit instruments that could make farm short-run or short-term credit available to them at fixed rates, or possibly lower rates, as I suggested through expansion of the small business bond.
The government could look at what the United States government is doing, specifically in the production credit association. Canadian farmers could then enjoy the same interest rates as American farmers. This would make them not only more competitive with American farmers but more productive and more competitive on a world scale. Canadian agriculture would be better able to compete. It would not only add to our exports, help our balance of payments and increase the demand on our Canadian dollar, but would also help interest rates at home.
Those are three suggestions I make to the government. I hope the parliamentary secretary will not merely tell us what is being done in the budget. We know that the only direct assistance in the budget, as far as interest rates are concerned, amounts to $15 per farmer. I hope that is not what he says
because the Minister of Agriculture (Mr. Whelan) is quickly becoming known as the "$ 15 minister."


Mr. Marcel Ostiguy (Parliamentary Secretary to Minister of Agriculture):: Mr. Speaker, in answer to the comments just made by the hon. member for Portage-Marquette (Mr. Mayer), it is indeed a coincidence, because when he asked for this last minute or so-called late show debate, he could not have known that the Farm Credit Corporation bill would now have been tabled in the House and considered for more than a week. Obviously, the $50 million is supposed to help farmers who are in a very tight situation and not every farmer who happens to contract a loan. I would rather not discuss the figures just mentioned by the hon. member for Portage-Marquette, but I can inform him that we are talking about much more than just $15 per farmer. Of course, it would average at $15 per farmer throughout the country, but in actual fact, when a farmer contracts a $200,000 loan, he will get $28,000, and not $15, over a two-year period, because instead of paying
18.75	per cent interest, he will be paying 11.75 per cent. It is quite true that the number of farmers experiencing serious financial problems is much greater than the number indicated in the bankruptcy statistics, and it should be recognized that this is a minority. In fact, farmers who sell their produce according to structured supply management or marketing plans are better able to cope with rising interest rates.
The manner in which they are paid often helps in reducing their interest payments. The fact that net farm income is expected to increase by 20 per cent makes it fairly obvious that present interest rates do not lead to total losses for all farmers. I may also point out, Mr. Speaker, that net farm income is calculated after deduction of all interest payments. Another important point is that the farmers who are losing their farms usually have a high debt ratio owing to recent purchase of the farm itself or of farmland, buildings or implements. The financial situation of these farmers is very precarious and can very easily lead to defaults on payments, especially if the market is depressed or interest rates increase or are allowed to float, as they are at the present time. Furthermore, Mr. Speaker, government assistance to farmers includes more than this particular FCC program. People usually fail to realize that the reduced interest rates on small business bonds which is now 5 per cent below the normal rate for people who are in serious difficulty actually constitutes a loss of revenue for the government. Through the Income Tax Act, the government has ordered that a substantial part of the interest collected by banks and similar lending institutions on small business bonds shall not be considered taxable income. Since normally, chartered banks pay about 50 per cent tax on their net income, they can now afford to reduce their normal interest rates by half in so far as their income from interests is not taxable.
February 2, 1982


I HP BIJDGII PROVISIONS AFFECTING PENSIONERS. (B) TAXPAYER STATISTICS. (C) MINISTER S BUDGETARY STATEMENTS
Howard Edward Crosby: Thank you, Mr. Speaker. I would like to take this opportunity to expand upon some remarks I made to the Minister of Finance (Mr. Mac-Eachen) when addressing a question to him on January 27, 1982 with respect to the tax measures affecting pensioners.
Briefly stated, Mr. Speaker, the budget tax measures proposed to deprive the pension recipient who invests some of that pension money and some of his or her other income in a registered retirement savings plan of the $1,000 deduction now available in respect of pension income. This same deduction would be lost to a taxpayer who provides payments in respect of registered retirement savings plans for his or her spouse.
This tax measure, Mr. Speaker, should be put in the context of the plight of all Canadian taxpayers. There are approximately 14.6 million taxpayers in Canada, according to 1979 statistics. Of that number, 1.1 million were receiving pension income and 1.5 million were over 65 years of age. The Minister of Finance tells us in his statistical analysis for the 1982 and subsequent taxation years that there will be approximately 16.5 million taxpayers. He says that 12 million of those 16.5 million taxpayers will pay less tax than they did in the previous 1980 and 1981 taxation years, and 3.5 million will pay the same tax. He says that only 800,000 people will pay more tax. But we discount those statistics, Mr. Speaker, and the Right Hon. Leader of the Opposition (Mr. Clark) pointed out in this very House some of the inaccuracies of those statistics.
As I have indicated, we have over a million persons in Canada receiving pension income and they may be affected by this tax measure which I questioned in the House on January 27, 1982. Briefly, Mr. Speaker, what will happen to those taxpayers is that they will be losing the $1,000 deduction that is now available to them because they have contributed to registered retirement savings plans and they will have their incomes increased so that more taxes will result.
What are we talking about with respect to this class of taxpayer, Mr. Speaker? Are we talking about executives who have received tremendous incomes, have now retired and engage in consulting and other work and are receiving large amounts of money in fees and other forms of income? No. For the most part we are talking about approximately one million Canadians who have retired from the Armed Forces, for example, at a very early age on a very modest pension. Perhaps they have retired from the Royal Canadian Mounted Police or from the provincial or federal public service or from a variety of other employment which resulted in very modest pension allowances. What they tried to do in most cases was to utilize that very modest pension and whatever other income they could acquire to provide for themselves in their later years, the years in which they would have no income on which to maintain themselves. Then the minister, in the name of equity,
Adjournment Debate
has struck out at these kinds of taxpayers and has eliminated an exemption upon which they rely.
What would cause the Minister of Finance to take such action, Mr. Speaker? He said in his documents accompanying the budget that his aim was to introduce tax measures which would improve the fairness and equity of the tax system. He also said that he wished to enhance the general incentives for individuals to work and to save and to invest. Mr. Speaker, to take away from those people who are in their later years and are trying to save funds to take care of their old age when they will be unable to earn money is hardly bringing equity to taxpayers and it is hardly benefiting the people of Canada.
In 1980, when the Minister of Finance introduced his budget in this House, he said that Canada had one of the best tax systems in the world. He said that Canada's individual and corporate taxes are lower than many other industrialized nations, including the United States.
Approximately one year later, in November of 1981, when he introduced the current budget, he said:
Many Canadians find our tax system unfair, and I agree with them. They realize that taxes are necessary to pay for important government services, but they feel that rates of tax are too high. They sense that others, the well-advised or the wealthy, very often pay less than their fair share.
Surely the Minister of Finance could not have been including in that group of well-advised and wealthy taxpayers those Canadians who are retired on modest pensions and are trying to build up funds to provide for their old age and are using the $1,000 exemption now provided to do that.
Time and time again throughout our examination of this budget we have found that the Minister of Finance was wrong and misleading the people of Canada with his taxation statistics. He said, as 1 indicated tonight-and as he has said two or three times in the House-that 12 million Canadians will pay less taxes in the ensuing tax years. There are approximately seven million Canadians whose health benefit plans will be taxed under the current proposals. I refer to the seven million Canadians who are now in receipt of benefits from their employers in respect of health benefit plans. There are 45,000 transportation workers who will be taxed on their passes. There will be 60,000 who will receive less in child tax credits than before. When the minister tries to tell us there are 12 million Canadians who will pay less taxes, we do not believe him. We do not believe he is sincere about his tax measures. We do not believe there is equity in this budget, and we want him to admit he is wrong on these matters.


John Leslie Evans: Mr. Speaker, the hon. member for Halifax West (Mr. Crosby) has raised several questions relating to the budget. First, he questions the impact the change in eligibility for the $1,000 pension income deduction will have on retired Canadians. The budget proposed that this $1,000 deduction be denied where the individual is still making contributions to an RRSP. This rule was intended to disallow the deduction in a case where a taxpayer was not
80108 18

February 2, 1982
Adjournment Debate
really retired. For example, a fairly common practice was for an individual to retire on a pension, take another job, and transfer all but $1,000 of his pension income tax-free into an RRSP. The $1,000 of pension income that was not transferred to his RRSP would then be available tax-free because it would be fully sheltered by the $1,000 pension income deduction. This was an inappropriate use of the pension income deduction.
Of course, the intention of this measure was not to penalize Canadians who are genuinely retired. Thus, as the minister stated in the House last week in reply to the original question, he "will certainly listen to the hon. member's representations very carefully when we have those matters before the committee of the House."
The hon. member went on to raise a second question as to the number of taxpayers who will gain or lose according to the budget proposals. 1 do not wish to repeat the original answer of the Minister of Finance (Mr. MacEachen), which was clear
and concise. Fet me, however, add one further point. It is the case that most individuals are, on balance, better off as a result of the budget, even though specific items may affect them adversely. For example, the ability to claim an extra $200 federal tax cut for one-earner couples will in many cases more than outweigh the impact of, say, $35 tax payable on an extra $100 of taxable income resulting from the taxation of employer contributions to a private health or dental plan. Indeed, it is precisely such over-all calculations that underlie the figures referred to by the minister and tabled as supplementary information to his budget.


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

Wednesday, February 3, 1982