1982-03-26

ROUTINE PROCEEDINGS


Mr. Douglas Roche (Edmonton South):: Madam Speaker, yesterday the central bank lending rate rose again, increasing to intolerable levels the financial pressure on the ordinary citizens of our country. In view of the fact that high interest rates have made construction of new apartment buildings and homes an unviable proposition, and that my city of Edmonton presently has a vacancy rate of only 1.1 per cent, with many people there facing mortgage renewals, rental increases and loss of income through increasing lay-offs, I move, seconded by the hon. member for Wetaskiwin (Mr. Schellenberger):
That the Minister of Finance take immediate steps to reduce present high interest rates, which are severely damaging not only the economy, but the lives of hard-working Canadians desperately worried about their own future.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN WHEAT BOARD
Mr. Stan Schellenberger (Wetaskiwin):: Madam Speaker, the initial payments for Canadian Wheat Board grain announced on Monday are totally inadequate. Canadians cannot honestly expect farmers to continue to produce grain at prices lower than last year when the farm input price index in western Canada skyrocketed by 11.2 per cent during that time. I therefore move, seconded by the hon. member for Bow River (Mr. Taylor):
That this House calls upon the minister responsible for the Wheat Board to show the courage and leadership which his office demands and immediately raise the initial prices to a realistic level which will allow farmers to cover the payments on their input costs which will come due this fall.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AWARDING OF MEGAPROJECT CONTRACTS TO FOREIGN FIRMS-MOTION UNDER S.O. 43
Mr. Ian Waddell (Vancouver-Kingsway):: Madam Speaker, I rise under Standing Order 43 on the matter of jobs from energy megaprojects. First we had the stacker reclaimer case in Prince Rupert and now we have a similar situation in the coal project at Sparwood, British Columbia. I have just been informed by letter from the regional manager of Westeel-Rosco Limited in Vancouver that a S20 million contract for conveyor covers was awarded to Continental Conveyor and Equipment of Alabama Inc., U.S.A. The American company gave assurances that almost all the components would be made in Canada. Continental then promptly awarded the work to a Chicago-based company and Canada lost another 20,000 manhours of work. Therefore I move, seconded by the hon. member for Winnipeg-Birds Hill (Mr. Blaikie):
That in order that the highly touted spin-off effect of Canadian energy megaprojects does not rapidly turn into a tailspin, the Government of Canada take immediate concrete steps so that Canadian resources can be used to help Canadian business and governments to provide jobs for Canadians and not allow them to go out of the country.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AUTOMOTIVE INDUSTRY
Mr. Stan Darling (Parry Sound-Muskoka):: Madam Speaker, the government, having made a complete shambles of our economy, is obviously unwilling or unable to resolve the problem. The resulting tragedies seem endless. We now have word that up to another 1,750 employees of General Motors of Canada will be laid off indefinitely next month, a depression-

March 26, 1982
sized lay-off that will undoubtedly have a serious ripple impact throughout the country. Therefore I move, seconded by the hon. member for Ontario (Mr. Fennell):
That this government take immediate steps to stimulate sales of Canadian-made vehicles, expand their efforts by bringing forward new programs to promote economic growth or, failing this, that this government call an election so that Canadians suffering from this indifference and inability of government will have the opportunity to turn the job over to others willing and able to achieve economic recovery.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


HUMAN RIGHTS
Mr. John Thomson (Calgary South):: Madam Speaker, I rise on a matter of urgent and pressing necessity to seek the unanimous consent of the House. Soviet Jewish dissident Anatoly Shcharansky has been unjustly held for over six months in solitary confinement and on low rations by the Soviet authorities, in direct contravention of basic human rights and of Soviet obligations under the Helsinki Accord to respect the fundamental freedoms of conscience and religion. In view of this injustice and the plea of Mr. Shcharansky's wife that politicians in the west take up her husband's cause, I move, seconded by the hon. member for Don Valley East (Mr. Smith):
That this House call on the Soviet Union to live up to its obligation under the Helsinki Accord and immediately release Anatoly Shcharansky from detention.


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


Some hon. Members:: Agreed.


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


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. G. M. Gurbin (Bruce-Grey):: Madam Speaker, Canadians are paying more in taxes than they do for food and shelter. Many of these taxes are hidden in consumer goods such as gasoline where, in spite of falling world prices, Canadians pay an increasing amount of hidden taxes which are justified by such things as the need to raise prices to world levels and the need to pay for oil imports even while available Canadian oil is not being used. As an example, Ontario farmers who use
gasoline are relieved from federal excise and sales tax of 20 cents a gallon while they are still paying 40 cents a gallon for other federal taxes. Ontario motorists now pay over 60 cents a gallon combined federal tax, and the federal government claims the largest single bite on a gallon of gas, 34.5 per cent. If the federal government is serious about fighting inflation, I move, seconded by the hon. member for Wetaskiwin (Mr. Schellenberger):
That the federal government immediately reduce the crushing burden of gasoline and diesel fuel taxation to consumers, and implement a rebate program on gasoline and diesel fuel to agricultural producers.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FISHERIES
Mr. Ted Miller (Nanaimo-Alberni):: Madam Speaker, I rise under the provisions of Standing Order 43. Whereas the Minister of National Revenue (Mr. Rompkey) told this House on February 26, 1982, that fishermen in Atlantic Canada support the plan to have fishermen's income taxed at source, and whereas fishermen in Prince Edward Island have now joined with fishermen in British Columbia in making known their discontent with a measure that will severely restrict their available cash and force them to borrow at exorbitant interest rates, I move, seconded by the hon. member for Vancouver East (Mrs. Mitchell):
That the Minister of National Revenue be instructed to withdraw his plan to tax fishermen's income at source and replace it with an arrangement more acceptable to the fishermen and fishing communities.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ADMINISTRATION OF JUSTICE
Hon. Elmer M. MacKay (Central Nova):: Madam Speaker, I rise on an issue which involves the fundamental rights of several Canadians now being tried in Montreal criminal courts. They happen to be officers and former officers of the RCMP, and this fact alone should not deny them a modicum
March 26, 1982

of natural justice. Therefore I move, seconded by the hon. member for Athabasca (Mr. Shields):
That the government reverse its refusal to release certain documents as requested by defence counsel of the accused, documents which allegedly confirm that the officers in question had acted with the full knowledge and indeed at the request of certain ministers of the Crown, and that the Minister of Justice undertake that no documents involving any allegedly illegal acts by the security service of the RCMP are destroyed and that they be transferred to the safekeeping of the National Archives of Canada, and that cabinet ministers who were found by the McDonald commission as knowing certain illegal acts had been committed by the RCMP resign immediately as it befits our parliamentary tradition of ministerial responsibility.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Dave Nickerson (Western Arctic):: Madam Speaker, whereas the Fraser Institute has calculated that the average Canadian now pays more for taxes than for food, clothing and housing combined, and that taxes are the most rapidly increasing area of expense, I move, seconded by the hon. member for Prince Edward-Hastings (Mr. Ellis):
That this House deplores the socialist policies of ever-increasing taxes and insists that the government take its greedy hands out of the pockets of Canadian taxpayers.


Some hon. Members:: Hear, hear!


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS DEBATE ON LEGISLATION-MOTION UNDER S.O. 43
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Madam Speaker, this House has been recently put in the difficult and unfair position of having to debate equalization legislation which has an expiry date, and established program financing legislation which does not. Given that the EPF proposals which pose great risks to health care and post-secondary education need to be debated as fully as possible, I move, seconded by the hon. member for Saskatoon East (Mr. Ogle):
That this House instruct the Minister of Finance to separate the two aspects of the fiscal arrangements legislation so that equalization can be dealt with now and EPF later, and that the equalization proposals be amended to offset the inevitable disadvantage to which the province of Manitoba is put by the new formula, in order to make that new formula acceptable.
Oral Questions


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CORPORATE AFFAIRS
Mr. Thomas Siddon (Richmond-South Delta):: Madam Speaker, given that the Liberal government has now abandoned the hypothesis that Crown corporations, senior government bureaucrats, and cabinet ministers are above the law, as witnessed by the argument by government lawyers that officials of Uranium Canada and Eldorado Nuclear Ltd. cannot be prosecuted for their involvement in the uranium cartel because they were acting in the name of the Crown, I move, seconded by the hon. member for Bow River (Mr. Taylor):
That the Prime Minister and his cabinet be soundly condemned for establishing a totalitarian standard in Canadian society where he and his officials can operate in blatant disregard of the laws of Canada while other Canadians are required to obey the same laws.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
[DOT] (U15)



ORAL QUESTION PERIOD


Mr. Scott Fennell (Ontario):: Madam Speaker, in view of the absence of the majority of the government, I will address my question to the Minister of State for International Trade. General Motors has announced a further 1,750 lay-offs in addition to the 7,444 during the past year, which has severely eroded the economies of Whitby, Oshawa and the surrounding area in southern Ontario. This situation is totally unacceptable. What is the government going to do about it?


Hon. Ed Lumley (Minister of State (International Trade)):: Madam Speaker, there are a substantial number of things the government is trying to do with respect to the Canadian automobile industry, and specifically with respect to General Motors in Oshawa. For the first time in Canada's history we obtained a major export contract for cars from General Motors in Oshawa to Iraq. That sale amounted to over $100 million. Unfortunately, the second order of that sale has not

March 26, 1982
Oral Questions
been forthcoming to date because the cars which were sent over did not work. The Government of Canada does not produce those cars; however, we are trying to finalize the second phase of that order as well as trying to obtain orders from other countries.


INQUIRY RESPECTING GOVERNMENT ACTION
Thomas Scott Fennell: Madam Speaker, the minister has totally failed the auto industry, the auto workers of this country, and the automotive parts manufacturers. One out of every six jobs in Canada is in the auto industry. The bottom line is that we cannot afford to sit back and watch the auto industry go down the drain. What is the government going to do?


Edward C. Lumley: Madam Speaker, even if I were not hoarse I would not holler like the hon. member across the aisle.


Mr. Clark:: That is part of the problem.


Edward C. Lumley: We are very conscious of the seriousness of the situation in the automobile industry, as we are with respect to the situation in other industries. That is one of the reasons we have made unprecedented representations to the Japanese government asking for voluntary restraint. A country such as Canada depends, for about one third of its total gross national product, on its export markets. We are also very conscious of the fact that we could precipitate action on the part of other countries, and that might not be in the best long-term interests of Canadians.


TRADE POLICY
Thomas Scott Fennell: Madam Speaker, voluntary restraint does not work within our own country; how could we make it work with our trading partners? Sixty thousand jobs in the auto industry, many of them in my riding, have already vanished. They are gone. We are not looking for a patchwork solution but a serious economic and trade policy which will bring jobs back to Canadians and get auto workers back on the job. What is the minister going to do about it?


Edward C. Lumley: Madam Speaker, with respect to trade policy the hon. member has failed to take notice of the fact that in the past two years we have had the two largest trade surpluses in Canada's history. One half of the trade surplus in the export market last year was in the finished goods area, which is labour intensive. Obviously the hon. member has not been reading the statistics.


JUSTIFICATION FOR TRADE AND ECONOMIC POLICIES
Mr. Bill Kempling (Burlington):: Madam Speaker, my question is directed to the Minister of State for International Trade. Last year Canadians purchased 903,531 cars and light
trucks. That is a very significant market, in case the minister does not know that. The Japanese took 23 per cent of that market, or 207,639 vehicles. If the justification for the continuation of the auto pact for 18 years is that it created 60,000 jobs or more, how does the minister justify the trade policies of his government and the disastrous economic policies which are now eroding jobs away permanently? After all, we have a very significant automotive market. How does the minister justify them?


Edward C. Lumley: Madam Speaker, surely the hon. member is not advocating that we renegotiate the auto pact with the United States at the present time when the automobile situation in the United States is worse than it is here in Canada. We have had negotiations and discussions with the United States government and with the automobile manufacturing companies in the United States and Canada with respect to their sourcing more parts in Canada during this very difficult time.


William James Kempling: Madam Speaker, I would have expected a stumbling and mumbling answer like that from the Minister of Industry, Trade and Commerce, but I expect more from the Minister of State for International Trade.


CANADA-JAPAN NEGOTIATIONS
William James Kempling: Madam Speaker, I take it from the minister's replies in press reports I have read that the Japanese minister of international trade and industry told the minister that, regardless, the Japanese are going to ship large numbers of vehicles into Canada and that the minister has neither the muscle nor the mandate to do anything about it. To get a little bit more basic, I want the minister to tell me what Liberal economic logic we are to convey to workers laid off at Ford and other plants who have lost their homes due to the high interest rate policy of the government, and who may now permanently lose their jobs because the government has neither the mandate nor the muscle to deal with Japanese imported vehicles.


Edward C. Lumley: Madam Speaker, knowing the hon. member I am sure that he is aware that Canada, being one of the world's largest traders, depends on its export markets for one third of its GNP. Last year we exported $84 billion worth of goods and services. This obviously created a substantial number of jobs in this country. International negotiations, particularly when considering taking unilateral action, can produce harmful effects in the long term. Consequently we give very serious consideration to any action that might be taken by the government.
March 26, 1982


THE ECONOMY
Mr. Doug Anguish (The Battlefords-Meadow Lake):: Madam Speaker, my question is directed to the Right Hon. Prime Minister. We all know that the chartered banks raised their prime lending rate to 17 per cent yesterday. We expect this to be a trend going into the spring and summer months. It seems that our high interest rate policy will be with us for a while. Mr. Bouey says that there will not be any change in the monetary policy. We have had this type of policy since 1975, and in terms of fighting inflation it has not worked. It obviously has not worked because our inflation rate is much higher now than it was in 1975.
I should like to ask the Prime Minister how much longer he expects we will have to wait for this to take effect? At what point will he change the monetary policy that we have now, as it obviously is not working?


Mr. Douglas Fisher (Parliamentary Secretary to Deputy Prime Minister and Minister of Finance):: Madam Speaker, I appreciate the question. This is my first opportunity to stand up and answer a question as parliamentary secretary.
The hon. member has hit on a very crucial point. I suggest to him the answer that was given by Governor Bouey to the finance committee yesterday, that the real cure to the interest rate problems we are facing is a severe and sustained attack on inflation. By bringing down our inflation rate we will undoubtedly bring down our interest rates.


AGRICULTURE
Douglas Keith Anguish: Madam Speaker, we obviously are not bringing down inflation, some of the backbench Liberals were saying on "The National" last night that the interest rate policy is not working.
In a recent magazine article the Minister of Agriculture is quoted as follows:
"Who is this man Bouey?" Whelan asks. "I wonder if he wants every farmer to go bankrupt so he could then say he was successful with his high interest
rates?"
Faced with the large number of high interest rate bankruptcies for farmers across Canada, from Prince Edward Island in the maritimes out to the other coast, I should like to know what the Prime Minister intends to do, or what the government intends to do. If he is not going to change the high interest rate policy will he do something at least to help one sector of our economy, that being the agricultural sector, the farmers who are going bankrupt? The small business bond is not the asnwer. I cannot think of one farmer who has received assistance under the small business bond program. What is the Prime Minister willing to do to help?
Oral Questions


An hon. Member:: Change the government.


Douglas Glenn Fisher: Again, Madam Speaker, I appreciate the comments from the hon. member. We did indeed hear some comments from government MPs yesterday which, to my mind, indicates the very great concern that members on this side have for their constituents and their effectiveness in bringing that message to the government.


Charles Joseph Clark: Where is Bob Kaplan when we need him?


Douglas Glenn Fisher: We appreciate hearing from them. We do not, under any circumstances, want them to stop prepresenting their constituents in this effective fashion.
The hon. member referred to the small business bond, and I should like to tell him that $2.5 billion has been lent under this program, of which $473 million has gone to farmers from four of the seven chartered banks involved in the program.


HOUSING
Douglas Keith Anguish: Madam Speaker, the Liberal Party is obviously in even more trouble than it thinks it is.
I should like to address a question to the minister in charge of CMHC. With interest rates expected to go up during the spring and summer, I wonder if the minister would encourage the government to have the chartered banks set aside part of their loan portfolios so that mortgage holders could renew their mortgages at a lower and locked-in interest rate, and I would suggest with no rollover for five years. Would the minister be willing to talk to his colleagues about that possibility?


Hon. Paul J. Cosgrove (Minister of Public Works):: Madam Speaker, I would be very pleased to take representations from the hon. member, or indeed from any member of the House, on how we might approach the problem to improve circumstances for Canadians facing roll-over situations and higher mortgages. I must admit that I do not share the pessimism of hon. members that rates will not be lower. Indeed I admit, too, that I have been preoccupied with the response of government in an attempt to speed passage of Bill C-89 before the House that will provide 60,000 jobs in the construction industry, which we know is in a downturn. In addition, there is the objective of providing 30,000 rental units of affordable accommodation, and there is the Canada Mortgage Renewal Plan which provides assistance equivalent to a 4 per cent or 5 per cent reduction in interest rates to those Canadians who find it most difficult to meet new higher interest rates.


Mr. Baker (Nepean-Carleton):: Get on with it?

Oral Questions CRIMINAL CODE


OFF-TRACK BETTING-GOVERNMENT POLICY
Hon. Allan Lawrence (Durham-Northumberland):: Madam Speaker, you will remember that yesterday afternoon in the House I asked a very specific question of the Prime Minister relating to any drastic change in government policy respecting gambling or off-track betting. The Prime Minister left the very distinct impression-and I would suggest that he intended to leave that very distinct impression with the House-that he knew nothing about any change in policy, that no change in policy would be effected by order in council, regulation or in any such way and, furthermore, if there was a change in policy forthcoming that it would be by legislative amendment to the Criminal Code, with all of which I agreed.
At approximately 5.30 last night, three hours after that exchange in the House, a press release was received in the press gallery, in the name of the absentee Minister of Agriculture, indicating that indeed by some form of ministerial regulation or departmental regulation a drastic change in regard to government policy on such a controversial issue as off-track betting had taken place. Was the Prime Minister attempting to evade, in his usual manner, a direct question with an indirect answer in the House yesterday, or did he honestly really not know about a drastic change in government policy?


Right Hon. P. E. Trudeau (Prime Minister):: Madam Speaker, the hon. member will recall that when he asked me the question my first answer was to say that I would take notice of it, that I was not aware of any impending change of the nature about which the hon. member asked, to wit, a change by order in council. In effect I found out that there had been no change by order in council. There has been a change by governmental regulation, by departmental regulation, which is something authorized under the law to which the hon. member referred.
That particular change is one which had been announced twice in 1980 and once in 1981, in the sense that it was said that these were the policies of government which were being discussed with the provinces and with the racetrack industry. In that sense there was no impending change of unknown proportions. There was a regulation carried out under the minister's authority. I honestly did not know that it would be announced yesterday afternoon, but of course I remember that the matter was discussed and authorized in cabinet a couple of years ago. No order in council was issued yesterday.


REQUEST THAT DEPARTMENTAL REGULATION BE REVOKED
Allan Frederick Lawrence: Madam Speaker, I am even more appalled than I was last night.


Some hon. Members:: Oh, oh!


Allan Frederick Lawrence: On top of metric, on top of emergency planning orders, and on top of 101 other things on which the government is evading Parliament, no wonder there is such
March 26, 1982
contempt for this place. It is falling down around our ears. Now we even have the Prime Minister being evaded by his own ministers.


Mr. Fox:: Question.


Allan Frederick Lawrence: My question to the Prime Minister is on a matter affecting moral issues, organized crime, law enforcement, tax policy and federal-provincial issues. Surely this should be debated in an open manner in the House.


Some hon. Members:: Hear, hear!


Allan Frederick Lawrence: Will the Prime Minister chastise his bullheaded Minister of Agriculture, revoke that measure, that regulation he should have known about anyway, and would he please bring forward a measure to this House which can be openly, freely and frankly debated in this House so that the people of Canada will know what is going on?


Some hon. Members:: Hear, hear!


Madam Speaker:: I do not know if that particular expression which the hon. member used to describe a minister is unparliamentary or not, but I would urge hon. members not to use these types of expressions. I do not think it is necessary in order to elicit information.


Pierre Elliott Trudeau: Madam Speaker, I find it somewhat astonishing that the hon. member accuses the minister of evading Parliament, particularly if he refers to my previous answer. The orders issued by regulation by the minister were issued on the authority of the law passed by this Parliament. They were issued after two announcements had been made in 1980, and one in 1981.


Allan Frederick Lawrence: Not in this House.


Pierre Elliott Trudeau: The announcements were made, Madam Speaker, because the minister was consulting with the industry, and with the provinces.


Thomas Edward Siddon: Why don't you respect Parliament?


Pierre Elliott Trudeau: If it is not respecting Parliament to do one's duty as a minister as provided for under the law, then I have a different conception of what respect for Parliament is than the hon. member does.


Some hon. Members:: Hear, hear!


SERVICE STATION COST OF GASOLINE
Mr. Jim Hawkes (Calgary West):: Madam Speaker, my question is for the Prime Minister. The Prime Minister will know that in the hearings of the Standing Committee on Public Accounts this week we discovered that we have a
March 26, 1982

national energy policy and a petroleum compensation charge which make imported oil cheaper to the refiner than comparable Canadian oil.
Most of the Mexican crude oil coming into Canada today is at a price to the refiner, because of the subsidy, which is 40 per cent less than the equivalent Canadian crude. This policy of importing oil throws Canadians out of work when we could be producing it, and it makes oil more expensive. If I were to drive to Montreal this afternoon where that Mexican crude is sold in the service stations, and if I were to drive up to a Petro-Canada service station, because Petro-Canada is an importer of Mexican crude, would I find my price at the pump to be 40 per cent less than I would find it at other service stations? If not, why not? Where is the money going?


Pierre Elliott Trudeau: Madam Speaker, I do not think one could attempt in the question period to explain all the energy policy of the government.


Charles Joseph Clark: And the energy taxes?


Pierre Elliott Trudeau: The hon. member perhaps needs to study the policy a little bit and then he would understand what is happening.


Charles Joseph Clark: It is called the OPEC subsidy.


Pierre Elliott Trudeau: I recall that his party last year was arguing that we were paying too much for Mexican oil, and now he is complaining that it is being sold too cheaply. I do not understand the concept.


Some hon. Members:: Oh, oh!


REQUEST THAT PRICE BE REDUCED
Frederick James (Jim) Hawkes: Madam Speaker, Mexican oil costs Canadians $32 a barrel. Comparable Saskatchewan oil is about $24 a barrel. It is the 18-cent a gallon subsidy, which all of us pay and which is given to Petro-Canada, amounting to $17.30 a barrel that saves Petro-Canada $17.30 a barrel. It produces a price that is $9.60 cheaper for Mexican crude than it does for equivalent Canadian oil from Saskatchewan. That is why the jobs are gone. Perhaps the minister might want to read the transcript of the hearings of the committee.
Yesterday we also discovered in the hearings of the Standing Committee on Public Accounts that by a change in policy-


Madam Speaker:: The hon. member must come to the question immediately.


Frederick James (Jim) Hawkes: -we could reduce the price at the pump 11.5 cents per gallon tomorrow. Will the Prime Minister instruct the Minister of Energy, Mines and Resources to read the transcript and, within a week or two, reduce the price at the pump by 11.5 cents a gallon as the evidence from the committee hearing suggests?
Oral Questions


Pierre Elliott Trudeau: Madam Speaker, I know you will recognize that commenting on the proceedings of a committee is not in order, nor is a question based on those proceedings in order. But nonetheless-


Charles Joseph Clark: Put them in an internment camp.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: Did you hear that, Madam Speaker? I was attempting to answer a question of one of his own members and the Leader of the Opposition interrupts by saying that I should put his member in an internment camp.


Some hon. Members:: No.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: He did.


Some hon. Members:: Oh, oh!


Some hon. Members:: No.


Pierre Elliott Trudeau: He said that, Madam Speaker. I am sure that the record will show that the Leader of the Opposition said "Put him in an internment camp". That is the Leader of the Opposition's answer to rational dialogue.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Who are you putting in the camps, Pierre?


AUTOMOTIVE INDUSTRY
Mr. Lome Nystrom (Yorkton-Melville):: Madam Speaker, my question is for the Minister of State for International Trade. It has to do with the automobile industry following today's lay-offs in Oshawa. You will recall in the 1980 election campaign that the Prime Minister promised to negotiate a fair deal under the auto pact with the United States. He then sent the minister of industry to Washington to negotiate a fair deal, and he failed. He then sent the minister of trade to Tokyo to negotiate a deal that he thought he would get, and he failed. Will the Minister of State for International Trade tell us what specific plans and programs does the federal government have to reduce the $1.7 billion deficit we now have in automobiles and parts trade with the United States of America?


Edward C. Lumley: Madam Speaker, as I said in answer to a question previously asked by the opposition, surely the hon. member is not advocating the renegotiation of the auto pact at this particular time when the United States automobile industry is in far worse shape than the Canadian automobile industry. I cannot believe, knowing the hon. member's qualifications, he would think that we would be able to negotiate a better deal for Canadians at this time.

March 26, 1982
Oral Questions 1980 ELECTION PROMISE


Lorne Edmund Nystrom: Madam Speaker, I am concerned, as I am sure you are, with the cynicism that people have toward this institution. I specifically asked the minister what the government is going to do about the 1980 election promise when it promised to negotiate a fair deal with the United States, for Canada and for the auto workers. Specifically I want to know what the minister is going to do to fulfil the promise his leader made in 1980 when he said that we can expect a fair deal in the auto trade with the United States.


William James Kempling: You can forget about it.


Edward C. Lumley: Madam Speaker, the government has kept the promise made during the campaign. We entered into consultations with the Americans immediately following the election. I think we have had about six or seven meetings specifically with cabinet members in the United States to discuss the automobile situation. One of our major concerns is how we can create a greater share for the North American automobile industry in the world. That is one reason why we have been working together, for example, in trying to obtain export markets for North American automobiles.


NUCLEAR ARMAMENTS
Mr. Bill Yurko (Edmonton East):: Madam Speaker, I have a question for the Minister of National Defence. It has to do with the U.S. military testing at Cold Lake. Canadian embassy officials have been quoted as saying that negotiations are for "an umbrella deal" that could extend beyond the testing of Cruise missiles. Could the minister give this House an idea, some advice, or clarify some of the following points: first, the limits or parameters of what is being negotiated; second, the extent and permanency of the U.S. facilities to be built at Cold Lake; third, the maximum number of U.S. military personnel who are to be stationed at Cold Lake, and fourth, the timeframe of such an agreement?


Some hon. Members:: That is for the order paper.


Hon. J. Gilles Lamontagne (Minister of National Defence):: Madam Speaker, I think all the details asked for by the hon. member should be placed on the Order Paper, but maybe I should elaborate on the question asked by him. First, the testing is not to be done at Cold Lake only. I should explain that about two years ago under the Carter administration discussions started on the possibility that the United States might test some of its weaponry in Canada.


An hon. Member:: Why not?


Mr. Lamontagne:: Yes, why not. In any case, discussions carried on. Then the Reagan administration came into office and at that time we thought that it would be better in terms of Canadian security if we could negotiate with the United States an umbrella agreement under which we would have full control of any testing done in Canada, so that we would know exactly what they want to do. This is what we are negotiating at the moment, so there is no question at the moment of testing weaponry now in Cold Lake or anywhere else in Canada. The negotiations are proceeding under the very strict surveillance of the Minister of National Defence and the Secretary of State for External Affairs, and nothing will be done which is detrimental to Canadians.


ENVIRONMENTAL AFFAIRS
Mr. Alex Patterson (Fraser Valley East):: Madam Speaker, it had been my intention to direct a question to the Minister of the Environment, but in his absence, and because of its importance and urgency I would like to direct it to the Prime Minister. It has to do with an extremely serious situation developing in my constituency which, unless arrested, could result in untold havoc in the Fraser Valley and possibly spill over into the state of Washington. I refer to the erosion which threatens the loss of 400 acres of prime land, including farm buildings, and in the near future could seriously threaten the dikes in the region of Carey Point, in the district of Chilliwack, B.C.
As the minister is aware of the problem, as well as the Minister of Agriculture, will he personally or through his officials respond to the rapidly increasing plea for assistance, and support the council of Chilliwack and district, which has already spent $80,000 on the project, by announcing his willingness to support their efforts, by matching any provincial grant up to $100,000 to complete the project currently under way?


Pierre Elliott Trudeau: Madam Speaker, I apologize that I am not on top of this particular question. I will have to take notice of it on behalf of the Minister of the Environment.


DANGER OF SPRING FLOODING
Alexander Bell Patterson: Madam Speaker, perhaps the Prime Minister could take this under consideration. Will the minister confer with his colleague, the Minister of Agriculture, who has seen the problem on site-a problem which has been headlined in valley papers over the past several weeks-and consider ways in which the federal government
March 26, 1982

could co-operate in meeting this threat which, in the event of a quick spring runoff, could have disastrous consequences?


Pierre Elliott Trudeau: Madam Speaker, I will convey that part of the question to the minister.


MINES AND MINING
Thomas Edward Siddon: Madam Speaker, my question is directed to the Minister of State for Mines. Speaking in Toronto on March 8 the minister made the following statement:
Investors taking shares in exchange for providing junior mining companies with risk capital to undertake exploration can write off exploration and development expenditures against other income-
I ask the minister whether this provision applies to income earned in the 1981 tax year, and can shares taken up after the year end, December 31, 1981, to shelter income earned in 1981, qualify for this tax benefit during the 1981 tax year? If Canadians invested 1981 income in junior mining companies before April 30, 1982, can they or can they not write that investment off against 1981 income?


Hon. Judy Erola (Minister of State (Mines)):: Madam Speaker, that is a rather complex question. On the surface I would say yes, but I would prefer to give the hon. member a firmer answer if he were to spell it out to me in a letter.


NATIONAL MINERAL POLICY PAPER
Thomas Edward Siddon: Madam Speaker, the minister's speech gave the clear impression that income earned in 1981 could be sheltered from tax if it was reinvested in shares of junior mining companies. Yet the Minister of National Revenue and his officials have totally contradicted the applicability of that rule after December 31, 1981, which makes a pure charade of the announcement by the Minister of Finance and its confirmation by the Minister of State for Mines.
My supplementary relates to a press conference held by the minister on March 8 when she released her national mineral policy paper. Will that paper be referred to the appropriate standing committee as a white paper for review by Parliament?


Judith A. Erola: Madam Speaker, it was released as a discussion paper, and other documents will flow from it. It is meant for discussion with industry, labour and the provinces. Many of those discussions have already taken place.


Thomas Edward Siddon: Not by Parliament.
Oral Questions CRIMINAL CODE


OFF-TRACK BETTING-POSSIBILITY OF LEGISLATIVE DISCUSSION
Hon. Jake Epp (Provencher):: Madam Speaker, I would like to direct a question to the Prime Minister supplementary to the questions asked by the hon. member for Durham-North-umberland. A lot of us are concerned about the proliferation of lotteries, gambling and gaming laws. The Prime Minister will recall that the Olympics lottery was a one-shot effort in order to raise money for a specific purpose. Some of us raised questions about it at the time it was brought into the House. There are provinces now investigating the whole question of lotteries, for example their effect on those below the poverty line and the inordinate amount of money they use to buy their once in a lifetime chance for success.
In view of the statetement made by the Prime Minister today in the House, and yesterday by the Minister of Agriculture, can the Prime Minister give members some direction as to how we might be able to address this question in a legislative forum, or in some other way, because I believe it is a question bothering a lot of Canadians. I think if this place is to be relevant, we would like to discuss that matter openly and fairly.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Madam Speaker, I have a great deal of sympathy for the points of view put forward by the hon. member, and I share some of them personally. He asks when the matter can be debated. If he refers to the various announcements made by the Minister of Agriculture he will see that some of the proposed changes would have to be made by way of amendment to the criminal code. Amendments have been discussed with the industry and, I repeat, the provinces.
The minister seems to believe there is a consensus for change but I, like the hon. member, would welcome a debate in this House on those matters, and I refer him once again to the intention of the minister to bring in those amendments to the Criminal Code, at which time it would be appropriate to debate the subject.


REQUEST FOR REFERRAL TO STANDING COMMITTEE
Charles Joseph Clark: The
Prime Minister has just indicated this is a matter which he believes should be subject to debate in the House of Commons or its committees. He has indicated there might be amendments to the Criminal Code which might come at some time in the future. We already have had, apparently without the Prime Minister's knowledge, a regulation passed which raises the question of morality referred to by my colleague, the hon. member for Provencher, and which may have the effect- may-of a regulation amending the Criminal Code of Canada. The Prime Minister gives the legal opinion that that is not the case. I suggest to him it is not all that clear.

March 26, 1982
Oral Questions
In order that it might be clear, and having regard to the statement just given by the Prime Minister, would he now agree to authorize a reference of this question to the Standing Committee on Justice and Legal Affairs immediately? I can say for this side of the House we would allow that to occur without debate. Will the Prime Minister make such a reference immediately?


Pierre Elliott Trudeau: Madam Speaker, there are several mistakes in the preamble to the question posed by the Right Hon. Leader of the Opposition, one of which is that in some sense this regulation is or might be illegal. It was issued, Madam Speaker, under the authority of the ministerial powers under the code and the ministerial act. It was discussed; it was made public, I repeat, on at least three previous occasions, and the House has had any number of occasions to debate it in the many, many opposition days they have had if they find it to be a serious question. If they do, I suggest they use one of the opposition days between now and the end of June, of which there are some ten or 12 if my memory is correct.
In so far as the legislation itself is concerned, I would be happy to discuss with the House leader and the Minister of Agriculture whether we can propose some early introduction of that legislation. If the hon. members see fit to do so, the House leader can discuss the matter with his counterparts.


REQUEST FOR IMMEDIATE REFERRAL
Charles Joseph Clark: Madam Speaker, will the Prime Minister agree today to make an immediate reference of the subject matter of the regulation to the Standing Committee on Justice and Legal Affairs? If not, will he tell us why he is depriving that standing committee of the immediate opportunity to look into this question?


Pierre Elliott Trudeau: Madam Speaker, will the right hon. Leader of the Opposition use one of his 13 opposition days to discuss this matter of high morality which he finds of such great importance to this House?


CORPORATE AFFAIRS
Charles Joseph Clark: I have another question, relating to the government's insistence on secrecy and its refusal to tell the House of Commons information the House of Commons and the public of Canada have a right to know. Yesterday the Prime Minister received a question from my colleague from Cambridge to which he declined to give an answer.
Will the Prime Minister tell the House of Commons whether the Minister of Energy, Mines and Resources, or any other
minister, is instructing counsel representing Uranium Canada or Eldorado Nuclear, or both, to argue that those Crown corporations are immune from prosecution? The question is not sub judice; the question relates to this government's habit of secrecy. I would like to know whether such instructions have been given to those Crown corporations by the Minister of Energy, Mines and Resources, or by any other minister.


Pierre Elliott Trudeau: Madam Speaker, the only way in which that question could be considered a supplementary is that both the previous one and this one referred to government secrecy. I put it to him, Madam Speaker, as I did to the hon. member from Northumberland, that this particular regulation has been announced three times-twice in 1980 and once in 1981-and it is hardly plausible to call something secret which has been discussed ad nauseam with the industry, with the provinces, and which has been discussed publicly for the past ten years that I have been listening to this.


THE ADMINISTRATION
Charles Joseph Clark: Madam Speaker, the other way in which those questions are related is that the Prime Minister refuses to answer either of them. They do have to do with the rights of this Parliament and of the Canadian public to know what is going on. Let me ask the Prime Minister two simple questions, both relating to the right of Parliament to know and the secrecy of this government. First, will the Prime Minister make an immediate reference of the subject matter considering the regulation that has been passed, to the appropriate standing committee? Second, will he tell us whether there has been an instruction by a minister to the two named Crown corporations to plead Crown immunity?


Pierre Elliott Trudeau: Madam Speaker, on the second question I would have to take notice of it and would have to ask the minister what instructions were given in this particular case. It is not a matter of denying Parliament its right to know; it is a matter of giving me notice of a question to which I do not have the answer.


Charles Joseph Clark: It was asked yesterday.


Pierre Elliott Trudeau: As to the first question, about the right to know, I think this Parliament has a right to know what the view of the opposition is on off-track betting. It would be nice to have them use one of their opposition days to take a party stand on this.


An hon. Member:: You said that before.


Pierre Elliott Trudeau: Yes, and the Leader of the Opposition put that question before.
March 26, 1982


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: Madam Speaker, would you please let these backbenchers get into the act? They seem to feel that their leader needs some support.


Some hon. Members:: Hear, hear!


FREEDOM OF INFORMATION
Mr. Svend J. Robinson (Burnaby):: Madam Speaker, my question is for the Minister of Communications. Since last December the minister has refused to allow the Standing Committee on Justice and Legal Affairs to pass the freedom of information legislation which is before it, using the phony excuse that he wants to hear the views of the provincial attorneys general-some of whom are making an eleventh-hour attempt to kill this bill.
In view of the fact that the minister has received many representations from important national organizations, and recently a strong representation from the attorney general of Manitoba, urging him not to allow this important bill, improved by committee, to die, will the minister bring the House up to date on his negotiations with the provinces, and assure the House that this bill will be dealt with before this session of Parliament prorogues? Or is he going to cave in to the pressure of the bureaucrats and continue to deny all Canadians this fundamental democratic right?


Francis Fox: Madam Speaker, in reply to the hon. member who raised this question, I am sure his colleague, the hon. member from Nepean-Carleton, could tell the House how helpful the hon. member has been in facilitating the passage of this legislation through committee, particularly last July.
As the hon. member knows, part of the support for the request to go the uniform bill route has come from a colleague from his own party, the attorney general of Saskatchewan, who has strongly supported the attorney general of Ontario, in making representations to us. I am not willing to dismiss out of hand the strong representations made by the eminent attorney general for Saskatchewan who shares the hon. member's philosophy.
As I indicated in private conversations with the hon. member as recently as last night, there are obviously three options open to the government at this stage. One option is to continue with Bill C-43. Another is to go back to committee with a number of amendments. The ultimate option before us is to accede to the requests which have been articulated by both the attorneys general of Ontario and Saskatchewan, to go the uniform bill approach as has been done by the attorneys general in other areas. I am in the process of continuing consultations with the attorney general of the province of
Oral Questions
Ontario and I will be reporting to my cabinet colleagues in the near future, analysing the recommendations made by these two attorneys general on behalf of most of the attorneys general of the country. I trust we will be in a position to announce the way we intend to go, in the not too distant future.


Svend Johannes Robinson: Madam Speaker, this kind of phony hypocrisy is guaranteed to kill freedom of information legislation in Canada.


Some hon. Members:: Withdraw! Withdraw!


ELECTION CAMPAIGN PROMISE
Svend Johannes Robinson: It is phony hypocrisy, Madam Speaker. My supplementary question is to the Prime Minister. The Prime Minister during the last election campaign promised Canadians that strong freedom of information legislation would be a high priority for a Liberal government. Will the Prime Minister now tell the House whether he and his advisers have gotten cold feet on this important promise, or whether he still believes that this legislation-including the fundamental principle of judicial review-is a high priority for his government in this session? Or is this going to be yet another broken Liberal promise?


Pierre Elliott Trudeau: Madam Speaker, I have little to add to what was said by the Minister of Communications. I think the hon. member himself will concede that it would be better if we could have the provincial governments and the federal government at the same time make progress in the area of freedom of information. That is obviously the objective of us all. It depends on the premiers.


LABOUR CONDITIONS
Mr. Maurice Foster (Algoma):: Madam Speaker, my question is for the Prime Minister. In view of the continuing concern with worker health and safety programs and legislation, and their co-ordination among the federal government departments, is the government planning to centralize all these federal government activities and legislation within the Canada Department of Labour, in order to improve the health and safety provisions for workers under federal jurisdiction, such as has already been done by a number of provincial governments?


Pierre Elliott Trudeau: Madam Speaker, that is the preferred option, but it is not yet a matter for announcement because the discussions do involve various departments, and they are proceeding. I will keep in mind the representations of the hon. member, and I repeat that it is still our preferred option.
Petitions


FREEDOM OF INFORMATION
[Stage Direction]
March 26, 1982

Walter David Baker: Madam Speaker, this is a supplementary to the Minister of Communications, with respect to freedom of information. When he is considering the options of the government will he consider very carefully and fully and completely the option of ignoring the foot dragging of Messrs. McMurtry and Romanow with respect to freedom of information? Also, would he remind himself and his colleagues in government that we are dealing with a federal bill and that provinces have every right to come before the Standing Committee on Justice and Legal Affairs with respect to the matter?
In order to contribute to openness in government and to allow the public to know the processes that have gone on in the committee, and the nitpicking amendments that have been put by the member for Burnaby, who has just suddenly become an advocate for openness in government, would the minister please table in the House of Commons a document which would indicate the number of nitpicking amendments brought by the NDP representatives to the committee dealing with freedom of information?


Some hon. Members:: Hear, hear!


Francis Fox: Madam Speaker, I want to acknowledge that the member for Nepean-Carleton has always been one of the most supportive members in the House of Commons Standing Committee on Justice and Legal Affairs for quick passage of the access to information bill. He has on many occasions bent over backwards to be helpful and to improve upon what is a very good bill and that he himself introduced in a previous stage. Unfortunately, we have not been able to proceed as quickly as we would have liked.
I think it is a matter of public record at the moment the type of amendments that he has referred to, and which have been tabled on the floor of that committee by the hon. member representing the New Democratic Party in that committee. As far as the representations made to me by the attorney general of the province of Ontario are concerned, I believe that I must give them all the due consideration that I am willing to give to the representations made to me by the attorney general of Saskatchewan.


PETITION
Madam Speaker:: I have the honour to inform the House that the Clerk of the House has laid upon the Table the one
hundred and eighty-eighth report of the Clerk of Petitions stating that he has examined the petition presented by the hon. member for Cariboo-Chilcotin (Mr. Greenaway) on Thursday, March 25, 1982, and finds that it meets the requirements of the Standing Orders as to form.



ROUTINE PROCEEDINGS


Mr. Ian Watson (Chateauguay):: Madam Speaker, I have the honour to present the fifth report of the Standing Committee on National Resources and Public Works.


FINANCE, TRADE AND ECONOMIC AFFAIRS-PRESENTATION OF ELEVENTH REPORT OF STANDING COMMITTEE
Mr. Jim Peterson (Parliamentary Secretary to Minister of Justice and Minister of State for Social Development):: Madam Speaker, I have the honour to present the eleventh report of the Standing Committee on Finance, Trade and Economic Affairs.
[Editor's Note: For above reports, see today's Votes and Proceedings.]

[Translation


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. David Smith (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 3,517, 3,680 and 4,040.
I suggest, Madam Speaker, that the remaining questions be allowed to stand.


Mr. Fretz: Is the computer system known as CPX used to expedite the clearing of incoming goods through ports of entry and, if so (a) how many ports initiated the system and on what dates (b) what is the cost of installing the system in each port (c) for each port using the system, what is the annual cost of maintenance and updating?


Hon. William Rompkey (Minister of National Revenue):: CPX-CEPACS (Cargo, Entry Processing and Collection System). CEPACS is a computer system which provides control over imported goods, processes entry information to ensure various legislative requirements are met and ensures that revenues assessed are properly accounted for.
March 26, 1982


Mr. Herbert: In 1981, by province, how many units of housing for handicapped persons were assisted by the Canada Mortgage and Housing Corporation and what amount was (a) spent (b) committed for the construction of the housing?


Paul James Cosgrove: I am
informed the following applies with respect to Canada Mortgage and Housing Corporation:
(a) and (b). See table below.

March 26, 1982
Order Paper Questions
NHA Loans Approved for Handicapped Persons in 1981
Province	Loans	New Housing Hostel Units Beds	Amount $000	Loans	Existing Housing Hostel Units Beds	Amount $000	Loans	Units	Total Hostel Beds	Amount $000Nfld	-	-	-	-	-	-	-	-	-	-	-	-P.E.I.	-	-	-	-	-	-	-	-	-	-	-	-N.S.	-	-	-	-	-	-	-	-	-	-	-	-N.B.	1	6	6	435	-	-	-	-	1	6	6	435Que.	-	38	-	1377	-	-	-	-	-	38	-	1377Ont.	-	46	-	2278	1	-	5	100	1	46	5	2378Man.	-	-	-	-	-	-	-	-	-	-	-	-Sask.	-	-	-	-	-	-	-	-	-	-	-	-Alta.	2	3	6	542	1	9	-	314	3	12	6	856B.C.	1	-	5	172	5	-	24	957	6	-	29	1129N.W.T.	-	-	-	-	-	-	-	-	-	-	-	-Yukon	-	-	-	-	-	-	-	-	-	-	-	-Canada	4	93	17	4804	7	9	29	1371	11	102	46	6175


Mr. Herbert: What proportion of all public servants covered by collective agreements are covered by contracts that pay maternity leave for (a) more than four weeks but less than 17 weeks (b) 17 weeks or more?


Mr. Norman Kelly (Parliamentary Secretary to President of the Treasury Board):: (a) None.
*(b) Twenty-five per cent.
* Represents paid maternity leave in the collective agreements for employees in the translation group and the clerical and regulatory group which becomes effective on April 1, 1982.


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Wednesday, March 24, consideration of the motion of Mr. MacEachen that Bill C-97, to amend the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, 1977, and to provide for payments to certain provinces, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
Mr. Dan McKenzie (Winnipeg-Assiniboine):: Madam
Speaker, I wish to continue the debate on Bill C-97, an act to amend the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, 1977 and to provide for payments to certain provinces. This bill has caused considerable controversy across the country. It has become one of the most important bills to be debated so far this session.
I wish to refer to a Conservative task force which travelled across the country earlier this year dealing with the budget and transfer payments. The document is entitled "They didn't ask us!". This seems to be a main problem with this government; it is acting unilaterally and not properly consulting the provinces, individuals, businesses or whatever.
1 wish to comment on a few of the statements by individuals and organizations which the Conservative committee met while travelling across the country. Some of these statements regarding federal programs were made by the City of Saint John, which stated:
The elimination of federal programs which were designed to help municipal governments was a very serious blow to the kinds of services which citizens require at local levels.
The elimination of this type of grant to the provinces and cities will cause more lay-offs. If there was proper funding, there would be more hiring. The municipalities would do a lot of their local work. The Students' Union of Nova Scotia in Halifax stated:
-post-secondary education in Nova Scotia will suffer as a result of the budget.
The government did not communicate with these groups prior to the cutbacks. Dr. Howard Dixon, Professor of Anatomy, Dalhousie University, Halifax, stated:
Clinical research faces the prospect of receiving a doubly severe blow from Mr. MacEachen's budget-not only will it be hampered by university cuts, but also by the increased financial burdens placed on hospitals as well.
Nobody has escaped the budget, the fiscal arrangements with the provinces and the cutbacks. The Saint John Construction Association in Saint John, New Brunswick, stated to our Conservative committee:
Mobility taxes will encourage workers to stay where they are and collect UIC.
That could cause another very serious problem. Dalhousie Bio-medical Research in Halifax stated:
March 26, 1982

The removal of billions will surely grease the skids for an accelerated decline of the university system as we know it.
We made a number of recommendations. I just want to name some of them. We found out from our communications and meeting with universities, individuals and businesses that what we need in this country is to, and I quote:
Restore individual and investor confidence by establishing a climate for growth, development and expansion.
Most of the witnesses who appeared before the committee said the government should, and I quote:
Withdraw the November 12 budget and replace it with an economic plan that will promote job-creation and economic development through private investment.
One of the highlights of the committee's conclusions and recommendations was that we should:
Restore harmonious federal-provincial relationships and ensure adequate federal funding of provincial health, education and other important ... programs.
I am going to go into that subject in a little more detail.
Newspapers, individuals and the provinces have all been expressing opinions on these transfer payments. We get a different story from each individual and each newspaper. One matter that will have to be gone into very thoroughly when it gets to the standing committee is who was right and who was wrong with regard to the amounts being cut back and the amounts going to the different provinces.
Earlier this week the Montreal Gazette's Ottawa bureau expressed its opinion on the budget in an article headlined "Ottawa to transfer $1.4 billion more to Quebec". I do not know the reason one province will receive an additional $1.4 billion to that which was first announced in November. According to the Montreal Gazette, four months later we find that an additional $1.4 billion will be paid to the province of Quebec. I quote from the article:
During the same five years, 1982 to 1987, yesterday's bill would cut by $405 million the equalization handouts to Manitoba, New Brunswick, Nova Scotia and Prince Edward Island.
The contents of this news article will have to be studied in detail by the committee. I again quote from the article:
In Halifax, Nova Scotia finance minister Joe Matheson said he hadn't expected the new bill to do so much for Quebec, but reserved further comment until he sees the Ottawa legislation.
1 hope that matter can be cleared up. If an additional $1.4 billion is going to the province of Quebec, other provinces in Canada deserve a detailed explanation why. Also, an assessment by the Toronto Star states:
Ontario, for example, stands to see $1.9 billion cut from federal contributions to health care and university funding over the next five years. As Ontario's deputy treasurer, Mr. Campbell, points out, the reductions will cut deeply into programs that the federal government itself encouraged the provinces to establish and build up over the past decade.
So we see reports of $ 1.4 billion more for one province and $1.9 billion less for another province.
We have also seen statements from the Manitoba government about how federal cutbacks will hurt that province the most. I do not know why Manitoba has been singled out to be
Federal Transfers to Provinces
hurt the most but apparently this has been decided by the Liberal government.
As a result of the new federal proposals to cut back on transfer payments, Manitoba stands to lose significantly more per capita than any other province. It was pointed out in the recent federal-provincial finance ministers' meeting in Ottawa that planned changes in the federal equalization payments and shared cost programs for health, medicare and post-secondary education should not be made until the full implementation of the proposals are known and a general consensus reached with the provinces. There are considerably detailed reports from Manitoba which indicate exactly where we will be hurt.
We want to know why the province of Quebec will receive an additional $1.4 billion, especially considering the way it runs its financial affairs. I suggest that there should be a moratorium on federal funding to Quebec until we find out exactly what its debt is, since there are rumours that it will reach $9 billion.
We have received many figures from the Department of Finance on transfer payments and other related items. Since these figures are not entirely clear, the committee will have to do a great deal of work in order to prepare detailed explanations to each province, as well as the House, with regard to these transfer payments.
The cutback in health care payments to provinces is of major concern to Canadians and we must attempt to maintain the standards which were established by the Conservative Party with regard to health care which date back to 1938. The Right Hon. Mr. Diefenbaker pointed out at that time that free hospitalization and medicare for the people of Saskatchewan was a number one priority for the Conservative Party. Mr Diefenbaker pointed out that the Progressive Conservative Party believed that the removal of deterrent fees for prescription drugs would increase the number of drugs provided under the plan. This position which was taken in 1938 at a Conservative convention in the province of Saskatchewan was the beginning of major health care programs in Canada.
During the last two federal elections there have been problems caused by Liberal and New Democratic Party candidates misinforming the electorate with regard to what was happening with health care payments provided to the provinces by the federal government. I have to combat these problems extensively when the Liberals and New Democrats misled and misinformed the people at every turn during the last two campaigns by stating that the province of Manitoba, which had a Conservative government at that time, was using federally provided health care funds to build roads. Of course, that statement was completely false. The Liberals have commenced their last two compaigns in Manitoba with this blatant lie. Of course, they had the full support of their NDP cohorts.
In 1979, the Conservative government commissioned Mr. Emmett Hall to do a study called "Canada's National-Provincial Program for the 1980s". After conducting a thorough investigation into how the funds were distributed for health care in Manitoba, Mr. Hall stated:

March 26, 1982
Federal Transfers to Provinces
I conclude therefore that the first part of the allegation, namely that "federal health dollars are being diverted", is not established.
He found absolutely no proof that the funds were being diverted to build highways and the NDP and the Liberals had absolutely no evidence of this. They were completely misleading and misinforming the public. No doubt they were using the same tactics in other provinces.
I can illustrate what a commendable job the Lyon government did for health care in Manitoba by referring to the 197778 budget which was brought in by the NDP government at that time. The NDP government was only increasing funding for health care by 0.1 per cent and consequently the percentage allocated to health care under the Lyon government which followed them rose from 34 per cent to 36 per cent. This placed Manitoba second only to British Columbia in the proportion of funds allocated to health care. This was accomplished by the Lyon Conservative government during their tenure. They had a much more commendable record for increasing health care funding than the previous NDP government.
There still has to be some investigation into the allocation of funds in health care, particularly in the province of Saskatchewan where there is a continual problem with regard to the amount being spent in that area. Before 1 deal with those figures, I will read some comments made by the former leader of the NDP, Mr. Tommy Douglas, when he wrote an article about medicare. He stated:
There are two of his-
He was referring to Mr. Diefenbaker's accomplishments.
-accomplishments which 1 shall always remember with gratitude and for which Canada owed him a great deal. When he became Prime Minister he amended the Hospital Insurance and Diagnostic Services Act to provide that Ottawa would pay approximately half the cost of hospital care in any province willing to provide such service. And he set up a royal commission under the Chairmanship of Mr. Justice Emmett Hall on comprehensive health insurance which was implemented in 1968 and constituted a major step towards comprehensive health insurance for all Canadians.
We want to maintain these standards which were originally established by Conservative governments. We do not want to see them deteriorate, as they are in the province of Saskatchewan. Due to the refusal of the Government of Saskatchewan to increase doctors' fees to a reasonable level, some patients must now pay for medical services received. After forwarding bills to the medicare commission, Saskatchewan citizens may discover that they are eligible for only a partial reimbursement, in some cases as little as 50 per cent.
Statistics from British Columbia to Quebec illustrate the position of the Saskatchewan government in relation to other provincial governments on per capita medical expenditures. These statistics show that Saskatchewan has the lowest expenditure. These figures speak for themselves. The per capita expenditure in British Columbia is $555; in Alberta $548; in Saskatchewan $534; in Manitoba $639, which is much higher than what is being spent in the NDP province of Saskatchewan; Ontario spends $547 per capita and Quebec spends $647.
There have been other problems with health care in Saskatchewan as well. The minister of health of that province has
stated to doctors in the past that he wants to discourage return visits. We have to be very careful about health ministers getting into the medical business and telling practitioners when patients should come for second or third visits. The Saskatchewan health minister stated physicians should be:
-telling patients who are in the office frequently, say every two or three weeks, that their problem "might not be medical";-
That is not a decision for anybody in the NDP government in Saskatchewan to make. That is entirely up to physicians. I suggest the Saskatchewan health minister keep his nose out of the medical practitioner business and let medical practitioners judge when patients should come to their offices.
I have recognized this problem in Saskatchewan for some time. In 1979 I introduced a motion in the House regarding a reduction of contributions to health care in the province of Saskatchewan. I said:
In view of the fact that since the time medicare was instituted in Saskatchewan, many doctors traditionally have not participated in the medicare plan, that 30 per cent of doctors in that province now are billing patients directly, that less than 5 per cent of doctors in Manitoba are operating outside the plan, and that there is a significant decrease in the budget for hospital insurance and medicare programs in Saskatchewan, I move ...
That the Minister of National Health and Welfare advise the recently appointed Hall commission to study immediately the reasons for the deteriorating budgetary contributions by the Saskatchewan NDP government for medicare, as well as the significant increase of extra billing by doctors in Saskatchewan.
I received support from my colleagues in the Conservative Party. I received support at that time from the members of the Liberal Party. The "Noes" came from the New Democratic Party. Hon. members in the New Democratic Party were frightened to death to have an investigation into deteriorating health services in the province of Saskatchewan.
In closing, I would like to talk about how we could increase funding to the provinces. I recommend that the Liberal government stop making special low-interest loans to Communist countries. The Liberal Party has lined up a special deal for the Russian communist government. A loan of $637 million has been arranged. The money is being borrowed in Canada at 16 per cent and lent over a repayment period of 12 years at an interest rate of 10 per cent to the Communists. The result would be a Canadian subsidy of $198.5 million in terms of future dollars or $139 million in present dollars. That money could be put to better use in Canada. It could provide low-interest loans to the provinces or individuals for housing. We should not be looking after communist countries. Let them look after themselves.
Another flagrant example of misuse of Canadian funds is the fact that we are helping to build a monument in Algiers. In that country the EDC portion of a $97.8 million loan is part of a $1.2 billion line of credit negotiated between Canada and Algeria in 1978 and expiring at the end of 1982. The Algerians get the EDC funds at somewhat less than 11 per cent interest, the rates prevailing in 1978, yet the Crown body must borrow at between 16 per cent and 17 per cent today. Someone-the
March 26, 1982

Canadian taxpayer-is making up the difference for this. I think it is time the Liberal government took a serious look at these types of subsidized loans to other countries. The information I have is that we receive very few benefits from these huge subsidized loans.
As I said earlier, the standing committee will have its work cut out for it in dealing with transfer payments. There should be an explanation especially as to why Manitoba's funding has been reduced so much and why we are getting reports of an additional $1.4 billion going to the province of Quebec. I will be calling on members of the committee not only from the government side but also from our side to make sure we get a detailed explanation of which provinces are getting what. This confusion should be cleared up once and for all.


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I enter this debate because of the importance of the subject. Difficulties will be created for our health care system and our postsecondary education as a result of the proposals brought forward by the government in this bill. I also enter the debate because I am one of the members who was here in 1972 and in 1977 when this same Liberal government brought forward proposals which began the process of cutting back. The process will eventually destroy the health care system and the postsecondary education system we have had since the end of World War II.
What we are being asked to do if we pass this bill is to take another step in the direction set in 1972 and accelerated in 1977 toward the destruction of a health care system and a post-secondary education system which has been national in scope and has provided services in the fields of hospital care, medical care and university education. We have a fairly equitable system serving all Canadians from the Atlantic to the Pacific at a certain basic standard.
This was not always the case. Many Canadians and many Members of Parliament cannot remember the time, because they are fairly young, when they or their neighbours could not see a doctor or enter a hospital because they simply could not afford to pay for those services. There was no universal government insurance which paid the bills incurred for hospital or medical services until the mid-1940s. The hon. member for Winnipeg-Assiniboine (Mr. McKenzie) quoted a former leader of the New Democratic Party, Mr. Douglas, who paid tribute to the contribution made by a former Conservative prime minister, Mr. Diefenbaker. It was a CCF government headed by Mr. Douglas which, in the 1940s, first inaugurated a non-profit hospital insurance plan which paid the hospital bills of all the residents of Saskatchewan who entered hospital. It was a federal Conservative government headed by Mr. Diefenbaker which passed legislation requiring the federal government to pay half the cost of a similar plan in any province in the country. That brought the other provinces into hospital insurance and eliminated the fear of bankruptcy many Canadians faced before hospital insurance was brought in. This prospect still faces many citizens of the United States if they have prolonged illnesses, because they have no hospital insurance plan such as ours.
Federal Transfers to Provinces
It was the same Conservative government headed by Mr. Diefenbaker which appointed Mr. Justice Hall to head a royal commission to study medical care. The report of that commission headed by Mr. Hall was brought down at a time when we had a Liberal government headed by Mr. Pearson, and that report led to the proposal by the then Liberal government offering the provinces financial inducements which led them to follow the example of the Saskatchewan CCF government respecting a universal medical insurance plan in each province which pays the fees for medical services provided by doctors. That plan came to fruition because the Liberal government agreed to pay 50 per cent of the cost of medical insurance plans. The Conservative province of Ontario was the last one to join in the medical insurance plan. It was brought in kicking and screaming because it did not like the plan. It still believed that the earlier non-profit, voluntary plans were better even though they excluded about 30 per cent of the people who could not afford to pay the premiums. But it could not stay out of the new plan because the people of Ontario, like those of every other province, recognized the benefits which would accrue to them.
There were some variations in the methods of financing. Some provinces finance the cost of medical insurance out of general revenue and some, like Ontario and British Columbia, require citizens to pay premiums. With these variations in the method of financing, the plans have worked quite well. They could be improved, of course, but until recently they met the basic needs of Canadian citizens.
In recent years costs have gone up for both federal and provincial governments. While that is true, the percentage of the GNP which the provinces and the federal government pay for health care has not gone up. Both the federal and provincial governments are finding it difficult to finance all the services they provide. This is partly due to the fact that the economy is not working at anything like full capacity. Revenues of the federal and provincial governments have decreased and they have begun to argue that they cannot afford the plans that are in place. They have taken steps which will result in destroying the universality and availability of the basic medical and hospital services provided for all Canadians.
Some provinces have instituted deterrent fees for hospital stays and doctor visits. This makes things difficult for senior citizens, the one million unemployed and the working poor. There is more and more extra billing by doctors because the provinces claim that they simply cannot afford to give doctors the high incomes they desire.
Canadians are fairly critical of doctors, Mr. Speaker. According to Statistics Canada they have the highest income of any group. We must face the fact, however, that their incomes have not increased in recent years as much as the cost of living has, so in effect they have suffered a reduction in real income.
In 1977 the Liberal government began to whittle at the system of health care which it had played a major role in

March 26, 1982
Federal Transfers to Provinces
establishing. In that year it replaced the 50-50 cost-sharing arrangement with a block grant system under which the provinces were not required to match federal grants for health care, hospital insurance or post-secondary education, as had been the case until then. They put the cap on the federal contribution to those programs.
The hon. member for Winnipeg-Assiniboine, who spoke ahead of me in this debate, tried to indicate that the provinces had not cut back on their expenditures on health care and hospital insurance. Of course they had, Mr. Speaker. They did so because once they were not required to pay 50 per cent of the cost of hospital insurance, health care or post-secondary education, they used the block fund grant from the federal government for other purposes. They were entitled to do that under the new agreement made with the Liberal government in 1977.
At that time members of the New Democratic Party in this House warned that this would lead to a fragmentation of the system and that the have-not provinces would not be able to match the programs offered by the wealthy provinces. That is what has happened. Provinces such as New Brunswick have imposed deterrent fees because they simply cannot afford to carry the cost of the services. Most of us did not foresee that the provinces, particularly some of the Conservative provinces, would use the block funding as an excuse for not continuing to match federal grants. The provincial cost of these programs has fallen.
We should not be surprised at that. The revenues of seven of the ten provinces are in bad shape because we are in a period of economic recession which has been brought about to a large extent by the mistaken policies of the Liberal government, aided and abetted by the mistaken high interest rate policy of the Governor of the Bank of Canada. He seems to be determined to continue those policies even though, in the six or seven years they have been followed, unemployment has increased drastically, as has the rate of inflation.
The Minister of Finance (Mr. MacEachen) and the Governor of the Bank of Canada have been dead wrong but they seem determined to continue the mistaken policies they began six or seven years ago. The provinces are just doing what comes naturally to them; they are cutting back on funding of hospitals, medical insurance and post-secondary education. This is at a time when the federal government, in the bill we are now discussing, proposes to cut back on the agreement it forced on the provinces in 1977.
Let us keep the record clear, Mr. Speaker. It is not the established programs financing part of the 1977 fiscal arrangements act which is being changed. What we are changing with this bill is the equalization portion of the 1977 agreement, the purpose of which was to enable all the provinces to provide reasonable levels of public service.
The provinces used the block funding agreement to claim that the money received with the revenue guarantee was unconditional and that they were not required to match the federal grants for hospital, medical and post-secondary education.
The hon. member for Winnipeg-Assiniboine said, quite properly, that New Democratic Members of Parliament and members all across the country criticized the Conservative provincial governments for doing that. He said we were wrong. He should also have put on the record the criticisms of those governments by the Minister of National Health and Welfare (Miss Begin) who has been attacking them for reduced spending on these programs and has threatened to take action. She has said, quite correctly, that that kind of reduction will lead to the destruction of the medical insurance program. She ought to make those arguments not to the provincial governments, and not out on the hustings, but to the Minister of Finance.
In his November budget the Minister of Finance argued, as the provinces had, that the money associated with the revenue guarantee "was never intended to finance health care and postsecondary education programs", even though in the cheques from the federal government to the provinces this money was always included.
Now, as a logical extension of the November budget, we have Bill C-97. It will put in place the mechanism to remove the revenue guarantee and will reduce federal contributions to the provinces in the next five years by $5.7 billion. This proposal has been attacked and criticized, naturally, by the provinces because they simply do not know how they will make up very drastic reductions in the moneys they were obtaining from the federal government. Also it was criticized very severely by the Economic Council of Canada. The Council warned that the cuts would inevitably lead to higher provincial taxes, to more user fees in health care and education, or to a reduction in services.
We have not had an explanation from the Minister of Finance or any other Liberal government spokesman as to how the provinces could avoid increasing their taxes to meet the shortfall which the federal government is forcing upon them, cutting services, or increasing fees for services which people in the provinces will have to pay if the services are not to be cut. It is not surprising that the provinces, especially the have-not ones, have come to the conclusion that the provisions of this bill, when implemented, will have a very detrimental effect upon them when, in the case of seven provinces, they are already facing very serious budgetary deficits.
Let me illustrate the problem faced by some provinces. In the province of Manitoba the government was left a deficit by the former Conservative government of close to $300 million when it took office. The new arrangement being forced upon the province by the Liberal government will mean a reduction in what it would have obtained under the 1977 agreement of over $60 million in 1982-83, $122 million in 1983-84, $172 million in 1984-85, $223 million in 1985-86, and $246 million in 1986-87. That is a five-year total of $828 million. There were some last minute negotiations between the province of Manitoba and the federal government, and that amount has
March 26, 1982

been reduced to S719 million, which is still a very substantial amount.
Let us look at another have-not province, the province of Nova Scotia. In the first year under the new agreement it will lose S28 million; in the second year, $32 million; in the third year, $36 million; in the fourth year, $41 million; in the fifth year, $46 million; for a total of over $183 million in five years. This is in a province which faces a budgetary deficit this year of close to $500 million.
If I heard the hon. member for Winnipeg-Assiniboine correctly, he seemed to imply that under the new agreement the province of Quebec will receive more money than it would have under the old agreement. In fact, in the next five years the province of Quebec will receive $1,363 million less under the new plan than it would have under the agreement which was reached in 1977. If we total the reduction in federal contributions under the new bill for all provinces and the territories, we see a reduction in the next five years of $5.7 billion. That is a scenario for disaster.
We are already seeing the results of restraint programs. There have been increases in user fees in British Columbia and Ontario, a reduction in ward bed numbers, increases in fees for semi-private rooms, and the opening up of commercial space in Ontario hospitals. If Ontario hospitals are permitted some free enterprise, and if they have big deficits, they will concentrate their efforts on semi-private and private rooms on which they will be able to charge whatever they can obtain. Of course, this will reduce the kind of service and the number of beds available to ordinary citizens of Ontario who cannot afford to pay for semi-private or private rooms.
Also we are seeing a substantial increase in the number of doctors who are extra billing. We are seeing threats, actual strikes, slowdowns or work to rule by doctors in different provinces. The universal equitable health care system, which we brought into being over a period of many years after World War II, is in danger of being broken, if not destroyed.
In rejecting the government's decision to cut back funding for existing programs, am I arguing that the present system is meeting all our needs? Not at all. We need to re-examine what we have accomplished. Changes are needed, improvements can be made. Some improvements might even save money by providing alternatives to the present expensive system which would cost less than present methods and provide better service.
Before making suggestions regarding some of the items at which we should be looking, I want to spend a few minutes discussing the problems of Canadian universities. I should like to give an historical perspective. Until the end of World War II we, in Canada, probably had only three or four universities which were of a standard achieved in other countries such as the United States, Great Britain and other western European countries. In 1946-47, the then Liberal government began to fund university education, partly because there were many veterans of World War II who wanted to attend university. In 1951, the then Liberal government began to give grants to the provinces for university education on a regular basis. By 1966, these grants had grown to almost $100 million for the year. In
Federal Transfers to Provinces
1967, the then Liberal prime minister, Mr. Pearson, argued that there was a broad national interest in maintaining a minimum level of services across the country in universities. He proposed a program under which the federal government would pay 50 per cent of the operating costs of Canadian universities in all parts of the country.
In 1972 the Liberal government put a cap on federal funding for post-secondary education, so that the annual increase of federal funds could not be more than 15 per cent in any one year. Under the 1972 act costs increased very rapidly. For education, federal funding rose from $1 billion in 1972-73 to $1.7 billion in 1976-77; it almost doubled. Hospital insurance funding by the federal government went to $2.6 billion in 1976-77, and medical insurance went to almost $1 billion, or $961 million, that year.
Let us give credit where credit is due. Without massive increases by the federal government in funding to Canadian universities and health care systems, we would have been in real difficulty by the late 1970s. They would have been very different from what in fact they are. In 1977 the legislation freed the federal government from having its expenditures tied directly to the cost of provincially-administered programs for health care and post-secondary education. The present proposal continues changes which began in 1977.
I have already indicated the serious effects that the proposal will have on the health care system, but what about universities? One hears stories or suggestions that universities are being too extravagant, that they are too rich, that we cannot afford them, and that they are not doing the job they ought to be doing. There is no truth to those suggestions, whether they come from federal government sources or from provincial governments. Let us look at the facts. In Manitoba this year the new NDP government has given the universities an increase of over 16 per cent. That is more than the increase in the cost of living. This will just begin to overcome the disastrous underfunding of four years of Conservative government in Manitoba. The reduction of funding in this bill will deal a body blow to Manitoban universities.
Let me put on the record the situation of the universities in Manitoba, and I will do it quite briefly. Brandon University is a small university located in the western part of our province. In the last four years, the library acquisition budget has increased by only $5,000. That is an example of the difficulties it is experiencing.
The University of Winnipeg, at which the Minister of Employment and Immigration (Mr. Axworthy) taught before he came to this House, suffers one of the worst staff-student ratios in Canada, and faculty salaries which were edging up toward the national median have now crashed to the near bottom level. Research funds have scarecly increased in recent years. Library acquisitions have fallen sharply in recent years. According to library projections they will be cut in half in the next five years.
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Federal Transfers to Provinces
At the University of Manitoba, which is the largest and most successful university in our province, students are using 40-year-old microscopes and 80-year-old rock samples. Money is lacking to buy new books and to hire teaching assistants. That is the situation in Manitoba. The proposal contained in this bill which will cut funding from the federal government substantially will have a disastrous effect on our universities.
What about the province of Ontario? In a study done for the provincial government, it was pointed out that the funding pattern that government has used has resulted in university operating grants falling almost 17 per cent in real dollars over the last ten years. A special committee appointed by the provincial government reported that without funding to match inflation, without additional funds to provide for faculty and staff advancement and without special funds to replace equipment and furniture, there would have to be an immediate move to restructure the system. Over four years government spending in Ontario has declined in real dollars adjusted for inflation by almost 5 per cent. University operating grants have declined by almost 13 per cent.
What will happen when the federal grants are cut as substantially as I have indicated, and as proposed in this legislation? Our universities and community colleges need more support from both levels of government, not less, if these universities and colleges are going to give us the trained, educated people to meet the challenges of the 1980s and 1990s in Canada. Almost every industrialized country in the western world spends more in terms of supporting universities and community colleges.
It is whispered by some in the federal government that our universities have been doing a poor job, that they have been training the wrong people for the wrong jobs. It has been suggested that Ottawa can do it better. This is a year in which we have well over one million unemployed and in which we are spending about $800 million on manpower training. This is a year when just a few days ago the Minister of Employment and Immigration made it clear that he would have to permit 20,000 to 25,000 skilled workers from offshore to enter Canada in order to meet our manpower shortage. How can a government which has failed so miserably to meet the need for skilled manpower, a field in which the government has almost complete control, suggest for a moment that it can do a better job of directing the universities to do what is needed than the universities have done up until now?
What we need is a co-operative effort by the federal government and the provinces, the educational institutions and the communities to rethink what we have accomplished, what our mistakes have been, what our needs are and what new programs we should implement. What we do not need but what we seem to be getting in this bill is the kind of unilateral action on the part of the federal government which has been such a disaster in the past.
Let me indicate a few of the problems which I think should be examined and make some tentative suggestions to deal with them. What the federal government is proposing in this bill is a
quick, surgical cut which fails to deal with real needs in the fields of education or health. The government does not deal with alternative methods of delivery which might very well do a better job and be cheaper. The federal government does not deal with preventive medicine. Both things are necessary. Alternatives in delivery would attempt to deal with relative ineffectiveness and escalating costs of searching for ways in which to improve performance at the same time as it would seek to lower costs. Preventive medicine is frequently talked about. Those in the field know how little has been done and how limited the provision of funds has been. They know they cannot do the job. We see evidence of that every day in reports of deaths and illness caused by not having cleaned up our environment and not providing for the kinds of safety measures required in our mines and factories.
Let me deal with some specific suggestions as to what we ought to do. Many people in Canada do not get the kind of health care they need. They do not get the kind of advice they need. They turn to the people they see every day, the people with whom they live, their peers, instead of turning to professional counsellors. They do that because they know these people but they do not understand them. Therefore, they cannot get the information they need.
We need to develop a training program for peers to deal with the disadvantaged group so that people can communicate. We have the beginnings of that kind of a training program right here in Ottawa at Algonquin College. We need to explore the possibility of developing a system for providing physicians' assistants. This kind of occupational group could bridge the gap between a medical doctor and a nurse. This is a very useful profession. It would be particularly useful in isolated communities in which it is difficult to get doctors to locate. This kind of program has begun already in Alaska.
We need to train more natives as nurses. This would encourage the natives to bring health services to their communities which are so often-


The Acting Speaker (Mr. Ethier):: It being one o'clock, I do now leave the chair until two o'clock this afternoon.
At one o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
David Orlikow: When we adjourned for lunch, Mr. Speaker, I was going over a short list of alternative approaches to the delivery of health care and post-secondary education which I think would extend the services and might even save money. I was at the point of suggesting that a major effort should be made to encourage more native people to become nurses. It is unlikely in the foreseeable future that we can persuade enough of the people who have traditionally gone into the health care
March 26, 1982

field, either as doctors or nurses, to work in isolated areas near the reserves where so many of our native people live.
I believe real benefits would accrue if we could encourage more native people to become nurses. They could provide these services not only in a technical way, but they would have the knowledge and be able to communicate in the language and in light of the customs of the native people. Programs like these have been very successful in the city of Winnipeg and I would urge the minister to give consideration to beginning to expand those programs.
Mr. Speaker, we need to expand our communications networks so that we might deliver post-secondary education to individuals who live too far from present college campuses. These courses can now be packaged in many ways. For example, the instructor and student can be in contact by telephone as well as by television. This is being done now, I understand, on a very small scale in the provinces of Alberta and British Columbia. Some of the other provinces may Find it too expensive to develop on their own and it may be that the federal government can help.
We have seen an increasing incidence of racial prejudice and racial discrimination, as we have seen an increasing number of native people moving into our cities and an ever-increasing number of immigrants coming from non-English or nonFrench speaking countries to the cities of Canada. These people often find it difficult, if not impossible, to deal with those who work in our educational institutions and in our social services institutions to which they frequently used to call for help. We need to train people who can work with both our new and our old Canadians. This is a field where programs would pay dividends both financially and in meeting the needs of all people.
We have seen new problems arising in the field of mental health. With the development of the tranquillizer drugs, many people who earlier spent years, if not their whole lives, in mental hospitals have been and are being released. The idea was that they would be serviced outside in the community which would help them in the transition years. It has been reported a number of times in the last couple of weeks that even in a city like Toronto there are very few services for these people, so they are going back to the hospitals again. That problem needs to be dealt with.
We also need to deal with the increasing number of teenage pregnancies, child abuse and juvenile delinquency. We do not know enough about how to deal with these things, but we need to find new methods because the cost of not dealing with these problems is escalating very sharply. We have a whole host of disadvantaged people whose education stopped too soon and who do not fit into our increasingly technological, complicated society.
Our post-secondary education needs to make real strides. It has made real strides in the past decade, but now that these people can receive regular service, they often require extra
Federal Transfers to Provinces
help in reading or in family support to compensate for earlier neglect. Unfortunately, in this time of Fiscal stress the minimum servicing we have provided up to now is being threatened.


The Acting Speaker (Mr. Ethier):: I regret to inform the hon. member that his allotted time has expired. Nevertheless, he may continue if there is unanimous consent. Is it agreed?


Some hon. Members:: Agreed.


David Orlikow: Mr. Speaker, I know there are others who want to speak, so I will take but a minute or two to conclude.
Let me summarize the position of our party with regard to this bill. We are completely opposed to the revenue guarantee money being eliminated. It demonstrates an abdication of federal support for health care and post-secondary education programs which we think is not warranted. We oppose the unilateral imposition of the new equalization formula. By this action the government is signalling the beginning of the end to the real co-operative federalism which we think is a must if this country is to survive and prosper.
We oppose the time pressure imposed by this bill. We oppose the mixing of changes in established programs financing with changes to the equalization formula. We urge the government to pay attention to the task force Findings. That task force was set up by the government and it brought in unanimous findings opposing the kinds of things which the government intends to do in this bill. We suggest the government pay attention to the judgment of the Economic Council of Canada and the arguments of the provinces and go back to the bargaining table in a spirit of co-operation, rather than with the big stick which they have been using.


Mr. Herb Breau (Gloucester):: Mr. Speaker, I am pleased to take part in this debate on the bill concerning Fiscal transfers and established programs Financing introduced by the Minister of Finance (Mr. MacEachen). I believe this debate is important because it concerns a very important aspect of our federal system of government.
Mr. Speaker, we must realize that fiscal arrangements constitute a truly unique system. There is probably no other country in the world that has a system through which it can influence events occurring within the jurisdiction of another level of government. When there is a national program or national aspiration and the Parliament of Canada, even if the matter is not within its jurisdiction, decides to act in the interests of all Canadians and in the interest of fairness, a system such as Fiscal arrangements provides a mechanism for making use of the entire country's resources, without changing the constitutional order-and I would say that this last is extremely important. Both levels of government agree on an automatic payment system, and although at the present time there is some disagreement as to the conditions of the arrangements, they agree that certain basic conditions will be met, as mentioned or deFined in federal legislation, in this case.

March 26, 1982
Federal Transfers to Provinces
For about one year, I have been involved in this area, together with other members of this House. I notice that the member for Lethbridge-Foothills (Mr. Thacker) is here this afternoon. I happen to know that the member for Scarborough West (Mr. Weatherhead) will be speaking later on, and other members of the committee have already taken the floor, including the member for Vaudreuil (Mr. Herbert), the member for Winnipeg-Birds Hill (Mr. Blaikie) and the member for Mississauga South (Mr. Blenkarn). I know that the member for Vercheres (Mr. Loiselle) is to speak Monday.
Mr. Speaker, our experience on this committee has been, once again I must use the word unique, because I believe that for the first time, we have succeeded in making this very complex matter of federal-provincial relations understandable to the public. Hearings were held across the country, in all provincial and territorial capitals and in Ottawa, and Canadians came forward to discuss federal-provincial relations as these concerned them directly. I feel this was a healthy process, and I know that it was a very satisfying experience for all members who took part. We have learned a great deal about this great and diverse country of ours.


Walter David Baker: Hear, hear!


Herb Breau: Mr. Speaker, I have carefully read and listened to the debate on this bill and I think it has been an interesting one. It has been informative and I believe that most of the members who spoke on it have a better knowledge of fiscal arrangements and probably the best knowledge and information on this question than they ever had before, when these very complex negotiations took place and we were confronted with a bill in the House of Commons without having had any ventilation of the issue at all.
The way in which Parliament was used, the way Members of Parliament were given the opportunity, adequate staff and resources to study the question and hold hearings has been of help to the government and to Parliament in debating this issue. It has been a great help to the country in that we have shown it is possible to provide a forum where the public can speak to both levels of government.


Walter David Baker: The practice should be expanded.


Herb Breau: Yes, it should be expanded. I recognize the sincerity the hon. member for Nepean-Carleton (Mr. Baker) had when he was government House leader for a short period in his attempts to find ways to make these smaller committees work. I am happy the government borrowed that page from the short-lived government of which the hon. member was a part. I hope, as the hon. member suggests, that it will be expanded in future, as I believe it is helpful to the government.
We should not conclude that the government has to accept in detail every recommendation of a committee for it to be a success. That is a falsehood. The government maintains its
decision-making influence. All the government does is delay its decision-making. In the meantime, we can have a better debate because we have more information and perhaps more controversy. Then the government decides.
The public and this House should not judge the value of a parliamentary task force on the basis of how many recommendations the government accepts from its report. The government may have valid reasons for not accepting some recommendations. What the report of a parliamentary committee does is force the government to answer why it does not accept certain recommendations. In that sense, a debate is better and the public is better served.
I want to deal with a matter raised by my friend with whom I spent some very interesting months last summer, the hon. member for Mississauga South. He wondered how the Liberals are going to vote on this bill. In particular, he wanted to know how I was going to vote because, in his view, the proposal of the government is very far from the report of the parliamentary task force.
I disagree with the hon. member that there is a wide gap between the report, the position of the government and the outcome of the negotiations, when you consider the overall aspect not only of the established programs financing, but the elimination of the revenue guarantee and the equalization program. Those are the payments by the federal government to the provincial treasuries.
I recognize that in the case of EPF some tax points were transferred to the provinces in 1977. It was part of a deal at that time. While those tax points are provincial revenues, they must continue to be included when measuring the federal government's contribution. The government is not misleading anyone when it counts them. It is not denying that they are provincial revenues. Nevertheless, they have to be counted as a measure of the federal contribution.
There is another element that should be considered. The budget changes proposed by the government on November 12 will have the effect of increasing the federal tax base by approximately $2.5 billion to $3 billion. This will automatically increase revenues to those provinces which are part of the tax collection agreement and use the federal tax base as their base and a percentage of that base to collect their tax revenues. Quebec has its own tax collection system and must be measured in another way.
In eliminating the revenue guarantee, the government is maintaining the financing of the programs as they were defined before 1977. I will not get into that disagreement now. When you consider the payments from the federal EPF and equalization, they are not far from a value that could be imputed to the recommendations in our report. There is a difference, but they are not that far apart.
In political terms, while the increase in provincial revenues resulting from the increase in the federal tax base is not a federal transfer, it is more income tax moneys which the provincial governments will collect merely because of a
March 26, 1982

political decision of this Parliament. We must take the flak for increasing the federal tax base. It is to the credit or debit of the Parliament of Canada, and the provinces will benefit.
In terms of political morality, it is not so bad as to say that, while we are eliminating the revenue guarantee, we are provoking additional revenues of $685 million to provincial treasuries in the next fiscal year, which begins next week.
In judging the total government response, while I admit it is not to the last number the same value as in our report, it is close enough for me to accept it. What makes me accept it even more is that, apart from the fact the government did follow many of our recommendations, a very important one of which gives a single entitlement, as well as others that the government accepted, the equalization program is being made much more generous than it was by the inclusion of local taxes for municipal services.

Mr. Speaker, it should be pointed out that the fiscal equalization system is going to be far more generous to the Atlantic provinces, because of the computation formula that will be included in the act, and the basis on which payments will be calculated. Now, the representative average will be the average per capita yield of five provinces, namely, Quebec, Ontario, Manitoba, Saskatchewan and British Columbia. When the representative average of these provinces is calculated, and since the per capita yield includes municipal taxes and local charges for municipal services, the four Atlantic provinces are going to be much better off, because traditionally, their property taxes, which are raised by the municipalities, have been very low. In Ontario, for instance, and British Columbia, which I know better, and I believe the same applies to Quebec, municipal taxes have always been very high. Because taxes are high in the five provinces and lower in the four Atlantic provinces, it means that in the long run, the equalization program will be far more advantageous for us, because on the whole-I am of course speaking generally-towns in Newfoundland, New Brunswick and Nova Scotia, in fact any small community, will have lower municipal taxes than the City of Ottawa, for instance. In Ottawa, I believe that property taxes, which include school taxes, for a house worth about $100,000, would be around $1,200 or $1,500 per year.


Mr. Corbin:: Or even more.


Herb Breau: Or even more, as my colleague for Madawaska-Victoria (Mr. Corbin) just said. In my own province, in New Brunswick, for instance, we would probably pay $500 or $600 in municipal taxes. So that under the equalization system, an average figure is calculated for the five provinces I mentioned earlier, and the federal treasury then pays the province of New Brunswick the difference between, for instance, its own municipal taxes and the average calculated for the five provinces. Clearly, by broadening the base for equalization purposes, the four Atlantic provinces stand to benefit considerably in the long run.
Federal Transfers to Provinces
With respect to how I would vote on the bill, I would vote for it because it is close enough to the task force report that I am satisfied that, first, we have influenced the government during the negotiations, and second, because the report must be seen as a consensus. I read carefully what the member for Winnipeg-Birds Hill said in his interpretation of the report. Again, one should not be too surprised to find that when politicians from different parties and different regions of the country have arrived at a consensus on a document after negotiations which must take place in order to agree to any coherent political statement, they have slightly varying interpretations of what the consensus is. That is what consensus is all about.
The day that you try to have another form of consensus, that system of trying to arrive at a consensus will break down. I do not believe the hon. member was fair when he stated that, in his view, the government ignored the recommendations of the task force. He said that the report rejected the government's claim that there was a fiscal imbalance. I would refer him and the House to page 33 of our report. He is entitled to his opinion and, being a politician, and one from the New Democratic Party, I knew he would put his own interpretation to the consensus, even if he agreed with the report. I have not been fooled because I expected that. However, the explanation of the task force is much broader on the question of fiscal imbalance than the selective words that the member for Winnipeg-Birds Hill decided to quote. Page 33 of the report says:
The federal deficits registered in recent years can, however, be explained partly in terms of discretionary counter-cyclical fiscal policy-a deliberate attempt to maintain employment at a time of world recession. In addition, the various tax expenditure measures introduced since the 1972 implementation of tax reform, as well as the indexation of the personal income tax system, have deprived the federal treasury-as well as provincial treasuries-of substantial amounts of money, and unusually high debt service charges have compounded the difficulty.
That is another interpretation of the consensus of the task force from that which the member had. The report goes on to say:
What is undeniable is that the federal government faces a major budgetary problem in the size of the public debt and corresponding debt service charges.
Members can read further if they wish, but I will move on to page 34 in order to make my point more succinctly. It says:
The federal government is at an interesting intermediate point on the spectrum between these two extremes, a point where a prolonged cyclical budget deficit begins to lead to some aspects of a persistent structural imbalance. The structural problem emerges because the size of the debt accumulated to date begins to constrain to an unacceptable degree the margin of manoeuvre in federal government decisions on fiscal policy.
The hon. member and some in the press have said that we categorically rejected the interpretation of the Minister of Finance of some fiscal imbalance is wrong. In the first place, the minister never said there was a fiscal imbalance. He said there had been a shift in the balance between the amount of money that the federal government was collecting some 20

March 26, 1982
Federal Transfers to Provinces
years ago and what it is collecting now in terms of the percentage of the fiscal pie, how much the federal government is spending and how much the provincial and local governments are spending. That is what the Minister of Finance said.
What we did was to study the two different kinds of imbalances, one of which was structural. We tried to determine what "structural" would have meant. That is what we said did not exist. What we meant was that no level of government in Canada has the taxation resources within the Constitution to deliver or discharge its constitutional responsibilities. That does not exist in Canada and the government has never said it did. The Minister of Finance never said it existed. What we have is an imbalance which has occurred over the years because of what I mentioned earlier, the discretionary countercyclical fiscal policy. We mention the tax expenditure measures. The government is taking steps to attempt to close the tax expenditure accounts.
I recognize that the Conservative members on the task force would not agree with these measures for too long, even if these tax expenditures were probably more acceptable to their philosophies than they were to the hon. member from the NDP. But now he says that the government is moving to close some of the "loopholes", as he calls them. The hon. member says that he would have closed other loopholes. That is a matter of political choice, but to suggest that the government did not take steps to deal with its deficit problem by closing the tax expenditure accounts is not true. The hon. member can disagree if he wishes, and I respect him for that. Obviously, whenever the government proposes to close the tax expenditure account in one area, he will say, "You should not touch that one, you should touch the other one". That is the political game. But generally, we came to an agreement and that is the first point that I want to make about the comments of the hon. member for Winnipeg-Birds Hill.
I was sorry to hear the member for Mississauga South use examples such as spending on CIDA, the budget of the CBC, the budget of the Commissioner of Official Languages, as well as other budgets, to make his point that we could have cut back in those areas and not reduce transfers to the provinces. He is entitled to make his own political judgments as to where cuts can take place. However, there is one point which is undeniable, and it is that over the years, due to cyclical reasons-he said that because he agreed to the statement on page 34-the structural problem emerges because the size of the debt accumulated to date begins to constrain to an unacceptable degree the margin of manoeuvre in federal government decisions on fiscal policy.
This next Fiscal year, approximately 22 per cent of the federal government's budget will be allocated to service the national debt, and over 20 per cent of the budget will be automatically transferred to the provinces. That is a total of 42 per cent which is entirely undiscretionary on the part of the government-that is, unless the government decides to come to Parliament and change the fiscal arrangements, which could not be done when you consider the political reality of this country.
When you take into consideration the other payments that are made directly to individuals, there is not too much money left for Parliament to deal with. I say "Parliament", because let us not give the people the impression that only the Liberals can make decisions on this. The Liberal government of the day can and should be influenced by the opposition as to what should be spent and where. It is often the case that it is influenced.


Douglas Roche: When?


Herb Breau: The hon. member for Edmonton South (Mr. Roche) asks when. Last year he and I were part of another very good political experience when we were on the parliamentary task force on North-South relations. It was as a result of this vigorous efforts in that experience, and partly because of his political support which he obtained from his party, that provoked additional appropriations on the part of the government. Backbenchers on the government side with the help of the opposition pushed the government into changing the trend of a decreasing appropriation to development assistance as a percentage of our GNP, recommended to the government that this trend be changed, and it was. Last year there was a 19 per cent increase in the development assistance budget. This year there is something in the area of 14 per cent or 15 per cent.
Why I say that there is not much room left to manoeuvre, even if opposition members disagree on the appropriations of the government, as they must, is that they should consider that it is the Parliament of Canada which will be strapped and stifled and incapable of carrying out its responsibilities in the international field, in the field of communications such as the CBC, in the fields of official bilingualism, national defence, and energy. So it is not the federal government of the day; it is the Parliament of Canada. What happens the day the Parliament of Canada has no more funds to appropriate when it must appropriate 42 per cent to the service of the debt and to transfers to the provinces? I do not know exactly what the percentage will be in 1982-83 with regard to payments to individuals for old age pensions, family allowances and so forth, but I venture to say it will be about 25 per cent. So there is not that much money left for there to be discretion on the part of the federal government in its spending. That has to be recognized.
I will prove in a minute that the only provinces the elimination of the revenue guarantee will affect to any important degree, if at all, will be the provinces of Ontario, Saskatchewan, Alberta and British Columbia. With the improvements to the equalization program, the other provinces will gain. What must be considered here is the increase in total equalization, and the increase in EPF which will continue to be indexed to the gross national expenditure. Over all, with the exception of those four provinces, there will be no effect to any important degree. When we consider the offsets from the increases in the federal tax base, in some cases the transfers will be much more generous.
March 26, 1982

I will provide figures to prove what I am talking about. Let us begin with the province of Newfoundland. The entitlement of the province of Newfoundland in 1981-82 to equalization is $431 million. The entitlement for 1982-83 is $522 million. It will increase from $431 million in 1981-82 to $799 million in 1986-87. EPF cash transfers to Newfoundland will be reduced by $5 million because of the elimination of the revenue guarantee, but the tax transfer will go up by $9 million, and the offsets from increases in provincial revenues, because of the increase in the federal tax base, will be $6 million. So for Newfoundland in 1982-83 the total increase in its revenues because of budget changes and because of fiscal arrangements changes will be from a base of $652 million in 1981-82 to $753 million in 1982-83. That is how generous this program will be. That is a $101 million increase.
Even if hon. members want to disagree politically-and we can have different philosophical perspectives as to how we should deal with the economy in a period of fiscal restraint- all hon. members who are responsible must admit that there has to be some restraint, and if the federal government must restrain its own expenditures on the things it has to do under the Constitution, as it is doing, surely the provincial governments should be able to accept-particularly the four richest ones I mentioned-some degree of adjustment. However, the equalization recipient provinces should not have to, and that is why the program is acceptable to me as a Liberal.
In the case of the four Atlantic provinces, Quebec and Manitoba there will not be reductions when we consider the matter over all. There will be very generous increases. I want to state emphatically to students and administrators in postsecondary education institutions in the four Atlantic provinces-I have looked at the numbers more carefully for those provinces-that there is no justification at all to say there are federal cutbacks because there are no cutbacks in those provinces to squeeze the students and administrators of those institutions. I say this also to health boards and health commissions in Atlantic communities. There is no justification for saying there are federal cutbacks in relation to these services, including hospitals, because in the province of Newfoundland there will be an increase in one year of $101 million. In the province of Prince Edward Island there is a $23 million increase, from $150 million in 1981-82 to $173 million. Someone else can work out the percentages. In Nova Scotia the increase in 1982-83 will be from $863 million to $986 million. That is a $123 million increase when considered over all, and that is how this must be considered.


Walter David Baker: What about Ontario? Do you have figures for Ontario?


Herb Breau: I have Figures for Ontario, but let me put the figures for my province on the record first. With respect to New Brunswick, when we consider the equalization entitlement for this year and next year we see that there will be an increase from $415 million to $490 million. When we consider equalization, EPF cash and tax, even after the elimination of the revenue guarantee, and when we consider the increases in
Federal Transfers to Provinces
provincial revenues because of increases in the federal tax base, we see that the total increases are from $695 million to $786 million. However, we do not even have to consider the provincial revenues because of the federal tax base. Some hon. members say we have no business counting those revenues because they are provincial taxes. Let us say I agree with that. Even without that, for Newfoundland the total in 1981-82 is $652 million. In 1982-83 it is $747 million, and it increases and increases by an average of between 12 per cent and 13 per cent a year for the next five years.
Let us consider my own province. In 1981-82 the total is $695 million, and I do not include in that the increases because of the federal tax base. In 1982-83 it is $778 million. There are increases; the numbers are there. There is no justification at all for the provinces of New Brunswick, Newfoundland, P.E.I. or Nova Scotia-I say this emphatically, and I am ready to defend it anywhere-to allege there are federal cutbacks because of the fact that we are eliminating the revenue guarantee. That was only one little part of the fiscal transfer. When we consider this overall, we find they are all getting very generous increases.
Let me refer to Ontario. The hon. member asked about Ontario. The EPF cash transfer was $2,367 billion in 1981-82. That will be reduced to $2,297 billion in 1982-83 because of the elimination of the revenue guarantee. The EPF tax transfer will go up from $1,703 billion to $1,989 billion. That continues to go up. Let us consider the net revenue increase due to the budget tax changes. That has to be considered because Ontario, without taking any political flak and without changing the tax laws in its provincial House, will collect more provincial income tax, $171 million. The total in Ontario goes up from $4,071 billion-and Ontario is not exactly a poor province-to $4,457 billion. Where is the justification for saying we have to cut back funds for the universities of Ontario and we have to cut back on health care because the federal government is cutting back?


Eymard G. Corbin: That is for the birds.


Herb Breau: My colleague says that is for the birds. That is for the Blue Jays.


Thomas Scott Fennell: They are doing pretty well this year.


Walter David Baker: Now tell us about the Alouettes.


Herb Breau: The revenues to Ontario go up from $4,071 billion to $4,457 billion. That is hardly a reduction. I admit that I included in that the offsets from the increases in the federal tax base. I do not say that they are federal I agree they are income taxes which are collected by the Government of Ontario, but the Government of Ontario does not have to go to its legislature at all to change its taxes. That comes automatically, and it is the hon. member for Nepean-Carleton and I who take the flak for that because it is done by the Parliament of Canada.

Federal Transfers to Provinces
I want to come back to my own province for a minute because again in terms of political responsibility or political morality is it so bad for the federal government, even if there was an effective reduction from one year to the next, which there is not, to be concerned about the fact that for some provinces the federal contribution as a percentage of what the provinces spend-and I use my words carefully here; it is the percentage of what the provinces spend or what the postsecondary institutions, for example, spend-has gone up? The federal contribution has gone up as a percentage since the advent of block funding in 1977.
Of course, Mr. Justice Hall and others have said that that is not breaking the law. The question is not one of breaking the law, Mr. Speaker. It may very well be legally and technically correct for the provinces to allocate that money as they wish because that was the spirit of the 1977 agreement; what is not correct is that when those provincial governments appropriated the funds they never told the public or the users of the institutions that more money was coming from the federal government. Surely in terms of parliamentary accountability, which is basic, one does not have to be so overly legalistic. That should have been told to the public.
Members of this House are responsible for taxing Canadians and appropriating their funds, so that when we vote-even if there is a division-on behalf of all Canadians to allocate certain moneys for post-secondary education, I do not think it is morally correct, even if it is legal, for a provincial government to allocate the money elsewhere without telling the public about it. The public should be told if the provinces have received more money under the federal-provincial transfer system and if it is being put in a trust fund or elsewhere.
The moral question is important, Mr. Speaker. My own province of New Brunswick is an example but we could take any province, the trend is the same in all. In New Brunswick the federal contribution as a share of provincial expenditures for post-secondary education through EPF-and I include in that, minority and second-language training-has gone from 78.1 per cent in 1976-77 to 107 per cent in this fiscal year. That is legally correct. Those are the facts, Mr. Speaker. In 1976-77 the federal government paid 67.7 per cent of what the post-secondary institutions spent. When I say post-secondary institutions, 1 do not mean only universities but include everything after high school-community colleges and technical schools. What credit does this federal Parliament get for that? Is the hon. member for Nepean-Carleton ever recognized as a federal member when something goes on at a technical school in Ottawa?


Walter David Baker: Mr. Speaker, I appreciate the hon. member pointing to me when he said that. I would remind him that it was the Right Hon. John Diefenbaker who began the system.
March 26, 1982


Herb Breau: I do not quarrel with that, Mr. Speaker. That is correct. There was a succession of governments, from the St. Laurent government to the Pearson government, involved. I recognize that the program under which the first technical schools were built came about under the Diefenbaker government, but that does not make it any less good, Mr. Speaker? It is just as good!
In 1981-82 the federal government paid 99 per cent of moneys spent by post-secondary educational institutions in New Brunswick. That means that the government of New Brunswick allocated 1 per cent of the cost of post-secondary education in technical schools, universities and community colleges in New Brunswick. I do not say that is wrong and I have supported it. There is no way that the government of New Brunswick could afford the kind of education it provides if things were not that way. Newfoundland probably would not have its Memorial University. Prince Edward Island probably would not have the University of P.E.I. Nova Scotia would not have St. Francis Xavier University, and St. Mary's University probably would not exist. In my province-

-the University of Moncton would probably not exist otherwise. However, we have to realize what the situation was. I find it abnormal that federal payments to New Brunswick should have amounted to 107 per cent of the share paid by the New Brunswick government itself during the 1981-82 fiscal year. The people in New Brunswick should at least know this. During the last five years, federal contributions to New Brunswick have increased by 18.4 per cent on average. The provincial government has allotted to its universities, community colleges and technical schools only 11.2 per cent of this average increase of 18.4 per cent in federal contributions. The Government of New Brunswick paid out only 11.2 per cent. I am not saying this is not enough. It is quite possible that these appropriations were adequate. I cannot pass judgment on that. All I say is that the people in New Brunswick are entitled to know.
Mr. Speaker, I said earlier that the equalization entitlement of New Brunswick of $415 million in 1981-82 would increase to $490 million. This represents an increase of 18 per cent in one year. If all the amounts resulting from the additional provincial revenues derived from the increase in the basic federal tax are included, provincial revenues in New Brunswick will go up by $92 million in 1982-83 because of federal contributions. Therefore the governments of the four Atlantic provinces are not justified in saying that the federal government has cut back its contributions and that they must in return reduce their grants to the institutions. Mr. Speaker, if they want to do that, that is a political judgment they will have to make. But if they do go ahead, let them say clearly to the people of New Brunswick and to the people of the other Atlantic provinces why they want to make cuts. In the case of New Brunswick, for instance, there is a $92 million increase-
March 26, 1982


The Acting Speaker (Mr. Ethier):: Order, please. The time allotted to the hon. member has expired and he may continue only with the unanimous consent of the House.


Some hon. Members:: Agreed.


Herb Breau: -if we take equalization into account, if we include the higher provincial revenues derived from the increase in the basic federal tax and if we consider that, with respect to the established programs financing, only the cash share is lower and the tax increase has not been reduced. For New Brunswick, all that adds up to an increase of roughly $92 million. For all the Atlantic provinces, the percentage is about the same. In the case of Newfoundland, I gave the figures a moment ago.
Mr. Speaker, I for one can support this bill because, first of all, if we look at the total figures and keep in mind the generous new equalization program, it all comes out pretty close to what we would get if we were to implement the recommendations of our report. I am convinced that if the provinces are so inclined, they will be able to continue to finance health and post-secondary education programs which will be of great benefit to Canada, and I am glad that the federal Parliament will continue to finance them.


Mr. Blaine A. Thacker (Lethbridge-Foothills):: Mr. Speaker, it is a pleasure to speak on Bill C-97 today, amending the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, 1977. I am sure that most Canadians do not realize the extent to which the federal and provincial governments have had historically, and will have in the future, a fiscal relationship that affects the day to day lives of every one of us as citizens.
Bill C-97 will effect very major changes to that transfer program. In 1981-82, under the equalization program federal tax dollars were transferred to the provinces to the extent of $3.6 billion; hospital insurance, approximately $2.8 billion; medicare, approximately $1 billion; extended health care, $700 million; post-secondary education, $1.8 billion; and Canada Assistance Plan, some $2 billion.
The taxpayers of the nation pay part of their money to the federal government and part of their money to the provincial governments, for which they receive services and the benefit of equalization payments made directly to provincial governments. For example, they receive hospital insurance, medicare, post-secondary education, welfare and social assistance. We should never forget that the taxpayers of Canada pay for these services. This was driven home to me more than anything else when I sat as one of the two Progressive Conservative members on the federal task force which looked into transfers. The last speaker, the hon. member for Gloucester (Mr. Breau), was the chairman of the committee. He did a first-class job.
I should like to talk about the results of the work of the task force. It was a fascinating process. Naturally we in the House
Federal Transfers to Provinces
are in an adversarial system, because Fiberals have a vision as to what they want for the country and we have a vision as to what we would do for the country. Those visions are different with regard to the role of individuals and that of the state. We also know that committees tend to be rather adversarial, but Parliament has come up with the mechanism of a task force. We have had seven task forces. In the case of the one to which I referred, there were four Fiberal members, two Conservatives and a member of the NDP. The members of the task force were all backbenchers. The purpose of the task force was for us to direct our minds to the problem. Rather than from the perspective of politics, we approached the problem with the idea of seeing if we could, from the evidence we gathered, come up with some solutions to recommend to our fellow members of Parliament. This is exactly what we did. Over the course of four months we travelled across the entire country. We talked to people who were actually delivering medicare, such as doctors and nurses. Also we talked to university administrators, students, people administering welfare programs and to members of provincial governments, including members of the cabinets and of the legislatures. A large number of common sense recommendations resulted from the work of the task force. If the government felt obliged to adopt them, I am sure the country would be much stronger.
I should like to make a few comments about the fiscal history of the country. As in the case of everything else, we are not addressing this problem in a vacuum. We have had a long history of federal-provincial relations which started with confederation. Section 91 of the BN A Act gave certain powers to the federal government, and Section 92 gave certain powers to the provincial governments. Prior to the 1930s or prior to the Second World War, some 70 per cent of public government moneys were spent by the provinces and some 30 per cent were spent through Parliament. As a result of the outbreak of World War II, the provinces gave up their taxing powers to the federal government because we wanted to finance the war. In that national effort, provinces gave up their taxing powers over their citizens to the federal government, pursuant to Section 92 of the BNA Act. At that time some 70 per cent of revenues were spent by the federal government and some 30 per cent through the provincial governments. We can see that it was a total reversal of what existed before the Second World War. Since that war there has been a gradual transfer of additional cash and tax points from the federal government back to the provinces, so that by about 1980 it was back to where it was before World War II, that is, some 70 per cent of the money was spent through the provinces and some 30 per cent through Parliament.
When citizens hear the government say that it is losing its fiscal capacity, that it is being weakened and that it must be strengthened, perhaps it is a legitimate political point of view, but if we look at the history of it we are back to where we were before. This is consistent with the country being a federation. We are so broad and diverse, with such differing provincial

March 26, 1982
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interests, that most people want their provinces to be significant in their lives. Most people feel that provinces are more responsive to them than we are in the House of Commons. This is understandable. When we superimpose Canada upon Europe, we realize that it goes from the west coast of Ireland, across Ireland, across England, across the Netherlands and Germany, through Poland and beyond the Ural Mountains in Russia. If we look at the various countries in Europe that operate in areas much smaller than that of Canada and compare them with what we have done in Canada with one federal government and ten provincial governments, I think we should be incredibly proud.
We shall always have federal-provincial conflicts, but the government should not say that the nation will fall because the sharing of tax and public revenue has now returned to what it was before the Second World War, no more than it did during the war when 70 per cent of the money was collected in Ottawa in the national interest.
We require fiscal flexibility so that during times of national crises or war financial power and decision making can flow to the centre and we can act as a nation. During peacetime there will be a natural filtering out and flowing of taxing authority and spending power to the provinces as a reflection of our huge country and its very diverse regions. As the task force travelled across the country, I did not find any objection to a mechanism which would be flexible enough so power and cash could flow to the federal government in an emergency. As I said, during the war the federal government took the taxing power from the provinces by way of a tax rental agreement. Since that time we have entered into a period of five-year agreements which are commonly called "tax collection agreements". The last one was negotitated in 1976-77. In the past, negotitions at each of those five-year periods were carried out between governments. Then a bill was presented in the House and in the provincial legislatures. This was felt by some of us in Parliament to be entirely not satisfactory from the perspective of representing our constituents. Therefore, the government agreed to the opposition request to set up this task force to travel across the country and come up with a large number of recommendations.
The process is correct now; Members of Parliament should have input. I hope the government agrees to this in the future. The real question is whether, compared with the 1977 agreement, the government would be cutting back the amount of cash it would transfer to the provinces, if it were extended for the next five-year period? The answer in terms of cash is absolutely undisputed-there is a cutback in cash transfers to the provinces. The amount of that cash cutback is what the federal government now refers to as the revenue guarantee.
I want to show that the government is cutting back, and that it should not be hiding it by trying to say that it is doing away with something which existed in 1971. The government should come out and say that it is cutting back money because of the deficit, because the provinces have been unreasonable, because it wants to decide how to spend more cash, or any number of other reasons. Why should the government not be honest and
straightforward? It should not come up with the fraudulent excuse of the revenue guarantee. The fact of the matter is that in 1971, there was a new tax regime which was brought in by Edgar Benson. As the five-year agreement was negotiated, there was a great deal of uncertainty as to whether the provinces, under the new taxing mechanism, would have the same cash flow. Therefore, the federal government said that it would give them a guarantee, and that took place. Then in 1976 the parties got together again to negotiate the new five-year contract from 1977 to 1982. Both the federal and the provincial governments had a position. Under the 1971 agreement there was a cost-sharing agreement, dollar for dollar, but the actual costs of operating health care and post-secondary education were going up enormously. Both levels of government agreed there had to be a cutback. They agreed there would be a base amount of funding by the federal government and between 1977 and 1982 that base would go up by a delayed three-year average of the gross national product. That was part of the negotiated settlement.
The question of the revenue guarantee was discussed. Health care and post-secondary education agreements were not coming up until 1980. Because the federal government would have been forced to continue paying dollar for dollar, it offered $7.60 per capita plus one tax point provided the provinces would give up extending those two agreements to 1980. That was the negotiated settlement. It is like you and I meeting and each of us making an offer and negotiating back and forth. We would then come to an agreement. That was it. The federal govenment then put in a base amount to be escalated by the three-year delayed average of the GNP.
The revenue guarantee effectively died. It no longer was a part of the federal-provincial fiscal arrangements agreement. That is why I say that it is really perverse for the federal government in 1982 to refer back to 1971 and forget entirely about the agreement of 1976. I would rather see the government be straight and honest and say "We are going to cut back the money, folks, because of one, two, three and four reasons." Let us not hear any of these silly reasons because that causes a breakdown in trust and relationships between levels of government and here in the House. I do not want to be part of any sort of fraudulent deal. Why do we not just face the situation? If we feel that Parliament needs to have more money here and less money for the provinces, let us face that directly.
Proof of that lies in a speech made by Donald Macdonald, as reported in Hansard, when he said that it was a deal and we gave them $7.60 and a tax point, and that ended the revenue guarantee.
I want to speak about equalization for a minute. There is no doubt that it is a program which is found in virtually every federation. But here in Canada we have come up with our own method. We have bounced around from national averages to a two-province proposal. The last agreement was back to a national average. Now we are basing our calculations on the
March 26, 1982

average GNP of some of the more wealthy provinces, excluding the Atlantic provinces. I do not see any problem with that. A five province average GNP is a good standard upon which to base equalization payments. I did not agree with the original suggestion that they should be based upon the average GNP in Ontario alone, because Ontario is in the process again, as a result of federal government unilateral actions, of effectively de-industrializing. Let me tell you why that is so.
Some ten years ago, the federal government decided that if the price of energy went up Canadians were going to be insulated from that. In other words, we were not going to be blackmailed by any of the Arab states. Therefore, the federal government made a unilateral decision to keep down the price of oil. But that sent out signals to the car manufacturers to continue producing big cars. It sent signals to Canadians to continue buying them. That is exactly what we did. But meanwhile Japan and Germany had no choice but to go to world price for oil. The top brains and engineers in Japan and Germany immediately directed their minds toward producing more efficient cars and engines. As a result, now, ten years later, we cannot compete with them. They beat us at every turn. Most Canadians losing jobs in the Windsor corridor do not realize that it was as a result of a government decision ten years ago to somehow deny reality. That is what happens when governments get involved. It does not matter of which political stripe they are. It is the function of a government that is too big and tries to protect people, for political purposes, which it is unable to do.
If you give a 10 per cent subsidy to an industry, Mr. Speaker, I can guarantee you that within two or three years that industry will be 10 per cent inefficient. Meanwhile, other countries that do not have the benefit of subsidies face reality. They produce within reality and they can beat the country with a subsidized industry.
Equalization is a good program. It is uniquely Canadian and it is now entrenched in our Constitution. Each area in turn over the course of Canadian history has been wealthy. Before confederation, for a while, the Atlantic provinces were wealthy compared to Ontario and Quebec. After confederation, Ontario became a wealthy province and contributed net benefits. We in the west were recipients. In the east they were contributors. Now we in the west are net contributors to the national good. That is the way it should be. We are proud to make those contributions. It may be that in 25 years from now the fish off the Atlantic coast, the oil in Hibernia or the oil in the north will bring more money into the central coffers. We may once again in Alberta be a have-not province. We can all operate with the east being strong for a few decades and then the west. Perhaps the pendulum will swing again depending upon the ebb and flow of world affairs and whatever is "hot" at the time. Clearly, we want to protect that equalization policy.
The other major program, commonly defined as the established programs financing, covers health insurance, medicare and post-secondary education. As I say, there is no doubt that these programs are being cut because of the revenue guarantee. There will be less cash transferred to the provinces. That is
Federal Transfers to Provinces
a situation we should be facing head on. The real problem comes again because provinces are like people; some have more wealth than others. Alberta, British Columbia and Saskatchewan will not be hurt that much by the cutbacks because they are wealthy provinces at this time. But the seven provinces east of Saskatchewan all have substantial deficits. To take a cut in cash transfers will have a great impact on them.
The real questions are, first, what is the fiscal capacity of government and second, which level of government has the strongest fiscal capacity to handle the deficit? Obviously the answer is the federal government. The federal government can tax all the people of this country. It can tax all of the northern lands and the oil and gas flowing from there. It can tax the oil and gas flowing offshore, both on the east and on the west coasts. But compare that kind of taxation with what can happen in Prince Edward Island. Prince Edward Island has 125,000 people and a few more potatoes than that. Its tax base is restricted basically to an agricultural type of economy, whereas Alberta can tax the oil production industry, the oil service industry, the oil refining industry and a very rich agricultural industry because of irrigation.
The federal government can tax by any means and mode. The real question Canadians should ask is which level of government can best handle the deficit. Clearly, it has to be the federal government. For the Liberal government now to transfer some of its deficit to the backs of the seven provinces east of Saskatchewan strikes me as being wrong. I would rather see the government face this problem directly. If Canadians need to have a tax increase to counter that, so be it. For years and years the federal Liberal government has been offering all sorts of attractive programs to Canadians, preserving for them that low capitalistic tax. The difference was made up by borrowing under the table. You can get away with that for a while. The national debt was $5 billion, then $10 billion and then $20 billion. But now the national debt is something like $100 billion. The interest alone to service that debt costs $17 billion. Some 20 per cent plus of every tax dollar just services the debt. So now we see the government having to apply socialist taxes to meet socialist programs.


Lorne Edmund Nystrom: Socialist! These guys are not socialists.


Blaine Allen Thacker: In the meantime, Canadians went out and bought bigger houses than they really needed, took on larger mortgages, and paid too much for land. Now we are getting the taxes to match the program, and business is dropping away. We are going to lose one third to one half of the small industry in this country, again because of government decisions to offer programs along with low taxes.
I certainly believe, Mr. Speaker, that there has been a higher level of debate in the House over the last few days as a result of this fiscal task force which the hon. member for Gloucester chaired. He did a first-class job and, if I may say so, I think the rest of us did also, including the hon. member for Scarborough West (Mr. Weatherhead). We found that
March 26, 1982

Federal Transfers to Provinces
Canadians have no problem in wearing both a federal and a provincial hat. They recognize that their money goes to both the federal and provincial governments. The overriding recommendation and advice they gave to us was: "Listen, you crazy politicians, make the system work. You have a duty to make the system work". They told us that again and again. Then we came back to our colleagues in the House and told them that Canadians want it to work. Co-operative federalism is the reality of this nation, and as elected representatives we have an obligation to make it work. We also found that the task force process was a good one, and we hope our colleagues will buy it in the future when the next agreement comes up, I suppose in 1987.
In dealing with the established programs financing we found it necessary to separate the programs, so we recommended that health insurance be separate from other programs and that it receive 67.9 per cent of the 1981-82 contributions. Postsecondary education, which we found to be a very unique area, should receive 32.1 per cent. It is unique simply because of our unique confederation. In 1867, because of its critical importance to the people of Quebec with regard to language and culture, education was left to the provinces under Section 92 of the BNA Act. Consequently, technically the federal government should have no say in it. But during the 1950s and 1960s when education became an important priority to Canadians, the federal government became involved because it had this massive taxing and spending power I mentioned earlier. This resulted in money being transferred to the provinces.
In spite of the fact the federal government puts a lot of money into education, we found, because of the Constitution and because of the very deep feelings of the people of Quebec, which go beyond all provincial parties, that the federal government basically had to be restricted to being not much more than a source of money. However, there is no doubt that the provinces over the past five years have not honoured their 1976 commitment to let the federal government share in the decision making, at least with respect to identifying national goals.
I have no hesitation in speaking against the provincial Conservative governments. They were too protective of their jurisdiction and should not now be seen to be whining and snivelling when the federal government says, "We wants to have more say in the matter, and either you give us a role or we will cut back". The provinces were too aggressive. Had they shared a little more, they could have helped the situation and we probably would not be in this position today. I have no hesitation in directing that toward all provincial governments, sir.
We believe, Mr. Speaker, that the federal government has to get its own house in order with respect to education. We recommended the creation of a focal point so that federal government contributions can be co-ordinated and synchronized. I did not hear the hon. member for Gloucester refer to that and I am not sure whether the government has accepted the recommendation in our task force study for the appointment of a central co-ordinator for federal programs. I hope the
hon. member will follow that up because I do believe it to be a sound recommendation.
Then there were recommendations dealing with students. As a result of federal cutbacks even in the revenue guarantee portion there is no doubt some provinces will have to increase tuition fees. That will have a serious effect because the one thing we achieved during the 1950s, starting with John Diefen-baker and carrying through the Pearson era, was that thousands of children from modest income families were able, through low tuition and the accessibility of universities, to go to university. Having done so, they were then able to go out in the world and build fascinating careers for themselves. Now, to the extent the revenue guarantee is cut back, the provinces, particularly those east of Saskatchewan, will have to increase tuition fees. There is no doubt that this will affect accessibility, which in turn will affect the capacity of this nation to build its future and become the most powerful and popular nation in the entire world.
It seems to me, Mr. Speaker, when the government cuts back on the revenue guarantee it should at least couple that with a solid commitment of funds to the Canadian student loan program so that those who wish to take on that burden will have it interest free until they are working and making a living. Most students would be prepared to take on that burden if they could have some help during the early years, such as this interest-free provision. We could also have a creative combination of grants and loans perhaps to cover the first year of university. Students would decide whether or not they like university, and if they do then they could have an additional loan and a smaller grant for the second year. The same would apply to the third and fourth years and on into graduate school. Unfortunately, Mr. Speaker, that is not to be because the government has not announced an increase of funding to the loan program, and I very much fear that many students in the eastern provinces will lose the opportunity of attending university. To that extent the cutbacks are truly a tragedy in their lives.


Walter David Baker: It is shameful.


Blaine Allen Thacker: I think that is an honest criticism of the government. It seems to be drawing back from the commitment and idealism of the 1950s and 1960s when we wanted to have a place where young people could get an education and then go out into the world and help co-operative federalism and social justice.
It is a fact, Mr. Speaker, that we in the task force found the federal deficit to be discretionary. We have this deficit because of conscious and deliberate decisions of Liberal governments since the coming to power of our present Prime Minister (Mr. Trudeau). In 1968 we had balanced budgets, a very low national debt, a very strong feeling of national unity, particularly after Expo 67, and sound health care and pension systems. We also had a good post-secondary education system, and Canadians were paying moderate taxes. As a result of these decisions made by Liberal governments we now find
March 26, 1982

ourselves in this deficit position, which is affecting our flexibility. The $17 billion interest cost is concentrating in the hands of people with real wealth, both in and outside Canada.
I wonder how many members realize there are some 12 million plus Canadians who have bank accounts. An interest rate of 19.5 per cent is just great for them. Those who have a million dollars have the choice of investing it in industry or business, where they have all the risk and might lose it all, or they can lend it to their own government and come away with $195,000 over a period of 12 months with no risk. It is guaranteed. What are they going to do? Of course they are going to lend it to their own government. But that is concentrating wealth. So we will have a class of people who are incredibly wealthy and a huge number of the very, very poor. That is exactly what happened in India and in some other countries that cannot break out of their cycle. That is what happens when governments get into deficit. At the same time, because of the inflation which is settling on land, within a decade we will have a class of landlords and a class of serfs, tenant farmers, and that is a step 900 years back into history.


Miss Begin:: Vraiment?


Walter David Baker: Ecoutez.


Blaine Allen Thacker: That is a step back to feudalism. The federal government has to take that swing right on the chin.
Mr. Speaker, the next topic is really medicare. That program has some very real problems attaching to it because it relates to a matter that affects us all dramatically, particularly as we come into our old age and start to lose our health. We want to have access not only to doctors but to good hospitals, to medical treatment, to drugs; it deals with doctors' incomes, and with extra billing and with service to people and to user fees.
We should recognize at the start that we are attempting to balance the very legitimate interests of the users, the doctors, the hospital support staffs and of the taxpayers of the country. There is no doubt as to the reality of the fact that the incomes of general practitioners are down. I think that is not so with respect to specialists, but it certainly is so with respect to family care doctors. To the extent that we injure our doctors and we affect their status and their belief in themselves, we are going to be hurting ourselves as citizens.
We all know the history, that prior to medicare doctors were self-employed individuals, they set up their own offices, they provided their own staff, they provided for their own pensions, out of the fee for service. A person went to a doctor and paid a fee. That fee was variable, depending on what the doctor felt. Oftentimes it was nothing, sometimes it was a great deal, depending upon the wealth of the recipient. It was a fee for service. Doctors had a real status in our community, and for that status and the ability to be self-employed they were prepared to hire the staff, to provide their own pensions and to work very, very hard. I do not think there is a person in this building who would deny the reality of the contribution that doctors made in those early days, with their horse and buggy and in their cars, going out at all hours of the night. That is a
Federal Transfers to Provinces
tribute which certainly is deserved in the community where I come from being a farm boy from the prairies.
They also had at that time a very special relationship which they described as the doctor-patient relationship. Then we got medicare, and again there was a feeling across the country that not everybody had access to doctors, that somehow it was demeaning for some to take medical services and not to be paid. Therefore, again the government became involved and it said: "We will step in, folks, we will guarantee you service" and they imposed a system upon the provinces. So the new factor was no longer a patient-doctor relationship, in terms of a health relationship or a fee relationship; there was now a doctor, a patient and a third party, government, and the government was setting the fee schedule. As a result, over a period of time, the charts show clearly that the incomes of general practitioners have dropped vis-a-vis other status people in the community.
Personally I feel we are in the process of destroying our health care. I feel badly about it because I think it is a product of government with its bureaucracy and its indirect lack of understanding by politicians of the true relationship and what happens out in the field.
Mr. Speaker, you will note that the task force recommended that extra billings be banned. I stand with the doctors 100 per cent in their opposition to the banning of extra billing, because that will genuinely fix in place a dishonest system. We should be, more than anything else, honest. If Canadians want to Have their doctors as civil servants, let us turn to the doctors, let us say: "Look, that is what they want; therefore wp will pay you a salary equal to that of Members of Parliament, that is $65,000." Really, I suppose we would have to pay them $75,000 because we get $16,600 tax free. Let us offer the doctors $75,000 as a salary, let us provide their staff for them, as the people do for us and as we do for staff doctors and for lawyers who work for us. Let us provide them with their offices, let us provide them with a pension plan as generous as ours. If that were done, you would have virtually 100 per cent of the doctors under the plan. Now they have the worst of all worlds. They have the so-called image of being self-employed and all the decoction of it, but they are not because their fees are set, and yet they are expected to provide their offices and their staff. So why do we not offer to take over all of their offices? It would cost the Canadian people several billions of dollars, but at least it would be honest and the doctors would be working 37 hours a week.
Some people say there are too many doctors in this country. The only reason there are too many doctors is that they are all working 60 and 70 hours a week. If the doctors were working the hours that our civil service work or the hours that are worked in most industries, 37 hours a week, there would not be too many doctors. If they can make $75,000 a year, have their pension provided for as we do, we would have no trouble.
So my plea to you, as fellow members, is this. We should face it directly. Either we want doctors as civil servants and we will make the necessary adjustment, or we are prepared to

March 26, 1982
Federal Transfers to Provinces
leave them as self-employed, independent people. We have to give them more freedom on their billing or we have to set up a mechanism where by they would truly know that they have power to get what they feel they deserve.
Mr. Speaker, Canadians must decide, because there is no doubt that the medicare system is failing. We have examples from other countries. Britain adopted a system which has tried to create the illusion of self-dependent doctors but with the government setting the fees. As a result, the system has deteriorated to the point where patients are assigned now to a doctor. In Britain you do not have the freedom to go to the doctor you choose, particularly if you are poor. You are directed to doctor A, and if you do not like him that is tough luck for you, you have a terribly difficult time shifting. At the same time, the doctor has his patient load assigned to him, and as a result there is opting out.
If there is anyone who thinks doctors can be prevented from opting out, they will find it cannot be done, because they will operate in their own homes if they want to. Then you get a two-tier system.


Mr. Rose:: On a point of order, Mr. Speaker, I do not like to interrupt the hon. member, because I find his speech excellent, but I would like the opportunity to ask him a question while he is on the subject of medical training and doctors, if he would permit it.


Blaine Allen Thacker: Certainly, Mr. Speaker, I am delighted to have a question.


Mark Willson Rose: The hon. member was saying that we had a couple of choices in dealing with the doctors-three choices- half civil servants, half free enterprise. He did not mention that their education is paid for by the public almost up to 90 per cent. Would he also agree that if we are going to move them into civil service status, then since there are so many young people who try to get into medical schools and fail, we should also increase the size of medical schools so that we could take in larger and larger numbers and thereby, by competition, which I am sure his party is all in favour of, reduce the value of a doctor's income, or at the least the wages that he can command, simply by competition?


Blaine Allen Thacker: Mr. Speaker, there is absolutely no doubt that if doctors were on staff as our civil servants are-many of whom are doctors, too, as we do employ many doctors-and if we provided for their pensions, and if they were working 37 hours a week, there would not be a surplus and we would therefore need to have a great expansion of our medical schools. I have no objection to that.
The one thing that we found on the task force, from the evidence that came forth, is his second contention that having more doctors would mean more competition and that their incomes would drop. It just does not happen that way. Medicare and medicine are the type of thing where the number of doctors really determines the amount of medical service available. There is really in effect an unlimited demand. The more doctors you have, the more people go to them and go more often, and there are people who stay away now who
would then go. This was borne out by the evidence that came before us. It was brought to our attention by some of the nursing groups. Some of the nursing groups would like to become a point of entry to the medicare system. Right now it is only doctors who have a point of entry. The nurses wanted to become a point of entry, on the basis that they could do a lot of the things that are of lesser significance medically. The hard evidence is that if there were an additional point of entry, the cost of medicare would just balloon enormously. It is not a question of supply and demand, like cars and trucks are.


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


Some hon. Members:: Agreed.


Blaine Allen Thacker: Mr. Speaker, I will summarize. Clearly there is no doubt that the federal government is cutting back cash transfers. The cutback is the amount of the revenue guarantee. I wish it would do it straight up and honestly rather than skip the 1976 agreement as though it never occurred and go back to 1971.
There is no doubt that the effect on the seven provinces east of Saskatchewan will be very dramatic. We are putting on to their shoulders a fiscal burden they cannot cope with. They do not have the fiscal capacity to do it. We in the central government have access to taxation by any means and mode. We have the fiscal capacity to handle it. We should face that problem here.
The reason for the cutback is that the federal government prevails when it wants more money in its hand. That may be legitimate with respect to certain provinces which have taken money from Parliament and given it to the people, taking full credit and giving no credit to the Parliament of Canada. However, when dealing with matters of health care and postsecondary education, I do not think Parliament should take the taxing power, spend money and get credit for it when it will cause harm to the provinces. I will be opposing this bill unless there is an amendment or two. If she has not already done so, the hon. member for Kingston and the Islands (Miss MacDonald) will be proposing an amendment that will substantially improve this bill. If it is accepted by the government, many members on this side will support this bill. As it is now, we cannot support it.


Mr. David Weatherhead (Scarborough West):: Mr. Speaker, I am pleased to begin speaking this afternoon on Bill C-97. I am pleased to follow my two colleagues on the task force, the hon. member for Lethbridge-Foothills (Mr. Thacker), and the chairman of the task force, the hon. member for Gloucester (Mr. Breau). It was a seven-man all-party parliamentary committee. As the previous speaker said, we worked very hard and intensively from March to July of last year, and finally published the report in August. The report, which has been mentioned in the House on different occasions, is the first
March 26, 1982

report of its kind dealing with fiscal federalism in Canada. It will be very useful in the days and years ahead.
In the second part of my remarks, which I will perhaps complete on Monday, I would like to speak more about the task force experience and something of the recommendations of the task force, particularly in the health care and postsecondary education fields.
The government has proposed that national standards for health care be clarified and that an effective mechanism for their maintenance be developed, in consultation with the provinces, for incorporation in new federal legislation by March of next year. The government has also proposed that there should be two full years, until March, 1984, for consultations and discussions of ways of implementing the national objectives with respect to post-secondary education.
The Minister of Finance (Mr. MacEachen) in his speech to the House on March 22 of this week at page 15681 of Hansard stated that the parliamentary task force had a good deal to say about the program aspects of EPF and that it made some rather helpful proposals in support of the directions in which the government is now moving. I therefore will get back to discussing some of these proposals in a few minutes. However, first it might be useful to summarize some of the main aspects of Bill C-97.
The bill when passed will transfer $105 billion to the provinces in cash and tax points over the next five years under the two major programs of fiscal equalization and established programs financing. Over the past five years $61 billion was contributed to these two programs, and we will be spending on these programs some $44 billion more during the next five years than we have in the past five years. The bill will also provide a new equalization formula.
It is not generally realized that the provinces now spend the largest share of public moneys raised in Canada. Between 1961 and 1981 the federal share of total government revenues declined from 57 per cent to 49 per cent and the provincial and municipal share increased from 43 per cent to 51 per cent. If you deduct federal transfers to provinces from federal revenues and consider them as provincial revenues, the federal share of the total revenue pie has decreased since 1961 from 50 per cent to only 38 per cent today. These numbers indicate that Canada is one of the most fiscally decentralized countries in the western world.
The fiscal equalization program is a cornerstone of the Canadian federation. It seeks to make possible for all provinces to provide reasonable standards of basic public services to their residents without having to resort to unduly high levels of taxation. About $29.3 billion of equalization will be paid to the four Atlantic provinces, Quebec and Manitoba during the next five years, compared to $16.5 billion paid to them during the last five years under the equalization program.
The equalization program has two fundamental components. The first is the measure of provincial fiscal capacity. That is the capacity or potential of a province to raise revenues through taxes of various kinds relative to the capacity of other
Federal Transfers to Provinces
provinces. The bill proposes to broaden the measure of fiscal capacity to include, among other items, municipal taxes and the sale of goods and services by local government. The second basic element is the equalization standard.
Originally the government had proposed to shift to the Ontario standard so that those provinces which did not have the capacity or potential to raise revenues equal to the capacity of Ontario would continue to receive equalization payments.
However, because many of the other provinces were concerned about the economic future of Ontario, the Government of Canada in this bill now proposes a more broadly based standard which will take into account the average taxation capacity of Ontario, Quebec, British Columbia, Saskatchewan and Manitoba.
The bill contains a transitional arrangement protecting provinces against too abrupt changes in the level of their equalization and it also contains a ceiling provision under which the growth of total equalization payments to all provinces will not exceed the rate of growth of the Canadian gross national product.
Equalization payments to the six have-not provinces will increase by 13.6 per cent in 1982-83 and by 11.2 per cent on average over the next five years. The transfers made under the Established Programs Financing Act have, since 1977, funded provincial health care and post-secondary education programs. They have also compensated provinces for termination of the 1972 tax reform revenue guarantee.
Under the present system of transferring cash and tax points, the wealthier provinces like Alberta and British Columbia obtained more benefit from their tax points than did the poorer provinces. As recommended by our parliamentary task force, this bill modifies the cash transfers so that the per capita value of total federal contribution to all provinces will be equal. The bill will also end the EPF transfer that compensated the provinces for the 1972 tax reform revenue guarantee. This equalled one personal income tax point and the cash equivalent of a second tax point.
The provinces have argued and are arguing that by ending the revenue guarantee moneys the Canadian government is undermining our support for post-secondary education and health. However, this is definitely not the case. When the premiers met last summer they explicitly declined to include the revenue guarantee as a portion of the federal contribution toward health care and post-secondary education. Mr. Justice Emmett Hall in his 1980 report on health programs also stated that the federal contribution to health programs does not include the two tax points attributable to the revenue guarantee. The government of Canada contribution to these two vital programs will continue to grow over the next five years in line with the increase in the gross national product. The tax measures announced in the November 12 budget for 1982-83 alone will increase provincial revenues by another $685 million.

March 26, 1982
Federal Transfers to Provinces
I wish to re-emphasize that the government's contribution to health care and post-secondary education will increase on an average of 11 per cent per year over the next five years, and so it is ridiculous to say that federal contributions are being cut back. The revenue guarantee program was designed to protect provinces against unforeseen reductions in their revenues which might have resulted from the 1972 tax reforms. It was supposed to end in 1977 but was extended for a further five years. The provinces have had ten years to adjust their taxes to the 1972 tax reforms, and there is no longer any justification to continue the revenue guarantee. In any event, the revenue guarantee in question may make up about 5 per cent of the total amount of moneys that are otherwise being paid to the provinces.
The bill contains certain other items, including allowing the government to transfer to oil producing provinces their share of the federal oil export charge for oil exported from November, 1980, to January, 1982, and to compensate certain provinces with respect to changes in population brought out in the 1981 census.
This bill will enable the federal government to contribute $105 billion for equalization, health care and post-secondary education over the next five years, which emphasizes the strong role that the Government of Canada will continue to play in providing Canadians with the services they need and deserve.
The task force was established last spring as a result of a proposal by the opposition parties which was readily accepted by the government. It included four Liberals: the chairman, the hon. member for Gloucester and hon. members for Vau-dreuil (Mr. Herbert), Vercheres (Mr. Loiselle) and myself; two Conservatives, the vice chairman, the hon. member for Mississauga South (Mr. Blenkarn) and the member for Lethbridge-Foothills (Mr. Thacker); and one NDP, the hon. member for Winnipeg-Birds Hill (Mr. Blaikie). The task force was empowered to retain the services of a professional staff, and Peter Dobell of the Parliamentary Centre for Foreign Affairs and Foreign Trade was able to recruit a group of able, knowledgeable and hard-working advisers under Dr. Rodney Dobell of the University of Victoria.
The research branch of the Library of Parliament also provided helpful support, and the research staffs of the three political parties also contributed greatly. The task force produced a set of guidelines and principles-a framework- within which we believe representatives of federal and provincial governments can best negotiate, whatever changes appear appropriate in light of the social goals of these programs and the economic circumstances that prevail as negotiations proceed over the next year or two. The thread that runs through the task force report is not budgetary calculations but accountability in Parliament for federal spending. We concentrated not on the government's expenditure plan but on the institutional changes designed to ensure that Parliament itself can deal more effectively with and be held more fully accountable for federal revenues going directly to provincial governments. We were willing to endorse this report collectively, not
because we all compromised to the point of reaching total consensus on the document, not because we erased all the philosophical differences that separate our positions, but because the report makes clear what some of the differences are. We sincerely believed that what was most important for us as a task force and what is important for us as a country was to work together to arrive at action that was mutually acceptable in light of our different values; not to separate and go our own ways because we cannot agree.
As mentioned, on page six of our report, as we crossed the country, one message was clear-Canadian citizens are more sensitive to what unites them than to what separates them. They are more concerned with a workable federal system than with fine points of jurisdiction. Despite the strains and controversy associated with energy policy, the Constitution, RCMP costs and other inter-governmental frictions, we found that individual Canadians still seem to have little difficulty wearing two hats; as federal taxpayers and voters and as provincial taxpayers and voters. We are heartened to be able to confirm that Canadians remain willing to share their good fortune through interprovincial redistribution and through interregional transfers. They look to the federal government to assure appropriate national standards of access and equity in the programs through which equality of opportunity can be achieved for all Canadians. We encountered few who quarrelled with the need for strong federal leadership in setting out these national standards. Particularly encouraging was the view of many provincial officials and ministers that in cooperative negotiations with their federal counterparts, there would emerge few serious differences on basic national objectives. In short, Canadians are more united than their governments sometimes seem to be-the links that bind them are in reality much stronger than the relations between their governments might suggest.
We held hearings in Ottawa, including evidence from the Minister of Finance, the Minister of National Health and Welfare (Miss Begin) and the then Secretary of State, the Minister of Communications (Mr. Fox). We then travelled to the capitals of each of the 12 provinces and territories and met with each of the provincial treasurers or finance ministers, as well as with representatives of the various interest groups, and members of the public at large who are involved with and concerned for our health care system, our post-secondary education system, the funding of our welfare and social services, and our equalization program for the have-not provinces. In addition, we heard views of academic experts, six former premiers of provinces, the Economic Council of Canada, our native peoples and many others.
The members of our task force are very conscious that this was the first occasion on which public consultation and active parliamentary involvement had been possible with respect to reviewing fiscal federalism in Canada, and we therefore recommended that prior to future intergovernmental negotiations on fiscal arrangements, members of Parliament again have a similar opportunity for consultation with the public.
March 26, 1982

Mr. Speaker, I have some more remarks which might be held over to Monday with respect to some of the recommendations regarding health care and post-secondary education. I wonder if I might call it four o'clock?


The Acting Speaker (Mr. Ethier):: Is that agreed?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: It being four o'clock the House will now proceed to the consideration of private members' business as listed on today's Order Paper, namely, notices of motions, public bills and private bills.



PRIVATE MEMBERS' MOTIONS


Mr. Marcel Dionne (Parliamentary Secretary to Minister of Agriculture) moved:: That, in the opinion of this House, the government should consider the advisability of the Department of National Revenue assuming responsibility for the expenses incurred by a taxpayer whom the Department causes to be investigated, when such investigation by the Department's officials does not result in a suit or claim.
He said: Mr. Speaker, I have been very anxious to see this motion tabled in the House of Commons and I am pleased to have an opportunity to speak to this subject. The purpose of the motion is to correct a situation in which many Canadians find themselves. Most members of this House know of similar cases in their ridings. The scenario is always the same. Your secretary puts through an urgent call from one of your constituents, usually a contractor, a businessman or perhaps a pensioner. Then, at the other end a voice says, panic-stricken: They are here. In a flash, you understand that your constituent has just had a visit from the Revenue Canada taxation officers. 1 am not blaming all the department's officers. After all, it is not much fun collecting taxes and income tax. On the other hand, there has been a certain amount of abuse, and I feel that Parliament should be informed.
I shall briefly summarize, if I may, the role of Revenue Canada, Taxation. As all Canadians probably know, personal income tax was introduced in Canada in 1917. When the legislation was passed, Canadians were given the assurance that it was only a temporary measure that would be abolished as soon as the First World War ended. The rest is history, Mr. Speaker. There is a vast store of witty remarks made by taxpayers regarding this temporary measure, which is not expected to disappear very soon. Perhaps this is one example where a government program has been too successful. A
Income Tax
Revenue Canada publication called "Inside Taxation", 1981 edition, tells us that the department took more than $50 billion out of our pockets in 1980-81. That is plenty of money and it explains why we are not about to witness the extinction of our income tax system. The Department of National Revenue is such a profitable business, Mr. Speaker! You can learn a lot by reading the publication "Inside Taxation". You learn that the first function of the Department of National Revenue, Taxation, is the collecting of taxes and other fiscal contributions while deterring fraud and tax evasion. Its second function is maintaining public confidence in the integrity of the taxation system by administering tax legislation fairly, uniformly and courteously. I am emphasizing the word "courteously".
Let me say a few words about courtesy. Of course, for most taxpayers, the payroll deduction system, also called fiscal anesthesia, avoids the need for direct contact with the tax collector. Once a year, every Canadian taxpayer completes a return in which he admits having obtained a certain income and enters as having been deducted from his paychecks, an amount of money which he never had in his pocket, and often is entitled to a small refund. On the other hand, self-employed workers and employers may have closer contacts with the officials of Revenue Canada, Taxation.
Finally, there are taxpayers whose returns are audited and who are provided with revised assessments. How many are there? According to departmental sources, 91,367 returns were checked in 1980-81, which resulted in 70,057 new assessments, and it is with this specific group of Canadian taxpayers that I am concerned. What is the pattern that fits this taxpayer? This constituent who gets in touch with us after having been visited by a taxation officer is often a contractor, a businessman or even a retired person. He has developed a business or a company and employs three, four, five people, often between 20 and 40 people and sometimes more. He pays all his income and other taxes. Most often, he has hired a professional, namely an accountant, to do his bookkeeping, to complete his various tax returns and to provide all the required forms to Revenue Canada, Taxation. One day, he is audited and can then see for himself how the Department of National Revenue goes about enforcing the Canadian tax legislation courteously.
It is unfortunate, but in the cases referred to me, I have found that the Department of National Revenue treats these Canadian citizens literally as though they were criminals. A taxpayer will find that if he is prosecuted by Revenue Canada, Taxation, the burden of proof does not rest on the plaintiff, namely the Department of Revenue, but on the taxpayer himself. It is therefore up to him to prove that he is innocent, hence that Revenue Canada, Taxation is wrong. In the circumstances, Mr. Speaker, it is easy to see that the department has all the advantage while the taxpayer must spend a lot of money

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to prove his innocence. When he succeeds, he is simply told: "Sorry, we made a mistake."
Mr. Speaker, I would like to bring to your attention an article published in Saturday Night magazine in April, 1981. The author quotes Mr. Alan Zener, a lawyer who worked with the Department of Justice and represented Revenue Canada in court. Mr. Zener said, and I quote:
Very often Revenue Canada comes before the courts with very little evidence, but they win their case because the accused, the taxpayer, cannot prove that the assessment notice was incorrect.
This should fly in the face of our sense of justice. However, there is something more serious. Despite the rules that hamper the taxpayers, some of them manage to prove that the assessment notice is incorrect. They win their case. But in order to do so, they have had to spend thousands of dollars in professional fees for lawyers, accountants or tax experts. And this they have to pay. It is in order that this injustice be redressed that I put forward my motion, and I take pleasure in reading it once more, Mr. Speaker, because I find it important:
That, in the opinion of this House, the government should consider the advisability of the Department of National Revenue assuming responsibility for the expenses incurred by a taxpayer whom the department causes to be investigated, when such investigation by the department's officials does not result in a suit or claim.
Indeed, Mr. Speaker, the audit branch at Revenue Canada, in addition to not having the burden of proof, has free access to an army of experts within the departments of Finance, Justice and National Revenue. The taxpayer is all by himself, and to get any help he must pay the price. If he happens to win his case, all he is entitled to is a few words of excuse. I am shocked by this. Where the taxpayer can establish that his position was clear and had to incur costs to do so, the Department of National Revenue should compensate for his costs. This in my view might reduce the number of charges against taxpayers, and perhaps even lead Revenue Canada to play a much more significant social role in other terms to humanize Taxation Canada.
The error made by the taxpayers who are investigated by the department of National Revenue is that they do not realize that the litigation, or rather the lawsuit, starts the moment the auditor knocks at his door. The auditor has the right to check everywhere, to require the production of all kinds of documents. This is where the taxpayer needs professional help. Why? The answer is quite simple: If the department goes before the courts, the answers given to the auditor in the course of an investigation may be held as evidence against the taxpayer. So, from the very start, he needs professional help. Sometimes after an investigation the department will close a file and matters will not go before the courts because they would lose their case. However, the taxpayer has proved his innocence at the investigation stage, if I may say so, and to do that he has had to incur costs. My motion is aimed at creating
a mechanism which the Department of National Revenue would use to reimburse the taxpayer's costs.
Mr. Speaker, several methods used by the investigators are unacceptable and border on indecency.
It often happens following some well-defined and specified transactions included in a contract that at the minister's discretion, such a transaction is denounced or cancelled, the burden of the proof always resting with the taxpayer but in most cases nothing is changed. Several tricks are also used and I will take the liberty of mentioning a few. I know many taxpayers who, following the sale of a building or some assets, finally set a price but once again after a visit, the tax assessors, whose specific task is to reassess those transactions, often maintain that the assessment is inflated or excessive.


Mr. Tousignant:: The assessor receives a commission.


Marcel Dionne: Well, it often happens my dear colleagues. In any case, I am under the strong impression that he is. He has been asked to perform a specific task and whether he is right or wrong, he sends out a bill which is disputed because the assessment is excessive. Then the whole procedure is undertaken, the taxpayer must provide some evidence and in most cases, the results are the same. However, what is more exasperating also is that a great number of taxpayers lead a modest life making every sacrifice while other taxpayers who may be next door neighbours have a high style of living, and are deemed to be exceedingly rich or very well-to-do. On the strength of anonymous information, their home is searched with the assistance of the RCMP and inspectors; everybody is threatened and once again Mr. Speaker, once the investigation is completed in most cases, it is realized that the taxpayer was right. However all kinds of threats are made to intimidate. A great number of taxpayers have been resentful and worried as a result of those procedures.
Mr. Speaker, I will go as far as to say that Revenue Canada officials have almost lost their sense of fair play. The fact is that during many years, thanks to accountants or tax experts, a lot of transactions were accepted from the start, but often, after a visit from a taxpayer, they forget all about fair play and reject what used to be accepted in the past. You always have to start all over again.


Henri Tousignant: Gestapo-like tactics!


Marcel Dionne: I have other examples to make my point, Mr. Speaker. I know company owners who have 15, 20 or 30 employees with a weekly payroll between $19,000 and $20,000 and, as everyone knows, they have to send advance payments to the Department of National Revenue on the thirtieth of each month. They have until the fifteenth of the following month to send in that money. Well, believe it or not, some people mail their advance payments on the thirteenth, the fourteenth or the fifteenth of the month. Some officials are
March 26, 1982

now going after many taxpayers to collect all kinds of penalties-and I am not talking about 10 per cent penalties either- which, in my opinion, are unfair and should not even exist. This sort of thing happens regularly although we know full well that our Post Office Department has been on strike in the past. A lot of contractors had mailed their payments, but that did not prevent two federal government departments from fighting each other and slapping fines on taxpayers who were forced to pay for the mistakes made by other departments.
Surely, Mr. Speaker, it will be agreed that this type of tactic is no longer acceptable nowadays. I could go on with this list until five o'clock, but I understand that some of my colleagues are seeking the floor and, in any event, they are entitled to speak against my notice of motion-


Eymard G. Corbin: For the motion.


Marcel Dionne: But I must say that many more would speak in favour of my motion if they had an opportunity today.


Henri Tousignant: A good many members silently agree with what the hon. member is saying out loud.


Marcel Dionne: As I was saying, Mr. Speaker, I could go on describing still more similar cases. It is a safe bet that some members will rise in a few minutes to talk about social conscience and a more humane system. They could talk about that and I share that viewpoint as well. But let us not forget either that through its officials the department must work in close co-operation, and I mean close co-operation, with the taxpayers to develop that social conscience. We expect taxpayers in this country to have a social conscience, but we also expect people who enforce legislation to develop their own social awareness in order to harmonize various measures and humanize their enforcement. It is true that some credit should go to the taxation officers who have to enforce a very difficult body of legislation, but even so, Mr. Speaker, I maintain that it is possible to humanize the enforcement of that law. I am convinced that these measures would be far more manageable if most tax auditors were given a more specific mandate before knocking on our doors, and if necessary, Mr. Speaker, I would suggest that courses be given to some auditors to teach them how to deal with the public and what is involved in dealing with people who are confused and upset and who, by some mistake or through their own ignorance, stand to pay large sums of money. In many cases, the truth is that they do not owe these sums of money after all. This is what is getting many citizens' backs up, when they get assessments for amounts they do not owe, and the department, because the taxpayer is unable to provide any evidence to the contrary, keeps after him, and often when the individual takes them to court, they just drop the whole thing and say: Sorry, we made a mistake. I think it is high time something were done about this, and I want to ask the ministers, deputy ministers and other officers concerned to work together on harmonizing the system, which is in a very sorry state.
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A. Daniel McKenzie: Mr. Speaker,
I wish to speak in support of this motion that the government should consider the advisability of the Department of National Revenue assuming responsibility for the expenses incurred by a taxpayer whom the department causes to be investigated, when such investigation by the department's officials does not result in a suit or claim.
I think this should be extended to cover all federal government departments, as was done in the United States. The problem that the hon. member for Chicoutimi (Mr. Dionne) will probably run into this afternoon is that one of his Liberal colleagues will talk this excellent motion out. It is one which certainly should be passed because it has much merit.
There is legislation in effect in the United States which covers all federal government departments. A United States senator by the name of Dennis DeConcini introduced a bill which was passed in 1980. After much legislative manoeuvring, the Senate and the House of Representatives passed a final version of Senator DeConcini's equal access to justice act. It was a bill to make federal government more accountable in the enforcement of its regulations. Basically, the bill which became Title II of H. R. 5612, the minority small business contracting bill, will force a government agency to pay legal costs incurred by individuals and small businesses, either in federal court or in an agency-level proceeding, if the agency loses the case and cannot substantially justify its action.
Individuals with a net worth of less than $1 million, businesses with a net worth of less than $5 million and less than 500 employees, and all non-profit organizations and agricultural co-operatives are covered under the legislation. Senator DeConcini claimed that the message was quite simple. He said:
Justice has simply become too expensive for the average American and small businesses, particularly when they are faced with a legal battle against the practically unlimited resources and expertise of the federal government. Many citizens have no recourse; because of the legal costs, they simply knuckle under to the government's demands whether they seem to be justified or not.
This bill not only will make the government more accountable for its actions, it will also provide Congress with a means of finding out how responsible the agencies are being in enforcing their regulations.
In another report of Dennis DeConcini respecting his equal access to justice act, he pointed out:
The law covers only individuals with a net worth of $1 million or less, businesses with a net worth of $5 million or less, and all non-profit organizations and agricultural co-operatives.
It is not, as some opponents have argued, "a threat to the very foundations of the American legal system".
I do not think it would be any threat to the Canadian legal system. He went on to point out:
Lawyers will point out, somewhat accurately, that the principles of equal access run counter to the general legal doctrine that requires each party in a court case to pay his own way. However, that doctrine was formed when the

March 26, 1982
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federal government was not a great deal bigger than a modern small business, and before the creation of the Occupational Safety and Health Administration .... the Social Security Administration, the Federal Trade Commission, the Environmental Protection Agency-indeed, even before the Internal Revenue Service. Fighting the federal government today means fighting a $650-billion-a-year Goliath; the government, its bureaucracy and its regulations are threatening to overwhelm us. Indeed, the equal access law, by balancing Americans' ability to use our system of justice, will strengthen that system.
I am in the process of preparing a private member's bill which will be similar to this motion. I want to cover all federal government departments. If the hon. member for Chicoutimi wants to speed things up, I am sure he could put pressure on the government House leader to bring in legislation to cover all federal government departments. Certainly there would be no difficulty from this side of the House in supporting legislation for ordinary citizens to fight the huge federal government Goliath of today. As other hon. members on this side want to speak on this motion, I will end my remarks, now.


Mark Willson Rose: Mr. Speaker, I am pleased to have an opportunity to say a few words on the motion before us. I have had some experience, as have my constituents, dealing with some officers from the Department of National Revenue. It has not always been very pleasant, so I thank the hon. member for Chicoutimi (Mr. Dionne) for bringing this matter forward.
The first time I had a problem brought to my attention as a member of Parliament, it related to the problems of reassessing. It did not concern reassessment of businesses. In this case it concerned reassessments of people who had hobby farms. These people lived on farms. They wanted to get out of the stinking city for the same reasons as I did, ultimately. They wanted to raise their children in rural settings for all the so-called benefits. They wanted a little more room in which to operate. They wanted to have animals and all that goes with semi-rural life. Since they had small farms, they were encouraged by the government in the form of exemptions and income tax breaks accorded to them. They set up small enterprises on their farms. They were involved in raising bees, cattle, chickens or whatever. In the early years they were able to write off part of their costs, such as those for fencing, development, buildings, telephones and sometimes even special licences for their trucks. However their main income was not from farming, and probably never would be, because their small farms did not have the capacity, certainly in the Fraser Valley, to produce sizeable incomes unless they were accompanied by marketing quotas. Most of these people operated under marketing quotas which allowed them to produce a certain number of eggs, turkeys, milk or whatever.
However, a pattern was established in certain parts of the country wherein such people began receiving visits from very amiable people. These visitors would knock on their doors. They were always very nice, friendly and outgoing. They would introduce themselves, sit down and ask a few questions. Nothing very important would occur and no one would become upset about the visits because they were fine people. Usually the visitors were offered tea, cookies and such. After asking a
few rather penetrating questions, they would depart. A few weeks later the people who had had such visits would receive a nice-looking official envelope from the Department of National Revenue. Lo and behold, they were reassessments. Sometimes the reassessments went back as far as three to five years.


Walter David Baker: Unless there was fraud, no further than four years.


Mark Willson Rose: I think the law allowed them to go back five years at that time. Certainly I would be guided by the advice of the hon. member for Nepean-Carleton (Mr. Baker) since he is steeped and learned in the law. Nevertheless, sizeable reassessment demands were placed upon these people.
Perhaps someone could say that I am not necessarily speaking to the business of paying for an investigation or for the legal defence thereof when a re-assessment is lost. I am not speaking to that directly, but I am talking about the manner in which these inspectors operated. I am not only referring to the inspectors in this branch of government but in other branches as well. I will deal with that later.
Suddenly, after they thought their income tax returns had been accepted, going back three or four years, they would receive bills anywhere from $2,500 to $5,000. Many people could not afford to pay such bills. It put them practically into receivership on their farms. They never believed they were cheaters; however the assumption of the Department of National Revenue was that they were. I think they operated in a sneaky manner.
I am old enough to remember a lot of the James Cagney and Edward G. Robinson gangster movies. Even in the shoot-em-ups of the westerns we all used to love; when the crook was finally apprehended and hustled into headquarters to make a statement, the detective or the arresting officer always gave this warning, "Anything that you say can be held against you." That is part of American law. That is one of the disadvantages,
I guess, of being so close to our friend, the United States of America. We begin to assume that we have certain rights under Canadian or British law, or under common law, even judges rules, that we do not have. These traditional words of caution were never given to any of the people I have mentioned. I think they should have been warned of their legal rights if they were being investigated by an officer from National Revenue.
This situation goes back almost ten years. I guess it is not the turn of the hobby farmers now, perhaps it is the dentists, but I know whom they are bothering. They are bothering the people who are away from home who receive benefits for working away from home. A CPR trainman asked me what to do about his situation a little while ago.


Walter David Baker: And the northern miners.


Mark Willson Rose: Yes, perhaps the northern miners.
March 26, 1982

But sizeable retroactive assessments cause severe problems to many of these people who are not tax dodgers, who are basically not tax cheaters but are operating under the assumptions that the income tax law allows them to make certain kinds of deductions. If they are not hauled into court, they are fooled into making statements which are later held against them.
When the inspectors come to them without any warning at all they ask for detailed advice. The average person does not have that kind of detailed accounting advice at his fingertips. I have never heard of these income tax officers or sleuths notifying people in advance that they are coming or what the nature of their visit is to be or that it would be a good idea, since the person is being investigated, to have his or her accountant or lawyer present. I have never heard of that happening yet, whether it is the small hobby farmer who is my constituent, a person who works away from home or whatever group that happens to be investigated at the moment in the spot check.
But I will say this much, that when the present Minister of Industry, Trade and Commerce (Mr. Gray) was minister of national revenue, I went to him about this problem. He made certain that the assessments did not go back more than one year. That was of great help. I do not know whether that continues to be policy, because I have not had the problem brought to me recently. But I can brag that through a combination of my efforts, the courtesy and willingness of the then minister of national revenue, we had some of the big sting taken out of the system.
Certainly the National Revenue Department should be looking for tax cheaters. I do not say that National Revenue should allow people to tip toe through the loopholes forever. I think if people are operating fraudulently, they should be nailed, and nailed as hard as they can be.
I mentioned other arms of government earlier that have resorted to what I consider to be sneaky practices as well. Working people who have had a long or a lengthy sickness or a jobless claim are frequently invited into the UIC offices for friendly chats, perhaps a little consultation and counselling. This cosy little arrangement purports to assist the claimant in finding new employment. There are no written questions. No one is invited to have his lawyer, his accountant, or his mother there to assist him. The person goes by himself and frequently condemns himself. We could be much more upright, honest, forthright and humane as a government department in dealing with people of whom 99 per cent are not crooks, cheaters or trying to get away with anything.
In the case of the UIC, once the interview is concluded the claimant is given a written document. He is expected then to sign it, and because he has signed certain things with certain words, he is probably, like many people before officialdom, frightened and embarrassed. He may even be degraded because he is idle. But the statement that is written up, not by the individual but by the counselling officer, is pretty close to what he thinks the story is, and he signs it just to get the hell out of there. He, too, like my friends the hobby farmer or the
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CPR trainman, get a nice letter a few weeks later saying they are cut off or he owes this or that or something or other.
I suggest a lot can be done to improve the situation. We hear that people are cynical about government. They are certainly cynical about officialdom, bureaucrats and probably politicians too. But this practice only adds to that cynicism if this attitude prevails or is allowed to prevail.
My advice to people, and I have given it recently, in writing-I write it in my newspaper column-is that if they are visited by a bureaucrat who wants to know anything they should first insist on their rights. Before answering any questions they should make sure those questions are written questions. Demand your own professional assistance or have a witness with you. Request that you be allowed to take the questions home while you think about them, or get some advice about them, whether it is from UIC, National Revenue or some other department. Do not be hurried, pressured or intimidated into saying anything that does not reflect your case precisely and accurately.
What I say to people is: demand your own rights; do not be pushed around; do not be intimidated by any form of officialdom, no matter how heavy-handed it might be. If we can get people to learn to stand up for their own rights, they will feel better about themselves too. They will think a lot more of government and its agencies. It will teach government agencies to be less careless about the rights and feelings of individuals, for which the department was constructed to deal.
I am pleased that this topic has come forward. It has allowed me as a Member of Parliament to raise in a particular way some of my concerns that go back a decade. I am sure if they occurred then, they are continuing to occur, but until this point in time I have not had an opportunity to speak on them.
The hon. member for Chicoutimi said there was something like 91,000 reassessments last year. All I know is that when the hobby farmers were being investigated, I could not get the numbers being investigated. I was told that they were doing a number in British Columbia and a number in southern Ontario, but when I asked how many were being investigated in Quebec-because I am certain that many people live on small holdings and work in the woods part of the year, then there are those who work in town if they live on a small farm in New Brunswick-I was told that I could not have that information. I put the question on the Order Paper and I was told the information was not available. Therefore, if the hon. member for Chicoutimi was able to ferret out this information-he has it at least in total, perhaps not geographically-it would be very helpful, especially if a member feels that his constituents are being discriminated against while other people's constituents are allowed to go free in these spot checks.
That is about all I have to say. I congratulate the hon. member for Chicoutimi for bringing this matter forward. I hope that we will be able to discuss it further. If the resolution does not pass, I hope at least that the subject matter will be referred to the appropriate committee.

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Mr. Claude Tessier (Parliamentary Secretary to Minister of National Revenue):: Mr. Speaker, first of all, I want to thank my hon. friend for Chicoutimi (Mr. Dionne) for his motion. Though he overdid it somewhat and went too far in his remarks, I can reassure him and tell him that they did include useful indications that should be checked if Canadians taxpayers are to be protected as much as possible. Still, I shall have to challenge them because there are two sides to the coin.
My colleague for Chicoutimi chose to dwell on the dark side of the issue. For my part, I shall now attempt to throw light on the matter, and show him that the exception is not the rule, even with Revenue Canada. I therefore take note of the representations of the hon. member and we shall make positive use of them. Still, I will not accept that a few isolated cases be taken as the rule of conduct in the Department of National Revenue. The role of civil servants does not in any way prevent hon. members from acting as ombudsmen when the need arises. However, the act is not negotiable nor does it lend itself to unwarranted representations especially when they are without basis.


The Acting Speaker (Mr. Ethier):: Order, please. The hon. member for Chicoutimi (Mr. Dionne) on a point of order.


Marcel Dionne: Mr. Speaker, may I ask my hon. colleague if he would allow me a question at this time?


Claude Tessier: Yes, Mr. Speaker, I am quite willing to accept his question.


Marcel Dionne: Mr. Speaker, I should like my hon. colleague to specify whether or not we are dealing with a few isolated cases when Revenue Canada decides to carry out a survey of all the loggers in a given area and decides unilaterally that the use of the panel truck to get to the bush gives them an entitlement of only 25 per cent to 30 per cent instead of 50 per cent to 75 per cent? Does my hon. colleague suggest that there are only a few isolated cases, involved when we are dealing with Canada at large? In the forest industry, and I could mention many other industries, there is going to be an inquiry.


Claude Tessier: After I have concluded my remarks, Mr. Speaker, I will reply to my hon. colleague. I suggest that it should be seen from the right perspective, failing which we would run the risk of setting a general rule on the basis of exceptions.
Mr. Speaker, as all hon. members are surely aware, the word "tax" is one which makes a great many shudder, but the reality of it is a necessity which affects nearly all Canadians. We must deal with it, therefore, in a co-operative spirit. The summary on auditing, I came across these last words: "One demonstrates co-operative spirit when one does with a smile what one must do anyway." I think that my hon. colleague possesses already this co-operative spirit, because he has made
remarks which contain elements of truth but which must be reconciled with the national revenue system.
Although by far the vast majority of Canadians are law-abiding citizens who are anxious to co-operate, a self-contributing tax system can exist only if there exists also a close scrutiny of income tax returns. The main purpose of taxauditing is to control the effectiveness of the self-contributing tax system. As such, it plays an important role in the realization of departmental objectives which are to collect taxes as prescribed by the act by encouraging compliance, and to ensure that Canadians have confidence in the integrity of the fiscal system.
Even in our most recent budget, we indicated that it was of paramount importance for our people to be convinced that we have an equitable tax system. And I suggest that through all the policies of the Department of National Revenue, we are doing our utmost to carry out this mandate. In the various taxation centres, tax returns are checked at the first stage of the process. District offices have set up programs to determine whether all applications for deductions are valid, to make sure that all revenues have been declared, and to identify the taxpayers who have not submitted an income tax return.
Let us consider now the Income Tax Act and the base system. The Canadian Income Tax system is a self-assessed tax system. Under this system, all corporations and persons, estates or taxable trusts must submit every year an income tax return on prescribed forms and determine the amounts which are payable for that year. After the initial processing and correction of obvious mistakes in filling out returns, and after the necessary cross-checking with returns from other people and information received from other sources, the return is selected for auditing and complete reviewing. Mr. Speaker, the examination is carried out under Section 231 of the Income Tax Act which compels all taxpayers to keep records and books necessary to determine the amount of income tax payable. Section 231 of the Act authorizes the Department to carry out this examination for any purposes related to the administration or enforcement of the act. In this regard, the act also authorizes the Department to seek and receive from any person information, records and accounts within such reasonable time as may be prescribed in the act. While the prospect of being subject to a tax audit is a strong motivation to voluntary compliance with the law, because, among other reasons, of the penalties applied in cases of obvious negligence or voluntary non-compliance, it still remains that the personal contact brought about by an audit is an ideal means of bringing home to the taxpayers the fact that each one of them only bears his legitimate part of the tax burden. It also helps, Mr. Speaker, to humanize a necessary tax-assessment system.
The type of audit made by taxation officers depends on the complexity of tax returns. There are two types: the office audit and the field audit. The office auditor usually works in the
March 26, 1982

district office where he is responsible for clarifying certain details about incomes, expenses and transactions reported by taxpayers. The auditor usually solves any problem through letters, telephone calls and personal interviews, while the field audit involves a detailed examination of the taxpayer's records. It usually occurs at his place of business and may take anywhere from a few days to several weeks to complete. Field auditors are professional accountants who are assigned the task of examining the complex records of large companies as well as the records of smaller companies made up of professional workers, such as farmers. These fields audits can take various other forms, including audits of a single industry and auditing teams. Audits of a whole industry involve the coordination of the audits carried out in a number of companies within one industry. The auditing teams include various specialists so that the records of large companies can be examined as thoroughly as possible. For instance, a data processing expert, a senior auditor and an economist on loan from another department may use their joint knowledge to audit a multinational which makes purchases outside Canada. This enables the department to make a more complete and more comprehensive audit. Since most large companies have computerized records, most major district offices now include computer science specialists.
The department also hires in its district offices corporate stock evaluators and real property assessors who determine the value of private company shares and of real estate. This evaluation is essential to determine capital gains. When the department makes an assessment and collects taxes, it ensures first of all that every taxpayer is treated fairly and impartially. That is why audits are reviewed in district offices. The main office co-ordinates and controls this review to guarantee that the tax legislation is applied consistently throughout the country. I have talked about the Income Tax Act and the system. I shall now deal, Mr. Speaker, with the audit philosophy and policy. I am well aware that this subject matter has an esoteric aspect, which means that it is incomprehensible to the layman. I would therefore like to explain the basic philosophy of the Department of National Revenue to the House.
Out of the 14.7 million taxpayers who filed income tax returns in 1979, a little under 10.5 million were employees and over 2.5 million were businessmen, salesmen on commission, farmers, self-employed fishermen, professionals or people who have an investment income. In addition, 550,000 companies file income tax returns. Most taxpayers receive wages or a salary from which taxes are deducted at the source. It is therefore relatively easy to check most tax returns with the information provided on salaries by the employers. We can therefore conclude that employees cause relatively few problems as far as complying with the law is concerned. Generally speaking, their taxes are collected through payroll deductions
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and their incomes are readily verified by reference to information supplied by their employers. The obligation to keep books and records hardly applies to this group, and with the exception of certain cases where, for instance, expenses may be deducted from wages or salaries, audits are usually unnecessary. The department's audit program focuses mainly on the two and a half million self-employed workers and 550,000 corporations. The audit program is essentially based on seven broad guidelines used in preparing the program and in determining objectives for measuring compliance and estimating non-compliance. According to the guidelines, first of all, perfect compliance with the law is not and will never be attainable. Second, the most effective and least costly form of compliance is voluntary compliance. Third, tax recovery encourages voluntary compliance with the law. Fourth, recovery of taxes is theoretically feasible by doing a complete audit every four years. Here I should explain that in some cases the size and complexity of the taxpayer's business may, for reasons of practicality and maintaining good relations with such taxpayers, require more frequent audits covering periods of less than four years. Fifth, audit quality should be such that audit costs are in direct proportion to the resulting tax recovery. Sixth, each group of taxpayers should receive a minimum amount of auditing. Finally, establishing of categories of taxpayers for auditing purposes should be done in a rational and impartial manner.
The taxpayer has the assurance that the law will be enforced equally in all cases because of a spontaneous observance of the principle that taxpayers who pay what they owe should not be obliged to pay for the tax evasion perpetrated by others. In all fairness, the department has a responsibility to detect dishonest dealings and to take action against them. All groups of taxpayers must understand that the audit program is based on fair and impartial criteria. To do its job, our staff must be very ingenious and do a great deal of investigating.
Also, Mr. Speaker, the audit program is changed every year based on the resources allocated each district office. For reasons of optimum use of such limited resources, much care is taken in identifying groups of taxpayers or bodies that have to be looked at in priority and the choice of audit procedures which could lead to an improvement in tax compliance. Often a survey is made to assess the degree of compliance of a group of taxpayers that are not considered a category for programs purposes. Homogeneous groups are targeted, with the aim of eliminating practices that are gross violations of our tax acts. Homegeneity here is that of the tax base selected for audit purposes. For instance, some projects have dealt with matters as different as enumeration of surpluses, shareholder pension schemes, management fees, non-resident operations and the reuse of waste. If results of a project point to a special compliance problem, the scope of the project is widened to apply as need be throughout Canada. However, what exactly is an audit and what are the costs incurred? Quite often rumours spread concerning those being audited. This is akin to a visit to the

March 26, 1982
Income Tax
dentist. Although we know we are dealing with professionals there is anxiety in having a tooth pulled out, with all the accompanying pain. This is what happens in the actual case. The audit program is essentially based on the approximate number of returns filled by each group of taxpayers and the number of returns that can be audited by the available staff. Variations in the scope of an audit are influenced by the degree of non-compliance or the tax gap among various groups of taxpayers, as established as a result of former audit programs.
By auditing a random sample of returns in a particular group, and examining the tax collections from that sample, it is possible to project within certain parameters the probable tax collections for the whole group. This is one way of determining the monetary size and the scope of non-compliance that is often termed tax gap. Through periodical monitoring of the tax gap in a particular group of taxpayers based on audit procedures for that group, it is possible to assess the impact of an audit on tax compliance. There is an increase or a decrease in audit procedures depending on whether the tax gap has increased or decreased within this group. Additional data collected through these sample audits are processed by computer in order to find out trends that could be useful to the future retrieval of files for audit purposes.
As audits are done in 28 district offices, the department wishes to ensure that the act is interpreted and administered in
a consistent manner. That is the main purpose of the audit review system which includes district offices and the Head Office. Every district office has a review unit which is responsible for achieving this goal within the district boundaries, whereas the operational audit division of the head office is responsible for ensuring consistency throughout the country. Since the main purpose of a tax audit is to control and maintain the self-assessment system, let me elaborate on it a little. As I mentioned at the outset, there are two kinds of audit, the office audit and the field audit, the latter being the main tool available to the department to administer the act. A field audit can take anywhere from a few days to several weeks depending on the nature of the operations.


The Acting Speaker (Mr. Ethier):: Order, please. The hour provided for the consideration of private members' business has expired. It being five o'clock, the House stands adjourned until Monday at 2 p.m. pursuant to Standing Order 2(1).
At 5 p.m., the House adjourned, without question put, pursuant to Standing Order.

Monday, March 29, 1982