1983-02-21

[Stage Direction]
The House resumed from Tuesday, February 15, 1983, consideration of the motion of Mr. Lalonde that Bill C-139, to amend the Statute Law relating to Income Tax (No. 2), be read the second time and referred to a Committee of the Whole.
Mr. Jim Hawkes (Calgary West):: Mr. Speaker, I rise this morning to speak at second reading stage on Bill C-139. The first thought that occurs to me is that 1 am participating in what fundamentally is an anti-democratic exercise. We have a Bill here that is 295 pages long and we have just heard the Clerk of the House indicate that the motion would move this Bill to a Committee of the Whole.
Inside this Bill are an enormous number of tax changes which attack our society, which create unemployment and which are not good for this nation. If we were moving this Bill into a standing committee we could call witnesses to provide us with testimony on the possible impact of each of the provisions of the Bill. By moving it into a Committee of the Whole, I am quite certain that the Government will ultimately invoke closure. We will not even be able to debate, with the kind of sureness that is required, each of the individual clauses and each of the individual tax measures. We certainly will not be able to call witnesses to tell the Canadian people and Members of this House what the possible repercussions are of each of these individual tax changes.
It reminds me of the omnibus energy Bill. That was such an abomination of democratic principles that we were forced as an Opposition to ring the bells in this Chamber for two weeks before the Government agreed to split the Bill into different parts and to move it to committee where witnesses could be heard.
Mr. Speaker, we are elected to come to this Chamber, hopefully with a sense that collective wisdom will prevail. We are not all experts on all aspects of Canada and the Canadian economy. Very few of us can feel comfortable with the diverse range of topics that go from national defence to atomic energy to farming to manufacturing, and on and on and on.
Some time today we will be asked to vote on this piece of legislation which is 295 pages long. It includes complex tax provisions which will affect all aspects of Canadian society. We have the certain knowledge that it will move into Committee of the Whole where we can talk about it more and question the Minister. However, experts and average Canadians will be denied the right to appear before a parliamentary committee as witnesses to provide information to Parliamentarians on what might be good in the legislation, what might be bad and what needs changing.
When the Government adopts processes of this kind regarding legislation that is so important, it is no small wonder that the country is in trouble. If you have bad processes, you have bad conclusions. If you have good processes, there is no guarantee of good conclusions, but the odds go up that the conclusions will be better.
As I stand in this Chamber and try to review the 295 pages of this Bill, I ask myself what principles are contained in this legislation. The first one that leaps out as I read through it is that this Bill will attack employers. Employers are the job creators. Many of the provisions will make it more difficult for companies to stay alive and employ people. In the present climate with over 1.5 million Canadians unemployed, why bring in a piece of legislation which attacks the employers, the job creators?
A principle of this Tax Bill will disallow future legitimate business costs. Businesses which want to grow and expand must borrow money. The interest cost on that money is a legitimate business cost, but this legislation says that some parts of it will not be legitimate. A trucking business that wants to expand must buy more trucks and a construction business would buy more construction machinery. According to this Bill, the cost of that machinery will no longer be a legitimate business cost in the same way. When you say to the employers of this nation that their interest costs, equipment costs, are not legitimate business costs, you are telling them not to grow, expand or hire more people. If you get an unemployment rate of over 12 per cent, with more than 1,600,000 Canadian unemployed, you should not be surprised. It is because the Government is attacking the employment creators through legislation such as this.
This Bill also attacks employees. It says they shall not benefit from their work the way they used to do. It is a discouragement for people to seek a job, a discouragement for them to put their heart and soul into their work. First it attacks employers and then employees. I repeat, Mr. Speaker, you should not be surprised to find 1,600,000 Canadians

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unemployed. This Bill attacks all Canadians. The minute you put a six and five cap on deductions in the income tax system, you increase the tax take. You take $1 billion this year and $2 billion next year out of the pockets of Canadians and hand it over to Government. Therefore, Canadians cannot make purchases which would create jobs. A farmer cannot stay in business if no one buys his produce. No one can stay in a manufacturing business unless we have people willing to buy what the manufacturer makes. This Bill will be taking a great deal of money out of the pockets of the consumers of this nation, the buyers of this nation, and if the consequence of that is not increased unemployment, then tell me what it is. I suggest it is increased unemployment. If people are not buying, there will be no jobs.
[DOT] ("15)
One other aspect of this Bill and other legislation is that it is a specific attack on Canadian families. It is a specific attack on the principle of marriage. In a most clear-cut provision previously in our tax system we have declared that any adult Canadian is entitled to own one piece of property and to dispose of that piece of property without paying tax. But this Government, the Liberals on the other side, have decided that if a person signs a marriage licence they have half of the rights of all other adult Canadians. They have a shared right, a half right, simply because they signed a marriage licence.
As for the Child Tax Credit provisions, we cut Family Allowances in this Chamber the other day much to the objection of the Conservative Party. We replaced it with a one time only $50 bribe. It does not go on forever, it occurs only once. That extra $50, Mr. Speaker, is given to someone who makes $10,000 a year, and it is also given to someone who makes $40,000 a year. That is not just, Mr. Speaker. It is not right. We have nothing in this provision to strengthen the traditional family in this country and we are doing much to hurt it, even destroy it.
On the weekend I held a public meeting and many people attended. Many of those people were disturbed about specific provisions in this tax Bill. They were disturbed about the general thrust of policy over the last three years. I feel, Mr. Speaker, that what has been destroyed by this Government is the spirit of Canadians, the sense of confidence which Canadians have had in their country.
One day in this Chamber one of the Hon. Members opposite stood up and told Canadians what it was to be a Liberal. At the public meeting I held on the weekend a Liberal was described as someone who put Party first and Canada second. A Conservative was described as someone who put Canada first, family second and Party third. It is time we got back to that kind of philosophy.


Hon. David Crombie (Rosedale):: because no one could understand what the investment policy or the state of the economic climate has been for the last 15 months.
Tax changes should be just and fair. The main theme which has been evident throughout all of the speeches which have been made in the Elouse, and indeed in editorials and statements from ordinary Canadians who were commenting on these budgets, clearly is that this legislation is not just and fair. Tax changes should be just and fair and perceived to be so. The theme which has been prevalent throughout speeches from all sides of the House has been that the tax changes hurt low and middle income people more than any others.
Second, there has been a shift in tax policy toward those who are self-reliant. This shift discourages people who are selfreliant and it discourages initiative.
Third, a tax regime has been created which has particularly left small and medium-sized businesses on their backs and gasping. This legislation is not just and fair. These are not tax changes which help low and medium-income Canadians. These are not tax changes which allow people who are self-reliant and have initiative to maintain that incentive. This is not a change in taxation which will allow us to support small and medium-sized businesses. Indeed, the reason the budget of 1981, the budget of June, 1982 and the budget of October, 1982 have been condemned time and again is simply because they have not only been confusing and unclear, but unjust and unfair.
The third principle which has been used for centuries to effect tax changes in a parliamentary system is that they must be seen to be linked to more general policies of Government, particularly as they relate to the economic environment. Tax changes do not exist in isolation; they are related to what a Government's economic program is. They are related to what a Government sees for the future economic growth of the country.
If you look through every page of the Bill, Mr. Speaker, including the explanatory notes, you will find nothing there about industrial strategy; you will not find much about improvement of productivity; you will not find much about the investment climate; you will not find much about human resources development; you will not find anything whatsoever about business confidence; you will not find anything about research and development; and you will find nothing about resource development.
There is nothing in these tax changes that in any way speaks to the Canadian people about the Government's economic program. These are tax changes related simply and only to the private imaginings of the people who work in the Finance Department and are unrelated to what happens in the streets, in the towns, in the villages and in the neighbourhoods of the country.
The reason that the Government is being challenged by this Opposition, and indeed is being challenged in all parts of the
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country, is that these tax changes are not clear and understandable to the people. They create difficulties for investment. They are not tax changes which are fair and just and they are not tax policies which are linked to some kind of economic recovery, economic renewal and economic growth in the country.
That is why we not only oppose these changes vigorously but, I can assure the Government, 25 million Canadians oppose them as well.


Mr. Fred King (Okanagan-Similkameen):: Mr. Speaker, ten minutes is not sufficient time to discuss Bill C-139 in detail, so that will not be my purpose. Much less is it enough time to consider the damage caused to the Canadian economy by the policies and actions of the two most recent "Ministers for Gillespie", but we shall try.
In Madrid today the Conference on Security and Cooperation in Europe, stretching its session into the third year, has as one of its aims to negotiate what they call confidencebuilding measures to reduce tensions between participating nations. What Canada needs today is a Government which is devoted to incorporating confidence-building measures into its philosophies, its politics, its actions, its motives and, most specifically, into its fiscal responsibilities. There is very little to generate confidence in the Government's management of national affairs.
This focus of blame on the Government of Canada cannot be dismissed as simply the rhetoric of Opposition Members. In its January, 1983 "Pre-Budget Statement to the Minister of Finance", the Canadian Chamber of Commerce observed, as set out on page 2 of that brief:
-uniquely Canadian factors which, in our view, have served to make the recession here in Canada more severe than it is in the United States or many of the countries in Europe.
On page 3 the brief goes on to say:
We believe that the most important "made-in-Canada" elements of our recession are the twin losses of consumer and business confidence.
On page 4 the brief reads:
-unprecedented weakness in business confidence . . . has resulted in extreme weakness in investment spending . . . while economic conditions were the most important factors causing the drop in business confidence, it is also clear that government policies have been a major contributing factor ... nearly 50 per cent of Canada's senior executives cited "government policies" as representing major impediments to increased investment.
In relation to taxing, the brief states on page 5;
-governments have been too optimistic in their assessment of the level of taxation that can be supported by the resource industries. As a result, overtaxation has undermined the ability of these industries to undertake the investment needed-
Confidence results from trust, trust that comes from a feeling that all will be dealt with fairly by the Government which has been entrusted with writing the rules under which we all live, individually and corporately.
The brief of the Canadian Chamber of Commerce indicated the unease which pervades society stating that:

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-business confidence in the Government's commitment to private enterprise as the main engine of economic growth in Canada is extremely low.
Also, as the Hon. Member for Rosedale (Mr. Crombie) just stated, tax legislation must be understood and understandable to allow confidence to be in place.
Let us consider the confusion about the automobile standby charge which began within the Department of Finance. It lacked the proper information for employers until December, 1982. It has left a substantial and unreasonable tax burden on many employees for whom there could be no withholding of tax because there was no information. The request of the Commercial Travellers' Association of Canada for delay in implementation until 1983 is not unreasonable. But the bases of the standby charge are inequitable. The initial cost of vehicles and the cost of their operation reflects the purpose for which employers buy or lease vehicles. It is not right that employees should be charged a share of exaggerated costs which do not reflect upon their use of the vehicles.
Farmers today are banding together in the Canadian Farm Survival Association. They find the Government acting to put impediments in the way of their very intent to survive. In October, changes to the Farm Credit Corporation prescribed a penalty for the farmer who might wish to pay off a loan to take benefit of lower interest rates which now prevail. One Okanagan farmer advised me that he would save $400 per month by refinancing at today's interest rate.
June Menzies, speaking to the National Farm Products Marketing Council in Vancouver, said the following:
It is important for everyone to remember that the foundation stone of the whole food system is the primary producer-in this country, the independent, commercial, family farmer who owns the farm and lives on it.
Also she added:
Urban-dominated policy decision, if ill-informed or misinformed, could lead to his destruction.
She further observed that sensitivity was part of Government leadership. What evidence do we have of sensitivity on the part of this Government to what is happening in the agricultural community today? Can it be found in the evidence that there was a Canadian farm bankruptcy increase of 55 per cent to 405 in 1982? Fortunately only five of those bankruptcies occurred in British Columbia where the Government of that Province takes a more enlightened view of its responsibilities to agriculture and to society.
The changes being made to the Unemployment Insurance Act will involve farmers in compulsory deductions and premium payments for employees working as little as 15 hours in any week. This change is resented by farmers generally. The tree fruit industry in British Columbia is particularly concerned because there are so many extremely short-term workers involved in producing and harvesting crops. Surviving farmers selling their family farms to provide for retirement will find that they are adversely prejudiced by the new rules for property reserves and may very well be forced to pay taxes on money not yet received.
On a personal note, my father, who is 93 years of age, left last week for a holiday in Hawaii. He would have been grossly penalized by the actions of this Government. The implications for the longevity, good health and happiness of my father are difficult to assess.


An Hon. Member:: Perhaps it was the apples.


Frederick John King: Yes, it could have been the apples, but what can be said is that his retirement comfort for the past nearly 30 years has been enhanced because he sold his orchard after 45 years of struggled farming, and when he sold it, he was not subject to the penalties to thrift and planning which the Government now places upon Canadians.
In a letter addressed to myself dated June 16, 1982 the then Minister of Finance explained some of the tax changes and indicated that:
The resulting revenue gain has been used to lower tax rates generally to the benefit of all Canadians.
Where is this benefit to all Canadians? Is it in the $27.2 billion deficit, the legacy of debt we leave for our children, the legacy of debt which the Government has run up through waste, patronage and carelessness? Is the benefit to all Canadians found in the competition on the part of Government for capital investment dollars that would better be put to productive use in Canada? Is the benefit to all Canadians to be found in the pressures of inflation and higher than necessary interest rates caused by year after year extravagances? Or is it to be found in the removal of incentives to work and achieve, which the Minister describes as benefits to Canadians?
Every action of this Government seems intent upon exacting some penalty on Canadians. The average citizen works, struggles and creates as he makes his way in the world, paying his bills, raising his family, pursuing the goals of home ownership and comfort in retirement. Especially evident is the way the Government puts blocks in the way of such individual achievement of legitimate goals.


Mr. Ian Deans (Hamilton Mountain):: Mr. Speaker, listening to the debate which has taken place on this piece of legislation over the course of a number of days reinforces in my mind the problems which Canadians have in understanding the tax structure.
I listened to a number of Members express concern about the complexity of the system. Many of them admitted, I think quite justifiably, that even they were having difficulty understanding it, although it be true that many of them were involved in the actual drafting of the legislation or, if not in the actual drafting, certainly in the passing of the legislation which existed prior to these amendments being brought forward.
I want to take a moment to talk about four points which strike me as important in this debate. The first one which is important to understand is that the present tax system is inherently unfair. The tax system places far too heavy a burden on those with limited means, those who are struggling daily simply to meet financial commitments to themselves and their families. They are being asked to carry a far larger share
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of the total tax burden than they reasonably can afford. I will return to this point in a moment.
The second point is the one 1 made a moment ago concerning the complexity of the Canadian tax system. 1 know of nowhere else where tax forms are so complex or where rules are so badly written as to make it virtually impossible for average Canadians, educated in the school system of the country, to understand what is expected of them when they fill out their tax forms. It has reached the point where, for the vast majority of Canadian families, tax time is not only a horror story, inasmuch as they might end up paying more than they can afford, but the very prospect of going through countless pages in an effort to find what it is they must pay and to what they are entitled by way of deduction is so onerous and frightening that a new business has been created in the country-the filling out of tax forms.
1 might say that I am sure other Members do as I do, and as I have done for a number of years, and that is provide through the constituency office a service, particularly to senior citizens. On occasion I provide this service to other than senior citizens. I assist people in filling out their tax forms. I confess that over the years it has become a complex matter. People arrive in my office with their tax forms in hand complete with their T-4s, T-3s, T-6s and other receipts. I have great difficulty in personally analyzing and coming up with something I feel confident will adequately reflect their tax situation.
My father, who is now retired, devotes a great deal of time to helping people. He has been an executive member of a credit union for years, and as such was involved in financial matters on a daily basis, and even since he has retired he is involved daily in financial matters. He takes the forms not only of those who cannot afford professional help but those who are unable to fill out their own forms, and he does it for them. He said to me just yesterday that the one thing that puzzles him is what that amount really means which is on the new tax form. It is supposed to reflect last year's income. He said: "I have not found anyone yet who can provide information, with the benefit of last year's forms, which would relate to that number appearing on this year's form. No wonder people are confused and do not understand."	[DOT]
My father has taken a number of courses in order to keep up with the changes. If someone has a mind and a bent for that kind of work and still has difficulty understanding the form, then you can well understand, Mr. Speaker, the terrible problems that confront other citizens who are working eight or ten hours every day struggling to pay their bills. At the end of the year they have a form handed to them in which they have not been schooled and about which they have received no real information but they are expected to absorb the contents and fill in the forms.
You cannot talk about a tax bill without considering the whole priority of Government spending. The reason for the tax changes is that the Government's spending priorities have been
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wrong over a substantially long period of time. You cannot help wondering as you look at the way this Government goes about establishing its priorities who gives the Government advice-


Mr. Thacker:: Who keeps the Liberals in power?


Ian Deans: -who it is that suggests to the Government that it is appropriate to take from those who have little to give to those who have more than they reasonably need.


Blaine Allen Thacker: Who puts the Liberals in Government?


Ian Deans: Yet this Government continually does that, egged on as you know, Mr. Speaker, by the Conservatives who are constantly preaching that people at the higher income levels need more, and to hell with those at the lower levels.
Then, of course, there is the need to look at the whole question of the Government's fiscal policy and the role of the Government in supporting the Bank of Canada's idiocy of the last two years. This support, I might say, as you are well aware, sir, was given not only by the Government of Canada but also by Conservative spokesmen. They supported a policy which time after time after time, as the Bank of Canada operated supposedly in the best interests of this country, has driven people out of their homes as a result of the insane high interest rate policy. Yet the representative of the Conservative Party on financial matters rose and said he believed that the Bank of Canada, and by implication the Government, was pursuing the right policy. You cannot look at the tax structure without considering that, too.
The four criteria for an analysis of the tax papers before us-the unfairness of the system, the complexity of it, the Government's spending priorities and the Government fiscal policy impact-add up to a terrible burden on the citizens of this country. This is a Government that has taken advice from all the wrong sources. It has followed policies that inflicted terrible hardship and it has followed policies that will inevitably, by virtue of what we have before us, add to the tax burden of the majority of Canadians. This action will make it no easier for Canadians to maintain themselves in the years to come than in the years just past.
Think about the questions 1 could ask, Mr. Speaker. How do you encourage a construction worker to work away from home on a project which may in the long run prove to be beneficial to the country if you are going to add a tax to his board so that he will be paying tax as if it were somehow or other income?
I see you are rising, Mr. Speaker. Let me add one final comment. How can you encourage small business development if interest rates, as a result of this Government's policy, will only drive those small business people out of business?
This Bill must get to Committee now. This Bill has to be analyzed more carefully because it will cause more harm than good.


Mr. Bill Vankoughnet (Hastings-Frontenac-Lennox and Addington):: Mr. Speaker, I appreciate this opportunity to

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speak on Bill C-139, an Act to amend the statute law relating to the Income Tax Act.
I believe it is in the interest of the Canadian business community for the Government to eliminate the high amount of uncertainty that presently exists with regard to tax changes. The federal Government's budget of November, 1981 was not an equitable document. While the June, 1982 budget did eliminate some of the more onerous aspects of that disastrous budget, this past October budget-and I refer to the Minister of Finance's (Mr. Lalonde) Economic Statement as a budget-has still not completed the task that is so essential in relieving the stress of this recession. The Minister of Finance has produced a document that still does not eliminate those provisions introduced by his predecessor that have contributed to such high unemployment and so many bankruptcies in this country.
Interested groups and individuals from my federal constituency of Hastings-Frontenac-Lennox and Addington have contacted me about particular aspects of the continual changes that have occurred in our income tax laws which serve to penalize the working man. It has been brought to my attention that, with the changed definition of "temporary employment", construction workers who incur legitimate expenses travelling from their permanent place of residence to the construction site where they are employed are now going to have to pay tax on this allowance.
All construction workers understand that their employment is temporary, based on the duration of the particular construction job. Construction workers are prepared to travel to their work wherever it occurs. The decision to tax the allowance for room, board and travel because the construction job has lasted more than two years is unrealistic. Workers in my riding are fortunate to be able to find employment at Ontario projects, such as at Bruce Peninsula and at Pickering. It is unrealistic for many of these workers to move to these sites due to the costs involved, allowable deductions for moving expenses notwithstanding, and the fact that the work is temporary and the individual can be laid off at any time. This is one example brought to my attention which illustrates the point that the Government's stated objective of implementing equity in the tax system in actual fact penalizes the working man.
I find that I am constantly reminded of the Liberal budget motion of 1979 which was moved by the former President of the Treasury Board and seconded by the former Minister of Finance. It stated:
-condemns the Government for its budget which will place an unfair and unnecessary burden of higher gasoline prices, higher fuel oil prices, and higher taxes on middle and lower income Canadians-
-condemns the Government for its outright betrayal of its election promises to lower interest rates, to cut taxes, and to stimulate the growth of the Canadian economy.
It is obvious that this Liberal Government's economic programs of the 1980s, as contained in the November, 1981 budget, which Parliament still finds itself addressing today, totally lacks reality, penalizes working Canadians, discourages investment, and has created an economic recession. There is no
doubt in the minds of the majority of Canadians that fiscal responsibility does not exist in the federal Government. In the November, 1981 budget, Canadians were told the deficit would be $10 billion. Then, in June of 1982, they were told that it would be $19 billion; the October, 1982 budget stated $23 billion, and now Canadians are being told $28 billion. Will the next announcement be $35 billion or $40 billion?
Now the Minister of Finance is asking Parliament for the authority to borrow a further $19 billion without giving any projection of need or any complete financial statements to back up this request. This is no way to run a country. If the average Canadian attempted, in any small way, to run his or her personal finances or small business the way in which the federal Government runs this country, he or she would certainly be bankrupt. The federal Government has been morally bankrupt for years. It cannot declare financial bankruptcy because it has nowhere to file.
The federal Government's high interest rate policy has forced a vicious cycle on Canadians. It has driven Canadians out of work. A record 1,598,000 Canadians were officially out of work in January of 1983. The Government's unemployment policy cost Canadian taxpayers approximately $8.5 billion in Unemployment Insurance benefits in 1982. For this cost, the federal Government informed Parliament that it must borrow $19 billion. This expensive borrowing supports the Government's high interest rate policy which will drive more Canadians out of work and force more Canadians through the high interest rate and high unemployment cycle once again.
The Minister of Finance insists that his October Economic Statement is not a budget. Glancing through Bill C-139, it is no wonder that small businessmen in Canada are experiencing great difficulty. This thick volume, comprising 295 pages of numerous provisions and the constant changes to the Income Tax Act, requires an army of accountants to decipher. It is painfully obvious to all Canadians, except those Liberal Members on the Government benches, that a simplification of Canada's tax laws is urgently required.
If the federal Government is serious in its desire to create a constructive program by which to help alleviate the unemployment in this country which leads to the kind of poverty the Prime Minister (Mr. Trudeau) feels Canadians are all the richer for, it will seriously undertake a program to uncomplicate the Income Tax Act. It has been recognized by many very competent income tax accountants that the Income Tax Act is much too complicated. Imagine how the struggling fisherman, farmer or small businessman feels when confronted by these same tax laws. Their simplification is long overdue.
It is clear that the huge federal deficit now facing the country is preventing a recovery of this country's fortunes in a time of economic recession. I do not believe that Canadians would be so troubled by changes to the income tax system if there were some indication that the money was being wisely spent. That is not the case. The numerous corporate bail-outs, the billions of dollars spent as well as the billions of dollars wasted, provide no indication that the Canadian taxpayer is
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receiving value for his taxes. The $34 million which was spent on the Maislin company is a glaring example of how the Liberal Party rewards its Liberal friends. The Pitfield Senate appointment and the $800 a day to be paid to Donald Macdonald are also examples of the kind of pork-barreling Canadians cannot afford today.
Bill C-139 does not address these problems. It is specifically the failure on the part of the Minister of Finance to provide effective leadership on the broad economy which prevents him from dealing with the individual problems concerning each and every Canadian.
Recent legislation of the federal Government which reduced pensions paid to Public Service and old age pensioners and limited Family Allowance increases demonstrates the federal Government's so-called restraint program which penalizes the very old and the very young but rewards its friends. Here we have a Government promising a just and equitable tax system but adopting a proposal which clearly discriminates against low and middle income Canadians. It was not competent management which led Canada to being twenty-fourth out of twenty-four OECD countries in economic performance.


Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, today we are dealing with the Income Tax Act, and many other Hon. Members have referred to it. I would say that the Government has much for which to be thankful. We have what it takes. When I look at this volume containing 295 pages, when I see what is happening to the economy and when I realize that there are 1.5 million people unemployed, I wonder why at this particular time we are dealing with a Bill which would, in effect, take money away from the economy and hinder employment in the private sector. For that matter, the Government will not even have enough, because of its deficit, to go into the public sector.
The question of capital gains is very important to many people in the sense that the capital gains tax itself has penalized those who, over the years, have been acquiring some assets. Without the benefit of any pension schemes, in effect, their only assets and only pension scheme amount to the farms or businesses they own.
At one time we argued against the inclusion of this particular tax because it is necessary to acquire capital in a country like ours. Why should it be that we must go to the United States or other foreign countries to borrow money when, in fact, that wealth could be accumulated here? We would not have to take money out by way of dividends later on. For that matter, we would not pay back as much interest, which is particularly important at a time when our dollar is so devalued. Therefore, if we cannot eliminate this tax and if the Government has to have money, the least it can do is to index the value of the property that it is taxing. If the personal indexing of individual income is a fair principle, then it also should apply to property.
Even if that cannot be done, the least that could be done is to provide an over-all exemption of an amount of $100,000. What happens in many cases where the businessman or farmer
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retires is that he simply sells off one asset and perhaps moves into a community and buys a home. Under the several examples that were provided here last Tuesday by the Hon. Members for Kindersley-Lloydminster (Mr. McKnight) and Assiniboia (Mr. Gustafson), out of a $60,000 sale he would end up with $15,000. That does not even begin to buy a home, so how can one retire on that? Why is it necessary constantly to change the regulations is such a way that people cannot even plan for their retirement?
Not only does it apply to businessmen or farmers, it also applies to people who have been employed and who have termination benefits. It is not possible to plan anything because one year the regulations say one thing and the next year there is another budget which changes the regulations. The third year the screws are tightened again, and before it is finished every possible exemption will be eliminated to the point that retirement benefits are going to be taxed. The only group that will benefit is perhaps the taxman, or the axeman, if you like. People who have over the years been relying on that retirement benefit are now being penalized. What kind of a society is this? Is it intended to confuse people, or what is the purpose of that type of a society?
I want to move on to another particular section. I am not a lawyer, but I heard the Hon. Member for Moose Jaw (Mr. Neil) the other day complaining about the Bill's complexity, and he is a lawyer. When I think of the forward averaging Section, Section 155.(1) provides:
"155. (1) subject to section 156.1, every individual whose chief source of
income is farming or fishing, other than an individual to whom subsection
153(2) applies, shall pay to the Receiver General"
106. (1) Subparagraph 157( 1 )(a)(i) of the said Act is repealed and the following substituted therefor:
"(i) on or before the last day of each of the first 12 months in that period, an amount equal to 1/12 of the amount estimated by it to be the tax payable under this Part by it for the year computed without reference to sections 123.3 to 123.5."
I do not know what that means but it seems to me that what is being asked here is that the farmer or fisherman prepay every month. If that is the implication of that Section, then I suggest that what is happening here is that more bureaucracy is being added and that adds more burden to a farmer or fisherman who is not surrounded by accountants and there is something on the face of his income tax form this year that says that he is going to have to prepay a portion of his tax. Whether he has an income or not, whether he has been hailed out or frozen out or did not catch any fish or whatever the problems are, he is going to have to pay money to the Revenue Department, so they can use his money, and he will pay an interest rate of 22 per cent, if that is what the rate is, only to have the income tax Department tell him a year later that maybe there is a refund to him.
What kind of an arrangement is this? Who is it that needs the money more? Is it the businessman or the farmer? We are

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asking the banks now to allow farmers to refinance because they are in difficulty, yet the Revenue Department is telling us: "No, sir, you cannot do that; you have to give it to us first whether you owe it or not". It used to be that one could average out over five years, and at least you knew what your expenses were over the year.
When I look at some of the decisions made by the Department, it tells one taxpayer that his machinery is too old and requires too much repair, that it cannot allow any claim. In other words, it is telling him how to run his business. It is telling him that he has to go and buy himself a new machine. The Department says that this machine is for personal use. A one-ton truck with a grain box is supposed to be for personal use? Can you imagine anyone lumbering around the city or town with a one-ton truck with a grain box, bang, bang, bang, for personal use? What other use is there?
At the same time the Department tells him that he has not enough land. There are many feedlots on a few acres. There are many chicken operations and many hog operations on a few acres, but it tells him that he has not enough land there for his cattle. It also tells him that he has to buy feed. Of course he has to buy feed; many farmers have to buy feed. In fact, the Government was subsidizing the transportation of feed because there was a drought, but the Revenue Department cannot see it that way. Immediately it makes that kind of a decision, the onus is on the individual to go and argue with the Department. The individual has to hire an accountant, run around and see lawyers, write to his Member of Parliament. He has to go through the whole rigmarole, all the stress and strain, and for what? Because somebody made a decision. Add to that the complexity of different people from different Departments giving different interpretations, and one has to choose which one is the proper ruling.
Because many farmers, for example, have had outside employment, because they needed the additional revenue, they are not allowed the same type of tax deduction on their farms. How in the world is financing arranged? The banks will not give it to you and the Revenue Department penalizes you.
I have just one other point. On an envelope dated January 12, the Department notified an individual that he was assessed a certain amount and on the back there was a remittance form stating that he had to make his payment by January 15. Tell me how that letter could be delivered and the money returned in three days' time.


Mr. Bill Clarke (Vancouver Quadra):: Mr. Speaker, I am glad to contribute a few comments on Bill C-139. I think it is significant that this Bill incorporates the last three budgets of this Government and the dozens of changes that have been made by the different Ministers of Finance in the last couple of years.
I think it is also significant to note that there will be several dozen more technical changes which the Minister says he will be giving to the House after we complete second reading of this Bill. 1 do not know whether they would have helped us get
through second reading sooner but it will certainly be interesting to hear those changes proposed.
1 want to restrict my remarks this morning to one particular aspect of the Bill, and that is the complexity of the whole income tax situation that we have now. I was amused by the example my colleague for Mackenzie (Mr. Korchinski), just gave of one horrendous and very complex clause in this particular Bill.
I am a chartered accountant and before I came here ten years ago I did a lot of tax work. In fact, I was the chief financial officer for a small group of companies and individuals and I was able to practise tax work as a chartered accountant. Now I cannot understand the law adequately to be able to give the advice that I used to give.
We have a Bill here, C-139, consisting of nearly 300 pages, and for a long time Liberal Ministers have been telling us that the aim in tax legislation was simplicity and equity. You do not achieve simplicity and equity by a 300-page amendment to the existing body of income tax law. Not only have we not achieved equity and simplicity, but we have come into the worst morass of tax law. It gets worse every time changes are made. We need a new reform which will give us both simplicity and equity.
We do not have equity or simplicity now. I will give an example or two. The present body of law and these changes will not make the tax law any more equitable for single parents, mothers or fathers, who must pay about $4,000 child care for each child in a normal daycare centre. The present tax law allows only $1,000 tax deduction before arriving at taxable income. A person in business is allowed to deduct expenditures; I think the wording in the Act is "laid out to earn income". There can be no argument that the amounts paid out for child care are laid out to earn income. If there was no child care, there would be no possibility of the parent earning a salary.
The parallel in the business world is that a taxpayer in business who hires a clerk to carry out certain functions and who can deduct the total wage cost in arriving at income under the tax law. For years we have been after the Government to increase that $1,000, but we still do not have equity for working single parents.
I have said that we do not have simplicity. That can be clearly seen in the fact that the tax preparation business in Canada is flourishing. I do not know how many hundreds of thousands, and it is probably millions of Canadian taxpayers, have thrown up their hands and said that they cannot cope with the body of information available to prepare their tax forms, so they go to the tax preparers.
I remember rising on another matter dealing with equity and simplicity some years ago. The then Minister of National Revenue was the Hon. Ron Basford. He stated at that time that the Government was unable to give refunds in advance of the return being filed and, therefore, in advance of the end of the taxation year and the returns coming out. Therefore, it
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would probably be April of the following year before a Canadian could get his money back.
That may not have been so important at that time, but we now have in Canada 1,500,000 unemployed. When Canadians get a job, their tax is deducted at source on the basis that they will be working for a full year. If they do, that is fine. Come the end of the year, they will probably owe all that has been deducted and maybe a little more. However, we now have a situation where a man works for a few months and then becomes unemployed. He needs those tax dollars back. The probability is that he will not owe any money at the end of the year. The Government has that man's money. He may have to go on welfare if he does not get the money back.
This has led to another whole new industry in Canada, tax discounting. The government has criticized the practice. It does not like it. With modern technology, computers and so on, wage statements could be made. The Government accepts a wage statement on the Unemployment Insurance form if a person is laid off. Why could the tax Department not accept a statement from the employer that so much has been deducted, and if the individual can show that at the end of the year he will not have any tax payable, the Government should be in the position of refunding his money? Many things could be done by this Government to achieve a degree of simplicity and equity in the tax laws. We certainly do not have that now.
Many groups have made submissions to the Government on this subject, including the Canadian Institute of Chartered Accountants, the Canadian Bar Association, the Canadian Construction Association, the Canadian Manufacturers' Association and the Canadian Chamber of Commerce. All of these groups represent millions of Canadians in one way or another. Most of them are in the small business sector. They cannot afford the technical and professional advice that is needed in order to cope with the tax laws.
I was particularly struck by a paragraph in the brief submitted by the Canadian Chamber of Commerce entitled: "Complexity of the Income Tax Act". It should be on the record and I propose to read it. I quote:
Income tax legislation, especially as it relates to Canadian-controlled private corporations, is becoming so complex that it is all but incomprehensible to the businessmen who are paying the taxes. In 1971 a new tax system was introduced which provided integration for Canadian-controlled private corporations; that is, the ultimate after tax return realized by the shareholder of such a corporation was almost exactly the same whether he earned business income directly as an individual, or earned it through a corporation. In 1977 a "mini reform" was introduced which included, among other things, an enriched dividend tax credit, one of the results of which was that shareholders of Canadian-controlled private corporations which had income eligible for the small business deduction received a larger after-tax yield on income received through a corporation than on income earned directly. Much of the present complexity stems from that decision, since successive budgets have been adjusting the system in an attempt to reduce this advantage. This patchwork series of adjustments finally resulted in the introduction, in the 1981 budget, of the corporate distributions tax (which we will deal with in more detail below).
I will skip a bit and then read the final paragraph dealing with complexity. I quote:
In considering whether the system has become too complex we believe a distinction should be made between acceptable and unacceptable complexity. If a businessman decides to reorganize his corporate structure, he would expect to be
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involved in complex provisions. However, we believe he is entitled to earn income, pay tax on the income and declare dividends under an understandable set of rules.
We on this side have often urged the Government to come up with a set of rules which the average taxpayer, whether he be a small-businessman, wage earner or-


Mrs. Mitchell:: He or she.


William Hillary (Bill) Clarke: The Hon. Member for Vancouver East (Mrs. Mitchell) is thrashing me for ignoring the women. I wish to put in the usual disclaimer. Any words which I use which denote the male gender are also to be taken to include the female gender.


Margaret Anne Mitchell: Mr. Speaker, I am not pleased to rise to speak to Bill C-139. I am very concerned about the impact of this Bill, particularly on low-income Canadians. As has already been stated, Bill C-139 is a complex, regressive, omnibus tax Bill. It is completely unacceptable to the New Democratic Party both from a social and economic point of view.
As the previous speaker pointed out, this 300-page Bill is very difficult to understand, even for him, and he is a tax expert. I am sure he will agree that the principles are easy to understand. This Bill follows the typical Liberal-Tory tax philosophy, which is punitive toward low-income earners and rewards the rich. As the social policy critic, 1 want to comment on the social implications of this unjust Bill.
On February 10 our leader referred to the injustices of Bill C-139 when in this House he implored the Prime Minister (Mr. Trudeau) to do something for over 3.5 million Canadians who live in poverty in this country. He pointed out that this Bill puts a disproportionate tax increase on the poor in comparison to the rich. For example, a family of three earning less than $18,000 lives in poverty, according to the latest poverty facts published by the Canadian Council on Social Development. Bill C-139 will increase taxes for this kind of a low-income family by 23 per cent. However, if we compare this with the percentage tax increase on higher income families, for instance a family of three with earnings over $ 100,000, the tax increase is only 10.5 per cent. Less than half, Mr. Speaker. Twenty-three per cent tax increases for the poor and 10.5 per cent tax increases for the rich.
There is no doubt at all of the principles and philosophy on which this tax Bill and, indeed, the whole tax system of Canada is based. The Hon. Member for Hamilton Mountain (Mr. Deans) said earlier this morning that the tax system of Canada is unfair. It places far too heavy a burden on those with limited resources and means. We know that the Liberal tax system which, in philosophy anyway, is supported by the other Party, is based on a hidden welfare system which robs needy Canadians of essential social security programs and provides substantial benefits through tax policy to upper and middle income families. Canadian expenditures for corporate
23024

February 21, 1983
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welfare continue to grow despite dismal results in job production and other promised socio-economic benefits. Canada forgoes vast sums in revenues which are needed for essential programs for the common good through a regressive and highly inequitable tax structure.
Bill C-139, of course, reflects this Liberal tax policy. It focuses on corporate welfare benefits while penalizing those of limited means and at the expense of funds which are needed to maintain vital social programs during a time of high unemployment and severe economic stress.
One of the specific measures of this Bill is to authorize payment of an extra $50 per year, for this year only, on the Child Tax Credit. And it is important to point out to the Canadian public, Mr. Speaker, that this is for one year only. It is a bonus of $50. This credit supposedly was to compensate for the rollback of indexation of Family Allowances to 6 per cent this year and 5 per cent next year. Of course, it does not take too much expertise to figure out that the rollback reduces, in effect, the base rate of Family Allowance payments which will continue thereafter.
The Child Tax Credit is really, in effect, a smokescreen in order to pacify people for one year, but it does not remain as a benefit for low-income Canadians. We strongly opposed this approach when we debated Bill C-132, which imposed indexing restraints on Family Allowances. This Bill obviously reflected the Liberal Government's inclination and subtle intent to undermine universal Family Allowances, a program which applies to all Canadian families with dependent children. We, of course, feel that in any universal program there is a need for more effective tax-back provisions to be applied to higher income families, if it is also to be just.
I want to put on record, Mr. Speaker, that this Party does not object to poor families receiving an extra $50 this year. In fact, the Child Tax Credit should be far higher, particularly since poverty and unemployment have increased so drastically. If Family Allowances and tax credits were increased, it would not only be a more just social policy, but it would also help the economy. Most Family Allowance cheques are spent immediately on consumer goods, for food and clothing, and Child Tax Credits are used by low-income families, and also slightly higher income families, largely for family items. This, therefore, creates jobs and helps small businesses.
The Child Tax Credit gift of $50 is sheer deception, however, Mr. Speaker. It is really hypocrisy. It is for one year only, and the reduction in the indexing of family benefits will continue to reduce the base amount of money which families will receive in the future. This is just not the position of our Party. And it was documented very clearly by the Canadian Council of Social Development when they appeared before the Committee on Health, Welfare and Social Affairs.
Recently I met with representatives of the National AntiPoverty Organization and we discussed their concerns about the Child Tax Credit. I would like to just refer to their news release in which they stated that approximately 2.5 million mothers receive the Child Tax Credit. The vast majority of these mothers cannot wait until the end of the year to receive their full Child Tax Credit. However, the National Anti-
Poverty Organization which surveyed a sample of low-income women found that these women wanted to have the Child Tax Credit retained as an annual benefit because they needed a lump sum amount. It is very difficult to save from a monthly cheque for certain larger payments which they have to make.
One of the great problems with relation to Child Tax Credit is the deplorable usury going on in Canada where low-income people are being exploited because of their need for an advance on the Child Tax Credit. I believe it is important to bring this problem to the attention of the House and the Government so that something can be done about it. We are told by the national anti-poverty group of their very serious concern regarding low-income families who are losing part of their Child Tax Credit benefit to tax rebate discounters. Loan companies are legally allowed to charge 15 per cent of the value of the rebate for filling out an individual's tax form and providing a tax advance. Of course, families who need this money are going to these "rip-off artists", as my colleague says, and are losing 15 per cent of the actual tax credit. We feel it is essential that the Government place some restriction on this kind of practice and we would ask it to consider such restriction. The executive Director of NAPO stated that a sizeable portion of the Child Tax Credit will not be getting to the families for whom it was intended this year-that includes the $50 increase provided by this Bill-if something is not done about this matter.
I would also like to say, Mr. Speaker, that we have called for a review of all the family benefit components of the income tax system with a view to reforming the system in order to provide the greatest benefits to those families with the lowest incomes. We feel that there should be a declining scale of benefits for families with higher incomes. In particular, we call for an analysis of spousal exemption, the child exemption, the child care deduction, the refundable Child Tax Credit, and the Family Allowance. We feel it is essential that these programs be reviewed and the tax policy be reformed so that benefits go to low income families and are reduced proportionately as the income of those families increases.


Mr. Gordon Towers (Red Deer):: Mr. Speaker, in looking at Bill C-139, we find that the Government is in a serious situation as a result of fiscal irresponsibility. It is a great misfortune, but it was the inevitable result of the direction in which the Government has been going over the past several years. Unfortunately, the Government has not adopted a policy of "cutting the cloth to fit the pattern". Therefore, we find that the Government's take from the economic community becomes greater and greater each year. This is a great misfortune because it is putting too much of a load on the ordinary business corporation in the business community and on the ordinary Canadian worker.
Canadians are awash in taxes. We have been provided some figures by the Fraser Institute. In those figures we find that in 1961 the average family with an income of $5,000 faced a tax bill of $1,675. By 1980, the average family was earning
February 21, 1983

$22,500 and, of that, $10,306 went to the tax man at three levels of Government. Since 1961, the tax bill to the average family has shot up by 515 per cent.
We have seen a perfect example this year of what a misguided Government is doing to our economic state because of its massive deficit borrowing. The Government first stated that the deficit would be $10.6 billion. It is now up to $27 billion and I believe there is a great possibility that it could end up at $30 billion at year end. Deficit financing, or borrowing, is, in effect, deferred taxation. Somewhere along the line someone- our children or grandchildren-will have to pick up the tab for what we are doing today. If we do not leave something tangible in return for that massive amount of borrowing, we are being very unfair and essentially stealing from future generations.
When one calculates this deficit borrowing into the whole picture, taxes have increased between 1961 and 1980 by 619 per cent. That is a tremendous increase which, of course, we cannot afford.
There does not seem to be any plan from the Government to bring us out of this economic mess that it led us into in the first place. While it has set up the Macdonald Commission, it will not make a report for another two or three years. There are economists, people in the business community, and I know there are Members in the Opposition, who could give the Government some advice about how it can get out of this current mess. I wish the Government would listen to some of the suggestions we are trying to make to it in order to assist not only the Government itself but the Canadian taxpayer generally, so that we may begin an economic recovery.
The tax index has escalated more rapidly than any other economic burden that a family faces. Canadian families now pay more in taxes than they do for food and shelter combined. I suggest that the editorial in the Toronto Globe and Mail dated March 31, 1982 perfectly depicts the situation that we are in. It says:
Most Canadians, unfortunately, won't see a copy of this Fraser Institute document-
These are the figures I used.
-and they will scarcely get much information on its message from their tax man or their political representatives. But, until they "wise up" to the fact that governments cannot spend the people's money better than the people themselves, we will continue on the long slide to total dependency on the state and its expensive bureaucracy.
Unless the Government adopts that as a basis for recovering from this mess, I do not see any other way to accomplish much for the ordinary Canadian taxpayer.
At the present time, we find that food prices are rising at approximately 7 per cent a year. This really does not make much sense to the agricultural producer in Canada when he or she, or both together, find their income depreciating by 15 per cent a year. That was the loss last year and that is what it will be this year. That does not make economic sense.
When one considers the number of bankruptcies that are occurring today both inside and outside the system, we will
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find ourselves in a very serious situation in the near future. Unless the Government develops a new policy, we will continue down this road to destruction.
John F. Kennedy used to say that "Victory has a thousand fathers and defeat is an orphan". This is also true for people starting a business. A person starting a business immediately has the Government as a partner-most of the time on their back-but once the business suffers reversals, he or she ends up as an orphan. There are certainly many orphans in Canada today. The rate of bankruptcies in Canada is staggering. In the past ten years, the total number of bankruptcies has increased four times in the business sector and more than ten times in the consumer or personal area. In 1982 there were more than 10,700 business bankruptcies and more than 30,600 consumer failures. To this total could be added those farmers and small business corporations which have simply closed the door. That is a tremendous amount.
In turn, this creates a real problem for the Department of National Revenue and the Government as a whole because those people are not paying taxes that they would normally pay. No doubt this is where the Government went wrong in its projection that the deficit this year would be a little over $10 billion and has ended up closer to $30 billion. The revenue was not there. Further, there will be large refunds out of that revenue to those who are asking for refunds on their income tax. No doubt as a result of Bill C-139 there will be a delay in those pay-outs until the next fiscal year. This will create further problems next year. This is why the Government is suggesting that the deficit in the next fiscal year will probably be $30 billion to $35 billion. We do not know whether the Government will be able to hold the deficit to that figure. I hope they are not as wrong next year as they were this year because the situation will be intolerable if they are. I do not think the Canadian taxpayer will be able to carry the burden when one considers the amount of debt we are acquiring.
That is why I indicated earlier that the Government must learn how to cut the pattern to fit the cloth. Until that happens we will just keep drifting. Of course, Canadian taxpayers will become more and more frustrated than they already are. They will not be able to carry the burden any longer.
I see you are prepared to rise, Mr. Speaker. Perhaps as this Bill progresses I will have the opportunity to make more comments on it.


Mr. Jack Murta (Lisgar):: Mr. Speaker, in the short time I have available I would like to make a number of comments relating to the amount of correspondence I have been receiving over the years from the farming industry in my riding that is particularly adversely affected by capital gains tax.
First, I would like to make some general comment on Bill C-139. Any tax changes that are brought about by the House of Commons should be clear and understandable, as well as just and fair. We have to use that as a broad, general guideline under which we must operate.

February 21, 1983
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Bill C-139 combines three budgets, Mr. Speaker, those of November, 1981, June, 1982 and October, 1982, and is probably the most complex Bill that this House has ever had to deal with. It is far from being clear and understandable. Our tax system is becoming more complex all the time.
What we are really doing through this measure is bringing about a guaranteed income for accountants and tax lawyers. If I were advising young people about an occupation they should consider, besides the sciences and computers, I would advise them to become involved with the Canadian tax system. By understanding portions of it at least, they would be guaranteed an income for as long as they wanted to stay in business. That certainly is not, or should not have been, the intention of Members of this House, but it seems to me it was the intent of the bureaucrats who drafted the legislation.
At the outset I mentioned that I wanted to talk about the capital gains tax as it pertains to agriculture. Over the years representatives of agriculture have pleaded with the Government to understand that agriculture is a different kind of industry and that, in the initial stages, the capital gains tax should not have applied to it. In my 12 years as a Member of Parliament representing an agricultural constituency, I have not received as much mail about anything as I have about the capital gains tax. The subject crops up when farm land changes hands through transfer or inheritance.
There are many items in the tax system that must be changed but the single most important item is the capital gains tax. It is wrong for agriculture because the capital that is taxed is tied to land and buildings, the value of which usually appreciates during the period of ownership. The capital gain that accrues over a period of time is generally regarded as the retirement fund or the old age pension for the farmer and his wife, but we are taxing it away and in some cases making it extremely difficult for farmers and their wives who have worked hard all their lives to look forward to a retirement on the same scale as the rest of society.
In my opinion, it is wrong to apply the capital gains tax to land and buildings and other farm assets. Farmers have asked for an upward adjustment of costs based on inflation. Valuation day, set for 1971, was the worst possible time for agriculture as low prices prevailed at that time. In southern Manitoba land was selling for less than $100 per acre. The price was depressed because there was a glut of grain which affected all of agriculture. At the present time most agricultural land in southern Manitoba sells for between $500 and $1,000 per acre. Valuation day does not take into consideration the inflation factor.
Farmers have also requested a once-in-a-lifetime exemption for bona fide farmers or their spouses who have been involved in farming for a long time. There is also the question of the rollover provision on transfer of farm property with deferral of tax on capital gains that should be extended to include several classes of people. First, a widow whose spouse was engaged in farming; second, a farmer who no longer can farm but is still
actively engaged in farming; third, a farmer who leaves his farm to his family farm corporation-and most farms are headed in this direction at the present time; and fourth, the farmer who cannot farm part of his land because of its location.
Ill-health, old age or distance may be an inhibiting factor in the transfer of a farm to a spouse or children and may prevent the farmer from being able to meet with the requirements of being "actively engaged in farming". Farmers without children are put into a special category which makes things difficult for them. They should be able to transfer the farm to another member of the family but obviously this cannot be done at the present time. Farming is tough enough, Mr. Speaker, and profits are hard enough to come by at the best of times without the Government making things much more difficult for the farmer, for his spouse and for his children.
When we deal with tax legislation in the next session of Parliament, I plead with Members of the House to consider some of the concerns that I have outlined. I do not ask that farmers receive any special treatment within the tax system but just what is considered by most people to be fair and equitable


Mr. Garnet M. Bloomfield (Parliamentary Secretary to Minister of National Revenue):: Mr. Speaker, I am sure you are aware that this is a very important Bill that we are dealing with and that every day passage is protracted is detrimental to many Canadian taxpayers. You will also be aware that the Government cannot process tax refunds until the Bill has become law. Early refunds tend to go to people who need them most, such as single mothers and others in dire financial need.
Time is of the essence on the Bill so we need to take advantage of the time available to us. Therefore, pursuant to Standing Order 8(4)(a), I move, seconded by the Hon. Member for Kent (Mr. Bossy):
That the House continue to sit between I p.m. and 2 p.m. this day for the purpose of considering Bill C-139.


Mr. Deputy Speaker:: The House has heard the terms of the motion. Is it the wish of the House to adopt the motion?


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


Mr. Deputy Speaker:: According to the provisions of Standing Order 8(4)(a), if 25 Members rise in their places to object, the motion is declared defeated. Shall the motion carry?
And less than 25 Members having risen:


Mr. Deputy Speaker:: There not being 25 Members rising in objection, the motion, according to the provisions of Standing Order 8(4)(a), is deemed to be carried.
Motion (Mr. Bloomfield) agreed to.


Mr. Joe Reid (St. Catharines):: Mr. Speaker, the riding of St. Catharines is an urban industrial riding. It ranges from big business, as represented by General Motors of Canada, its
February 21, 1983

largest employer, to a wide range of single family, small business operations. As one voice, they cry out that the Government should provide a fair and reasonable tax system, put it in place and end the fiscal uncertainty which has plagued Parliament for so long.
The Minister speaks of many consultations and says that the Bill is the product of those consultations, while in fact it has its foundations in the budget of November, 1981, one which will change the course of budgets from here on. There are four major versions of that budget: the one which was introduced in November 1981; the one as amended in December, 1981; the June 28, 1982 version; and the statement version of October 27, 1982. In addition thereto, there have been a great number of minor setbacks, announcements and variations which have completely confused the business world. Real consultation in advance might have saved much of that confusion.
Before the Government embarked upon such a punitive tax Bill as this one, it should have taken a realistic look at our business community and started to listen to some of its concerns. Canada's productivity performance is the worst in the western world; at least so says the chief economist of the Organization for Economic Co-operation and Development. Canada's cost of production is way out of line, comparatively speaking. Among other recommendations made at that time, it was recommended that taxes be shifted away from investment, that there should be a release of some of the pressure on profits, and an encouragement of new technology, renovations and equipment.
But what do we have here? It is nothing less than an attack on investment. It eliminates the incentive of investment. The limiting of the capital cost allowance, as was mentioned frequently before, to one half the normal rate in the year of purchase of the asset discourages the retooling needed to increase productivity. It adversely affects our shipbuilding industry, the automobile industry and papermakers, let alone its deterring effect on small business generally.
Our country does not particularly reflect a nation of good employer/employee relations. The November budget proposed to increase the taxation of employee benefits in several different areas, and now the taxation of employee benefits will result either in higher wages, when wages are already a deterring factor in our productivity, or add to the friction between employer and employee. Yes, the Government yielded on the taxation of health and dental proposals, but it still proposes to tax employer loans which businesses make to their employees so that they may purchase homes. And so it goes on with respect to other travel and accommodation costs.
To create better working relations and to give employees an interest in the business, loans were made to assist employees to purchase shares in their respective businesses, particularly the ones in which they are working. How many of those employees will now pay tax to purchase shares from their employers? If an employee has the use of a company-owned or leased automobile, he is taxed on a standby basis. That standby charge is to be doubled, imposing an unnecessary hardship on
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the employee and further aggravating an already troubled auto industry. All down the line we see that the economic problems facing us today point in one direction, while this budget goes in the opposite direction.
I mentioned earlier that this budget was the result of a patchwork job on the November, 1981 budget. The patching is bad enough and the uncertainty created has been simply disastrous, but just when we think the Government has settled on a final version, the Minister of Finance (Mr. Lalonde) stands in his place and tells us that it just is not so. Questioned in the House about the tattered discards of the November budget, the Minister rose to their defence and said that there was nothing wrong, that he believed in them and that only the timing was wrong. When, Canadians might ask, is the time right? Would it be tomorrow, next month or next year? Until that question is answered, the threat of the full November 12 budget will still be hanging over us; the confusion and the uncertainty will still exist.
Is there any wonder that there is frustration in the St. Catharines business community? No business can plan with this kind of tax uncertainty, and the Minister's remarks only fan that uncertainty. Nor does this Bill give a business or an individual much cause for optimism about the future. For businesses, this legislation means more paperwork, less private financing and higher taxes. For individuals, particularly in the lower to middle-income tax bracket, the result is higher taxes. Yet these same individuals are being urged to get out, spend their available dollars on consumer goods and help the economy get going again.
Quite the reverse is bound to happen. Disposable income which might have found its way into a new car, new furniture or appliances will be chipped away and the remainder regarded as a necessary buffer against future calamities or casualties. It is not that long ago that these same Canadians were struggling with 20 per cent mortgage rates. However, I must admit that what galls my constituents and me the most is the fact that this legislation has a negative impact upon employment. St. Catharines-Niagara is an area which has been plagued by high unemployment for many years. Jobs have disappeared at the rate of 1,750 per month over the last two years; 33,000 people in my community are actively looking for work. This legislation will further aggravate the situation because it will hurt the shipbuilding, automobile and construction industries, all three sectors which affect employment in our area.
I have gone on record on numerous occasions, Mr. Speaker, as being opposed to the November budget and the dog's breakfast which this Bill presents. I strongly urge Government Members to give careful consideration to the anti-investment aspects of this legislation and the detrimental effect they will have in their respective ridings.
I see you are rising, Mr. Speaker, but just let me say that if Government Members do not consider that, perhaps the dubious wisdom of raising taxes at a time of severe recession

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will surely affect their vote. I ask them to vote with the Opposition in the best interests of Canada and in the best interests of their own constituents.


Mr. G. M. Gurbin (Bruce-Grey):: Mr. Speaker, I am glad to add my remarks on Bill C-139. First, I would like to comment on the remarks made by the Parliamentary Secretary to the Minister of National Revenue (Mr. Bloomfield), who indicated that by debating Bill C-139 and trying to deal with some of the issues and principles involved, we as the Opposition were delaying the issuance of tax refunds to Canadians.


Some Hon. Members:: Oh, oh!


Mr. Cosgrove:: That is true.


Mr. McDermid:: What about the T-4s?


Gary Michael Gurbin: One of the reasons Canadians are having difficulty trusting this Government and politicians today is the kind of comment emanating from Parliamentary Secretaries and Ministers who sit opposite. They try to bluff their way through and create the illusion that they are being responsible by giving us a Bill consisting of 295 pages and containing a number of complex issues. The Government first presented this Bill last December, waiting over a year to introduce it. In the meantime, the Government brought in a number of other bills, including C-131, C-132 and C-133. These Bills reduced Family Allowances, pensions and other matters and will affect a large number of Canadians who are in difficulty because of the economic times which have been created by the Liberal Government. The Government did all of those things and yet tells us that we should not take a careful look at this complex piece of legislation, which probably most Members opposite do not understand if the truth were known.
Tax refunds probably will be delayed this year. The Government needed an excuse. It needs the capital and the money it will save by doing that. Also the computers will be down in the Department of National Revenue which will prevent the refunds from being issued on time. There were ample opportunities for the Government to bring in this Bill so that it could be adequately discussed. For the Government to claim now that we are holding up this legislation is a sham, and it should be ashamed.
1 have three points that I would like to outline. They have been made in a variety of ways by a number of Members. Dealing just with the complexity of this Bill, let me open the Bill at random. At the top left-hand side under Section 54, it reads:
"(5.4) Where there has been a disposition by a non-resident of a life insurance policy in Canada by virtue of subsection 148(2) or any of subparagraphs 148(9)(c)(i) to (ii) and (iv.l), the insurer under the policy shall, for the purposes of subsections (5.2) and (5.3) be deemed to be the taxpayer who acquired the property for an amount equal to the proceeds of disposition as determined under section 148."
1 would challenge one of the Parliamentary Secretaries or the Minister to stand up and interpret that paragraph for us very quickly. It contains four or five references which I pulled out at random. This paragraph identifies one of the major problems we have in Canada with our whole tax system by
showing how very complex it is. It creates great difficulties for the taxpayer.
Mr. Lyman J. Maclnnis, a senior partner of Touche, Ross and Company in Toronto and President of the Chartered Accountants Institute in Ontario, delivered a speech a little while ago in which he made three basic points about the tax system in Canada. He indicated that the tax system in Canada should be self-assessing. In other words, the individual taxpayer is required to respond to this system on his own behalf. The majority of Canadians are required to interpret legislation like this and then establish their tax position. They are required to deal with the Department of National Revenue, which employs a large number of specialists who devote their full time to dealing with tax policy. Mr. Maclnnis also said there should be an ability for self-assessment by having tax measures in clear and unmistakable language. Let me again refer Canadians to the random opening of Bill C-139 that I have just made. Is that an indication of clear, unmistakable language?
The courts have identified this problem. They, too, have said that tax legislation should be in clear, understandable language. There is hardly any argument, whether from an accountant, a lawyer or a Member of Parliament, that this is a basic problem of our tax system. Mr. Maclnnis gives us a number of examples going back to the first tax Bills right up to the most recent. He gives us the impression that the accountants, those dealing with this matter, are not able to respond satisfactorily to the needs of their clients and individual Canadians. The language in our Income Tax Act has created confusion. It is difficult for any of us to deal with it. Unless the language is cleared up and we start to deal with this problem adquately, it will go on resulting in more and more specialized people dealing with measures that are more and more confusing to the average Canadian. We will have a dichotomy, a separation, of interests and understanding. In fact, we are left as a country in confusion over the whole tax system.
I have two other points. One is on behalf of the Canadian people. I will quickly run through proposals that will affect individual Canadians through their personal income tax changes. One is the replacement of the IAAC deduction with the forward averaging measure. Then there are the changes referring to the taxation of employee benefits; the limitation on deduction for investment interest costs; a reduction of federal dividend tax credit to 34 per cent of cash dividends; the repeal of the capital gains revenue deductions; the requirement of professionals to inventory work in progress; the prevention of excess transfer of claims for $1,000 investment and pension income deductions; the restriction of $1,000 pension deduction to retired persons; the restriction of personal exemption for non-resident dependants; and deindexation to 6 per cent in 1983 and 5 per cent in 1984. These are all things that affect individual Canadians through their personal income tax. It gives us a situation whereby Canadians will face higher income taxes as a result of these provisions.
I see that my time is drawing to a close, Mr. Speaker. I could list things that affect business, making it very difficult

February 21, 1983

for business to operate. Included are the capital cost allowance changes and so on. These are leading to a situation where individual Canadians will be less able to look after themselves, where business is less able to function, to grow and create the economic activity which is important to our country. We end up with a government that is increasing activity daily, increasing its spending, its deficits, its borrowing. We have more and more emphasis on Government activity and less and less ability for individuals and business in Canada to carry on with theirs. We are forcing Canadians-this is the crime of which Bills like this are part-to depend upon a state that cannot look after them.
That is the legacy of the Liberal Party. That is the result of years and years of mismanagement. It started off with John Turner and Donald Macdonald, and it is continuing under this regime.


Mr. Rod Murphy (Churchill):: Mr. Speaker, in speaking on Bill C-139, it is interesting to point out that the Government has used its right to extend the sitting hours so that we are sitting through the lunch hour to discuss this very important piece of legislation. The Government is once again proving that it will use the mechanisms of the House to try and rush through important legislation.
This bill represents the economic and moral bankruptcy of the Government. As well, it represents its bankruptcy of leadership. We have before us a 300-page piece of legislation which would bring in a number of amendments to the Income Tax Act. Our taxation system is already tremendously complicated. An article written by Robert J. Jackson, the head of the political science department at Carleton University, for yesterday's Toronto Star states in part:
Income tax forms have grown so complicated over the years that great numbers of confused Canadians seek professional help to fill them out. Yet difficulties at the individual level are but pale reflections of the confusion and insecurity that is generated throughout the system by flaws in the taxation process.
Yet that process will be further complicated if the legislation is passed at this time. Another layer of amendments is being added to the Income Tax Act, another layer of confusion which will make it hard for the ordinary Canadian to understand what taxation is all about. The Government should be introducing comprehensive legislation, rewriting the whole Income Tax Act, making income tax something that ordinary Canadians can understand again, doing away with the litany of tax deductions which help those at the top, and doing away with the confusion which it has created when it has introduced as it is now doing, piecemeal changes to the taxation system.
I said earlier that the Government suffers from a lack of leadership. It is evident in every piece of legislation that comes before the House. It is evident in the very acts and speeches of cabinet Ministers of the Liberal Government. They have lost the ability and the will to lead the country. Only the problems of the Conservative Party keep the Liberal Government in power at this time.
Canadians are facing record unemployment. Canadians are suffering because of lack of leadership by the Government.
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Canadians want the Government to provide leadership. Canadians want jobs for themselves and for their children. They want the Government to introduce legislation which will help them in each and every part of the land. This Bill does not do that.
The Bill, we are told, must be passed because to delay it would affect the amount of time required by the Government to process 1982 income tax forms and refunds. However, let me remind Your Honour that many of the articles in the 300 pages of the Bill are from a budget which was introduced in the House in November of 1981. The Government did not act at that time. Other parts within the Bill come from the June 28 budget of 1982. Again, the Government did not act to introduce legislation in the House. Other parts of the Bill come from the October, 1982 budget of the present Minister of Finance (Mr. Lalonde). Again the Government did not introduce legislation in the House.
The Government had 13 months in which to introduce this legislation but it failed to act. Now we are speaking during the lunch hour as a result of an attempt by the Liberal Government to rush this legislation through, to pass it before Canadians who will be affected have a chance to respond to their Members of Parliament and to the Liberal Government. That is part of the moral bankruptcy of the Government, part of its mechanisms which stifle debate and prevent Canadians from understanding the taxation system in this land. It is part of the mechanisms used by the Liberal Government to prevent Canadians from participating in the democracy of this land, because they are not able to understand what is going on in the House of Commons and are not aware of what is in the legislation being discussed.
This does not apply to all Canadians. Those Canadians who are represented by powerful lobbies, by interest groups which meet with the Prime Minister (Mr. Trudeau) and the Cabinet, do have the ability to change legislation. They have the financial resources to ensure that their loopholes are enhanced. They have the ability to ensure that Government introduces legislation which, as this legislation does, removes the percentage of tax to be paid by those who earn the most. Significant deductions will be allowed to those who earn the most. The tax percentage of those people who earn over some $130,000 a year will be dropped from 43 per cent to 34 per cent, a tremendous reduction for those who could best sacrifice.
The Prime Minister has appeared on TV and radio to discuss the necessity of sacrifice and of Canadians co-operating together, yet the Bill states that those who have the most, who earn the most, who are best able to sacrifice, will pay less to the Government of Canada. What kind of justice or taxation system is that? What kind of Government would introduce taxation legislation enabling the rich to become richer at a time when we have unparalleled unemployment across the country? We must oppose the legislation because it is unfair and because it is complicated. Our taxation system should not be so complicated that Canadians cannot fill out their own

February 21, 1983
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taxation forms. However, we oppose it mostly because it represents the bankruptcy of the Government, the fact that the Government is now moving from legislation to legislation, from speech to speech, from PR effort to PR effort, without any concrete plans which would help the average Canadian.
This approach by the Government, by the PR team headed by the Liberal Senator Keith Davey, whose sole job, financed by the taxpayers of Canada, is to keep the Liberal Government going, represents the moral decay of the Government. It represents the Government's loss of concern over the fate of the average Canadian. It represents the fact that the Government has only one purpose, and that is to retain power. Canadians deserve better than that, and I hope all Hon. Members will oppose this legislation and force the Government to introduce comprehensive tax legislation and economic policies so that Canadians can once again trust the leadership of their Government.


Mr. Lome Greenaway (Cariboo-Chilcotin):: Mr. Speaker, most people today have been speaking about measures included in Bill C-139 and how they will affect Canadian taxpayers. However, I would like to talk about a measure that should have been included in any Bill amending the Income Tax Act but is not in Bill C-139.
When the previous Minister of Finance introduced his ill-fated budget of November, 1981, he promised reform of the Income Tax Act that would promote equity and fairness. Bill C-139 stems from that budget, yet it does very little to promote the goal of equity and fairness.
As a good example of this, I would like to discuss Section 31 of the Income Tax Act which deals with the deductibility of farm losses. Under the Income Tax Act, there are three classes of farmers. There are those whose major source of income is farming but who may earn some other income not related to farming; there are those whose chief source of income is not farming, or a combination of farming and some other source of income, but who still carry on farming with a reasonable expectation of a profit; and third, there is the taxpayer whose chief source of income is not farming but who carries on farming activity with no reasonable expectation of making a profit. This category is commonly referred to as the "hobby farmer."
My concern is with the second class of farmer and how Section 31 applies to this taxpayer. Under Section 31, the second class of taxpaying farmer, whose major source of income does not come from farming but who can reasonably be expected to make a profit from his farming, can only deduct farming losses of $5,000 a year. This $5,000 deduction has remained constant since it was introduced in 1952, over 30 years ago. Not once has it been increased to reflect general inflation or specific cost increases to agriculture. If this deduction had been indexed since 1952, I suggest it would today be worth $20,000, a four-fold increase. In other words, the deduction is only worth one-quarter of its 1952 value. This is obviously inequitable and unfair to this class of farmer.
It is fairly easy to speak of Section 31 in the impersonal terms of a Government tax accountant, but what we often fail to see is the terrible impact that such a measure can have on an individual or a family. In my riding, I have had a number of individuals who are trying to start up a farming operation come to see me because Section 31 of the Income Tax Act is effectively wiping them out.
I would like to discuss one particular case because I think it illustrates the problem very well, and it was brought to my attention just last summer The farmer in question was born and raised on his parents' ranch, and he inherited one-quarter of it in 1970 upon the death of his father. Being raised on the ranch and trained as a rancher, he knew the business and felt he could make a living and support a family. During the two years that the estate was being settled, my constituent worked hard with an exploration company and saved every cent he could to develop his share of the ranch. When it was finally his in 1972, he began fencing in the land to raise livestock. He acquired some cattle and purchased necessary farming equipment, paid for by taking out a bank loan and by working parttime off the farm.
In 1975, he applied to the Farm Credit Corporation for a loan to buy additional equipment, put up a barn, purchase a mobile home, instal power and do some necessary roadbuilding. He was turned down for a Farm Credit Corporation loan.
In spite of this setback, my constituent continued to work his land, and in addition he began to consolidate his property which had been in nine separate parcels. He also sold low, wet land where half of his hay crop had been flooded out and purchased upland hay land. However, in spite of his efforts my constituent had to begin full-time work off his farm in 1977 to get sufficient money to continue developing the farm. Basically, this was because the Farm Credit Corporation had been unwilling to give him the loan necessary to develop the land. From 1977 to 1981, my constituent worked at a sawmill located in a remote area of B.C. accessible only by aircraft and he put every penny he could into his farming operation. During this interval he could only farm approximately 84 days a year, weekends and holidays, because of his outside job. In June of 1981 he again applied to the Farm Credit Corporation for a loan, this time being successful, and he began to farm full-time once again.
Since 1978 he has cleared over 200 acres of hay land and more than doubled the amount of hay produced. He started to build a home on his land, but at this time he, his wife and their three young children live in the basement of this partially completed dwelling, without the benefit of running water. His land is good and he is finally on the brink of reaping the benefits of the 10 years of hard labour that I have just described.
However, last spring Revenue Canada struck, in the form of tax auditors. Because of Section 31 of the Income Tax Act, my constituent can claim only $5,000 a year in farming losses for the 1977 to 1981 period, even though he plowed all the money
February 21, 1983

he earned into his farm during that period. His actual losses during this time ranged annually from $7,500 to almost $17,000 and totalled over $48,000. Under Section 31, however, he could deduct only $20,000 in total, leaving him with losses disallowed for this period of over $28,000. The back taxes and penalties now assessed are impossible for him to pay unless he sells land, which at this time is very difficult.
Now, if the $5,000 limit established in 1952 had been indexed, this rancher would have been well within his allowable deductions and would perhaps be facing a profitable future. Instead he faces potential bankruptcy at the hands of his Government. And what will be gained? A family on Unemployment Insurance, if not welfare, defaulted loans, and the lost production of a new farm. Where is the equity and fairness in this?
My constituent, his accountant and myself have tried to reason with Revenue Canada, to no avail. The Act appears to be written in stone. When I wrote to the Minister of Agriculture (Mr. Whelan) about this case, I received a one-page, three-paragraph reply. The Minister said in his last paragraph, and I quote:
Yours is one of a number of representations I have received on this issue, and I thank you for bringing to my attention these examples of the impact of present tax law.
What a farce! The Minister made no effort to see that this inequitable piece of legislation was amended. He acknowledges the problem but refuses to take any action whatsoever. And so here we have Bill C-139, legislation which could have amended this injustice and put some incentive into the system but does not.
The Secretary/Manager of the B.C. Cattlemen's Association put the situation into perspective when he wrote to me recently on Section 31 of the Income Tax Act. He said, and I quote:
In my own opinion the problem stems from the lack of clear national policy regarding development of new agricultural production units (farm or ranch) and recognition of such policy through the Income Tax Act. If we as a society want to encourage development of new farms and ranches, we should say so and provide for it through taxation.
Truer words were never spoken. Bill C-139 fails miserably to address this very issue and the silence and inaction of the Minister of Agriculture simply underlines this lack of a clear national policy. But, Mr. Speaker, it is not simply the young farmer starting up a new operation who is being hurt by this counter-productive policy. Professionals who wish to invest in agricultural operations are being actively discouraged from doing so by Section 31.
As an example, the expansion of the Canadian equine industry has been severely curtailed by Section 31. People cannot be persuaded to invest in a horse-breeding operation when they can only deduct $5,000 a year against losses. When we now see outstanding horses selling for hundreds of thousands of dollars, the $5,000 deduction becomes even more ludicrous.
The Canadian Horse Council has recognized this and in a February, 1983 article in "Hoof Beats" the Council made the
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reform of Section 31 its first task. In that article they said, and I quote:
The agreed upon first task of the Horse Council will be to see if Section 31 of the Income Tax Act can be either eliminated or at the very least, have the limited loss liability amount raised from its present S5.000, the amount it was first set at when the section was enacted way back in 1951. From becoming an intended incentive to agriculture, it has become a disincentive.
This is plainly the case. The present structure of the Income Tax Act is antiquated. The Minister of Finance (Mr. Lalonde) and the Minister of Agriculture have been negligent in failing to introduce measures in Bill C-139 that would either repeal Section 31 or bring the $5,000 deduction to a more reasonable limit of $20,000 or more.


The Acting Speaker (Mr. Corbin):: Order. The Hon. Member's time has expired. He may continue with the unanimous consent of the House. Is it agreed?


Some Hon. Members:: Agreed.


Lorne Everett Greenaway: Thank you, Mr. Speaker. Their failure to do so has resulted in a great deal of hardship to those attempting to get started in agricultural ventures, thus posing a serious threat to Canadian agriculture. If the Government is truly serious in its oft-stated concern for this sector of the economy, then let it immediately introduce a simple tax reform.


Mr. Harvie Andre (Calgary Centre):: Mr. Speaker, I am rather surprised to be here at this time participating in this debate at second reading of this Bill. I thought this was the lunch hour. Apparently under the spirit of parliamentary reform, lunch hour will not be what it used to be. If that spirit carries on, I am afraid that reform will be an improper description of what will be occurring in the future. However, two can play the same game.
The Bill we are debating today is a classic example of the absolutely absurd budgetary system we have in this country. On November 12, 1981, well over a year ago, the then Minister of Finance brought in a budget. We have the absurd situation in this country where at the instant a Minister of Finance tables a notice of Ways and Means, basically a piece of paper which says "I hereby give notice of a Ways and Means Motion", that has the effect of law. From that point on the Government can start collecting the tax. He does not need to make a budget speech before doing that. At any time any Minister can table a piece of paper called a "notice of Ways and Means", and from that point on the tax can be collected. It is absolutely incredible.
That system was put in place at a time when there was some sort of adherence to practices and traditions. Following immediately upon the Ways and Means motion was a budget debate. That was followed immediately by Bills flowing from the budget. The time lapse between that period and it becoming law, having been passed by this House, the other place and approved by the Governor General, was very short. Through sloppiness, contempt of Parliament, incompetence and a

February 21, 1983
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variety of other reasons, we have the absurd situation where the rules governing parliamentary democracy have been so distorted that over a year after the budget was brought in we are debating the legislation.
We did not get to see the Bill until a year after the budget was presented. For over a year Canadians were forced to pay the tax. They were forced to adhere to the law. They did not know the law. They still do not know it. They have received T-1 forms which they are required to fill out. They are to send in the money they owe for taxes even though they do not know what the law is. Even though they do not know the law, they have received their T-l forms and are expected to comply. It is incredible.
The sorry situation is that we have become more tolerant of that incredible situation. It is an insult to Parliament and to those Canadians who elected us to carry on with this absurd situation. By comparison, let us look at the situation in the United States.
Prior to the end of January, the executive presents a budget to both Houses of Congress. That budget is then considered for eight months. It is amended and changed by their parliamentarians, the people elected to represent the population. The subsequent legislation is passed before the end of the fiscal year, October 31 of the year. In other words, there are eight months of consideration by their legislators. Frequently, in fact most of the time, there is significant amendment, depending on what the legislators want. The law is then passed and comes into effect. That is the way it should be.
In a democracy, the most important group is the electorate. The second most important group is those elected by the electorate. No one in Government has the right to introduce laws imposing conditions and forcing people to obey something not passed by the legislature. That is what democracy means in that country.
We have the absurd situation of Canadians being expected to comply with the law that Parliamentarians, those whom Canadians elected to represent them, do not even become aware of until nearly a year later. It is an absolutely absurd situation. One of the serious consequences of this is contempt by Canadians for Government, for Parliament and the law. When that contempt extends to the Income Tax Act, we are in serious difficulty.
Many of my colleagues and others have spoken of the excellent address given by the chairman of the Ontario Association of Chartered Accountants dealing with the complexity of the Act and the inability of the average person, and, indeed, those who have been trained such as chartered accountants and lawyers, to comprehend the Income Tax Act. He said it is an absurd situation when we have a self-assessing system. Individuals are expected to know the Act, to comply with it and to voluntarily send in their tax based on the self-assessment system. How can one self-assess, how can one do a proper job of fulfilling that responsibility, if one cannot understand the Act?
I am one of the better educated people in this country. I stayed in school until they would not have me any more. I am not suggesting that I am the brightest, among the brightest, or anything like that. However, after 20 years of publicly-supported education, 1 still cannot understand the Income Tax Act. I humbly suggest that either there is something wrong with the education system or, more likely, something wrong with the system that generates this kind of Income Tax Act.
More important in terms of the attitude of Canadians toward this Act is the increased evidence of tax avoidance. It is not only practised by a few sharp cookies, but practised far and wide. It is estimated that the underground economy, that is, the economy which escapes the taxman and recognition by the information takers in Government, is in the order of $50 billion. That is not the cash economy but the barter economy. The lawyer says to the carpenter that he will draw his will if the carpenter will do some work in his rumpus room. The dentist would say to the plumber, I will look after your children's teeth if you will put the plumbing into my cottage or farm. The house painter says, it will cost you $2,000 for me to paint your house unless you pay me in cash, in which case I will be able to do it for $1,200.
That, Mr. Speaker, is not hypothetical. It is not a rare situation. According to hard evidence gathered by research groups, that sort of thing constitutes something like $50 billion of our economy. It is an underground economy. People simply have so much contempt for this Income Tax Act that they are now using schemes which heretofore were not contemplated. A chartered accountant in Calgary who has been in business 30 years told me that clients are asking him to do things now in terms of avoiding tax which had he suggested to them ten years ago they would have fired him. Ten years ago there was a feeling that one did not avoid tax because that was unpatriotic. It was unfair. Maybe it was not illegal in the strict sense but a good Canadian did not avoid tax. Today people are saying to their accountants or lawyers: "Find me a way to avoid tax because I do not have any respect for a Government which would bring forward tax Acts like this, and I do not intend to pay one penny more than I am absolutely required to do".
That situation, Mr. Speaker, is extremely dangerous for Canada, is extremely dangerous for the future, and leads inevitably to what we are seeing-an increase in the number of tax collectors, an increase in the Gestapo of the National Revenue Department, to go out and force people, and it changes Canada significantly.


The Acting Speaker (Mr. Corbin):: Order, please.


Hon. John C. Crosbie (St. John's West):: Mr. Speaker, it is always a pleasure to follow my learned colleague to my left, the Hon. Member for Calgary Centre (Mr. Andre), because, as he says, he is one of the most educated men in this House; but at the same time that is not saying very much.
February 21, 1983

This is my first opportunity to speak on this piece of legislation, Bill C-139, and the people of Canada have to understand that this is the result of three Liberal budgets-or could we call it two and half Liberal budgets? The first one of November, 1981, was brought in by the Deputy Prime Minister (Mr. MacEachen), who was then Minister of Finance. Of course, he is no longer Minister of Finance. He was driven from that position by the Liberal caucus members, which caused him to be a fugitive now in the safe bosom of External Affairs. The Cruise missile is as nothing compared to the missiles which that former Minister of Finance got from his colleagues in the Liberal caucus as a result of his attempt to perform the functions of a Liberal Finance Minister.
He was the gentleman, Mr. Speaker, who said in Halifax on September 9, 1980-the former Minister of Finance, and I want to identify him as Mr. MacEachen, the now Deputy Prime Minister-"It was to create jobs, improve living standards and to promote greater equity that I took on the position of Minister of Finance". Of course, it is exactly for those reasons that the poor devil was driven from the post of Minister of Finance. He created to jobs. In fact, we have lost 582,000 jobs since the summer of 1980. He created no jobs. We have the highest unemployment in our history, 1,600,000. Living standards have done nothing but fall since he took the portfolio on in 1980.
He said he wanted to promote greater equity. It was in his budget of November, 1981 that he attempted to provide this equity. And, Mr. Speaker, this became the most elastic budget ever presented in the House of Commons. Its elasticity became 100 per cent. That poor Minister became a whirling dervish, retreating from this proposal of reform, so-called, retreating from that proposal. Within seven days he had twirled and whirled and we had about 18 reverses of the positions he had taken in that budget of November, 1981. And he whirled and twirled until I believe it was June, 1982, when he brought in another budget, and again he was forced to twirl because the budget which he brought in did not provide equity.
Finally, Mr. Speaker, he was given the coup de grace and removed from that position. We now have a new Minister of Finance the former Minister of Energy. A gentleman more widely known outside as Mr. Lalonde. He brought in another document in October of this year.
It is the process of those three budgets which is interesting. In the October document, the new Minister of Finance reserved again many of the provisions which were in the first two budgets of his predecessor. It was funny, Mr. Speaker, and I have remarked on this before, how the Hon. Members of the Liberal backbenches in this House sat there on the night of November 21, or whenever it was, of 1981, when the Minister of Finance of the day said he was going to bring more equity and reform into the system, and applauded all his attempts to reform the system. The same people sat here in October, 1982 applauding the successor to the then Minister of Finance as he reversed all those so-called attempts to reform and to create equity. What was equitable under the MacEachen budget was inequitable under the Lalonde budget. What was fair under
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the MacEachen budget was unfair under the Lalonde budget. What was reform under the MacEachen budget was "deform" under the Lalonde budget. And the same people sat there giving the same claps, cheers and smiles as they saw their two Ministers of Finance completely reverse themselves in the period of 15 months.
Well, the result of that abominable procedure is this Bill which is before the House. So that the public might understand, I believe it has 289 pages and it took the Government 389 days. A budget was brought in in November, 1981, yet this Bill was not tabled in this House until December 7, 1982. Some 389 days after the great budget of reform of Mr. MacEachen, we have the Bill finally produced in this House, and there were hundreds of changes in between.
The present Minister of Finance says we are to deal with this budget fairly quickly or else he will not bring in a new budget. I say, Mr. Speaker, thank God for that. The longer we can dwell on this Bill, the better chance we have to stopping the new Minister of Finance from bringing in his new budget; because if his new budget is anything like the budgets we have had since February 18, 1980, it is in the public interest to stop it from being brought into this House. I recommend to the Hon. Members of this House that we talk on this Bill from now until the end of 1983 to prevent another Liberal abomination of a budget coming before this House.
When I came into office in June, 1979, Mr. Speaker, I found left behind the debris from two Liberal budgets. I had to appear in this House and introduce legislation to try to salvage something out of two previous "Chretien" budgets. Oh, we have had Ministers of Finance, Mr. Speaker, from the Liberal Party; we have had Chretien, MacEachen, Lalonde-


The Acting Speaker (Mr. Corbin):: Order.


John Carnell Crosbie: Sorry, Mr. Speaker; we have to use the names of their ridings.


The Acting Speaker (Mr. Corbin):: Yes. Would the Hon. Member please refer to other Members of this House by their ridings or their portfolios.


John Carnell Crosbie: Well, I have to refer to the Donald Macdonald budget. He is no longer in the House. He is on to a good thing outside the House now. He is riding a fine Liberal stallion outside the House and being paid $850 a day, and you know what stallions are paid to do. That is what he is being paid to do to the economy of this country, at $850 a day.
We have another former Liberal Minister of Finance in the person of Mr. John Turner, the man who started it all back in 1972.


Some Hon. Members:: Oh, oh!


John Carnell Crosbie: I like to listen sometimes to the brains of the hon. gentlemen opposite, but this is a very solemn occasion where we are having this Bill forced through this House. I mentioned Mr. John Turner, not because he is the only hope left for the Liberal Party, as he skulks and sulks in his office

February 21, 1983
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on Bay Street in Toronto and he goes to that well-known restaurant, I cannot remember the name-


Mr. Turner:: Winston's.


John Carnell Crosbie: Winston's. We poor Opposition characters cannot afford to go there. But as John Turner sulks at Winston's waiting to be called upon to save the great Liberal Party of Canada-and, of course, nothing can save that Party today, but some people hope that he can or else the Hon. "Iona" will save it, or perhaps the two of them together, the Hon. "Iona-Turner". Put the two of them together and we will have a saviour for the Liberal Party. He was the man who introduced the suggestion which was made by the Leader of our Party, the Hon. Robert Stanfield, that it was only fair, right and equitable that the income tax system should be indexed. It was John Turner who stood in the House and introduced indexing, to make it fair so that people would not suffer unfairly as a result of inflation by automatically having to pay more taxes each year as their incomes went up due to inflation when their real income was not going up because of the increase in the cost of living. Mr. Turner introduced the great Conservative principle of reform which was suggested and campaigned upon by Bob Stanfield. He stole that suggestion. We did not mind the Liberals stealing it. The Liberals steal everything. If they are not stealing from the Conservatives, they are stealing from the NDP. The trouble with stealing from the NDP is that they have nothing left worth stealing. Now they are reduced to stealing from just the Conservatives. I do not have the exact research material before me, but that was introduced in 1972 or 1974 by Mr. Turner.
What does this Bill do? It reverses that great Conservative "Stanfield-Turner reform" by capping the indexing of the personal income tax so that the people of Canada will pay more income tax this year as the result of inflation, not as a result of any real gain on their part in their income. They will pay more because in this budget the principle of indexing the exemptions and the principle of indexing the tax brackets is removed, and we now have this famous six and five ceiling imposed. It does not matter that the cost of living actually went up approximately 9 per cent last year. This year, you will only get your indexing up to 6 per cent or 5 per cent.
It is also interesting to note that we have another distinguished Conservative in the Liberal Cabinet. Of course, he is a chap who used to be a young Montreal tax lawyer and used to be able to speak his mind, be truthful, honest, direct, free and critical when he wanted to be. He was unwise enough to write a book called "Fiscalamity: How to Survive Canada's Tax Chaos". He could see the MacEachen budget looming over the horizon. I have to use his district, "the Cape Breton budget". What did the Minister of State for Economic Development (Mr. Johnston) say about what Ottawa's bureaucrats were doing? I quote from his book:
This mysterious process of unsolicited tax reform by Ottawa bureaucrats should be severely curtailed.
Now he is in the Government. He is the Minister of State for Economic Development. He is the big cheese. He has a lot of influence, so we are told. Yet, has this mysterious process of unsolicited so-called reform been severely curtailed? It has not. There are 297 pages of uncurtailed and unsolicited tax reform in the Bill that is now before the House. Our friend, who is now the Minister of State for Economic Development, is not carrying out the principles that he had written about back in 1974 before he got into the somewhat murky coils of the Liberal Party.
These three budgets that are included in that tax package- I am only getting started, Mr. Speaker.


The Acting Speaker (Mr. Corbin):: Order, please. I regret to inform the Hon. Member that his time is up.


John Carnell Crosbie: Do I have unanimous consent?


The Acting Speaker (Mr. Corbin):: Is there unanimous consent to allow the Hon. Member to continue his speech?


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


The Acting Speaker (Mr. Corbin):: There is not unanimous consent. The Hon. Member for Dauphin (Mr. Lewycky).


Mr. Laverne Lewycky (Dauphin):: Mr. Speaker, I am pleased to be able to speak on Bill C-139 in these remaining minutes. I find it rather ironic that we are discussing this particular Bill at this time. The Government is urging us to give quick passage to this Bill. It is very interesting that it did not use the same logic whenever it wanted to pass other legislation or take other action. For example, the Government did not show any concern about implementing the six and five regulations on Family Allowances before that Bill was passed in the House. However, at this time, they want to blackmail the Opposition over Bill C-139 by attempting to scare people and saying that they will not receive their income tax refunds if this legislation is not passed.
I believe that the confusion we have surrounding income tax and the whole problem with Revenue Canada is only the tip of the iceberg. They are an indication of the problems that the Liberal Party is facing with regard to the entire budget. This legislation comes as a result of numerous budgets that the Government has brought forward. There is an old adage which states, "If you look after the pennies, the dollars will take care of themselves." Unfortunately the Liberal Government has not been able to look after its pennies. As a result, it has brought the country into this economic mess. This legislation will only place additional pressure and fear on Canadians. It is absolutely unnecessary at this time.
I would like to comment on my personal experience in my constituency office and indicate, for the benefit of Members opposite, that one of the greatest problems I face in my constituency is in my dealings with Revenue Canada. 1 must say, with due respect to the previous Minister, that the problems we faced then were perhaps not as great. At least some of
February 21, 1983

the constituency problems we raised were listened to with a half-open ear. However, our difficulty in dealing with Revenue Canada in the Manitoba region has multiplied. The situation has become catastrophic. We are dealing with problems in our constituency office never before experienced as a result of the kind of regulations that are being put into effect. There are people who are becoming physically ill because of the manner in which Revenue Canada in Winnipeg is treating them. There are situations in the Department of Revenue Canada in Winnipeg where the left hand does not know what the right hand is doing. For example, the auditing department will say that it will review the case raised by a particular constituent but, at the same time, that individual constituent, will receive a call from the collection department demanding immediate payment. Some older people in the area are becoming physically sick because they do not know what to believe. The Department will say, on the one hand, that their cases are being reassessed and, on the other hand, it will send out immediate demand notes. These elderly people are going to their children to ask if they must go to their credit union to withdraw $8,000 because of the demands they are getting from Revenue Canada.
This legislation does not help those people. It is not alleviating any fears because it is not dealing with some of the problems that are occurring.
I suggest that the Government should consider the problems that it is creating through urging the quick passage of a Bill by such sneaky methods as having us sit here through the lunch hour. We must debate these measures within the income tax Bill so that our citizens do not have to live in fear when there is nothing really to fear at all.
The policy of publicly displaying the average annual income of individuals on the new income tax forms has certainly made these forms less confidential. Surely the average annual salary of taxpayers could be conveyed to them in another manner. It appears in its present form only because the Government wants to make the information more accessible to its own bureaucrats. Many people have complained to me that this confidential information can be revealed by anyone simply opening up a letter received from Revenue Canada. Canadians are not guaranteed their confidentiality simply by way of having these income tax forms personalized.
[ Translation]


Madam Speaker:: Order. I am very sorry, but pursuant to Standing Order 18(3), I must now interrupt the debate to proceed with Statements under Standing Order 21.


STATEMENTS PURSUANT TO S.O. 21
Garnet McCallum Bloomfield: Madam Speaker, I would like to comment briefly on the debate that has consumed much of the Question Period these past few days in the House of Commons. I am referring to the on-going dialogue concerning the umbrella Weapons Testing Agreement which Canada and the United States have recently signed. Unfortunately, in the confusion over just what has and has not been agreed to, we have seen the very heart of the issue recede into the background, overshadowed by the rhetoric and moral posturing of some of the Opposition.
What I think is important for the House of Commons and Canadians to recall is that Canada and Canadians fully support NATO and the Alliance. We believe that a "credible deterrent" is needed to maintain peace with liberty. The two-track approach which we support calls for actively engaging in negotiations that could contribute to meaningful and verifiable arms control and disarmament agreements, while at the same time working with our Allies to modernize our theatre and conventional defence forces in Europe so that they will in fact form a deterrent to the frightening build-up of Soviet armaments.
I am confident that we will give serious consideration to any serious Soviet proposals that would enhance the chances for effective and verifiable agreements, but it is obvious that real progress can only be made on the basis of the principle of mutual security. I would like to remind Members of this House and all Canadians that the crux of the issue at hand is our security, without which we are unlikely to continue to enjoy peace, independence, and hope. We would all be well advised not to lose sight of these facts.


AGRICULTURE
Blaine Allen Thacker: Madam Speaker, there persists a myth that much of Canada is still a frontier where vast areas of good agricultural lands are yet to be discovered and developed. In fact agriculturally suited lands are very limited in quantity and quality.
Improved farmland in Canada amounts to 44.2 million hectares, about 5 per cent of the total land area and only 50 per cent of that is in classes 1 to 4. Yet the results of recent research show there has been and there is vast land deterioration.

February 21, 1983
Man assumed a dominant role in soil degradation. Cropping practices presently followed in western Canada account for the alarming increase in soil salinity. Dryland saline seeps are expanding at an average rate of 10 per cent a year. As a result, substantial decline in soil productivity has followed.
Farmers in the prairie provinces are losing some $20 million annually because of land degradation due to salinity. A cumulative loss of $930.6 million by 1990 and $44 billion by the end of the century is forecast. This is just one aspect of the problem. Available documents quote a number of agricultural activities resulting in vast amounts of land being lost irretrievably.
If the present farming practices, proven to have degrading effects on land, are to be continued, the most important resource heritage for our descendants will be at stake. The prime need is for increased funding and raised priorities for research-


Madam Speaker:: Order.

[ Translation]


RAILWAYS
Mr. Gaston Gourde (Levis):: Madam Speaker, I would like to raise a matter involving the national railways and Canadian taxpayers. Canadian National, which has lines across Canada and has a duty to serve Canadians, is generally conscientious in this respect. However, it has come to our attention that landowners who must cross CN tracks are being forced by the corporation to sign contracts that are highly unreasonable. CN thinks it alone has any rights in the matter. The terms of these contracts are incredible, and in our opinion, they should be revised. Although as far as railway rights-of-way are concerned, it should be a matter of two-way negotiations, landowners with land adjacent to the tracks are given agreements to sign, without any possibility of further negotiations. For instance, three people from Levis will have to pay $60 a year- the amount set by CN-under the terms set by the corporation. The contract says that this amount may be revised as the railways see fit.
I think this goes against the elementary rules of law, especially considering the fact that the properly can only be reached by crossing the tracks. I urge CN to review its position and I would also urge the people concerned to think twice before signing such a document.


LABOUR RELATIONS
[Stage Direction]
EVENTS IN QUEBEC-ATTITUDE OF THE PARTI QUEBfeCOIS
Mr. Henri Tousignant (Temiscamingue):: Madam Speaker, after witnessing recent events in the public sector in Quebec, we are now in a better position to assess the sincerity of political groups that boast about their affinity for the working classes and see themselves as the defenders of the working man. I am of course referring to the Parti Quebecois and to socialists of every description.
It is truly outrageous to see the Levesque Government conspiring with the union leaders to manipulate, perhaps I should say betray, those who put their trust in them. It is not a matter of being for the unions or for the Government, or of considering whether a particular group is being paid too much or too little. I understand why they were given more than they asked for before the referendum, but when the Government then turns around at the end of the year and demands a 20 per cent reduction in wages that, I feel, is totally unacceptable and demonstrates an incredible degree of mismanagement. What Canadian employer would be allowed to get away with that, Madam Speaker? I am rather surprised that our archmanipulator, Mr. Levesque, has not tried to prove to some highly impressionable people that once again, it is all Ottawa's fault.


REGIONAL ECONOMIC EXPANSION
Mr. Stan Darling (Parry Sound-Muskoka):: Madam Speaker, as the House knows, for many years I have been trying to have the Muskoka area designated under the terms of the Regional Economic Expansion Act, now the industrial expansion legislation. Indeed, the present Minister's three predecessors had all encouraged me to believe that this was in process of being done.
When last I asked the present Minister about this, he replied by pointing out the extremely heavy demand for designation that already exists. The example he used was ILAP, the Industry and Labour Adjustment Program, and he said that he thought that demand for designation under this program "must be close to the $500,000 mark".
I think it is worth bringing to the attention of the House that, by my figures, up to the end of last August over $30 million of ILAP funds, representing some 65 per cent of the financing, 53 per cent of the project and, by the available figures, over 65 per cent of the jobs created, went to Windsor, Ontario, the riding of the Minister then responsible for the Program.
February 21, 1983

It seems to me that the only interpretation it is possible to put on these data is that these celebrated government programs are not being used for the benefit of the country as a whole, but as plums for the partisans of the Party opposite.
At a time when the morality of the Government has been repeatedly called into question, I can find neither comfort nor reassurance in these figures.


STATUS OF WOMEN
Margaret Anne Mitchell: Madam Speaker, today the Canadian Advisory Council on the Status of Women will release a report called "A Working Majority: What Women Must Do For Pay", which documents the deplorable conditions of women in Canada's paid work force.
The pervasive and debilitating ghettoization of women's jobs has intensified, as more than 70 per cent of women are in clerical, service, sales, and processing jobs and one-third are employed in jobs where men earn twice as much. Women are even being displaced by men in the few well-paid job areas such as teaching.
Just as shocking as the lack of opportunities and inadequate pay for women is the finding that the federal Government itself discriminates against women.
This House must launch its own inquiry into accusations that the Canada Employment Commission discriminates against women on the basis of age, sex and national origin. Women who cannot find work have been refused unemployment insurance and some have been cut off without reason or warning. I and other Members have had similar complaints from constituents and from women who cannot get into trade training or apprenticeships.
This evidence of discrimination makes it imperative that governments set an example. The federal Government must implement mandatory affirmative action and require equal pay for work of equal value. Affirmative action must be applied to federal job creation and training programs to give higher priority and equal opportunities to women workers.


Madam Speaker:: Order.


POLITICAL PARTIES
Mr. Bill Domm (Peterborough):: Madam Speaker, in honour of the third anniversary of the 1980 general election, better known as the infamous "election of broken promises", I would like to take this opportunity to remind the Prime Minister (Mr. Trudeau) of his pledge to the Canadian people, stated on January 12, 1980, as follows:
There is a prior commitment that I want to make clear. Liberals will do what we say we will do. And if we can't do it, we won't say it.
He also asserted that "This Party will not simply stand by and let the recession come". As all Canadians now realize, this pledge was a complete fallacy.
In fact the above statements are as fictitious as those made by the Hon. Allan MacEachen in his reference to gasoline prices and the 18 cents tax when he stated, "Vote Liberal and the Price Will Stay Down".
Since 1979 under the Liberals gasoline has increased in price from $1.14 per gallon to $2.15 per gallon, while heating oil has doubled from 70 cents per gallon to $1.40 per gallon. Everyone now knows that a Liberal made-in-Canada oil pricing policy results in increased prices for Canadians and that if only the Conservatives had given the 18-cent increase per gallon in metric, for example 4 cents per litre, we would probably still be in office.


CANADIAN ARMED FORCES
Hon. Bud Cullen (Sarnia-Lambton):: Madam Speaker, 1 should like to take this opportunity to bring to the attention of the House and the respective Ministers responsible for the Department of National Defence and the Privacy Act a situation which needs clarification and, if necessary, legislation to spell out clearly under what conditions police forces will have access to Canadian Armed Forces fingerprint files.
The confusion surrounding an informal request by the Metropolitan Toronto Police Force investigating the murder of nine-year old Sharin Keenan, in checking a suspect's fingerprints with the indentification bureau of the Canadian Armed Forces, should not be repeated.
One Section of the new Privacy Act reads:
Personal information under control of the Government institution may be disclosed ... to an investigative body specified in the regulations on written request of the body for the purpose of enforcing any law of Canada ... or carrying out a lawful investigation.
This Section should be immediately brought to the attention of all Departments in order that they may live within the spirit of the new Act and not delay or impede in any manner an investigation such as the one into the brutal and reprehensible murder of Sharin Keenan.


HARBOURS
Mr. Lloyd R. Crouse (South Shore):: Madam Speaker, correspondence is on file going back to July 29, 1980, to the former Minister responsible for small craft harbours, requesting that action be taken to improve government facilities in Lunenburg, Nova Scotia, and I made special mention of the need for over-all dredging in the entire harbour.

February 21, 1983
This request was followed up by another letter on September 10, 1981. On October 7, 1981, the then Minister of Public Works informed me that the extensive survey required to determine the dredging quantities involved could not be carried out until late fall, with a final report expected around the middle of February, 1982.
I again wrote to the Ministers of Fisheries and Public Works on February 1, 1982, and again on March 12, 1982, and later on July 26, 1982, to the Minister of Transport (Mr. Pepin), since shipping comes under his authority. On October 13, 1982, I wrote to the present Minister of Fisheries and Oceans (Mr. De Bane) endorsing all previous requests, followed up by another letter on December 7, 1982, and a further letter on February 2, 1983.
On February 9, 1983, the present Minister of Fisheries informed me that the Public Works dredge had arrived in Lunenburg Harbour, but that dredging would only be carried out in the area adjacent to the government wharf. This will be helpful, but it is imperative that the entire ship channel be dredged if the harbour is to function at full capacity and allow ships to make adequate use of the repair facilities and berthing space, without scraping bottom.
In conclusion, I ask the Minister of Fisheries why this necessary task is not to be completed while the equipment is on site.


RAILWAYS
Mr. Stan J. Hovdebo (Prince Albert):: Madam Speaker, the proposal of the Minister of Transport (Mr. Pepin) to change the Crowsnest Pass freight rate has not been submitted to Parliament. To date we have a Liberal Party position which is not the law of the land, and may never become so. I do not believe that Liberal Party proposals are entitled to be publicized at public expense. Nevertheless, the federal Department of Agriculture has placed large advertisements in Quebec newspapers favouring Crow change. The full-page ad appearing in today's edition of The Gazette in Montreal is worth $4,535.
These ads are slanted to convince Quebec farmers that a changed Crow rate is good for them. For example, The Gazette ad says that higher transportation costs will prevent Western pork and beef producers from becoming more competitive with their Eastern counterparts. Yet the Transport Minister's Crow statement predicted that this could mean an expansion in the output of the Western livestock industry of about $1 billion by 1990.
The arguments being used to sell the Minister's proposal in the West are being downgraded in the East. This is classic Liberal divide-and-rule politics. If Cabinet Ministers persist in using public money to sell partisan policies, then provision must be made for public funding of opposing viewpoints. This
principle is well established in the equal time provisions for the broadcasting of differing party points of view.



ORAL QUESTION PERIOD


Hon. Erik Nielsen (Leader of the Opposition):: Madam Speaker, my question is directed to the Deputy Prime Minister and is based on that memorable ceremony of April 4 in Port Hawkesbury, which is recorded by videotape for posterity, that press conference wherein the Deputy Prime Minister had this to say: "Things always come out right in the end. Gillespie is now one of the beneficiaries of his own foresighted policies". I wonder if the Deputy Prime Minister would please explain to the House what he meant by the words, "Gillespie is now one of the beneficiaries of his own foresighted policies".


Hon. Allan J. MacEachen (Deputy Prime Minister and Secretary of State for External Affairs):: Madam Speaker, I think the interpretation ought to be self-evident to the Hon. Member-


Some Hon. Members:: It is.


Allan Joseph MacEachen: -that on that occasion at least we were participating in an event at Port Hawkesbury in which a consortium was launching a proposal that might have the effect, if implemented, to transform Nova Scotia coal into synfuels, and if this project obviously came to fruition-and that is not certain yet-if it came to fruition, all members of the consortium would hopefully benefit, as well as the Province of Nova Scotia.
I certainly was quite aware of the potential benefits that might accrue to the coal industry of Nova Scotia, to the miners and to the unemployed if this project is ultimately a success. We do not know that yet, but if it led to an actual building of a plant, presumably all members of the consortium would benefit-not just Gillespie and Associates-including Petro-Canada, including the corporation formed by the Government of Nova Scotia, including the Cape Breton Development Corporation, including Gulf Products Limited, including Algas. All corporations, all participants, if this succeeded, would benefit, and particularly the people of Nova Scotia. This is what I meant, and I am very happy to have the opportunity to repeat it here today.
I am quite prepared to give the Hon. Member all the information that was made available to the people of Canada on April 4, 1981, information which is now becoming known to the Members of the Official Opposition.


Some Hon. Members:: Hear, hear!
February 21, 1983


APPLICATION OF MINISTERIAL CONDUCT GUIDELINES- TREATMENT OF DEFEATED MINISTER
Erik Nielsen: Madam Speaker, I would like to suggest to the Minister that the merits of the project, the jobs to be created and the value of the project to the people of Nova Scotia are totally irrelevant. What is relevant is the moral conduct of Ministers with respect to their own guidelines.
It might do well to put that guideline on the record once more. On April 28, 1980, the Prime Minister wrote to the Deputy Prime Minister with those prohibitive guidelines for sitting Ministers, and I quote:
In any official dealings with former office holders. Ministers must ensure that they do not provide grounds or the appearance of grounds for allegations of improper influence, privileged access or preferential treatment.
Those guidelines were for sitting Ministers, as he well knows.
I am glad that he has given the explanation he has given, because some Canadians might be forgiven for believing that preferential treatment was given to Gillespie who stood to make three-quarters of a million dollars on an investment of $25,000. Does the Minister really ask Canadians to believe that that kind of obscene profit to a former office holder, made possible by existing office holders, is not preferential treatment?


Allan Joseph MacEachen: Madam Speaker, 1 am very pleased the Hon. Member has seen fit to refer to the guidelines which are directed to the conduct of Ministers presently in office. He has referred to the paragraph which reads:
In any official dealings with former office holders, Ministers must ensure that they do not provide grounds or the appearance of grounds for allegations of improper influence, privileged access or preferential treatment.
I would draw to your attention that the guidelines do not prohibit official dealings between present Ministers and former office holders, whether they be former Ministers or not.


Some Hon. Members:: Oh, oh!


Allan Joseph MacEachen: In fact the guidelines presume that such official dealings will take place, otherwise they would not read:
In any official dealings with former office holders-
What the guidelines attempt to do is to provide guidance for present Ministers as to how they ought to regulate those dealings. In the regulation of those dealings, present Ministers must ensure that there are no grounds or appearance of grounds for preferential treatment-


An Hon. Member:: But there are.


Allan Joseph MacEachen: -or improper influence or for preferential access. Not a single piece of evidence has been adduced to
Oral Questions
demonstrate that Mr. Gillespie has received preferential
access.


Some Hon. Members:: Oh, oh!


Allan Joseph MacEachen: It is rather important to remember that the funds, a million dollars or so, which were made available to this consortium, were funds that were in a bank account in the City of Halifax, in the Province of Nova Scotia. That is a fact. Those funds were transferred as a result of the agreement reached, I believe, in 1977.


Mr. Crosby:: The funds came from the Parliament of Canada.


Allan Joseph MacEachen: The release of those funds is up to a management committee, of which there are two provincial members, two provincial civil servants, and two federal public servants so that the funds are not within the free, so to speak, gift or decision of the Government of Canada. It requires a joint decision of the Government of Canada and the Government of Nova Scotia.
Let me ask the Hon. Member to argue that the Province of Nova Scotia, in giving its assent to the release of those funds, is subject to improper influence, because that is the inference, quite clearly. I ask my hon. friend how can he argue that there is preferential treatment to a former Minister when every member of the consortium received access to those funds? Alastair Gillespie and Associates received precisely the same access as Algas, which is an Alberta corporation, and as Gulf Canada Products. Thank you, Madam Speaker.


John Horton McDermid: What a snow job.


QUERY RESPECTING COMMITMENT OF FEDERAL FUNDS
Erik Nielsen: Madam Speaker, the Minister tried desperately to justify what is wrongful conduct on the part of the now Minister of Finance, then Minister of Energy-


Mr. Ouellet:: Smear.


Erik Nielsen: -and what is wrongful conduct on his own part. In doing so he has-


An Hon. Member:: Resign.


Erik Nielsen: I should not resign. It is those two Ministers at the very least who should resign.


Some Hon. Members:: Hear, hear!


Erik Nielsen: In doing so, the Deputy Prime Minister has misled the House. He has misled the House when he asks the House to believe that the Government of Nova Scotia had any discretion with respect to the disposition of those funds. He knows the terms of the agreement of June, 1981, as well as any other Minister on the treasury benches.
In Clause 4 it is stated that Canada-and Canada was a signatory to that agreement through the now Minister of Finance:

February 21, 1983
Oral Questions
Canada and Nova Scotia hereby agree that, through the Canada-Nova Scotia Agreement-


Some Hon. Members:: Question.


Erik Nielsen: I know, Madam Speaker, they do not want the questions to go on when the heat is on. I will continue:
-Canada and Nova Scotia hereby agree, that, through the Canada-Nova Scotia Agreement and from the Oil Substitution Fund, they shall contribute-one million dollars.
Invoices are to be submitted under paragraph 4.2. Under paragraph 4.3 it reads that the Management Committee shall manage the fund. But paragraph 2(b) of that clause stipulates that the federal Government, after having paid promptly to the Nova Scotia Government, that the Nova Scotia Government promptly thereafter must release the funds in the amount of up to $1 million from the Oil Substitution Fund to the consortium in payment of the bills.


Allan Joseph MacEachen: What is the date?


Erik Nielsen: The effective date is June 30, 1981. That agreement required the Government of Nova Scotia to pay those moneys.


Allan Joseph MacEachen: That is not true.


Erik Nielsen: They had no discretion over it whatsoever.
Let me ask the Deputy Prime Minister this question. Has the Government considered advancing any further moneys toward this project? Has the Government even considered that? Has the Government, in fact, committed any further federal funds to this project?


Allan Joseph MacEachen: Madam Speaker, I will be glad to answer that question but I must deal with a series of misstatements made by the Leader of the Opposition.


Erik Nielsen: I read from the agreement.


Allan Joseph MacEachen: The announcement which was made in Port Hawkesbury, or at least the statement which I made in Port Hawkesbury on April 4, 1981, stated quite clearly "that the management committee of the agreement," namely, the 1977 agreement on conservation and oil substitution between Canada and Nova Scotia, "the management committee of the agreement has approved in principle a contribution of $1 million to the project."


Mr. Fraser:: Keep going.


Mr. Epp:: Continue.


Allan Joseph MacEachen: The management committee of the agreement. May I just explain the agreement, Madam Speaker, that on March 31, 1977, Canada and Nova Scotia signed an agreement on conservation and oil substitution under which Canada transferred $9.2 million to a bank account in Halifax-


Erik Nielsen: For the production of electricity.


Allan Joseph MacEachen: -not in Ottawa, not in Kamloops or the Yukon, but in the City of Halifax.


Erik Nielsen: For the production of electricity.


Allan Joseph MacEachen: This money is intended to be used to initiate projects which reduce Nova Scotia's dependence on oil. The agreement, Madam Speaker-


Erik Nielsen: For the production of electricity.


Allan Joseph MacEachen: -places the funds under the control of a management committee with equal representation from Canada and from Nova Scotia.
The release of those funds requires a decision on the part of Nova Scotia as well as the Government of Canada. The fund was transferred to a bank account in Halifax.


John Horton McDermid: So what?


Allan Joseph MacEachen: It was the management committee which made the decision to release the funds. That is the fact, and the Hon. Member better get that in his head before he proposes to make a case about this particular transaction.


Some Hon. Members:: Hear, hear!


PAYMENT OF FUNDS
Erik Nielsen: Madam Speaker, the Deputy Prime Minister better read the clauses of the agreement, which I have just finished reading to the House, again. But he did not answer my question. Has the Government either paid or committed any further federal funds beyond that called for in these agreements, to this project?


Allan Joseph MacEachen: Madam Speaker, yes, I will be glad to bring the Hon. Member and his Party up to date. Obviously they do not know what is going on. They are not following events.


Some Hon. Members:: Oh, oh!


Allan Joseph MacEachen: Obviously the Nova Scotia Members are not following events.


Howard Edward Crosby: Watch yourself now.


Allan Joseph MacEachen: On January 24, 1983-not 1981, but this year-the Minister of Energy, Mines and Resources announced that the Government has entered into negotiation with the Nova Scotia Coal Synfuels Project consortium for a $750,000 contract to test Cape Breton coal in a new high yield liquefaction process. That is a negotiation with respect to the same project, and it was announced on January 24 in a release from the Department of Energy, Mines and Resources, in the name of the Parliamentary Secretary.


Howard Edward Crosby: Where did the funds come from?
February 21, 1983


Allan Joseph MacEachen: That is well known. It is the same project, announced in January of this year. No one got up and cried "foul" or "conflict of interest". I find it very surprising-


An Hon. Member:: Answer the question.


Allan Joseph MacEachen: -that they are not on their toes, Madam Speaker.


Some Hon. Members:: Hear, hear!


QUERY RESPECTING KNOWLEDGE OF FORMER ENERGY MINISTER
Hon. Edward Broadbent (Oshawa):: Madam Speaker, the Deputy Prime Minister is aware of the old maxim, "When you are arguing and it is bad, you shout a lot".


Some Hon. Members:: Shout louder!


Mr. Fisher:: Go ahead.


John Edward Broadbent: Appropriately, Madam Speaker, I will attempt almost to whisper my question to the Deputy Prime Minister.
I would like to refer to one of the guidelines which was not cited. The Deputy Prime Minister has made much of his claim that Mr. Gillespie was somehow an innocent participant in what we on this side of the House regard as being a scandal. However, I want to read the guideline, and then ask the Deputy Prime Minister a serious question. It states:
Within a period of two years of leaving office. Ministers should not
c) lobby for or on behalf of any person or commercial corporation before any
department or agency for which they were responsible on an ongoing basis
during the last two years of their participation in the Ministry.
It is clear that Mr. Gillespie violated this principle. He acted within two years. It is clear, that he, and he alone, stands to make three-quarters of a million dollars, and it is clear, from what the Deputy Prime Minister said in Cape Breton-


Erik Nielsen: He knew about it.


John Edward Broadbent: -that he knew about it.
The Deputy Prime Minister said:
Mr. Gillespie is now one of the beneficiaries of his own foresighted policies.
Considering that he, as the Deputy Prime Minister, knew this in April, could he explain to the House how the then Minister of Energy, Mines and Resources, whose Department was directly involved-


An Hon. Member:: You are shouting.


John Edward Broadbent: -did not know anything about it until September? Did the whole Cabinet know, except Mr. Lalonde?


Erik Nielsen: None of them knew. See no evil.
Oral Questions


Allan Joseph MacEachen: Madam Speaker, 1 will attempt to follow the exceptional conduct of the Hon. Member and not raise my voice. I find that he usually raises his voice quite a lot. Maybe it is because he finds his question to be so ineffective that he does not want it to be heard very loudly in the House.


Some Hon. Members:: Hear, hear!


Allan Joseph MacEachen: Madam Speaker, the Hon. Member has said that I knew about this project. Of course I did. I was present when the announcement was made, with the Premier of Nova Scotia and with all the other members of the consortium. I knew before the announcement that it was under consideration by the Department of Energy, Mines and Resources. In fact the press release, which I issued on the day of the announcement, suggested to all and sundry that if they wanted further information on this matter to call two officials in the Department of Energy, Mines and Resources. Anyone could have called and found out about it.


John Carnell Crosbie: A piece of skullduggery.


Allan Joseph MacEachen: It was a normal project in the Department that officials knew about, and it was my business to know about, not only as a Member of Parliament but also as a regional Minister, because for quite a long time I had been following the situation in the coal industry of Nova Scotia and it was most natural that a project of this importance should be drawn to my attention by Mr. Gillespie, by my own staff, and I knew about it.
The Hon. Member has asked me how it is that the Minister of Finance was unaware of that project.


Erik Nielsen: The Minister was fixed with knowledge.


Allan Joseph MacEachen: I do not draw any inference from that question, except to say that it was not a project of such unusual character that it required any conversations between myself and the Minister of Finance.


Erik Nielsen: He was fixed with knowledge.


Allan Joseph MacEachen: It was handled fully at the official level, and that is the explanation.


John Edward Broadbent: Madam Speaker, that answer may convince the people sitting behind the Deputy Prime Minister, but it will convince no one in this country who is following the matter with seriousness.


Some Hon. Members:: Hear, hear!


RESIGNATION OF MINISTER OF FINANCE REQUESTED
John Edward Broadbent: One of the other guidelines which was quoted earlier in the House referred not to former Ministers, but, rather, to present Ministers. Indeed,

February 21, 1983
Oral Questions
in this instance, with reference to the Deputy Prime Minister and his responsibilities, it is stated:
Ministers should not allow themselves to be influenced in pursuit of their official duties by plans for or offers of outside employment:
Further, it is stated:
In any official dealings with former office holders, Ministers must ensure that they do not provide grounds or the appearance of grounds for allegations of improper influence, privileged access or preferential treatment.
It is now public record that Mr. Gillespie negotiated with officials in his former Department within the two year time period, clearly violating one guideline for ex-Ministers. It is now known that the Deputy Minister to the then Minister of Energy, Mines and Resources, now the Minister of Finance, exchanged correspondence with Mr. Gillespie concerning this project.
Given the whole theory of ministerial responsibility as it exists, at least in some countries with parliamentary government-


Erik Nielsen: Not this one.


John Edward Broadbent: -and under such circumstances where there has been a clear violation of the guidelines, clear involvement by the Deputy Minister, for whom the Minister must be held accountable, does the Deputy Prime Minister not believe, now that this is revealed, that he, as Deputy Prime Minister, should recommend to the Prime Minister upon his return that the present Minister of Finance should resign from the Cabinet?


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


Allan Joseph MacEachen: Madam Speaker, the Hon. Member is drawing our attention, once again, to the guidelines. I take these guidelines quite seriously.


Some Hon. Members:: Oh, oh!


An Hon. Member:: He means well.


John Carnell Crosbie: Old twister.


Allan Joseph MacEachen: The guidelines state:
In any official dealings with former office holders, Ministers must ensure that they do not provide grounds or the appearance of grounds for allegations of improper influence, privileged access or preferential treament.
I think I have demonstrated that in this particular case, where $1 million was made available to a consortium, of which Mr. Gillespie, in equity, owned less than 3 per cent, it was not within the power of the Government of Canada, acting alone, to provide any benefit. It required-


Erik Nielsen: It signed the agreement.


Allan Joseph MacEachen: -the consent of the Government of the Province of Nova Scotia.


Erik Nielsen: The Government of Canada signed the agreement.


Allan Joseph MacEachen: I ask the Hon. Member, who I think attempts to be fair in these matters, whether he believes that there was preferential treatment given to Alastair Gillespie Associates when Alastair Gillespie Associates held less than 3 per cent of the equity in a consortium composed of four other corporations, two public and two private? What is the ground for believing that there was even the appearance of preferential treatment given to Alastair Gillespie Associates? It was the same treatment given to Petro-Canada, given to the Cape Breton Development Corporation, the same treatment to-


Madam Speaker:: Order.


Allan Joseph MacEachen: -to Algas and to Gulf Products, so there was no preferential treatment.


John Horton McDermid: They were not former cabinet Ministers.


Madam Speaker:: Order, please. If Hon. Members will take a look at the clock, they will understand my plea for shorter questions and shorter answers.


REQUEST THAT DEFEATED MINISTER DIVEST HIMSELF OF FINANCIAL INVOLVEMENT
John Edward Broadbent: Madam Speaker, I would be only too glad to answer the Deputy Prime Minister's questions. Yes, indeed, I believe, and the evidence is clear, that Mr. Gillespie violated the guidelines. He ought not to have negotiated with his own Department within the two-year period.


Some Hon. Members:: Hear, hear!


John Edward Broadbent: Furthermore, I believe that he and the present Minister of Finance violated guidelines pertinent to them in the knowledge that Mr. Gillespie stood to benefit, personally. He is the only person in all of this who stands to make three-quarters of a million dollars.


Erik Nielsen: For $25,000.


John Edward Broadbent: The rest are corporations. I say to the Deputy Prime Minister that the fact that other Governments went along with this recommendation is irrelevant.


Madam Speaker:: Order, please. Does the Hon. Member have a question?


John Edward Broadbent: Yes.


Some Hon. Members:: Oh, oh!


John Edward Broadbent: Madam Speaker, I was just trying to cooperate with the Deputy Prime Minister. I would like to now ask him a related question. Given the clearly perceived sense of unfairness in all of this, in terms of the almost a million dollar benefit going to Mr. Gillespie as a result of his negotiating
February 21, 1983

with his former Department, will the Government at least have the decency to request that Mr. Gillespie divest himself completely of financial involvement in this project?


Allan Joseph MacEachen: Madam Speaker, there is no personal benefit to any individual from the million dollars. The million dollars, as I recollect, was to finance a feasibility study as to how coal could be converted into gasoline.


An Hon. Member:: He can make money from selling his shares.


Allan Joseph MacEachen: The project has not yet been proved to be feasible. What the Hon. Member has to understand is that every one of the members of the consortium may gain, but every one of them may lose because the project has not yet been implemented. It has not yet been proved that it is economically feasible, so the Hon. Member is rather premature in talking about benefits that have yet to be realized. My hope is that this project will succeed because it will provide a new market for Nova Scotia coal, and will provide more jobs in an area of the country which desperately needs these jobs, but no one knows this is a fact.


John Carnell Crosbie: Mr. Gillespie needed a job, too.


Allan Joseph MacEachen: The Hon. Member is suggesting that the Government ought to have rejected this project because of a bad interpretation of guidelines by the Hon. Member.


REQUEST THAT FINANCE MINISTER RESIGN
Harvie Andre: Madam Speaker, it is interesting to see the change in defence. Last week the Prime Minister was pleading ignorance on the part of all cabinet members, and a two-year statute of limitations, as if that precluded Ministers from complying with the guidelines.
The Deputy Prime Minister just indicated, reading from his press release of April 4, 1981, that the management committee on the agreement has approved in principle a contribution of one million dollars on the agreement to the project. The federal co-chairman of that management committee stated in press releases over the weekend that he had serious doubts whether the project was eligible for funding under that agreement, and he said, and I quote:
We put it to Mr. Lalonde and his provincial counterpart.
Therefore that quote from that official, and the Deputy Prime Minister's press release, which states a decision had been made, clearly establish that the Minister of Finance, the then Minister of Energy, knew about this project in intimate detail prior to April, 1981, which is not what the Prime Minister told us last week. The Prime Minister pleaded ignorance on the part of his Minister last week. We now have proof that that is not the case. When will the Deputy Prime
Oral Questions
Minister live up to his responsibilities and see that the resignation of the Minister of Finance is presented to the Prime Minister, forthwith?


Allan Joseph MacEachen: Madam Speaker, I think I should clarify one point for the Hon. Member. There is no two-year statute of limitations with respect to a serving Minister. Any Minister now in the Government, with respect to any former office holder, whether he is out of office for two years or twenty years, is still obligated to follow the guidelines dealing with current Ministers. The two-year or the one-year provision applies solely to former office holders, and I think the Hon. Member understands that.


Harvie Andre: That is fog; give me the substance.


Allan Joseph MacEachen: The Hon. Member has asked me to recommend the resignation of my colleague, the Minister of Finance. If any Hon. Member opposite had put forward any grounds to lead one to believe that a current Minister had provided preferential treatment or preferential access to a former office holder, then I think that he might have a case.


Erik Nielsen: Three-quarters of a million dollars for $25,000?


Allan Joseph MacEachen: But that has not been put forward in any of the statements that have been made.


John Edward Broadbent: The appearance.


Allan Joseph MacEachen: The appearance was a public announcement. It made the front page of the provincial paper in Nova Scotia. It is not The New York Times but it is the biggest paper we have in Nova Scotia. It told what John Buchanan said and what Alastair Gillespie said-


Madam Speaker:: Order, order.


ROLE OF FORMER DEPUTY MINISTER OF ENERGY
Harvie Andre: Madam Speaker, the Deputy Prime Minister was in his seat when the Prime Minister last week was acknowledging that this transaction would have been a violation of his guidelines had it in fact occurred within that two-year period because that clearly establishes the culpability of Mr. Gillespie and any co-operation from a sitting Minister of the Crown in that kind of activity is, by definition, in violation of the guidelines, and the Deputy Prime Minister knows that.


Some Hon. Members:: Hear, hear!


Harvie Andre: The Prime Minister pleaded ignorance. He said that the Minister of Finance, the then Minister of Energy, did not know what was going on.


Madam Speaker:: Order. I have to ask the Hon. Member to go straight to the question. He is now repeating arguments that he had in his previous question, in the preamble. I would ask him to go to his question.

February 21, 1983
Oral Questions


Harvie Andre: Madam Speaker, I will certainly take less time than the Deputy Prime Minister did in his answer.
A press story over the weekend by Tim Naumetz of Canadian Press indicates that Alastair Gillespie had conversations with Mr. Marshall Cohen, Deputy Minister of Energy to the then Minister of Energy, who is now Minister of Finance. Indeed, there was correspondence as well as conversation. It is inconceivable that in fact the Minister of Finance, then Minister of Energy, could have been ignorant of those conversations, as the Prime Minister told us last week.


Some Hon. Members:: Question.


Harvie Andre: In view of this overwhelming evidence, the Deputy Prime Minister's own words, the words of the official, the officials who commented on Mr. Cohen's knowledge, how much evidence is required? Do you need a coloured photograph? Do you need a tape recording of these conversations? What is required for this Government to face up to its responsibilities and admit that these guidelines were violated?


Allan Joseph MacEachen: Madam Speaker, the Hon. Member is repeating a statement that the guidelines were violated, without demonstrating how they were. He has raised the question of Mr. Cohen. I have discussed this matter with Mr. Cohen and he has indeed had a discussion with Mr. Gillespie. They exchanged correspondence.


Harvie Andre: Can you table it?


Allan Joseph MacEachen: Yes, I would be glad to prepare the correspondence and table it for Hon. Members. Mr. Cohen has also told me that at no point did he notify his Minister that he had had these conversations because he did not think it was justified or necessary.


An Hon. Member:: Mr. Read said he talked to Mr. Lalonde.


Allan Joseph MacEachen: At no point had he felt that he was under any kind of improper influence or at any point that he was being lobbied, in the words of the guidelines.


John Carnell Crosbie: Table Cohen, too.


Allan Joseph MacEachen: I will provide the Hon. Member with the fullest possible information on that particular point.


RESPONSIBILITY OF FORMER DEPUTY MINISTER
Hon. Michael Wilson (Etobicoke Centre):: Madam Speaker, my question is also directed to the Deputy Prime Minister. The Deputy Prime Minister is aware, I am sure, that these conflict of interest guidelines also apply to Mr. Cohen as a Governor In Council appointee. I have worked with Mr. Cohen. I understand how he operates and I understand the scrupulous care which Mr. Cohen took, during the terms of office that I was Minister and he was my Deputy Minister, in bringing to my attention every matter which had any significant bearing in a political way on the activities of me in my role as a Minister and on his activities as the Deputy Minister. Did the Deputy
Prime Minister ascertain fully in his conversation with Mr. Cohen whether or not he spoke to the previous Minister, Mr. Lalonde, to ensure that this matter was not brought to his attention, in view of the great care that Mr. Cohen has always taken in bringing those matters to the attention of Ministers?


Allan Joseph MacEachen: Madam Speaker, I am not sure I understood fully the question which the Hon. Member has asked.


Erik Nielsen: It was very clear.


Allan Joseph MacEachen: Let me answer by saying that Mr. Cohen, in my conversation with him this morning shortly before I came into the House, asserted that he had not found it necessary to discuss his conversations with Mr. Gillespie or report them to his Minister at that time. If I take the Hon. Member's analysis of Mr. Cohen's conduct, then I conclude that Mr. Cohen felt that his conversation did not have any significant bearing upon the political activity of his Minister.


Erik Nielsen: The Minister is fixed with Mr. Cohen's knowledge. You know that.


Madam Speaker:: Order.


POSITION OF DEPUTY PRIME MINISTER-REQUEST FOR TABLING OF DOCUMENTS
Michael Holcombe Wilson: Madam Speaker, the Deputy Prime Minister surely knows that the activities of the Deputy Minister are clearly the responsibility of the Minister in charge. That is the tradition here. It is the tradition that should be followed when a Minister tenders his resignation. The Deputy Prime Minister said clearly earlier in this Question Period that he was aware all along of this particular transaction. Since the Government of Canada was to sign this agreement, since Mr. Gillespie was to make a profit of $725,000 if it was successful, and since there were no tenders called on the matter, did the Deputy Prime Minister question at any time whether there were grounds or the appearance of grounds for allegations of improper influence on the part of the existing Minister?
While I am on my feet, Madam Speaker, may I ask the Deputy Prime Minister to table all documents, not just the documents he referred to in response to my colleague from Calgary Centre, but all documents related to this, so that everyone in this House of Commons and Canadians can understand just exactly what went on with this transaction?


Allan Joseph MacEachen: Yes, Madam Speaker, there are a number of documents that may be of interest to Hon. Members.


Some Hon. Members:: Oh, oh!
February 21, 1983


Allan Joseph MacEachen: 1 will make a search and table all that are possible to be tabled.


John Horton McDermid: Not just the ones you pick out; all of them.


Allan Joseph MacEachen: In reply to the first question, I had no reason to believe, nor do I now have reason to believe, that the conduct of either the Minister of Energy, Mines and Resources of the day or of his Deputy Minister, Mr. Cohen, was anything but in accordance with the guidelines as I read them and as they apply. That is my understanding. It is the view of the Prime Minister. I gave him an honest appraisal of my understanding of the guidelines as they apply to myself and my colleagues in the Government of Canada.


APPLICATION OF GUIDELINES TO DEFEATED MINISTER
Ian Deans: Madam Speaker, my question is also for the Deputy Prime Minister. I refer the Deputy Prime Minister to the guidelines, those that refer specifically to former Ministers. Number 1(c) says that within a period of two years of leaving office, Ministers should not lobby for or on behalf of any person or commercial corporation before any Department or agency for which they were responsible on an ongoing basis during the last two years of their participation in the ministry. Does the Minister not believe that Mr. Gillespie violated that guideline?


Allan Joseph MacEachen: Madam Speaker, I think I have to go to another point in my understanding of the guidelines. The guidelines are just that, guidelines.


Some Hon. Members:: Oh, oh!


John Carnell Crosbie: They are not carved in concrete.


Arthur Jacob (Jake) Epp: They are not like law?


Allan Joseph MacEachen: They are a guidance to Ministers.


John Carnell Crosbie: They are meaningless; they do not mean anything.


Allan Joseph MacEachen: I find it surprising that Hon. Members would not understand that they are guidelines.


John Carnell Crosbie: We are not Liberals. Our minds are not twisted like yours.


Madam Speaker:: Order. Precious time is being taken up by the heckling on both sides of the House.


Arthur Jacob (Jake) Epp: Have they no moral force on you?


Allan Joseph MacEachen: Madam Speaker, Ministers of the Government, including myself, are obligated to look to these principles for guidance in the conduct of our public affairs. Obviously we are obligated to look for guidance and to follow them according to our judgment.


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


Allan Joseph MacEachen: If, as a member of the Government-


John Carnell Crosbie: That's easy.


Allan Joseph MacEachen: That is the obligation on every person to whom the guidelines apply; to every single Minister, Order in Council appointee or public servant. These guidelines are self-enforcing. There is no monitoring agency. They are up to the conscience of the individual.


John Edward Broadbent: They depend on the integrity of the Minister.


Allan Joseph MacEachen: Exactly. For the Hon. Member now to ask me to police the guidelines for all the various ex-office holders is something that is not contemplated or asked for, or intended in the guidelines. That is the point the Hon. Member has to get into his head. It is unfortunate that so much misunderstanding has existed about the effect of these guidelines.


POSITION OF DEPUTY PRIME MINISTER
Ian Deans: Madam Speaker, I have a supplementary question. The Minister very carefully avoided answering directly the question that I asked him. Let me ask this question. Was the Deputy Prime Minister aware of the guidelines that were in existence from April 28, 1980, as they applied to former office holders, former Ministers of the Crown? Did he not think that it might be in the best interests of the country, Mr. Gillespie and the Government, to bring to Mr. Gillespie's attention that such guidelines existed and that he might be in violation of them?


Allan Joseph MacEachen: Madam Speaker, of course I was well aware of the guidelines. They were sent to me in a letter of April 28 by the Prime Minister. I was aware of the guidelines. It is my responsibility to observe the guidelines as they apply to my conduct. I intend to do that. It is up to every other individual to apply the guidelines to his conduct. That is the purpose of the guidelines.


Ian Deans: It is a public matter.


Allan Joseph MacEachen: Of course it is a public matter, but it is a guideline, and the Hon. Member better understand that. These are guidelines that we must follow.


Ian Deans: You broke the guidelines if you dealt with him when you knew he was breaking them.


Allan Joseph MacEachen: The Hon. Member is attempting to extrapolate beyond the guidelines and establish a new principle that is not covered in the guidelines.


CONFLICT OF INTEREST GUIDELINES
Hon. Roch La Salle (Joliette):: Madam Speaker, 1 was listening to the Deputy Prime Minister as he tried to defend

February 21, 1983
Oral Questions
and even diminish the scope of the guidelines which his own Government established some time ago. I would like to ask him whether he agrees that the guidelines clearly prohibit lobbying on behalf of any persons corporation or agency for which the Ministers were responsible. It is clear that on October 29, the former Minister, Mr. Gillespie, was responsible for an agreement in principle that led to the announcement made by the present Deputy Prime Minister on April 4. It is also clear that negotiations and lobbying took place, and that contacts were made. Mr. Gillespie was responsible, and this has been proven.
In the circumstances, I feel that today, instead of following the example of the Prime Minister who last week gave a distorted interpretation of the Government's own guidelines, the Deputy Prime Minister should respect these guidelines and demonstrate to Canadians that the people representing them today have the moral courage to demand the resignation of those who were at fault in this matter.


Allan Joseph MacEachen: Madam Speaker, 1 would like to hear the Hon. Member's question.


Roch La Salle: Madam Speaker, my question is very simple. I am asking the Deputy Prime Minister whether he has the moral courage to oblige his Government to respect its own guidelines. If he does intend to respect the guidelines, he will have to ask the Minister of Finance and perhaps others among his colleagues who took part in this project to resign, because of their failure to respect the guidelines and meet the obligations imposed on them by the present Prime Minister. Finally, I would like to know whether the Prime Minister has the moral fortitude to enforce directives established by the Government for its own Ministers. That is my question.


Allan Joseph MacEachen: Madam Speaker, the Hon. Member has asked whether I respect the guidelines. I do respect the guidelines. They have been issued by the Prime Minister to provide guidance to Ministers on how they ought to conduct their affairs in order to avoid the appearance of conflict of interest, or to avoid conflict of interest in themselves, and I fully respect the guidelines. I refer to them frequently, and my financial affairs are being conducted fully in accordance with the guidelines. But when it comes to a guideline like the one which I quoted earlier, surely, in the first instance, it is up to the conscience and the judgment of a responsible Minister to ensure that his conduct is in accordance with the guidelines. That is the point I am making. 1 add, Madam Speaker-


Ian Deans: The Government should act in concert with-


Some Hon. Members:: Oh, oh!


Madam Speaker:: Order.


Allan Joseph MacEachen: -that it is the responsibility of every former office holder to bring his conduct within the framework of these guidelines-that is where the responsibility lies-and sitting Ministers. I have made that point clearly. The Hon. Member has asked me to suggest the resignation of my colleague, and I ask him, on what grounds? On what grounds?


Erik Nielsen: Preferential treatment.


Allan Joseph MacEachen: Because there are absolutely no grounds for believing that there was preferential treatment given to a former office holder.


Some Hon. Members:: Hear, hear!


PETITION
Madam Speaker:: I have the honour to inform the House that the Clerk of the House has laid upon the Table the three hundred and ninety-seventh Report of the Clerk of Petitions stating that he has examined the petition presented by the Hon. Member for Lethbridge-Foothills (Mr. Thacker) on Friday, February 18, 1983, and finds that the petition meets the requirements of the Standing Orders as to form.


[Stage Direction]
MR. CROSBY-REMARK OF MR. MacEACHEN DURING QUESTION PERIOD
Howard Edward Crosby: Madam Speaker, on a point of order. During the course of Question Period, I am sure you heard the Deputy Prime Minister (Mr. MacEachen) remark on the fact that Nova Scotia Members had not made any reference in the House of Commons to the Scotia Coal Synfuels Project. I would like to point out to the Hon. Minister that on January 25, 1983, this matter was raised-


Madam Speaker:: Order. Order. 1 am sorry, that is not a point of order. The Hon. Member, I believe, knows himself that he is just trying to continue the debate. He may do that on another occasion, but not now.
Is the Hon. Member for Halifax West (Mr. Crosby) rising again?


Howard Edward Crosby: No, just leaving, Madam Speaker.


Mr. Maurice Harquail (Restigouche):: Madam Speaker, that is good news in a sense because perhaps that will give us an opportunity on this side to be recognized and to have an
February 21, 1983

opportunity to speak. I have not made a practice of raising the question of not having an opportunity to put questions during Question Period, but last week for a period of three to four days very few, if any, questions were asked from this side of the House. Again, starting this week, we have just gone through Question Period without any Member on this side of the House-and I am talking not only


Some Hon. Members:: Oh, oh!


Maurice James Harquail: When I talk, 1 speak of rights; we all have rights. I think, with respect to order in the House and to our rights, there is not a bit of evidence which has been brought forward on the subject which has taken up so much time of this House that has indicated any proof. No one has proven his case, and yet the time of the House was taken with no regard for other Hon. Members on both sides of this House who may have had some pertinent questions on the economy, who may have had questions with respect to transportation problems-


Some Hon. Members:: Order.


Maurice James Harquail: -and other problems having to do with the day-to-day operations of this country. That is the point which I find pretty disturbing, and that is why I am raising it as a point of order. If the Official Loyal Opposition does not recognize its duty to pay attention to matters relating to the economy and the business of this country-


Madam Speaker:: Order. Order. Order, please. I accept the point of order put forward by the Hon. Member when he is discussing the matter of Hon. Members on the Government side not having been recognized during the Question Period. That is a perfectly legitimate point of order and I am willing to hear the Hon. Member on that point of order. But when he is debating issues which might have been brought up in the course of those questions, I cannot hear him any longer. If the Hon. Member has now made his point about not being recognized today in the Question Period, I can answer him now, and I will.
I have two Hon. Members of the Government side who have been put on the list, which is cumulative, for the purpose of asking questions. Those are two Members on the Government side. Today 1 have not recognized a single Member on the Government side. I want to make clear now to Hon. Members that I like to give everyone a chance and I tried to recognize an Hon. Member from the Government side today. But Hon. Members on the Opposition side of the House must suffer when the questions of some of their colleagues are too long. They then have a fewer number of Hon. Members who can get into the Question Period. In the same way, Hon. Members on the Government side have to realize that when Ministers take up a lot of time and give lengthy answers, which has been the case today, the result is obvious to everyone.
I allowed it to go that way because at some point during the Question Period it is important to give everyone a chance to clear up a certain matter. Because of that, obviously, Hon. Members on the Government side did suffer today. I acknowledge that, but I cannot apologize for it because it is the only way to run the Question Period.
Point of Order-Mr. Harquail


Maurice James Harquail: Madam Speaker, I certainly have demonstrated before, and it continues today, my support and respect for your judgment, and for the Chair. I want to bring to your attention, however, with respect to my point of order, that it does not only arise or begin today. It began last week. And that, by way of explanation, tells you the reason I am on my feet-


Madam Speaker:: I am sorry. No, I am sorry. If the Hon. Member thought that he was being punished unduly last week, he could have raised the matter last week. We are speaking of today. I gave my explanation for today. I will give the Hon. Member statistics on the number of Members on the Government side who have been recognized last week. I will be glad to do that. If I have not recognized a sufficient number of Liberals, I will certainly correct that in due course, as I do with Hon. Members. Justice is not done every day of the week, but within a certain period there is a balance. I can assure Hon. Members about that. I have statistics daily, weekly, monthly. It is all done in the computer. And I do that because I want to be fair.


Maurice James Harquail: But, Madam Speaker, in your preamble you have asked me, invited me, to explain. That is why I made reference to the fact that the same situation existed last week, when we were not able to be recognized throughout the whole of the Question Period.
The only point that I want to make in my point of order today is that I am being restricted from doing my duty here, which is to bring problems such as the Eastern Provincial Airways strike which exists in the Atlantic Provinces right now-


Madam Speaker:: Order. All right. Very well. I try to give Hon. Members a chance, but the Hon. Member knows that the subjects discussed in the House are raised in a certain order. The Chair has nothing to do with it.
1 explained things for today. I hope the Hon. Members accept what took place in Question Period today. I do feel there was no other way to handle it today. I did my best. I think the Hon. Member, who is now nodding, accepts that as far as today is concerned. I will try to give the Hon. Member a chance on another day.


Mr. Lewis:: Madam Speaker, with respect to the Question Period today, I would like to point out that we on this side can understand the frustration of the Hon. Member opposite. He probably wanted to get into the debate and ask questions about the conduct of the Minister of Finance (Mr. Lalonde). If he would like to see us after the Question Period today, perhaps we can assist him and other Members on that side who want to pursue this matter and who feel that the truth should come out. We would be pleased to speak to them about how we might fit them in.

February 21, 1983
Order Paper Questions


Maurice James Harquail: On that particular point, that Member and others have no lesson to give us on this issue. Let them bring the evidence and let them be prepared before they come here.


Madam Speaker:: Order. Would the Hon. Member for Restigouche (Mr. Harquail) not agree that he is getting a formidable chance right now?


Mr. Tobin:: Madam Speaker, I just wanted to say that the attempt of the Hon. Member opposite at being humorous on this important point of order is surely an indication of the Opposition's belief that somehow they can set up-


Madam Speaker:: Order. That point of order is closed.


Brian Vincent Tobin: Only the Opposition can be heard on relevant points, I understand.


Some Hon. Members:: Shame.


An Hon. Member:: Withdraw.



ROUTINE PROCEEDINGS


[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Jim Peterson (Parliamentary Secretary to Minister of State for Economic Development and Minister of State for Science and Technology):: Madam Speaker, the following questions will be answered today: Nos. 4,388 and 4,578.


Mr. Scott (Victoria-Haliburton): 1.	Who sits on the Regional Board that decides who gets assistance through the Enterprise Development Program of the Department of Industry, Trade and Commerce in the constituency of Victoria-Haliburton?
2.	Who sits on the Central Board of the Program?
3.	What are the criteria for eligibility for assistance under the Program?
4.	Who is responsible for informing MP's of successful applications for EDP funding in their constituencies?


Hon. Ed Lumley (Minister of Industry, Trade and Commerce and Minister of Regional Economic Expansion):: In so
far as the Department of Industry, Trade and Commerce is concerned:
1.	The Ontario Region Enterprise Development Board serves the whole of the Province of Ontario. This Board consists of three private sector members: R. C. Buck, Chairman; John Webster and Norman T. Curry. Senior officials of the Departments of Industry, Trade and Commerce and Regional Economic Expansion as well as the Federal Business Development Bank are also members of the Board.
2.	The Enterprise Development Regulations provide for membership of the Central Board to consist of nine private sector members and nine public sector members. The regulations provide for the public sector to be represented by senior officials from the Departments of Industry, Trade and Commerce; Regional Economic Expansion; Finance; Employment and Immigration; Ministry of State for Science and Technology; Ministry of State for Economic and Regional Development; and the Federal Business Development Bank. The private sector members of the Board are:
Pierre Demers (Acting Chairman)
Montreal, Quebec.
Francis Murphy Vancouver, B.C.
Murray Auld Winnipeg, Manitoba
John G. McD. Brown Wolfville, Nova Scotia
Helen Rice
Grande Prairie, Alberta
Marcel Bundock Drummondville, Quebec
Presently, there are three vacancies in respect of the private sector membership.
3.	Each of the various forms of assistance has certain criteria, but in general, the eligibility criteria are that the firm and the project must be viable; for loan insurance the firm must be unable to obtain financing on reasonable terms; and for grants the project must represent a significant burden in relation to the firm's resources.
4.	News releases are made available to MPs on a regular basis advising of the assistance provided to various applicants across Canada.


Mr. Siddon: 1.	With reference to the Petroleum Incentives Program grants, how many applications for the grants were received to date since the establishment of the Program?
2.	How many of the applications were received from (a) companies with prior involvement in the oil and gas industry (i) in Canada (ii) outside of Canada (b) companies involved in the (i) distillery business (ii) insurance business (iii) banking and finance business (iv) real estate business?
3.	What was the amount of the largest grant and to which company was it given?
4.	What was the average amount for grants given?
5.	Of all the companies receiving grants to date, what was the average Canadian ownership rate?
6.	What amount was spent to date for the administration of the Program?
7.	How many Program application kits were printed and distributed and what was the total cost of the kits?
February 21, 1983


Mr. Dave Dingwall (Parliamentary Secretary to Minister of Energy, Mines and Resources):: The Department of Energy, Mines and Resources reports as follows:
1.	To date, a total of 499 applications for incentives have been filed with the Petroleum Incentives Program.
2.	The requested information is not available in departmental records.
3.	Pursuant to Section 17 of the Petroleum Incentives Program Act, the name of a specific applicant is privileged information and, therefore, cannot be released. However, payments will be reported in an appropriate manner in EM&R's Annual Report.
4.	To date, the average incentives granted per applicant has been $5,300,624 and the average incentive granted per application has been $3,032,234.
5.	More than 96 per cent of payments made to date, have been made to applicants with Canadian ownership rates high enough to qualify for the maximum rate of incentives.
6.	Administrative costs to date are $7,070,889.
7.	The Petroleum Incentives Program kit released July, 1982 was printed at a cost of $38,500 for 10,000 copies. Initially, 6,300 copies were distributed to the PIP mailing list and distribution outlets across the country. Since that time, an additional 1,900 have been sent to individuals requesting the information.


James Scott (Jim) Peterson: Madam Speaker, if question No. 4,500 could be made an order for return, this return would be tabled immediately.


Madam Speaker:: Is it the pleasure of the House that question No. 4,500 be deemed to have been made an order for return?


Some Hon. Members:: Agreed.

EM&R NEWSPAPER ADVERTISEMENT


Mr. Munro (Esquimalt-Saanich): 1.	Was a full page advertisement placed in mid-August in a number of Canadian newspapers by the Department of Energy, Mines and Resources and entitled "Complete Energy Security for Canada is this close" and, if so (a) what was the total cost (b) in which newspapers was it placed and how often in each (c) by newspaper, what amount did each placement cost?
2.	(a) Who designed the advertisement (b) what was the design cost (c) what was the advertising agency's fee?
Return tabled.
Income Tax


James Scott (Jim) Peterson: Madam Speaker, I suggest that the remaining questions be allowed to stand.


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


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Lalonde that Bill C-139, to amend the Statute Law relating to Income Tax (No. 2), be read the second time and referred to a Committee of the Whole.
Laverne Lewycky: Mr. Speaker, I wish to continue my remarks on Bill C-139. Before I was interrupted pursuant to Standing Order 21, I was saying that Bill C-139 was brought in as a result of some three budgets that have been brought down by the Government. They were the budgets of November, 1981 and June, 1982 and the mini-budget of last fall. This legislation, which deals with tax policy, took considerable time, some 15 months, to come to the House. It comprises some 300 pages. It is extremely complex and people do not understand it. It certainly has a detrimental effect on the performance of the Department of National Revenue. The Department has indicated that Canadians will not receive their income tax refund until this legislation is passed.
I was attempting to point out earlier how the Department of National Revenue certainly has no qualms about collecting taxes before appropriate laws are passed. However, we see how the bureaucracy is acting with regard to tax refunds. Unfortunately, this omnibus Bill does not address many problems that people such as my constituents face.
There are many farmers in my constituency as it is a rural, agricultural constituency. Many of the measures in this legislation do not deal in a systematic and helpful way with the problems faced by farmers in my area.
I would like to reiterate one of the matters raised by our agriculture critic earlier in the debate. It concerns the fact that one of the major changes introduced in Bill C-139 eliminates the income tax averaging annuity contract and replaces it with a system of forward averaging. In many respects, this is not the best answer to the problems that some of the farmers or small-businessmen face in our area. Within Bill C-139 we find that there is a reduction in the capital cost allowance in the first year. This is of particular concern in respect of farm equipment which would have been eligible under the previous provisions for a 30 per cent allowance in the first year. Under

February 21, 1983
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the new proposals, only 15 per cent of the capital cost allowance would be eligible. I would point out in this respect that if our agricultural and other primary producers received a proper benefit in income tax on the operating costs of their farms, the rest of the economy would move again.
I notice that you are getting ready to indicate that my time is up, Mr. Speaker. I would just mention that we oppose this Bill because it is seriously flawed and because we think it should not be dealt with in its present form at this time.


Mr. Bud Bradley (Haldimand-Norfolk):: Mr. Speaker, 1 take this opportunity to speak on Bill C-139. If the Hon. Member for Restigouche (Mr. Harquail) had been really concerned about taking part in debate on meaningful issues in the House, he could have put his ten minutes to use and possibly spoken on Bill C-139. However, our Party will speak on it seeing that he had his four chances to stand in the House this afternoon to have what amounted to a main question and three supplementary questions. We will try to assist him in the future and, hopefully, move him over here to the Opposition where he can ask questions to his content.
We certainly support the Speaker in trying to sort this problem out in the House. We realize the hardship the Hon. Member faces on occasion.
I did not think that 1 would have a chance to speak on this Bill, but the Hon. Member for London-Middlesex (Mr. Bloomfield) made it possible as a result of his attempt at parliamentary reform and kinship across the floor by forcing us to sit through the lunch hour.
As you know, 1 come from a riding in southern Ontario. Many of my constituents are very concerned about Bill C-139. In my riding there are people in the small business field, in the agricultural field and even in the major industrial field, and amongst all of them there is confusion as a result of the complexities of this Bill. There have been some 500 changes to the Income Tax Act in the last 11 years, 42 of them in the Bill before us. People do not know where to turn for understanding. The only people the Bill seems to assist are the accountants, and even they are frustrated.
Having had some military experience and thus something to do with regulations and having spent some eight years in university, I thought I would be able to understand the Bill. However, being a moderate man from a rural riding, I need some assistance, and this Bill does not offer it.
One of the things that concerns people in my riding, for example, is general averaging. It is being replaced by forward averaging and that sounds fine. When we read the definition of "accumulated averaging amount", however, this is what we are faced with in clause 69(8) on p. 162 of the Bill, which reads as follows:
(o) "accumulated averaging amount" of an individual at the end of any taxation year means the product obtained when
(i) the amount, if any, by which the aggregate of
(A)	the individual's accumulated averaging amount at the end of the immediately preceding taxation year, and
(B)	the amount deducted under subsection (1) by the individual in computing his taxable income for the year
exceeds
(C)	the amount added under subsection (2) by the individual in computing his taxable income for the year
is multiplied by
(ii) the ratio, adjusted in such manner as may be prescribed and rounded to the nearest one-thousandth or, where the ratio is equidistant from two one-thousandths, to the greater thereof, that the Consumer Price Index for the 12 month period that ended on the 30th day of September next before that year bears to the Consumer Price Index for the 12 month period that ended immediately before the commencement of that 12 month period; and
The people of Haldimand-Norfolk find that very confusing, Mr. Speaker, but perhaps the Minister and the people in his Department do not. We are just average, rural folk, and we would like the Government to try to make things a little simpler for us. The small business people and the farmers in my riding need help, not more regulations or definitions or restrictions. Small-businessmen are concerned about interest rates and about the decreased purchasing power of the individual. The farmers are not concerned about how much paper work they have to do to calculate their taxes; they are concerned about the cost of equipment, fertilizer, help, fuel and everything they need on the farm. They are concerned about the low return they receive for their work, not how difficult the Government can make the Income Tax Act.
I looked for the capital gains exemption and a new valuation day date which was promised by the Minister of Agriculture (Mr. Whelan) in the last election campaign. That is what the farmers need; it is what they count on for their retirement plan. They also need something to stimulate their business, not more bankruptcies and foreclosures. How can they be proud of their country when they consider the economic outlook?
Figures issued by the OECD on economic outlook indicate that in the areas of economic growth and productivity, Canada ranks last of the 24 leading industrialized countries. We have the second highest unemployment rate in the industrialized world, second only to the United Kingdom. Japan has an unemployment rate of 2.25 per cent, and Germany 8.25 per cent, 5 points less than ours. Canada is the only OECD country in the top ten, whose industrial productivity has decreased. We rank tenth behind the United States, Japan, Germany, France, United Kingdom, Italy, Belgium, Denmark and Sweden. All other countries registered some increase but Canada experienced a drop of 0.2 per cent.
How can small businessmen and farmers make plans? The figures I have quoted do not demonstrate leadership. They cannot plan five years ahead when the governing Party changes the Act every time it presents a budget. All levels of business are concerned-individuals, small business people, major corporations, farmers, fishermen, even municipal and provincial Governments.
In the pre-budget statement presented to the Minister of Finance (Mr. Lalonde) in January, 1983, the Canadian Chamber of Commerce stated as follows on p. 19:
February 21, 1983

We have expressed our view on previous occasions that the post-budget process is now grossly over-extended. We hope that we will not see again a situation where legislation is passed in 1983 relating to the 1981 taxation year. We believe that the government should adopt an approach where draft legislation is tabled on budget night. We are appreciative of the change in approach taken for Bill C-139 where detailed explanatory notes were released. We believe this approach should be followed in the future, and even be amplified, making it much easier to react to the draft legislation in a timely fashion.
We believe that it is generally agreed that the Income Tax Act has become too complex in the past few years, especially in the areas relating to small business. The reason why this has occurred is not difficult to establish; every budget in the past few years has added another layer of complexity onto those which have gone before, so the whole system is now virtually staggering under its own weight.
When the Chamber of Commerce expresses that view, Mr. Speaker, we are in trouble.
How does all this affect Canadians? There have been four different versions of a budget-the one introduced in November 1981, the version that amended it on December 18, 1981, the one that was dropped on us on June 28, 1982, and then, of course, the one of October 27, 1982. In addition, there have been all sorts of minor announcements and clarifications, such as the January 1982 announcement of employee benefits.
These other things I mentioned concern us and we want to see them clarified and brought into better perspective in the budget. We could talk about this for days and hours, but I am glad to have had the time to raise a few of the issues that are of concern to people in my area and which I think should be of concern to all Canadians.


Hon. Allan B. McKinnon (Victoria):: Mr. Speaker, this Bill is totally incomprehensible. I realize that it is not the first one that we could not understand and that nobody else, including the Minister of Finance (Mr. Lalonde) could understand. The Minister of National Revenue (Mr. Bussieres) also has problems with it.
1 was glad to see Members of the NDP participate in the debate and slam the Liberals today. I had been worried about their close collaboration with the Liberals when they were saying that they would not campaign against them in the constituencies in the foreseeable future. But they are with us on Bill C-139, Mr. Speaker.
This Bill is partly the result of the worst budget ever brought down. That was in November 1981 when the Deputy Prime Minister (Mr. MacEachen) was Minister of Finance. He decided to correct everything without giving any real thought to what the effects might be. Consequently, he brought in a horrible budget to close the so-called loopholes. Actually, they were tax incentives that had kept such industries going as the building industry. Suddenly the door was slammed. I shall not soon forget the look of absolute horror on the face of the Deputy Prime Minister who was then the Minister of Finance. It was pointed out to him by the Hon. Member for Vancouver Centre (Miss Carney) that the immediate result of his budget at that time was to put some 20,000 construction workers out of work in the Province of British Columbia. Until that time I believe he had gone through it as a kind of exercise in some sort of paper war so that he would look good to people who were fretting about tax loopholes in the construction industry. Possibly this was his first realization that he had actually put a lot of people out of work, simply because of what he thought was a good speech
Income Tax
given in support of a budget that some people believe to this day he had not read before presenting.
All the changes in the budget ever since then have been piecemeal and have frequently left the impression that they have postponed the implementation of various sections, have cut amounts in half, have cut percentages in half or by a third, or found some other amelioration for the rather savage changes. They did not withdraw the entire budget, and they withdrew very few major portions of it.
I would like to speak for a few minutes about the problems with the terminology in the Bill and in taxation matters in general. I have received many letters about the inability of people to understand the taxation rules until too late. One such letter was from a lady in my riding. I wrote to the Minister about it. I would like to refer to parts of this letter and, rather than identifying the woman who wrote it, I will call her Ms. X. The second paragraph indicates that at present she is age 99 and is fortunate enough to have a gentleman, whose address is such and such, to look after her affairs and have power of attorney. This gentleman was most upset because he had paid her taxes for 1981 on time but on a once-a-year basis. He did that because her total income in 1981 was $16,843. More than $14,000 of this income came to her only in November or later in 1981. This would likely be because of savings bonds or Government bonds. She received her income in November but was expected to pay taxes in June, on the first instalment for the year. She did not understand that and made only a onetime payment for 1981.
I run into quite a few people in my riding whose incomes come from sharecropping arrangements which they have back on family farms in Alberta or Saskatchewan. This is a payment they receive whenever the Government makes a wheat payment. It is not necessarily phased out once every quarter of the year; quite often it comes in in the fall.
I wrote a letter to the then Minister of National Revenue in which I said that it was difficult to understand why the Government wished to have my constituent pay through three-quarters of the year on income she would not receive until the fourth quarter of the year. It is no wonder that the gentleman who was looking after her affairs was puzzled. In part my letter read:
I wonder if you would be kind enough to have your officials look into this matter and determine if proper warning was given to Mr. . . . that Mary ... (aged 99) would be required to pay taxes quarterly apparently based on her total annual income.
I look forward to your early, favourable reply.
I received the usual answer acknowledging receipt of my letter, and then I received a further reply a month after I had written. That was pretty quick time for that group.
As an aside, 1 would like to congratulate the current Minister of Finance. I guess he needs every kind word he can get after the shambles he has made this week and last week of the

February 21, 1983
Income Tax
conduct guidelines of the current Prime Minister (Mr. Trudeau). But he did something of interest, because I am now receiving letters from the Minister of Finance in answer to ones which I wrote to the former Minister of Finance, the present Deputy Prime Minister, over a year ago. 1 thank him for his letter of January 1982. At least the current Minister is beginning to get the mail answered. Apparently he has something over a year's backlog left to him by the rather feckless Deputy Prime Minister when he was Minister of Finance.
A month after 1 had written asking about this particular lady who paid her taxes on an annual basis until this year, 1 received a reply from the Minister. The first thing she recalled about it all was that not only was she to pay on a quarterly basis, but she owed them so much for the first quarter and so much in interest on the payment she had not made. The answer, which was supposed to please them, was contained in a letter addressed to me from the then Minister of National Revenue, which read in part as follows:
I am writing in reply to your letter of July 14 ... in regard to the income tax affairs of Ms.-
It is true that the requirement to pay tax on income in the year received creates situations where a portion of the tax is required to be paid prior to receipt of the actual income. Self-employed businessmen in summer seasonal operations face a similar problem.
I am sure that would be of great interest to this 99 year old lady! It continued:
In their case, they would not normally be in receipt of any income until the month of July but, nevertheless, would have been obliged to make a quarterly payment of tax in the immediately preceding June and March quarters.
My Head Office officials have reviewed Ms. ... records and have informed me that she was advised during the 1980 calendar year that she may be subject to the instalment requirements.
Now, listen to this; it goes on:
The advice Ms. . . . would have received was in the form of a T7B, Instalment Guide for Individuals, along with a T3T01 remittance form. In addition, Ms. . . . was also charged instalment interest on the 1980 tax assessment.
I trust the foregoing explanation will assist you in replying to your constituent in a satisfactory manner.
Flow on earth do we reply in a satisfactory manner to a 99-year old constituent when the officials claim that because they sent the Instalment Guide for Individuals in an envelope to her in 1980, she should have known that it changed her system of paying taxes, and therefore they will penalize her for not paying them under this system right from scratch. Ridiculous.
I am one-and I suppose the same is true of most Members of the House-who has my income tax forms completed by an accountant. It has gone beyond the scope of most of us to fill out our own income tax forms. I believe Department officials should begin considering the fact that all the accounting could be done by the Department or something, because I do not know how to figure it out. When one tries to read the form which Ms. X was supposed to have understood, one would not believe it. It is ten pages long. It is full of anomalies. It talks about Option A and Option B. I can hardly believe that the poor soul was supposed to understand. In part it read:
General Requirements
If you have a taxable income, you are required to make quarterly instalment payments of income tax unless:
(a)	taxes deducted at source from at least three-quarters of your "Net
Income";
(b)	your chief source of income is farming or fishing; or
(c)	either your Federal Income Tax for 1981 or your estimate of Federal
Income Tax for 1982 does not exceed $400.
Instalment payments of Canada Pension Plan contributions may also be required (see page 7).
There are ten pages in this document, and by the time one gets to page 7 it tells one the following:
Calculation of Canada Pension Plan Contributions.
I am not sure what that has to do with it. Also it indicates:
Estimated Canada Pension Plan Contributions Payable by Instalments.
Perhaps they made a mistake and it should have been page
8.	Who knows? This is the kind of problem with which Members of Parliament are faced because of these omnibus or enormous Bills that contain totally non-understandable English.
How would Hon. Members like to be faced with understanding Clause 12.(1) at page 44, which reads:
Paragraph 20(l)(r) of the said Act is amended by striking out the word "or" at the end of subparagraph (ii) thereof, by adding the word "or" at the end of subparagraph (iii) thereof and by adding thereto, immediately after subparagraph (iii) thereof, the following subparagraph:
"(iv) borrowed money used to acquire an interest in an annuity contract to
which section 12.2 applies, or would apply if the contract had a third
anniversary in the year-
Is that clear? In conclusion I would like to refer to an Act which was passed by the United Nations. We should send down Bills to them. This one was written in simple English, and we are able to understand it very easily. I am sorry I do not have any time left in which to quote from it.


Mr. Neil Young (Beaches):: Mr. Speaker, I agree with every other speaker whom I have heard comment on Bill C-139. It is the most complex piece of legislation which this House has seen for some time. Certainly the most complex that I have ever had to deal with since coming here three years ago. The Bill itself, which is to amend the Income Tax Act, is about 300 pages thick.


Mr. Riis:: It is sick.


Neil Young: It is sick. That is probably right. But it took the Department of Finance another 200 pages in explanatory notes in an attempt to set out to Canadians and to Members of this House what the amendments are all about. It has not been particularly easy for Members of Parliament, for the public and even those who are experts and professionals in the field, to understand what the Government is trying to do here. In fact, one writer, Robert J. Jackson, head of the Political Science Department at Carleton University, in attempting to define what the Government was trying to do, wrote:
In the tax field the two MacEachen budgets, of November, 1981 and June, 1982, were catastrophes that never became law. Neither did Lalonde's minibudget of last fall, which tried to undo the worst damage of his predecessor.
February 21, 1983

What we are attempting to do is to deal with bad amendments which were supposed to have been made less so by a new Minister of Finance (Mr. Lalonde).
In going over the Bill itself and looking through the explanatory notes it would seem that the present Minister of Finance has resorted to the same kind of twisting and bandying about of an income tax system that in general is totally inequitable. It is particularly inequitable in regard to people at the low end of the income scale. He had an opportunity, I think, in finally bringing this particular Bill before the House, to have made some amendments to the Income Tax Act for which many groups across the country have been calling for quite a number of years. For instance, he could have taken into consideration the findings of the Special Committee on the Disabled and the Handicapped which travelled across the country listening to disabled groups and individuals about their financial needs and what the Government could do to make life a little bit better for them to help them participate in the mainstream of Canadian life as able bodied individuals have been permitted and allowed to do over the years. There was one simple amendment the Minister could have brought in, to which he said earlier he would give consideration, namely to bring in some amendments to the Income Tax Act which would have offset the cost of disability. A disabled or handicapped person has living costs which are in excess of what an able bodied person has. Very often a person, particularly one with mobility problems, requires special forms of transportation. This is an additional cost to that individual. It should be remembered that most disabled people receive far below what we would normally consider to be an average income. In fact, most individuals have incomes which would be considered at or below the poverty level. The Government could have acted on some of the recommendations made by that Special Committee. Amendments could have been made to the Income Tax Act.
In response to a constituent's complaint in this area, the Minister of Finance stated that his Department was reviewing income tax concessions currently available to the disabled as well as recommendations which were made to our Committee. The Minister of Finance certainly could have made some move in that area without its having a drastic effect on the existing revenue the Government receives.
In another area the Minister could have done something for the disabled people and their families by taking into consideration the financial needs of those who have mobility problems, those who are not sighted and those with other disabilities. Concessions could have been made through the income tax system to allow either the disabled persons or their families to make renovations to their own homes or apartments so as to make them easily accessible for disabled people.
Under current legislation there are many contradictions which make accessibility difficult to achieve. For example, special devices to assist disabled persons in making their toilet should be made tax deductible. What about renovations to make the doorway to the bathroom wider so that the disabled person can have access to the bathroom? The committee felt that in specific instances such as those, the Department of Finance could act immediately to provide deductions without
Income Tax
waiting for presentations from other Departments. That would have been a rather simple thing for the Minister to do had he so chosen. But, he did not.
What about amendments to the Income Tax Act to encourage on-the-job-training for disabled people? The Minister's Department did bring forward an employment program several years ago. It provided some assistance with equipment to allow a disabled individual to fit into the normal workplace. That particular program, to my knowledge, has not been very successful, primarily because the federal Government has not shown an example by bringing in, within its own Departments, adequate training programs or affirmative action programs for disabled people. In the federal Government's own employment practices it still has a long way to go to accomplish some level of satisfaction in that area. The private sector is not likely to act until the Government-and the Committee argued this very strongly-takes a leadership role in employing disabled and handicapped people. From my own experience, especially in small business, small businesses are more open to the suggestion of hiring disabled people than are large corporations and governments.
The Government could have assisted small businesses which recognize that disabled people should be judged for their ability rather than their disability. The very least the Gover-ment could have done was to accommodate the good citizenship shown by the small business community and to assist small businesses to do their job even better.
1 see that my time has run out, Mr. Speaker. I could speak for another 40 minutes on this subject.


Mr. Chris Speyer (Cambridge):: Mr. Speaker, I am pleased to take part in this debate. It is probably one of the most important events that has ensued with respect to matters incredibly complex. I have heard the Hon. Member for Victoria (Mr. McKinnon) speak about complexity. He put it within one term of reference. I have a personal term of reference within which I would like to put the complexity. It came about as a result of being aware that I would be speaking today concerning the provisions of the Income Tax Act. I met three tax accountants from a large Canadian Firm in Toronto last Friday. They outlined two points to me. The first one dealt with ordinary accountants, those in small firms in towns like Cambridge. In some cases because of the complexity of this Bill it was beyond their capabilities to understand it fully. The result was that accountants were coming to these large firms to seek advice, but even these large firms found it difficult to give advice in some circumstances.
This tax partner, who deals with international finance and large multinational corporations, made a second point. These particular areas are complex by their very nature, with international implications. However, when compared with the provisions with which a small business person and an accountant advising the small businessman must deal, they bear no

February 21, 1983
Income Tax
absolute relation in terms of their complexity. He asked me if I would point out in my speech the provisions of Section 125(3) of the Income Tax Act and he asked me to defy anyone, through Your Honour-and I see that the Minister of National Revenue (Mr. Bussieres) is here-to say exactly what the provisions of Section 125, 1 through 6, mean. I read it over the weekend. I was once a practising lawyer and dealt with a great deal of tax litigation. I will say to Your Honour that ordinary people certainly cannot understand it and accountants do not even have the time to try to understand it. Some do not have the aptitude to do so. The large firms are having a great deal of difficulty, especially with the one section that I pointed out. Taxes are the price that we pay for civilization, and it is a very dear price that we are paying these days.
I would like to discuss three or four aspects of the new provisions of the Income Tax Act. One of the most important, from my perspective because I am a small business critic, concerns RRSPs. Everyone knows that interest expense on contribution to RRSPs made after November 12, 1981, will not be deductible. The provision with respect to deductibility was a tax preference because it was given on the social understanding that it was wise for people to provide for their own retirement. That was a laudable social and public goal. It has been absolutely stripped by the provisions of this particular piece of legislation. The objective of the RRSP, as I say, is to allow savings for retirement. If an individual continually borrows year after year in order to make RRSP contributions, never paying off any of these loans, then the objective of saving for retirement is completely frustrated. However, most lenders require that the RRSP loans be paid off within one year. If one goes to the lending institutions, whether it be the credit unions or the banks, and looks at the advertisements, one finds that they will lend money for the purposes of buying an RRSP, but one of the provisions is that it be paid off within one calendar year.
This is obviously another Government grab for revenue. It is as simple as that. The reality is that if people cannot borrow for the purposes of providing for their own retirement, they will not become involved in RRSPs, which I believe to be a public and social necessity because it deals with the philosophy to which I subscribe, that is, self responsibility. I find the situation with respect to RRSPs nothing short of appalling.
Let me deal with capital cost allowance. Here we are, at this particular point in our history, in the depths of a very deep recession. We are in a situation where the Government will be taking $3 billion out of the private sector and putting it into the public sector. I find this to be absolutely against the grain so far as I am concerned. It is certainly nothing in which I have ever believed, especially at this point in time. There has been an abridgement by the Government. Specifically, I point out Class 29 write-offs, depreciable property.
Your Honour may recall the budget of May 8, 1973, I believe, brought in by John Turner. In his speech on the budget, with respect to Class 29, he said he wanted to create
employment because that was the most imperative social issue at that time. He brought in what is known as the speedy writeoff for manufacturing. In other words, in the first and second years a person could write off 50 per cent of any manufactured machinery purchased. He was holding out a carrot. The former Minister of Finance gave three reasons at that point in time. First, he said it would create employment. I agree, it did create employment. Second, he said it would enhance cash flow. Because that carrot was being held out, the third provision was that we would avoid obsolescence. As I say, to take such a tremendous amount of money out of the private sector and put it into the public sector at this time is totally without foundation or justification.
The third matter I would like to discuss is the corporate distribution tax. I can certainly understand why the Government is proposing it, because it is trying to ensure that salaries are treated in the same manner as dividends. That is where I disagree. I will give a very short example. Under the old system, if a company was taxable at $100, the corporate tax, the small business rate, would be approximately $25, with $75 left over. If a dividend was paid on the $75 under the 1982 scenario, it would amount to approximately $18.75, which was one-quarter of the amount. The total tax involved would be $18.75 plus the $25, so that at the most the taxpayer would be paying $43.75. Under the 1983 budget provisions, with that same $100, there is a quarter off, which makes it $75; there is the corporate distribution or Part II tax, payable by the company, which brings it down to $66.67; and the personal tax on the dividend at one-quarter of the rate, and what we get, really, is $50. The point I am making is that it becomes a question of preference. I understand, because it has been clearly stated, why the Government did this. I have always believed, and still do, that being able to take money out by way of dividends in this-no doubt about it-preferred way, was socially and publicly good. I do not see why it was changed.
I would like to touch briefly on two other areas. One concerns work in progress. I was happy to see that the provisions of the November 1981 budget were changed with respect to professionals such as lawyers and accountants who could not be incorporated. What irritated me is that it discriminated against architects and engineers. I do not think there are any Members in the House who have not received letters from their local engineers about these discriminatory provisions. In my view, the reason these professional people were discriminated against was that it was said they could incorporate and were therefore eligible for the small business rate of tax. However, from everything that I have been able to ascertain, if I could use a word of the street, the architects and engineers are really getting "shafted" with respect to this provision, whereas there are proper remedies with respect to lawyers and accountants.
I had hoped to make a couple of points more, but I see that Your Honour is giving me the nod to signal that my allotted time has expired.
February 21, 1983



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: Order, please. It is my duty, pursuant to Standing Order 45, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for Trinity (Miss Nicholson)-Industrial Safety and Health-Dust Hazard in Grain Elevators; the Hon. Member for St. John's West (Mr. Crosbie)-Energy- Negotiations between the federal Government and Newfoundland on offshore resources, b) Telexed message; the Hon. Member for Nanaimo Alberni (Mr. Miller)-Fisheries- Kirby Task Force Recommendations-Presentation of Government Response, b) Request that Government secure equity in East Coast fish plants.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Lalonde that Bill C-139, to amend the Statute Law relative to Income Tax (No. 2), be read the second time and referred to a Committee of the Whole.
Mr. John A. MacDougall (Timiskaming):: Mr. Speaker, it gives me great pleasure to speak to Bill C-139 which deals with the amendments to the Income Tax Act. This Bill is the most complex Bill since 1971, and it is some 297 pages long. Moreover, it has taken the Government 398 days to bring this Bill into the House.
As a new member, elected in October, 1 must say that it is very hard for me to be able to absorb 298 pages in such a short period of time, the changes from the budgets of November, 1981, June 28, 1982 and October 27, 1982, and 350 changes to the Income Tax Act.
Today I want to speak on a few of those. My riding, which is Timiskaming, stretches from Lake Nipissing through to James Bay. My constituents have a concern with some of Bill C-139, and I would like to take a few moments to describe some of the proposed changes we would like to see. The proposed taxation on professional work in progress has been withdrawn for professions outlined under Section 125(b)(f) of the Income Tax Act: medical doctors, lawyers, accountants, dentists, veterinarians and chiropractors. The measures, however, remain the same for architects and other professions.
The one profession I would like to mention to you today is that of insurance adjusters. I have a constituent who has a very small operation and is concerned with regard to the taxation on work in progress in the adjuster's office. His understanding
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of this reform means that at a certain date it will be necessary for him to calculate the amount of time he has spent on each file. The time will be converted into a financial figure and, once this is done, taxation would apply.
His letter went on to say that if this is to happen as his operation has a very minimum margin of profit it would probably force this individual out of business. This is one concern that we have in this riding in regard to Bill C-139.
Another area which is of grave concern is the taxation of northern benefits. To the north of my riding, which enters into the James Bay area which takes in Moosonee and Moose Factory, at any time it is very hard to get qualified people into the area. Under Bill C-139 the taxing of northern benefits is not only going to jeopardize the individuals who are now in Moosonee and Moose Factory, but in future trying to interest employees whether they be in the Moose Factory hospital or with the James Bay Board of Education or with the Ministry of Natural Resources in that area, is going to be very, very difficult. And I hope that this will be taken into consideration not only for my riding in northern Ontario but in other northern areas across Canada.
I would like to move on to another area in which there is great concern with Bill C-139. Prior to my being elected to the House of Commons I was a salesman, and the taxation of the travelling expenses of individuals who are employed as salesmen is of great concern. There are many salesmen provided with a car by their company, not only in my riding but across Canada, who work for a very low income and work on an incentive basis. An individual might drive anywhere up to 125,000 miles a year, and he is being taxed for possible use of this car during the weekend or in the evening. I must say that it is very wrong to tax an individual who happens to be making in the neighbourhood of $12,000 a year on the one benefit that he might have, a car sitting in his yard for a short period of time over the weekend, and if he uses this car in any sense, whether it is going down the street to shop with his wife or whether it is just going out to a private home, he is being taxed on that.
I must say that at the same time there are companies across Canada today which are saying to their salesmen: "We are no longer going to supply you with a car. You have to go out and buy your own car. Because of this taxation we feel it is much better for you to own a car and then in turn be paid by the company." Once again, if you are in the income range of $12,000 to $16,000, a car payment on top of everything else today-everyone recognizes the problem with the way the economy is, and the fact that selling is not the same as it was five years ago-is another burden. I would like to say once again that that is another concern with Bill C-139.
There is another very, very large concern in I think almost every area across Canada, and that is taxation in regard to MURBS, in regard to apartment buildings that are much needed across this country. In my riding of Timiskaming a new
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industry was started three years ago, and we had the opportunity of having a contractor come into our area who was willing to build apartment buildings that were required. But under the taxation of the budget of November, 1981, this was taken away from private individuals who wanted the opportunity to invest money in apartment buildings. I urge this Government to reconsider this matter because this provision must be put back in, in order not only for the riding of Timiskaming to have the opportunity for the much needed apartment buildings but because there are numerous towns and cities across this country that require that extra building.
In closing I must say that under Bill C-139 it is very, very important that we look after the small businesses across this country, small businesses which make up this country. With a bill such as this, 296 pages long, and the problems that a small businessman has today in trying to understand a Bill such as this, I, and I think all Members on this side of the House, see the urgency of making this task easier. We have to make it a lot easier for the individuals because, as we all realize in these times, it is very hard to break even, let alone have to worry about hiring a chartered accountant, which some of these small businesses or individuals really cannot afford to do.
In closing I must say to you, Mr. Speaker, that I am very pleased to have had the opportunity to speak on this Bill. My people in the riding of Timiskaming are certainly pleased that you have given me that opportunity.


Hon. Elmer M. MacKay (Central Nova):: Mr. Speaker, in order for a taxation system to be successful it has to be intelligible and citizens have to abide by it cheerfully and voluntarily. I think it was the Member for Cambridge (Mr. Speyer) who said it is a price we pay for civilization.
It is becoming increasingly apparent, as the Member who just finished speaking noted, that Canadians are becoming frustrated and bewildered by the complexities of trying to cope with a very complex set of rules and regulations. It is interesting from a historic perspective to recall that when a taxation system becomes too complex and too onerous some irresponsible politicians make great gains by leading so-called tax revolts. I say to the Minister opposite, who I know is a keen student of political history, that Pierre Poujade in France at one time controlled the very balance of power in the French National Assembly by espousing a tax revolution. In the meantime, we have seen a similar phenomenon in the United States, in the State of California, and recently there has been another movement in that regard.
I think that the taxpayers and the business community want more than anything else in this country is some stability and some continuity in the taxing system. It seems to me that the Ministry of Finance and the Ministry of National Revenue are inextricably bound together. When one looks at the plethora of Ministers in the last four years and looks at the contradictory policies that have been espoused, it is very easy to see why the business community is in such a quandary about what to do.
Colleagues will remember when the present Minister of Energy (Mr. Chretien) brought in his budget. He never had that budget legitimized. The election came before that could occur. My colleague, the Hon. Member for St. John's West (Mr. Crosbie) then became Minister of Finance. That budget was never implemented. Then we had, as many Members have said, that dreadful budget brought in by the Deputy Prime Minister (Mr. MacEachen) when he was Minister of Finance. We then had the son of that budget, which in some ways was even worse than the first one.


Mr. Munro (Esquimalt-Saanich):: The illegitimate son.


Elmer MacIntosh MacKay: We then have the present Minister of Finance who brought forward a very well accepted economic treatise or statement which really served in the place of another interim budget. Now we are waiting for yet another budget. Just consider that, all within the space of four years.
Looking at the Ministry of National Revenue side, we go back to Tony Abbott in 1979, not so long ago. Well, he is gone. We had the Hon. Member for Nepean-Carleton (Mr. Baker) in our short-lived administration. We then had the Hon. Member for Grand Falls-White Bay-Labrador (Mr. Romp-key), and now the present incumbent. Again, with all respect, it is difficult to get any continuity or stability with all this turnover of ministers. In fairness, that was not enough time for these gentlemen to have mastered the complexities of the Department and perhaps not enough time for them to have coordinated their particular policies with the Minister of Finance.
However these kinds of fundamental policies as opposed to specific regulations surely need not have suffered as much as they had. I note, not with amusement but with some interest, that in order to make the situation look a little bit better for itself and perhaps more relevant, the Government recently raised the base of the cost of living index. In effect, we are starting off on a much higher plateau for the eighties. This serves to make people forget how badly their standard of living has eroded in the last decade.
Our capital gains evaluation, which was set in 1971, has not been touched. That surely is a great disincentive to the kind of business activity and confidence that the Government should be wanting to instil in ordinary Canadians and the business community. I remember speaking to the then Minister of Finance about this, the present Deputy Prime Minister. I asked him questions shortly after he became Minister. On March 13, 1981 I asked him:
Since it is approximately ten years from valuation day, and since the Minister knows that when assets change hands now they are being taxed heavily on inflation, which I think he would agree is confiscatory, what plans do he and his Cabinet colleagues have to revise or otherwise make more equitable the capital gains tax structure in this country?
The then Finance Minister replied to the effect that he had released a discussion paper on capital gains and talked about
February 21, 1983

the question of indexing. I pursued the matter in a supplementary question to the Minister, asking him about the time frame and about more specific information.
1 quoted a man named Harris who was President of the Canadian Institute of Chartered Accountants. He wrote a very good treatise on the ironic situation in which people who benefit from lotteries are not subject to capital gains while people who invest in their country are, and people who save to buy securities from Canadian companies in order to put their children through college or provide for their retirement are taxed heavily in the same way as someone who speculates in or buys foreign securities.
I pointed out to the Minister that there was room here to be more equitable, to tilt toward Canadian securities, to encourage investment in Canadian companies and be fair about the way that capital gains are being assessed. The Minister indicated that he was interested. Accordingly, I wrote him a few days later, and I said among other things:
I am enclosing a copy of Mr. Harris' speech to the Winnipeg Rotary Club as well for your information I am attaching a copy of a letter I sent to Mr. Harris.
I wrote to Mr. Harris bringing to his attention the fact that I had made these representations, based on his speech, in the House of Commons to the Minister of Finance. I suggested that Mr. Harris might wish to take the Minister up on his offer for further information and elucidation about what he said. That was the absolute end of it.
I do not know whether the present Minister of Finance expects to look at changing the capital gains tax. I know there are Members on the other side who share my views. I trust that they will make these kinds of representation because, if the present situation continues and people are taxed on a capital gains for assets based on a 1971 valuation day, they should realize that in many cases their assets are simply confiscated because of inflation and they are punished for having been prudent investors.
There is another point I would like to make in the realm of general policy. That is the need to co-ordinate some of the efforts of the Minister of National Revenue with his Cabinet colleagues. Time and again I have been struck by the anomaly of someone trying to build up a family farm as a part-time farmer to the point where he or she can leave their present employment and become a full-time farmer, but then being frustrated by the rather harsh tactics of the field workers of National Revenue. On an arbitrary basis they disallow a lot of the farmers' deductions, and go back several years to do it.
On the other hand we have the Minister of Agriculture (Mr. Whelan) who is constantly espousing the welfare, as is his job, of the farm community in this country. He is making available money through the Farm Credit Corporation and encouraging in every way he can the welfare of farmers. While he is doing this, his Cabinet colleague is chopping down the efforts of those who are trying to achieve the status of full-time farmer. Those kinds of things are very anomalous.
Although it is slightly off the subject, let me point out that it would help to staunch the drain on our taxation revenues if we tied work-training programs to unemployment insurance payments so that people who are in this enforced period of
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idleness could at least benefit to some extent from the sustenance that they are getting in order to keep them in a decent position until work is available. It would help them to become more flexible and qualified. I do not see any real effort being made to do this.
There is also the question of the attitude of the Department of National Revenue. I want to pay tribute to the present Minister and his predecessor, the Hon. Member for Grand Fall-White Bay-Labrador, for being very open and available to me and listening to the suggestions I put forward. However, there are many instances, some in my own Province, where a Draconian approach has been taken by field workers and some of the officials. In that regard, and on a bi-partisan basis, I want to pay tribute to the Hon. Member for Northumberland-Miramichi (Mr. Dionne) who, on March 26 of last year, moved the following motion:
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 taxapayer whom the Department causes to be investigated, when such investigation by the Department's officials does not result in a suit or claim.
This is sometimes done in quasi-criminal and even criminal cases when an accused is acquitted.
Has my time elapsed, Mr. Speaker? Thank you, Sir.


Mr. Ray Skelly (Comox-Powell River):: Mr. Speaker, I enter into this debate this afternoon with some misgivings, given the very serious economic plights of this country and the absolute and inappropriate actions of the Government of Canada. In talking at second reading of this income tax Bill, the basic statutory vehicle through which Government economic policy is implemented, we are in very serious difficulty with the directions of this Government and the principle it is developing. In indicating the direction taken in this particular legislation, the Income Tax Act, and the provisions within it, based on previous budgets by the Minister of Finance (Mr. Lalonde), the Government missed completely the needs of the consumers in Canada. The individual Canadian is faced with problems of trying to maintain a home or a small business and living in this very negative environment.
There are five criteria, Mr. Speaker, which we should be looking at in this House of Commons which would assist people to move through this recessionary period, this worldwide recessionary period, with nowhere near the degree of harm which has occurred to date. Rather than simply considering the Income Tax Act in isolation, this particular piece of legislation should be put forward with a five-point program. First of all, we must have an industrial strategy. The impact of the Income Tax Act on shaping investment, shaping the redistribution of wealth in this country, and producing revenue for Government programs, is all for naught if there is not some idea of a plan, where we are going to go with that very fundamental instrument and how we are going to use it to shape the nature of industry in this country. It is an absolute waste of

February 21, 1983
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time to put a statutory vehicle like the Income Tax Act before us without some kind of an economic plan.
The second point is that we need an employment strategy based on full employment. The Government over there is quite content to see the abysmal levels of unemployment continue in this country. A million and a half Canadians are unemployed, and that figure is certainly underestimated when we are talking about unemployment figures in most of the communities which I represent, whether it is Courtney, Campbell River, Northern Vancouver Island, Powell River, or the sunshine coast in British Columbia. Those communities are experiencing unemployment at rates of above 30 per cent, and that is a sort of official level. The figures do not count people on social assistance or people who have given up looking for work and do not qualify for UIC or Social Assistance. Therefore, what we should be doing today is talk about an employment strategy, a commitment on the part of this Parliament nationally to ensure that every Canadian has a right to employment, the right to a job.
The third point this Income Tax Act should be coupled with is an investment strategy. This is a major vehicle which can shape the nature of investment in this country, which can bring fulfilment to an industrial strategy and employment strategy. It is a waste of time to sit here this afternoon producing a lot of hot air in discussing an Income Tax Act which is not coupled with a logical economic plan. An investment strategy, without a broadly based industrial strategy will result in an insane investment of available capital. In my own Province of British Columbia today, the Premier of that Province is trying to explain to 1,900 men and women who have lost their jobs in the coal mines of southeastern British Columbia why this has come about. The reason it has come about, Mr. Speaker, is that the Province of British Columbia, and Ron Basford, a former Member of the Cabinet in this federal Government, have no concept of an appropriate investment scheme for that Province. Southeast coal has an over-capacity to provide coal to the Japanese. We have northeast coal; billions of dollars are being sunk into a project which will just increase the overcapacity in coal. Then, in my own riding we are going to dig another open-pit mine to undercut the price of both those projects and sell more coal to the Japanese in a shrinking, softening Japanese energy market. That is a waste of scarce and valuable capital. That is an absolutely insane resource development policy for this federal Government and the provincial Government to adopt. Where are your heads? Pull them out of the sand. Let us get this country together.
The fourth point we need a national co-operation program in this country. To sit here and talk about an Income Tax Act in isolation is ridiculous. We need a national co-operation program instead of the national conflict program which has been promoted by this Government. We have gone on long enough driving wedges between business, labour and Government for political ends. We must resolved the problems which are faced by so many Canadians in this recession. It is time to stop fighting and start cooperating and working together.
The six and five program was designed by the Liberals to pit business and Government against labour to create a fight, to envelop the population in a national internecine war. It is the most destructive thing which I have seen in my term in Parliament and what is a most destructive feature is the attitude, the failure to develop a program, and counting on short-term political gains by turning the population of Canada against organized labour, against the Public Service, and trying to entrap the business community into that obscene alliance. This Income Tax Act which we are debating this afternoon is a farce. What we need is a sense of direction. Japan, West Germany and other countries in the world have established a sense of direction. Where are we going? We need a re-commitment to social programs in this country. Health, education and welfare are the fundamental programs which underpin this country. There is an erosion of our health care system where the elderly, the poor, are going to suffer with user-pay programs. Students can no longer afford to attend our universities because costs are skyrocketing and their jobs are disappearing. Faculty members, who have spent years trying to stay on the leading edge with proper training, proper equipment, proper class sizes, in order to train the engineers and professionals of the future, are being driven out of the universities. We must make investments in those social programs.
These five points are absolutely important to establishing a direction, and we can sit here until hell freezes over, but at some point we are going to have to take positive action. At some point we are going to have to sit together and develop those five basic principles of national reconstruction. Until that happens, Mr. Speaker, the Canadian people will continue to suffer.
There are two statutory vehicles which this Government could immediately put into place. One of them is the Income Tax Act. It is here before us this afternoon. Just recently we have looked at figures on the poverty level, Mr. Speaker, and we have found that 20 per cent of the people in this country take 80 per cent of the income. The other 20 per cent of the people at the bottom take about 10 per cent of the total income. That is a national obscenity. But it can be corrected and, with any sense of fair play, it has to be. It should be done by this legislation, but that question is being ignored. The Income Tax Act could also establish an investment program in this country which usefully uses our pools of capital to develop a diversified industrial strategy, in the forest industry, in the mines and in the shipbuilding industry, so that Canadians could have jobs. Those jobs are sitting there waiting and we are doing absolutely nothing. That is an absolute obscenity.
A second legislative vehicle is the combines law which could structure the state of competition, and the nature of business. Part of the problem we face today is the result of that enormous glut of greed which went on in this country with corporate takeovers. Instead of investing in this country in appropriate technology and manufacturing, bringing us to the leading competitive edge of the world's market, we watched our major corporations swallow up other corporations trying to make a
February 21, 1983

fast buck, cutting people out of work. We watched the Minister of Consumer and Corporate Affairs (Mr. Ouellet) spin his wheels, and the Government spin its wheels, by failing to bring forward an appropriate combines law which would structure the nature of our economy and would give small businesses a fair opportunity in the marketplace to compete with the large businesses, the Imperial Oils and the Royal Banks of this country.
With respect to the Bankruptcy Act, a third legislative vehicle we need in the short term to protect home owners and businessmen from the loss of their homes and business. The Income Tax Act is important, but if it stands alone, Mr. Speaker, we are spinning our wheels, we are producing nothing for Canadians. That Income Tax Act has to be coupled with a change in policy, and the five points which I outlined should be acted on now so we can make rational sense of this legislation before us today. Those five points should be coupled with at least three pieces of legislation which are already before this House, and certainly a program which would see a national employment strategy develop. Small businesses, Mr. Speaker, in many areas of this country have been hammered into the earth. We are looking at a situation today where the combined weight of Government, provincial and federal and municipal, are crushing them. We are talking about half of the small businesses in this country being driven into the ground by Government policy.


Mr. Deputy Speaker:: Order. I regret interrupting the Hon. Member, but the time allotted to him has expired.


Mr. Walter McLean (Waterloo):: In entering into this debate on Bill C-139, we have been reminded that on December 7, 1982, the Government finally brought in the income tax legislation necessary to implement the November, 1981 budget some 13 months later. There were 389 days needed to bring Bill C-139 forward, which is a mammoth 297 page document. In spite of the fact that there have been what the Government calls extensive consultations, this document continues to be an attack on individual Canadians and on investment. It is the same attack that was announced in the November budget. The Government says that it is listening and makes a great deal about the fact that it is consulting. But it has become very clear that it is not responding. I enter this debate to reflect the views of Kitchener and Waterloo and southwestern Ontario, including parts of Woolwich Township and Elmira, the Township of Wellesley, New Hamburg and Wilmot Townships. It is an area of industry, farm and small business. I find that there is in this area a definite sense of repudiation of the direction taken in the Income Tax Act.
What is seen as being needed today is the incentive for the farmer, the small-business person and those in larger businesses in order that they may keep operating. What we see happening, rather, and the reason that this Bill is so inappropriate at this time, is a resort to survival tactics. Our small businesses are trying desperately to hold on. If the Government were interested in recovery and job creation, it would listen to what the small business are saying.
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One has to ask why such changes should be introduced at this time in the face of what is happening. Some will ask where the incentives are. They certainly are not available to those in the Waterloo regional area who are part of our soaring statistics.
The Kitchener-Waterloo Record of February 4, 1983, entitles its lead story, "Recessions Victims". It states:
The unemployment rate in Waterloo region soared in January to the highest-ever recorded level-14.2 per cent-as 22,000 people were jobless out of an area work force of about 152,000, Statistics Canada said today.
That's up from 10.8 per cent unemployment in December, when an estimated 16,000 were jobless in an area work force of 151,000.
The article continues:
Locally, 15,402 people were registered in January at the Canada Employment Centre in Kitchener as unemployed and seeking work. At the end of December there were 14,157 registered.
This particular statistic is compounded by the fact that there is a lack of incentive in the tax system for our companies to continue. In the last few weeks, Leigh Instruments has announced that it intends to sell or close its Waterloo operation. At the same time, B. F. Goodrich is seeking to sell one of its divisions, the engineering products division. The combined potential loss of jobs in the next number of months may add another 800, plus the spin-off effects.
With the tax measures that we are asked to pass, come more penalties instead of incentives to create jobs in the workplace. As I look at Kitchener-Waterloo, and the Waterloo region which is home for a major part of Canada's insurance industry, I see that industry forced into a defensive position, especially in the life insurance capital dividend-accounts, as they affect estate planning.
I look at the farm community, and I see some of the finest farming area in southwestern Ontario. As a measure of the desperation that is a part of that community, and which shows the lack of faith it has in Government, we find the phenomenon of penny sales by the Farm Survival Association. On February 10, the Kitchener- Waterloo Record reported:
About 300 militant farmers shouted down the appointed auctioneer, persuaded him to step aside and proceeded to auction off an estimated $100,000 worth of farm machinery for $19.80 near here Wednesday.
After a $40,000 tractor sold for $2.20, a truck for $5.20 and a hay wagon for less than $1, the farmers ignored police warnings and cut through wire fences to make off with the machinery belonging to an area beef farmer.
The story went on to say that the low bidding, which is the latest tactic by the Association, was to aid strapped farmers who are unable to repay their bank loans.
What we have in the mood of the country at the moment is the danger of men and women pushed, in many cases to the limit, beginning to take the law into their own hands and the structure of our society beginning to break down. What we have in rural areas is not unfamiliar in the cities.
In recent weeks I have heard a number of comments about the style of operation of the officials of the Department of National Revenue. The question now is whether they are henchmen or whether they are public servants as they begin to try to feed a Government which is functionally bankrupt with

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more revenue, which is like taking blood out of a stone. The time has come to begin building some structure of trust and incentive for those who have been working and want to continue to work.
Let me say another word in the time 1 have remaining about what this defensive posture is doing in the whole area of charities and what is being forced on our charities. The November, 1981 budget would have required charitable foundations to include the full amount of capital gains and losses in computing income, subject to the disbursement requirements.
In April, the original proposal was replaced with a requirement that foundations annually distribute an amount at least equal to 4.5 per cent of the fair market value of all their investment assets. Included was a formula to minimize the adverse impact of fluctuations in asset values, that is, disbursement in a single year will be based upon an average value of foundations' assets in the previous two fiscal years. A penalty will be imposed if the requirement is not disbursed in the given year.
Consultations with charitable foundations are continuing. The draft legislation is still outstanding. The new rules governing disbursement requirements will only apply in taxation years commencing after 1983. This will be the subject of legislation that will be introduced at a later date.
The whole matter of Bill C-139 and these income tax changes pertain not only to a lack of incentives to business, farms and industry, but also to charitable foundations and to charitable agencies themselves. I have already been espousing in the House the case of the need for a task force to review the give and take tax proposals which have been set forth by the national voluntary agencies. We are now set in the ridiculous context of Quebec-based charitable organizations being actually taken to court by National Revenue because they are pressing the Government to implement give and take tax reforms.
In all of these areas there is a need for incentives. Instead, we are faced in this House with a Bill that brings disincentive and disruption.


Mr. Arnold Malone (Crowfoot):: Mr. Speaker, this Bill is an attack on Canadians, particularly those in the middle income sector. It has been introduced by a desperate Government-a Government without heart, a Government without conscience. The Government has reached the point that it needs to impose more taxes on Canadians primarily because, due to its own mismanagement, it does not have the wealth it needs in order to govern. Fairly or unfairly, Canadians must pay to maintain the burden of over-Government which is now in place.
The Government must be blamed for its lack of vision of what would happen in the OPEC situation. Like other nations, we are dependent on oil to pull us through this period. With Brazil, Venezuela and Mexico, we are over-dependent on the high price of OPEC oil and now, with the effect of the failing price of that oil on general revenues, the Government has had to revert to a heartless attack on the Canadian farmer, those
who set aside money for their retirement, on women and on the whole future of the country. This is an attack on those people by the Government which should be protecting them. It did not have the foresight to look beyond the income it was planning to receive through its most recent energy agreement. It believed it was going to receive millions of dollars because OPEC prices would rise to S60 per barrel. Now that the price has fallen, the Government is short of money.
This country should not be dependent on one industry. We are one of the most blessed nations in the world. Not only do we have oil, we also have one-third of the world's fresh water and mineral wealth not equalled by any other nation, a forestry capacity that would be the envy of many-we want nothing, Mr. Speaker. We have every resource, including the enormous talent of the men and women of the country.
If we had practised business principles as the Japanese and Germans did we would be the wealthiest nation in the world today. Just a decade ago this country ranked second amongst the leading nations of the world; today it ranks twentieth. That has happened because the Government is taking an increasingly large portion of the Gross National Product for its own expenses and is spending less and less on incentives for the private sector.
It is a generally accepted principle that the private sector creates wealth in society. It is the engine which creates growth in the economy. The public sector redistributes the wealth to make sure it is shared equitably.
Fifteen years ago it took 27 per cent of the Gross National Product to run Government, but today it takes 42 per cent. Let me show how dangerously close we are to a totally negative position, Mr. Speaker.
If the private sector is the engine for the creation of wealth, then any time a Government tries to distribute more wealth than it creates, say 50 per cent plus one penny, it is heading in a negative direction. Today, it takes 42 per cent of the total wealth of the country to run the Government. That is necessary because of the Government's mismanagement and ill-founded projections.
When the Minister of Finance (Mr. Lalonde) was in charge of energy he put an energy program in place. But he knew nothing about energy, Mr. Speaker. He believed that the OPEC price would keep going up, with no end. That was the whole basis of the arrangement. But OPEC collapsed and so did the Minister-so badly that they put him in charge of another Department.
That dependence on one industry in a country where many industries should flourish, has caused this desperate Government, without conscience, to attack the people in the middle income sector in their retirement years. It is taking away from them income that they earned throughout a lifetime. It is a desperate snatch at nickels and dimes. In the process they are taking away the incentive that would cause the country to grow.
We are coming dangerously close to the position of the Mexicos, the Venezuelas and the Brazils of the world. For
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different reasons those countries are vulnerable because they depend on one industry. Mexico had some agricultural resource, a beef industry, some leather manufacturing and fruit production, but primarily its strength was based on petrodollars. That was even more the case with Venezuela. Brazil is an interesting contrast with Canada because it had a broader industrial base. But it made all its projections on the basis of petrodollars. Brazil is more heavily populated than Canada, and today it is on the verge of bankruptcy with a debt of $80 billion. With a population of only 24 million, this country has an accumulated debt of $140 billion.
The only reason that this country is sustained to some extent is that our forests are so large, our mineral wealth is so great, our fresh and salt water fisheries are so extensive. Otherwise, today we would be in the position of Mexico, Venezuela or Brazil.
It is because the Government believes that the price of oil would go up forever that this Bill, that attacks the farmers and retired people, is before us today. Before we pass legislation like this, the Government should do an enormous housecleaning.
Although the amount may be small in terms of total expenditures, we have to ask for the justification of the $800 per day for Donald Macdonald, the justification of the coal project connected with Alastair Gillespie who stands to make $750,000 on the basis of a $25,000 investment, for putting Michael Pitfield into the Senate or making sure that a former Minister of the Crown, Judd Buchanan, is able to establish a housing project in a national park in Banff. No other person could put such a construction unit in there because the area was not designated for that kind of housing. There are many other examples, Mr. Speaker.
Day after day the Government continues to waste money on inefficiencies and on large bureaucracies. There are Departments employing 2,000 people. We must ask why we need tax measures such as those before us if the Government cannot show that it is making every effort to restrain spending.
On the one hand we have no constraint being shown. There is no reason for the Liberals to believe that they need to hold back their spending, no reason for them not to pad the incomes of their friends, but they attack the retired people of the country, they attack farmers and small-businessmen! Small-business persons, according to this Bill, are greatly damaged by the fact that they cannot set aside moneys to invest for their future. In short, we have a Government which has caused an ill economy. It is treating it with an eyedropper. Somehow it believes that tremendous expenditures will bring about a recovery or that somehow its band-aid proposals or make-work programs are the answer. Painting the hall is not satisfactory for the creation of employment in the country. We need the private sector to be operating again for wealth to be generated in the country. On the basis of initiative-
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The Acting Speaker (Mr. Blaker):: Order, please. I wonder whether the Hon. Member would like to seek the unanimous consent of the House to continue his remarks or whether I should recognize the next speaker, because the time allotted to the Hon. Member for Crowfoot (Mr. Malone) has now expired.


Arnold John Malone: Mr. Speaker, in the interests of other Hon. Members of the House, I will not take much longer. I will just take a moment or two-


The Acting Speaker (Mr. Blaker):: Order. If the Hon. Member for Crowfoot wants to take any longer at all, I must tell him that in accordance with the rules he should seek the unanimous consent of the House. I will recognize the Hon. Member for that purpose only, that is, the purpose of seeking unanimous consent to continue his remarks.


Arnold John Malone: Thank you, Mr. Speaker, for clarifying that. I seek such consent and I trust you will find it.


The Acting Speaker (Mr. Blaker):: Is there unanimous consent for the Hon. Member to continue his remarks?


Some Hon. Members:: Agreed.


An Hon. Member:: No.


The Acting Speaker (Mr. Blaker):: There is no unanimous consent.


Some Hon. Members:: Shame!


Mr. Girve Fretz (Erie):: Mr. Speaker, there is an old saying that an infinite number of monkeys using an infinite number of typewriters would eventually type all the great works. I think they completed their first one. It is called the Canadian Income Tax Act. Believe me, it keeps getting worse. The Bill we are discussing today, Bill C-139, an Act to amend the Income Tax Act, does nothing to change this situation.


Mr. Bosley:: It will take more bananas.


Claude Girvin (Girve) Fretz: That is right. We in Canada are subject to an income tax system which is based in the first instance on selfassessment. This means that it is up to us as individuals to determine how much income tax we owe and when and how it must be paid. It is not like sales tax where the rate is applied to a fixed amount, such as the price of goods, and included on an invoice, a cash register tape or a restaurant slip. Nor is income tax like property taxes, which local Governments calculate for us and on which they then send bills telling us how much we owe. No, when it comes to income tax, as I said, our system is such that the responsibility rests with us to determine how much we owe and when and how it must be paid.
Second, for decades it has been a well-established rule of jurisprudence that income tax laws be written in clear, unmistakable language. This is so because it is a self-assessing system. The most quoted statement by a court in this respect indicates:

February 21, 1983
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It is not enough to attain a degree of precision which a person reading in good faith can understand, but it is necessary to attain, if possible, a degree of precision which a person reading in bad faith cannot misunderstand. It is all the better if he cannot pretend to misunderstand it.
Third, the cost of obtaining professional help in the preparation of a tax return for the vast majority of Canadians is not deductible for income tax purposes. To be able to deduct the cost of getting one's tax return prepared, one either has to have business income or a substantial volume of investment income. Thus, the very people who most need help-that is the wage earner or the taxpayer, with perhaps one T5 for interest or a bit of dividend income-cannot get a deduction.
All right, we have established the context. It is a fundamental principle of tax law that taxpayers should be able to understand the Act. Under Canadian law it is our responsibility to Figure out correctly how much tax we owe and when and how it is to be paid. For most Canadian taxpayers, the cost of getting help with their tax returns is not deductible for tax purposes. Yes, the Income Tax Act is an unmitigated mess. The reason I say this is that it is incomprehensible. Yet every taxpayer in the country is required by law to understand it; if we do not, the cost of obtaining help is probably not deductible; if we make mistakes on our returns, we may end up paying interest and penalties.
The entire Income Tax Act was revamped back in 1972. That is really not long ago, and that so-called reform of the Act was supposed to give us a well-thought-out, simpler tax system. Since 1972 there have been more than 30 major amending Acts. There were 350 changes in 1980-81 alone. Two months ago, the Minister of Finance (Mr. Lalonde) introduced the latest amending Act. It contained 133 amendments, most of which are incomprehensible.


Mr. Baker (Nepean-Carleton):: Like the Minister.


Claude Girvin (Girve) Fretz: Yes, like the Minister. Bill C-139 is such a confusing document that neither I nor most other Hon. Members even know where to start in attempting to give it a fair appraisal.
It is not only desirable but absolutely imperative that taxpaying citizens of the country be able to communicate with their elected Government in terms that they both can understand. Is it unreasonable to expect that?


Some Hon. Members:: No.


Claude Girvin (Girve) Fretz: No, not at all, yet here we have a massive contraption of some 295 pages which reflects no less than four budgets, near budgets, mini budgets, non-budgets and what have you. This does not count the number of minor statements, adjustments, changes, modifications and just plain retreats that this monstrosity reflects. In turn, it proposes amendments to a taxation system which nearly defied logical explanation at its inception. The inevitable result of all this is that the poor individual taxpayer is so totally helpless and at sea when confronted by a taxation problem that he cannot deal with it without professional help. I believe this is wrong in principle.
Bill C-139 is also harmful to insurance companies. There remains a clear disincentive for individuals to invest in life insurance, what has been until now the main investment vehicle for the less advantaged among the Canadian population. In other words, now people might just say, "What is the use of saving money, we might as well squander it, we won't worry about it, let the state take care of us when we reach age 65".
This disincentive takes two forms. First, policyholders are to be taxed on accrued income from their policies or deferred annuities. To tax a person on hypothetical income which he or she has not received is, in every case, to force a hardship on the investor. Investors must either scrimp and save from their current incomes to pay the tax or they must liquidate some of their investments to do so. In either case, there is created a strong disincentive to invest, and that is a likelihood that one more family and one more elderly couple will be dependent on the state when they reach the end of their working and earning lives.
There are many deficiencies in the new amendments to the Income Tax Act. Not only are there sections detrimental to the life insurance companies and to the people who hold policies, but businessmen who drive company cars are now being fingered for victimization at the hands of Revenue Canada. The Government is not taxing the folks in limousines. It is taxing the hard working, marathon-driving salesmen whom you find in Holiday Inns across the country in the late evening after a day spent selling their products. They are the people who keep this economy moving. We need these people. We are treating their company vehicles almost as a form of personal income and taking away what for many was one of the few tangible and enjoyable fringe benefits of their jobs.


Walter David Baker: The transition is very expensive, too.


Claude Girvin (Girve) Fretz: What about the hardworking waitresses and waiters? Under the new terms of the Income Tax Act, they are being treated almost as common criminals. Their miserable incomes are being scrutinized with a magnifying glass.


An Hon. Member:: A typical socialist ploy.


Claude Girvin (Girve) Fretz: At the same time, the Government is going to pay Mr. Macdonald how much a day?


Some Hon. Members:: Eight hundred dollars a day.


Claude Girvin (Girve) Fretz: Again, how much?


Some Hon. Members:: Eight hundred dollars a day.


Some Hon. Members:: Shame!


Stan Darling: And $125 a day for expenses.


Claude Girvin (Girve) Fretz: Mr. Macdonald is receiving $800 a day for activities of questionable benefit to the country. These waiters
February 21, 1983

and waitresses are honest people. They are hard working. They scrimp and save, and they serve you and me in restaurants across this great country. I am proud of them.


Walter David Baker: They are the salt of the earth.


Claude Girvin (Girve) Fretz: 1 submit that in carrying on this way against the little people of this nation, the Government is giving birth to unparalleled resentment, and it will be to their own detriment.
In conclusion, Mr. Speaker, my Party has no argument with the spirit of tax reform. We say, bring it on. However, only when that reform includes the closing of loopholes for the rich and influential and the simplifying of the tax return for the average citizen will the Government receive our full and uncompromising support.


BUSINESS OF THE HOUSE
Mr. Pinard:: Mr. Speaker, on a point of order. I wish to inform the House, or rather confirm, that tomorrow, Bill C-143 will be on the agenda.


INCOME TAX
[Stage Direction]
The House resumed consideration of the motion of Mr. Lalonde that Bill C-139, to amend the Statute law relating to Income Tax (No. 2), be read the second time and referred to a Committee of the Whole.
Mr. Bob Corbett (Fundy-Royal):: Mr. Speaker, I must say I do not take a great deal of pleasure in speaking to this Bill this afternoon, particularly when it is a Bill designed to gouge the taxpayers of this nation of additional millions and millions of dollars. It seems a bit of a paradox this afternoon that we should be called upon as a Party to defend the rights of Canadians to be represented in this Parliament on the heels of a Bill that I now understand has been introduced by the Government to request an additional borrowing authority of $19 billion, which will be debated in due course.


Walter David Baker: It is a shameful Bill.


Robert Alfred Corbett: There is no question that this Bill will hit people who can ill afford to continue to support the wanton whims and ways of the Government that seems to be afflicted with some sort of desire to create a classless society. There will be no initiative left for anybody to take to work in a system that is responsible for the great country we have today. I am referring, of course, to the free enterprise system. This Government seems determined to wipe out all incentive for people to work and to contribute to society. It is a Government that seems determined to lead us down the path of socialism, a path
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fraught with great danger and one that holds very little benefit for the people of Canada or any encouragement for them to support the continuance of the group opposite.
I want to talk about the burdens this Bill will impose on people, particularly the middle and low-income people of this country who will derive very little or no benefit from the lower taxes that it will create for them. The middle and low-income people will lose proportionately from partial deindexation. There is nothing left for these people in the country but a great amount of despair. This program is being implemented by a Government that is panicking in taking steps to gain revenue. The Bill introduced in the House which requires an additional $19 billion in borrowing authority is reflective of the sort of desperation which this Government is experiencing. This Government is penalizing those Canadians who continue to remain in the work force, either through diligence or through good fortune, to support their families.
We have dealt in the House before with the plight of life insurance holders. Those people are still being penalized. The language in Bill C-139 is so difficult as to be incomprehensible. It creates hardship to people. Those people who hold insurance policies and the companies that issue them are still terribly upset with the attitude of this Government and its absolute determination to penalize policy holders.
There is a particular class of people with whom I want to deal. They are the ones who are being hit hard. They include people of retirement age and people who have worked for years contributing to pension plans and now find themselves unable, because they are relatively few in number, to deal with the magnitude and the enormity of the burdens this Government is placing on them.


Walter David Baker: It is another attack on senior citizens.


Robert Alfred Corbett: It is a desperate state when the attack of the Government has to be directed primarily at low-income earners, middle-income earners and those who are least able to protect themselves, namely those people who are about to go on pension or have recently gone on pension.
This is a sad reflection on the direction the country is taking. I suspect that if Members on the other side of the House were truthful they would admit that their offices have been flooded in recent months, as has mine and those of most Members on this side of the House, by people Finding themselves in trouble with the income tax people and who have found it more difficult to deal with this bureaucracy over the years, and over the past months in particular. These people are receiving little or no satisfaction. It is the mentality of this Government and of the Department of National Revenue that in their eyes a person is guilty until that person is able to prove his or her innocence. That is completely contrary to the foundations or democracy laid down by our forefathers when this great country of ours, Canada, was set into motion some number of years ago.

February 21, 1983
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I want to refer, as an example, to the sort of frustrations my constituents in Fundy-Royal are facing. They are basically hard working, conscientious people who, over the years, have developed, and substantially contributed to, the foundation of free enterprise and to the development of the country in no small way. Let me read a short paragraph from a piece of correspondence I received not too long ago which I think sums up very nicely the frustrations of these people. It states:
-my visions of a democracy have been greatly shattered and today I see just a hair's difference between a democracy and that of a totalitarian, socialistic Government. It appears that those individual rights of a citizen under the Charter of Rights is all a hoax and very hypocritical. It again appears that the time wasted for the constitution was merely a diversion from the real economic problems of the country with its energy and trading problems.
Your Honour will recall that at that time a good number of us who sat on this side of the House said just exactly that, that it was indeed a diversion from the economic problems. Now we know, months later, that a budget deficit which was initially forecast as being $9.8 billion was escalated to some $19 billion and went from there to $22 billion. If one checks the record, it will be found that we suggested the Minister of Finance at the time resign if it rose $3 billion over the $22 billion. Now we are told that it will be $27 billion.


Walter David Baker: Will it ever end?


An Hon. Member:: Twenty-seven billion plus.


Robert Alfred Corbett: I am sorry, $27 billion plus. That is a sorry tale to be told. I suggest that the Government must take several proposals under advisement, one of them concerning educational benefits. The Government should release the students of this nation from that doctrine which seems to be "keep 'em down on the farm". It is deplorable that if one earns $40,000 a year and is attempting to send three children through college at $4,000 a year, by the time one ends up paying taxes, one probably ends up with an income of $8,000 with which to run the household and put food on the table. Of that $8,000, probably another $3,000 will be spent on federal and provincial sales taxes.
I will suggest to the Government that it place a moratorium on the Income Tax Act changes for a period of two years in order to build up some confidence in the business community of this nation, particularly the small business community that, as we all realize and understand, is the least able to defend itself but which provides the bulk of the job.
Let us put this country back on the road. Let us create an income tax system which can be defined in layman's terms so that even the tax people, the accountants who deal with tax reform, are able to understand it. That is not the case today.
I wish the people of this nation were fully aware of the fact that the frustrations we are experiencing have been caused solely at the hands of those people opposite who refuse to recognize the plight of the low and middle income people, the pensioners, those who are least able to defend themselves. I can
only say that unless there is a distinctive change in the attitudes of those who are directing the course of the nation, God help us.


William Henry (Bill) Domm: Mr. Speaker, in dealing with Bill C-139, which is an Act to amend the statute law relating to Income Tax, I would like to point out something which was just brought to my attention today and which I feel is rather important. An article appearing in the Ottawa Citizen stated:
Businessmen who purchase gas by the gallon at a new anti-metric service station being opened Tuesday by a group of Conservative MPs can kiss their fuel tax rebates goodbye unless they convert their purchases to litres.
Anyone who uses a car for business is entitled to claim an excise tax rebate of 1.5 cents per litre-but apparently nothing per gallon.
"If you send us a rebate request in gallons, we'll just send it right back and ask you to correct it to litres", an official in the government's excise tax branch said Friday.
"It's illegal to sell gas by the gallon, so there's no way we are going to give rebates on anything but litres."
Consumers who buy their gas in gallons will have to convert their bills to litres to qualify for the rebates.
That is a lot of hogwash. Canada has been selling gasoline by the gallon in Provinces from British Columbia to Prince Edward Island since Canada became a nation. There is nothing illegal in Canada-yes, Mr. Speaker?


The Acting Speaker (Mr. Blaker):: I thank the Hon. Member for realizing that I am concerned. The issue, obviously, concerns the relevance. It is always an extremely difficult subject, particularly for the Chair, but perhaps the Hon. Member could relate his remarks to the subject matter of Bill C-139 from time to time. That would make it easier for the Chair.


William Henry (Bill) Domm: For the benefit of the Speaker, Members of the Government and Hon. Members on this side of the House, I refer to Bill C-139 at page 65a which states, "This amendment would convert the measurement of area from imperial to metric."


Some Hon. Members:: Aha!


William Henry (Bill) Domm: It states:
"-effective after 1981, the measurements referred to in the Act be converted into their metric equivalents."
With all due respect, my remarks are relevant to the Act. I am discussing the costs to the small businessman in the conversion of his land, his gas, his expenses in the running of his business, so that he can make a profit and pay some of that profit to the Government, so that he can continue on with his operations.
Since the Speaker has dealt with the isue of mandatory conversion to metric, I will draw to the attention of the House an invoice from the Department of Consumer and Corporate Affairs, which I have in my hands, which became a tax item in the hands of the retailer who received the invoice. The retailer was Len Welch's Food Market Limited of 52 Hunter Street East, Peterborough, Ontario. The invoice was dated October
February 21, 1983

20, 1982 and stated that Consumer and Corporate Affairs Canada wished to bill the dealer for a breakdown of fees involving one hour of inspection time and one and a half hours of travel time, for a total of two and a half hours at $20 per hour, amounting to $50, plus a distance of 78 miles at 22 cents per mile.


An Hon. Member:: How many kilometres is that?


William Henry (Bill) Domm: My question is, if it is not legal for a retail businessman to submit his expenses to the Government in imperial, that is, the price per gallon, why is it legal for the Department of Consumer and Corporate Affairs, which is responsible for the Metric Commission, to bill retail establishments across the country in so many cents per mile for so many gallons of gasoline?


Some Hon. Members:: Shame!


William Henry (Bill) Domm: I draw the attention of Hon. Members opposite to the fact that the Department of Consumer and Corporate Affairs is responsible for the Metric Commission which has stated that it is mandatory to use metric measurements while it is invoicing businessmen in imperial measurements, right across the country. Why is Canada Post, which is also under the Department of Consumer and Corporate Affairs, dispensing gasoline by the gallon at the main branch in Toronto, and why is the Armed Services base, under the Department of National Defence, dispensing its fuel to their required users in gallons? Why is Canada Post using imperial weigh scales to weigh parcels before they are shipped from post offices in Ontario.
I realize that I have only 10 minutes and I have only made one point, but 1 think I made it. I would like to deal with a few other points, and these are some of the reasons why we in the Opposition have been spending a considerable amount of time Fighting over one budget or another or one tax Bill or another since some three budgets ago.
I would like to put in my concluding remarks some of the things that we in Opposition have won on behalf of the people of Canada in our fight against unfair, prejudiced tax levies against the business community of this nation. I am going to list them.
First, the Government, because of the Opposition, will not tax employee health and dental benefits.
Second, the implementation of the shift in the manufacturers' sales tax to the wholesale level is delayed until 1984. It is only delayed, but it is delayed because we have consistently fought on that point of the necessity to reconsider that retrogressive measure.
Third, professionals such as doctors, dentists, lawyers, accountants and veterinarians, who are all eligible for the small business tax rate and those who would be ineligible if they were incorporated, will not be affected by the new tax treatment of work in process.
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Fourth, the small business dividend distribution tax will only apply to dividends paid out of income earned in the taxation year, starting after the end of 1982, instead of being levied on dividends paid out after November 12, 1982.
Fifth, tax exemption for housing and travel benefits of employees in northern Canada will be extended one more year, and a modified system of taxing these benefits will be phased in over a four-year period, beginning January 1, 1984.
Sixth, the pre-budget rules on the tax treatment of capital gains in corporate re-organizations will continue to apply after the end of 1982. Any new proposals resulting from a current study by independent tax experts and subsequent consultations on a planned draft document will not apply to re-organizations that are substantially advanced from the date of the new proposal.
Seventh, the proposal to require that the interest on money borrowed to earn investment income only be deducted against investment income has been now withdrawn. However, interest on money borrowed to buy RRSP's or contribute to PDSP's or a pension plan may not be deducted as was proposed last November.
Eighth, there has been a reduction in the proposed automobile standby tax from 2.5 per cent to 2 per cent. The old rate was 1 per cent. That is one of the reasons we have been debating this for so long, it is not where it should be yet.
Ninth there are, modifications to the proposal relating to forward averaging for athletes and artists.
Finally, significant changes have been made to the November, 1981 proposal concerning periodic taxation of life insurance. Policies purchased before December 2, 1982, are not affected by Bill C-139.
I say to this House that there is no easy way to pass anything today brought in by a Government that has lost its credibility. It has shown its ineptness in balancing its own budget. Whether one is a businessman, a farmer, a homeowner, a housewife or whatever, if one cannot run the Government of Canada, one cannot run one's own home. The responsibilities of Members of Parliament are to live within the framework of the money that is available, at their disposal. If the Government cannot generate through its policies the necessary income, then it behooves this Government to show responsibility to curtail some of its budgeting expenses. One of those expenses that I am happy to announce has been cut down and on which this Government has finally seen the light, is that of the Metric Commission. They have told the Metric Commission of Canada that they have walked their last kilometer. Starting the end of this month, sectors in the Metric Commission will be phased out, and by the end of 1984 we will save an annual budget of $26 million by the abolition of the Metric Commission. Following the course of Mrs. Thatcher in Britain and Ronald Reagan in the United States, we are now going to see the end of the Metric Commission in Canada. When we revert to voluntary in metric we will save the business community dollars, we will save this Government dollars and we will be more credible in the eyes of the people of this nation.

February 21, 1983
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The Acting Speaker (Mr. Blaker):: Before I recognize the next Hon. Member, it seems to me that the Chair owes at the very least a compliment to the Hon. Member for Peterborough (Mr. Domm). I have a vague feeling that I walked into a very well prepared process, but if I am vague about that I am very clear that the process was very well prepared and I admire it and I accept that the point of the Hon. Member was quite relevant.


Mr. Ted Miller (Nanaimo-Alberni):: Mr. Speaker, I would like to deal with Bill C-139 from the perspective of a whole industry which was confused because of the tax structure in this country, an industry in which tremendous difficulty was created amongst fishermen and their families as a result of a confusing income tax law. This law caused untold difficulty in the fishing industry, particularly in the area of Newfoundland and Prince Edward Island as well as Nova Scotia, New Brunswick and British Columbia.
The Bill we have today does nothing very much to clarify the situation for fishermen, but it does show a reversal of policies that were introduced in the November, 1981 budget. This action was taken by the Government in order, I think, to some extent to compensate for an audit of fishermen and the hardship that audit brought on, an audit which was done on both coasts, and went back many years over fishermen's income and which assessed fishermen a tremendous amount in income tax. A net of $30 million was assessed on an industry which was under some severe financial difficulties for a number of reasons: reduction in the quota, the amount available to fishermen; increases in the cost of energy and increases in the cost of interest to finance those industries. As a result, fishermen were faced with bills up to $500,000 in some cases but more often. 1 think, in the range of $1,200, $1,300, $1,500 and $2,000. That kind of income tax audit and the harassment from Revenue Canada in trying to collect brought hardship on families and concern from law-abiding citizens who were confused about the income tax laws, felt that they had filled in their income tax forms for a number of years well, they had received their payments from the Income Tax Department and had had no complaints for several years about how they were filling out their income tax forms. All of a sudden, during an audit, the income tax officials decided that these people had not been filling out their income tax properly, that their receipts were not adequate to qualify for the deductions they had made and, as a result, we had garnishees of up to 50 per cent of the income of those fishermen for the 1981 fishing season.
The answer to that and the answer to the number of representations from fishermen's groups about the audit and the way that the audit was being carried out was a proposed change in the Income Tax Act in the November, 1981 budget. Until then fishermen were able to pay two-thirds of their estimated income tax at the end of December and make up the difference at the end of the tax year. The Government felt that led the fishermen into some difficulties and suggested there should be a remission at source. Every time a fisherman sold fish to the processors, that income tax was to be paid.
The Government did not understand the sensitivity in the fishing industry, the requirement of fishermen to finance their operation during the fishing season. It did not understand that the fishermen had to use that source of income in the early part of the season to finance the purchase of gear, gasoline and meet other expenses.
Fortunately, fishermen were organized to some extent. There were petitions and letters from the Maritime Fishermens' Union of Prince Edward Island, the Fundy North Fishermen's Association, the United Maritime Fishermen's Co-op, the Eastern Federation of Fishermen, the Newfoundland Fishermen and Allied Workers' Union and the union in British Columbia. All made representations through the New Democratic Party and through petitions in the House objecting to the remission of income tax.
At one time the Minister of National Revenue was determined that it was the industry which proposed this change to the Income Tax Act. Their intervention was able to turn that around to the point where the Minister said that the remission of income tax at source could be voluntary. In the June, 1982 budget, it was indicated that that would be the provision in the Income Tax Act at that point. In the provision in this mass of documents before us, they no longer have the option of giving income tax at source. We are back to the status quo. What about the millions of Canadians who are not in the fortunate position of having a union or association to represent them? What about the millions who have to face the Income Tax Act on their own? They are faced with this cumbersome law which should have been reformed and simplified years ago. Instead, we are complicating it for these people.
There are accountants in my constituency who do not understand where we are going with the Income Tax Act, yet the fishermen, farmers and workers are expected to interpret this when working out their payable income tax. It is an impossibility. It just cannot be done.
Without the help of organizations, the average citizen is helpless to deal with this Government and the kind of legislation it imposes on Canadians. The sooner the Government realizes that income tax laws should benefit the citizen and not the lawyers, accountants and Government, the sooner we will have meaningful income tax reform. It should not be in a way which, as this Bill does, benefits the more wealthy in society. We should recognize the contribution of middle and low-income Canadians to the income of Government and the social programs which that income provides. Individual workers should be given credit for their work and they should receive some benefit from the Income Tax Act. They should at least have the opportunity to understand what they are supposed to be doing in terms of filing their income tax returns. Do not put them in the position in which fishermen were put in 1982 when they had to pay thousands of dollars in revenue to the Government after having believed they filed their income tax returns in a lawful manner.
February 21, 1983

This Bill is too complex for the average Canadian. As many Members of Parliament have said, it is too complex for them. Obviously it is too complex for those on the Government side.


Mr. Geoff Scott (Hamilton-Wentworth):: Mr. Speaker, many of my colleagues on this side have already placed on the record the utter contempt of the Official Opposition toward Bill C-139. It is my intention during the next few minutes to highlight a couple of the points made by my colleagues, especially those who were Members of the Progressive Conservative task force on the budget that came down in November, 1981 and on which this Bill is largely based. I would also like to express a couple of my own thoughts and those of my constituents on this Bill.
At the outset, let me express my concern and a feeling bordering on disgust at the way this Liberal Government is proceeding with Bill C-139. In November 1981, the Government introduced one of the most complex, massive and comprehensive documents in income tax history. How complex is it? When my colleague, the Hon. Member for Peterborough (Mr. Domm), dealt specifically a few moments ago with metric, he was brought to order. Even such an intelligent occupant of the Chair as yourself, Mr. Speaker, did not know that in the amendments to the Income Tax Act there is a complete section which deals with metric conversion.
How complex is it? This was dealt with by the President of the Institute of Chartered Accountants of Ontario, J. Lyman Maclnnis. I understand this has been quoted during the debate by my colleagues. He gave an amusing and fascinating speech entitled "Cleaning Up Our Act (The Income Tax Act, That Is)". This senior partner of Touche, Ross and Company of Toronto had his audience on the floor when he got to an item which affects millions of taxpayers at all levels of incomeearning capacity and wealth, capital gains. I wish to quote him very briefly. Here is how he defined capital gains under the Income Tax Act:
There are three sections of the Act listed under the heading of "Capital Gains"
.. . Let's assume you are a logical person, so you start with the first section listed there. It is Section 39. When you find Section 39, you will also find that the fun is just beginning. Section 39 begins with a sentence that has 774 words, 28 commas and two semi-colons. Lincoln's entire Gettysburg address had only 267 words in it.
Section 39 has seven subsections. It refers you to ten other sections of the Act, which in turn refer you to another 40 sections. Section 39 also refers to a completely different law called "The Cultural Property Export and Import Act". And, I'll bet you all have a copy of that sitting on your coffee table!
So here we are. In trying to find out what a capital gain is we've already had to look at about 50 different sections of the Income Tax Act, and another completely different law. And, if you get that far, the reality then hits you that Section 39 only dealt with the word "Capital". To get a definition of the word "Gain' you have to look at Section 40. I'll spare us all that agony because Section 40 makes Section 39 look easy.
In my view it would be irresponsible and a disservice to Canadians to railroad Bill C-139 through all stages of debate. This complex Bill is far too long. Its implications go far too deeply for Canadians in all walks of life. It deserves full parliamentary scrutiny.
During the summer, the Standing Committee on Finance, Trade and Economic Affairs examined a draft version of Bill
Income Tax
C-139. However, the draft Bill was incomplete and there had to be several changes. Even the Government admits the weakness of the Bill because of the number of changes it brought in insubsequent budgets and budgetary statements. Several of my colleagues have pointed out a couple of the serious weaknesses that the Government should be realizing and which this Parliament should be dealing with.
In the length of time, Mr. Speaker, that this Parliament has been called upon to deal with this huge Bill arising out of the November, 1981, budget, in human terms, over 500,000 people have lost their jobs and some 50,000 bankruptcies have been declared during this period. To put that into perspective, that means more than 500,000 jobs lost, a figure which is just about equal to the entire population of Hamilton, or Quebec City, or Calgary, or Winnipeg, or Edmonton. It is an incredible figure, Mr. Speaker, and it is something which indicates the deep concern Canadians have about the way the Government is running the country, and the very real concern which we in this Party have heard expressed by millions of Canadians as we travel across the country, and by letters coming into all of our offices.
This concern indicates that this approach to tax reform is wrong. It is dead wrong. Bill C-139 is hitting the lower and middle class income groups in so many different ways that it is going to take Canadians a long time to realize just how serious the impact will be as a result of this Bill.
The hardest hit, of course, will be the lower and middle income Canadians who will gain little or nothing from the lowering of marginal tax rates and who will lose proportionately more from partial de-indexation. The increased taxation of employee benefits will hit hardest at those in the lower and middle income brackets. It will encourage employees to seek higher wage settlements at a time when moderation is required. The taxation of housing loans will make it harder to recruit employees who must relocate. For those who already have loans, the taxation of this benefit may represent a rude shock which was not anticipated when an employee accepted a housing loan as part of his relocation package.
As my colleague, the Hon. Member for Simcoe North (Mr. Lewis), pointed out, the retirement nestegg is created by paying off the family farm. This is why farmers in my riding, farmers all over the country, but particularly the small farmers who I am familiar with in southern and southwestern Ontario, are hit very hard by Bill C-139. The Liberal Party and its bureaucrats simply do not understand that the family farm is the Canadian farmer's pension plan.
All of our constituents work hard on a day-to-day basis to put something aside for retirement. And as my colleague, the Hon. Member for Simcoe North has reported during this debate, that retirement nestegg is created by paying off the family farm. What the farmer does is sell the farm and take back a mortgage. Before the Government changed the rules, a farmer could sell his farm and invest the capital gain portion in

February 21, 1983
Income Tax
an income averaging annuity. That allowed him to plan for retirement. He could calculate his chances for surviving, and for how long, and invest the money and get an annuity. The Liberals have changed all that, and they do not care. They do not have any idea of what is happening out there. They have no idea whatsoever what is happening, particularly to farmers in Canada who now face an even greater uncertainty if the provisions of Bill C-139 go through.
The Hon. Member for Provencher (Mr. Epp) touched on much the same plight which is hitting the farmers. He put on record how the income tax legislation relates to the farmers in Manitoba, and the same applies to farmers in Hamilton-Wentworth. Every Hon. Member who represents a rural riding has been noting the number of people who come to our offices to complain about the tax system and the manner in which the tax Department is treating individual taxpayers. There is an increasing number of representations being made to our offices, Mr. Speaker, about what constitutes a hobby farm and how the income tax Department is going to be able to treat those people who own hobby farms equitably. This legislation does not speak to this at all, Mr. Speaker.
Finally, I would like to read into the record one letter which came from a constituent in Hannon, in my area:
Dear Sir,
I am writing to you about the college tuition fee income tax deduction, as of now only the student can claim this deduction. Now it seems to me that if the student has no income whatsoever, as in my son's case, as he cannot get a job, this means that the parents are paying the tuition fees, so why can't the head of the household claim these fees as a deduction.
In closing, Mr. Speaker, I would just like to say that there are many millions of Canadians out there whose individual situations will be drastically affected by Bill C-139, if it goes through as the Government is now proposing to ram it through. We, on this side, find that approach unacceptable and we are going to bat for those millions of Canadians who are concerned about what is happening to them in an income tax sense with unfair taxation, even if the Government side will not.


Hon. Flora MacDonald (Kingston and the Islands):: Mr. Speaker, earlier today I was addressing a large gathering of secretaries and administrative assistants from across the country. During the course of my remarks, I happened to mentioned that I would be returning to Ottawa to take part in the debate on the amendments to the Income Tax Act later today. I can tell you, sir, that a groan went up from that audience, not because I said I was going to go back to Ottawa to take part in this debate, but because the very mention of the Income Tax Act, and further amendments to it, brought a groan from them, as it is bringing a groan from Canadians from one coast to the other.
What those women said to me when I mentioned this, sir, was, "Is there anybody in Ottawa who can write anything at all about the income tax in straightforward, direct terms which we can understand?" They told me that what the Government is sending to them is totally incomprehensible. And these are women who work in offices, who transact business, who do
detailed studies of various financial matter every day. But what they are receiving, and what their offices are receiving, with regard to income tax is totally incomprehensible to them.
It is increasingly incomprehensible, not only to Hon. Members of Parliament, but to the general public, just how the Government House Leader (Mr. Pinard) is ordering the business of this House. I would say to him that this tax Bill, this huge Bill we now have before us, is the best example I know of, of the Government's incomprehensible and, indeed, I would say, inscrutable way of processing legislation through this House. What we have is a document 300 pages long with 134 different tax changes. That is almost impossible to digest, whether you happen to try it mentally or physically. Many of the measures contained in it need detailed study and analysis just to see what their impact is going to be on average Canadians. This is a big document, it is a hefty document, and I sometimes wonder if the Government is not trying to calculate the worth of this document by its weight.
Quite seriously, this Bill emerges from what I would consider the incomprehensible Fiscal policy of this Government stretching back over many months, indeed, years. We had that well-remembered budget in November, 1981. No Canadian will forget that budget the former Minister of Finance (Mr. MacEachen) brought down. No one will ever forget the way it was put forward, the way it was countermanded, changed, corrected, and parts withdrawn. The only tragedy is that it was not all withdrawn.
Before the measures in that particular budget were passed through the House, another budget was introduced, in June of last year. That budget contained even more complex measures. In October of last year we saw an economic statement which also introduced new measures. Just the other day, the Minister of Finance (Mr. Lalonde) came before the Flouse with his latest projections, saying he wanted authority from the House to borrow an additional $19 billion. That is not $19 million, something which we might have found comprehensible, but an additional $19 billion. Of course, none of the projections he gave us for the deficit, unemployment or inflation had any relation to the economic statement of October, 1982 or the November or June budgets. In each case, the projections for the deficit have escalated. The projections continue to soar with every passing month.
What is worse, the financial picture of Canada is in a total state of confusion. Is it any wonder, given that confusion and financial mess, that the Government wants to push this Bill through with the least possible scrutiny? That is what is happening right now. The Government is telling the House and the general public that it wants to get this Bill through, regardless of the fact that the impact of many of its changes will be detrimental to individual Canadians, small businesses and corporations. Indeed, the Government is using a not so subtle form of blackmail to make sure they bring down the hammer of their majority on this Bill. It is trying to insinuate that, without the passage of this Bill, tax refunds cannot be
February 21, 1983

sent out to the many millions of Canadians who will be receiving them. That is downright duplicity on the part of this Government. No one knows better than that crowd over there that computers of Revenue Canada will be down from the middle of February to the end of March for reprogramming. There can be no tax refunds sent out during that period of time and they will not be available until April or even May of this year. As the Minister knows, some of the officials in Revenue Canada have had the honesty to admit that fact. However, none of the Government Ministers have deigned to do so.
The scrutiny of the 134 tax changes in this Bill will not hold up the mailing out of tax refunds. What will hold up the mailing out of those tax refunds is the Government's lack of planning in the manner in which the Department handles tax refunds.
When we get into the Committee of the Whole, we will have an opportunity to question the Minister on some of the more repugnant measures contained in this Bill. I want to mention a few of them in the time I have left. They are measures such as the taxation of employee benefits, the replacement of general averaging and income averaging annuity contracts by forward averaging, and the imposition of the 12.5 per cent small business redistribution tax. I want to say something about those particular measures.
Before I do so, I want to mention an issue that has been raised by Members on both sides of the House concerning individual tax reforms which have been sent out to Canadians all across the country. 1 was simply appalled to see confidential and private information printed on those forms; marital status, last year's income and social insurance numbers of individuals, with no security that these forms will actually land in the hands of the individuals to whom they are directed. There is no security or guarantee whatsoever. In fact, the release of that material on the 1982 Income Tax returns is surely a contravention of the Protection of Privacy Act. These Acts were put through by the House, yet the Government turns around and refutes them.
I have had dozens of people call my office about this particular issue. I have had many complaints from people who are concerned about what is happening here. These people are very upset that this private and confidential information which pertains to them particularly is now being made available for others to use. What they are most worried about is that if this particular step is currently being taken by the Government, what will it do next? What other information will it make available to the general public? Surely, if the Government makes that type of information available on the Income Tax forms it is sending out this year, it should make a definite determination right now that next year's returns will not contain the same private and confidential information.


Mr. Stan Schellenberger (Wetaskiwin):: Mr. Speaker, it seems the excellent speech by the Member for Kingston and the Islands (Miss MacDonald) has the Minister worked up. It will be difficult to get the Minister more excited than he now is
Adjournment Debate
in the time I have left. The points made by the Hon. Member were excellent. Perhaps that is why the Minister of National Revenue (Mr. Bussieres) is excited.
My colleague spoke about this legislation being incomprehensible. People in my riding are telling me about their frustration and bewilderment over the complex Income Tax Act that has evolved over the last 20 years. Because people feel the Income Tax Act is unfair they try to find ways around it or they feel they must hire accountants at tremendous cost to keep them within the law. Billions of dollars of tax revenue are being lost each year as people try to get around the Act.
It is not very difficult to get around the Act with so many changes to it, such as the 139 additions from the last few budgets. We have had budget after budget with clause after clause added to the Income Tax Act. As a result, people revert to such procedures as the barter and cash systems, with jobs performed on a cash basis or in return for another project. Canadians are resorting to this practice because they feel too much money is being taken from them by the Government. Therefore, the underground movement begins. We, as parliamentarians, do not want that. As legislators, we do not want to enact legislation that people feel is unfair. However, that is the situation with this Bill.
The Minister who introduced these budgets said that we must close the loopholes. These loopholes exist in a tax system under which people have set up their businesses on which they depend for the income to raise their families. They are now called loopholes by the Government. Of course, as it discovers the political problems resulting from its budgets the Government backs off. In turn, the people and businesses of this nation sit back and wonder when the Government will stop its vacillation. The Government must determine the investment it should be making in the future, and how taxes should be levied in the future as well.
I have mentioned some of the difficulties this system of taxation is causing Canadians, Mr. Speaker. There are many other things I wish to say, but perhaps I may do that on another day, and call it six o'clock now.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the House under Standing Order 45 deemed to have been moved.

Miss Aideen Nicholson (Trinity):: Mr. Speaker, as a Member with a particular interest in occupational health and safety,

February 21, 1983
Adjournment Debate
I have followed the disappointingly slow progress of negotiations with grain elevator operators over a number of years. Grain dust within elevators has long been considered a cause of serious lung disease. Furthermore, because the dust is combustible, high levels often constitute a fire and explosion hazard.
In 1972 the Government and the industry agreed on a system of voluntary compliance to improve the protection of workers. When that failed to produce results, the Department of Labour established a schedule with a three-year deadline, which in turn had to be extended by a further 18 months. However, by the end of 1982, 32 per cent of the 53 large terminal and transfer elevators, and 31 per cent of the 2,900 smaller primary elevators, were still without safe dust control measures. Clearly, persuasion has not worked and the time has come to enforce standards to protect the health of Canadian workers in grain elevators. I regret very much that we have not been able to arrive at voluntary compliance. This has always been the Canadian way. Voluntary standards are surely preferable in an industry. Management and workers surely have the same interest in maintaining a safe and healthy workplace. Where management has set up health and safety committees in other industries, the results have usually gone far beyond the immediate health and safety aspects, and have tended to result in better management-worker relations and higher productivity. There have been a lot of other gains.
It is unfortunate that in this particular industry progress has been slow, for whatever reason. I can understand that one reason may be the uncertainty about future rail planning and the high cost of installing safety measures. When human health and lives are at stake, surely that must be the overriding factor. The evidence is in that people who have worked in the grain industry are showing very definite signs of lung damage. As well, in 1978 there was a series of bad accidents in American terminals and we would not want to see that happen here.
In a recent speech the Minister said that he would have preferred to see voluntary standards work. He said that selfregulation is not predicated on a compromise in objectives-in this case the health and safety of the employee-but rather, it is predicated on a shared objective of management and labour and an agreed means of achieving it.
In 1978 this House passed amendments to the Canada Labour Code which gave workers the right to refuse to work if they thought conditions were unsafe and if other measures had failed to bring about the correction of difficulties. The refusal to work is a very serious decision for workers to arrive at. The voluntary improvement of conditions using the vehicle of health and safety committees with workers and management both involved is surely a much better decision. In these times particularly, when we talk about productivity, many of us are very much aware that we lose far more days of work through illness, industrial accident and injury than we do through strikes.
The issue of workers' safety is one which goes far beyond the grain industry. It needs to be addressed in every facet of Canadian working life. I had hoped that at this particular time, when, because of the six and five program bargaining on monetary issues is limited, we might have seen some very creative bargaining with good faith on both sides on occupational health and safety issues.


David Charles Dingwall: Mr. Speaker, there is certainly no question in this Chamber about the concern and interest of the Hon. Member for Trinity (Miss Nicholson) as it relates to occupational health and safety. She brings a great deal of interest to debate on this particular matter.
It should be noted that when the Minster of Labour (Mr. Caccia) replied to her question last week he was very concerned about the entire occupational safety and health of workers in the grain industry. In fact, industry officials have been informed that they will be required to show Labour Canada why they have not complied with the regulatory requirements for occupational safety and health. This directive places the onus on various companies to come up with some rationale or reason why they have not complied. I assure the Hon. Member that the Department of Labour will be following up on this matter very closely.
The primary objective of Labour Canada's grain dust program was to protect the pulmonary health of grain workers by reducing the amount of airborne dust in elevators. Included also was a requirement for environmental and medical surveillance. The directive contained specific objectives to be accomplished within certain time frames in accordance with established criteria. I wish to underline that certain objectives must now be met within a specified time frame. The industry will be contacted in the very near future and advised of the details of Labour Canada's follow-up plans, so that there can be no misunderstanding by the Department of Labour or the industry as a whole. I assure the Hon. Member that this matter is receiving the utmost attention of Labour Canada, the Minister and all his officials.


ENERGY-NEGOTIATIONS BETWEEN FEDERAL GOVERNMENT AND NEWFOUNDLAND ON OFFSHORE RESOURCES. (B) TELEXED MESSAGE
John Carnell Crosbie: Mr. Speaker, I rise in connection with a question which I asked on January 26 of the Minister of Energy, Mines and Resources (Mr. Chretien) that dealt with negotiations between the federal Government and Newfoundland on offshore resources.
Since asking that question, the Newfoundland Supreme Court on appeal brought down a decision, last Thursday, I think it was, in which it found that the Province of Newfoundland does not have legal ownership of the oil and gas and other minerals which lie off the shores of Newfoundland and Labrador. It has found, for technical, legal reasons, reasons of precedents and obscure points of law, which of course are dealt
February 21, 1983

with in these kinds of court cases, that technically and legally the Government of Canada owns these resources. That judgment will be appealed, of course, to the Supreme Court of Canada. There is another case starting tomorrow in the Supreme Court of Canada involving the very same issues on a reference by the Government of Canada.
First 1 want to say that I have the highest respect and regard for the Appellate Division of the Supreme Court of Newfoundland, as I have for the Supreme Court of Canada. I want now to turn to the parliamentary assistant and make the point that it matters not a whit what is the legal position. It does not matter whether or not the Government of Canada is found to be the legal owner of these resources. In equity and justice, they were all brought into Canada as resources by Newfoundland when Newfoundland joined Canada on March 31, 1949; two-thirds of the whole East Coast of Canada was brought into Confederation by Newfoundland. That is all of the area off Newfoundland, the Continental Shelf and off Labrador. Two-thirds of the whole Canadian East Coast offshore was brought into Confederation by Newfoundland. If Newfoundland had not joined Confederation, those resources would not have belonged to Canada at all.
We had a comparable situation in Canada in the period before 1930. I draw this to the Minister's attention. Up until 1930 neither Saskatchewan, Alberta nor Manitoba owned their mineral or natural resources under the soil of those three provinces. Those provinces were created from lands which the Dominion of Canada acquired, the lands of Saskatchewan and Alberta in 1905 and the lands of Manitoba, of course, earlier.
The legislation and the law was quite clear. The Government of Canada retained ownership of all the resources in those three western provinces. In 1930, because it was felt to be just and equitable under our system of confederation-the Canadian Constitution-to take such action, the Government of Canada and this House enacted legislation to provide for a transfer of ownership of those mineral resources from the Dominion of Canada to those three provinces; Manitoba, Saskatchewan and Alberta. Had that not been done, Alberta and Saskatchewan and their Governments would not today be in the healthy financial situation they are now in. Action was taken, and I will quote from the debates at the time. In this particular case the debate is dealing with Manitoba. The debate reads that the Government should place Manitoba:
-in a position of equality with the other provinces of Confederation with respect to the administration and control of its natural resources as from its entrance into Confederation in 1870.
What the Government must do to put Newfoundland and Labrador , Nova Scotia and other maritime provinces in a position of equality with the other provinces of Confederation, is to have this House pass legislation, and, if necessary pass the necessary amendments to the Constitution to provide for ownership of these offshore resources in the provinces off whose shores they lie. That is the only just and equitable position that can be taken by any Government that cares in this country. Those provinces are, by the way, the have-not provinces. Then they can be given an equal chance with the
Adjournment Debate
other, let's call them, land-locked provinces in Canada who do now own their resources.
I point out that when the boundaries of Ontario and Quebec were enlarged at the beginning of this century, by including in their areas large portions of what is now the Northwest Territories and the Arctic regions, the resources were also transferred to those provinces. If Newfoundland in this particular case is to have an equal position in Confederation with the other provinces, the action taken in 1930 has to be taken again. It was later on July 15, 1930 for Manitoba and on October 1, 1930 for Alberta and Saskatchewan.
The position of our national Party, and my position, as exemplified in a letter written to all the Provinces of Canada on September 12 or 14 of 1979, when we were in office by the then Prime Minister, Mr. Clark, is that we were carrying out that exact policy. That is our policy, and it will be our policy when we resume office again. We will transfer ownership to the offshore provinces of all the offshore oil and gas and other mineral resources. The "offshore" provinces will be put in the exact same situation as the other provinces of Canada. They will then be able to make their own way, stand on their own feet economically and have control over activity that is going to be impinging most heavily on them, no matter who has legal ownership of the particular resources. That is the only fair and equitable thing to do.
I ask the Parliamentary Secretary today-I suppose he cannot give me the answer-to plead with his Minister and the Government to cease their attempts to bully and browbeat the Province of Newfoundland and Labrador, and to change its policy, and announce in the next several weeks that the Government will transfer and convey to Newfoundland and Labrador, Nova Scotia, New Brunswick, P.E.I., and British Columbia rights of ownership, management and control over those resources. Therefore, the principles of Confederation will apply equally to all provinces including the less well endowed ones.
I want to appeal to the Government, Mr. Speaker. It could get the Hibernia development under way. It could start introducing the opportunity for some prosperity in eastern Canada if it moved now to carry out my advice. Wait no longer. If you, the Government, do not do that, I for one will support the Government of Newfoundland in its position that never should it agree to anything less. When we have a chance to form the administration in this country we will see that these things are carried out.


David Charles Dingwall: Mr. Speaker, I want first to say that I found the remarks by the Hon. Member to have been somewhat confusing. In the first instance, he said that he has a great deal of respect and admiration for those individuals who sit in the Supreme Court of Newfoundland. Then in his second breath he proceeded to explain the legal argument for one side of the case. I found that to be very confusing.

February 21, 1983
Adjournment Debate
It should be noted that the Government of Canada has always been willing to enter into debate or discussions with the Government of Newfoundland to try to resolve the offshore dispute in that particular Province. I would like to remind Hon. Members of the extensive progress which the Minister of Energy, Mines and Resources (Mr. Chretien) had made in his negotiations with Mr. Marshall before the Newfoundland Government began to resort to negotiations via telex. The Minister had found a solution to the four points made by Premier Peckford in his speech of October 12.


John Carnell Crosbie: Absolute twaddle.


David Charles Dingwall: He confirmed his proposal that there be a revenue sharing regime which would initially provide the Province with 75 per cent of all offshore resource revenue. Second, he provided assurances that there would be no sudden and drastic reduction in equalization payments by the federal Government. Third, he offered to consider a specific provision for Newfoundland concerning the choice of a suitable production system. Fourth, he agreed to a system of offshore management involving three people each from Newfoundland and from the federal Government. These were the concerns of Premier Peckford which the Minister had met.
Then suddenly, after much hard work by the officials of both Governments, Newfoundland cut off the negotiations and began making greater demands by telex in the form of 17 entirely new points.


John Carnell Crosbie: That's nonsense.


David Charles Dingwall: The Minister indicated in his response-


John Carnell Crosbie: Try to be truthful.


David Charles Dingwall: -to Mr. Marshall's telegram that he was very surprised to find the Government of Newfoundland taking the position of setting out 17 positions before the negotiating talks could be resumed. I received that confirmation when I visited Newfoundland and met with Mr. Marshall.
I specifically asked him whether he would return to the bargaining table and he said, "No, I will not return to the bargaining table until such time as these 17 points, many of which are new, are put into writing". He would not.


John Carnell Crosbie: Hear, hear!


David Charles Dingwall: The Minister thought they had both agreed that they had to move away from their old positions upon which negotiations foundered last year. The Minister made it clear that while he was not prepared to negotiate by telex, he was ready to address each and every one of the 17 points with Mr. Marshall in meetings with him on a face to face basis.
On the matter of the work of the negotiators for the federal and Newfoundland Governments, the Minister reiterated his understanding that the mandate of his negotiators, as well as that of Newfoundland's negotiators, was to identify areas of agreement as well as areas of disagreement. The latter were to be referred to the two Ministers for consideration before they met their respective cabinets. Unfortunately, rather than
agreeing to meet the federal Minister to discuss and try to resolve these points, Mr. Marshall decided to go back to the Government prematurely, and refused to continue the negotiations. Newfoundland changed the rules of the game and wanted negotiatons between cabinet. This could not work.
I do not wish to dwell at any length on the Hon. Member's comments concerning the decision of the Newfoundland Supreme Court. All I can say is that the matter is now being appealed before the Supreme Court of Canada, which shall decide.


FISHERIES-KIRBY TASK FORCE RECOMMENDATIONS- PRESENTATION OF GOVERNMENT RESPONSE. (B) REQUEST THAT GOVERNMENT SECURE EQUITY IN EAST COAST FISH PLANTS
Edward Allan Miller: Mr. Speaker, I rise to discuss the question of Thursday, February 17, following the release of the Kirby Report on the Atlantic fishing industry. I would like to remind the Parliamentary Secretary that in the beginning the Kirby Task Force was formed to look into the severe financial difficulty in which the fishing industry found itself, particularly in Newfoundland, but also in Nova Scotia, New Brunswick, Prince Edward Island, Quebec and Labrador.
In November of 1981, ten fish plants shut down in Atlantic Canada. In January of 1982 The Globe and Mail reported:
National Sea . . . owes the Bank of Nova Scotia $100 million and the government of Nova Scotia ... $10 million. The Lake Group avoided bankruptcy through an 11th hour infusion of federal and provincial funds that will allow it to reopen its plants at Grand Bank and Galtois. They had been closed since late summer."
The Financial Post reported:
Fishery Products Ltd. last week announced its plant at St. Anthony ... had lost $10 million in the past four years and might not open at all this year.
On August 13, 1981, St. John's Evening Telegram reported:
Last Tuesday ... National Sea Products Ltd. announced it was shutting down its plant in St. John's and others in Nova Scotia, indefinitely ... laying off some 1800 workers-
The Kirby Report was initially supposed to be tabled, or at least given to the Government, in the summer of 1982. After a long one-year wait the report was made public, yet the Minister is hesitant about tabling it in the House of Commons so that the Forestries and Fisheries Committee can deal with it in any meaningful way. That report did not address the urgent problem of the fishing industry. In fact, Mr. Kirby and the Minister announced that it would be another two months before we would know about the financial conditions and the restructuring of the fishing industry. I do not think it is adequate that a report which has cost the Canadian taxpayer some two million dollars should not deal with the uncertainty of many communities in the Atlantic fisheries, including the still unemployed people in Ingall's Head, New Brunswick and Georgetown, Prince Edward Island. When I was there this weekend, I was questioned about the Georgetown, P.E.I., plant, whether it would be opening or not. I had to admit that 1
February 21, 1983

did not know, that we had to wait two more months before the Government's restructuring program would be announced. We also have uncertainty in Lewisporte, Bridgeport and Jackson's Arm, Newfoundland, and Lismore, Nova Scotia, and the people of Grand Banks and Burin are fighting desperately to save their plants and the income of plantworkers in those communities.
The Report of the Task Force that started out as a result of thousands and thousands of plantworkers being unemployed in Atlantic Canada still has not addressed that problem. I think that is unfortunate because people are dependent on the fishing industry, and they have not really been dealt with in a fair way to this point by the Government.
There is some suggestion in Mr. Kirby's comments that some of those plants will never open again. There is some suggestion in the report that in order to open we may have to depend on some foreign capital. Some of his recommendations and options call for the possibility of the Atlantic fisheries, including the possibility of Fishery Products, Lakes Group and Nickerson, coming under a Crown corporation. We have no certainty that that is going to occur.
We now know how desperate the situation is. Kirby estimates, as a result of very detailed accounting investigations, that there is some $520 million of debt in the Atlantic fisheries, and there will have to be a massive amount of money put into that industry to protect this fleet and the jobs of fishermen. The Minister was not able to say whether or not there would be any equity position of Canadian taxpayers, or any say on the Board of Directors by community and plantworkers and fishermen if we are again going to bail out the fishing industry, as we did in 1974 with a $200 million bail-out, only to have companies that were no longer viable at that time come back to the Canadian taxpayer in 1982 and 1983 for another major infusion of capital.
It is not good enough to carry on with the same management scheme, and not good enough to say that this report will bring greater benefits to fishermen in 1985. The report does not deal with a better price for fishermen. It says that fishermen will have to carry out mandatory bleeding and gutting on their vessels to deliver a better product to the dock. However, it does not say that that better product will demand a better price. It says that a processor should be able to give a better price, but there is no mandatory provision whereby processors must guarantee fishermen a better price.
We are disappointed in the report because it does not deal with the key issue. We are disappointed that we cannot tell people in Georgetown, Fermeuse, Trepassey, Burin and Grand Bank that they are indeed going to have a fish plant with employment for their community. This Government has a responsibility to see that those jobs are protected and to ensure, when Canadian taxpayers' money goes into a bail-out,
Adjournment Debate
that there is some equity for the amount of money, and that the processors will be involved in the decision making.


David Charles Dingwall: Mr. Speaker, in releasing the report of the task force on Atlantic Fisheries on February 17, 1983, the Minister of Fisheries and Oceans (Mr. De Bane) made clear that the task force had two mandates. The first mandate was to advise the Government on the long-term policies it should implement to promote a healthy fishery in the future. It is that mandate which has been fulfilled with the release of the task force report.
The second mandate of the task force was to advise the Government on how to deal with the specific requests which came in late 1981 for financial assistance from the Lake Group and H. B. Nickerson and Sons Limited, both important integrated offshore groundfish companies.
As the Minister stated, it quickly became clear that what was required to solve the immediate financial crisis of these companies was substantial restructuring of the offshore processing sector. Such restructuring is more complicated than simply handing out financial assistance. The whole process became much more complicated when, in November of 1982, Fishery Products Limited also came forward with a request for financial assistance. The problem of how to put the activities of these three companies on a viable footing is extremely complex and can only be worked out through a process of negotiations with all interested parties, including the major creditors, provincial Governments and, of course, the Government of Canada. These negotiations are now in their final stages. They are critical both for industry and the Atlantic region.
The companies concerned have plants in many communities throughout the region. These plants are, in many cases, the lifeblood of the communities in which they are located. The Government is very much aware of the sentiments expressed by the Hon. Member and we hope we can make those decisions in addressing these problems very soon.
These negotiations, which have been going on for some months, are currently in a very delicate stage, and I am not in a position to go into any detail at the present time. I can say, however, that the objective of these negotiations is not to bail out existing shareholders. Rather, it is to restore the offshore sector to reasonable financial health so that it can continue to generate the jobs upon which so many communities and individuals depend. The extent to which the Government might have to become involved to achieve this objective, and the form in which such involvement might take, will be a matter for negotiation.


The Acting Speaker (Mr. Blaker):: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 11 a.m.
At 6.30 p.m. the House adjourned, without question put, pursuant to Standing Order.

Tuesday, February 22, 1983