1983-04-12

GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Monday, April 11, 1983, consideration of the motion of Mr. Rompkey that Bill C-136, Small Business Investment Grants Act, be read the third time and do pass.
Mr. Lewis:: Mr. Speaker, I rise on a point of order. There have been discussions with the Government House Leader in the interest of expediting matters and bringing on the important legislation, Bill C-142, which deals with an adjustment of and increase in the amount of deposit insurance and concerns Canadians right across this country. We have had discussions on this side and are content to see Bill C-136 have third reading now on the basis that the Government would then immediately call Bill C-142, which would be dealt with for the balance of the day.


Mr. Deans:: Mr. Speaker, on the same point of order, I concur with the comments that have been made. I think that we could quickly dispose of the Bill that is currently before the House, in fact dispose of it right away, and move towards dealing with the legislation that effectively raises the insurance levels for savings from $20,000 to $60,000.
I want to just add one minor point. I hope that in doing so we will be able to dispose also of the deposit insurance legislation today. Although we may have minor disagreements on the numbers, I would very much like to think that we could have a worthwhile debate between now and six o'clock today and deal with that legislation through all of the stages, to show that the spirit of co-operation and effort that we think exists in the House of Commons is indeed there.


Some Hon. Members:: Hear, hear!


Mr. Pinard:: Yes, Mr. Speaker, we discussed the matter last night and earlier this morning, and there is now agreement for completing the third reading stage of Bill C-136 and putting the question without further debate. All parties are agreed that there
will be no recorded vote on the third reading stage and that the next item to be considered will be Bill C-142. Although there is no definite agreement on disposing of all stages of Bill C-142 today, like the New Democratic Party we intend to do everything we can to have all stages of Bill C-142 disposed of by the end of the day. I want to emphasize that the Government will certainly not obstruct passage of the third reading stage of C-142 later today by withholding its agreement. Although we have no definite agreement on this item, as soon as the question is put on Bill C-136, we shall call Bill C-142, in the hope that all stages can be disposed of later today.


Philip Derek Lewis: Mr. Speaker, that is basically the arrangement, as outlined by the Government House Leader. We will naturally wish that Members who want to be heard on Bill C-142 be heard. That will depend upon being able to contact the Members who wish to speak on this very important matter. That is basically the arrangement.


The Acting Speaker (Mr. Corbin):: The House has heard the motion of the Hon. President of the Privy Council (Mr. Pinard), seconded by the Opposition House leader in the House. Is it the pleasure of the House to agree with this proposal?


Some Hon. Members:: Agreed.


The Acting Speaker (Mr. Corbin):: It is agreed and so ordered. Shall 1 now put the question?


Some Hon. Members:: Agreed.


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


Some Hon. Members:: Agreed.
Motion agreed to and Bill read the third time and passed.


CANADA DEPOSIT INSURANCE CORPORATION ACT
Hon. Paul J. Cosgrove (Minister of State (Finance)) moved: that Bill C-142, an Act to amend the Canada Deposit Insur-

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Canada Deposit Insurance Corporation
ance Corporation Act, be read the second time and, by unanimous consent, referred to a Committee of the Whole.
Ele said: Mr. Speaker, this is a very short Bill indeed which is before the Elouse today. The main purpose of the Bill, as has been indicated, is to increase to $60,000 the amount of protection carried or provided by the Canada Deposit Insurance Corporation on savings deposits with financial institutions in Canada that are so recognized under the provisions of the Act.
As most Eton. Members know, the Canada Deposit Insurance Corporation is a Crown corporation that was formed in 1967 by the Canada Deposit Insurance Corporation Act. The main purpose of the Corporation is to insure, within limits specified, savings deposits placed by the public with member financial institutions. The existence of deposit insurance has given security and stability to the savings deposit market in Canada and has almost completely eliminated the fear of runs against financial institutions.
All banks and all federally incorporated trust companies and mortgage loan companies that accept deposits are members of the corporation by law. Provincially incorporated trust companies and mortgage loan companies accepting deposits may become members on application if the Province of incorporation concurs and if the financial condition of the company is acceptable to the Canada Deposit Insurance Corporation.
I can give the House some statistics. As of the end of 1982, 132 federally incorporated institutions were members of the Corporation; 65 were banks and 67 were trust companies or loan companies. At the same time, there were 52 provincially incorporated trust companies and loan companies holding membership.
In so far as the finances of the Corporation are concerned, at the end of 1982 the total assets of the corporation amounted to approximately $255 million. Its income for the year amounted to approximately $14 million in the form of premiums and $25 million in the form of interest. The total deposits insured by the Corporation as of April 30, 1982 amounted to $118 billion. The corporation is a tax-paying institution. It is expected to pay approximately $12 million in taxes in respect of the 1982 taxation year.
As far as the administration of the Corporation is concerned, it is governed by a board of directors comprised of a chairman appointed by Order in Council, and, ex officio, the Governor of the Bank of Canada, the Deputy Minister of Finance, the Inspector General of Banks and the Superintendent of Insurance.
The three purposes of the legislation, Mr. Speaker, are as follows: first, to increase the maximum limit of insurance on each deposit, as I have indicated, to $60,000 from the present $20,000; second, to increase the borrowing authority of the Corporation, which naturally flows from the first item; third, to reduce possible misunderstanding where member institutions receive funds which are not insured deposits.
In addition, there are a few technical amendments which are not in the same category of importance as the three items which I have just discussed.
Dealing with these items in order, Mr. Speaker, first as regards the limit on the amount of insurance, as I indicated in the House on January 17, 1983 the Bill provides for an increase of insurance to $60,000 to take effect as of that date; that is, the date on which the Government's intention was announced to the House. Since the time the deposit insurance plan was first adopted in 1967, the limit has been fixed at $20,000 per depositor in each institution. All of the deposits which a depositor has with one member institution are grouped together for the purposes of that limit. However, if an individual has a deposit account in his own name and, for example, another jointly with another person, the two deposits are insured separately. Also, a deposit made by a trustee for a beneficiary is insured separately from a deposit made directly by that beneficiary.
RRSP deposits and RHOSP deposits are insured separately from deposits made directly by the owner of the plan. Thus, Mr. Speaker, although the limit has been $20,000 per depositor for some time, it has in fact been possible to obtain insurance for considerably more than that amount, either in one institution or by deposits through various institutions. The $20,000 limit was initially set with the intention of enabling the Corporation to insure the normal demand in term saving deposits of ordinary Canadians with small or moderate means, but without going so far as to be insuring investments as such and as a result interfere with the normal functioning of the financial market.
We believe that the $20,000 limit has served well and has resulted in all but a very small proportion by number of deposits in member institutions being insured, and even by amount, the $20,000 insurance limit covered a substantial portion of all deposits made with all institutions. Current estimates show that the $20,000 limit covered 63 per cent of all deposits in banks and 76 per cent of deposits in trust companies and loan companies.
Having said that, Mr. Speaker, the Government recognizes, however, that a number of changes have taken place in the year since the $20,000 limit was established. Deposit levels have risen as a consequence of inflation. The existence of deposit insurance has probably had an effect in increasing this type of savings as compared with other possibilities which a person might opt for, such as investments in bonds or stock. And the existence of tax-deferred plans such as Registered Retirement Savings Plans and Registered Home Ownership Savings Plans, which I have referred to, probably have also stimulated savings of the insured type. As a consequence, it seems desirable to make an increase in the level of deposits insured at this time.
The $60,000 limit proposed was recommended by the Standing Committee on Finance, Trade and Economic Affairs in its report on the profit situation of chartered banks, published in July, 1982. It is estimated that the $60,000 limit will now cover approximately 78 per cent of deposits in banks and
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92 per cent of deposits in trust and loan companies. I recommend, Mr. Speaker, to all Hon. Members the rationale used by the Members of the Standing Committee on Finance, Trade and Economic Affairs in making that recommendation. I would draw to their attention that Hon. Members such as the chairman, Mr. John Evans, for Ottawa Centre and the ViceChairman, Mr. Peterson from Willowdale, together with Members opposite such as the acting critic for finance, Mr. Blenkarn from Mississauga South and Pat Carney, the Hon. Member for Vancouver Centre.


The Acting Speaker (Mr. Corbin):: Order. The Hon. Minister still has time left, but I should remind him that he should refer to Hon. Members by their ridings, not by personal names. The rule applies to everyone.


Paul James Cosgrove: Mr. Speaker, I thank you for your admonition. I would like to identify other Members on the Committee. For example, the Hon. Member for Edmonton West (Mr. Lambert), the Hon. Member for York-Peel (Mr. Stevens) and the Hon. Member for Etobicoke Centre (Mr. Wilson) all joined in support of encouraging the Government to adopt the $60,000 limit which is in the Bill before us today. As I said, I invite Hon. Members to take a look at the study that was done by the Committee and the reasoning put forward by the Committee in urging the adoption of the $60,000 limit.
Now, some suggestions have been received that the limit should be set much higher than $60,000. The Government is conscious of these suggestions and also of the fact that in the United States under the Federal Deposit Insurance Plan the amount has been set at $100,000. However, Mr. Speaker, I understand there is a study in the U.S. which indicates that that amount should be reduced and limited. However, we believe that the limit of $60,000 would be appropriate for the Canadian plan at the present time.
It is important to keep in mind the basic purpose of the plan, which is to insure saving deposits rather than to insure investments at a level where the investor could be expected to exercise his own judgment or, for example, to seek professional advice. It is not desirable to interfere in the normal functioning of the financial market by setting deposit insurance guarantees at a level that puts all other types of investment activity at a disadvantage. It is important to note as well that the main volume of premium funds received by the Corporation comes from large, strong institutions, whereas the smaller and less known institutions are probably the beneficiaries of the plan to an extent out of proportion to their relative size. There is to be some reasonable limit to the extent to which the large institutions, for example, have therefore to carry the load or contribute to a pool of this type.
The Bill proposes no change in the premium structure. Under present rules, the annual premium required of each member institution is one thirtieth of 1 per cent of the amount of insured deposits. However, the Corporation has certain limited authority to reduce the premiums below this level if it believes the fund is adequate.
Canada Deposit Insurance Corporation
With respect to borrowing power, the Corporation now has the power to borrow up to $500 million from the Consolidated Revenue Fund. Any such borrowing is to meet financial needs to the extent that the Corporation cannot conveniently do so from its own resources. Any such loans would be at a rate of interest appropriate to the circumstances and would be repaid by the Corporation either from realization of its own assets or from revenue produced by future premiums.
It is important, if CDIC is to play its full role as a stabilizing influence in the savings deposit market, that it be of such size and, of course, have resources sufficient to make clear to everyone concerned that it can reasonably fulfil the function which it is intended to play. The borrowing limit of $500 million, set in 1967, which was adequate at that time, is of course no longer adequate. In the context of this fact, and in concert with the proposed increase from $20,000 to $60,000, it seems appropriate to provide the Corporation with access to larger financial resources to meet emergency needs. Therefore, the Bill proposes that the borrowing authority be raised from $500 million to $1.5 billion.
With respect to possible confusion where a member institution accepts money which is not insured, the Bill proposes that all member institutions be required to mark clearly any instrument issued in return for funds where the transaction does not give rise to insured deposit. I made reference to that as being the third major thrust of the legislation before the House. Certain exceptions are specified in the Bill where it is most unlikely that any misunderstandings would occur. This provision is for the purpose of meeting certain problems which experience has shown have arisen in connection with the operation of the Corporation through its mandate.
The request for this legislation has been reinforced by Hon. Members from all Parties and by Canadians in general who have written to Hon. Members, to myself or to the Department. For example, I have in my hand copies of numerous requests that this legislation be addressed quickly by the Government. For example, I have in my hand a letter from the Hon. Member for Nepean-Carleton (Mr. Baker) dated March 1, wherein the Hon. Member refers to an urgent inquiry from Mrs. Sinclair of Vernon, Ontario. The Hon. Member recites that she and her husband are worried about bad publicity re the trust companies and do not know what to do, but that they do badly need the $20,000 which will be due to them. The Hon. Member concludes:
I have been asked to refer the matter to you for advice and in view of the time frame involved, I would ask for your advice as quickly as possible-
I have in my hand another letter from the same Hon. Member for Nepean-Carleton, again with regard to constituents who are concerned about the same matter, and it is dated February 21. The Hon. Member concludes by requesting an urgent response to this matter.
Similarly, I have in my hand the same kind of letter from other Hon. Members. For instance, the Hon. Member for Wellington-Dufferin-Simcoe (Mr. Beatty) requests a speedy

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Canada Deposit Insurance Corporation
response to an inquiry from one of his constituents. A similar letter from the Hon. Member for Don Valley West (Mr. Bosley) requests a response to an inquiry about the status of this legislation on behalf of constituents. The letter is dated March 28, 1983 and the Hon. Member concludes by saying:
I look forward to receiving your comments to guide me in replying to my constituents.
As I say, I have also received letters from individual Canadians who have written. I have in my hand a second letter from the same Hon. Member, the Hon. Member for Don Valley West, indicating the concern of a constituent. This letter, dated March 11, asks for a report on the status of the legislation.
Therefore, I can assure Your Honour that there is a widespread interest as reflected by many Hon. Members who have written to me on behalf of their constituents asking for advice and a report on the intentions of the Government and the status of the legislation in front of us. I have a letter from the Hon. Member for Yorkton-Melville (Mr. Nystrom) inquiring about the suggestion of raising the limit to $100,000, which is a suggestion made by one of his constituents. I have a letter from the Hon. Member for Burnaby (Mr. Robinson) inquiring about the implications of the legislation as far as the RRSP stock certificate is concerned. I merely refer to those letters in order to demonstrate that, in addition to the direct inquiries from Members of all Parties, they reflect the concern of Canadians generally.
Although we have had the opportunity to appear with officials before the Standing Committee on Finance, Trade and Economic Affairs, where some questions have been raised with respect to this matter, I have not had full opportunity to discuss the implications of the legislation with Members of the Official Opposition.
I do have a press report today from the Ottawa Citizen which raises an issue which I think I should deal with before I conclude in order to indicate the Government's position and intention in this legislation. This report attributes to the Hon. Member from the Ontario riding of Simcoe North (Mr. Lewis) the statement that it is his Party's wish that the Bill be back-dated several years so that investors in such firms as the defunct ReMor Investment Management Corporation can receive more money back.
When addressing the issue of the effective date of the legislation, I indicated in my opening remarks that it is the Government's intention that the legislation be effective as of the announcement of the legislation, which is January 17. Passage of the Bill, hopefully today, would make it effective on January 17. It is not the Government's intention that the legislation should go into the past beyond the date that the Government publicly announced its intention to change the legislation.
With respect to the specific case of ReMor Investment Management Corporation identified by the Member for Simcoe North, I would add as well that I am holding a report dated March 23 from the Ombudsman of the Province of
Ontario in which he addresses issues raised by the Member for Simcoe North concerning the security of investors who had deposits in that corporation.
I should draw to the attention of Hon. Members the conclusion of the Ombudsman report at page 10, which states that there was maladministration in the registration of ReMor. The Ombudsman goes on to indicate what that consisted of. I have read the report very carefully and I would not recommend that the Government consider coverage under CIDC in this situation because I think it is very clear that it was more than simply maladministration by the provincial Ministry of Consumer and Commercial Relations. In my view, it was gross maladministration. It is my conclusion that the responsibility for the difficulties in that case must be met by the administration responsible, which is the Province of Ontario.
In principle, we do not recommend in this Bill that the legislation be back-dated beyond the date of its public announcement. Second, with respect to the request that it be made to apply retroactively to ReMor, we say that clearly on the basis of the report of the Ombudsman, the Province of Ontario should accept total responsibility for any losses over and above the insured amounts that have been covered by CIDC with respect to the depositors in that corporation.
Although the Ombudsman refers to the federal Government in the report, he is very careful to qualify his remarks by saying that he received no evidence, conducted no investigation and it was only on the basis of hearsay that he suggested that the federal Government be involved. Since he is a former jurist, I suspect that he knew that he really did not have the basis for such a recommendation and for that reason recommended that the Province cover any amount that had been suggested might conceivably be covered by the federal Government.
In conclusion, the Bill before us and the Government's request of Members that the amount of coverage be increased to $60,000 has been well received by the public. It is a matter that has been urged upon the Government not only by Members on this side of the House but by Members of the Official Opposition. As well, it is my understanding from the comments made by the financial critic for the New Democratic Party at hearings of the Finance Committee that the NDP would support the legislation.
There may be some arguments that the legislation should be increased to the larger sum of $100,000, as has been suggested in a Private Member's Bill and by some Members in the House, but I hope that I have indicated the basis for the Government's intention to proceed to the $60,000 limit. It is based largely upon the report of the Finance Committee and on the fact that those who urged the $100,000 limit, using the American experience, must now realize that the Americans themselves are moving toward reducing the $100,000 limit under their program in certain circumstances.
Finally, because this is a self insuring plan for which the financial institutions themselves provide the funding by premiums for the program, we believe it would not be wise to
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go beyond the date of the intention expressed by the Government to change the amounts and to go retroactively to those institutions to tell them that they must make additional levies for additional premiums, because in the long run that would simply be a charge against the system and finally against depositors and ordinary Canadians.
I join with the House Leader who urges that this legislation receive attention and disposition by the House at the conclusion of today's business.
Mir. Blenkarn: Mr. Speaker, I rise on a point of order. Before I commence my remarks, would the Minister accept two or three questions to determine if we could settle this Bill more promptly, much in the way we were able to settle Bill C-136 through co-operation from both sides of the House. On that basis, would the Minister answer some questions?


The Acting Speaker (Mr. Corbin):: That could be allowed by unanimous consent since the Standing Orders do not provide for a question and answer period at this time. Is there unanimous consent?


Some Hon. Members:: Agreed.


Mr. Blenkarn:: Would the Minister advise the House whether the effective date of January 17 will enable the Canada Deposit Insurance Corporation to cover the losses people may suffer in Greymac and Seaway inasmuch as both of those corporations and their subsidiaries, Greymac Mortgage and Seaway Mortgage, were seized by the Province of Ontario? In other words, they were put into a form of receivership on January 7. Is it not the case, or arguable perhaps, that the people who were depositors with those corporations lost their money effectively on January 7 and, therefore, would not be covered by a January 17 commencement date?


Paul James Cosgrove: Mr. Speaker, I indicated in my comments that it was as a result in part of some of the problems that were identified by the difficulties with Crown, Seaway and Greymac which gave rise to Government's introduction of the legislation. Specifically as to whether the legislation would cover all potential claimants in those companies, if the Hon. Member would grant me the opportunity, I would like to confirm with counsel that the legislation as passed would cover those cases. That was the Government's intention. I would want to be doubly sure that in fact would be the effect of the legislation. I will get the answer and give it to the Hon. Member when I have it confirmed, hopefully this morning.


Donald Alex Blenkarn: Mr. Speaker, I thank the Minister for that answer. It would be our understanding that this Bill should certainly cover Greymac and Seaway and any losses that may result in Crown to depositors. If the opinion is to the contrary, can we accept the Government's undertaking to include an amendment to set out specifically that, notwithstanding January 19 being the date of introduction of this Bill, the Government will nonetheless order and direct the Canada Deposit Insurance Corporation to cover these losses at least?
While I am on my feet I have one further question for the Minister. He will know that the Ombudsman for Ontario has
Canada Deposit Insurance Corporation
made certain claims with respect to ReMor. ReMor, as the Minister will know, was part of the Astra Corporation. He will also know that we have raised on several occasions in the Standing Committee on Finance, Trade and Economic Affairs the maladministration of the federal Department of Insurance, the Department that supervises trust companies. Will the Minister take a look at those questions with respect to ReMor and Astra and the arrangements? Will he look into the fact that a number of persons made deposits in Astra which deposits never reached Astra? Those deposits went directly into ReMor. Will the Minister take a look again at the statements and the investigation of the Ombudsman to see what he can do to make some ex gratia payment to those who suffered losses as a result of Astra being allowed to conduct itself the way it did, despite warnings and evidence that the company should have been closed up ages ago?


Paul James Cosgrove: Mr. Speaker, with regard to the first question asked by the Hon. Member as to whether we would accept specifically the amendment he proposed, that is based on supposition that I find an answer from the solicitors to say the legislation does not cover these companies now. If the legislation does not cover Greymac, Seaway and Crown, it would be the intention to ensure they were covered, whether in the amendment proposed by the Hon. Member, through some other device or through some other amendment worded in a different way. I will have to take that question under advisement and report to the Hon. Member. I believe we can do that through further discussion of the Bill as it proceeds, but I will look at that immediately.
With regard to the second question, I dealt with that issue in my opening remarks. I mentioned that I had seen reference to the issue by the Hon. Member for Simcoe North. That is why I urge the Hon. Member for Mississauga South to take a look at the actual report of the Ombudsman for Ontario dated March 23, 1983. In the report, the Ombudsman recites that he has investigated certain claims against the Ministry of Consumer and Commercial Relations for the Province of Ontario. In the first ten pages of that report he details the investigation of the charges that his section conducted under the auspices of the Ombudsman Act for the Province of Ontario. As a result, the Ombudsman concluded that in so far as ReMor was concerned there was maladministration. Let me quote his sentence found on page 10 of his report:
-there was maladministration in the registration of ReMor-
By and large, the two reasons were that the registration should not have been on the basis of information the Ministry had. The Ombudsman concludes ReMor ought not to have been registered. Second, the reasons given for the registration at the time were dependent upon a follow-up monitoring by the same Ministry which, as well, was not conducted. For those two reasons, the Ombudsman found, as he says in his report, "maladministration on the Province's part".
Having read the report, with the greatest respect I would say that it was more than simple maladministration; I would

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say it was gross maladministration. Those two things ought not to have occurred. Therefore, when you come to the part of the report where the Ombudsman makes certain recommendations flowing from his findings, you find a very curious thing, Mr. Speaker. Dealing with the federal Government, the Ombudsman says:
Without necessarily adopting the following-
Therefore, he disclaims what he has to say following this, which reads:
-I note that federal participation in any compensation scheme has been advocated-
In dealing with the federal role, which is the issue raised with Astra firm which was federally incorporated, and the relationship with ReMor, the Ombudsman is very careful to qualify his remarks and does not adopt them to begin with. Second, he indicates that his remarks are based on hearsay evidence. The hearsay evidence is listed in four paragraphs found on page 11 of his report under items (a), (b), (c) and
(d). In my view, had the Ombudsman the opportunity of talking to federal officials or of investigating the hearsay evidence put to him, he would have found that federal officials disputed the allegations in those sub-paragraphs. Indeed, the federal department successfully disputed those allegations in the Federal Court last year was successful at trial in disputing them. The case is presently under appeal.
It is the position of the federal Government that there is nothing in the Ombudsman's report that advances the case for additional consideration. There is nothing new which the Department has not considered and there is nothing new that the Department has not advanced in a court of law in defence of those allegations. Those matters are still pending.
Having said that, I qualify my comments by indicating to the Hon. Member for Mississauga South that there is the issue of tracing. If that is what the Hon. Member has hit upon, I confirm that the Department is still working with the firm of accountants investigating the relationship of ReMor and Astra. Officials are looking at the issue of the flow through of funds from ReMor to Astra. Solicitors for the federal Department have indicated that legally there could be a basis for a claim in law. Our difficulty is not with the law or the basis of liability; our difficulty thus far has been getting the evidence to substantiate in detail that flow through.
I met with the provincial Minister, Dr. Elgie, in November or December. I requested that kind of evidence or documentation. I have to date received no more information. Obviously the matter has been raised in the Ombsbudman report. Our officials have again gone back to the law firm and the firm of chartered accountants which are investigating. If a proper case for tracing is established, the Department has always indicated that that is a proper basis for a claim and will be entertained by the Deposit Insurance Corporation.


Donald Alex Blenkarn: Mr. Speaker, the Minister will know that over the last three years a number of problems were raised in the Committee with respect to the Department of Insurance.
On the insurance side, we have had the defalcation of Cardinal, Strathcona and Pitts. On the trust side we have had Astra Trust, Greymac Mortgage and Seaway Mortgage Corporation. The feeling has developed over a period of time that there is something wrong with the way the Government has been supervising these companies and the way the Department of Insurance has been operating.
Second, the previous Minister introduced a draft Bill together with a suggestion for a new Trust Companies Act. Has the Minister yet had an opportunity to confer with his colleagues on the basis of forming a special committee of Parliament to look into the whole question of the supervision of loan and trust companies and what should be done with respect to changes to the Loan Companies and Trust Companies Act?
The Minister will appreciate that the same propositions are now before the Government of Ontario. Representations have been made to him by the Canadian Bankers Association and the Trust Companies Association of Canada. The Trust Companies Act has been in need of revision for some considerable period of time. There have been promises to introduce a Bill in this regard. At this stage, before going ahead madly with legislation, it might be appropriate for the Government to take the advice of Parliament and have a committee look into the entire question. Has the Minister had an opportunity to this point to discuss such a matter with his colleagues?


Paul James Cosgrove: Mr. Speaker, I have not discussed the matter in the context of a formal submission to my colleagues in Cabinet. However, I did discuss the matter with the former Minister who had responsibility for this portfolio and who was responsible for issuing the paper calling for public input into the matter.
The Hon. Member for Mississauga South is correct. The Government asked for recommendations from all Canadians. We put a time limit on the public input to that process. I believe we asked for submissions as of the end of November, 1982. We received dozens of comments from interested persons. Some of those comments were late in coming. They were received toward the end of December or early January.
I have not, in consultation with my officials, satisfied myself as to the best method of bringing this matter to a conclusion. For example we have not decided whether there is a need for the matter to be addressed before a committee and whether further public input should be sought. As the Hon. Member says, the matter is now complicated by the unfortunate experience with three provincially incorporated and supervised trust companies in the Province of Ontario, Seaway, Greymac and Crown. By parallel, the mortgage companies which are subsidiaries of those companies were brought into the control of the federal Superintendent of Insurance under the federal Loans Act.
The matter is further complicated in that under the federal legislation a hearing is required when the federal Superintendent moves to take control. A hearing is required for the companies that are sought to be controlled. In those hearings they are permitted to make submissions on the Government's intended
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action. Those hearings are presently continuing. I spent two full days last week receiving submissions by solicitors and officers of those companies. They were making representations with respect to the federal Government's action to take control of the companies.
I cannot say to the Hon. Member at this time that I have concluded that the best way to have the matter resolved is by reference to the Standing Committee on Finance, Trade and Economic Affairs or whether it should be some other way. I have concluded that I should not make up my mind and I should not proceed to the next step until such time as I have had the opportunity of discussing this matter with the provincial Minister of Consumer and Commercial Relations, Dr. Elgie, and the other provincial Ministers who have similar responsibilities.
The Deputy Ministers of the provincial Ministers of consumer and corporate affairs met last Friday. That meeting was attended by Mr. Hammond, the Superintendent for the federal Department. The issues of sorting jurisdiction and attempting to overcome some of the difficulties that may be experienced because of split jurisdiction were dealt with at the meeting of the Deputy Ministers. As of today I have not received formal advice as to the conclusion of the Deputy Ministers.
I guess I have given the long answer. The short answer would be that I am considering the request of the Hon. Member, but it is premature. I am really not at the point to make the kind of decision that he has invited me to make.


Donald Alex Blenkarn: Mr. Speaker, it seems to me as a Member of Parliament that any new legislation will have to come before Parliament and that legislation might be expedited if the thoughts of Members were expressed in a committee hearing prior to the legislation being introduced. The Minister will appreciate that today the question of the $60,000 insurance limit can be dealt with rather expeditiously because a committee of this House recommended $60,000. It is rather difficult for the House to say that it will not accept the Finance Committee's recommendation made only a few months ago. It is on that basis that I make the suggestion to the Minister.
While the Minister has certain problems with respect to the management of trust companies under the existing legislation, under the Canada Deposit Insurance Corporation legislation rather draconian steps can be taken against both federal and provincial institutions and presumably, under Sections 24 and 25, without hearings. In other words, it is a matter of a report to the Minister and the Minister makes a decision. There is no requirement for public hearings or discussions. The Minister can move quite quickly.
On that basis, why did the Minister not take action against Seaway and Greymac under the Canada Deposit Insurance Corporation authority rather than under the loan and trust companies authority vis-a-vis the two mortgage corporations?


Paul James Cosgrove: Mr. Speaker, there are two reasons why I did not move under the CIDC legislation as opposed to the action now under way under the Loan Companies Act. First, the Department of Insurance of the Government of Canada acts as
Canada Deposit Insurance Corporation
the regulatory and inspection agent for the CIDC in all Provinces of Canada with the exception of the Provinces of Ontario and Quebec. Had the difficulty arisen in any Province except Ontario and Quebec, where the actual regulation and daily, monthly or yearly control is by CDIC, it is conceivable that, having a hands on control relationship with the companies, I might have exercised jurisdiction under that legislation.
In the cases that the Hon. Member has cited in the Province of Ontario, I did not exercise jurisdiction because the Province of Ontario, through its Ministry of Consumer and Commercial Relations, and the companies that were primarily affected, the major players-no pun intended-Crown, Seaway and Greymac Trust, were the big brothers or big sisters, if you want, in the piece. The major action was in those companies.
The mortgage companies, which were federally incorporated and under the supervision of the federal Department, were really subsidiaries and under the control of the management of the provincially incorporated and controlled companies. Hence, the Department, although it shared parallel concerns with the Province, really was a minor player in the larger picture. Obviously the control decisions were made by the interlocking boards of directors and the major decisions were made in the parent company. The mortgage companies subject to federal jurisdiction were really minor players in the piece and that is why, for example, the Province moved first to exercise control in respect of Crown, Seaway and Greymac Trust. The federal Government moved subsequently, but in concert because of parallel concerns and because the companies were all interrelated in directorship, in operations and in investment opportunities. So that in effect, if the complaint of the provincial Government at the operation of the parent companies was one that could be satisfactorily concluded, that in turn would solve the problems with the subsidiary mortgage companies.


Donald Alex Blenkarn: Mr. Speaker, I hate to keep on going at this. I wanted to go on with my remarks, but the Minister has raised an issue. The Minister will note that there is a Quebec Deposit Insurance Corporation that handles Quebec companies, but it was my understanding, confirmed by the Minister, that all Ontario companies are registered under the Canada Deposit Insurance Corporation, as are most other trust companies and desposit taking institutions in the rest of the country. It is only in Quebec where they have their own insurance.
Why, then, as the Minister seems to have indicated today, did the Canada Deposit Insurance Corporation delegate its supervisory responsibilities to the Minister of Consumer and Commercial Relations in the Province of Ontario, particularly when it is the credit of Canada, not the credit of Ontario, that is responsible to ante up the losses?


Paul James Cosgrove: The short answer, Mr. Speaker, is because the Province of Ontario requested it. Second, it is not accurate to say that the delegation was a complete delegation. The Province reports the results of its inspections and supervisory
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April 12, 1983
Canada Deposit Insurance Corporation
control to the federal Department of Insurance through the Superintendent of Insurance and his officials, so that they are in constant communication. It is a shared supervisory capacity.


Donald Alex Blenkarn: Mr. Speaker, on that basis would the Government give us the undertaking now to terminate that shared responsibility and take responsibility as required under the Canada Deposit Insurance Corporation? If Ontario wants to insure its depositors in Ontario registered corporations, let them do so; but if they are going to be insured by the Canada Deposit Insurance Corporation, surely we cannot have a situation where the Government of Canada can slither around and say: "Well, we really are not responsible because we sort of shared the responsibility with Ontario, yet at the same time we are responsible".
Will the Minister now give us an undertaking that this whole business of letting some other Ministry in some other jurisdiction do the supervisory work, presumably on contract or something like that, will cease, that we will do the supervisory work if we are responsible for the losses?


Paul James Cosgrove: Mr. Speaker, when I made reference to a meeting of the Deputy Ministers of consumer and corporate affairs of the Provinces and the Superintendent of Insurance for the federal Government on Friday of last week, this was presumably one of the issues that was discussed and considered by the officials. But it is a working relationship between the Province of Ontario and the Government of Canada at this time. I have not received the report as to what the conclusions of the meeting of the officials were. It is obviously something that the Ministers for the Province of Ontario and the Province of Quebec will have to consider. As the Hon. Member himself said, it invites a total review of whatever level or whatever Government it is that is supervising trust company operations in Canada.
It is premature for me to give the undertaking that the Hon. Member has asked for, though it is a matter that is being considered. The timing is quite appropriate because the Province of Ontario, I understand, will be publishing a white paper and asking for public input. The federal Government has already asked for input into changes in the Loan Companies Act, and that legislation, of course, would be before this House and presumably in the Standing Committee on Finance, Trade and Economic Affairs for consideration.


Donald Alex Blenkarn: dealt with the question of supervision of these companies. I should like to read into the record a question that I put on that occasion and an answer given by Mr. Humphrys, then the Superintendent of Insurance. At page 53:9 of the proceedings of the Finance Committee I stated:
Now the Loan and Trust Companies Act allows a trust company to lend up to 75 per cent of the value of a piece of real estate, a home, for example. What are you doing to monitor that situation to make sure that the companies are not just fuelling the inflationary rise in prices and are not getting themselves in a box so that if the bubble bursts on some of these inflationary prices-prices, I might point out, of properties being sold at very much more than the cost of production-we will not wind up with the situation that existed after 1974 when the bubble burst in the last inflationary boom?
Mr. Humphrys replied:
Mr. Chairman, the comment is correct that the law puts a limit of 75 per cent of the value of the property on the amount of the mortgage loan. That is the limit of our statutory authority to control the mortgage lending of the companies. We attempt to see to it that the values that are put forward to justify compliance with this limit are well considered; but, if the market goes up and the properties are trading at the values, there is nothing that we can do other than exercise such persuasive influence as we have on company management to have regard for the fact that the prices may be pushed up in a temporary inflationary surge and that they should not get themselves hung up too severely on these values.
In other words, the Superintendent of Insurance said that he really did not do anything. I pressed him further with respect to Astra Trust when I said:
To a large extent the answer by some of the people in the Astra Trust case is going to be that all they were doing was lending in relation to the price of the property.
That, of course, was their answer. Then I went on to say:
Are you doing spot checks with these companies, checking out the physicals of what they claim to be mortgages on account on a frequent basis? What checks are you doing?
And later I asked:
All right. Are your people going out and checking those appraisers?
Mr. Humphrys replied:
Not usually, sir, no. If he is a professional and qualified appraiser, we would accept that.
That is exactly what happened to us. The real issue before the people of Ontario at the moment is the purchase of Cadillac properties for $270 million, the subsequent sale of those properties, within days, for $500 million and the mortgaging of those properties to 75 per cent of value based not on $270 million but on $500 million. The whole issue is that the Loan and Trust Companies Act allows companies to make advances on real estate to 75 per cent of value. But what is value, Mr. Speaker? It is in the eye of the beholder. We are involved in guaranteeing deposits of people who put their money in what they think are trust companies, in what they think are secure, guaranteed corporations that are supposed to look after their money as a trustee would, but we know there are some high flyers who are not supervised and who get in the marketplace and take accounts and make loans that are totally inappropriate. They pretend they are staying within the law by pretending that they are using appraised values.
We are going to pass this Bill because we need to, but that does not solve the problem. How many times are we going to allow the situation that existed with Astra, and that now exists
Canada Deposit Insurance Corporation
with the Seaway, Crown and Greymac companies, to happen again?
Deposit insurance came into force in this country after the problems that occurred with respect to a corporation called British Mortgage and Trust Company in Stratford. It was a well respected trust company in the Province of Ontario that was taken over by some people who had a little different idea from most of us of what a trust obligation was. They proceeded to do the same thing-to make fancy loans based on imaginary appraisals. The company went under and was bailed out by Victoria and Grey Trust Company. There were no depositor losses at that time but deposit insurance was brought in. Now we have a series of claims and there may be more. As we all know in our own communities, instead of real estate prices rising, in many cases they have tumbled by 15, 20, 25 or 30 per cent. When the properties are mortgaged to the hilt, a tumbling of values creates a situation very rapidly where a property is mortgaged for more than 100 per cent of its value. Yet there seems to be no arrangement by the Department of Insurance, or by the Canada Deposit Insurance Corporation, to force companies to take out of current, proper trust assets mortgages which are in excess of 75 per cent of the value of the property. There seems to be no arrangement by the Department of Insurance properly to appraise and spot check the kinds of investments held which are supposed to be back there to protect depositors.
Let us take a look at some of the evidence given before the Committee on Finance, Trade and Economic Affairs by Mr. Hammond, the current Superintendent, with respect to the Greymac and Seaway matters. I believe it is important that we go over that evidence today which was presented to the Finance Committee. First of all with respect to the Seaway Mortgage Corporation, the Department of Insurance determined on its own, prior to March 31, 1982, which is over a year ago now, that Seaway was in trouble. It put a $70 million limit on the borrowing of Seaway. It renewed the right of Seaway to do business on a month to month basis. Then all of a sudden this company was not being handled correctly, as is now evident. People who had put money up for guaranteed investment certificates in that company had not even received their guaranteed investment cetificate paper. The accounting records were in abominable shape. And it is now evident that, despite the order that they could not increase their borrowing beyond $70 million, in January they were at $106 million.
I ask you, sir, where is the supervision? How come that corporation was allowed to have people in charge who paid no attention to this Minister, to any Minister, to any Superintendent of Insurance, or to any rules and regulations in connection with the management of trust affairs? The answer is that the policemen either did not have the competency, did not have the staff or did not have the power. I say they had the power, perhaps not the competence. They did not have the intestinal fortitude to blow the whistle and terminate these companies.

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Canada Deposit Insurance Corporation
The same thing happened with Greymac. Greymac was on a short leash from March 31 onwards, yet people put their savings in Greymac and this Department did not do anything about it. Greymac's associated company, Greymac Credit, was able to go into the open market and buy up the shares of the Crown Trust Company. Yet the Department of Insurance and the Canada Deposit Insurance Corporation-managed, I might add, by the same people as the Department of Insurance, the same policemen-did not do anything about it.
The original proprietor of Greymac, Mr. Rosenberg, was able to work with his new proprietor, Mr. Player, and they were able to use the treasury of Crown Trust, the treasury of Greymac, their mortgage corporations and their trust companies, and the depositors' money which was insured by the Canada Deposit Insurance Corporation, to play games and to make maybe $125 million for themselves. If the Department of Insurance and the people supervising the Canada Deposit Insurance Corporation had done their duty to Canada, had taken their responsibilities in the way they should have, the damage that was done, and has been done to all sorts of people in the country, would not have occurred. The damage which has been done to the confidence of people in trust and savings organizations, and the damage done to the confidence of investors, would not have happened.
This is a serious matter. We cannot, as a Parliament, allow the kind of poor, inept, incompetent supervision which took place with respect to Greymac, Seaway, Crown and Astra to continue. The people involved in that supervision have an obligation to find other employment. The Government responsible is this Government opposite, because this situation was brought to its attention in the Finance Committee in April, 1981. It was brought to its attention again in December, 1981. I personally asked the former Minister what he was doing with respect to flash audits. He said he was doing nothing. I personally asked him how come the same problem of lack of supervision caused losses in the insurance companies of Caledonia, Strathcona and Pitt? What did he do about it? What is he doing about the trust companies? Why is there not supervision? But nothing was done. Now depositors across Canada are going to wind up paying directly or indirectly larger premiums to the Canada Deposit Insurance Corporation to cover losses which should not have occurred, and would not have occurred had there been proper supervision.
We have a palliative. We are going to increase that insurance to $60,000 and we are, presumably, going to bail out the depositors in Greymac, Seaway and Crown. We should be bailing out the depositors in Astra also because, despite what the Minister says, despite the warnings, they did not do anything to clean up their act; and it was because they did not do anything to clean up their act that the Greymac, Seaway and Crown affair occurred. The Minister is still depending on the same people. He still has a meeting of people in Ontario. He still has not changed his method of supervision.
I asked him today why he does not bring Parliament into the picture. Let us have some hearings and get this matter straightened around. All he wants to do is talk about it. But
that is not good enough. This Bill must pass, but that is not good enough, because it will not restore confidence other than the confidence of people who will say: "At least they will cover me for $60,000". What about the $3 million lost by the Peel Board of Education on a deposit made in Greymac effective January 1, 1983?


Mr. Fisher:: On the advice of the Ontario Government. You know that as well as I do.


Donald Alex Blenkarn: What about that? What about the supervision? The supervision was not there. My friend, the Hon. Member for Mississauga North (Mr. Fisher), says that it was perhaps on the advice of the Ontario Government.


Douglas Glenn Fisher: Definitely.


Donald Alex Blenkarn: I am not saying the Ontario Government has not been responsible, or that the Ontario Minister of Consumer and Commercial Relations is not responsible. Indeed, I say that since we are the Government that should be responsible for financial institutions, particularly those that come crying to Canada for deposit insurance, that supervision should be done by employees of the Government of Canada through the Canada Deposit Insurance Corporation and no one else. They ought to be responsible. To shuffle off responsibility on some other Government is no answer to building the confidence of depositors and investors in Canada. It is the responsibility of the Government of Canada to do that, and you cannot do it by shuffling off your responsibility on another junior level of Government.


Douglas Glenn Fisher: With a regional Premier.


Mr. Kempling:: It is a real Joke, isn't it?


Donald Alex Blenkarn: There are two or three concerns about this Bill. First of all, the limit of $60,000 is an important one. It was suggested by the Committee as being appropriate for ordinary deposits, that type of thing. Unfortunately the Committee did not put its mind to the concern with respect to cumulative registered Canada savings plans. Members will appreciate that if interest is calculated monthly at 12 per cent, money will double itself every five years. So a modest deposit of $5,000 today in a trust company, on that basis, will be worth $10,000 in five years, $20,000 in ten years, and $40,000 in 15 years. In 20 years you are out of luck because it becomes $80,000 and the insurance is only $60,000.
Because Registered Retirement Savings Plans are of such a nature that the tax implication of withdrawing the funds is pretty damaging and they cannot be easily moved around by virtue of the Income Tax Act, it is my feeling that the Government ought to consider some provision-perhaps not now because I think it is urgent that the Bill go through-to protect Registered Retirement Savings Plans to a larger amount than the present limit, and to treat them differently when held by a trust company.
April 12, 1983

The Minister made mention of tax. The Canada Deposit Insurance Corporation pays regular income tax. I suppose this is a method by which Government collects its money. It strikes me that the Government is really insuring the financial system, and why the Corporation should be a profit-making institution is beyond me. It seems to me that it should be a co-operative system that would insure deposits and handle various deposittaking institutions in accordance with the risk presented by those deposit institutions. To make a few dollars, or $12 million as the Minister said, in corporate tax is not, in my view, the important function of the Canada Deposit Insurance Corporation. The Minister might well reflect on the fact that what we really want is deposit insurance.
I think we are not really today addressing this particular concern by trying to figure out how to derive another $1 million or so revenue for the Government of Canada. Surely to goodness deposit insurance is not a method of trying to get a few more dollars of revenue for Canada; it is to make sure that those who deposit funds with our financial institutions have a sense of security.
The Minister mentioned briefly that premiums were going up. It is unfortunate that premiums will have to rise. They have not been one-thirtieth of 1 per cent of the amounts deposited; the arrangement up until now has been one of significant reductions in premiums. So that while the Act calls for a premium of one-thirtieth of 1 per cent on deposit, that has not been the practice. Companies who have paid for a five-year period are only paying additional premiums on additional business coming in. Sir, in fact the premiums are going up because of the defalcations, because of this mismanagement. I call on this Government, as I did earlier, to form a special committee of this House immediately to inquire into loan and trust company legislation and into the Canada Deposit Insurance Corporation activities, so that we can have confidence as Members of Parliament that things are being changed, that they are going to be managed directly from now on and that we can say to our constituents, all of us, that they can have faith in the deposit institutions of Canada once again.


Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, I rise to speak for a very short time on Bill C-142, an Act to amend the Canada Deposit Insurance Corporation. The New Democratic Party agrees that this Act needs to be passed without delay. We recognize the need for an increase in the insurance levels to protect those people who trust the system and who really in many cases do not know that much about it.
I was a little surprised to find myself agreeing on financial structures with the Hon. Member for Mississauga South (Mr. Blenkarn). That is not a usual area of agreement as far as our Parties are concerned, but controls over financial institutions need to be increased, to the extent that security of deposits is something which people can continue to count on. There should be controls to the extent that a situation such as the Crown, Greymac and Seaway Trust affair could not happen.
It is very important that we recognize the needs of the innocent depositor who puts money into a trust company, because he is going to need the money some time down the road. It perhaps pays a little better interest, but they are not in there to make a great deal of money. These depositors are not
Canada Deposit Insurance Corporation
speculators, they put money in there to save because they are going to use it for their retirement. Those kinds of depositors need to be protected. They are not putting money in because they want to make a great deal of money; they want it to be safe. So we need to look at the financial structure in order to safeguard these depositors. In fact, we should look at the financial structure which allows speculation, because speculation is an attempt by people to make money from nothing. That is not part of the structure of our country.
I believe there is little doubt in many people's minds that inflation is the direct result of high interest rates, exorbitant profits and financial manipulation which makes money from nothing, from speculation. In situations where there is no production of goods, where there is no service rendered, and in our financial structure which we have developed and with which we live, should we allow the kind of money making which does not take into consideration the requirement of protection of the small depositor? Many years ago Christ chased the usurers from the temple. Here in Canada and in most of the capitalistic western countries, we have allowed many of them to come back in a kind of structure which protects very few of the people who are unable to protect themselves.
As long as we are in the kind of system which does lack control, then we as a Parliament, as a Government, must protect those people. Apparently, a great number of institutions do not believe that they have any responsibility toward their clients but, rather, believe they should have as much leeway as possible to make as much money as quickly as possible, without concern for their responsibility toward their clients. Therefore, some kind of protection is needed and should be at such a level that the small investor feels secure in putting his money into a financial institution.
A couple of years ago, the $60,000 limit seemed adequate, and it may, in some ways, still be adequate. However, it may not be adequate two or three years down the way. That is why several Hon. Members of this caucus have suggested that perhaps, while we are changing the limit, we should put it at a higher level, rather than coming back a year or two years from now trying to raise it. We must recognize that if we did put it at a higher level, we would not reduce the effectiveness of the Bill. In fact, we would expand its effectiveness to some extent.
The New Democratic Party will support the quick passage of Bill C-142 because it needs to be passed to protect the small depositors from putting the last parts of their life savings into these companies. It does not mean that our Party is happy with the system, but we do support the quick passage of the Bill, so that the people who do trust the system and make use of it can go on trusting it and using it.


William James Kempling: Mr. Speaker, we finaly have Bill C-142 before the House, and what a long and tortuous road it has travelled to arrive here. The Minister, who

April 12, 1983
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is probably one of the cloudiest Ministers we have ever had in the House, has pulled every string to keep this issue clouded.
As Your Honour knows, there are conversations across the floor on various Bills. Before we rose for the Easter break, the Minister of State for Finance (Mr. Cosgrove) came across the floor and had a conversation with my colleague, the House Leader for our Party, the Hon. Member for Simcoe North (Mr. Lewis). He drifted across the floor or, should I say, floated across the floor in his usual fog and, putting on a political, partisan hat, said to our House Leader: "Your friends in Toronto are anxious to have the CDIC Bill passed". That was his comment. So our House Leader, in reply, told him to go and see the President of the Privy Council (Mr. Pinard) and request that he put it on the Order Paper for debate and that we would pass it. The Minister of State for Finance did not say that he wanted the Bill passed. He did not say that the Government had a sense of urgency that the Bill should be passed. Rather, he said: "Your friends in Toronto want this Bill passed". In other words, he-


Douglas Glenn Fisher: Your rich Tory friends.


William James Kempling: -has no concern, as far as I am concerned, for the trust industry, the depositors or the trust companies. He is interested only in trying to play little-minded political games. That is the way he has throughout his period of responsibility for the two portfolios we have seen him holding in this House. His purpose was to try to have the Bill passed with no debate. That was his objective. It was a typical Liberal trick. He knows that the federal Government was negligent in the matter involving Astra Trust, so he does not want the matter before the House. He does not want debate. He does not want anything out in the open; he wants to keep it under a cloud. That was his purpose in doing that.
Several of my constituents lost several millions of dollars in the bankruptcy of Astra Trust. The typical, unsophisticated investor went into the Astra Trust offices in Burlington and elsewhere and, in good faith, invested their money. They received a receipt from Astra Trust. This one happens to read: "Mrs. W. Stevens, SI0,000".
When one considers the profile of the average investor in Astra Trust, this is what one finds: a relatively unsophisticated investor. By that, I mean one with no experience in investing at any time in his or her personal history. Perhaps a family that had grown up and a couple was in possession of a house which they were able to sell and from which they made a profit. So mama and papa took the money and split it down the middle, perhaps $40,000 or $50,000, went to Astra Trust and invested it. They thought they were investing in a guaranteed income certificate, guaranteed by CDIC. They found out, to their sorrow, that they had invested in a piece of mortgage, because several weeks later they received a document which stated that they were a partial holder of a mortgage somewhere down in the Niagara Peninsula.
The Minister himself, in his announcement on January 17, has continued his confusing ways. He announced that the Bill was to be introduced and that it would raise insurance limit
from $20,000 to $60,000. So what happened in the trust industry? All the trust companies put advertising up on their walls and advised their clients that the limit was now $60,000. It became so blatant that on March 31 the Canada Deposit Insurance Corporation issued a telegram to all CDIC members telling them to stop advising people that the CDIC limit was $60,000. That was a direct result of the Minister's release and the fact that he did not have the muscle in Cabinet to have the matter brought forward. Certainly, it would have been brought forward and debated in short order in the House, but he wanted to cover it up. He did not have the muscle with the President of the Privy Council (Mr. Pinard) to get this done. He has confused this matter as did his predecessor.
The liquidation of Astra Trust, the bankruptcy of ReMor Investment Management Corporation and the receivership of C & M Financial Consultants are three events which are interconnected through a common ownership of share stock, common directors, and twisted, crooked business dealings designed at the outset to bilk innocent victims of their life savings.
A committee for the Government of Ontario sat for weeks studying the whole matter. The evidence of the connection between Astra Trust and ReMor is so plain that the only person in Canada who cannot see it is the Minister of State for Finance. He had the audacity to say, as reported in The Globe and Mail of April 8, 1983:
Mr. Cosgrove said he has told Dr. Elgie in the past that he would like to see any evidence of a financial link between Re-Mor and Astra. Such a link would be the "only legal basis on which the federal government could be involved" in any plan to compensate those who have suffered losses.
The link is there and it is very direct. Not only are the depositors of Astra Trust victims, but some of the shareholders have been gutted by a group of financial sharks who left behind a trail of shattered lives, broken dreams, threats of suicide out of despair and a cynicism so deep that it could lead to violence. I have heard many who have come to my office threatening violence.
Victims of the ReMor scam were baited by smooth-talking trust officers who took their money, gave Astra Trust receipts to the victims and switched the money to worthless ReMor mortages. When the victims complained, they were told they were the holders of good, solid First mortgages when, in reality, they owned a piece of a fourth or fifth mortgage on a piece of property that was next to worthless and much of which was under water.
The purists in business practice cannot invoke caveat emptor, "let the buyer beware", because most of the innocent victims who entered the doors of the trust company say on the doors, the walls, the windows and counters the display of advice that Astra Trust was a member of the Canada Deposit Insurance Corporation. They had that warm, comfortable feeling that the Government was there to protect them. Adding to that mixture of deception, the words "guarantee" and "guaranteed" were prominently displayed in the office and in
April 12, 1983

the advertising on the wall charts and brochures. When one adds the fact that Astra Trust was, of course, paying a slightly higher interest rate than other trust companies, one begins to see the dimension of the scam. It was trust company with protection by the Government and it was all guaranteed.
As in most deceptive dealings, there was another side that was not up front or displayed. It was the fact that the trust officers of Astra Trust were also commission agents for ReMor. They were paid a salary by Astra Trust and a commission by ReMor. They took the money from their mark in the trust, Government protected guarantee atmosphere and switched the money into a worthless ReMor mortgage.
The Minister of State for Finance has tried to weasel out of this dirty, smelly, disgusting mess by saying that ReMor is a provincial responsibility. That has been his comment. There are dozens of unanswered questions that must be investigated. Let me list a few. Is the Department of Insurance adequately staffed? Does it have the mandate to perform adequate inspections of the trust industry? After all, it was only a short time ago that Argosy Trust left behind a trail of shattered certificate holders.
How closely were the affairs of Astra Trust monitored by the Department of Insurance? What liaison is there between the federal and provincial Governments? I suspect there is very little.
What leverage does the Department of Insurance have that it can get the Ontario Securities Commission to hold back on a stop trading order on a trust company that has violated the regulations under which it operates? Did the inspectors from the Department of Insurance refer the advertising of Astra Trust to the Ministry of Consumer and Corporate Affairs when it was obvious to anyone that it was misleading? Why did the Department of Insurance not intervene when it was apparent that the trust officers at Astra Trust were acting as commission agents for ReMor? Surely they knew the amount of money that was passing through Astra Trust. If the Government instructed Astra Trust to close down C & M Financial Services when the trust licence was given to Astra Trust, why did it act blindly to the activities of ReMor? Was C & M really closed down? The evidence is to the contrary.
Did the Department of Insurance inspectors' report to the Department of Consumer and Corporate Affairs indicate that bait and switch tactics were being used by Astra Trust officers? If not, why not? They certainly had enough evidence.
What liaison existed between the Department of Insurance and CMHC? That is an interesting question. The present Minister of State for Finance was formerly the Minister of Public Works responsible for housing. A question was put on the Order Paper by my colleague from Simcoe North. He asked if Astra Trust Company was an approved lender for the purposes of purchasing, making and administering approved loans under Part I of the National Housing Act and, if so, what date was such a designation approved, who approved the designation and on what basis; and, if not, had the company ever been so designated and, if so, on what date was such a
Canada Deposit Insurance Corporation
designation approved, who approved the designation, and on what basis? This was the reply by the Minister of Public Works who is now the Minister of State for Finance:
I am advised by Canada Mortgage and Housing Corporation as follows:
Astra Trust was designated an approved lender by an Order in Council November 22, 1979. CMHC reviewed all pertinent information and documentation submitted by the applicant and was satisfied that this applicant met all criteria established by the corporation. On this basis CMHC sought an order in council designating this company as an approved lender.
I suggest that if this was put in chronological order, it would be seen that other investigations were under way at that time. There was no co-ordination at all between the Departments.
How much money was diverted from Astra Trust into a condominium in Spain? Do we really know if the money went to that development, or is it in a numbered account in Switzerland or Liechtenstein? We know that RCMP officials traced the money as far as they could. But were directors of Astra Trust so inept that they would invest trust funds in a venture that was so questionable and which was against their charter, an agreement with the federal Government? Was it chosen, rather, as a front to deliver money to a hidden account so that it could be retrieved at a later date? I suspect that this is what happened.
With a mass of regulatory violations outstanding against Astra Trust after 12 months of operation, why was firm action not taken at that time before the whole mess festered and grew into the tangled fraud that we have before us today?
I could go on, but in the final analysis the bankruptcy of ReMor and the liquidation of Astra Trust is a scar on the entire trust industry. While some in the industry express their views verbally regarding the licensing of Astra Trust, no one in that industry put their concerns in writing, through their trade association, about the licensing of Astra Trust to the Canadian Deposit Insurance Corporation. They knew because they talked privately about Astra Trust and the people who were directing it.
We must ask, whom do you trust? To whom do unsophisticated investors turn when they wish to invest the proceeds of the sale of their home, bequests or other funds that they may have available?
I have contended for some time that we must have an open judicial inquiry, a joint federal-provincial royal commission, if necessary, into this matter. The personal assets of the officers and directors of Astra Trust, ReMor and C & M should be frozen by the Government. The assets of their wives should be frozen so that the inquiry can determine if loans and other funds have been diverted or transferred to second or third persons to shield them from seizure as a result of the liquidation, bankruptcy and receivership of the tangled companies involved.
If the Government fails to do this, I believe that in the final analysis the trust industry as we know it today will not exist very much longer. It is a dirty, tangled, smelly mess.
One of the headlines appearing in the papers today says: "Are the Trusts Just a Bust?" That headline appeared in a

April 12, 1983
weekend newspaper. The way this matter has proceeded is absolutely scandalous and disgusting.
May I call it one o'clock?


The Acting Speaker (Mr. Corbin):: Order please! It being one o'clock, I do now leave the chair until two o'clock this afternoon.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.


Mr. Jean-Guy Dubois (Lotbiniere):: Madam Speaker, I am pleased with this opportunity to speak under the provisions of Standing Order 21. My subject is Bill C-78 which was passed by the House last year in February and subsequently, after being passed by the Senate, received Royal Assent in May of the same year.
I would like to draw the attention of the House to Section 17 as it applies to a person receiving pre-retirement benefits and who is, already was or subsequently becomes a widow. If this person is receiving pre-retirement benefits under Section 17, according to the Section, the benefits this person receives as a widow must be deducted, except for retirement or disability pensions provided under the Canada Pension Plan or the Quebec Pension Plan.
Madam Speaker, in the circumstances, a woman who is widowed and is receiving pre-retirement benefits, even if her husband contributed to the Quebec Pension Plan all his life, is penalized because her pre-retirement benefits are subtracted.
I think this has created a special problem, since widows, women who worked with their husbands, are being penalized. People who have become disabled or are retired do not have equivalent amounts deducted from their pre-retirement benefits, but as soon as a woman is widowed, she loses certain amounts under the provisions of Section 17. Madam Speaker, I would therefore ask the Minister of Labour to look into this matter and amend the Act so as to avoid penalizing women who become widows.



AGRICULTURE


Mr. Gus Mitges (Grey-Simcoe):: Madam Speaker, there is no question it is quite evident that our farmers are among the most productive in the world. In fact it is generally agreed that they are the unsung heroes of the so-called war against inflation.
There is no question as well that Canadians do indeed receive a tremendous deal when they line up at check out counters of supermarkets and other food stores. Those who complain about the high cost of various food products are indeed missing the point when you consider that, in Britain, families spend about 30 per cent of disposable income on food. In West Germany it is 33 per cent, and in Japan food costs are 40 per cent of disposable income. In Canada we spend little more than 18 per cent of disposable income on food.
Beset by high interest rates, escalating costs, and low prices, it is remarkable that our agricultural community is able to compete in world markets. In spite of this, many consumers downgrade farmers the minute food prices increase, no matter how little. Perhaps it is time that all of us begin to understand that, unlike many other countries, we are able to buy what we want and at prices that are among the cheapest in the world.
Our farmers deserve more recognition and credit for the tremendous job they are doing. Therefore I call upon the Government and the Minister of Finance (Mr. Lalonde) to recognize seriously and to deal seriously with their problems in the forthcoming budget by providing all assistance necessary to keep our farmers and food producers solvent. Otherwise the farm population will decrease even move to the further detriment of our economy and of the food industry in particular.



HOUSING


Mr. Gaston Gourde (Levis):: Madam Speaker, the Residential Rehabilitation Assistance Program, commonly referred to as RRAP, has been an unprecedented success, thanks to the project officers and other CMHC employees who helped to set up the project. For instance, in the riding of Levis alone, 117 homes were improved during the first eight months of 1982, $491,000 were lent under the program and $379,000 will be paid to citizens in the form of grants.
We feel, however, that the rural side of the program should be broadened. At the present time, only rural municipalities with fewer than 2,500 people are eligible for rural RRAP. Otherwise, they come under the urban RRAP, and the procedure for obtaining a grant is far more laborious. We feel that the Canadian Government should immediately make municipalities with up to 10,000 inhabitants eligible for rural RRAP, and plan to raise the ceiling even more in the years to come.
April 12, 1983

We are aware that if rural RRAP were offered to all municipalities, the costs involved would be astronomical. We would like to remind the Minister of Finance (Mr. Lalonde) that the program has a direct job-creating effect on a sector that has suffered considerably, namely, the construction industry. This would certainly be a welcome addition to the budget speech on April 19.



THE ECONOMY


Mr. Gordon Taylor (Bow River):: Madam Speaker, yesterday in this House the Prime Minister (Mr. Trudeau) said "the economy is performing well".
"Performing well" with Statistics Canada just releasing figures that 1,658,000 people are unemployed, with some
475,000	persons out of work and discouraged from even looking for a job.
"Performing well" with business bankruptcies in Canada up 55 per cent and farm bankruptcies up 111 per cent over one year ago.
"Performing well" with 40,000 of our young people being forced to leave their Canada to find work.
"Performing well" when the pillows of hundreds of women are wet with tears because UIC has run out and there is no money for clothes or sufficient food for the kids.
The Prime Minister must be living in a different world, or perhaps he meant the "economy is performing well" for exMinisters like Mr. Buchanan and Mr. Gillespie, and for Senator Pitfield. Certainly the economy is not performing well for two million unemployed, for hundreds of young people about to leave university or high school, for our businesses or our farms.
I urge the Prime Minister to get out among the people and to heed the aftermath of a similar statement from a well-to-do person in France when told that the people were hungry and had no bread. "Let them eat cake!" she said.
"The economy is performing well," our Prime Minister says. Shame!



CANADIAN NATIONAL RAILWAYS


Mr. Bill Blaikie (Winnipeg-Birds Hill):: Madam Speaker, on May 1, 1983, the CNR is scheduled to go ahead with the system-wide lay-offs that it announced in January. At Tran-scona Shops this means that a couple of hundred young railroaders with families, mortgages, and a will to work, are facing a permanent lay-off. Yet they also know that this layoff could be significantly reduced if the CNR were to build the 900 coal cars it needs, in its own shops, as it is now capable of
doing in Transcona, for instance. This has been their hope, and mine, that, through a decision of the CNR to build all or a portion of the cars itself, jobs could be saved.
With May 1 not far away, and in view of the fact that speculation about the coal car contract has lingered for months, I suggest to the Minister of Transport that he ask CNR, in all fairness, to make up its mind so that, whatever the case may be, people will at least know what is going on and will be able to plan accordingly. People whose economic wellbeing is dependent upon such decisions deserve to be informed earlier than at the last possible minute.
Having said that, I nevertheless want to repeat my contention that the lay-offs are unnecessary in any case and will turn out to be an example of tragic shortsightedness on the part of the Government, whose failure to mandate the CNR to plan for the long-term, instead of responding to short-term budget considerations, hurts not just CN workers but the whole country. If there were any economic sense on the other side we would be talking about whether more people were to be hired to build coal cars, and not about reducing the effect of an unnecessary and short sighted lay-off. There is, after all, plenty of work to be done.



REGULATIONS AND OTHER STATUTORY INSTRUMENTS


Hon. Perrin Beatty (Wellington-Dufferin-Simcoe):: Madam Speaker, I want to raise a point which I believe is timely, with the second Commonwealth Conference on Delegated Legislation being held in Ottawa this week.
Over the course of the life of the Standing Joint Committee on Regulations and other Statutory Instruments where the committee has been charged with the responsibility of inquiring into the legality of regulations passed by the Government, a problem has arisen. Often our Committee counsel makes recommendations which indicate that, in his opinion, actions taken by the Government are illegal. The response the Committee has had in the past often stated that the Minister of Justice (Mr. MacGuigan) had been asked and had given a legal opinion which indicated the Government's actions were entirely legal. When the Committee asked for an explanation of that, the Committee was told the opinion was privileged because of a solicitor-client relationship, and it would not be given an explanation.
On January 13, 1977, the then Minister of Justice, Mr. Basford, wrote to the Committee to indicate that, in future, Departments would be given the responsibility of explaining to the Committee why it was that their actions were legal. Unfortunately, in recent days we found the Government

April 12, 1983
backing off that, as the Minister of Indian Affairs and Northern Development (Mr. Munro) has taken the position that only the Minister of Justice has that responsibility.
It is not good enough for a Minister to say that he is acting in a particular way because, in a secret opinion, the Department of Justice has said it is okay, any more than it would be appropriate for any of us to rob a bank on the strength of a legal opinion from a lawyer that it is legal to do so. We would ourselves be-


Madam Speaker:: Order, please.



HAZARDOUS SUBSTANCES


Donald Alex Blenkarn: Madam Speaker, the decision in the United States Court of Appeal overturning the ban on urea formaldehyde foam insulation used in the insulation of residential property brings to the fore the problems of all sorts of Canadians who have taken advantage of the CHIP program and insulated their homes with this foam. In some cases the foam, improperly installed, has caused health problems, but in the vast majority of cases, as was found in the Court of Appeal in the United States, there is no health hazard.
The effect, unfortunately, of the ban on urea formaldehyde foam insulation and the subsequent publicity has been to make those homes where there is no health problem totally unsaleable and unmortgageable, and the owners of those homes have suffered enormous financial loss. The Government's $5,000 grant is of little assistance. The foam cannot be removed for $5,000 and, unless a home can be certified foam-free, no mortgage company will lend, few buyers will purchase, and then only at a significant discount.
This House must deal with the problem which the ban on urea formaldehyde foam insulation has created for home owners, by certifying those homes where there is no health problem to be safe, and by guaranteeing the homes and occupants against any health hazard.



STATUS OF WOMEN


Mr. Cyril Keeper (Winnipeg-St. James):: Madam Speaker, women in this country still only earn 60 per cent of the average wage of men because they are restricted to job ghettoes, yet the Government states that it has a commitment to affirmative action, which is a plan to rectify this systematic discrimination. What is absent is any results from the policies of the Government. In fact there is only one affirmative action plan resulting from this policy right across the country.
I want to refer briefly to the memo that was issued a year ago in Winnipeg that directed the local affirmative action consultants not to take any action in this area. It is time that the Government started to respond and to answer some tough questions about affirmative action. How many contracts have they signed? How many firms have been visited? Has the action on affirmative action that was promised a year ago, resulted in anything? If there are no results we can only conclude that the Government has no concern about the incomes of women and no real commitment to affirmative action.



ADMINISTRATION OF JUSTICE


Mr. Howard Crosby (Halifax West):: Madam Speaker, let me bring to the attention of the House of Commons, particularly of the Minister of Justice, a recent decision of the Supreme Court of Nova Scotia, under the Canadian Charter of Rights and Freedoms, that affects the enforcement of the Narcotic Control Act. The Supreme Court of Nova Scotia held that the so-called onus provision under the Narcotic Control Act was unconstitutional by virtue of the provisions of the Canadian Charter of Rights and Freedoms. This will allow drug traffickers to avoid the responsibility placed on them under that provision of the law in relation to charges of trafficking in narcotics and other illicit drugs. This will have an adverse effect on the administration and enforcement of the Narcotic Control Act.
I hope the Minister of Justice (Mr. MacGuigan) will examine this decision very carefully and bring before this House of Commons, at the earliest opportunity, legislation that will correct the effect of this court decision. I do not think when this House of Commons passed the Canadian Charter of Rights and Freedoms it intended to benefit drug traffickers. I think the Minister of Justice can take action to remedy this result.



ORAL QUESTION PERIOD


Hon. Ray Hnatyshyn (Saskatoon West):: Madam Speaker, my question is for the Prime Minister who yesterday, in response to a question posed by my colleague from Lethbridge-Foothills, stated that the young people of Canada should look at the reality of statistics rather than at the gloom that is forecast by the Opposition. Since the recession which we are suffering began in this country, 401,000 young people have lost
April 12, 1983

their jobs, including 10,000 people last month. There are fewer young people employed now that at any time since 1973. Given these realities, how does the Prime Minister expect anyone in this country to believe that the economy is performing well? What rate of unemployment does the Prime Minister believe we have to reach before he will say that the economy is not performing well?


Right Hon. P. E. Trudeau (Prime Minister):: Madam Speaker, the Hon. Member will recollect that yesterday, in the exchange with the Minister of Finance, he quoted several statistics indicating the increase in job creation and the increase in productivity. I gave some statistics indicating an increase in the Gross Domestic Product over the past several months, the past three months I believe.
It is obvious that, if you look at the figures of high unemployment and the figures of still high interest rates, you can take a pessimistic view of the future. The Minister of Finance, other Ministers and the Government are not taking that pessimistic view. They are saying that there are signs of improvement. It is these signs of improvement to which the Minister of Finance and I referred yesterday. You can always look at these signs of improvement, hang your head and say it will get worse. We say it is going to get better, and we intend to have a budget that will make things better faster.


GOVERNMENT APPROACH TO BUDGET PREPARATION
Ramon John Hnatyshyn: Madam Speaker, with the rate of unemployment we face in this country, particularly as it relates to young people who will be coming into the workforce very soon from the schools of the nation, I cannot understand how anyone in his right mind would suggest that the economy is working well. The Prime Minister is desensitized to the plight of Canadians who are unemployed. Indeed, it permeates the press in this country, and the Government. They have become insensitive toward the human tragedy occurring across the country in terms of those who are facing unemployment.
The Government has taken the position that it is going to tough out this recession and place the consequences on the backs of the unemployed. Is this the attitude that the Government is taking in its new budget, that the economy is performing well, when one out of every five young people in the country is out of work?


Pierre Elliott Trudeau: Madam Speaker, the Hon. Member refers to the necessity to have an open mind, and questions whether the economy is working well. I wonder if his open mind is working well. He accuses the Government of being insensitive to these problems. Not only are we not insensitive to them, we deplore the situation and we have done a great deal about it. We spent more than $2.5 billion in the June budget and in the October-November announcement of the Minister. More than a billion of this was addressed to creating jobs and helping to create skills among the young people.
Oral Questions
It is obviously not a matter of the Government being insensitive. On the contrary, these figures indicate that we are not only telling the people that we are trying to provide jobs for them, but we are not taking the attitude that we are going to tough it out. If we were, we would be looking at the Opposition and saying, "Let us just talk about the doom and gloom". We are presenting programs. We did in the June budget, and in November. We will do it again next week in the coming budget, to create jobs, to create the skills and create the infrastructure which will help the economy pull out of its very serious situation.
I repeat, the Hon. Member's mind must not be working very well if he has not seen this, if he just wants to look at the bad side of the economy and not look at the positive indicators that everybody is recognizing. It may not be a great future, but it can be if we decide to make it so.


LABOUR CONDITIONS
Ramon John Hnatyshyn: Madam Speaker, for a country that has had the poorest growth rate of all of the OECD nations, it is difficult for any of us to try to be dispassionate and look at these figures in a constructive way to find anything to give us any hope for the future, with this Government in control.
I want to ask the Prime Minister a question in relation to youth unemployment. In 1977 the Prime Minister told young people of Canada at the University of Toronto, "If they don't like it here, let them find another country. If it is just a job you want, my heart does not bleed for you." In view of the fact that in 1977 there were 411,000 young Canadians out of work and now we have 658,000 young people out of work, I want to ask the Prime Minister if this is the current continuation of his philosophy and the Government's philosophy, that their hearts do not bleed for the young people of this nation.


Pierre Elliott Trudeau: Madam Speaker, the Hon. Member is reaching to 1977 to talk about my philosophy. I would be very interested to compare my philosphy in that exchange I had at the University of Toronto or at any one of the halls of university with that of the Hon. Member. I was telling the students that the Government could not sign a blank cheque and guarantee them their future; that we could not guarantee them jobs; that if they wanted that, we would have to have a totalitarian state in which indeed we could direct students to study this and do that, and that was my philosophy. I am surprised that it seems unacceptable to the Hon. Member. Is he holding, and is his Party holding, that the Government owes a job to everyone and that the Government should be directing every student into every particular department so that he would have a guaranteed job in some part of the country regardless of his freedom to move? I would

April 12, 1983
Oral Questions
be very surprised if that were the philosophy of the Hon. Member.
Instead of digging back to 1977 why doesn't he dig back a little bit into his own ingenuity and ask himself what his philosophy is on this matter.


REQUEST FOR ADVICE FROM PRIME MINISTER
Miss Pat Carney (Vancouver Centre):: Madam Speaker, my question is also addressed to the Prime Minister. In terms of our philosophy I think it is very clear that in our Party we believe that, in a country with the riches and the scope of Canada's, every Canadian should be able to find a job.
In terms of youth unemployment, we are talking about a lost generation. We know that one out of four young men in Canada under the age of 25 is out of work. As a parent, what practical advice does the Prime Minister have to offer our sons and our daughters who want to earn their independence and pay their own way? What practical message can they take to cope with a situation that looks very bleak to them?


Pierre Elliott Trudeau: Madam Speaker, now the Opposition has asked me to give my advice as a parent. I give my advice as a parent to my children. I hope the Hon. Member would have the ingenuity to do the same to hers.


Pat Carney: Madam Speaker, if that is his attitude, I feel sorry for all the sons and daughters of all Canadians today.


Some Hon. Members:: Hear, hear!


DESCRIPTION OF CIRCUMSTANCES
Pat Carney: Madam Speaker, my supplementary question is addressed to the Prime Minister.
In view of the Prime Minister's statement Monday that the economy is "performing well", how does he describe the circumstances facing the half million Canadians whose jobs have disappeared and who will never return to the work bench or never return to the mine site or never return to their ordinary job because those jobs have gone forever? What hope does he offer them?


Pierre Elliott Trudeau: Madam Speaker, how I describe that is as a very regrettable situation. Canada is caught up in a world-wide depression, recession, whatever you want to call it. We are part of the trading nations of the world, and we are doing our best in order to make sure that jobs will be created. I repeat, we have spent more than $2'/2 billion in order to do that. We are announcing projects every week. There will be more in the budget next week. We are not telling people that things are going to get miraculously better overnight in Canada just because the Opposition wills it, if the rest of the world does not enter into the recovery process at the same time as we do.


REQUEST THAT TARGET BE SET FOR UNEMPLOYMENT REDUCTION
Hon. Edward Broadbent (Oshawa):: Madam Speaker, I have a question for the Prime Minister. The Prime Minister has just referred to what is appropriately described as a world-wide recession. I have a question for him precisely in this context.
There are two other industrial countries, Sweden and Japan, which have unemployment levels of 3 per cent, which is one-quarter the unemployment level in this country. The other characteristic that these other two countries have, however, unlike the Government of Canada, is that the Governments of Sweden and Japan have declared a national emergency in terms of unemployment being at 3 per cent in their lands. On the eve of the budget, given the human cost of unemployment in Canada, given the economic cost of about $1 billion a month in unemployment insurance alone, will the Prime Minister give his assurances that the Government will say there is an emergency in terms of unemployment, and set specific growth targets for 1983 in terms of guaranteeing, in terms of its targets, in terms of bringing in special programs, a bringing down of the level of unemployment by a certain percentage by the end of this year?


Pierre Elliott Trudeau: 
THE ECONOMY
John Edward Broadbent: Madam Speaker, the Government of the two countries I have referred to have not talked in slogans, they have not made vague promises in the past, they have acted. That is why, even today in the worldwide recession the Prime Minister is talking about, they have only 3 per cent unemployment.
My question to the Prime Minister is in terms of action. He did promise a while ago that we would have in Canada what my Party has talked about for a long time, namely, an industrial strategy. The Prime Minister said in 1980 that the Government, and I quote him, must not remain "a passive referee" but instead become "an active player" in the economy. Just before the Parliamentary recess the Minister of Industry, Trade and Commerce said the opposite. He said the Government should intervene only when and where the private sector tells it to. Will the Prime Minister clear up this contradiction? Does the Government believe that it ought not to remain passive, or is it going to do now what the Minister of Industry, Trade and Commerce said, simply let the private
April 12, 1983

sector do what it will and let the chips fall where they may, even if that means two million unemployed Canadians?


Pierre Elliott Trudeau: Madam Speaker, I don't think the Hon. Member would be suggesting that the private sector itself reflects a situation where there are
1,600,000	unemployed. The Hon. Member knows that the private sector, which includes the employers, the investors and so on, has been having a difficult time of it as well. Therefore it is not for their love of unemployment that they think the private sector can do a job. I have said many times before that this Government has a philosophy which permits Government intervention in some cases. For instance, we have made that quite clear in areas like the creation of Petro-Canada, and our national energy policy, and so on.
In the overwhelming majority of areas we say the jobs should be created by the private sector, and it is the business of the Government to try to make sure that the appropriate social legislation is in place to make sure that the people who have to be helped are assisted. But, by and large, the jobs have to come from the private sector. Therefore the private sector has to have good confidence in the future of the economy, in the way it will be conducted, and in the possibility of investing soundly in order that jobs be created.


ROLE OF GOVERNMENT
John Edward Broadbent: Madam Speaker, the Prime Minister knows as well as the people on this side of the House that he did not answer the question at all. No one is saying that the majority of Canadians, now and in the foreseeable future, won't be employed in the private sector. What we are asking the Government is whether, in the context of a mixed economy, it is going to live up to its own commitment to provide an industrial strategy, which is a different kind of matter entirely.
I want to ask the Prime Minister if he is standing by his old campaign promise, or is he going in the direction of the Minister of Industry, Trade and Commerce? Will he give Canadians a sense of hope, a sense of optimism about the future, by saying the Government will play an active role in setting investment priorities in the economy so we can get more long-range jobs which Canadians desperately need?


Pierre Elliott Trudeau: Madam Speaker, the Hon. Member uses the term "mixed economy", which is the one this Government has been following. If he needs examples of Government intervention and direction given to the economy, he could look to his right and he would find too many examples to please them. He would just have to look at his own position and the position of his Party on the Crow announcement that we made some months ago. Here is a case where the Government was giving direction to the economy, proposing solutions, and what happens? The NDP sits on its hands and prefers being reactionary to change-a change which is necessary to create the infrastructure in this country.
Oral Questions FINANCE


MINISTER'S APPROACH TO BUDGET PREPARATION
Mr. Pat Nowlan (Annapolis Valley-Hants):: Madam Speaker, my question is directed to the Minister of Finance. Not to engage in the interesting dialectical exercise of arguing philosophy, especially with the Prime Minister, but coming down to very practical questions of politics and policy making, I have a question for the Minister of Finance. Is he using, as his premise in the preparation of the budget next week, the position of the Prime Minister that "the economy is performing well"?


Hon. Marc Lalonde (Minister of Finance):: Madam Speaker, I can understand the Hon. Member being very fearful of discussing philosophy with the Prime Minister. I want to tell him that I am preparing a budget that takes into account the current economic situation-the situation in which the Canadian economy is finding itself, bearing in mind also the world situation in which we live. I hope the measures that the budget will contain will have the support of the Hon. Member and that, indeed, he will find there the best possible answer to a very difficult situation at the present time.


John Patrick (Pat) Nowlan: Madam Speaker, there is no problem with me in debating philosophy with the Prime Minister, but that does not answer the questions affecting the 2 million unemployed.


BASIS FOR MINISTER'S POSITION
John Patrick (Pat) Nowlan: Madam Speaker, would the Minister of Finance come back to my question? Taking all these factors in the world and in this country into consideration, is the Minister writing his budget on the basis that the economy in Canada is performing well?


Marc Lalonde: Madam Speaker, there are elements in the economy that are certainly performing much better than they were previously.


Mr. MacKay:: Pawn shops.


Marc Lalonde: I mentioned the figures yesterday. Industrial production in January registered its largest increase in nearly 50 years. The gross domestic product had its highest rise in seven years. We have had housing starts at the rate of 177,000 units in the last month. We have had the largest trade surplus in our history. We have now cut inflation in this country in half in the space of slightly over one year. Interest rates are coming down. Interest rates in Canada on short-term paper at the present time are at the same level or even below those in the United States-I mean they are not below the United States but the spread has been practically eliminated between the U.S. and the Canadian rates on short-term paper. These are positive elements. Employment has grown in the last month.
Obviously, however, there are also negatives. The main negative is the high level of unemployment at the present time, which we all deplore. We are trying to address this issue even

April 12, 1983
Oral Questions
more than we have done in the past. As the Prime Minister has said, we have taken numerous measures in that regard. We are trying to see whether we could do even more, but at the same time one should not believe that there is a kind of cure-all that one budget can bring forward.
As a matter of fact, of all the questions, that I have been asked by the Conservative Opposition in the last few weeks and days, more has contained one single practical, realistic proposal, and I am not surprised.


Miss MacDonald:: Open your mind.


INQUIRY RESPECTING CAPITAL GAINS TAX
Elmer MacIntosh MacKay: Madam Speaker, I do not know if this is a solution or a question for the Minister of Finance. The next thing I expect him to say is that he will be bringing forth a bilingual currency, redeemable in wheat and beaver pelts or something in Winnipeg.
Is he going to do something about the taxation structure, in his budget? Is he going to do anything about the capital gains structure that has not been touched in ten years?


Marc Lalonde: Madam Speaker, my answer to the Hon. Member is that I shall be bringing down the budget at eight o'clock next Tuesday evening. I invite the Hon. Member to be present, and if he is unable to come, I should be glad to send him a copy of the budget. He will then be able to see for himself whether or not the problems he is raising are considered in that document.


EMPLOYMENT
Mr. Bill Domm (Peterborough):: Madam Speaker, I have a question for the Prime Minister. I have received a letter from a student at Sir Sanford Fleming College in Peterborough, in which he writes as follows:
I have applied to many programs set up for student summer employment .. . One place I applied to, for example, had 700 applications for 43 positions.
If the Prime Minister would like something tangible, I wonder if he would consider abandoning the $80 million to $100 million advocacy expenditure budget of the Government and turning that money, which is spent with no return other than propaganda, to the creation of student employment programs that are so badly needed in Canada today?


Pierre Elliott Trudeau: Madam Speaker, since we are in the process of saving money, could I suggest that the Tory Party give up all research money allocated to its caucus research group so that we would be able to create jobs with that, rather than have them ask silly questions like this?


NATIONAL DEFENCE
Mr. Tom McMillan (Hillsborough):: Madam Speaker, my question is for the Minister of National Defence. The Department of National Defence is spending millions of dollars on advertising to recruit young Canadians into the Armed Services but, at the same time, it is turning away thousands of qualified Canadians on the grounds that it does not need them. Would the Minister be prepared to accept a major slash in advertising expenditures for recruiting purposes in his Department, and to recommend to his Cabinet colleague that the money be used, instead, for job-creation purposes elsewhere within the Government?


Hon. J. Gilles Lamontagne (Minister of National Defence):: Madam Speaker, what the Hon. Member is suggesting has already been done. Our publicity budget has been cut by 52 per cent and the money has been allocated for better purposes.


SMALL BUSINESS
Mr. Otto Jelinek (Halton):: Madam Speaker, my question is directed to the Minister of State for Small Businesses and Tourism. In view of the fact that the small business sector is the largest potential employer in Canada, can the Minister tell the House whether he has made representations to the Minister of Finance to include employment tax credits or other similar incentives for small business in his forthcoming budget in order to encourage the private sector to create jobs, as opposed to the costly and temporary make-work programs of the Minister of Employment and Immigration? These have obviously not been working. Has he made these representations and, if so, what has been the response of the Minister of Finance?


Hon. William Rompkey (Minister of State (Small Businesses and Tourism)):: Madam Speaker, I can tell the Hon. Member that the Minister of Finance has met with the Small Business Consultative Committee, which is my main group. It represents small-business men from all across the country. We have had lengthy discussions with the Minister of Finance, and I know he is very sympathetic to their needs. As a matter of fact, if the Hon. Member check Hansard for the answers of the Minister of Finance in the House recently, he will know that the Minister is fully aware that small business is indeed a very important factor as we come out of this recession. I know he is aware of that, and I think that is what we need to know.


Otto John Jelinek: Madam Speaker, the Minister has not answered the question.
April 12, 1983


EMPLOYMENT INCENTIVES SOUGHT
Otto John Jelinek: Madam Speaker, may I put a
question to the Minister of Finance, who wanted concrete proposals? Will he consider giving small business some tax incentives for employment, or will he not?


Marc Lalonde: Madam Speaker, it is a real pleasure to receive this suggestion from a Member of the Opposition. I shall give it my attention.


AIR TRANSPORT
Mr. Robert Gourd (Argenteuil-Papineau):: Madam Speaker, my question would normally have been directed to the Minister of Transport, but in his absence, I shall direct it to the Minister responsible for Energy. Last summer, the Minister of Transport announced at a press conference a number of measures which, according to the Minister, would enhance the viability of Mirabel Airport. Earlier, the Minister of Transport had told the mayors of the North Shore and area Members of Parliament that getting the Mirabel question off the ground was a matter of political will. It is now April 12, in other words, a year later. The people of the area, the mayors and myself, are inclined to think political will is particularly lacking in Transport officials and perhaps the Minister himself. Therefore, could the Minister responsible for Energy inform the House whether any action will be taken to implement the promises made by the Minister of Transport with respect to the fuel tax so that this airport's operations will finally become viable?


Hon. Jean Chretien (Minister of Energy, Mines and Resources):: Madam Speaker, I can assure the Hon. Member that this matter is far from forgotten. I had occasion to discuss the subject with the Minister of Transport not long ago, and there are a number of technical problems. The Minister of Transport and myself intend to find a solution as soon as possible. I hope that we will be able to report on this to the House within the next few weeks.


EXTERNAL AFFAIRS
Mr. Bob Ogle (Saskatoon East):: Madam Speaker, my question is directed to the Secretary of State for External Affairs, but in his absence I will direct my question to the Prime Minister. It has been documented by The New York Times, by The Guardian, and by Newsweek magazine and
Oral Questions
other sources, that ex-Somosistas troops supplied by the United States of America, and trained in Honduras, are invading Nicaragua. Could the Prime Minister tell this House if the Secretary of State for External Affairs protested to the Secretary of State for the United States yesterday? If he did not, when and how will Canada protest?


Hon. Charles Lapointe (Minister of State (External Relations)):: Madam Speaker, I answered a similar question by the Hon. Member three or four weeks ago, and I pointed out at the time that the Government condemned, without any hesitation, all foreign intervention and armed support in Nicaragua.
Regarding representations or protests to be filed with Washington or other countries that might be active in Nicaragua, the Hon. Member will have an opportunity to put his question to the Secretary of State for External Affairs when he returns to the House tomorrow.


REQUEST THAT CANADA FORWARD MEDICAL SUPPLIES
Robert Joseph Ogle: I have a supplementary, Madam Speaker, if the Prime Minister will answer. I have been informed that the invasion is taking over farm lands as well as creating great health problems with the wounded. Nicaragua has only 14 anesthetists. Is Canada prepared to increase both its medical and food aid to that country, and in what quantities?


Charles Lapointe: Madam Speaker, I have noted the Hon. Member's suggestion and I shall give him my comments on the subject some time this week.


PETRO-CANADA RETAIL PRICE OF GASOLINE
Mr. W. C. Scott (Victoria-Haliburton):: Madam Speaker, my question is directed to the Minister of Energy who is out behind the curtain, if he would drop in. The Minister is responsible for the price of gasoline in Canada today. Two weeks ago I visited my local BP station and paid just over 38 cents per litre for a tank of gasoline. Last week, lo and behold, when I filled up at the same location, now a Petro-Canada station, I paid over 41 cents per litre. Can the Minister tell us is this the cost of buying from the Government?


Joseph Jacques Jean Chrétien: Madam Speaker, the decision on pricing gasoline in the market is made by the different companies, and we are

April 12, 1983
Oral Questions
not intervening on a daily basis. There has been some great fluctuation lately in the Ontario market because there is some competition between the different companies. 1 have seen a regular change in the price in other places in Canada. This change between those two prices has no relationship at all to the fact that BP became part of Petro-Canada.


REQUEST THAT PRICE INCREASES BE HALTED
William C. Scott: Madam Speaker, my supplementary question is also directed to the Minister of Energy. I have received many letters from my constituents complaining about the cost to the Government of a recent advertising campaign announcing the purchase of BP by Petro-Canada. The re-opening of the stations by Petro-Canada, and my experience with the local station, has shown me how this purchase and the advertising were paid for by increased prices at the pumps. Will the Minister please halt these price hikes and prove that the Government is not out to gouge the public unfairly?


Joseph Jacques Jean Chrétien: Madam Speaker, I do not think that the Hon. Member should make a statement like that. It was absolutely appropriate for Petro-Canada to advertise that they were taking over BP. In fact they have taken over BP because it will give them many more outlets to sell gasoline. Indeed, the residents of Canada, especially in Ontario, were writing letters to Petro-Canada requesting more stations in Ontario because they preferred to buy from that company. As a matter of fact, Petro-Canada was the only company which managed to increase its share of the market compared to the others. So if Hon. Members do not want to buy from Petro-Canada, they can always buy from an international company.


EMPLOYMENT
Mrs. Jennifer Cossitt (Leeds-Grenville):: Madam Speaker, my question is directed to the Minister of Employment and Immigration. There is a desperate sector of unemployed people who cannot find work because they lack experience. They cannot collect unemployment insurance benefits because they do not have enough insured weeks. They do not qualify for welfare benefits because other members of the family are supporting them. I have a constituent who falls into all of these categories, and because of this he is disqualified from any of the job-creation programs the Minister proudly refers to from time to time in this House. What is the Minister doing to find jobs for this person and the thousands of others like him who do not qualify for present job-creation programs?


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, the Hon. Member would have to be a little more specific in terms of the person himself, and we would be very glad to have representations and to receive a
letter from her. But I want to point out that there are in place a number of job-creation programs which cover a broad spectrum of opportunity. There are employment programs for students. There are wage subsidies to the private sector and to small business to hire people, particularly young people and those who are handicapped. There is the Canada Community Development Program which hires a broad range of Canadians, regardless of qualifications. There is also the NEED Program which has now approved over 30,000 jobs across the country. I would suggest, therefore, Madam Speaker, that there is a broad range of job-creation programs which are available. If the office of the Hon. Member would like to get in touch with me, I would be glad to give her the information and she could pass it on to her constituents.


NEW EMPLOYMENT EXPANSION AND DEVELOPMENT PROGRAM
Flora Isabel MacDonald: Madam Speaker, I have a supplementary to the question posed by my colleague, the Hon. Member for Leeds-Grenville. I would like to explain to the Minister that there are people who have run out of unemployment insurance benefits. They are not youths. They are in their thirties and early forties. They will not apply for welfare assistance. They may live at home with another relative, but they have no income whatsoever-none! They do not qualify, therefore, under the NEED Program. That is the group of people that we are trying to do something about, and that is the group to which I would like the Minister to direct his attention.


Lloyd Axworthy: Madam Speaker, I am very happy that the Hon. Member has raised that question, because she has obviously been operating under a misapprehension. The fact that the very person whom she has described, with the kinds of problems which he faces, is eligible under the NEED Program. We have set up a priority listing of those who are eligible, if she would like to inform those people who are caught in those circumstances that they are eligible for these areas. I would hope that she, or other Hon. Members who are so misinformed, would correct the situation in their own areas.


REQUEST FOR CLEARER CRITERIA
Flora Isabel MacDonald: Madam Speaker, I would like to inform the Minister that his offices, the Canada Employment Centres, are turning down people, saying that they are not qualified. That is who is doing the turning down.


Some Hon. Members:: Hear, hear!


Flora Isabel MacDonald: Where are the directions coming from? Why does the Minister not get his lines of communication
April 12, 1983

straightened out so that these people are not left in such desperate need?


Lloyd Axworthy: Madam Speaker, if there are special circumstances, or offices, where that information is not being transmitted, I would be very pleased to hear about it and I will have it corrected. But the fact is that even when we put forward, back in January, the initial set of criteria of eligibility, we did indicate that very clearly. And every Member of Parliament received that information in their own offices. All they have to do is go back and check the actual statement of announcement which did include those people. I would be glad to check into any particular cases, but I must say that the Hon. Member had that information on the very first day of announcement.


FREEDOM OF INFORMATION
Mr. Svend J. Robinson (Burnaby):: Madam Speaker, my question is directed to the President of the Treasury Board. Since last summer the Government has been promising that freedom of information legislation would be proclaimed on April 1 last. Recently, however, the Government House Leader said that the law will not be proclaimed until 30 days after the end of this session. Since both Opposition Parties have said that we are prepared to give immediate passage to the resolution which will appoint the Information Commissioner, what possible reason does the Government have for not moving to bring forward this resolution immediately and proclaim the legislation, other than possibly legislative blackmail by the Government House Leader, and a desire to continue the policies of secrecy and non-accountability?


Hon. Herb Gray (President of Treasury Board):: Madam Speaker, as 1 informed the House some weeks ago, we are working very actively to have all the procedures and material ready. We have been doing so with a view to an April 1 proclamation of the Act. However, with the lack of passage by the House of the resolution appointing the Commissioner provided for under the Act, obviously one cannot carry out the proclamation in the absence of this vital step. I am sure the Government House Leader has taken note of my hon. friend's comments about the resolution and will keep it in mind in the organization of House business.


Svend Johannes Robinson: Madam Speaker, we are prepared to pass that resolution today, and I am sure the Official Oppositon takes the same position.
Oral Questions PROPOSED SCALE OF FEES


Svend Johannes Robinson: Madam Speaker, I have before me a copy of the confidential draft Freedom of Information Regulations being considered by the Government at this time. If these Regulations are implemented, proposed costs for access to information will constitute a very serious barrier to open Government, for example, $250 for a quarter hour of computer time, and a simple request for one sheet of paper will cost at least $10. Will the Minister agree to reexamine this proposed exorbitant fee scale which will mean that freedom of information will not be a fundamental democratic right but a privilege only for those who can afford it?


Herbert Eser (Herb) Gray: Madam Speaker, no decision has been made on this matter as yet. I will take note of my hon. friend's comments. These concerns are very much on our mind as we approach final decisions on these matters.


POSITION OF NEW DEMOCRATIC PARTY ON LEGISLATION
Hon. Walter Baker (Nepean-Carleton):: Madam Speaker, has the Minister made any inquiries of the Hon. Member who just asked the question to find out whether he has now changed his mind with respect to Bill C-43 on freedom of information, bearing in mind that the NDP voted against freedom of information when that legislation was here in the House of Commons?


Some Hon. Members:: Hear, hear!


Marc Lalonde: So true. Typical NDP hypocrisy.


Herbert Eser (Herb) Gray: Madam Speaker, I think the facts cited by my hon. friend speak for themselves.


EXTERNAL AFFAIRS
Hon. Sinclair Stevens (York-Peel):: Madam Speaker, my question is for the Minister of Defence. As he will have noted earlier today, one of our socialist Members raised the question of the rebellious action in Nicaragua and referred to external forces. Does the Minister have any knowledge or evidence, through the usual sources, NATO or otherwise, of Cuban involvement in Nicaragua, and possible Soviet involvement? In short, the use of Soviet weapons in that country?


J. Gilles Lamontagne: Madam Speaker, I am not aware of any such information or allegation. In our NATO meeting we never discussed these issues of Central America or other areas outside of NATO. I know for a fact, because of the trip I have just made, that the Russians are influential in other parts of the world. As far as Nicaragua itself is concerned, I cannot affirm or negate any of these allegations.

April 12, 1983
Oral Questions


INQUIRY RESPECTING POSSIBLE SOVIET INVOLVEMENT
Sinclair McKnight Stevens: Madam Speaker, in view of certain news accounts, including a report in The Globe and Mail last week-end, of Soviet weapons being used by Nicaraguan Government troops to shoot and kill some of those who are rebelling in that country, some in fact associated with Eden Pastora, would the Minister look into that situation and report on whether in fact there is such evidence of Soviet involvement in that country?


J. Gilles Lamontagne: Madam Speaker, I would be very glad to investigate with the Department of External Affairs to see if both of us could get the information the Hon. Member seeks. Personally, I would like to have the information for myself.


CANADIAN ARMED FORCES
Hon. Allan B. McKinnon (Victoria):: Madam Speaker, my question is also for the Minister of National Defence. A month or so ago the idea was put forward in this House that the Armed Forces might consider taking in some 25,000 to 50,000 short-term enlistees to give them some employment and training at the same time. The Minister seemed favourably inclined but was having difficulty with, of all people, the Minister of Employment. Has the Minister had any luck in getting that strong man in the Cabinet to go along with him?


William James Kempling: Straw man.


J. Gilles Lamontagne: Madam Speaker, I think, as you are aware from my comments, I was in favour of having, as far as the employment program is concerned, some of our youngsters enlist in the forces. But obviously, because of the need for financial resources, I have to wait for the Minister of Finance's budget to know how much money I will get in this matter.


SUPPORT FOR PROGRAM
Allan Bruce McKinnon: Madam Speaker, considering that 108 of the Minister's backbenchers approve of this scheme, and he has the support of the Opposition, does he have any indication from the Minister of Finance that he will make some provision in the budget for this scheme which will do much to increase employment among this army, if I can be forgiven the word, of unemployed?


J. Gilles Lamontagne: Madam Speaker, as the Hon. Member knows, the Caucus and backbenchers express their views on many ways of creating jobs. Among them was one to enrol some youngsters in the military. But as far as that is concerned, I think the Minister of Employment and Immigration and the Prime Minister explained the many ways this Government is making job
creation very appropriate. Military enrolment is one of those ways, but we have to proceed very cautiously on this matter.


GOVERNMENT POLICY ON RECRUITMENT
Hon. Erik Nielsen (Leader of the Opposition):: Madam Speaker, we were gratified when Government Members supported that policy suggestion that the Minister of Finance is always accusing this side of not making, with respect to the voluntary induction of 25,000 to 50,000 of young people into the Armed Forces. I ask the Minister of National Defence, has the Government made a decision to adopt this as policy?


J. Gilles Lamontagne: Madam Speaker, as a matter of fact, when Members mention
25,000	or 50,000 people, I think that is quite exaggerated in that I wonder if we could take in as many people as that without spending a lot on infrastructure and accommodation. We have made certain suggestions to the Minister of Finance and to the Cabinet about what we could do without spending so much money on infrastructure and reorganization. I am sure the suggestions will be taken into consideration at budget time.


GOVERNMENT POSITION
Erik Nielsen: Madam Speaker, may I once again put the very simple and direct question requiring a very simple and direct answer from the Minister. Has the Government made any decision with respect to the induction of any number of young people into the Armed Forces-


Mr. Tobin:: Wait for the budget.


Erik Nielsen: -to alleviate the unemployment problem?


J. Gilles Lamontagne: Again, Madam Speaker, I think the Caucus and Members on this side of the House made many, many suggestions as far as job creation is concerned. Obviously we have to wait until the budget comes down to know exactly what will be done by this Government.


Some Hon. Members:: Hear, hear!


AIRPORTS
Donald Alex Blenkarn: Madam Speaker, in the absence of the Minister of Transport I will direct my question to his Parliamentary Secretary. He will know that in Mississauga a study was done with respect to the Toronto International Airport and the new terminal proposed for that airport. Would the Parliamentary Secretary advise this House why that project has not gone forward, in view of the fact that
April 12, 1983

it could be built without the investment of any public money because lessees of the terminal would in fact put up all the cash required?


Mr. Jesse P. Flis (Parliamentary Secretary to Minister of Transport):: Madam Speaker, I am very pleased to reply to the Hon. Member on behalf of the Minister of Transport. The latest studies show that the demand projected for Terminal 3 for the 1980s has not materialized. The studies indicate that this demand will not appear until the 1990s so the Terminal 3 project has not been shelved; it has been put on the shelf.


Some Hon. Members:: Oh, oh!


Mr. Epp:: Not been shelved, but put on the shelf?


Jesse Philip Flis: If future studies show there will be a demand, he will get his Terminal 3, Madam Speaker.


Donald Alex Blenkarn: Madam Speaker, this Government wants to put on the shelf Canadians who want jobs. That is what it wants to do.


DATE OF THE IMPLEMENTATION
Donald Alex Blenkarn: Madam Speaker, the Government knows that we need another terminal at Malton and it could go ahead with the project without one dime of public money invested. When will the project go ahead, and when can we put people to work?


Jesse Philip Flis: Madam Speaker, I think it is time that the public put the Hon. Member on the shelf with that kind of a remark. As I indicated earlier, our latest studies show that there will not be a need for Terminal 3 until the 1990s.


Donald Alex Blenkarn: Nonsense.


ELECTORAL BOUNDARIES READJUSTMENT ACT
Madam Speaker:: It is my duty pursuant to Section 19 of the Electoral Boundaries Readjustment Act, Chapter E-2, Revised Statutes of Canada, 1970, to lay upon the Table a certified copy of the report of the Electoral Boundaries Commission for the Province of Alberta, 1983.
Pursuant to Standing Order 46(4), this report is deemed to be permanently referred to the Standing Committee on Privileges and Elections.
Order Paper Questions


PETITIONS
Madam Speaker:: I have the honour to inform the House that the petition presented by the Hon. Member for Edmonton-East (Mr. Yurko) on Monday, April 11, 1983, meets the requirements of the Standing Orders as to form.



ROUTINE PROCEEDINGS


Hon. Mark MacGuigan (Minister of Justice):: Madam Speaker, I am pleased to lay on the Table of the House a copy, in both official languages, of the Sixth Annual Report of the Canadian Human Rights Commission, 1982. I ask that the report be referred to the Standing Committee on Justice and Legal Affairs.


QUESTION PASSED AS ORDER FOR RETURN
Mr. David Smith (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, if Question No. 3,505 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. 3,505 be deemed to have been made an order for return?


Some Hon. Members:: Agreed.


CORRECTIONAL SERVICE OF CANADA
Mr. Friesen: 1.	What are the job classification titles under which an individual would be employed in the Correctional Service of Canada in the Department of the Solicitor General and what is the salary range for each classification?
2.	As of September 30, 1981 (a) what was the average income for each classification (b) how many individuals were employed under each classification (c) what was the total number of personnel employed with the Service?
3.	As of September 30, 1981, for each classification, how many individuals were employed (a) at the National Headquarters of the Correctional Service of Canada (b) in the Atlantic Region at the (i) Springhill Institution (ii) Shulie Institution (iii) Dorchester Penitentiary (iv) Westmoreland Institution (c) in the Quebec Region at (i) Leclerc (ii) Laval (iii) Montee St. Francois (iv) Sainte-Anne-des-Plaines (v) Archambault (vi) Cowansville (vii) the Correctional

April 12, 1983
Order Paper Questions
Development Centre (viii) La Macaza (ix) the Federal Training Centre (d) in the Prairie Region at the (i) Stoney Mountain Institution (ii) Rockwood Farm Annex (iii) Saskatchewan Penitentiary (iv) Saskatchewan Farm Annex (v) Regional Psychiatric Centre (vi) Bowden Institution (vii) Drumheller Institution (viii) Edmonton Institution (e) in the British Columbia Region at the (i) Mission Institution (ii) B.C. Penitentiary (iii) Elbow Lake Institution (iv) Ferndale Institution (v) Kent Institution (vi) Matsqui Institution (vii) Mountain Institution (viii) Regional Psychiatric Centre (ix) William Head Institution (f) in the Ontario Region at the (i) Prison for Women (ii) Joyceville Penitentiary
(iii)	Milihaven Institution (iv) Pittsburgh Institution (v) Bath Institution (vi) Beaver Creek Correctional Camp Institution (vii) Regional Reception Centre (viii) Warkworth Institution (ix) Collins Bay Institution (x) Frontenac Institution?
4.	For each institution listed in Part 3, for the month of September, 1981 (a) what was the total (i) payroll (ii) operating cost, excluding payroll (iii) number of individuals incarcerated (b) in which institutions was there considered to be a shortage in man-years and by how much (c) in which institutions was there considered to be a surplus of labour in man-years and by how much?
5.	For each institution, from January 1, 1981 to September 30, 1981, what was the name of each full-length feature film viewed by inmates and, of the Films which did not receive the approval of the warden before they were shown, who did approve them?
6.	For each institution, for each year 1975 to date, how many inmates escaped from lawful custody (a) while incarcerated (b) while being transferred and on what date was the last escape made?
7.	How many charges of a criminal nature which were laid against prisoners incarcerated in federal penitentiaries during 1980 were heard in public court?
8.	(a) For each year since the policy of mandatory supervision was introduced, how many prisoners were released from each of the applicable institutions listed in Part 3 (b) how many such prisoners violated the terms of their parole and, of those (i) how many were returned to prison (ii) in each case, what was the nature of the parole violation (iii) how many were subsequently sentenced for another criminal offense and what was the nature of the offense?
9.	For each year 1975 to date, for each institution (a) in how many instances was contraband seized by prison officials and what was the nature of the contraband (b) were any prison officials reprimanded by their superiors for (i) smuggling contraband (ii) ignoring pleas from inmates (iii) assaulting inmates
(iv)	any other actions and, in each case, what was the nature of the reprimand (c) how many grievances were submitted by prisoners, how many were considered to be legitimate and what was the nature of each legitimate grievance?
10.	For each year 1975 to date, for each institution, how many psychiatrists were employed on a (a) full-time basis (b) casual or part-time basis and carried on a practice in the private sector (c) contract basis?
11.	For each category of psychiatrist (a) what was the total cost to the Service for salaries (b) how many psychiatrists received their professional degrees in (i) Canada (ii) the United States (iii) other countries and what were the other countries (c) how many psychiatrists, employed by the Service in 1980, were licensed to practise psychiatry in Canada?
12.	For each year 1975 to date, for each institution, how many psychologists were employed on a (a) full-time basis (b) casual or part-time basis and carried on a practice in the private sector (c) contract basis?
13.	For each category of psychologist (a) what was the total cost to the Service for salaries (b) how many psychologists received their professional degrees in (i) Canada (ii) the United States (iii) other countries and what were such countries (c) how many psychologists, employed by the Service in 1980, were licensed to practise psychology in Canada?
Return tabled.


David P. Smith: Madam Speaker, I might point out that that question cost many thousands of dollars to answer. Your Honour can see the size of it.
I ask, Madam Speaker, 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. Cosgrove that Bill C-142, to amend the Canada Deposit Insurance Corporation Act, be read the second time and, by unanimous consent, referred to a Committee of the Whole.
William James Kempling: Madam Speaker, I believe I have about five minutes left in which to complete my remarks. This morning before the luncheon break, I covered many phases of the Bill and related many of the details pertaining to Astra Trust. It is interesting to note whom we have seen making representations before the House of Commons on the matter of Astra Trust and other trust company matters. I do not believe we heard anything, at any time during the tortuous events involving Astra Trust and ReMor, from the Hon. Member for Niagara Falls (Mr. McBain) or the Hon. Member for Welland (Mr. Parent). However, we did hear from the Hon. Member for St. Catharines (Mr. Reid), the Hon. Member for Erie (Mr. Fretz), the Hon. Member for Mississauga South (Mr. Blenkarn) and from others on this side of the House whose constituents have lost money in that affair. Until the Hon. Member for Ottawa Centre (Mr. Evans) stood, there had been little or no representation from the Government benches to the various Ministers who had responsibility for the CDIC.
In the few minutes left to me, I would like to leave a few more questions with the House, because I believe that we should have a full inquiry, a royal commission into this whole matter involving the bankruptcy, the receivership and the difficulties of Astra Trust, ReMor, C & M Financial Services and all the other trust companies which have been involved in financial difficulties. I say that because we need the trust industry in this country. We really cannot get along without it. Unless some strong support and help is given to that industry in the period ahead, then I am afraid it will lapse and become ineffectual as a source of financial funds.
One of the things in the Astra Trust matter which has intrigued me is the conduct of the former Minister of Finance. Two of his officials from the Department of Insurance had to be subpoenaed by a Speaker's warrant to ensure that they would appear before a committee of the Ontario Legislature. Both of the Ministers who have been responsible in the conduct of the matter involving Astra Trust have laboured again and again to try to dissociate the federal Government from
April 12, 1983

that matter. In fact, the former Minister of State for Finance has said that we should not try to link Astra Trust and ReMor unconditionally. He said that the nature of the inquiries is different, that the RCMP is investigating Astra Trust and that the Province of Ontario is investigating ReMor. He has given no information to us at all but, rather, has advised his officials, when summoned before the provincial committee, not to give evidence to assist the committee in coming to a resolution.
Then we had the spectacle of the Minister standing here today and saying that there is no connection, that he wants the Minister in the provincial House to provide him with evidence of some connection before the Government will consider reimbursing those who were gutted by the ReMor operation, before they are to receive any funds from the federal Government. I think it is deplorable, degrading and disgusting, and it is unbecoming of the federal Government of this country.


Mr. John Evans (Ottawa Centre):: Mr. Speaker, it is a pleasure for me to rise to speak today on Bill C-142, because there was a great deal of discussion and study concerning this particular matter of deposit insurance at the time of the investigation into bank profits. As indicated earlier by the Minister and by other Hon. Members, the Standing Committee on Finance, Trade and Economic Affairs, of which I had the privilege and honour of being Chairman, did bring a recommendation back to the House and to the Government that the limits of deposit insurance be raised from the present limit of $20,000 to $60,000. Subsequently, the Minister indicated that he intended to do just that and introduced Bill C-142, indicating at the time of introduction that the legislation would be applied as of the date of introduction which, to my understanding, was January 17 of this year. Therefore, we are now discussing legislation which I very strongly urge should be passed, if not today, at the earliest possible opportunity, although hopefully today. This legislation would then raise the limit, retroactively back to January 17, to $60,000.
Questions raised in a Private Member's Bill presented earlier by the Hon. Member for Kingston and the Islands (Miss MacDonald) would suggest that the limit should be raised to $100,000 as opposed to $60,000. At that time I spoke and indicated that I did not agree with that increase. I raised a number of reasons at that time and I will reiterate those as I go through my comments today.
First, the Standing Committee on Finance, Trade and Economic Affairs considered the question of the adequacy of the coverage of deposit insurance. Since the deposit insurance limits which we now have were established in the mid-sixties, it was clear that inflation had badly eroded the coverage which was available to depositors under that Act. As a result, our solution was to inflation-exhaust the limit of $20,000 and to bring the global limit back to a level such that the real level of protection would be the same as it was when the limit was established in the mid-sixties. To do that would raise the level of deposit insurance coverage to approximately $60,000.
After extensive discussion by the Hon. Member for Mississauga South (Mr. Blenkarn), the Hon. Member for Edmonton West (Mr. Lambert), the Hon. Member for Mississauga
Canada Deposit Insurance Corporation Act
North (Mr. Fisher), the Hon. Member for Lambton-Middle-sex (Mr. Ferguson), the Hon. Member for Etobicoke Centre (Mr. Wilson) and others, it was found that all of these Hon. Members were, to a greater or lesser degree, of the opinion that $60,000 was the appropriate figure because it simply restored the real value of that coverage. There were, of course, certain Hon. Members who believed that a slightly higher figure would be appropriate. Others, quite honestly, were of the opinion that something lower than $60,000 would be appropriate. After due discussion and deliberation in the Committee, we were ultimately able to come to a consensual agreement that $60,000 was the appropriate figure. We therefore recommended that figure in the study on bank profits to which I earlier referred. As I have said, this Bill raises the coverage to a level today which is the equivalent in real terms of the coverage when it was established in the mid-1960s. In my opinion, it provides for adequate coverage.
One reason it is essential that these limits be raised is that with today's Registered Retirement Savings Plans and other forms of savings, which are so necessary today to protect the retirement of Canadians, it is important to have enough coverage such that individuals do not have to spread small deposits among a large number of institutions in order to protect their savings. Savings of $20,000 can be exceeded very rapidly in a Registered Retirement Savings Plan, with its compound interest and so on. It is important that we not force individuals to maintain a large number of small deposits but make it easier for them to maintain their deposits in fewer accounts. The $60,000 limit would certainly provide for that.
Many individuals who have retirement funds in place now, especially those in my riding, have contacted me in recent weeks to ask whether or not their retirement savings are indeed covered by the legislation. The Minister has indicated earlier that those who have their savings in Greymac Trust and Seaway Trust would be covered by the legislation since it would be retroactive to January 17. Since the receivership did not occur at that time, the deposits in those institutions would indeed be covered by the new legislation.
Some questions were raised in the House earlier by the Hon. Member for Mississauga South as to the certainty with which the Minister holds that view. I am sure the Minister will clarify that question at a later point in this debate. The issue at hand now concerns the fact that there is a great deal of confusion existing in my riding, and 1 am sure in other ridings in the country as well, about whether individuals who have deposits in excess of $20,000 in these institutions which have experienced trouble in recent months are covered by the new limits of deposit insurance. That confusion must be cleared up.
A second real problem exists irrespective of whether the new limits will apply retroactively. It concerns the fact that receivers of these institutions to which we have referred have indicated to some of my constituents who have retirement savings plans which are generating income for them now for their retirement that until the legislation is passed, even though the

April 12, 1983
Canada Deposit Insurance Corporation Act
Government intends to cover amounts up to $60,000, the individual will have the right to receive only $20,000 maximum should any of the certificates of deposit come due, minus the interest that has accrued in income to these individuals back to the date of the receivership.
For example, if an individual had $50,000 or $60,000 in certificates in one of these institutions which came due on May 1, he would be given $20,000 less the interest that has been paid for the period of two months or three months. The other $40,000 would remain in receivership and unavailable to the individual depositor. As a result, the reinvestment of that money would not be possible. Consequently, the income stream that is generated by the savings that the individual has accumulated would fall dramatically in the ensuing months.
If the legislation was not passed until September or October, those individuals who have contacted me in my riding would have to live on greatly reduced incomes since their savings would not be available to generate the income on which they are living. For that reason, regardless of whether the legislation is retroactive, which the Minister's comments make me confident it is, it is very important that the legislation is enacted as soon as possible to ensure that these term certificates can be reinvested as they become due in order to generate the income that many individuals are depending on for their retirement income. For that reason alone, I believe it is imperative that the House not be complacent about the passage of this legislation and pass it now with all the diligence which has been shown toward the legislation.
This is a relatively simple piece of legislation which does not require a great deal of analysis and study. The Standing Committee on Finance, Trade and Economic Affairs has conducted that study and recommended to the House in good conscience that the limit be raised to $60,000. Therefore, I would ask the House to act on this recommendation and pass the legislation immediately.
It will certainly reduce the concern that many of my constituents have expressed to me, not only about the security of their savings but their ability to generate the necessary income to enable them to carry on their daily lives. I do not believe there is any reason to hold this legislation up any longer. It has been carefully considered and its contents have been recommended to the House by all parties on the Committee. I hope the House will act on this legislation expeditiously, put it through all three stages today, send it to the other place for consideration and give it Royal Assent within a short period of time.
1 wish to comment briefly on the opinion that I and I believe other Members of the Finance Committee shared about the proposal to raise the limit to $100,000. When we examined this issue in Committee we rejected the idea of providing amounts greater than $60,000 as well as the amount of $100,000 specifically recommended by the Hon. Member for Kingston and the Islands. It was the view that $60,000 is an amount that allows individuals to spread their investments efficiently in one institution in different types of savings vehicles or in a number of institutions.
As the Minister indicated earlier, an individual may have a savings account which is covered up to $60,000 as well as a Registered Retirement Savings Plan account which is covered up to the same amount. An individual may then have up to $120,000 covered in those two accounts in any one institution. Furthermore, an individual could potentially have up to $240,000 in two institutions, and it causes very little inconvenience to an individual to cover the size of his deposit and protect his savings with federal insurance. In addition, an individual and his or her spouse could have a joint account which would allow another $60,000 to be covered. Therefore, two individuals having separate accounts and a joint account would have coverage exceeding $500,000, which is far in excess of what the average Canadian will ever have in any of these institutions. Therefore, $60,000 coverage is entirely adequate for the average Canadian and, indeed, the far above average income Canadian.
What are the implications of raising these limits? As they are raised from $20,000 to $60,000, it will be necessary for the Deposit Insurance Fund to include larger amounts to offset the potential liability that exists with the insurance coverage. That will mean each financial institution will have to pay higher premiums into the fund. After all, the insurance coverage ultimately comes from premiums paid by the financial institutions. This will mean that individual Canadian savers will either have to earn lower rates of return on their deposits- because that is where the money will come from to pay premiums-or borrowers will have to pay higher rates on loans in order to make up the additional premiums. I do not think that is necessary, Mr. Speaker. If we limit the amount to $60,000 maximum, the premium increases can be minimized and all Canadians can receive the kind of effective protection they need.
In addition, as we raise premiums we have to ask ourselves what are we doing and on whom are we putting the cost? All institutions will have to pay in accordance with the deposit liabilities they have. This means that large, efficient institutions will be paying the lion's share of the premiums in order to protect small, inefficient and improperly run institutions.
What we are doing by raising these limits excessively and requiring that the premiums be raised to fund this insurance is requiring well run, efficient institutions to subsidize potential losers, the poorly run institutions. This would give the poorly run institutions a competitive edge which they would not otherwise have vis-a-vis well run institutions. We are not encouraging institutions to be prudent and well managed when we raise the amount of insurance that will be available to them. I do not think we should provide full insurance coverage for all deposits in all institutions. There should be an incentive on the part of the institution to be well managed and prudent and to make that fact known to the public. I do not think you should place all institutions in the position of having to subsidize the losses that may occur as a result of events such as those we have seen recently with regard to the provincial trust companies that have faced difficulty.
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I have a couple of comments in closing. This whole issue of deposit insurance and the issues we are facing with regard to ReMor and Astra Trust raised by the Hon. Member a moment ago, and the issues that have been raised by Greymac, Seaway Trust and others in recent times, raise a much more fundamental issue in this country than simply whether or not insurance coverage is adequate for certain financial institutions or whether these financial institutions are being run properly. What we have I would say, in my view, is an archaic, fragmented system of financial institutions in Canada.
It seems to me the time is right, in fact it has been right for quite some time, for a review as to what the powers of these financial institutions should be, where they should be able to operate and how we can stimulate greater competition between institutions. I suggest the way to do that is to bring forward a revision to the Trust Companies Act and the Loan Companies Act at the earliest possible opportunity. We should at least refer that matter to the Standing Committee on Finance, Trade and Economic Affairs so we can get at it.
There are other financial institutions which have also indicated their desire to have their enabling legislation reviewed; the insurance companies, for instance. Over the years I have been in communication with co-operatives. They have indicated they would like to have some enabling legislation at the federal level allowing them to qualify for deposit insurance and to operate outside the confines of one Province. There are some others.
Years back when I was a public servant at the Department of Consumer and Corporate Affairs, a very good friend of mine and an eminent scholar, Dr. Phil Anisman who is now at York University, completed an intensive and comprehensive study of a national securities act which would start a move into a national regime of regulating securities. This would expand Canada's capital markets and make it easier for firms and individuals who wish to start businesses to raise equity capital.
These are the kinds of broader questions which have to be addressed within the context of financial markets and institutions, in addition to the very important legislation we are dealing with here today. It seems to me the time has come for us to be looking at the broader question of financial institutions in this country. We completed the review of the Bank Act, and I think we did an admirable job of revising that Act two years ago. But I think the job has only just started. We have to move on to trust and loan companies, which are badly in need of legislative review, and to insurance companies and co-operatives, such as credit unions and the Caisses populaires, and finally to the whole question of a national securities act. We have our plate full for many years to come and I think it is time we got down to business on these things.


The Acting Speaker (Mr. Corbin):: Order, please. Are there any questions?


Donald Alex Blenkarn: Mr. Speaker, does the Hon. Member think the Government should structure a committee of the House to look into the proposed loan and trust companies act and the white paper concerning that together with the Canada Deposit
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Insurance Corporation, particularly in view of the fact that we have had some real supervisory problems concerning trust companies as evidenced by the losses in Greymac, Seaway and Crown? Does the Hon. Member think that is the way to proceed, bearing in mind it is the report of the Finance Committee with respect to bank profits that suggested the Canada deposit insurance limit be increased to $60,000?


John Leslie Evans: Mr. Speaker, those of us who are members of the Finance Committee have for some time now been saying precisely what the Hon. Member for Mississauga South has been saying. Trust company legislation should be referred. We have asked that it be referred. I am sure the Minister will at the earliest opportunity refer that legislation to our committee or introduce legislation in the House for first and second reading. Perhaps we can get it that way. I am sure members of the Committee would be prepared to undertake the task of reviewing that legislation, making recommendations on how we could proceed at the earliest opportunity. I think that would be appropriate. I think we are capable of doing a fairly first-rate job of making those recommendations.


Donald Alex Blenkarn: Mr. Speaker, bearing in mind that members of the Committee have not been satisfied over the past three years with the management of the Department of Insurance, particularly with respect to the insurance companies Pitts, Strathcona and Caledonia with respect to Astra and ReMor, and now with respect to Greymac Mortgage, Seaway Mortgage and so on, which is clearly a sleeping policeman operation, does the Hon. Member believe that the management capacity of the Department of Insurance should be specifically referred either to the standing committee or a special committee of this House?


John Leslie Evans: Mr. Speaker, I am of a contrary mind to the Hon. Member on that particular question, primarily because I have not, in my analysis of the situation we have been facing, been troubled by the adequacy of the scrutiny done by the federal Department of Insurance. However, I have become very concerned with the adequacy of the scrutiny given by provincial regulatory bodies with respect to trust and loan companies. I am very concerned with that. I know that concern is shared by Members of the provincial legislature and by others who have looked into this. However, I would stop very far short of making condemnations of the federal Department of Insurance, which I think has done an excellent job in dealing with the regulatory problems it has faced. It has done an excellent job with its limited manpower. I suggest that that operation has been given its mandate and its regulatory power. It has done a very good job of dealing with the problems that have come before the country in the area to which we are referring. I would not say the same, of course, with regard to its provincial counterparts.


Mr. Riis:: Mr. Speaker, I would like to raise a couple of questions with the Hon. Member for Ottawa Centre (Mr. COMMONS DEBATES
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Evans). A number of times during his presentation he mentioned the inquiry carried out by the Standing Committee on Finance, Trade and Economic Affairs into bank profits. He will recall that on a number of occasions concerns regarding the banks' high risk exposure in terms of sovereign loans were raised in the Committee.
Has the Hon. Member given any thought to the possibility that increasing the depositors' insurance, as we are doing today, from $20,000 to $60,000 might encourage the financial institutions to become even more exposed as a result of this increase? I base this question on recent studies done in the United States which have found that to be the case in the American financial scene. Has the Hon. Member given any thought to the Canadian scene in that regard?


John Leslie Evans: Yes, Mr. Speaker. In fact, I mentioned in my speech, if the Hon. Member had been listening a little more carefully, that one of the problems with raising deposit insurance significantly above the level that we have recommended was that it did indeed take some pressure off the institution to be financially prudent. However, I would suggest that it is not appropriate for us to reject the increase in deposit insurance as a means of ensuring prudent management of financial institutions. That can be done through the regulatory vehicles available to us. That includes the Inspector General of Banks and the Superintendent of Insurance. As I said, these two arms of Government, these two regulatory bodies, have done a very good job.
During the study of bank profits, the Inspector General of Banks raised a concern. It is on the public record. There was concern with regard to some of the issues raised by the Hon. Member for Kamloops-Shuswap that we should be looking at that issue. Indeed, we did look at that issue relatively carefully. We did make some recommendations on capital adequacy and the other issues that have just been referred to. We did look at that and made recommendations. To the best of my knowledge, the Inspector General of Banks is watching that issue very closely. From all the reports I have, it seems that Canadian banks have been able to weather this storm in a very successful fashion.


Nelson Andrew Riis: Mr. Speaker, I would certainly like to debate that last comment of the Hon. Member, but this is not the time or the place. The Hon. Member went on at some length about the necessity for Opposition co-operation in terms of quick passage of this Bill. He stated that the Bill has been before the House for some time and it is time we wrapped it up. I believe that is the intent of the House. It is certainly the intent of my Party.
Can the Hon. Member explain why it was, when his House Leader brought forward the 13 Bills that had high priority for moving through this House, this Bill was not included in that list?


John Leslie Evans: Mr. Speaker, it is certainly not my job to recommend what is priority and what is not priority to the President of the Privy Council (Mr. Pinard). I can assure him that in my discussions with the Minister of State for Finance (Mr. Cosgrove), who brought this Bill forward originally and
brought it to the House today for second reading, it was clear that the Bill had priority in his mind all along. That is reflected by the fact that it is before the House now for debate on the second day after we came back from the Easter break.


Mr. Nickerson:: Mr. Speaker, the Hon. Member for Ottawa Centre (Mr. Evans) quite often has some good ideas. He is one of the more thoughtful Members opposite. Of the two suggestions that he made today, I certainly concur with the first one, that a Committee of Parliament make a detailed study of the legislation affecting financial institutions.
If the Trust Companies Act were referred to the Committee, I am sure there would be no problem with the Official Opposition, if this session of Parliament ended and another one began, in bringing the legislation back to the Committee at the same stage, as was done with the Bank Act. That makes a lot of sense when something as complex as the Trust Companies Act is being studied.
The Hon. Member's second idea dealt with national securities legislation. When he said that, it rang a bell. I must say that it got my back up. This is something of a new idea. Can he explain briefly exactly what he means. Is there to be federal Government licensing of brokers and investment counsellors? Will there be federal control over stock exchanges? What exactly did he have in mind?


John Leslie Evans: I did not know we were still on questions. I was expecting this to be a speech that the Hon. Member was commencing. There is a very large document which I think is entitled "A National Securities Act" which would provide for centralized regulatory procedures for the issuance of and dealing in securities from coast to coast.
As the Hon. Member knows, the Province of Ontario has the Ontario Securities Act. It established the standard by which most other provincial Governments established their securities acts. There are very real differences. Stock exchanges in Calgary, Vancouver, Montreal and Toronto do not operate in precisely the same way. The listing conditions are not the same. I would refer to the study by Dr. Anisman, published by the Department of Consumer and Corporate Affairs under the title of the Minister's name. It is about that thick. It is a very well researched and well documented piece of work that is highly commended.


Mr. Ron Stewart (Simcoe South):: Mr. Speaker, it is a pleasure to speak on this Bill which increases the present coverage for depositors from $20,000 to $60,000. I want to assure the Hon. Member for Ottawa Centre (Mr. Evans) that this Party is all for that Bill and has been for a long time. We would like to see speedy passage of the Bill. However, I disagree with the Hon. Member when he says there is no blame on the federal Department of Insurance or on the Government for the fiasco in which we find ourselves as far as the Deposit Insurance Corporation is concerned.
Let us hearken back to some of the old publications of 1980 and look at what was said with regard to ReMor and Astra, Astra in particular. In October 1979 Astra Trust had been
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under increasingly close supervision by the federal Department of Insurance for at least two years. That was prior to 1979. We are still waiting for them to come up to $60,000 of protection, which only covers inflation to this date.
Virtually from the day that Astra started to operate, it was being investigated. The company was founded primarily through the efforts of the two men, a Niagara Falls businessman named Carlo Montemurro, and a Welland lawyer named Patrick Luciani, but only after three years of negotiation with the Department of Insurance, the federal body that regulates trust companies. The Department of Insurance was reluctant to grant Astra Trust a licence for a number of reasons. One was that Carlo Montemurro had attempted to get an Ontario trust company charter and had been turned down. You can see that we must get our act together between the Ontario Government, the provincial Governments, and the federal Government, as far as trust companies are concerned. One of the reasons was, and I quote:
-Carlo Montemurro had attempted to get an Ontario trust Company charter and been turned down, for reasons the provincial Government has not made public.
A second was that Montemurro, a bouncy 46-year-old former hockey player, had been involved with the Canadian operations of Investors Overseas Services before that company went bankrupt, leaving investors around the world holding the bag for $224 million.
And perhaps most serious, Montemurro also owned an investment company called C & M Financial Consultants, which operated in effect as a mortgage broker, raising money and investing it in mortgages. Since the trust company would be doing essentially the same thing, the federal regulators were concerned .... Superintendent of Insurance and the civil servant Finally responsible for issuing Astra Trust's charter: "We didn't feel the people concerned should be running two companies in the same business, especially when one was subject to federal regulation and the other was not."
Yet somehow the federal regulators overcame those misgivings and granted Astra Trust a charter and a licence to operate in February of 1977.
This is now April of 1983 and there was six years during which we and the federal Government knew this type of thing was going on, and yet the Government did not see fit even to bring in legislation such as the Bill we are looking at now, not to mention tightening up the trust laws, which probably would take a new trust and loans Act.
As much as we support the legislation and want to see its speedy passage, we cannot stand here in and say in all seriousness that as far as the trust companies were concerned the federal Government or the federal Insurance Department was doing its job as a policing agent because we were forewarned a long time ago, long before we got caught in the web of Grey-mac, Seaway and Crown.
The Canada Deposit Insurance Corporation was brought into being in 1967 to provide protection for the deposits held by the chartered banks. The coverage at that time was $20,000 for each individual depositor and for each financial institution. At that time it was quite adequate. That figure was established some 15 years ago, so it is totally unrealistic in view of today's economic climate. As I mentioned before, $60,000 just brings us to today's rate of inflation. The proposed amount of $60,000
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is an improvement, but I feel, as my colleague, the Hon. Member for Kingston and the Islands (Miss MacDonald), and the Hon. Member for Mississauga South (Mr. Blenkarn) and some of the others have mentioned, that a more realistic sum would probably be $100,000, or $75,000 at the very least in case inflation takes us any further than it has today. That is where I disagree with the Hon. Member for Ottawa Centre.
Inflation, high interest rates, ungovernable unemployment, our youth, 15 to 20 years old, are now looking at 20.6 per cent unemployment and the large Government deficits have contributed to our uncertain economic climate and are creating fear among individuals for their personal financial security.
The Canada Deposit Insurance Corporation provides deposit insurance to banks, federally-incorporated trust and loan companies, and most provincially-incorporated trust and loan companies. Credit unions and the other institutions are administered under provincial arrangements, as we are all aware.
There has been a need to increase the limit of deposit insurance from the original limit of $20,000 per person simply because there has been a significant increase in the level of deposits together with a decline in the purchasing power of these deposits. The current fiasco with Greymac, Seaway Trust and Crown Trust certainly points out and illustrates factually the need for an increase and the reason it has come before the House. As was pointed out, it was not an item that was on the Government House Leader's 13 important pieces of legislation, and yet those depositors are sitting out there chewing their fingernails, as was pointed out by the Hon. Member for Ottawa Centre.
The deposit insurance coverage underwritten by the federal Deposit Insurance Corporation in the United States has been reviewed and increased over the years to its present level of $100,000 per depositor per institution. Again, I disagree with the Hon. Member for Ottawa Centre. I think it is our duty to make sure that the small additional amount that would be charged would bring it up to the $100,000 level, because it is not really that much more than what is charged for $60,000.
The limit of $20,000 per depositor per institution in Canada has not been revised, as I said, since 1967, and we all want to see it done.
Many of my own constituents have been writing or calling me over the past months asking if their interest was going to be covered, asking what is going to happen, and that was explained. I will not go into it because it was reviewed by the Hon. Member for Ottawa Centre, but they wanted to know when we were going to introduce legislation to increase the amount of coverage. My reply to them has been as stock a reply as those of my colleagues. It is not up to us, it is up to the Government. We are all in favour of it, and now we have finally got in on the floor. My constituents have all been extremely worried about their deposits, and they are going to be worried about them in the future after what has happened in the Ontario trust market. It has been quite evident over the past few years that the Government has not been offering these individuals the protection they require.

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Many proposals have been suggested over the years to strengthen the Canada Deposit Insurance Corporation. The Consumers Association of Canada suggested again that the limit should be $100,000, which most of us on this side of the House agree with, I think, and that the confusion should be removed from the legislation to avert any crisis of confidence. That is a very difficult thing to accomplish when one looks at today's economy in general.
The Canadian Bankers' Association had suggested increasing the coverage to $40,000 with unlimited coverage for Registered Retirement Savings Plans.
With this Bill, the Government is finally taking positive steps to ensure that there will be adequate protection for depositors. Canadian investors want to be assured that their investments are protected. I do not think they care about the little bit more that it takes to protect them as far as interest is concerned. They are tired of the uncertainty, and the best way to relieve their anxiety is to provide the security the investors have a right to expect as Canadians.
Deposit insurance was originally established in the 1930s at the initiative of the United States and in Canada as well. More serious bank failures had occurred in the United States and the authorities there were afraid that there would continue to be runs on financial institutions whenever rumours arose. Thank God we have not really had that problem in Canada. But it was feared a particular institution in the United States might not be able to pay off its depositors. Here, as I said, we do not have this same worry because there has not been the same type of uncertainty, and I think the last bank failure was in the 1920s of a relatively unknown institution, according to my information.
The Canada Deposit Insurance Corporation fund is financed through premiums from its member institutions. The large, strong institutions which hold the majority of deposit are the principal source of funds for the CDIC. Again I disagree with the Hon. Member from the Government side who feels that that little bit more to be charged in premiums would hurt. Some of these financial institutions have expressed concern that their premiums would increase if the limit were increased. However, when you look at the total amount of assets and the recent increase in profits of these large banks, I have no doubt they will be able to meet the increase in their premium payments.
The deposit insurance is arranged in such a manner that the proposed $60,000 is not the total coverage available to an individual. A depositor can have a deposit in an institution with coverage at all branches of that institution, whether it is a bank or trust company, up to the maximum of $60,000. That person's spouse can also have coverage in the same bank or trust company for accounts in that individual's name up to that $60,000. As well, they can have a third joint account which is also covered. Therefore, using three different accounts, a married couple, under the $60,000 ceiling, is insured for up to a total of $180,000 in a single institution.
If we were to take that up to the $100,000 mark, we might never have to worry again, not even in a review, which in my view should be at least every three to five years.
However, like everything else the Government does, it only introduces measures after things have reached crisis proportions such as with Greymac, Seaway and Crown Trust.
I think it is a bad commentary on our free enterprise system that the Government can step in and take over such corporations. In my Province of Ontario, as we have seen, without any charges being laid, the Government walked in and took over trust companies such as Kilderkin Investments, etc., and still it has not been proven to anybody's satisfaction that there has been any fill-in. It was probably necessary but the method by which it was done leaves a lot to be desired in a country as free to operate as Canada is. Again, I think that this is a step in the right direction. If they looked at what happened to Astra some six years ago, all of this could have been averted with a trust and loans Act. A lesson should have been learned from the whole fiasco of Astra Trust which went into bankruptcy in 1980. This firm, as I said, had been under federal Government supervision virtually from the day it started in operation, but in the end many small investors lost all their money. Last week Ontario offered to pay, retroactively, some $2.8 million to ReMor investors who suffered in the 1980 collapse of that company. I hope the federal Government will consider the same type of program. We need our trust companies. We have one of the finest banking systems in the world and we do not need threats of financial collapse for any reason. I hope there are no repetitions, and I hope that the Government has learned a lesson from the ReMor and Astra incidents. They need not have happened; the warnings were there. They could not get a provincial franchise but they did get federal funding. I think that we must review the system every three to five years.
We hope that the Bill, with our support, will get speedy passage, Mr. Speaker.


The Acting Speaker (Mr. Corbin):: The Hon. Member for Kamloops-Shuswap (Mr. Riis).


Nelson Andrew Riis: Mr. Speaker, I do not have a question but I am prepared to contribute to the debate.


The Acting Speaker (Mr. Corbin):: Are there any questions or comments at this time? There being no questions, we will now proceed to debate.
The Hon. Member for Lethbridge-Foothills (Mr. Thacker).


Mr. Blaine A. Thacker (Lethbridge-Foothills):: Mr. Speaker, I rise to join with others in debating the principle of Bill C-142 to amend the provisions of the Canada Deposit Insurance Corporation Act. This Party agrees that this is one Crown corporation that fulfils a worthwhile role in society. The corporation does not take away the rights of individuals who operate but acts as background insurance so that ordinary depositors in banks and trust companies may have some protection when putting their money into the hands of others.
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It is a corporation that enabled our parents and grandparents to take their money out of the socks, from under the sofa, under the bed, and from the backyards and put it into financial institutions, knowing that even if there were a run on the bank they would be protected to a limit of $20,000. We have to make the point that the $60,000 limit is just a reflection of inflation and is not really an increase.
I was interested to hear the Minister of State for Finance (Mr. Cosgrove) say that we have 132 federally incorporated companies that are members under the statutes, comprising 55 banks and 67 trust and loan companies. There are also 52 provincially incorporated companies. It is nice to know that there is a broad degree of participation, but I wonder if the Minister could indicate at some point what types of institutions are operating in the marketplace today that are not part of this insurance protection. Perhaps this debate will alert Canadians to take steps to protect themselves. That might be sufficient incentive to those companies not presently registered to bring themselves within the statute.
I think we need to know that deposit insurance amounts to $118 billion. That is a contingent liability that Parliament has agreed the Consolidated Revenue Fund should accept in the event of a depression and a massive deflation. If people wanted their money, Parliament would have to come up with $118 billion, less the assets of banking and financial institutions at that time. I do not suppose that is impossible because, of course, we have already had a depression in this country.
I was interested to hear the Minister argue, as did the Hon. Member for Ottawa Centre (Mr. Evans), that the $60,000 limit will result in some 78 per cent of bank deposits and 92 per cent of deposits in trust companies being covered. Why not 100 per cent, Mr. Speaker? The advantage of raising the limit to $60,000 is that people can now close out many of the $20,000 accounts they had in different banks. They can now consolidate those accounts to a limit of $60,000. If, by the mechanism of setting up accounts in different institutions, people can obtain 100 per cent protection for their financial assets, why do we not just incrase the limit automatically to 100 per cent of the deposit? It seems to me that by putting the limit at $60,000, if there is a depression we are going to injury the ordinary Canadian who puts all his savings into one account compared to the more worldly-wise or business oriented person who spreads that money over different institutions. So why not protect the innocent, rather than those who are sophisticated?
I was glad to see that this Bill will be effective as of January 17. I look forward to hearing the Minister confirm to the House and to Canadians that all those people who put money into Crown Trust and Seaway Trust will be covered. I think that is the purpose of the increase in the limit, and we agree with that.
This protection that is granted to our citizens should be seen in the same light as stabilization programs or crop insurance. It is there to protect the people from precipitous declines in economic activity or in an emergency that might cause them to
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have less certainty or to take other courses. That is a legitimate role for Parliament to play. I can stand wholeheartedly behind the principle of the Bill, as can most Members.
This also shows that good laws pass this House quickly. I hope the Government will take this as a lesson and keep Bills short and to the point in future. Any time there is a real feud in the House it is over omnibus Bills or Bills that attach a whole bunch of amendments that affect other statutes and are undesirable in certain parts of the country. In such cases, Members have to oppose a Bill although they may agree to 75 or 80 per cent of the content.
The Bill before us today shows that if the Government brings in short Bills and addresses a problem directly, the Parties can often come to agreement. The Government sometimes accuses us of obstruction but, as you know, Mr. Speaker, 120 Bills have been passed. The average time for a Bill to pass through the House is three days. That is not bad in a country the size of this one. After a Bill is introduced it takes many weeks for people all across the country to become fully aware of it and to make their views known to their Member of Parliament so that he or she can make some input in caucus and committees and also in the House Committees. It takes time to pass Bills, and so it should in such a huge country with the diversity of interests and of language and religion that, on the surface, could split the country as they have so many other countries. The beauty of Parliament is that when a Bill is introduced, there is enough time to receive input and to achieve the compromises that make our laws acceptable to the citizens.
I hope that all Members of the House will adopt the ninth report of the Standing Committee on Procedures and Organization, Mr. Speaker. That would permit Madam Speaker to have a panel of ten chair persons who would develop expertise on certain legislative matters. Therefore, when a Bill such as the Bill on the Canada Deposit Insurance Corporation came up, the chairman of that legislative committee, who would be assigned the Bill, and a small group who would work with him, would have some very real skills on that particular legislative matter. It would not interfere with the Standing Committee which would be dealing with other matters like Estimates and special inquiries into Crown Corporations. I hope that Hon. Members will accept that because I believe it would be of great help to us.
While we need to have the certainty of this Bill so that people will be able to invest their money and not have to worry about a precipitous decline in its value, let us not forget for one moment that the reason we have this Bill before us is that it is the 100 per cent predictable and logical result of the policies of the Government over the last 15 years, which, instead of proposing a program and a corresponding tax for people, proposed a program which permitted people to keep the tax low and borrowed the difference.
As you know, Mr. Speaker, in this year alone, we are, through this Parliament, injecting into the economy of Canada some $30 billion more for the programs than we are taking

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away from the people in terms of taxation. We are taking away from the people $30 billion by way of borrowing in order to make up the difference between the cost of the program and the taxation withdrawal from people. The ordinary citizen will ultimately pay that, but for the moment we are borrowing from people with wealth, paying them a good rate of interest, then we are distributing the money among all of us citizens. That deficit, of course, Mr. Speaker, now totals over $200 billion if we add in the deficit of the Crown Corporations. That has caused an enormous inflation in the country, which in turn has led to the high interest rates, because people do believe they are entitled to a real rate of return on their money. Elistorically, it was always 2 per cent or 3 per cent. More recently, the real rate of return has been much greater. Even when the inflation rate was 12 per cent, the interest rates were 19.5 per cent in the 1981 issue of Canada Savings Bonds, which meant that people had a greater rate of return on their money in 1981 than ever, I believe, in the entire economic history of this country. And this was at a time, Mr. Speaker, when hundreds and hundreds of thousands of people were being laid off, and when the Old Age Security benefits of our senior citizens were being restricted to a 6 per cent raise in their incomes, some $180 this year. We Members of Parliament were taking something like $3,900 out of the economy. Deputy Ministers earning $100,000 were taking an extra $6,000 out of the economy. The reason we have this Bill before us is the result of those accumulated bad policies which have put every sector of our society in jeopardy.
There are, however, certain sectors we are protecting. We are protecting with this Bill those people with enough money to have a savings deposit somewhere. There are many Canadians in this country who do not have one extra cent which they can put into a safety deposit box, by way of share certificates or cash in the bank. They simply live on a hand-to-mouth basis. Again, Mr. Speaker, that is the result of the deficit, because when you borrow $30 billion from people with wealth and you pay that back to them at the end of the year, together with the accumulated interest, they become incredibly wealthy without having to take any risks or responsibility. Indeed, if they put their money in different institutions up to $60,000, the state will guarantee them 100 per cent return. Of course, that concentration of wealth is at somebody's expense, because every nation has only a certain amount of capital which it has developed and which is ongoing at any one time. When we add this to the people who already have wealth, it invariably comes out of the pocket of the ordinary working Canadian, and very often it is the farmer who is on the land, or the man who is working in the factory.
That is why I have argued time and time again, Mr. Speaker, that we need a whole new philosophy in times of high inflation. We need to have flat across-the-board settlements rather than percentage settlements, because that will bring our society closer together rather than making the rich richer and the poor poorer, and leading to a class society which gives people no chance but to go on the streets.
I would like to state clearly to anyone who might be listening across the country, that they need to be aware that they have this protection up to only $60,000. If they are anticipating depositing $100,000 in the bank, they should slit it up and put it into two different institutions, in order to have full protection. I would like to state again that we believe that the amendment of the Hon. Member for Kingston and the Islands (Miss MacDonald) was entirely reasonable at $100,000 rather than $60,000, because it is not going to be a draw on an ongoing basis in the Consolidated Revenue Fund. As I understand it, this is a self-sustaining, self-paying insurance program with the premium rate being one-thirtieth of 1 per cent from the contributing institutions, and the only time we will get involved is if there is a depression, and the only time there is going to be a depression, Mr. Speaker, is if we leave the current Government in with its philosophy of sustaining deficits. In order to protect themselves really, Canadians must get out there in the next election and defeat the Government at the polls. That means defeating the Hon. Members opposite, who are otherwise very good people with good thoughts on business, but we must defeat them individually so we can get the Government out.


Nelson Andrew Riis: Mr. Speaker, I must say this has been one of the more enjoyable days which I have spent recently in the House of Commons in terms of the quality of the debate, the seriousness of the debate and the questioning which has occurred. It has been a very positive debate. I believe Hon. Members have been really making an effort to contribute to the improvement of this legislation which is before us, and coming up with suggestions to improve subsequent legislation of a similar nature.
I listened with interest when the Hon. Member for Ottawa Centre (Mr. Evans) brought forth the proposal that it is high time we began to examine, via the Finance Committee, the matter of trust and loan companies in Canada. I will certainly endorse that position.
I must say, however, just to be positively critical for a moment or two, that it was January 17 when the Minister of State for Finance (Mr. Cosgrove) brought forward this particular Bill for first reading, under a considerable amount of pressure. Pressure had mounted, particularly in the Province of Ontario, because of the problems we were having, to take some action to protect the number of depositors who were very frightened at the possibility of losing parts of their deposits because of the financial difficulties certain institutions were experiencing. When you consider that depositors' insurance rate, or amount, was set way back in 1967, it is surprising that there has not been more of an effort made by the Government to improve and update this particular amount since 1967, knowing the tragic results of the high inflation rate and what it has done across the country. However, while one might stand here and cast stones at the Government's inaction over the past decade or more on this matter, the point is, I suppose, that we are dealing with it today, and for that we should be thankful. I am certain that depositors across Canada will be thankful also when this legislation is finally passed.
April 12, 1983

I listened with interest when the Hon. Member for Ottawa Centre was encouraging the support of the Opposition for rapid passage of this Bill when I remember instance after instance when Hon. Members of the Official Opposition, as well as Members of the New Democratic Party, were indicating their willingness to pass this Bill in a day's debate, a very limited debate. Let us get on with it now so that we can bring some sense of security, Mr. Speaker, to the people of Canada. These are such unnerving times, with uncertainty and fear across the country, that this is one small effort Parliament could make to ease the concern so many Canadians have regarding their deposits in various financial institutions. Members opposite were quite prepared to co-operate, yet when the Government House Leader said a number of days back, "We have some very important legislation on which we want the Opposition to co-operate to obtain early passage", it was interesting to note that one Bill was conspicuous by its absence from that list of Government priorities, namely Bill C-142 which would protect depositors across this country. However, let us recognize what small gains we do make these days and recognize that we are debating this legislation this afternoon and, hopefully, we will see its passage before the day is out.
While there is no question that the NDP supports this Bill in principle and will vote in favour of the principle of the Bill when we have the opportunity, we do have a number of concerns. My first concern is with regard to the amount we have identified as the insurable limit of $60,000 on a particular deposit. I recognize that you can make two cases. One, that the amount could be, and perhaps should be, higher. In the U.S. the maximum amount of coverage is $100,000, and there is no reason that we could not have that in Canada. When the Hon. Member for Kingston and The Islands (Miss MacDonald) presented a Private Members' Bill reflecting that upper ceiling, a number of good examples were put forward. I remember that not long afterwards I had the opportunity to raise the issue with my constituents. In speaking at a number of town hall meetings, I found people were wondering why it was necessary to have $60,000 as the maximum, let alone $100,000. Then, through discussion with a number of people there and subsequently with Members of my caucus, it became clear that when many Canadians retire they sell their home and find themselves with a sizeable piece of change. It is not unlikely to have a typical family with $60,000, $80,000 or $100,000 as a result of the sale of their home. When invested, that amount will see them through their retirement years as a supplementary income. For that reason perhaps we ought to be looking at higher levels of depositor protection. I would encourage the Minister to give this some thought in bringing forth a subsequent Bill in the months ahead to achieve the security that Canadians are seeking today.
Quite frankly, Mr. Speaker, I supported the idea that it was to an investor's advantage perhaps to have his or her deposits placed in a number of institutions. We have seen the dangers in the last number of months of placing all our hopes in one particular venture, or putting all our eggs in one basket, when
Canada Deposit Insurance Corporation Act
we saw the Government's so called economic strategy consisting of the large energy megaprojects in western Canada. When those projects failed to materialize, then the hopes of that particular strategy were dashed. Again, I think we want to encourage Canadians to reflect upon the advantage of placing deposits in perhaps two, three or more institutions so that they may have better protection for those hard earned deposits. However, we still recognize that under this legislation one may have a deposit of $60,000 in one institution, $60,000 in another, and $60,000 in a shared account or shared deposit between husband and wife, which again would be protected. In the final analysis, I believe the $60,000 maximum is adequate and will serve Canadians well.
I do want to mention to the Minister that in spite of the fact he introduced this legislation for first reading back in January, 1983, and made it very clear that it was retroactive legislation, it was interesting to note that the Canada Deposit Insurance Corporation asked its member institutions to stop advising clients that the maximum insurance provided was $60,000. In other words, the institution was advising its clients that they do not have protection to that amount at this time. If this legislation passes the House and receives Royal Assent, then they will, but at the moment the maximum allowable insurance is $20,000. So I think Canadians were, in a sense, misled to a certain extent because Bills can be amended. At least I would hope the Government has that option open to them.


Douglas Glenn Fisher: Why didn't you say that about the Income Tax Act?


Nelson Andrew Riis: Perhaps the amount we are talking about is not $60,000, but it could be amended to $40,000 or $80,000 or whatever. So I believe the Minister has to be criticized for perhaps inadvertently providing a false sense of security to Canadians.
There is a particular point I want to make, Mr. Speaker, one that deserves some analysis today and which has not been discussed at length until this point, that is, whether coverage up to $60,000 is really in the best interests of the country. Leaving aside the depositor's point of view, I would ask what that does to the institution's perception of how risky a venture it is prepared to take on. When we carried out the analysis of bank profits in the Standing Committee on Finance, Trade and Economic Affairs, one thing became very, very evident. The banks of Canada had over-extended themselves in many areas. They had become highly exposed and consequently were considered by some to be relatively risky financial ventures. When one looks at the year-end accounts of the class "A" chartered banks of Canada, I think one has to draw the conclusion that on a number of occasions they made some very imprudent loans and found themselves in very serious and over-exposed positions, particularly when it came to sovereign loans. Perhaps this insurance protection of $60,000 will encourage those institutions, who have made imprudent loans in the past, to continue that behaviour. It is simply speculation at this point, but it is something the American Government

April 12, 1983
Canada Deposit Insurance Corporation Act
has been concerned about for some time. As a matter of fact, their deposit insurance institution has raised this issue.
I do not have to refer to the United States to remind Hon. Members that not so many years ago the Economic Council of Canada made a particular recommendation to Members of the House of Commons. I remember, when the Economic Council was before the Committee a few weeks ago, asking the President or chief executive officer of that particular group, Mr. David Slater, what he did for a living. Did he serve the people of Canada well? Did he advise the Government properly? He said that he did, and I think members of the committee felt that indeed we were receiving some relatively sound advice from the Economic Council. They were able to lay out what the problems were in terms of our economic future, and consequently the Government was expected presumably to respond favourably and positively to those recommendations. Well, back in 1976 the Economic Council of Canada recommended that deposit insurance premiums ought to reflect the specific risks involved in the same way that a bond rating company evaluates the diverse securities of Governments and corporations. This step would add to the flexibility of the system. Institutions which chose to hold safe portfolios would benefit from lower insurance premiums, whereas those holding risky portfolios would not. I want to emphasize that this is an insurance scheme, and usually insurance rates reflect the state of riskiness of a venture. If one is a driver today and has had 250 auto accidents compared to the driver who has had a safe driving record for the last 20 years, one will probably be paying a different rate. Compared to the person applying for life insurance who is 25 years old, one who is 80 years old will be paying a different rate because of the different risks. However, in this situation, regardless of what kind of risk one may be, regardless of how risky is a venture in which the financial institution is involved, one pays the same premium. That is quite a peculiar insurance company.
We have a similarly peculiar insurance company which is called the Maritime Pollution Claims Fund. That is the fund under which a certain levy is placed on every barrel of oil which comes into eastern Canada to protect the East Coast in the event of an oil spill. Whether one has a two-bit, old, beat-up, rusty ship or a super, ultra modern tanker, one pays the same rate. It is ridiculous, yet it is called an insurance fund. It is a ridiculous fund because obviously the old, tin-pot rusted out venture out there, filled with oil, is more of a risk than the ultra, super, brand-new tanker. The same is true with this piece of legislation. Certain trust companies which can go unnamed at this point because we all know what they are, which are over-extended, involving themselves in some questionable, peculiar activities which are imprudent by anyone's definition, are paying the same rate, 0.3 per cent of their insured deposits, as the venture which is the most conservative, the most laid back or, the best way to say it, the most "secure" venture available.
I guess what I am saying is that it is unfair. Not only is it unfair, but we must consider that we are in a situation which is
quite different from the one which prevailed when the Insurance Act was introduced back in 1967. At that time, when the decision was to levy a particular premium on the insured deposits of 0.3 per cent, the banking or financial system of Canada was relatively tranquil or stable. Since then, however, the situation has changed. We are in an incrediably dynamic financial situation which is changing by the month in terms of new approaches, with new technology and techniques being applied to the way in which we manage our finances. The Inspector General of Banks himself admitted that it is virtually impossible for him and his Department to keep on top of the system these days. We have a financial system out there which, to some of us at least, appears to be out of control in certain areas in terms of the people of Canada having any sense of what is going on with regard to regulations or the ability to regulate some activities.
I will use an example of some of the questionable practices of the banks in terms of their offshore ventures. I think that if the realities or the truth were ever known, if an explanation were required as to what those ventures were, which is not the case under present legislation, Canadians would be somewhat concerned. Therefore, here we are in a situation where the banks of Canada have now expanded into the international lending sphere, which is certainly much more risky in terms of the loans Canadian chartered banks make in countries such as Argentina, Mexico, Venezuela, Columbia and the like. It is questionable whether these countries will ever repay those loans. We find today that 20 per cent of 40 per cent of the total business of some of our chartered banks concerns overseas activity. Also, the total liabilities of banks have expanded to more than 30 times their shareholders' equity.


Donald Alex Blenkarn: Thirty-four.


Nelson Andrew Riis: In some cases, it is as high as 34, and some months back it was as high as 38. These are highly risky, highly levered situations, again placing the situation in quite a different risk climate than we were experiencing back in 1967.
The problem that I see is that we must make some changes to the Bill before we will be happy with it. I do not believe that today is the time to offer those amendments because of the need to pass this particular legislation to bring some security to the depositors across Canada. However, I would certainly urge the Minister to consider the unfairness of requiring the same premium to be paid by both risky ventures and secure ventures. If it is really an insurance scheme, then I suggest that that ought to be changed and changed quickly.
I want to mention one other aspect which has not been considered seriously to this date. To enable the CDIC to cover deposits in the three trust companies in Ontario concerning which there was some difficulty, the federal Government must approve a loan of $500 million to the agency. The CDIC previously had only $260 million in available funds based on premiums paid to it by its 150 member institutions, including the banks and trust companies. What that means is that it was ultimately the people of Canada who had to come back and guarantee the situation. The premiums which the companies
April 12, 1983

themselves were paying, that is, .3 per cent of their insured deposits, is perhaps not adequate under these dynamic financial times to provide the necessary coverage if the CDIC had to come to the federal Government to have a $500 million loan approval offered to it. Perhaps in terms of the ultimate security to Canada's depositors, these are some of the items which should be reconsidered.


The Acting Speaker (Mr. Corbin):: I will recognize the Hon. Member for Restigouche (Mr. Harquail) in a moment.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Corbin):: 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 Central Nova (Mr. MacKay)-Regional Development-Hawker-Siddeley plant at Trenton, Nova Scotia-Request for assistance; the Hon. Member for Win-nipeg-Birds Hill (Mr. Blaikie)-Medical Care-Status of proposed Canada Health Act-Drafting of legislation; the Hon. Member for Spadina (Mr. Heap)-Trade-Level of clothing imports.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Cosgrove that Bill C-142, to amend the Canada Deposit Insurance Corporation Act, be read the second time and referred by unanimous consent, to Committee of the Whole.
The Acting Speaker (Mr. Corbin):: The Chair would like to remind Hon. Members that under Standing Orders of the House of Commons, under permanent and provisional Standing Order 15(3), when an Hon. Member is speaking, no Hon. Member shall pass between that Hon. Member and the Chair. I would hope that Hon. Members would adhere to that Standing Order in the future.
Before recognizing the Hon. Member for Restigouche (Mr. Harquail), the Chair should first inquire as to whether there are questions or comments arising from the remarks of the Hon. Member who spoke last.


Dave Nickerson: I would like to ask a question, Mr. Speaker. The Hon. Member for Kamloops-Shuswap, who has just spoken, went on at length criticizing the operation of the
Canada Deposit Insurance Corporation Act
Canada Deposit Insurance Corporation because, according to him, it will not operate under proper insurance principles according to which the premiums or the levy should be greater when there is greater risk. He also cited the operation of the fund which has been established to compensate people in eastern Canada who are victims of oil pollution. He said that this Bill operated the wrong way, in his opinion, because everyone was subject to the same levy. These are sound conservative insurance principles.
However, in Canada there is another insurance scheme, that is, the Unemployment Insurance scheme. This one, according to the Hon. Member's principles, presumably works backwards because the premiums are less and the benefits are greater when the risk is greater. Is the New Democratic Party advocating that unemployment insurance benefits in Newfoundland should be less than they are in Alberta, or that residents of Newfoundland should pay higher premiums? That is the natural corollary to what he was saying this afternoon.


Nelson Andrew Riis: Mr. Speaker, I actually appreciate the opportunity to speak on this point because the NDP has always considered the Unemployment Insurance scheme not to be the best method of ensuring adequate incomes to people during difficult times. We have always advocated a more comprehensive universal social scheme to replace it. What the Hon. Member is making is again the kind of simplistic inquiry that one would expect from a Tory backbencher on a topic such as this. It reflects once again their, or perhaps his, inability to understand the complexity of this particular problem.


Mr. Maurice Harquail (Restigouche):: Mr. Speaker, it is indeed a genuine pleasure for me to participate in this debate this afternoon, to come back after our recess and sense this fresh breeze of co-operation that exists in the House this afternoon. I speak of the attitude among all Parties in the House with respect to Bill C-142, an Act to amend the Canada Deposit Insurance Corporation Act. I certainly want to congratulate the Hon. Member who spoke before me, the Hon. Member for Kamloops-Shuswap (Mr. Riis), the NDP financial critic, for his positive attitude toward the importance of this Bill.
He did raise a few points in his comments about Unemployment Insurance and about the Minister's statements on this. However, I am sure he will agree, and all Canadians know, that the principle of insurance is based on sharing the risk with the largest number of people involved. It would follow, with respect to the Bill we are debating today, that the same principle would apply and the same benefits would accrue to all Canadians. The issue with which we are concerned today is a matter of bringing ourselves into the eighties and updating this measure to meet the needs of all Canadians in our modern times.

April 12, 1983
Canada Deposit Insurance Corporation Act
The main purpose of this short Bill is to increase to $60,000 the amount of protection provided by the Canada Deposit Insurance Corporation on savings deposits placed with financial institutions in Canada.
As most Members know, the Canada Deposit Insurance Corporation is a Crown corporation that was formed in the centennial year of 1967 under the Canada Deposit Insurance Corporation Act. The main purpose of the Corporation is the insuring, within limits, of savings deposits placed by the public with member financial institutions. The existence of deposit insurance has given security and stability to the savings deposit market in Canada and has almost completely eliminated any fear of runs against financial institutions.
All banks and all federally incorporated trust companies and mortgage loan companies that accept deposits are members of the Corporation by law. Provincially incorporated trust companies and mortgage loan companies accepting deposits may become members on application if the Province of the Corporation concurs and if the financial condition of the company is acceptable to the Canada Deposit Insurance Corporation.
At the end of 1982, 132 federally incorporated institutions were members of the Corporation, of which 65 were banks and 67 were trust companies or loan companies. At the same time there were 52 provincially incorporated trust companies and loans companies holding membership.
At the end of 1982, the total assets of the Corporation amounted to approximately $255 million. Its income for the year amounted to approximately $14 million in the form of premiums and $25 million in the form of interest. Deposits insured by the Corporation as of April 30, 1982, amounted to $118 billion. The corporation is a tax-paying institution and is expected to pay approximately $12 million in taxes in respect of the 1982 taxation year.
The Corporation is governed by a board of directors comprising a chairman appointed by Order in Council, and, ex officio, the Governor of the Bank of Canada, the Deputy Minister of Finance, the Inspector General of Banks and the Superintendent of Insurance.
The three principal purposes of the Bill are, first, to increase the maximum limit of insurance on each deposit; second, to increase the borrowing authority of the Corporation; and, third, to reduce possible misunderstanding when member institutions receive funds that are not insured deposits. In addition, there are a few technical amendments not involving any important principle.
As I indicated in my opening remarks, the Government has indicated the importance of bringing the Bill up to date to meet demands in the country today. The previous speaker referred to some recent incidents which occurred in a Province which caused great concern to many Canadians and certainly to investors and depositors.
I suggest that it speaks well of our present Government that we have accepted the responsibility of assuring Canadians that, through this Bill, they are encouraged to deposit their savings. We are showing them that we are prepared to take the
necessary action to protect them in every way possible by increasing the amount of coverage from $20,000 to $60,000.
Another attractive feature of this measure, which was referred to by the previous speaker, is the fact that this legislation is retroactive to January, 1983. The legislation is being changed in recognition of a number of changes that have taken place. Many are aware that deposit levels have risen of a consequence of inflation. The existence of deposit insurance has probably had an effect in increasing this type of savings as compared with other possibilities such as investments in bonds or stocks in the market. As well, the existence of tax deferred plans such as Registered Retirement Savings Plans and Registered Home Ownership Plans have probably also stimulated savings of the insured type. As a consequence, it seems desirable to make an increase in the level of deposit insurance at this time. The $60,000 limit proposed was recommended by the Standing Committee on Finance, Trade and Economic Affairs in its report on the profit situation of the chartered banks published last July. It is estimated that the $60,000 limit will cover approximately 78 per cent of the deposits in banks and 92 per cent of the deposits in trust companies and loan companies.
Some suggestions have been received that the limit should be set much higher than $60,000. The Government is conscious of these suggestions and also of the fact that in the United States the limit on deposit insurance under the Federal Deposit Insurance Plan has been set at $100,000. However, we believe that a limit of $60,000 would be appropriate for the Canadian plan at the present time. It is important to keep in mind that the basic purpose of the plan is to insure savings deposits rather than to insure investments at a level where the investor could be expected to exercise his own judgment or seek professional advice. It is not desirable to interfere in the normal functioning of the financial market by setting a deposit insurance guarantee at a level that puts all other types of investment activity at a disadvantage.
As well, it is important to note that the main volume of premium funds received by the corporation come from the large, strong institutions, whereas the smaller and less known institutions are probably the beneficiaries of the plans to an extent that is out of proportion to their relative size. There has to be some reasonable limit on the extent to which the large institutions are forced to contribute to a pool of this type.
The Bill proposes no change in the premium structure. Under present rules, the annual premium required of each member institution is one-thirtieth of 1 per cent of the amount of insured deposits. However, the Corporation has certain limited authority to reduce the premiums below this level if it believes that the fund is adequate.
With respect to borrowing power, the Corporation now has the power to borrow up to $500 million from the Consolidated Revenue Fund. Any such borrowing is to meet financial needs to the extent that the Corporation cannot conveniently meet these needs from its own resources. Any such loans would be at
April 12, 1983

a rate of interest that is appropriate to the circumstances and would be repaid by the Corporation, either from realization of its own assets or from the revenue produced by future premiums.
It is important, if the CDIC is to play its full role as a stabilizing influence in the savings deposit market, that it be of such size and have resources sufficient to make clear to everyone concerned that it can fulfil the function that it is intended to play. The borrowing limit of $500 million set in 1967 was adequate at the time. However, the total amount of all insured deposits is now more than six times the amount that was insured in 1967. In the context of this fact and of the increase in the insured limit from $20,000 to $60,000 it seems appropriate to provide the Corporation with access to larger financial resources to meet emergency needs. The Bill, therefore, proposes that the borrowing authority be raised from $500 million to $1.5 billion.
With respect to possible confusion where a member institution accepts money that is not insured, the Bill proposes that all member institutions be required to mark clearly any instrument issued in return for funds where the transaction does not give rise to an insured deposit. Certain exceptions are specified in the Bill where it is most unlikely that any misunderstanding would occur. The purpose of this provision is to meet certain problems that have arisen in connection with the operation of the Corporation over the years.
Because of these pertinent facts and of all the figures and other substantive information I have given, I encourage and urge Members on all sides of the House to assist us in the giving of second reading to Bill C-142 as expeditiously as possible.


The Acting Speaker (Mr. Corbin):: Questions, comments, debate.
The Hon. Member for Western Arctic (Mr. Nickerson).


Some Hon. Members:: Hear, hear!


Dave Nickerson: Listen to the applause, Mr. Speaker.


Cyril Keeper: There is only one person applauding.


Blaine Allen Thacker: Let those who have ears listen.


Dave Nickerson: Mr. Speaker, before I get into the detail of second reading debate on Bill C-142, I would like to digress a little, but no more than did the Hon. Member for Ottawa Centre (Mr. Evans). He made the remark that he favoured greater federal presence in the securities business. I have some reluctance in accepting offhand that type of advice. If the federal Government gets into the business of regulating the sales and dispositions and trading in securities of corporations that are provincially chartered, I think that might cause some difficulty. If all stock exchanges in Canada were to become subject to federal regulations and all operated the same way, we might not have as good a system as we now have where legislation affecting the operation of stock exchanges is made by the various Provinces. The example that comes to mind is what happened in Ontario several years ago at the time of the MacMillan Windfall episode. At that time
Canada Deposit Insurance Corporation Act
the Ontario Securities Commission, the Ontario Stock Exchange and the Government of Ontario of that day decided they wanted to get out of the junior end of the securities business. They wanted to concentrate solely on blue chip issues such as Inco, the Bank of Montreal, Chrysler, Massey-Fergu-son and so on. When they got out of the junior end of the business, the action went to Vancouver. The Vancouver market grew and expanded because it was fulfilling a necessary function, that of raising junior capital largely for resource exploration. It was obvious to Canadians that that type of business was required in Canada. Had it been a federal decision to get out of the junior end of the business, there would have been nobody else to look to and we would probably have lost it entirely. As it is, with these things under provincial jurisdiction, people in Ontario who now realize they made a mistake want to change their rules to draw back a little of the business from Vancouver.
To get on with the second reading of Bill C-142, amendments to the Canada Deposit Insurance Corporation Act, let me say that I, like just about every other Member of the House, am in favour of the provision to raise the maximum insurable deposit from $20,000 to $60,000. This amendment has been brought to us largely at the urging of the Opposition. We spoke out on this matter at considerable length some time ago before the crisis, the Greymac Trust and Crown Trust fiasco, which brought the matter to the attention of the Government and forced the Government to act. About the only sense of fulfillment we have on this side of the House, and presumably what will continue to happen until the time of the next election when we will then find ourselves on the other side of the House, is that once in a while we have the opportunity to say, "I told you so".
I would like to quote from Hansard of February 17, 1982 when I spoke, over a year ago on this matter under the provisions of Standing Order 43.1 said then:
Madam Speaker, in order to take into account the decrease in the value of money brought about by years of Liberal-caused inflation, I move, seconded by the Hon. Member for Brampton-Georgetown (Mr. McDermid):
That the maximum deposit insured by the Canada Deposit Insurance
Corporation be increased from the present limit of $20,000 to a more
reasonable limit of $100,000.
This allows me to say, "I told you so." It is nice to see the Government acting on my recommendations, Mr. Speaker.
What I would like to see happen in this House this afternoon is the same as what was brought to our attention by the Hon. Member for Ottawa Centre. We would like to see the Minister of State for Finance (Mr. Cosgrove), responsible for financial institutions stand in his place and give an absolute assurance that the provisions of the Bill we are debating today will apply to the victims of the Greymac Seaway disaster. There is some doubt that is the case. I see the Minister is nodding, and I hope he will do as has been asked by Members on both sides of the House today.
Personally I would have preferred it had the limit been raised to $100,000. This figure has been accepted in the
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April 12, 1983
Canada Deposit Insurance Corporation Act
United States of America since 1978. We are told the $60,000 limit corresponds, after taking inflation into account, to the original 320,000 set in 1967. It is pretty evident that inflation, even if controlled somewhat, will continue. The huge deficits run up by the present Government of Canada will guarantee this will happen. Therefore, it will only be a matter of a few years' time when we will have to address this issue again because the limit will have been eroded by inflation. If we now raised the limit to $ 100,000, it could probably be kept in place for a number of years.
Like the Hon. Member for Restigouche (Mr. Harquail), I think that a system of deposit insurance is fundamental to a modern banking system. Any fractional reserve system of banking is inherently insolvent. On occasion the banking system, individual banks in particular, are subject to runs. The only way this can be stopped is to have the cash ready for depositors when they come to the window and ask for their money. If that cash is not available, the whole system is subject to the domino effect. One deposit-taking institution after another can fall by the wayside unless somebody has the cash handy to hand out.
Before a system of deposit insurance was brought into effect in the United States in the thirties and a little bit later in Canada, runs on banks and the collapse of banks, especially the smaller ones, were much more frequent than today. Probably one of the greatest advances made during the Depression years in order to ensure that repetitions of the disastrous financial collapses of that time would not reoccur was the institution in the United States of a federally-sponsored system of deposit insurance.
Before that was brought into effect, providing cash in times of crisis was largely up to the major bankers of the day, who sometimes rendered sterling services in making loans available to various banks and institutions that were in fear of collapse because of a run on them taking place.
It is a better system to have a federally-sponsored deposit insurance than to leave it up to the larger bankers in the country or in a particular area. Of the many Crown corporations that we have in Canada-and I do not know how many we have altogether but probably about 450 federally-in my opinion the Deposit Insurance Corporation is one that really fulfills a necessary function. It is something that Canadians can be proud of.
It is my intention to look at some of the provisions of the Bill. Of course, the most important one is the increase from
320,000	to 360,000 of insurable deposits. Everyone who has spoken on the Bill has mentioned this. There are other items in the Bill that deserve some attention.
The Hon. Member for Restigouche mentioned that the maximum amount that can be lent out of the Consolidated Revenue Fund to the Canada Deposit Insurance Corporation will be increased under this Bill from the present limit of half a billion dollars to 31.5 billion. I would like to know where the 31.5 billion comes from. It is a nice round figure. I will be proposing some nice round figures later, which I would have
some difficulty in justifying absolutely. When this Bill is at Committee stage, some explanations should be given as to why the 31.5 billion is to be imposed. Why is it that figure rather than 31. billion or 32 billion? Why was it decided that the correct figure was 31.5 billion?
I agree with the Hon. Member for Kamloops-Shuswap (Mr. Riis) who, when it comes to insurance is very conservative, that the Corporation should be self-financing. I agree it is necessary that the Corporation in very particular and, in unusual circumstances, should have the authority to borrow money from the Government out of the Consolidated Revenue Fund. It has to have that authority for those times when everything goes awry and it needs a lot of cash at one time. Hopefully the cash can be paid back once the emergency has receded. However, by and large the operation of that Corporation should be self-financing. It should be financed out of the premiums it charges.
The present levy is one-thirtieth of 1 per cent of deposits. The Hon. Member for Kamloops-Shuswap misled the House when he said that it was .3 per cent. I am sure that was inadvertent. No doubt he will have the opportunity to correct that. It was obviously just a slip of the tongue. He cited the figure wrongly by a magnitude of ten.
I understand that CDIC presently has 3260 million on hand. At least that is the figure cited in the press. It is stated that about 3200 million of this could be used up as a result of the Crown Trust default, if that is the right word. It probably is not. In any event, it is the Crown Trust case. If that were to take place, there would be virtually no cash left within the Corporation. Therefore, as a very immediate measure, it should have authority to borrow from the Government.
In my opinion, the CDIC should have a cushion of about 3500 million from which it could operate. Please do not ask me why I came up with 30.5 billion. I do not think I could explain it any better than the gentleman opposite could explain the 31.5 billion figure. It seems in the region of adequacy.
In order to build up that cushion, it might be necessary to increase the premium over the intermediate or short term. Perhaps a system could be adopted whereby the premium would be increased until the cushion was built up. I am not adverse to the insurance principles voiced this afternoon by the Hon. Member for Kamloops-Shuswap, but we might have difficulty unless we have a formula based on past experience of allocating different premiums to different deposit-taking institutions. Because the premium or levy is so small a percentage, if we were to go by strict insurance principles, the levy for different institutions might not be that much. For the sake of simplicity, we might be able to live with a system of a uniform levy. After the cushion had been built up to the 3500 million range, it may be desirable to decrease the premium.
I now want to look at the different ways in which the Deposit Insurance Corporation can fulfil its function. The worst case is where an institution goes absolutely belly up, is no longer there, and the CDIC has to pay the depositors up to the maximum amount.
April 12, 1983

I am pleased to see contained within the Bill a minor amendment to Subsection 13(4) of the Act which has the effect of clearing up certain possible legal difficulties with regard to who should be paid by the Corporation. I understand that previously it had to be the depositor named in the books of the member. There might be some errors there. The owner of record of that deposit might not be the beneficial owner of that deposit, so I am pleased to see that that technical amendment has been made.
OO)
When the member deposit-taking institutions is savable, when it has not gone completely belly-up but where with a little bit of help it might get by, there are various ways in which the CDIC can operate. Formerly the main way in which it did this was to make a loan to that member. Now in the Bill there are other proposals. I am not quite certain whether CDIC had the authority to help out in these other ways, but now it is quite explicit. It now has the authority not only to make loans to the member institutions but it is to have the authority to guarantee loans. If a trust company is in difficulty and wants cash on hand to pay its depositors, it can borrow that money from a bank and CDIC now has the authority to guarantee that loan. CDIC now has the authority to make a substantial deposit in a deposit-taking institution which is in trouble, and it is pretty obvious that that has the same effect.
If depositors are standing in line wanting $200 million that probably does not exist and CDIC comes along and puts a deposit of $200 million in that institution and says that it has no intention of withdrawing those funds for some time, then the effect will be the same. It will be known that the institution has cash with which to pay its debts, make good the deposits, and the lines will discontinue.
There are certain good points about these other methods of dealing with the problem. Certainly CDIC is to be given a greater degree of flexibility than it had previously. It has a greater number of weapons in its arsenal to fight insolvency. But there are also some points about this that are not so good. First of all, when it goes into loan guarantees and deposits-making, there is no actual cash involved so it is not so hard to do and it is sometimes done under the bushel, so to speak. It is away from the eyes of the public and away from the eyes of Parliament. CDIC could perhaps over-extend itself not by cash loans but by way of loan guarantees. We see this in other areas of Government where loans have been guaranteed and the Government says, "Oh, they are never going to exercise that guarantee". But then things go from bad to worse and the Government gets hooked. I have seen that at the provincial level and it seems that I have also seen that at the federal level.
If these things are to happen, in my opinion, then there should be maximum numbers imposed on the guarantees and on the deposits in these shaky institutions and these matters should be reported regularly. These matters, I suggest, need careful study in committee.


Mr. Deputy Speaker:: Are there any Hon. Members rising to ask questions of the Hon. Member who has just spoken? If not,
Canada Deposit Insurance Corporation Act
the Chair recognizes the Hon. Member for Vancouver Quadra (Mr. Clarke).


Mr. Bill Clarke (Vancouver Quadra):: Mr. Speaker, I want to take just a few moments of the time of the House to add some words on Bill C-142, an Act to amend the Canada Deposit Insurance Corporation Act. I, too, favour the principal proposal in this Bill to increase the amount of insurance on individual deposits from $20,000, which was the amount established in 1967, to $60,000, an amount that will approximately reflect the loss of purchasing power since that time.
It is worth noting that the Act covers deposits in 91 federal member institutions, including 29 banks and 62 trust and loan companies, and 54 provincial deposit-taking institutions, making the total of 145.
We have agreed, I think, that the limit of $20,000 was a ridiculously low amount and had to be changed. However, there is one principle that has not been addressed in this Bill, and that is that it was already easy under the $20,000 limit to circumvent the limit by moving funds around, by opening deposit accounts in different institutions or in different names because the $20,000 limit only applied to accounts that were held in one individual name.
Now the $60,000 will overcome the purchasing power problem but it will not change the fact that depositors will still be able to move funds around and put funds into more than one account in more than one deposit-taking institution and achieve coverage that perhaps the Government did not intend to give in this amending Bill.
I think it was another colleague, perhaps the Hon. Member for the Northwest Territories (Mr. Nickerson), who suggested that there should not be any kind of limit at all. That is something that the Government-


Dave Nickerson: No, it was not.


William Hillary (Bill) Clarke: It was not the Hon. Member for the Northwest Territories. I heard another colleague suggest that we should not have any kind of limit. I think that should be studied by the Government because it is so easy to get around this $60,000 proposal by having multiple accounts in different deposit-taking institutions. Probably all our deposits should be insured. I leave that to the Government to consider.
When the Canada Deposit Insurance Corporation was established in 1967, obviously it was felt that there was a need for protection for depositors. Indeed, some three years later, the Commonwealth Trust Company collapse in Vancouver confirmed that need. The loss then as recorded by the Corporation was $5 million. There was not another loss until 1980, but by then the funds had begun to build up and build up. By 1980, the Corporation had on its books a cumulative surplus of over $200 million. By the end of 1981, the surplus in the premium account was $167 million and in the accumulated earnings, $58 million; the surplus totalled $225 million at the end of 1981. I have been unable to confirm the 1982 figure but using that progression, it is now probably $260 million in surplus.

April 12, 1983
Canada Deposit Insurance Corporation Act
Where is the surplus, Mr. Speaker? A reference to the Public Accounts of Canada or the Canada Deposit Insurance Corporation's annual report tells us that $82 million of that surplus is invested in Government of Canada Treasury bills and another $82 million is invested in Canada Bonds. A total of $164 million has been taken out of the CDIC and invested by the Government in its own securities.
If the money has just come out of one company and gone into the Government coffers, then I would like to know what the difference is between this kind of a levy or so-called premium and a tax. I do not think the Government will be successful in answering that question because they do not answer it about many other forms of tax like Canada Pension Plan premiums and Unemployment Insurance premiums. These things all just go into the federal pot and get lost.
If it is a tax, then is it a desirable tax? The premiums for 1980 were $22 million, and the 1981 premiums were $20 million. I suggest, and I know from the annual report, that reduced premiums have been in effect for the last ten years, presumably because the surplus is building up adequately. Well, now the surplus is building up in any event. The investment surplus in 1981 was $13 million so that to tax the companies, which amounts to taxing the depositors another $20 or $22 million, seems to be totally unnecessary. All of that money, the $20 or $22 million, could be left in the company's hands. The Bill will increase the loan capability of CDIC from $500 million to $1.5 billion. I contend that there is no need for the company to build up a surplus at the rate of $35 million or so every year. This is not a private enterprise but a Government enterprise. The Government is making it possible for the CDIC to dip into the Consolidated Revenue Fund on the basis of loans for anything from $500 million to $1.5 billion. The surplus that has been building up is totally unnecessary and leads to the kind of abuses that the Auditor General reports nearly every year.
Another reason why I say this surplus is not required is that the Department of Insurance supervises all of the deposit taking institutions and also the operations of CDIC. Banks, trust companies, mortgage and loan companies and mortgage investment companies are supervised by Government. A surplus is not necessary. Altogether, 145 companies are insured in the CDIC. Even in a year as disastrous as 1982, it is extremely unlikely that these companies would produce a substantial loss. The losses produced in any year are going to be relatively small if the experience of the last 15 years is a guide. And, of course, we should not consider 1982 as an exemplary year. If CDIC should go into a deficit position, the Government has given it the power to borrow $500 million, and is now proposing that it have the power to borrow $1.5 billion. If the borrowing power were used, it would mean lower premiums for all participants in the scheme.
Looking at the financial condition of the company and even taking into consideration what happened in 1982, it would
appear to me that the premiums could be suspended for the foreseeable future. Let the losses, if any, absorb the surplus and then, if the company needs to, let it dip into the borrowing power given under this Bill. If there is a big loss, it makes no difference if CDIC has to cash in its Government bonds-the Government then has to find the money to retire the bonds so that CDIC will have the money to pay its claimants-or, if CDIC simply goes to the Consolidated Revenue Fund and borrows $500 million or even $1.5 billion.
While we agree with speedy passage of this Bill, I appeal to the Government for a renewed assessment of the need for a surplus which is left in the hands of the Government rather than in the hands of the taxpayers.


Mr. Deputy Speaker:: Is the House ready for the question?


Some Hon. Members:: Question.


Mr. Deputy Speaker:: Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, Bill read the second time and, by unanimous consent, the House went into Committee thereon, Mr. Francis in the Chair.
On Clause 1-
Donald Alex Blenkarn: Mr. Chairman, I should like to put some questions to the Minister of State for Finance arising out of the second reading debate before we proceed to approve clauses. The Minister and I had a discussion concerning the Bill, and I think we came to an agreement but the Hon. Member for Vancouver Quadra has indicated that he has some concerns about the inbreeding, in effect, that is going on.
The Superintendent of Insurance is a director of the Canada Deposit Insurance Corporation and is responsible for the supervision and management of registered trust and mortgage companies. The Inspector General of Banks is a director and he is responsible for the banks that are covered by the Canada Deposit Insurance Corporation. He is supposed to inspect them and look after them.
I wonder if the Minister has given any thought to changing the directorships to make sure that there is another check and balance in the process of managing the Canada Deposit Insurance Corporation so that the interlocking control that seems to exist will not take place but that different people be made responsible for the Corporation than are responsible for the operation of the institutions covered by the Corporation.


Paul James Cosgrove: Mr. Chairman, there was some discussion of the point raised by the Hon. Member for Mississauga South on the potential for change of directors or the widening of the directorships. I agree that the Superintendent of Insurance and the Inspector General of Banks are closely associated with two sectors of the economy that are large depositors in the Corporation and that this could be perceived as inbreeding.
On the other hand, I would urge that the Hon. Member consider that it is the very strength of their position that gives
April 12, 1983

them the ability to advise the Corporation. They have knowledge gained in the supervision of the industry and through that, can ensure the strength and the health of the industry. On the one hand there is a danger that they may be so close and so expert that they may overlook something. Perhaps the difficulty with an expert is that he is so good at what he does he loses the larger picture.
We have not received requests from member organizations that the directorships be changed; we have not received a submission from the Minister of Consumer and Corporate Affairs advising the Government that the membership should be changed, and we have not received submissions from the public to that effect either. I agree with the Elon. Member and we have had the thought in mind.
Because we feel that the advice has been strong and the experience in the Corporation has been good, although he might refer to a hypothetical difficulty with the directorships we are not inclined to make a change at this time. If the Hon. Member wishes to develop that line of thought further I would certainly be willing, as I am sure the directors of the Corporation would be, to consider a well presented brief. We do not see any need for the change at this time but we are willing to hear further submissions on the point.


Donald Alex Blenkarn: Further to that issue, Mr. Chairman, the other directors of the Corporation are the Deputy Minister of Finance, the Governor of the Bank of Canada and one outside director. Obviously the Minister gets no complaints from the institutions. In the case of trust companies, the Superintendent of Insurance is their superintendent. You are surely not going to find them complaining about the Superintendent being their chief insurer, and you are not going to find very many banks complaining about the Inspector General of Banks. I have never heard a bank complain about that. That has been one of the concerns of the Finance Committee as to whether the banks were well enough supervised because they seem to get along in a very patsy arrangement with the Inspector General of Banks. The Deputy Minister of Finance, from the way this country is being managed right now, is probably having enough trouble just keeping the books of the country together. The Governor of the Bank of Canada tells us he has to bring on additional staff just to look after the borrowing requirements of the Government. It strikes me that the only people who are effective directors of this Corporation are the very persons who are responsible for making sure that these institutions are operating according to law.
Earlier, in the second reading debate, I brought out the fact to the Minister that we had real concerns. Indeed, I certainly expressed concern at the meetings of the Finance Committee in 1981, and subsequently with respect to how these institutions were being supervised by the Superintendent of Insurance. To have the Superintendent of Insurance, or his people, running the Canada Deposit Insurance Corporation effectively really means that the Superintendent of Insurance can use the
Canada Deposit Insurance Corporation Act
Deposit Insurance Corporation to cover up his own mistakes in management. Perhaps if the Superintendent of Insurance had been on the ball and had pulled the plug on Greymac and Seaway a year ago, we would not have the problems we have today with those corporations. We certainly would not have the problem with Crown Trust because the owners of Greymac could never have purchased Crown Trust. No one would have sold it to them. They could not have financed it. Therefore, the problems that this Corporation now faces would not be there had the Superintendent of Insurance done his duty.
I ask you, therefore, could we not at this point consider that very seriously and make sure that we do not have a person who is supposed to be judge on one side and judge on the other side, policeman on one side and policeman on the other side, and no cross-reference control?


Paul James Cosgrove: Mr. Chairman, with respect, I do not believe the Hon. Member has advanced his case. As a matter of fact, I believe he has weakened his case in his representations; the point being that he has confused the role of the Superintendent of Insurance in his relationship to the Corporation. He is merely one of the directors. Along with him, as the Hon. Member has indicated, there is the Deputy Minister of Finance, who has responsibilities to the Minister of Finance. The Minister of Finance has responsibilities under Acts of Parliament, the Administration Act. These Acts require the Minister and his deputy to act in accordance with law for the public good. Similarly, the obligations assumed by the Governor of the Bank of Canada are to act in the public good, not on behalf of the Superintendent of Insurance or on behalf of any other official of any other Ministry of Canada. Therefore, the role of the Superintendent of Insurance in that makeup is simply as one of the members, and he is joined by other officials who have a legislative responsibility, which is to act for the good of the public, generally. I believe there is, therefore, a safeguard built into the operation of the Corporation.
I do not want to appear quarrelsome, Mr. Chairman. I did say in my comments that the role of the Superintendent of Insurance, the former Superintendent of Insurance who has recently taken retirement, and the role of the new Superintendent of Insurance, were challenged in the courts, and at trial none of the statements which were repeated by the Hon. Member for Mississauga South were upheld by the court. I admit that that case is under appeal, but I would respectfully suggest that the Hon. Member really is jumping to conclusions when he makes those allegations. I emphatically reject the allegations made by the Hon. Member that the Superintendent of Insurance, or any officer or employee of the Government of Canada and the Department of Insurance acting for him, acted in any way which was less than the duty imposed by the statutes or any less than what a reasonable and efficient officer of the Government would have been required to do under their circumstances of employment. That is the case which the Government put in the Federal Court of Canada. It was one, as I have indicated, which was upheld by the independent judiciary. I certainly hope that the Hon. Member is not casting

April 12, 1983
Canada Deposit Insurance Corporation Act
any aspersions on the judiciary in his wide brush condemnation of staff, because it is not supported by the judiciary.


John Leslie Evans: Mr. Chairman, I would like to ask the Minister, in light of the fact that Crown Trust, Greymac and Seaway are all provincial institutions, whether he could clarify to me what the role of the federal Superintendent of Insurance is with regard to the regulations of provincially chartered institutions?


Paul James Cosgrove: Mr. Chairman, I thank the Hon. Member for Ottawa Centre for that question. It gives me the opportunity of indicating that, of course, in the Provinces of Ontario and Quebec it is the provincial ministries which are responsible for the licensing and supervision of provincially-incorporated companies, and that includes Crown Trust, Seaway Trust and Greymac Trust. Giving the Hon. Member for Mississauga South the benefit of the doubt, I thought, when he used simply the name of Greymac and Seaway, that conceivably he may have been referring to Seaway Mortgage and Greymac Mortgage, which are, of course, federally incorporated companies. The Hon. Member will know that he raised these very questions at the Finance Committee meeting. He asked the Superintendent what circumstances prevailed vis-a-vis these companies during the last few months. The Superintendent responded that they have been on short licence and that the Superintendent had been monitoring their performance very closely, and was monitoring them very closely up until the month of December, 1982. The Superintendent was not satisfied with the performance of the companies, notwithstanding the warnings and requests that they comply with the statutes. They moved in the first week in January to assume control under Section 73 of the Act.


Donald Alex Blenkarn: Mr. Chairman, that is most interesting but I thought we were talking about the Canada Deposit Insurance Corporation. I was wondering if the Minister could tell me, if the directors of the Canada Deposit Insurance Corporation are not responsible for enforcing the Act, who is? Are the Seaway Trust Company, the Crown Trust Company and the Greymac Trust Company not insured under the Canada Deposit Insurance Corporation? And does the Canada Deposit Insurance Corporation not provide, under Section 24 and Section 25, that if that Corporation is not satisfied the securities are available to satisfy the requirements of the Canada Deposit Insurance Corporation, it is required to do something to effect the closing down of those companies and prevent those companies from taking deposits insured under the provisions of the Canada Deposit Insurance Corporation Act? Does that not mean that he is also responsible as the Minister designated in the Canada Deposit Insurance Corporation?


Paul James Cosgrove: Mr. Chairman, this is really a rehash of the questions we went over in this morning's deliberation. At that time I pointed out that by way of agreement between the Province of Ontario and the federal Government, the Province
has the responsibility for supervision and inspection of provincially incorporated companies. Reports are made available to the Superintendent of Insurance as the agent for CDIC federally. But it is not as if the Department is acting in isolation. I have indicated in the House and Committee that, because the Superintendent was already involved with subsidiary companies of Seaway, Greymac and Crown, both the federal and provincial ministries had taken parallel steps to indicate their concern and moved to exercise supervisory control over those companies. So that although the major responsibility is with the Province, the federal Department was aware of difficulties and had moved in areas in which it has specific responsibility to take specific steps to protect depositors as well as the interests of the Corporation.


Blaine Allen Thacker: Mr. Chairman, I have two questions for the Minister. In his speech he set out the number of financial institutions covered by the statute. Are there a number of financial institutions not presently covered, and which ones are they so that Canadians can be aware of that?


Paul James Cosgrove: My officials advise that there are none that we are aware of, Mr. Chairman.


Blaine Allen Thacker: Mr. Chairman, the Government has chosen to limit the amount to $60,000. We of course would like to see it at $100,000 because first, that coincides with the United States whith which we have a lot of investment going back and forth and we might as well synchronize with them, and, second and more important, some innocent people will be caught even with a $60,000 amount if there were ever a major catastrophe. That compares to the more sophisticated investor who will put his money into more than one institution and cover himself for 100 per cent. Why are we leaving at risk the less sophisticated person with, say, $100,000 who puts it in just one bank account?


Paul James Cosgrove: Mr. Chairman, in my opening remarks I attempted to explain that when the Act was originally introduced it was designed to protect the ordinary investor in Canada. It was not designed to provide total protection to everyone, certainly not, for example, to those large companies or very wealthy individuals who would have the advantage of lawyers or accountants to advise them in their investment practices. By and large the result of the move to $60,000 would bring a great measure of protection to the majority of Canadians. As I recall the figures, it was something like 92 per cent of deposits in trust companies and somewhere in the high seventies for banks.
I would remind the Hon. Member of the study done by the Standing Committee on Finance, Trade and Economic Affairs, and Members on both sides of the House, who looked into this issue in detail. The basis of their recommendation to increase the maximum amount from $20,000 to $60,000 had to do with the general performance of the economy. I would also remind him that if he is using the American experience as a precedent, then he should be aware that there is a move afoot in the United States to decrease the $100,000 maximum because the experience is that it is too rich. The American administration
April 12, 1983

in certain areas has now moved to actually limit the $100,000 and to reduce it in certain categories. So I think that for those reasons the $60,000 is an adequate amount.


Blaine Allen Thacker: Mr. Speaker, would the Minister confirm that the exposure to the Consolidated Revenue Fund is $118 billion? If there was a total collapse, that presumably would be the amount to be paid out less the value of the bank's assets which could be recovered. Could the Minister tell us what the value of those banks would likely be and what the exposure to the Consolidated Revenue Fund would be?


Paul James Cosgrove: Those facts are correct, Mr. Chairman.


Nelson Andrew Riis: Mr. Chairman, when the sum of $60,000 was determined, was the rationale simply the increase in inflation since 1967, and did it also include consideration given to the changing nature of the financial institutions in Canada since 1967 and their over-all exposure?


Paul James Cosgrove: Mr. Chairman, I was not a member of the committee which studied bank profits and made the recommendations, but I have read it. I think both those matters were taken into account by committee members. As I recall, the most important one, and one on which they spent some time in demonstrating mathematical parallels, was the one having to do with inflation. In other words, you will find that 60 per cent is very close to the actual inflationary experience in the economy from 1967 to the time the committee considered the matter.


Nelson Andrew Riis: Mr. Chairman, I would like some clarification regarding the fees paid on the insured deposit. Do all participating members, regardless of whether they have participated since 1967 or perhaps others who have been participating since 1977, do they all pay .03 per cent of their insurable deposits on an annual basis, or is there some differentiation depending on the length of time a firm has been participating?


Paul James Cosgrove: Mr. Chairman, the answer is yes. It is a uniform amount irrespective of time involved.


Gordon Edward Taylor: Mr. Chairman, I would like clarification of Clause 8(2), which says that in order to be eligible for deposit insurance a deposit must be repayable on or before the expiration of five years. I would like an explanation of that, and I would also like to know whether there are going to be other considerations set out in regulations concerning the payment of $60,000 or any portion thereof?


Paul James Cosgrove: Mr. Chairman, as to the second part of the question, no, there are no more regulations affecting additional requirements. Secondly, the five-year deposit has always been the practice of the Corporation. This merely clarifies the practice. The thinking behind the Clause is that again the Corporation and the legislation were not designed to insure long-time deposits. It was for the average Canadian depositor, and experience shows that the majority of people in ordinary
Canada Deposit Insurance Corporation Act
circumstances would not be investing beyond that period. It was a judgment call.


Gordon Edward Taylor: Mr. Deputy Speaker, my second question is, when is the Bill to come into force? I notice that Clause 9
states:
Subsections 3(1) and (2) shall be deemed to have come into force on January 17, 1983.
Subclause (2) states that Sections 4 and 7 shall come into force upon proclamation. I wonder why the entire Act is not coming into force upon Royal Assent. Is there some reason for delaying the bringing of this Section into force or into effect?


Paul James Cosgrove: Mr. Chairman, Clause 9(1), which makes reference to Subsections 3(1) and (2), deals with a part of the Act addressing the amounts, the change from $20,000 to $60,000. The setting of the day upon which it was to come into effect was to ensure that it came into effect as soon as possible. After all, the whole objective is to bring that kind of peace of mind and security to ordinary Canadian depositors as quickly as possible.
On that point, the Member for Mississauga South and I have had discussions on a possible change in the date so as to secure peace of mind for a number of people involved in present difficulties with some companies in the Province of Ontario.
The other part dealing with Sections 4 and 7 concerns the question of stamping and the way in which depositors are made aware as to whether a deposit is covered by the Act. It is felt that the institutions will need some time in order to amend their business practices and put that into place. Therefore, it was thought that there should be some flexibility to ensure that all member companies in the Corporation have sufficient time to allow them to be ready to administer it properly. That is the only reason some flexibility was retained.


Gordon Edward Taylor: I would like to ask one short question. Just to make it abundantly clear, does the balance of the Act, other than those Sections, come into effect upon Royal Assent? Second, I understood from what the Minister said that there is likely to be an amendment to Clause 9(1) later today.


Paul James Cosgrove: That is correct, Mr. Chairman.


Donald Alex Blenkarn: Today the Minister made some reference in the debate with respect to an arrangement with the Province of Ontario, the Minister responsible in that Province for the administration of CDIC work. I was wondering if there was not a written agreement between the Corporation and the Province of Ontario with respect to that supervisory work. Could he point out to me where in the CDIC statute it is stated that the authority to enter into an agreement to have the supervision required under the Canada Deposit Insurance Corporation can be delegated to another corporation? Could he point out how that delegation takes place and what the arrangements were and are for payment to the Province of

April 12, 1983
Canada Deposit Insurance Corporation Act
Ontario for the supervision which it presumably did or did not do?


Paul James Cosgrove: Mr. Chairman, the officials advise me that there is no written agreement between the Province of Ontario and Canada. It is a practice between the two Departments. Second, the authority for that is under the employment of staff section, Section 39 of the Act as it presently exists. Counsel have indicated that it is sufficient legal authority, in their view.


Donald Alex Blenkarn: That being the case, what remuneration is paid to the Province of Ontario officials, agents and employees? How are they paid and under what arrangements are they paid? Did each of these employees or agents enter into an oath of fidelity in accordance with Subsection (2)?


Paul James Cosgrove: Mr. Chairman, I assume that the questions of the Hon. Member are raised because he is looking at the words of the Section. I am satisfied that when the provincial authorities give oath or are employed by the Province, they are finally employed by the Crown, by the Queen or by the Governor in right of the Queen. Whether it is an oath which is taken under employment in Canada or in Ontario, it is one which calls for allegiance to the public good. There would certainly be practical considerations which would flow from that employment.
Second, no, the Province does not pay Canada for the services which it provides. Obviously, the Department of Consumer and Corporate Affairs for the Province of Ontario feels that it is large enough and well enough equipped to do the work and it is one which, as I say, is done without remuneration.


Donald Alex Blenkarn: I think that at some point the Minister would like to read Section 39 of Chapter III of the Revised Statutes for 1976-77. I think that on reflection he will not that the use of Ontario civil servants, unpaid and not under any oath of fidelity to the Canada Deposit Insurance Corporation, is not the employment of staff required under the terms of the Act, that the Minister is responsible for the Act, and that his employment of staff in this regard is probably illegal.
I make that point for his benefit in that it might well arise, in the lawsuits with respect to Crown and Seaway Trust, that he has perhaps not fulfilled his responsibilities. He will know that in the take-over of those corporations, there are threats of lawsuits involving in excess of $1 billion and that he may well be in trouble with respect to his supervision here.
I suggest that he obtain counsel and consider this very closely. I suggest to him that in the meantime he direct the directors of Canada Deposit Insurance Corporation immediately to engage their own staff on some sort of a payroll arrangement because he may well be in trouble. May I ask the Minister-


Paul James Cosgrove: Mr. Chairman, I appreciate the legal advice which the Hon. Member, who is a lawyer, has offered me and the Government of Canada, I might say, free of charge. Certainly we will consider it.


Douglas Glenn Fisher: Very worthwhile.


Paul James Cosgrove: I hope it is worth more than what we are paying for it, Mr. Chairman. Neither the Government nor the Corporation has been made a party to the action with which the Province of Ontario is now involved. All I can say is that our legal advice is not the same as the Hon. Member's opinion.
Clauses 1 to 5 agreed to.


Dave Nickerson: Mr. Chairman, could we have an explanation as to why the maximum amount of funds that the Corporation is entitled to borrow from the Government has been raised from $500,000 to $1.5 billion? Was it seen that in the immediate future they will have to borrow more than the present maximum of half a billion dollars? Why was it decided that the figure was to be $1.5 billion rather than some other figure? What is the justification for the request made in this section?


Paul James Cosgrove: Mr. Chairman, when the Hon. Member spoke he made a recommendation that the amount be increased to $1 billion. That is an increase of $500 million. The Hon. Member shakes his head. What was the amount?


Dave Nickerson: I did not suggest an amount.


Paul James Cosgrove: He did not suggest an amount and did not want us to ask him why he did not suggest an amount since he could not give a rationale. I was going to say that I wish he would not ask me the same question.
In fact, the rationale is that the increase is in the same proportion as the amount the individual premium increase has been for the deposit. Therefore, if it went from $20,000 to $60,000, in order that any potential difficulties that might arise in the future be covered, we used the same proportionate amount. It is a reserve and a guarantee. We just used that increase of two times.


Dave Nickerson: Mr. Chairman, could we be told what amount of money is presently owing by the Corporation to the Government of Canada?


Paul James Cosgrove: Mr. Chairman, it is $85 million.


Cyril Lloyd Francis: Shall Clause 6 carry?
Clause 6 agreed to.
On Clause 7-


Nelson Andrew Riis: Mr. Chairman, would the Minister elaborate ever so briefly on Subsection (4)? That Subsection states that every person who violates any provision of this section is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000 or imprisonment for a term not exceeding six months. Could he explain to whom this might apply?


Paul James Cosgrove: Mr. Chairman, I cannot really do much more than refer the Hon. Member to Section 45(1) which specifies those institutions which are subject to the penalty for violation
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of a section. It is no federal institution that is a member institution, no officer, agent or employee. Those are the ones who are prohibited from doing the following things in Section 45(1). I am told that the amount is a standard amount in the statutes dealing with breaches of financial undertakings.


Nelson Andrew Riis: Mr. Chairman, as a final clarification, if a participating company were to violate the terms of this agreement in a very serious way perhaps, would the maximum fine be $5,000? If that is the case, does that not seem to be just a little light?


Paul James Cosgrove: Mr. Chairman, we must remember, of course, that this refers to a situation where the Government would feel compelled to proceed in criminal courts by way of summary conviction. It does not take into account all of the other provisions of the Act that provide supervisory control over the Corporation, for example, or for the Superintendent under companion legislation to move to control corporations and prevent them from continuing in business or require them to wind down.
For more than the $5,000, in terms of philosophy of criminal law, there is the threat of imprisonment, although it is a term not exceeding six months. But in my opinion, that would be a very salutary consideration by any person who deliberately would attempt to get around the provisions of this section.


Cyril Lloyd Francis: Shall Clause 7 carry?
Clause 7 agreed to.


Cyril Lloyd Francis: Shall Clause 8 carry?
Clause 8 agreed to.
On Clause 9-


Donald Alex Blenkarn: That Bill C-142, an Act to amend the Canada Deposit Insurance Corporation Act, be amended in Clause 9(1) by striking out line 34 at page 8 and substituting the following therefor:

He said: Mr. Chairman, the reason for the amendment is our fear that the Bill will come into force with respect to the $60,000 only on January 17, 1983. People who have demanded moneys from Greymac, Seaway, Crown or any of their agencies in the period from January 7 until January 17, when this Bill comes into force in normal circumstances, would have no claim beyond $20,000. Rather than moving to January 6, we went to January 4, because that is the first banking day of this year since January 3 was treated as a bank holiday, representing New Years Day for 1983.
I think it is imperative that we ensure that all those people who conceivably have a claim on Greymac, Seaway or Crown be covered. I think that is the intention of the Government and that is the reason why this amendment was moved.


Paul James Cosgrove: Mr. Chairman, I have discussed this with the Hon. Member for Mississauga South and I agree with what he has said. I would say that out of abundant caution, we have agreed to make sure that there is no difficulty with the section
Adjournment Debate
and the Government's intention to cover those people. We believe that the Hon. Member and all Hon. Members have been very co-operative today. I think it just demonstrates that with some co-operation this House can move to take action on matters. I support the amendment.


Cyril Lloyd Francis: Shall the amendment carry?


Some Hon. Members:: Agreed.


[Stage Direction]
Amendment agreed to.
Cyril Lloyd Francis: Shall Clause 9, as amended, carry?


Some Hon. Members:: Agreed.
Clause 9 as amended agreed to.


[Stage Direction]
Title agreed to.
Bill reported with amendment.
Paul James Cosgrove: that the Bill be concurred in.


[Stage Direction]
Motion agreed to.
Mr. Deputy Speaker:: When shall the Bill be read the third time?


Some Hon. Members:: Now.


Paul James Cosgrove: that the Bill be read the third time and do pass.


[Stage Direction]
Motion agreed to, Bill read the third time and passed.

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

Elmer MacIntosh MacKay: Mr. Speaker, a few days ago I once more raised the issue of Government orders for the Hawker Siddeley railcar plant at Trenton, Nova Scotia. I was assured at that time by the Minister of Regional Economic Expansion (Mr. Lumley) that he was concerned about the plant and the work force which has been idle for so long. We were also informed that the Minister has in the past tried to expedite orders for Nigeria, that he met with the Chief Executive Officer of the plant and also expressed the hope that this company would be able to take advantage of developments in offshore oil exploration. I personally, and 1 am sure most people in my riding appreciate these sentiments of the Minister. We appreciate his good intentions, but the path to hell is often paved with good intentions.
I am here today to raise the issue once more with the Minister and to point out that by comparison not very much is

April 12, 1983
Adjournment Debate
being done to find relief for this key industry in a town in Nova Scotia that is almost entirely dependent upon it. I do not want to be unreasonable, Sir, or unrealistic in calling upon the Government to expedite orders for this industry. I only want the Government to do in a small way what it has been doing for other large employers in other areas of the country at much greater cost.
We need and can use, if we are to believe the government's own policy statements, additional railway rolling stock. We need the jobs desperately in this part of Canada from where I come. We do not, for example, really need Challenger jets to develop our country, particularly the ones that are showing such unreliability and are being produced at such terrible cost by a company that everyone knows is being subsidized by a tremendous amount of frontend debt guaranteed by this Government, an amount probably well in excess of $1 billion. If we are talking about value for money or reasonable job creation, certainly we will not find it in the way Canadair is being managed or operated.
To use another comparison, CN Marine, another example of profligate spending, probably spent between $80 million and $90 million constructing a new CN ferry to operate between Borden, P.E.I. and Tormentine, New Brusnwick. The new vessell, the Abegweit, is the closest thing I have seen lately to the sea going equivalent of a car that is popularly known as a lemon. It is a vessel that has not been performing satisfactorily. The sad part of it is that the former vessel which had performed for many years could have been renovated and would have served well for another decade if $3 million or $4 million had been spent upgrading it, the same amount of money that was probably earned, in interest by CN Marine when in my opinion it squirrelled away $25 million, meant to pay for the new vessel, and kept it in an unauthorized bank account for many months.
I make these comparisons, Sir, to support my plea to the Government opposite to use a little bit of selectivity and common sense when it is dealing with large amounts of taxpayers money.
Instead of having a good vessel, perfectly serviceable, which would have freed $70 million or $80 million for useful purposes, we sold this vessel to a Chicago yacht club for considerably less than $100,000 Canadian dollars, a travesty if I ever saw one. Contrast that kind of economic stupidity with the real economic benefit that could accrue if some large orders for railcars in this amount were placed with this key industry in this town in Nova Scotia; an industry, I emphasize, that has a work force of nearly 2,000 people when the plant is employed at full capacity. There would be very little net cost to the Government in doing this because this work force, through no fault of its own, is drawing unemployment insurance benefits when it could be producing something useful.
People in my area are getting very tired of the inequalities and inequities of seeing money thrown around in certain constituencies in this country where jobs are maintained or created, regardless of the expense. Yet there is no money to
ensure work by producing useful commodities or useful machinery; something that would be far more appropriate than many of the profligate schemes that are being used to buy types of equipment and vessels, such as the one I mentioned, purchases that could easily be deferred for many years.
It is very little wonder that people in this country have lost faith in the judgment and capacity of Ministers of the Crown when day after day in the House of Commons we hear the Minister of Finance (Mr. Lalonde) and the Prime Minister (Mr. Trudeau) say that our economy is performing satisfactorily at a time when we have record unemployment and record budgetary deficits. Most Canadians see the difference clearly between the way things are and the way they could be if a little more attention was paid to practical, sound, businesslike and appropriation practices in Government, with less attention paid to party politics and favouritism in subsidizing some industries and not others.
Instead of getting the taxpayers heavily involved with companies like Canadair, de Havilland, Massey-Ferguson, Maislin, to name just a few, it would be nice to see the Government stretch a point and make sure that certain useful equipment and machinery was ordered from companies that have not had to go to the public trough, but are still capable of producing it. These types of ventures would pay off. When they were completed, if the economy is as rosy as the Minister of Finance and the Prime Minister seem to think it is going to be, and that we are in the midst of a recovery, which we all hope is and will be the case, we would have value for our money. There would be something there to justify these expenditures.
At the present time we are getting very tired of seeing selective largess in certain areas of the country at the taxpayers' expense, when in many instances there are good corporations that are capable of producing useful work, if only the Government would use a little common sense and expedite these kinds of orders.


Mr. Andre Maltais (Parliamentary Secretary to Minister of Industry, Trade and Commerce and Minister of Regional Economic Expansion):: Mr. Speaker, the Hon. Member for Central Nova (Mr. MacKay) has asked what the Government intends to do about unemployment in Nova Scotia, in the Trenton area, and especially at the Hawker-Siddeley plant. I would like to point out to the Hon. Member that railway companies have been affected by a substantial drop in overall demand for freight cars. In fact, 20 per cent of railway rolling stock is now in storage. It is clear that the present problems are the result of a substantial drop in the use of railway transport.
However, until economic equilibrium has been restored and the surplus absorbed, the demand for new rolling stock will probably be very slight. However, there is hope yet, since the
April 12, 1983

new measures relating to the Crow rate provide for the acquisition by the Canadian Government of 3,840 grain cars over the next three years. These orders should create about 1,200 person-years of work in the Canadian rail car construction industry. To ease the pressures on the industry, purchase of the first 1,280 cars has already begun.
The Hon. Member would perhaps be interested to know that Hawker-Siddeley has made a tender which, if accepted, would result in a very substantial number of jobs being created in Trenton. In fact, during the last few years, the Government has ordered more than 5,000 grain cars from Hawker-Siddeley. I therefore feel that an important step has been made which shows that the company has a good reputation for quality and that the Government does not always subsidize companies but also makes uses of the private sector. The Department I represent is continuing its search for other ways to remedy the employment situation in Trenton. Two of our main objectives are to increase exports and diversify manufacturing. The Minister has travelled to Nigeria and Indonesia to help Canadian companies making tenders for railway projects. We have talked to financial institutions in order to be able to provide competitive financing. As far as these projects are concerned, it would seem that the Hawker-Siddeley Trenton Works are in a good positiion to offer competitive prices on large orders of railway cars. Representatives of the Department are working together with Hawker-Siddeley staff to see what other products can be manufactured during periods when the demand for railway cars is weak. At the beginning of February, Hawker-Siddeley formed a consortium with CanO-cean Resources Ltd. (a branck of Nova, and Alberta-based company) and they are now looking into the possibility of entering into agreements with other Nova Scotia enterprises for the purpose of developing natural gas deposits on Sable Island-


Mr. Deputy Speaker:: Order, please. I am sorry to have to interrupt the Hon. Member, but his time has expired.


MEDICAL CARE-STATUS OF PROPOSED CANADA HEALTH ACT DRAFTING OF LEGISLATION
William Alexander (Bill) Blaikie: Mr. Speaker, on March 17, I asked the Minister of National Health and Welfare (Miss Begin) to tell the House what sort of timeframe she had in mind for the tabling of the proposed new Canada health act and encouraged her to put an actual proposal before the Canadian people so that there could be informed and concrete debate about what she has in mind for the founding principles of medicare and for the future of medicare itself. The Minister said then that the Department of Justice was drafting a document, but that it was important to take the time needed to get a better act than what we have now.
On March 29, I asked her to speed up the process by which Canadians would get the long-awaited Canada Health Act, and get it in a form that would prevent what has happened the previous day when Alberta announced that it was imposing, as
Adjournment Debate
of October 1 of this year, a variety of user fees for emergency, out-patient and in-patient services, on top of the recent hikes in premiums in that Province and the toleration of a 35.5 per cent extra billing rate.
The Minister replied that I was being too future-minded and not cognizant enough of the powers she now has under existing legislation to do something about what is going on in Alberta.
My point, however, is this. All that the Minister can do under the existing legislation is withdraw all, and I repeat, all federal health payments from Alberta. This is clearly an option that is drastic in nature and which involves both known and unknown risks to our national health care system. It was an option which was rejected by the Special Parliamentary Task Force on Federal-Provincial Fiscal Arrangements, which recommended instead that some more gradual form of penalty be designed for Provinces perceived to be violating the principles of medicare. Existing legislation simply does not provide the federal Government with the kind of flexibility and mano-euvering room it needs, forms of which it gave up in 1977 against NDP advice to the contrary.
This is why the Minister must now make clear her proposals for a new Canada health act and how those proposals address, among other things, the need for ways to enable the federal Government to enforce and encourage practices which respect the five founding principles of medicare. The Minister must do more than wait for public opinion to work, as she did in New Brunswick. New Brunswick is not a one-Party state like Alberta, and, in any case, it is about time that this Minister actually did something about the erosion of medicare, instead of just talking about it. I suggest to her that tabling a proposal for debate, around which, hopefully, all pro-medicare people could rally, is what she must do as soon as is humanly possible.
While she is at it, she might also try to put back some of the money that was withdrawn from EPF payments just about a year ago, a step which clearly eroded her bargaining power with the Provinces and which has provided a cover for those in Alberta, Ontario and B.C., who for philosophical reasons have always resented medicare and who see in federal reductions and in the recession in general an opportunity to advocate their idealogical preferences under the guise of economic realism, instead of coming out and saying honestly to the Canadian public that they prefer more privatization of medicare.
I realize many of the difficulties involved if the Minister were to bring forward an Act without getting prior agreement from the Provinces, but I think it is at the point where she needs to act. She needs to put clear and supportable proposals before this House and before the Canadian people so that all pro-medicare people can rally to the cause of a new Canada health act which will prevent the kinds of things we are seeing happening to medicare at the hands of Progressive Conservative provincial Governments in this country.


Mr. Jim Schroder (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, regarding the current status of the Canada health act, the Minister of

April 12, 1983
Adjournment Debate
National Health and Welfare (Miss Begin) would like to strongly assure all Canadians that the development of a new Act is proceeding as quickly as is possible, given the importance of this issue.
The Provinces and others have consistently requested that the Minister put before them, in black and white, just how she intends to strengthen our existing health insurance program and specifically how she proposes to encourage the elimination of extra billing and user charges. This is exactly what she intends to do in the very near future. The Minister believes it is essential that this extremely valuable program not be allowed to deteriorate to the point where many Canadians feel they cannot get the health care they need because of various barriers that have grown in the program.
The current Canadian Medical Association campaign against the Canada health act represents the view of only a small number of the physician population of Canada which has been attempting unsuccessfully to generate general public fears about Government involvement in assuring health services to all Canadians. It has however been repeatedly made clear to the Minister of National Health and Welfare that Canadians want prepaid universal health insurance, without barriers to necessary services. She is committed to preserving this Canadian privilege.
Other professional and public groups have made known to the Minister that they would like to see insured health services shift toward health prevention and promotion. Much as she supports these moves, and the support of the federal Government is evident in grants to the provinces for extended health care services, our present system of insured health care services has a long and strong tradition and is, therefore, slow to change. While such changes evolve in our health care services, the role of the federal Government must be to facilitate such moves, but at the same time not lose the insured health services that Canadians can depend on now. Public interest in health and health care has never been higher, and we all recognize that health care services will have to be increasingly responsive to the expectations of the public. The Minister of National Health and Welfare will not fail to do her part in strengthening our national insured health service program through the introduction of new health legislation, following a meeting which she expects to have with her provincial colleagues.


TRADE-LEVEL OF CLOTHING IMPORTS
Mr. Dan Heap (Spadina):: Mr. Speaker, a few days ago I asked the Minister of Industry, Trade and Commerce (Mr. Lumley) to recall the failure of the bilateral negotiations for quotas on imports of clothing and textiles from South Korea, Taiwan, Hong Kong and China. I asked him to confirm that imports are up by 18.8 per cent this year compared to last year, and to tell us when Cabinet will decide to impose unilateral quotas as requested by the industry.
The Minister was party to those negotiations and meetings but he ducked the question. I understand why he chose not to answer. It is because the Cabinet does not want to make up its mind. I also understand why he passed the question to the Minister of State for International Trade (Mr. Regan)- because that Minister was not in the House to be asked. Nevertheless, the industry wants this question answered. Will the Government protect the 150,000 workers directly employed in this industry from unfair competition?
The fact is that according to the Government's own reports, mainly the Textile and Clothing Board reports of 1980, 1981 and 1982, the textile and clothing industry of Canada is competitive; it is efficient; it is technically on a par with the industries of other countries. The productivity of this industry is as good as the productivity of other manufacturing industries in Canada, or is better than average. The capital investment rate in this industry is larger than the capital investment rate in most secondary manufacturing in Canada. In other words, we are not suffering from fair competition. We are not suffering from competition simply in terms of putting out good work and being productive.
The competition we are suffering is the result of excessively low wages, about 49 cents per hour in the Philippines in 1979, or $1.27 an hour in South Korea a year ago. These low-wage countries have been increasing their exports of clothing into Canada in the last two or three years. Yet Canada absorbs only about 1 or 2 or 3 per cent of the production of countries such as South Korea, Brazil, the Philippines, Singapore and Hong Kong. Far more could come in from those countries which have wages that no one in this House would ask Canadians to accept. No Member opposite would dare ask his constituents to work for 50 cents an hour and support a family on that. Yet, this is the implication of the Government's policy.
The Government argues that if imports are restricted, clothing prices will rise too quickly. Yet it is the price of the import which has been rising at a faster rate than the cost of living and it is the price of Canadian made clothing which has been rising at a slower rate than the cost of living. In other words, if Canadian competition is taken out of that industry, the import prices will rise much faster yet, and the consumers of Canada will be the losers.
There is no gain to Canada in destroying an industry which employs 150,000 people, mostly women, many of whom are the sole supporters of their families. There is no gain to Canada in destroying an industry which indirectly employs another
100,000	in terms of supplying material and services. There is no gain to Canada in losing the buying power of 250,000 more workers, adding them to the two million people who are already out of work.
It is the duty, therefore, of this Government to defend the garment and textile industry of Canada against unfair competition, competition based on excessively low wages. It is the duty of the Government to protect our workers against unfair competition because there is no benefit in forcing Canadians to
April 12, 1983

work for 50 cents an hour. There is no benefit in destroying the industry which provides the bulk of the clothing of Canadians. Canadians, with our severe climate, would then become absolutely dependent on clothing imported from foreign companies under the control of large multinational companies which would then be able to force prices up.
If the Government wishes to force wages down by promoting unemployment, and by destroying established industries of Canada, then the policy it is following is quite logical. This Government will have to answer for its actions, if two million unemployed become three million unemployed next year because of its policy of promoting unfair wage competition.


André Maltais: Mr. Speaker, I was very pleased to hear what the Member for Spadina (Mr. Heap) had to say. I think the Minister of Industry, Trade and Commerce is extremely sensitive to the concerns that were expressed by the Hon. Member with respect to import quotas for clothing, in the same way the Department was last year on the subject of import quotas for shoes. In the latter case, the Government achieved very good results by revising quotas and thus giving Canadians an opportunity to manufacture products for Canadian consumers.
As far as the clothing negotiations are concerned, the Hon. Member knows perfectly well that these involve bilateral agreements and, in fact, the entire spectrum of international trade. When the agreements are signed, we will have a certain number of responsibilities and if there were any changes, there might be penalties for countries that break the agreement once it is signed. Nevertheless, the Minister of Industry, Trade and Commerce (Mr. Lumley) already announced six months ago,
Adjournment Debate
in October 1982, a number of short-term measures leading up to negotiations with Korea, Hong Kong and China on certain changes that would make the import quota system more flexible. These negotiations have been more or less satisfactory, but there is still a lot of work to be done. Cabinet intends to make a statement on a clothing import policy as soon as the policy has been revised. This is being done at the present time, and it is one of our top priorities, because the Government is indeed very sensitive to the concerns expressed by the Hon. Member, and we certainly do not want anyone in Canada to be adversely affected by any import policy. On the contrary, it has never been the intention of this Government to make Canadian workers work for 50 cents an hour.
However, the Hon. Member will understand the Government's position with respect to its commitments to other countries. There is a matter of trust involved among various partners, because there are many different agreements covering clothing, cars, certain kinds of ores exchanged between countries, and so on. If countries were to unilaterally change contracts that were entered into on a voluntary basis in a perfectly normal way, one could hardly expect a climate of trust to exist. Therefore, before taking any radical unilateral measures, the Government prefers to explore all possible avenues, and I think that, not necessarily very soon but in the near future at least, the Government intends to act responsibly and make a very clear statement to the Canadian people on what it intends to do with respect to import quotas on clothing.


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 2 p.m.
At 6.25 the House adjourned, without question put, pursuant to Standing Order.

Wednesday, April 13, 1983