1983-03-18

STATEMENTS PURSUANT TO S.O. 21


Mr. Gaston Gourde (Levis):: Madam Speaker, yesterday, my colleague from Lac-Saint-Jean (Mr. Gimai'el) indicated that he was very upset about the exorbitant price of gas per gallon in the Province of Quebec. Perhaps 1 may recall a few facts for the benefit of Canadians and Quebec residents. At the end of 1982, the price of gas per litre was a few cents higher in Canada than in the United States. It was, however, 22 cents less than in West Germany, 30 cents less than in the United Kingdom and France and 48 cents less than in Italy.
In Canada, in January 1983, Quebecers were paying 16.4 cents per litre in taxes to the Government of Quebec, in other words, 40 per cent of the total price. Quebec has the highest gas prices in Canada owing to Mr. Parizeau's sales tax, and this means Quebecers are paying at least 13 cents per litre over and above the average price in Canada. Today, people in Saskatchewan can buy a litre of regular gas for around 33 cents. That is certainly not the case in Quebec.
The Canadian Government has guaranteed security of supply for Canadians, and now stringent measures will have to be taken to guarantee oil prices, in order to prevent the Provinces, and especially Quebec, from taking the consumer hostage.


ANTI-DUMPING TRIBUNAL COMPETITION FROM IMPORTED WINES
Mr. Joe Reid (St. Catharines):: Madam Speaker, the Canadian wine industry is a growing, developing industry, satisfied that, based on fair competition, it can compete in terms of both price and quality. The Canadian wine industry is, however, experiencing other than fair competition from low-priced import wines, notably Italian products.
Canada continues to categorize its wine industry as part of the larger alcoholic beverage industry, while European producers benefit from a system of support subsidies and incentives. Documents and materials were filed with the Department of National Revenue in 1981 showing how Italian wineries have benefited very significantly from such subsidies, and the adverse effect that unrestricted imports of such products will have on the Canadian market.
Since 1981 the officials of the Canadian Wine Institute have been in constant touch with Revenue Canada, the Department of Finance, and the Department of Agriculture. The time has now come for more positive action. The Minister of National Revenue (Mr. Bussieres) should move the application forward so that the allegations and submissions made might be heard by the Anti-Dumping Tribunal.


THE ADMINISTRATION
Mr. Ian Waddell (Vancouver-Kingsway):: Madam Speaker, I want to return to the Cafik affair and make it clear that what I was saying was not that Norman Cafik had breached the guidelines. He did not breach the guidelines. As a former Minister he was dealing with a different Department, unlike Alastair Gillespie. I acknowledge that a former Minister is entitled to full rights, including the right to deal with Government. Former Ministers should not be paupers, as the Prime Minister (Mr. Trudeau) once said.
The fact is that Mr. Cafik did lobby. He used his expertise to get a Government grant that was stuck in the process. I quoted his own words as evidence; I did not get this second hand. I saw it via satellite, using a new satellite dish, as Mr. Cafik was on the Webster show in Vancouver. He said that. Cafik said that he met with the President of the Treasury Board (Mr. Gray). It raises questions about the guidelines as they apply to the former Minister, the present Minister responsible for the Treasury Board and formerly Minister of Industry, Trade and Commerce.
Our problem in the House is that we cannot ask any questions of the former Minister, and we cannot get the matter before a Committee. In other words, there is no means of public scrutiny in these matters. That is the fault. The matter is still unresolved. The public is very cynical about former Ministers dealing with Cabinet. I plead with the Government to let us have an open system of Government in Canada. Let us have a Committee to examine these matters and examine

March 18, 1983
the proper guidelines. That is in the interest of the governed and in the interest of the governors too.


SCIENCE AND TECHNOLOGY
Mr. Jack Burghardt (Parliamentary Secretary to Minister of Communications):: Madam Speaker, I would like to bring to your attention the nature of direct federal support of research and development performed in Canada's universities. Earlier this month the Minister of Science and Technology (Mr. Johnston) released a summary of anticipated 1983-84 federal spending on science and technology. Among the highlights was an impressive 27 per cent increase in the amount of federal funding of industrial R and D. An increase in funding of that magnitude should be acknowledged and applauded, and I certainly do that. Regrettably, however, any delight I might feel has to be tempered by the recognition that federal funding of university R and D will increase by 6 to 7 per cent for the same period.
At a time when universities are strapped for funds, due primarily to provincial diversion of federal transfers, when the rate of inflation in research specifically is approximately 20 per cent, and at a time when economic recovery and growth hinge on innovation, I do not believe that increases for funding of university R and D, that barely allow research to remain at last year's levels, are enough.
Currently at the University of Western Ontario in London, two researchers are finalizing development of a pesticide sprayer that will use static electricity to spray crops more effectively. This important example of university level R and D will generate cost savings, which agriculture needs, and will substantially lessen environmental contamination. It is this important work, yielding tangible results, that the federal Government should be supporting to the maximum level.


FINANCE
Mr. Gordon Towers (Red Deer):: Madam Speaker, the cavalier statement by the Minister of Finance (Mr. Lalonde) that the federal deficit may climb above $30 billion next year, on top of the $27 billion this year, is distressing news and unacceptable to those of us on this side of the House. The Government is bereft of ideas and policies to rejuvenate and stimulate the economy and, instead of attempting to build a bigger and better productivity pie, it is attempting merely to reassign the slices. This is not good enough. If the only policy this Government has is to push Canada further and further in the red with its reckless deficit spending, then it is time for Canadians to say, "Go. In the name of goodness, go!"


NATIONAL DEFENCE
Mr. Neil Young (Beaches):: Madam Speaker, yesterday, in the Standing Committee on External Affairs and National Defence, the Minister responsible for National Defence stated that the Cruise missile, which the Canadian Government is planning to test on behalf of the United States Government, " ... is not a weapon, is not dangerous, . . . and is just a vehicle." The Minister also continues to tell Canadians, who are opposed to the testing of this weapons system over their territory, that they are either ignorant or they are misguided.
Since there appears to be some confusion, perhaps even profound ignorance, in the mind of the Minister of National Defence (Mr. Lamontagne) as to what constitutes a weapon, I would like to propose on behalf of all Canadians that the Minister of National Defence resign and hand over his ministry to someone who will stop blaming Canadians for the ignorance which he himself displays.


ENVIRONMENTAL AFFAIRS
Hon. Bud Cullen (Sarnia-Lambton):: Madam Speaker, I would like to call to the attention of the House an article published in the Sarnia Observer, which reads:
The federal government has taken a curious stance in its latest attempt to clean up the Canadian atmosphere.
In an announcement last week. Environment Minister John Roberts said lead in gasoline will be restricted and possibly banned because of the health hazard associated with its use.
The government plan would have met with much more support if it was designed to accomplish a reduction in an area of desperate need.
But as it stands, the evidence used by Mr. Roberts to support the need for a ban has been questioned.
There has been a steady and marked drop in the use of lead in fuels over the past decade in Canada.
An official with Ethyl Canada says gasoline lead usage in Canada has dropped 51 per cent in the last decade. New autos have been increasingly tailored to run exclusively on unleaded gasoline.
So why has the lead problem suddenly become so pressing.



Mr. Stanley Hudecki (Parliamentary Secretary to Minister of National Defence):: Madam Speaker, in order to control pollution and to safeguard the lives of people in communities bordering the Niagara River and Lake Ontario, we must, as a country, make strong representations to the Government of the United States to ensure that a very serious attempt will be made to clean up the chemical dump sites along the Niagara

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River. These chemical dump sites are like a time bomb and could have dire consequences for the health and safety of Canadians, either through a massive chemical leak into the Niagara River and then into Lake Ontario, or through slow seepage into the water systems, which could reduce the quality of our drinking water and lead to long-term health effects.
The Government of Canada could help in the search for suitable toxic chemical controls. Presently, there is $2.5 million earmarked for toxic chemical control, which money has been frozen by the Treasury Board and which, therefore, might not be spent this year. Toxic chemical control and the need for additional, more frequent monitoring procedures, are crucial matters of concern, and these funds should therefore be made available.
I strongly urge the Government to recommend to the Treasury Board that these funds be released as soon as possible so that progress can be made toward the eventual resolution of chemical pollution into Lake Ontario and the Niagara River, especially in light of recent reports that the levels of possibly lethal chemicals in Lake Ontario are on the rise for the first time in several years.



ORAL QUESTION PERIOD


Miss Pat Carney (Vancouver Centre):: Madam Speaker, my first question is directed to the Minister of Finance. The figures released today by Statistics Canada indicate that Canada's inflation rate dropped in February below the rate of a year ago, but prices are still rising much faster than the incomes of Canadians. As a matter of fact, at the end of 1982 disposable income was down about 4 per cent, and prices have increased almost a full percentage point in the last two months, so that Canadians are still net losers. When is the Government going to introduce measures which will put Canadians back to work and give those who are working an even shot at keeping up with price increases?


Hon. Marc Lalonde (Minister of Finance):: Madam Speaker, I am pleased to note, as the Hon. Member has, that the inflation rate has continued to decline. In effect Canada is experiencing its lowest rate of inflation in six years. This is the ninth consecutive month during which the inflation rate has moderated, so we are looking forward to a year in which the inflation rate in Canada will be still lower than what we have known in the past. Certainly the outlook for the cost of living in 1983 looks very encouraging today.
Obviously the unemployment and disposable income problems that the Hon. Member has raised are still very serious, and will remain serious for a while. I have indicated that the
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Government has already taken a number of measures in the statement I made last October, and I am considering additional measures in my budget. But in the meantime the best way of helping to increase the disposable income of Canadians would be to very quickly pass the income tax amendments, which would ensure that we could shift $6 billion worth of refunds to Canadians. Canadians are waiting for that money, and will be very happy to spend it.


LEVEL OF UNEMPLOYMENT
Pat Carney: Madam Speaker, the rate of inflation may be the lowest in six years, but the unemployment rate is the highest in 50 years. The underlying reasons for the moderation of the inflation rate are the plants which have closed, the people who are unemployed, the people who had to take salary cuts last year, and the people who had to take part-time work. If the Minister is so anxious to take credit for the moderation in the inflation rate, when is he going to accept responsibility for the two million unemployed?


Marc Lalonde: Madam Speaker, I have indicated that a number of factors indeed have played a part in the reduction of the inflation rate. Government measures which have been taken have helped in that direction. I have also indicated to the hon. lady that I have announced a number of measures, including over $2 billion worth of direct employment funds, in order to try to alleviate the very serious unemployment problem we are facing. The hon. lady also knows that our competitors in other industrialized countries are experiencing a similar problem at the present time. As I indicated to her, let us pass the income tax amendments quickly, and that will ensure that Canadians receive $6 billion. That would be quite a significant stimulus to the economy in the next few months.


FINANCE
Thomas Gordon Towers: Madam Speaker, if the Minister of Finance is honest he will recognize the reason the consumer price index is lower than it has been for some time is simply because of the fact that it has been done on the backs of agricultural producers. At the present time grain is selling in Canada at a dollar a bushel less than the cost of production, and the loss in hothouse products is running at about $7,000 an acre. All of these losses could be alleviated if the federal Government would remove the federal excise tax. That is my question to the Minister. Will he take away that tax which is creating this loss to agricultural producers in Canada?


Marc Lalonde: Madam Speaker, I assume my hon. colleague is referring to the excise tax on
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March 18, 1983
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oil products. I can inform him that this tax is already refundable to farmers in Canada and has been for some years. Farmers across Canada have benefited from this provision for some time. I may say that farmers in the Prairie Provinces in particular have been benefiting very substantially. Earlier this week, I gave the House the figures for these refunds, according to province. I think that in Alberta, Saskatchewan and Manitoba, average refunds amounted to between three and four million dollars per year for the farmers concerned. Therefore, the excise tax is already refundable.


FERTILIZER TAX
Thomas Gordon Towers: Madam Speaker, the Minister of Finance is either misleading the House or does not understand the situation. Ninety dollars per ton on fertilizer, which is approximately one-third of the cost, is the result of the federal excise tax. If the Government would relieve the agricultural producers of that tax, then they could at least break even. At the present time they are losing money. What is the Minister of Finance going to do about it?


Marc Lalonde: Madam Speaker, it was interesting to hear the Progressive Conservatives who all want to cut taxes while at the same time complaining about the extent of the deficit. Not that I am very surprised at hearing Progressive Conservatives speak out of both sides of their mouths, but I do think they should co-ordinate their strategy in this respect.
The Hon. Member is aware that the Government levies taxes on all Canadians in order to finance Government programs that assist all Canadians. I think the Hon. Member is aware of the very substantial contributions made by the Canadian Government to agriculture, for the benefit of farmers in this country. If he looked at the figures, he would realize that the programs established by the Canadian Government have been very beneficial to farmers in this country, and I would ask him to look at the balance between the debit and credit side in this respect. He will see that the Government of Canada is giving very substantial assistance to farmers across Canada as it has done for years and will continue to do.


PETROLEUM COMPENSATION CHARGE
Mr. Geoff Scott (Hamilton-Wentworth):: Madam Speaker, my question is also directed to the Minister of Finance and refers to today's Statistics Canada figures. The good news is that the inflation rate is down. The bad news is that prices are up. A big component of that is Government administered prices, especially in the field of energy. Given that the gasoline price wars are over and that an increase in the price of oil coming through at the pumps on March 1 will probably show an even more significant month-to-month increase in the rise of inflation in March over February, can the Minister assure
us that he will remove the petroleum compensation charge and give consumers a break at the gas pumps?


Marc Lalonde: Madam Speaker, under the agreement that we have with the Government of Alberta, the petroleum compensation charge is the amount that is necessary to cover the price of our imports compared to the lower price that we charge Canadians for oil in this country. That amount is required in order to finance the lower price of oil that is charged to Canadians. Under the agreement with Alberta we are not supposed to run a surplus on that account. The tax will be only the amount that is required to pay for the difference between the Canadian price and the international price. That tax has been provided for under the agreement with Alberta. If for any reason that tax were to generate a surplus, obviously there would be a reduction in that amount.
As long as the Canadian price for oil is lower than the international price, obviously there will be the necessity to pay for that compensation, and the petroleum compensation charge is raised for that purpose. As well, it helps Canadians to buy that oil at a lower price than the international price.


THE ECONOMY
Geoffrey Douglas Scott: Madam Speaker, I have a supplementary question for the Prime Minister on the very important subject of inflation. Did the Prime Minister discuss the long-term outlook for inflation with the Premiers when he met them this week? Given that if there is a recovery coming, it is going to be slow and steady but it has to be consumer-led recovery and that as people begin to feel better about inflation they may feel so good about it that they may slip back into the inflation soup again, did the Prime Minister discuss with the Premiers the termination date for the six and five program, or a more long-term possibility of price restraint?


Right Hon. P. E. Trudeau (Prime Minister):: We discussed the subject, Madam Speaker, but from the point of view of the particular question the Hon. Member is asking there was no discussion of what happens after the six and five federally. I made it quite clear that our six and five had been applied, that the legislation had been passed, and that in fact we were down below six if we looked on an annualized basis at what happened since July 1 last year. We have been successful to that extent.
The concern we all expressed-I would think every Premier and myself-was that inflation could return if Canadians do not understand the danger of assuming that inflationary
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psychology is gone forever in Canada. It is not. In that context I reminded the Premiers that our settlements within federal areas of jurisdiction were down at 8 per cent for 1982, that the private sector settlements were at 10.2 per cent for 1982, that provincial sector settlements were at 11 point something per cent, and that the municipal sector was almost 13 per cent. In other words, the federal Government had contributed more to bringing inflation down than the Provinces, the private sector, or the municipalities. For that reason 1 made it quite clear that it was not up to us to try to look at any measure beyond the six and five; that it was up to them to try to apply the six and five in their areas of jurisdiction.


BANKS AND BANKING
Mr. Nelson A. Riis (Kamloops-Shuswap):: Madam Speaker, it is the time of year when Canadians have either filed their tax forms or are in the process of filling them out and questioning the whole matter of tax fairness. In response to the Hon. Member for Red Deer, the Minister of Finance said that all Canadians had taxes to pay. In the last few days we have just found out that the Royal Bank of Canada and the Bank of Montreal combined made profits in 1982 of $569 million and did not pay a single penny in income tax, yet obtained tax credits for this year to the tune of nearly $50 million.
If we consider that the big five paid an effective tax rate of 8 per cent, which is the same as a Canadian earning $7,500 per year, how long does the Minister of Finance plan to allow this unfair tax system to continue? Large profitable corporations do not pay a single cent in income tax, whereas Canadians on an individual basis, most of whom have their tax deducted at source, continue to pay obviously an unfair percentage.
[ Translation]


Marc Lalonde: Madam Speaker, I would like to point out to the Hon. Member that this is not a new issue. Actually, it is very easy to take a company's figures for one year and claim these are profits on which no tax has been paid. However, what we must realize is that alongside profits, there are also expenses which are deductible. For instance, investments have been made that are eligible for capital cost allowance and tax credits.
We are trying to create an environment in which the private sector will continue to invest and do so even more actively than it has in the past. These investments create jobs for Canadians, and if we want to succeed in bringing down inflation in this country, the private sector must be able to invest actively and thus stimulate the Canadian economy. In my view, the fact that there are profits is not in itself an indication that there is a kind of free-for-all going on in the private sector, within the Canadian economy. What we must realize is that these profits are being used for investments in Canada and for creating jobs.
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If my hon. colleague believes, according to the socialist gospel, that by eliminating profits we will stimulate the Canadian economy, I wish him good luck in the Opposition, because that is where he is going to stay as the third party for quite some time.


Nelson Andrew Riis: Madam Speaker, that is a terrible reaction, quite frankly, when we consider they are trying to argue that it is quite legitimate for the banks to pay no tax at all and, in other words, look at that sector for stimulus, while the average working Canadian who is expecting to consume these days is unable to do so. I think it was a very inappropriate response.


LOBBY AGAINST BILL C-653
Nelson Andrew Riis: The Minister will have noticed the hallways of Parliament are blue-grey now that the bankers' lobby has brought out its biggest guns in an effort to shoot down Bill C-653. I notice in this morning's The Globe and Mail that the banks have their agricultural lackeys, the Canadian Cattlemen's Association, on their side in terms of mobilizing opposition to Bill C-653.
Because of the incredible banking lobby which has been launched in the last two days, is the Government reconsidering pursuing Bill C-653 in its present form, or is the Government backing off because of this incredible lobby?


Marc Lalonde: Madam Speaker, I notice the main person who is dressed in blue and grey today is the Hon. Member.


Some Hon. Members:: Oh, oh!


Marc Lalonde: I can tell the Hon. Member that the Government has encouraged the passage of the Bill in question. It has had second reading and has been referred to a Committee. The Committee will of course, want to examine this Bill and reach its own conclusions. It is a Private Member's Bill, and I am happy to see that it is a Liberal Member who is sponsoring and pushing the Bill very aggressively. I congratulate the Hon. Member and Members of the Liberal caucus for their persistence in that regard.


Mr. Nielsen:: They were dragged, kicking and screaming.


BANK'S TREATMENT OF MANITOBA FAMILY FARM
Mr. Rod Murphy (Churchill):: Madam Speaker, my question also relates to the Royal Bank, and it is directed to the Prime Minister. Last October in his mini series on television, the Prime Minister asked the banks to reconsider their policy on foreclosure. To quote the Prime Minister, he said, "Take a chance on a Canadian." The Royal Bank must have taken the Prime Minister's advice to heart. The Royal Bank did not foreclose on the DeMings' family farm in Manitoba. The bank repossessed all their farm machinery. That did not work. The DeMings stayed on their farm. Last month the Royal Bank

March 18, 1983
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sent a letter to the DeMings asking them to transfer their farm voluntarily to the Royal Bank to avoid messy foreclosure proceedings. That did not work, the DeMings stayed. So this month the Royal Bank has foreclosed on the DeMings family.
Will the Prime Minister have his officials talk to officials at the Royal Bank and consider some of the many options the people in that area have suggested in order to keep those farmers in their homes?


Marc Lalonde: Madam Speaker, I shall certainly take note of the specific case mentioned by the Hon. Member and bring it to the attention of the Inspector General of Banks, who, I am sure, will want to pursue the matter with the bank in question. However, I may remind the Hon. Member that the Royal Bank has announced a program aimed at allowing farmers to remain on their farms even if they are unable to meet their payments. Furthermore, I would like to point out to the Hon. Member that spokesmen for the Canadian Federation of Agriculture have stated that the measure taken by the Royal Bank is a positive one in the present economic situation.


PRESENCE IN GALLERY OF DELEGATION FROM THE INU1T TAPIRISAT OF CANADA
Madam Speaker:: I would like to draw the attention of the House to the presence in our gallery of a delegation from the Inuit Tapirisat of Canada.


Some Hon. Members:: Hear, hear!


TRANSPORT
Mr. Doug Lewis (Simcoe North):: Madam Speaker, my question is for the Minister of Industry, Trade and Commerce. Last summer the trucking industry was led to believe, as a result of the Maislin bail-out, that other trucking firms could apply for special assistance and receive that special assistance from the federal Government. Have any requests been granted? When will the Minister's office deal with the large number of requests from the trucking industry that we understand are in his office, and so end the uncertainty within the industry respecting further loans and assistance?


Hon. Ed Lumley (Minister of Industry, Trade and Commerce and Minister of Regional Economic Expansion):: Madam Speaker, the Hon. Member asked a similar question yesterday.


Douglas Grinslade Lewis: No, I didn't.


Edward C. Lumley: My predecessor, after he announced assistance to the Maislin Corporation, indicated that we would take a very serious look at expanding the guidelines to include other industries in the service sector. While officials were looking at these possible changes, the Department was inundated with applications from the manufacturing and processing sector. As funds were limited at that time we made the decision not to proceed with service sector applications. Consequently, we are not looking at other applications of a similar nature.


An Hon. Member:: This is really unreal.


Douglas Grinslade Lewis: Madam Speaker, I did not ask any questions yesterday about criteria. Yesterday, the Minister made accounting history with his terminology of shareholders assistance.


MAISLIN INDUSTRIES-DELAY IN APPOINTMENT OF GOVERNMENT-NOMINATED DIRECTOR
Douglas Grinslade Lewis: Madam Speaker, I have a further question for the Minister of Industry, Trade and Commerce. Yesterday he told the House the only condition of the loan agreement with Maislin that had not been met was for the federal Government to appoint a director, a watchdog for taxpayers. Can the Minister explain to the House why, in view of the $34 million exposure Canadian taxpayers have, it has taken the Government over seven months to appoint this particular individual? Will it perhaps be a short-term appointment?


Edward C. Lumley: Madam Speaker, as the Hon. Member knows, being a chartered accountant, when a director sits on a board, that director under the Corporations Act is responsible to the shareholders of the company, of which we are only one, through Government guarantees. We have made attempts to find somebody knowledgeable in the transportation sector who obviously would have no potential conflict, and to this point in time we have not been able to find a suitable candidate.


Some Hon. Members:: Oh, oh!


QUERY RESPECTING NUMBER OF TRUCKING FIRMS RECEIVING ASSISTANCE
Hon. Bill Jarvis (Perth):: Madam Speaker, may I direct a question to the Minister of Industry, Trade and Commerce? Are we to assume, therefore, that the only Canadian trucking company to be the beneficiary of government largesse is Maislin? Despite the fact that many other trucking companies, based on the suggestion by the minister's predecessor, have applied and would qualify under a particular program and its guidelines, are we now to assume that the only trucking company in Canada to benefit under this bail-out will be Maislin Trucking?


Mr. Baker (Nepean-Carleton):: What a beautiful friendship.
March 18, 1983


Edward C. Lumley: I want to remind hon. colleagues that one of the reasons we had many trucking companies applying for assistance was as a result of action taken by the U.S. Government with respect to permits for the U.S. market. As a result of the very competent work accomplished by my colleague, the Minister of State for International Trade, in negotiations with the U.S. Trade Secretary, that problem was rectified during the sixty-day limit, and consequently many of the trucking companies did not need the assistance.


Some Hon. Members:: Oh, oh!


Mr. Nowlan:: You are off your tree. That has nothing to do with the question.


Madam Speaker:: The Hon. Member for Perth. Does he have one supplementary or two?


William Herbert Jarvis: One, Madam Speaker.


Madam Speaker:: I just want to remind Hon. Members that when they are recognized, because they rise rapidly and say they have a question supplementary to whatever is going on, they need not expect to ask two.


Some Hon. Members:: Why not?


William Herbert Jarvis: I will take three or four supplementary questions if you are in the mood, Madam Speaker.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


ENTERPRISE DEVELOPMENT PROGRAM-ELIGIBILITY OF TRUCKING COMPANIES
William Herbert Jarvis: Madam Speaker, again I direct my question to the Minister of Industry, Trade and Commerce. The promise to the trucking industry was on the basis of a question put by the Minister's colleague, the Hon. Member for Northumberland-Miramichi, at which time the Minister's predecessor said he was looking at the Enterprise Development Program for other truckers. I want to be very clear about this. Do any truckers in Canada, except Maislin, qualify under the Enterprise Development Program or any other program for government largesse, or has Maislin got an exclusive monopoly on these bail-out funds?


Edward C. Lumley: Madam Speaker, as I indicated, the Enterprise Development Program at the present time, as well as six months ago, only applies to the manufacturing and processing sectors. Those guidelines have not changed.
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UNEMPLOYMENT INSURANCE
Mr. Mark Rose (Mission-Port Moody):: Madam Speaker, my question is for the Minister of Employment and Immigration. On January 1, 1983, we finally got the discriminatory section of the UI regulations removed from the Unemployment Insurance Act. We on this side of the House applaud this move because there are over 100,000 seasonal farm workers in Canada, many of whom are immigrants and do not speak English very well. They do back-breaking, arduous, seasonal, and sometimes extremely dangerous work. I think it was an injustice that Section 16 was there in the first place which either denied these people access to unemployment insurance benefits or forced them, often against their will, into the arms of labour contractors.
Because of some farm lobby, we hear that the Minister is drafting a new set of regulations. We are concerned about this. Will the Minister acknowledge that this is a serious matter by guaranteeing to this House that there will be no change in the current regulations, which are fair to everyone, including seasonal workers, until at least representatives of those farm workers have met with the Minister?


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, I am very pleased that the NDP caucus has now recognized the problems facing the agricultural workers that this Government recognized almost a year ago when it changed the regulations.
I do want to give the assurance to the Hon. Member that what we are concerned about in discussing amendments is the paperwork and administration that have been encountered as a result of the change of those regulations, and that all we are simply doing is having discussions and negotiations that would allow us to reduce any extra paperwork that would be required. The basic intent, purpose, and objective of limiting Section 16 will be maintained.


Mark Willson Rose: I put that question forward in all seriousness. I resent a sleezebag reply like that.


REQUEST THAT REGULATIONS NOT BE CHANGED WITHOUT CONSULTATION
Mark Willson Rose: Madam Speaker, when I raised this issue in the House a year ago, the Minister did not even know what we were talking about. Then he gets up and makes a political type of crass remark like that. I want him to assure the House that he will not make any move whatsoever without first coming back to the House to discuss it, and to discuss it with those people who are affected as well. What we now hear will happen is that he will put the same kind of regulations on the backs of these people and take away their rights and opportunity for a decent kind of unemployment insurance protection, and put them in the same category as circus workers.

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Lloyd Axworthy: Madam Speaker, the Hon. Member should not be quite so defensive about his position.


Neil Young: Answer the question.


Lloyd Axworthy: There were a number of representations made by many people, particularly Members of this caucus, concerning the plight of agricultural workers. It was this Government that made the change to extend the privileges of full coverage of unemployment insurance to that group.
I would remind the Members of the New Democratic Party who are bellowing in the corner that we were the ones who made the decision to make the change in the first place, and the kind of commitment which we made will be maintained.
We also believe that we have a responsibility to ensure that it works with some efficiency and with some productive ability of the farmers to administer the program. Those are the kinds of discussions that we are providing for all groups because we do have discussions before decisions.


LABOUR RELATIONS
John Patrick (Pat) Nowlan: Madam Speaker, my question is directed to the Minister of Labour. It concerns the unfortunate work stoppage and strike between EPA and its pilots which is affecting all of Atlantic Canada and other parts of the country.
Does the Minister appreciate that in yesterday's appointment of a mediator he is appointing a mediator who, in effect, acted for CALPA in the last strike situation against EPA in 1980? Does he consider that this practice of appointing a mediator who represented one of the parties in the previous labour problem will ensure the necessary good faith of the parties to settle this matter now, and which should be settled now?


Hon.   Chas. L. Caccia@Minister of Labour: Madam Speaker, the Hon. Member is referring to a mediator who was appointed by Labour Canada a week ago. He is the Chairman of the Newfoundland Labour Relations Board. He is a highly respected mediator who is knowledgeable in labour matters.
He has indicated to me in a cable that the participation in the previous labour matter was that of a member of his law firm. The credentials of Mr. Easton are the highest and are respected by the employers in the Newfoundland community. He had a preliminary meeting yesterday with both parties. We hope that he will be able to conclude his assignment successfully.


John Patrick (Pat) Nowlan: I am not casting any aspersions upon the integrity, character, or competency of the gentleman in question, Mr. Easton.


POSSIBLE REACTION OF COMPANY
John Patrick (Pat) Nowlan: Madam Speaker, my question concerned the principle of having a person appointed, no matter how competent, whose law firm as well as himself acted for CALPA, the pilots, against the very company in question today during the last labour problem in 1980.
Does the Minister really expect, while the recognition of his competence by the employees is obvious, that the employers will be able to come to that mediation with the necessary good faith that is fundamental to resolving this issue?


Hon.   Chas. L. Caccia@Minister of Labour: Madam Speaker, the Hon. Member is referring to the firm to which the mediator belongs. He is not referring to the mediator himself. As I said, the mediator himself has the highest credentials in labour relations in the industrial community. I would urge the Hon. Member to give Mr. Easton a chance to conclude his assignment.


THE ADMINISTRATION
Mr. Howard Crosby (Halifax West):: Madam Speaker, my question is for the Prime Minister. It concerns the status of the conflict of interest guidelines which he established in 1980. The Prime Minister admitted that he has some concern about the effectiveness of the existing guidelines, and his Deputy Prime Minister said that the prohibitions are not enforceable. His Deputy also said that the final sanction rests with the Prime Minister.
Can the Prime Minister tell us in clear terms what sanctions he would impose upon a Cabinet colleague or Government official who violated a prohibition under the current guidelines? I remind him that he created these guidelines and that surely he has some obligation to explain them to us and the Canadian public.


Pierre Elliott Trudeau: Madam Speaker, it is the privilege of the Prime Minister to give certain guidelines to his Ministers. He is the one who can decide what sanctions to take when those guidelines are not implemented. It can be done in various ways in discussions with the Ministers.
As far as former Ministers are concerned, they are, of course, not within the reach of the Prime Minister. I doubt, if he attempted to reach them, whether he would be allowed to do so within the Canadian Bill of Rights.


ROLE OF FORMER OFFICIAL IN IMMIGRATION CASE
Howard Edward Crosby: Madam Speaker, let me put a case to the Prime Minister. Under the existing guidelines a Cabinet Minister must avoid any suspicion of
March 18, 1983

improper influence, privileged access or preferential treatment respecting former public officials.
The Toronto Globe and Mail reported that James Coutts, who held the important office of Principal Secretary to the Prime Minister, regularly calls Cabinet Ministers, and received help from the Minister of Employment and Immigration in a specific immigration case. Surely the Prime Minister has seen this report and recognizes that it is a clear violation of several provisions of the conflict of interest guidelines. What does the Prime Minister intend to do? He knows that there is no court of public opinion to which he can refer Mr. Coutts and his Minister.


Pierre Elliott Trudeau: Madam Speaker, I would think that it is the duty of the Minister of Employment and Immigration to assist on any immigration case, no matter who refers the case to him. I would think that a referral from a former Minister or former adviser is just as valid as a referral from a member of the Opposition.


NUCLEAR ARMAMENTS
Hon. Allan B. McKinnon (Victoria):: Madam Speaker, my question is directed to the Minister of Justice. Last month, when the Minister was absent, there was considerable debate in the House on whether he had misled the House and committee concerning an agreement to test the Cruise missile. He had said on April 29, 1982, that the request "has been accepted by the Canadian Cabinet." The current Secretary of State for External Affairs denied this on February 14, this year. As reported at page 22852 of Hansard on February 15, the Prime Minister said, in answer to a question from the Member for New Westminster-Coquitlam:
If she believes MacGuigan, we will wait until he enters the House and the Hon. Member can ask him her question.
The Hon. Minister is now in the House. Did he or did he not mislead the House on this matter on April 29, 1982?


Hon. Mark MacGuigan (Minister of Justice):: Madam Speaker, due to the restrictions about answering questions related to my former portfolio, I think I should answer that question in this fashion: in my previous portfolio and in this one, I have always openly and forthrightly stated the policies of the Government exactly as I understood them. On one or two occasions when I found that I made an erroneous statement about government action or policy, as in one exchange with the Leader of the Opposition, I came into the House at the first opportunity to correct that.


Mr. Beatty:: Translation please.
Oral Questions


STATEMENTS ON CABINET DECISION
Allan Bruce McKinnon: Madam Speaker, I would like to quote the Prime Minister when he was speaking on this matter. He said, as reported at page 22890 of Hansard:
In that sense whether the former Secretary of State for External Affairs used exactly the right words or not, I am not prepared to say. I am anxious to hear his own explanation.
Having heard it, we are just as much in the dark as ever. Therefore my supplementary question is to the Prime Minister. On February 15 he said, as reported at page 22851 of Hansard:
There has been no agreement to test the Cruise.
The Minister of Justice said on April 29, 1982, and I quote:
-President Carter requested ... that we allow ... the Cruise missile system, to be tested in Canada. It is the Carter request, which ... has been accepted by the Canadian cabinet.
I wonder if the Prime Minister would tell us which of these contradictory statements we should believe?


Pierre Elliott Trudeau: Madam Speaker, things developed as I had said in the House. When the Minister returned I asked him about the quotes which had been put to me by a Member of one of the Opposition Parties. He referred me to the pages in Hansard where this matter was discussed by him. The Hon. Member will recall I had to deal with quotations just given verbally, in the same way as one has been given just now by the Hon. Member opposite. Therefore I was answering on the basis of these selective quotes, but having read the whole statement I am satisfied that the Minister was stating government policy and that government policy had been to consider testing the Cruise but that the actual decisions as they were eventually recorded in cabinet were to authorize the negotiation of an umbrella agreement under which the Cruise could or could not be tested, but that would be the subject of a different decision at a different time. I am satisfied, if the Hon. Member reads the entire statement of the Minister, that that is what he was saying.


EXPORT RESTRICTIONS ON BRANCH PLANTS-REQUEST FOR RELEASE OF DOCUMENTS
Mr. Lome Nystrom (Yorkton-Melville):: Madam Speaker, my question is directed to the Minister of International Trade. Last week I asked questions in the House about export restrictions on foreign-owned branch plants in Canada, and the Minister said he would be very happy to investigate some specific examples. Since then we have placed some classified ads and done some research, and this morning I have with me a licence agreement between a head office in the United States and a Canadian plant that was signed in the middle of 1982. In

March 18, 1983
Oral Questions
Section 3 of this particular agreement it says, and I paraphrase, that plant cannot export without the specific consent in writing of the parent company.
In light of that, and in light of the request I also made last week, that the Minister make public several documents that talk about limitations on branch plants in Canada, I wonder if he can explain to the House why he is stonewalling in releasing those documents? Why will he not release those documents to me? What is the Government trying to hide? It released some of those documents to a professor, but it will not release them to the House of Commons. Why?


Hon. Gerald Regan (Minister of State (International Trade)):: Madam Speaker, I thank the Hon. Member for Yorkton-Melville for a question on an important subject. I want to tell him that I do not intend to stonewall him; that is not my style. I intend to release those 20 year old documents to the Hon. Member. They were not released to a professor. A professor was given the opportunity to study them where they were but not to take them away, but I will release them to the Hon. Member and to anyone else who wants them.
I want to say that those studies showed that in the sixties there were practices by some American subsidiaries of not allowing exports from their branch plants in Canada.
While it is hard to tie down cause and effect, I suggest to the Hon. Member that those studies undertaken by the Government of that day may well have contributed very substantially to the development of FIRA. The Hon. Member will be aware that one of the criteria that FIRA looks at in allowing American investment in this country is the willingness of the new undertaking to participate fully in export markets. It also led to the establishment of such things as PEMD and the development of the Export Development Corporation and other facilities that have made Canada in the intervening years one of the great exporting countries of the world.


Some Hon. Members:: Hear, hear!


ROLE OF UNITED STATES GOVERNMENT IN PROHIBITING EXPORTS
Lorne Edmund Nystrom: Madam Speaker, the Minister asked for examples. I have an example here of a licence agreement in 1982. I realize we are not the MacDonald Commission and we cannot pay our researchers $800 a day, but we do have examples that we are going to give to the Minister right after Question Period.
In this particular case there is a clause on the restriction of trade that says shipments may be prohibited by the United States Government. It says it is understood that the head office power to give consent to such sales is limited by the United States Government and in some cases the head office will be forbidden to give such consent. This is a 1982 agreement between a head office in the United States and a Canadian firm.
Madam Speaker, I thought this was a sovereign nation, a sovereign country. Would the Minister not agree that this is an attack on sovereignty and on our nationhood? Can he explain, if in 1980 the Government across the way campaigned to strengthen FIRA to prevent this type of situation, and it was good enough in 1980, why is it not good enough in 1983?


Some Hon. Members:: Hear, hear!
Hon. Gerald Regan (Minister of State (International
Trade)): Madam Speaker, I will not reach conclusions on something that is quoted possibly out of context by the Hon. Member. I think he is contributing in a very solid and constructive way to the parliamentary process by bringing this information to my attention. I want to assure him that any examples he gives us, during or after the Question Period, I will investigate most thoroughly.


ECONOMIC SUMMIT
Erik Nielsen: Madam Speaker, I have a question for the Prime Minister, if he has completed obtaining explanations from his Minister of Justice.
Is there to be a follow up of the Montebello Summit and, if so, when, where, and will the same Heads of State be participating as participated at Montebello?


Pierre Elliott Trudeau: Yes, Madam Speaker. There was a follow up, as the Hon. Member knows, in Versailles last June, and there will be a second follow up which will take place in Williamsburg in the last days of May. I think it is May 28 and May 29, but I would have to check the exact dates. I believe it is the last weekend in May of this year.


Erik Nielsen: Heads of State?


Pierre Elliott Trudeau: Heads of State and a few Heads of Government.


Erik Nielsen: The Prime Minister might make it to the end
of May.


FORMULATION OF AGENDA
Erik Nielsen: Madam Speaker, may I ask the Prime Minister whether the views of Secretary Shultz, as I understand them, will be carried out and that the personal viewpoints of the Heads of State who will be attending will be requested for the purposes of framing an agenda? If that is the case, no doubt Canada is in the process of preparing such an agenda. Is it the intention of the Prime Minister to request the views of the Opposition here with respect to matters to be included on that agenda?


Pierre Elliott Trudeau: Madam Speaker, the dates of the Summit were of course set before the dates of the Tory Convention, but I understand that there was
March 18, 1983

some relief when the other members of the Summit realized that I would certainly be here until the beginning of June.
As to the more serious part of the question, the agendas are being discussed these very days by the personal representatives of the various summiteers who have been meeting in San Diego, after having met in various-


Henry Perrin Beatty: That is similar to Mouseketeers.


Pierre Elliott Trudeau: -the Musketeers? Well, if we want to get knowledgable about it, those representatives are called sher-pas, a sherpa being a person who leads a person to the summit.


Some Hon. Members:: Hear, hear!


Pierre Elliott Trudeau: That is much more appropriate than Musketeer, or summiteer or whatever.
The agenda is being prepared. It is not in the hands of any one country, but naturally the host country is the decisive element in it. I would be happy to transfer to my sherpa for their next meeting any suggestions made by the Hon. Leader of the Opposition or members of his Party for adding to or subtracting from the agenda.


LOW PRICE OF IMPORTED VEGETABLES
Mr. Benno Friesen (Surrey-White Rock-North Delta):: Madam Speaker, my question is directed to the Minister of Finance. Yesterday the potato growers in the Fraser Valley dropped the price of potatoes by $40 a ton to meet Washington competition. Three hours later the United States dropped their price by $5 or maybe $10 a ton. The price of B.C. onions has been dropped by $5 a hundredweight and they are selling below the cost of production.
It may be that the cost of living has gone down, but, if it has, it has gone down because the U.S. product can be dumped on the Canadian market below the cost of Canadian production.
The Minister refuses to put on a surtax in order to protect the Canadian farmer. Is it his intention that the Canadian farmer go out of business and that the Canadian consumer be abandoned to the corporate interests of the United States?


Hon. Paul J. Cosgrove (Minister of State (Finance)):: Madam Speaker, of course that is not the intention of the Government. The intention of the Government is to provide whatever assistance the Minister of Agriculture, for example, thinks is appropriate to help that sector of the agricultural economy.
Second, in looking at that problem and that particular area of the agriculture sector and the relationship with the producers on both sides of the Canada-United States border, the Government of Canada wants to ensure that the relationship is
Business of the House
one that is conducted in accordance with international conventions and rules. There is a remedy for any complaints that the producers may have. There is a procedure and an investigation which can be followed under the due process under those conventions.
We would be happy to have representations. We would follow the normal course in seeing whether any undue advantage was taken by the procedures in the United States.

[ Translation]


PETITIONS
Madam Speaker:: I have the honour to inform the House that the petitions presented by Hon. Members on Thursday, March 17, 1983, meet the requirements of the Standing Orders as to form.


BUSINESS OF THE HOUSE
Mr. Deans:: Madam Speaker, I have a question for the Government House Leader. On Wednesday last the House agreed to pass Bill C-653 and send it to the Standing Committee on Agriculture. It has become apparent, at least to me, that there are some problems in getting that Bill through. The Steering Committee of the Agriculture Committee has not yet met and will not meet until Tuesday next. The Bill is required to be dealt with in all stages here, go through the Senate and receive Royal Assent before we leave if we are to fulfil the obligation we have made to the farming community. Could the Government House Leader and the House Leader of the Official Opposition make it clear that it is the wish of the House of Commons that Bill C-653 be dealt with expeditiously, reported back as quickly as possible, at the very least in time for it to be dealt with here and to go through the various other stages necessary to make it law?


Mr. Pinard:: Madam Speaker, we have agreed to send the Bill to Committee. It is the intention of the Government to see that this Bill is proceeded with expeditiously, but we do not want to meddle with the business of the Committee. The committees are master of their own procedure.


Some Hon. Members:: Oh, oh!


Yvon Pinard: I understand there are some Tory Members on the Committee. The minute the Bill is reported by the Committee, I can assure the Hon. Member that it will be considered very seriously. Yes, we want this Bill to be considered very seriously, efficiently and as early as possible.

March 18, 1983
Business of the House


Ian Deans: Madam Speaker, there are two additional matters I would raise. If it is apparent that the Committee to which the Bill is referred is not prepared to deal with it in time to allow it to pass through the House, the Senate and receive Royal Assent before we leave a week from next Wednesday, will the Government House Leader ask that that Bill be brought back and referred to another committee that has the time and the will to deal with it properly?


Yvon Pinard: Madam Speaker, as I have just indicated, we have never meddled with committee business. We do not intend to start now.


Walter David Baker: Madam Speaker, the President of the Treasury Board is in the House. As he knows, this House and the other place have approved Bill C-43 respecting freedom of information and privacy. He has indicated to the House that he intended to proclaim the Bill on April 1, 1983. This does bear on business because, as the hon. gentleman knows, this House will have to take a step in terms of the appointment of commissioners. I would ask the hon. gentleman if it is the intention of the Government still to proclaim that Bill on April 1.


Yvon Pinard: Madam Speaker, I discussed this with the Minister of Justice (Mr. MacGuigan), and I believe it would be preferable to appoint the Information Commissioner before royal assent is given. I also discussed the appointments, and the parties indicated that substantially, they agreed with the proposals but would still like to make representations and comment on this subject. Therefore, I would like to give the House the assurance that we shall proceed with the joint resolutions as our last item before the session is prorogued. As soon as the appointments are made, I believe the Minister of Justice (Mr. MacGuigan) would prefer to delay royal assent for thirty days until the Information Commissioner has had a chance to become acquainted with his new duties before he is to implement the legislation in question. The situation is therefore that first of all, we must appoint an Information Commissioner. When? At the end of this session. Second, when will this session end? The answer is up to the Opposition. Third, when will the legislation take effect? As things stand now, it will probably be thirty days after the appointments are made.


Walter David Baker: Madam Speaker, I guess that the decision as to when the session ends is in the hands of all of us, including the Government House Leader.
I have another question that relates to the Business of the House. One of the issues is the fees to be charged on applications, for duplication, for searches and all other things that are necessary with respect to the matter. Between now and the time when that Act is proclaimed into force, is it the intention of the Government to table in the House of Commons a statement, by Order in Council or otherwise, of fees that will
apply in each particular case? Are we now at that stage? Also, will there be standard fees throughout the Government, or will those fees vary from Department to Department?


Mr. Gray:: Madam Speaker, we are now working on the very issue that the Hon. Member has raised. We have not completed our consideration of it. I have been working with a view to being ready to proclaim the Act on April 1, but for the reasons the President of the Privy Council (Mr. Pinard) mentioned, it now seems sensible to wait for 30 days after the two commissioners are appointed. I will strive to get a decision on the schedule of fees so that I can make the information available before or at the time the Act is proclaimed.


Walter David Baker: Thank you.


Ian Deans: Madam Speaker, I have one final point with regard to Bill C-653. I do not know whether I am misreading or misunderstanding what the mood is, but I believe I heard the Government House Leader say it is the hope of the Government that we will have dealt with the Bill in all stages and it will become law prior to a week this coming Wednesday. In the interest of having this matter dealt with as expeditiously as possible, will the Opposition House Leader tell us what his Party's view is, since I get the sense that there may be some problems?


Douglas Grinslade Lewis: Madam Speaker, I am perfectly free to meet with the NDP House Leader and the Government House Leader at any time to discuss this matter, but I do not think we should do it on the floor of the House.


POINT OF ORDER
Mr. Harvie Andre (Calgary Centre):: Madam Speaker, I rise on a point of order that is becoming kind of habitual. It has to do with the Estimates and whether in fact the Estimates are in order. As you are well aware, Madam Speaker, the issue of Estimates and the Appropriation Act flowing from the Estimates has been the subject of many points of order going back to 1971, I guess initiated as a result of the rule changes in 1969. 1 will not go over all the arguments. However, I want to quote from Your Honour's decision of June 12, 1981 wherein you quoted Mr. Speaker Jerome of March 1977 when he said:
The Government receives from Parliament the authority to act through the passage of legislation and receives the money to finance such authorized action through the passage by Parliament of an Appropriation Act. A supply item in my opinion ought not, therefore, to be used to obtain authority which is the proper subject of legislation-
Madam Speaker then went on to say:
In other words, the Government may not by the use of an Appropriation Act obtain authority that it does not have under existing legislation.
That is very clear, very precise. The Government is not to seek authority under an Appropriation Act which it does not have under existing legislation. In view of that very clear
March 18, 1983

ruling by Madam Speaker on June 12, 1981, I would refer the Chair to Vote LI lc under the Fisheries and Oceans in Supplementary Estimates (C), fiscal year ending March 31, 1983. That Vote states:
Vote Lllc-To extend the purposes of Environment Vote L30b, Appropriation Act No. 1, 1974-To increase the aggregate outstanding at any time of the amounts which may be borrowed from any bank upon the credit of the Freshwater Fish Marketing Corporation and the amounts loaned by the Minister of Finance under the authority of section 17 of the Freshwater Fish Marketing Act from $20,000,000 to $30,000,000
The Supplementary Estimate on that is for $1. Section 17(2) of the Freshwater Fish Marketing Act states this:
The aggregate outstanding at any time of
(a)	the amounts borrowed by the Corporation pursuant to paragraph 7(g), and
(b)	the amounts loaned by the Minister of Finance under this section, shall not exceed five million dollars.
The legislation, therefore, the Act as passed by this Parliament in 1968-69, states that the amount outstanding shall never exceed $5 million. Vote Lllc of Fisheries and Oceans seeks to raise that limit to $30 million. Now, granted, the limit had been raised from $5 million previously by other Appropriation Acts illegally and improperly, the last time being 1974, which was a period prior to the Speaker having made very clear, unequivocal decisions that this type of procedure of amending legislation through Appropriation Acts must stop. There must not be any attempts to amend legislation by Appropriation Acts, and this is clearly what this Vote attempts to do. This one dollar item attempts to amend the Freshwater Fish Marketing Act to raise the loan limit to $30 million. 1 submit, Mr. Speaker, that, in view of Madam Speaker's ruling of June 12, 1981, Mr. Speaker Jerome's rulings of March, 1977 and of December, 1977, it is abundantly clear that this Vote is out of order. It is simply out of order. It is not permissible to attempt to amend the legislation, the Freshwater Fish Marketing Act, by an Appropriation Act.
The second Vote, Mr. Speaker, which is out of order, in my view, and I believe it is pretty clear once it is explained, is Vote 10c of Industry, Trade and Commerce. That Vote is also for $1. It reads as follows:
Trade-Industrial-The grant listed in the Estimates and contributions-
The description of that grant is under the sub-title "Industry Development". It reads:
Payments under the Small Business Investment Grants Act (Funds were provided from the Treasury Board Contingencies Vote to pay for this ''em)	1,000,000
In other words, Mr. Speaker, what has happened is that a grant of $1 million has been paid out of a contingency fund, and here is a Supplementary Estimate for $1 to authorize spending retroactively. The House is again put in this insulting position of being asked to rubber-stamp retroactively money which has already been spent. But the real issue, Mr. Speaker, is that that grant was granted, as the Estimates say, under the Small Business Investment Grants Act, and that Act has never been passed by this Parliament. It is in the Order Paper as Government Order No. 136, which reads as follows:
Point of Order-Mr. Andre
November 23, 1982-Consideration of report stage of Bill C-136, Small Business Investment Grants Act, as reported (without amendment) from the Standing Committee on Finance, Trade and Economic Affairs.
It is at report stage. It has never been passed by this House, by the Senate, nor has it received Royal Assent. Therefore, we have this absolutely immoral, disgusting situation where a Bill which has not been passed by the House has been used for justification to dip into contingency funds to make a grant which the Government is now coming forward to ask the authority of this House to legalize, based on legislation which has not yet been passed by the House. Talk about putting things backwards! First the Government spends the money, then it asks for authority of Parliament to spend the money, and then it passes the legislation legalizing the program upon which it spent the money. Any six-year old grade one student knows that if you are being proper and decent, you do it the other way around. You pass the law, then you requisition the money, and then you spend it. You do not spend the money, then requisition it, then pass the legislation to make the program legal.
I humbly submit, Mr. Speaker, that this should be tossed out immediately, the persons who put it in should be chastised by this House for insulting us in that fashion, and the officials who put it in should be fired.


Herbert Eser (Herb) Gray: Mr. Speaker, about halfway through the Question Period, my hon. friend sent me a note informing me that he was going to raise these points, and I thank him for doing so. I endeavoured to get some detailed explanation about these points and while I have some information, it is not in the detail which I had with me when I appeared before the Committee on Miscellaneous Estimates, expecting, perhaps, that the question of the $1 Votes would be raised. However, I will attempt to assist the House and the Chair by making some comments aimed at reassuring my hon. friend and the Chair that these items are consistent with the rulings of successive Speakers.
First of all, with respect to the item listed as Vote LI lc on page 66 of the final Supplementary Estimates (C) with respect to the borrowing authority of the Freshwater Fish Marketing Corporation, I am informed that what we are talking about here does not involve a request to Parliament to spend moneys. It is not a budgetary item which will have to be voted on specifically by the House because it requires the expenditure of money, and in fact it involves the amendment of a previous Appropriation Act. I am informed that there are many precedents setting out the acceptability of the procedure with respect to Vote Lllc, involving as it does not a request to authorize the Government to spend money, but simply to increase the level of borrowing authority. My hon. friend has already pointed out that Parliament has previously voted to increase the borrowing authority of the Freshwater Fish Marketing Corporation from the ceiling, I believe he said on a previous occasion, of $5 million, to $20 million, and now Parliament is simply being asked to follow the same procedure which, I submit, has been found acceptable by Speakers in the

March 18, 1983
Point of Order-Mr. Andre
past, to extend the borrowing authority to a ceiling of $30 million.
With respect to my hon. friend's second point, the request to Parliament that it adopt Vote 10c, a one dollar item to authorize payments of $1 million for the purpose of the Small Business Investment Grants Program, I am advised that this is simply a transfer of funds from one category to another. Here also the House is not being asked to authorize an additional expenditure of funds, but simply, as I have said, the transfer of funds from one Vote to another. This is the accepted procedure for doing so, a procedure which has been accepted by Speakers in the past.
My hon. friend expresses some concern that the Small Business Investment Grants Act has not yet been passed by the House, but 1 would remind him that the proposal was contained either in the economic statement of last October, or- and I think this is the correct place-it was found in the budget of last June. Certainly the House has conveyed its approval in principle at the very least of the program when it voted an expression of support for the budget last June. Also, I would like to think that my hon. friend and his colleagues support the early and prompt expenditure of funds aimed at reducing interest costs for small business in their purchase of depreciable property to expand and modernize. I would like to think that he is simply raising a technical point-and I appreciate the seriousness with which he does so-and is not opposing this very worthy program.
We all know that the disposition of business in this House does not always proceed with the timeliness that many of us would like. There are others on our side of the House who have commented on the pace of disposition of House business and expressed their view as to the reasons for that pace. We have argued that the Opposition bears some responsibility for this. While I do not think we want to reopen that debate at this point, I do not think it is unusual for Supplementary Estimates to be presented for Parliament's approval of something which is already under way.
So I would like to conclude by again thanking my hon. friend for giving me some notice of this point of order. It is a serious one which has been raised in similar circumstances in the past. I do not claim a deep expertise in these matters, although obviously I am attempting to learn as quickly as possible. But I have provided the House the explanation I was able to obtain in the short period after the Hon. Member gave me notice. I would like to think that this explanation will reassure the House and above all the Chair that these items are perfectly consistent with the rulings of the Chair on previous occasions.


Harvie Andre: Mr. Speaker, first let me say to the Hon. Minister that the reason I gave only a half hour notice is that I
did not know until early this morning that in fact this would be the only day I would have the opportunity to raise this matter.


Herbert Eser (Herb) Gray: I am not complaining.


Harvie Andre: No, I recognize you were not. Normally I would have given more notice.
The Minister indicated, concerning the Vote in Industry, Trade and Commerce, that the one dollar item merely represented a transfer between spending under one category to spending under another category. I humbly submit that that in fact is not true. What has happened is that money has been spent out of a contingency fund based on legislation which has not in fact been passed by the House. I do not even know if the legislation was introduced when the money was spent.
So you have a situation where we are being asked to legalize expenditures under an Act which has not been passed by the House. This is clearly in contravention of decisions reached by Madam Speaker and her predecessor, Mr. Speaker Jerome, and indeed by Mr. Speaker Lamoureux who said that supply items are to seek appropriations to spend on programs authorized by Parliament. They have to be authorized by Parliament. The fact they have had second reading is immaterial. They are not law. There is no law for that program, and therefore the Government has no right to ask us for authority to spend on a program which is not law.
As to the question of whether it ought to be law, there has never been any question on that on our side. The legislation proceeded very quickly through all processes and was stopped on November 23, 1982, and the Government House Leader has to deal with that.
With respect to Vote LI 1C, under Fisheries and Oceans, the Minister indicated that it was merely the changing of an Appropriation Act which had been done in the past and therefore it is okay. I might say that Madam Speaker, on June 12, 1981, perhaps anticipated that kind of argument when she stated this:
Finally, it seems clear that it is in order to extend the purposes of an item in an Appropriation Act by means of an item in the Estimates-
That was the Minister's argument. She then said:
-provided that it does not amend any other legislation.
Clearly Vote LI 1C, under Fisheries and Oceans, amends the Freshwater Fish Marketing Act, Section 17(2). So in that instance the Minister's argument that it is merely changing an Appropriation Act has been anticipated by Madam Speaker's ruling of June 12, 1981, and I humbly submit that both Votes must be found out of order.


The Acting Speaker (Mr. Corbin):: The Chair thanks Hon. Members for their contributions to the point of order. The matter will be taken under advisement and Madam Speaker will certainly want to rule on it at the next sitting of the House.
March 18, 1983



ROUTINE PROCEEDINGS


[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mir. Jim Schroder (Parliamentary Secretary to Minister of National Health and Welfare): Mr. Speaker, the following questions will be answered today: No. 4,168.
Mr. MacKay: 1.	In the past 30 years, how many times was the Security Service of the RCMP penetrated by foreign powers, as mentioned in the August, 1981 McDonald Report, 2-2, p. 714 and, in each case (a) what was the (i) name of the foreign power (ii) date of apprehension (iii) rank of the RCMP officer or the classification of the RCMP civilian employee (b) what action was taken against employees of the RCMP who became agents of foreign powers?
2.	Since World War II, how many persons were charged with espionage offences under the Official Secrets Act, as referred to in the October, 1979 McDonald Report, 1, p. 4 seq. and in the August, 1981 McDonald Report, 2-1, p. 65 and, in each case (a) on what date were the charges laid (b) what were the names of the persons charged (c) what was the disposition of the case?
3.	Were any studies commissioned by the Planning and Transitional Group concerning Canada's Security Service, established in August, 1981 and, if so, in each case (a) what were the terms of reference (b) who were the contractual parties (c) what was the amount of money involved (d) what was the deadline for completion of the study?


Mr. David Smith (Parliamentary Secretary to President of the Privy Council):: I am informed by the Departments of Justice and the Solicitor General as follows:
1. It would not be in the public interest to elaborate on information provided in the McDonald Reports, concerning this matter, other than to confirm that the Government was advised in 1977 of a case involving foreign penetration of the RCMP Security Service. At the time, the Government was advised there was insufficient evidence to prosecute any person involved either under the provisions of the Official Secrets Act or the Criminal Code of Canada. In view of recent developments concerning this case, the original determination concerning prosecution is being reconsidered by officials of the Department of Justice.
Order Paper Questions
David Gordon Lunan William Pappin Eric George Adams Matt Simons Nightingale Agatha Chapman David Shugar
Philip Durnford Pemberton Smith Frederick Poland
Israel Halperin Henry Harris Fred Rose Raymond Boyer Sam Carr Freda Linton John Douglas Creighton Peter Worthington Bower E. Featherstone Peter Alexander Treu
Convicted-5 years
Acquitted
Acquitted
Acquitted
Acquitted
Acquitted
Convicted-5 years
Acquitted-1 charge
Dismissed-1 charge
Acquitted
Acquitted on appeal-2 charges Convicted-6 years Convicted-2 years Convicted-6 years Charges withdrawn Charges dismissed Charges dismissed Convicted-2xh years Acquitted on appeal
3. Yes, three.
(1)	(a) As a consultant, to study and provide recommendations for the establishment of a professional audio-visual capacity with the new Service, (b) Department of the Solicitor General and G.E. Nixon, (c) Total amount for recommendations was $2,000. (d) This contract was in effect from May 26 until July 3, 1982.
(2)	(a) As a consultant, to study and develop a model of an information management system for the new Service, (b) Department of Solicitor General and the Centre for Conflict Studies, University of Brunswick, (c) The total project was not to exceed $30,000. (d) This contract was in effect from April 28 until December 31, 1982.
(3)	(a) As a consultant, to assist telecommunications task force in: (i) planning, policy and project co-ordination; (ii) conducting communications surveys; (iii) writing required procedures; and (iv) preparing study documentation for the Transitional Group, (b) Department of the Solicitor General and Melvin Henry Watson, (c) $130 per day for each day during which the consultant is involved providing services. Total amount will not exceed $20,000. To date, no services have been provided, (d) This contract is to be in effect from January 3 to October 31, 1983.
2. Since World War II, 23 persons were charged with espionage offences under the Official Secrets Act.
(a)	To provide information as to the dates of charges under the Official Secrets Act would require an inordinate amount of time and manpower.
(b)	and (c)
Names of Persons
Emma Woikin Kathleen Mary Willsher Edward Wilfred Mazerall Harold Samuel Gerson James Scott Benning
Disposition of Charges
Convicted-2xh years Convicted-3 years Convicted-4 years Convicted-4 years Acquitted on Appeal


The Acting Speaker (Mr. Corbin):: The question enumerated by the Parliamentary Secretary has been answered.


Mr. Schroder:: I ask, Mr. Speaker, that the remaining questions be allowed to stand.


The Acting Speaker (Mr. Corbin):: Shall the remaining questions be allowed to stand?


Some Hon. Members:: Agreed.

Electoral Boundaries


[Stage Direction]
March 18, 1983
[Stage Direction]
On the Order: Orders of the Day:
No. 1.
February 28, 1983-Consideration of an objection relating to the Province of New Brunswick.
No. 2.
February 28, 1983-Consideration of an objection relating to the Province of New Brunswick.
No. 3.
March 8, 1983-Consideration of an objection relating to the Province of Prince Edward Island.
No. 4.
March 9, 1983-Consideration of an objection relating to the Province of Manitoba.
Yvon Pinard: I rise on a point of order, Mr. Speaker. Concerning consideration of those four objections to the reports of the Electoral Boundaries Commissions, I had discussions earlier today with my counterparts in the Opposition Parties and I would like to confirm that we have agreed to the following, and I stand to be corrected if it is not exact. First, that the maximum of one hour today will be devoted to the consideration of those objections. Second, at the conclusion of that one hour of debate, if there are still some Members who would like to participate and who are not here today, we have agreed to resume that debate at a later date, which will be chosen, as usual, by Government and, as usual, after consultation with the Opposition Parties. Third, if we do not debate this matter for one hour because of a lack of speakers, the agreement we have made to resume debate at a later date will still apply.
I think that is the essence of the agreement, Mr. Speaker. We would not like to see the Speaker send a report to the Commissions before the debate on the objections is completed. We do not think it will be possible to complete that debate today, whether we give it one hour or less. We have therefore agreed that when the debate expires today it will be resumed at a later date.


Douglas Grinslade Lewis: Mr. Speaker, the Government House Leader has outlined the essence of the agreement between the House Leaders, which is that we will move from this motion on to Government orders at the end of one hour or a lesser time if we run out of speakers due to the fact that Members on all sides have other commitments. We would not want this to be a precedent. It is being done by agreement rather than by a formal motion.


Mark Willson Rose: Mr. Speaker, 1 thank the Government House Leader for advising me of the agreement reached among House Leaders and the Acting House Leader for this Party. I take his word that that is what has been agreed to and it has been confirmed by the House Leader for the Official Opposition.


The Acting Speaker (Mr. Corbin):: The House has heard the proposal put forward by the President of the Privy Council (Mr. Pinard). Is it agreed?


Some Hon. Members:: Agreed.
Agreed and so ordered.



ELECTORAL BOUNDARIES READJUSTMENT ACT


[Stage Direction]
The House proceeded to the consideration of objections to Reports of the Electoral Boundaries Commissions for The Provinces of New Brunswick, Prince Edward Island and Manitoba.
Hon. J. Robert Howie (York-Sunbury):: Mr. Speaker, as one of New Brunswick's Members of Parliament, I join my colleagues today to express objections to the Report of the Electoral Boundaries Commission for my Province.
Among the guidelines the Commissioners had to follow in New Brunswick was the maintenance of an average of 69,540 voters per constituency. I realize that this was a difficult mandate to fulfil and I feel the Commissioners have done the best job they could within that mandate. However, in the process, almost inevitably community interest has suffered for the sake of population requirements.
For example, the northern portions of the Parishes of Douglas, St. Mary's Stanley and Maugerville in my constituency would be moved to the renamed constituency of Miramichi, creating a hardship for both the residents and their Member of Parliament. Residents of Maugerville must travel southwest to Fredericton to reach Route 8, which will take them northeast to their representative's constituency office in Newcastle.
Even residents of Taxis River which is located near Route 8 and on the existing boundary between York-Sunbury and Northumberland-Miramichi, have only about 80 kilometres to travel to my constituency office in Fredericton, but twice that distance to Newcastle. I consider that a disservice has been done to these citizens to effect a modest shift in population between the two constituencies.
I also feel that the community of interest provision was violated in the proposal to shift Southampton Parish to Carle-ton-Charlotte. While it is located, geographically, at an equal distance from the hubs of both constituencies, communities in Southampton have had longstanding social and economic ties with the Fredericton area.
A particularly striking example in New Brunswick of the population imperative taking precedence over both geographic and community considerations, is the proposed shift of Salisbury parish, from Moncton to Westmoreland-Kent. This idea completely ignores the parish's obvious ties to the City of Moncton, and its geographic link to Fundy-Royal.
March 18, 1983

I am not in favour of the recommendation that the name of my constituency be changed from York-Sunbury to simply Fredericton. The constituency of York-Sunbury was established under the Redistribution Act of 1914 and was an excellent choice of name since it reflected the amalgamation of the former constituencies of York, Sunbury and Queen's.
Organizations in the Fredericton area, such as the York-Sunbury Flistorical Society, have also taken this name to reflect the rich United Empire Loyalist tradition of the region.
Fredericton is, indeed, the largest population centre in the constituency, but to drop the name York-Sunbury is to ignore the importance of dozens of small communities surrounding the capital, which were established long before Confederation.
Perhaps the most wasteful provision of the Act is the amalgam method of determining the number of seats the House of Commons will have. It starts with a base of 75 seats for Quebec, adds four for each redistribution, then follows a most complicated formula to reach the allotment for the other Provinces.
The result will be the addition of 28 new constituencies in 1984. As a share of the tremendous Ottawa and constituencies administrative and logistic support structure, it will drain more than $14 million out of the public Treasury each year. I submit that we cannot afford to increase the number of seats, nor is it necessary to do so.
In the United States, Senators and Congressmen represent about 413,000 voters each, but their local and Washington offices are manned by much larger staffs. Since each of us represents an average of only 80,000 to 85,000 constituents, with no increase, or in some cases with a relatively modest increase, of staff and other support elements, we could serve our slowly increasing population as efficiently, and far less expensively than the alternative of a larger House.
We all know how difficult it is for middle and backbench MPs to be recognized during Question Period. Imagine the scene when 310 Members are competing for the Speaker's attention. Debates on major Bills will inevitably be slower, too, in order to give every Member who wishes to speak a chance to do so. We have a backlog of legislation to consider now, but the logjam can only grow if we must allow even more participants in each debate.
I would urge the Government and all Hon. Members to consider freezing the situation as it now is and referring the matter to a Parliamentary Committee for careful and thorough study before we proceed.


Mr. Maurice A. Dionne (Northumberland-Miramichi):: Mr. Speaker, I appreciate the opportunity to participate in this debate today. This is one of those strange occasions when a Member on one side of the House finds himself in almost total agreement with what has been said by a Member on the other side of the House.
As you come from New Brunswick, Mr. Speaker, you will know that my constituency is adjacent to that of the Hon. Member for York-Sunbury (Mr. Howie). It is also adjacent to the constituencies of Gloucester, Westmorland, Kent, Fundy-Royal Restigouche, Madawaska-Victoria, and Bonaventure-
Electoral Boundaries
Iles-de-la-Madeleine, as well as a couple of constituencies in Prince Edward Island. It is rather centrally located.
I concede immediately that the population of my constituency is considerably below the mean population. However, it is above the minimum population for constituencies in New Brunswick. The changes proposed by the Electoral Boundaries Commission, while adding many hundreds of square miles to the territory, would increase the population from 56,362 to 57,165. That means that for about 800 people, many square miles would be added to what is already the largest constituency, geographically, in New Brunswick and, 1 believe, the largest constituency, geographically, in the three Maritime Provinces.
Furthermore, the basic reason given by the Commission was to supplement the population of the electoral district of Northumberland-Miramichi, but only by about 800. Originally the Commission proposed that an additional parish from Kent County, the parish of St. Louis, be added to Northumberland-Miramichi. Because of representations made to the Commission by residents of the parish of St. Louis, the proposal has been dropped. This destroys the argument that they are making additions to increase the population.
As the Hon. Member for York-Sunbury said, the proposed additions to Northumberland-Miramichi include parts of the parishes of Douglas, Stanley and St. Mary's in York County and part of the parish of Maugerville in Sunbury County. That part of the parish of Maugerville which is proposed to be added is very sparsely populated. As the Hon. Member rightly pointed out, there is no direct access from Northumberland County to Sunbury County without first going to Fredericton and Oromocto. These people would have to travel very long distances to reach the constituency office in Northumberland-Miramichi. The representative, whoever he or she might be, would have to travel very long distances to reach what is now known as the riding of York-Sunbury. It makes no sense whatsoever. There can be no rationale for that kind of cosmetic change. In fact, it makes very poor cosmetics.
As far as those parts of the parishes of Douglas, Stanley and St. Mary's in York County are concerned, there can be no argument that they are not adjacent to the constituency of Northumberland-Miramichi, but I could make many arguments that the population of those parts of parishes does not in fact have a community of interest with the Miramichi. There is some community of interest, just as there is a community of interest between Edmundston and Nackawic or between Bathurst and Buctouche or between Saint John and St. Mary's.


Mr. Mazankowski:: What about Ecum Secum?


Maurice Adrian Dionne: We will deal with Ecum Secum in another debate. The fact is that because we are all New Brunswickers we have a community of interest, but the fact also is that there is no commercial or professional

March 18, 1983
Electoral Boundaries
community of interest between those areas of York County and Northumberland County.
The orientation of the people who live in that part of York County is toward Fredericton. It is not toward the Chatham-Newcastle area, which is the commercial centre of the riding of Northumberland-Miramichi. I have discussed this privately with the Hon. Member for York-Sunbury before the debate today. We both agreed that it would be a mistake to change the boundary in the way the Commission proposed. The distances which those people would have to travel to visit the constituency office located in Newcastle are extreme in terms of New Brunswick. I agree that it does not always have to be located there, but it is the centre of the riding and that part of the riding where the largest possible number of people can telephone the riding office without being required to make long distance telephone calls. As I said, the distances these people would have to travel are extreme in terms of New Brunswick. They may not be extreme in terms of Labrador, the Northwest Territories, northern Ontario, the northern prairie Provinces or British Columbia, but we are not debating those circumstances. We are debating electoral boundary changes in New Brunswick. It seems to me that that is what the focus should be on and that is how the commissioners should have proceeded to do their job.
I do not know where they got the idea from that there is a community of interest between the areas they are proposing to add to Northumberland-Miramichi and the Miramichi area. That community of interest just does not exist. Of course there are interests in common. The ancestry of the people is a common interest. The life style of the various communities would be very common from those areas of York County to the parishes of Ludlow, Blissfield and Blackville in Northumberland County, but The Fact remains that their orientation is toward Fredericton, not toward Chatham-Newcastle.
To add that much territory to the constituency of Northumberland-Miramichi without a significant change in population makes no sense electorally, geographically, socially or commercially. Therefore, it should not be pursued. However, I agree with one suggestion of the Commission. At least, I will not protest it, that is, the name change of the constituency which I now have the honour to represent. If it is changed to Miramichi, that is fine with me. Miramichi encompasses more than Northumberland County itself. The Miramichi River system is probably the most diverse river system in New Brunswick. Of course it is famous the world over for its production of Atlantic salmon. No river in the world compares with it in that respect. Because it already has two parishes of Kent County in it, I favour the change of name if that is how it comes out in the final analysis. I am not proposing that change myself, but I will not protest it.
For those reasons, I wanted the opportunity today to protest. When the Commission held hearings, as usually happens in New Brunswick the Miramichi region was not on its list of areas in which to hold hearings. As usual, we were lumped in with either the Bathurst region or the Moncton region. We are a region unto ourselves, encompassing about a tenth of New
Brunswick. It is high time that was recognized by all Government institutions at both levels.


Mr. Jack Murta (Lisgar):: Mr. Speaker, at the outset I would like to make one observation, that is, that the electoral boundaries commissioners did what I think most Manitobans would consider to be a reasonably good job in terms of outlining the changes to the Electoral Boundaries Readjustment Act in the Province of Manitoba, with the major exception of the constituency of Portage-Marquette. The concern which has developed in the Province of Manitoba over the constituency of Portage-Marquette has been for two reasons. The first is the name change, which most people in the area do not feel is warranted, and the other is a boundary change. Both are not large items. Both can certainly be accommodated when the Electoral Boundaries Commission meet again to review the report. If this were done, certainly it would meet with everyone's satisfaction.
The Hon. Member for Portage-Marquette (Mr. Mayer) has spoken at length on the subject and has expressed his concern. I would also like to do so today, basically on behalf of many people in the province of Manitoba. In suggesting that the name of Portage-Marquette be changed to Portage-Min-nedosa, the Commission is ignoring a proud tradition in that part of Manitoba. To give you just a little background, Marquette was one of the original ridings in Manitoba when Manitoba entered Confederation. There were approximately four or five original constituencies, Marquette being one, Provencher being another, Lisgar being another, and there were one or two others. History goes back to the days of Sir John A. Macdonald who represented Marquette very briefly. Arthur Meighan represented the constituency of Portage, which is encompassed in the total name change of this constituency. History goes back a long period of time for that part of what is considered south central or south western Manitoba.
The Commission proposed to change the name of the constituency from Portage-Marquette to Portage-Minnedosa, ignoring the cultural and historical ties that bind the two names together. Instead of taking into account the very important historical factors which originated the name Portage-Marquette-and I have described probably the most important of those factors-the Commission has decided to replace the name of Portage-Marquette with the names of two large communities in the riding, that of Portage La Prairie, or Portage, and Minnedosa.
First, this name change is unacceptable as far as the constituents of that area are concerned, and it is unacceptable generally to the Province and to the people in the Province of Manitoba. If we cannot follow our historical pattern in these changes, then perhaps one should not be making the changes that are contemplated at all.
Second, the Commission changed the northern boundary of the constituency, thus ignoring the geographic factors which tie the communities of Russell, Onanole, Rossburn, Vista, Wasagaming, Binscarth to the rest of the riding. These are all

*
March 18, 1983

farm communities. By making this change, the Commission has ignored the natural boundary created by Riding Mountain National Park, which is a federal park in western Manitoba, and the Commission has created a new boundary which excludes these communities from the areas above and below Riding Mountain National Park, which will be foreign to the people in those communities.
The Hon. Member who preceded me talked about communities of interest and their importance. I suggest this same analogy apply to the riding of Portage-Marquette. People get used to dealing and trading as a particular known area. They receive literature from their Member of Parliament, whoever the person may be. Residents of areas are used to a particular name of an area, especially when there has not been a change before or for many years.
I would suggest the Commission has to take another look at the situation and it should redraw and probably reinstate the boundary to its original position. This can be done without any great problem. In proposing to shift the present boundary south of Riding Mountain National Park, the Boundaries Commission will make it very difficult for most of the communities along what is called the Turkey Trail to get in touch with their Member of Parliament. This is an area along the foot of Riding Mountain National Park. That area has been known for years and years as Turkey Trail and the people know that part of the constituency by that name. A change would cause a fairly substantial disruption to the whole trading area and the base of that constituency.
Electoral Commission hearings were held in Portage-LaPrairie on October 26, 1982. Because Portage LaPrairie is the largest town outside of the City of Winnipeg and, until one reaches Brandon, Portage LaPrairie is over 200 miles from the area to be affected, nobody attended the hearings to make objections. It was too far away. For the hearings to be held properly, they should have been held in Shoal Lake or in either Minnedosa or Rossburn, and the Commissioners would have heard basically what I am saying now in terms of the objections to the name change.
In my opinion, the Commissioners have shown insensitivy to the circumstances peculiar to this riding. What is most important is that the people in the riding are not happy about the name and the boundary change. Their Member of Parliament is not happy. The changes will not be substantial to reinstate the boundary lines, and they should be done because this is what everybody wants. We are here to try to assist constituencies in the different areas of Canada.
In reviewing the decision concerning the constituency of Portage-Marquette, I am sure the commissioners will see that what I have been saying and what the Member of Parliament for that constituency has said, as well as what the people in the area feel and want, is to return the constituency to its original state.


The Acting Speaker (Mr. Corbin):: There being no other Member rising at this time to contribute to the debate, in
Small Businesses Loans Act
accordance with the Order passed earlier this day, this debate stands adjourned until a later date.
The Chair senses there may be a disposition to call it one o'clock. Is it agreed?


Some Hon. Members:: Agreed.


The Acting Speaker (Mr. Corbin):: 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.


Hon. William Rompkey (Minister of State (Small Businesses and Tourism)) moved: that Bill C-144, to amend the Small Businesses Loans Act (No. 4), be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
He said: Mr. Speaker, it is an honour for me to table in the House Bill C-144, to amend the Small Businesses Loans Act. The Act is a popular and useful feature of the Government's measures to help small businessmen and small business firms who, as the House will know, can obtain loans guaranteed by the Government from private lenders at interest rates set out at 1 per cent over the prime lending rates of the chartered banks.
The Act was passed by the House in 1961 and its impact since that time has indeed been substantial. One hundred thousand loans totalling approximately $2.5 billion have been authorized under the Act. In 1982, almost 17,000 small businesses from every region of the country borrowed some $427 million under the SBLA. During the course of the last four years, almost one out of ten small businesses in Canada have borrowed under this program. It is an effective program because it encourages lenders in the private sector to make term loans available to small business with a minimum of intervention by the Government in the financial markets. The revisions to the Act have broadened the eligibility for loans, increased the ceiling, and introduced a more flexible rate structure to increase the amount and availability of loans.
The Bill that I have tabled now will provide for extension of the Small Businesses Loans Act for another two years. I would urge Hon. Members to provide for speedy passage of this measure. I know that there is a disposition on both sides of the House to help small business, and I know that Hon. Members

March 18, 1983
Small Businesses Loans Act
on both sides will co-operate in the speedy passage of this Bill. This measure, together with other efforts by the Government such as the Federal Business Development Bank, is helping small businesses to weather the current economic downturn and to position themselves to take part in impending economic recovery. It is important that support be provided to small firms. This measure ensures that this will be so.
There are a number of key areas of the Act that are considered for amendment and which, from time to time, are changed. These areas generally include the size of the eligible firm, the size of a loan, the interest rate and the purpose of the loan. I have examined each of these issues with the view to determining whether amendments are warranted at this time.
The eligibility under the Act is currently limited to firms with gross annual revenues not in excess of $1.5 million. A recent study showed that some 95 per cent of all firms in Canada have annual revenues of less than $1.5 million. Based on that information, there would appear to be little reason to increase the size of the firm eligible for assistance at this time.
The maximum amount of the loan that may be outstanding to any one firm is $100,000. This figure has been considered, too, but we have found over the years that the average loan is in the area of about $26,000. I see no need for extending the upper limit at this time.
In 1978, the maximum interest rate chargeable was changed from a fixed rate to a floating rate, based on prime plus 1 per cent. As all Hon. Members know, there has been a substantial and sustained growth in the number and total dollar volume of loans guaranteed since that interest rate change was made in 1978. The new rate provides the lender with a margin of profit necessary to make loans, and it provides the borrower with loan funds at 2 to 3 per cent below the rate that would be charged on similar non-guaranteed loans.
I would now like to talk briefly about a subject that has been raised with respect to the Small Businesses Loans Act, and that is, working capital. Possibly the most attractive feature of the SBLA is the absence of red tape associated with it and the lack of unnecessary intervention of the bureaucracy in the private lending area. These activities are totally in the hands of the borrower and of the lender. We believe that any change now might upset that up-to-now smooth relationship between the two.
This passive approach to administration that we have had is possible in large part because the purposes of SBLA loans are limited to the purchase of fixed or moveable equipment, improvement or modernization of plant equipment or premises, the construction of premises, or the purchase of land.
I am sure that all Hon. Members would agree that fixed-asset loans are relatively low risk and require less monitoring than receivable or inventory loans that are more volatile by nature.
A recent study by a major financial institution showed that its working capital loans were 2.5 times more risky than its
next highest risk category. The higher risk level of such loans is also borne out by the loss rate of other Government programs supporting such loans. Should the SBLA be amended to accommodate these types of loans, I believe that the passive nature of the program would be jeopardized.
In asking this House to provide for continuation of the Small Businesses Loans Act, I am also taking into account my recent request to the Small Business Consultative Committee to examine the SBLA, its impacts and the means by which it might be improved in greater detail. As some Hon. Members may be aware, the Small Business Consultative Committee is my main source of advice from the small business community. It is made up of people from all across the country from British Columbia to Newfoundland. They meet, and I meet with them, regularly and I have asked them to look particularly at a number of areas with regard to the advancement of policy for small businesses including the Small Businesses Loans Act. There are 22 members. They include small business owners, representatives of financial institutions, association executives and indeed people from every region of the country, as I have said before.
It has appointed sub-committees on tax policy, the FBDB, and the future strategic thrusts of the Government in the small business field. It has approved its own work program and elected its own chairman. It has requested briefings from officials of the Small Business Financing Review, the FBDB, the Department's priorities and the Small Businesses Loans Act. These men and women on that committee have given of their time and their experience, and I want to thank them for it at this time. They have given their time and experience to a process which must be described, I believe, as the fullest dialogue which the Government has ever established with the private sector regarding opportunities and constraints facing small businesses in Canada.
The Consultative Committee has already raised a number of concerns, which I share, which must be explored further and which are relevant to the long-term future direction of programs such as the Small Businesses Loans Act. They include the current imbalance toward debt over equity in the financing of small firms as well as the role that Government can play in providing an environment for entrepreneurship and investment in small business, irrespective of the specific programs it makes available.
The Small Businesses Loans Act is just one measure, albeit very important, by the Government to help small firms in Canada. The SBLA complements other thrusts such as the Federal Business Development Bank. The FBDB, through its many offices across Canada, offers financing to small and medium-sized firms by means of loans, loan guarantees, equity financing, or a combination of these. The bank currently has $1.8 billion in outstanding loans with 32,000 customers. Some of these loans are for working capital. In addition to its extensive lending and management services activities, FBDB has over $64 million worth of equity investments with 123 customers.
March 18, 1983

The Government has taken other steps to help small firms. One is the Small Business Investment Grant which was announced by my colleague, the Minister of Finance, last year. This $400 million program provides interest grants by the federal Government to small businesses of up to 4 per cent per annum for two years. As Hon. Members know, that is now presently before the House, too. It has gone through the committee stage, and I would make an appeal at this time that, when we are dealing with the Small Businesses Loans Act, we also give speedy consideration to the Small Business Investment Grants Act, particularly for the sake of farmers and fishermen. Sixty-two per cent of all the business under the Small Businesses Investment Grants has been aimed at farmers and fishermen. They are using it extensively, and I would urge the House to give speedy passage to this Bill because if we cannot have that legislation by the end of March farmers and fishermen particularly will be in a disadvantaged position.


Walter David Baker: Bring on the Bill.


Bill Rompkey: This initiative is exclusive of the lower corporate tax rate available to small firms, namely the fact that the tax rate, as Hon. Members know, on the first $200,000 of income of a Canadian-controlled private corporation is 20 per cent to 21 per cent less than on that of larger firms. This rate is available as long as retained earnings do not exceed one million dollars.
All of these initiatives are an expression of the Government's commitment to small business. They are also in recognition of the contribution of independent business to the Canadian economy. The 645,000 small businesses in this country account for 42 per cent of business employment, and 25 per cent of business GNP. They have been and they are going to continue to be a significant force in creating and preserving jobs in this country. They will play a key role in meeting the employment challenge facing Canada in the next little while. They provide an important vehicle for risk-taking and innovation. They provide a counterbalance in the economy that would be otherwise dominated by large firms.
The SBLA is a program that has widespread support. It is specifically geared to the needs of small business. It is widely used in all regions of the country. It is available for almost all industrial activities, but it is most widely used by the service sector.
I want to conclude by asking my hon. colleagues once again to recognize, as I know they do, the important contribution of small business to Canadian economic life, and to support very speedily the measure that I have brought forward today.


Walter David Baker: Small business is the lifeblood of a nation.


Donald Frank Mazankowski: Mr. Speaker, at the outset I want to say how very pleased I am to enter this debate in support of Bill C-144. I am pleased to note as well that the Minister, in his opening remarks, made reference to the fact that this Bill was originally passed in 1961. I think that is significant in that there was a Conservative Government in
Small Businesses Loans Act
power at that time and I think it amply demonstrates this Party's commitment to the small business sector at that time, as it is today.
I certainly want to echo the comments that the Minister has made in respect of the important role that small business plays in our country. In debating this Bill we are really in essence dealing with one of the most important and dynamic sectors in the Canadian economy. As the Minister pointed out, some 42 per cent of all private sector employment and 25 per cent of the goods and services are produced in this country by small business.
The other important element of small business is that in many instances it is a family-owned enterprise which has played an important historic role in the development of the Canadian economy. It is part of the Canadian dream of many to own and run their own business and to have their family involved in it. In that connection, I want to put on record the kind of feeling that we witness in a community and within an enterprise, the kind of family enterprise I am talking about.
On March 3 1 received a letter from the firm located in my constituency, Geo. C. Webb and Sons (1980) Limited. 1 am being invited to a fiftieth anniversary celebration. I want to quote in part from the letter. It exemplifies the significance of small business in a small community and the importance of the family connection. The letter reads:
On June 23 we are ... to mark an anniversary that we are very proud of as 50 years ago, George C. Webb, our father, signed a contract with the Massey-Harris Co. that started us in the farm machinery business in the Vermilion district.
Over the 50-year period many changes have taken place, we have added a fertilizer business and an automotive business. The third generation of our family has assumed positions of responsibility, hopefully assuring continuation of this business for many years to come. With all these changes, one very significant fact has always existed and that is the warm and friendly association we have enjoyed with our customers, our suppliers and our staff.
This is why they are celebrating. That really puts the issue of small business in this country in perspective. It is important that we see the small business sector as being healthy and thriving, giving the opportunity for members of the family to participate and be engaged in providing very necessary services to our country.
It is important to note that, notwithstanding the recession and the downturn in the economy that we were experiencing, the spirit of small business is alive and well. It is noted in a recent submission of the Canadian Federation of Independent Businesses that some 150,000 business start-ups occurred in 1982. I know that there have been a number of failures, and we regret that very much. Some blame could be laid at the doorstep of the Government in that connection. Nonetheless, the resilience and entrepreneurial spirit is alive and well in this country. It is important that we undertake to do all we can to encourage, motivate and facilitate the development and good health of that enterprise. That can be done in many respects, not only through legislation but by developing a positive environment and attitude among all levels of Government.

March 18, 1983
Small Businesses Loans Act
I cannot help but make this point. In the campaign of 1972, the NDP campaigned on a theme of the "corporate welfare bums". Because of that campaign they in essence attacked all business, whether it was small, large, foreign or domestic. They tarred all sectors of business with the same brush. Business enterprise throughout the country is still suffering from that harsh attack. We do not need that kind of attitude and environment.


Nelson Andrew Riis: That is sleazy politics.


Donald Frank Mazankowski: The truth hurts, but it has to be recognized.


Nelson Andrew Riis: The truth is you do not have anything to say other than sleazy two-bit politics.


Donald Frank Mazankowski: I will put my business credentials up against that gentleman who is speaking from his seat any day. I will compare my credentials with him any day. I will talk about small business. The reason I mentioned the NDP is that I as a businessman was tarred and feathered with the same devastating brush they used during that election campaign. It is unfortunate for small business and for the Canadian economy.


Nelson Andrew Riis: It is unfortunate we took over the Government of Manitoba. It is unfortunate that we are going to take over the Government of B.C. next month.


Mr.   Biaker@Acting Speaker: The Hon. Member and all Hon. Members are aware that heckling, if I may use that term, is normal practice.


Nelson Andrew Riis: Some can take it, some can't.


Mr.   Biaker@Acting Speaker: The Hon. Member who has been speaking from his seat may want to consider rising in his turn and perhaps having his remarks recorded in Hansard.


Donald Frank Mazankowski: It is important to develop the kind of attitude and environment that is conducive toward not only the promotion, but the encouragement and, indeed, the health of the small business sector because it is the leading edge of the economy. It is efficient, innovative and flexible. It involves a high amount of risk-taking and a great deal of work. When one is engaged in this high risk and the long hours of work it involves, there has to be some reward.
It is important as well to support the kind of enterprises that are stable, such as the firm of Geo. C. Webb and Sons (1980) Ltd., which has served the community for 50 years. There are always the fly-by-nighters, but when you look at an enterprise like this, you find that it has not only provided a good standard of living and welfare for the families, but an excellent service to that community.
Small business gives individuals the opportunity to be creative, innovative, productive and to generate new wealth for the Canadian economy. This was summed up very well by Jim Gray, Executive Vice-President, Canadian Hunter Exploration Ltd., on March 4, 1982 when speaking to the Calgary Women's Canadian Club. He had this to say:
Let me repeat, we won't mend the economic health of this nation by building megaprojects. Little companies are the sinews of a nation. They are a medicine with which we should be treating the Canadian economy today. All that is needed is that we unshackle our entrepreneurs, free creative ideas, encourage individual initiative, constrain the political bureaucrats and limit the take of the national tax gatherer.
That summarizes it very well. If we look at our number one priority today, the generation of new jobs, we clearly see the small business sector as a very promising area in which to generate those new jobs. This is confirmed by someone who started out as a small business entrepreneur and still has a tremendous amount of respect for the small business sector. Over 60 per cent of the jobs created in North America today are created by the small business sector. In fact, David Birch, of the Massachusetts Institute of Technology found that approximately two-thirds of all new jobs created in North America are in firms with fewer than 50 employees. Establishments with more than 100 employees accounted for less than 20 per cent of the new jobs. In addition, the firms which created jobs are dominantly young firms. Eighty per cent of the new jobs were created by establishments less than five years old. We have the initiative there and we have the spirit. What we need now is some kind of positive climate to allow that to happen.
I believe, Mr. Speaker, that in large part, the policies of this Government have tended to frustrate the efforts of small business. In some areas they have held back vital development, which has resulted in lost opportunities. I believe that rather than facilitating the development, growth and health of the small business sector, in many cases Government has tended to frustrate them. The Government has destroyed the environment in which small businesses flourish. It has overwhelmed them with an excessive paper burden and regulations. We are now faced with a tax act that, in the words of the President of the Institute of Chartered Accountants of Ontario, " ... is an unmitigated mess because it is incomprehensible". Many small businesses cannot afford the luxury of accountants, tax lawyers and experts, so it is important that we develop a tax system which is comprehensible and understandable by Canadians and Canadian entrepreneurs.
The budget of the former Minister of Finance of November, 1981 included two measures which really inflicted a desperate blow to the small business sector, the reduction in the capital cost allowance and the 12.5 per cent corporate distribution tax. What small business needs is some stability, some assurance that the rules of the game are not going to change in the middle of the night. They want to be sure that they live in a certain climate, and that has not been the case. Very closely associated with that is the lack of trust in the efforts of the Government in bringing in the kinds of budgetary provisions which were contained in the budget of the former Minister of Finance.
March 18, 1983

The other problem small business has is certainly the effects of inflation, which in large part are reflected in the state of the economy and the bad management of this Government. Another very crucial issue is interest rates. The small business sector has been hurt by the fact that interest rates have escalated way out of proportion. The exchange rate has also had an impact on the welfare of the small business sector. And I emphasize that uncertainty is really a very crucial element, uncertainty created by Government legislation, by excessive regulations and by the complex, counterproductive and regressive tax system which we have.
I believe it is fair to say as well that the banks have played a role in the success or failure of the small business. I do not know whether the banks can be absolutely proud of their record in terms of dealing with the small business sector in recent times. Those of us who go home to our constituency on the weekends will know that many small businessmen and farmers are having difficulty dealing with their bankers, particularly some banks who refuse to utilize the various Government programs that have been created for that specific purpose.
Many small businessmen feel they are discriminated against by the banks by virtue of the fact that there seems to be a double standard. If you are sufficiently deep in debt with the bank you will get treated one way, and if you are at all liquid, they use the hammer. I believe the banks must re-examine their policies and ensure that they do their part in sustaining the welfare and the health of the small business community.
We must do everything we can to create a positive environment. It does not necessarily mean more Government programs. In many respects it could very well mean fewer Government programs, fewer Government regulations and less frustration. What is really important is a genuine change in attitude by Government to encourage the expansion of the small business sector.
Of course, small business is looking for favourable tax treatment. Touche Ross and Partners made a survey of 124 companies across the country which indicated that businessmen would rather have tax incentives, as being the most beneficial form of Government assistance, than grants and a whole host of other programs. I hope that the Minister of Finance (Mr. Lalonde), when he is writing his budget, will look at some of these recommendations. I would hope he would also look at ways and means of removing the regressive elements of the tax system, simplifying the tax laws, and bringing about some reform to our regulatory framework.
These are all suggestions which have been made by the representatives of all organizations associated with small business, including the Chamber of Commerce. As I said earlier, one of the biggest problems is the matter of interest rates. I believe the Government can show leadership and demonstrate that it is responsible in that regard by holding down the deficit and cutting back wasteful and extravagant expenditures. That is clearly an area in which the Government has room to work. Tax incentives are really the key and, as the Canadian Federation of Independent Business pointed out as well in its recent submission, there are ways in which the pools of capital can be expanded through investment under the
Small Businesses Loans Act
Registered Retirement Savings Program. It has been suggested that more than $2 billion is presently held in self-administered RRSPs and that 50 per cent of that could be used for the private business sector. There is also another recommendation with respect to the need to encourage the utilization of the registered stock investment plan as another area. We must also have the withdrawal of the 12.5 per cent corporate tax on the distribution of profits. There are, therefore, many things which can be done, and I would urge that the Government consider these proposals in order to help the small business sector.
It is important most of all to re-establish a climate of confidence where small businesses will have the confidence to take risks, to make long-term investments, not expecting their windfall in the next year but somewhere further on down the road. I believe that is a very, very important aspect to consider because small business, if we give them the opportunity, will be in the forefront in putting Canada ahead technologically. I believe if we consider the flexibility of small businesses by virtue of their size and their creative spirit, they are in a better position to take advantage of every opportunity. I do not believe there is any question but that small business can adapt to the technological advances, and in many cases create the kind of new technology which we are looking for and which we need. If we are to survive in the international marketplace- and Canada must export in order to survive-we are simply going to have to produce a product at competitive prices. It is going to have to be a product which is the utmost in quality, and we must have the kind of skills and marketing teams and credit facilities to ensure that we can penetrate those international markets.
The area of computer-aid design and manufacture is clearly an example where small business has heretofore excelled, and it has tremendous opportunity and potential to grow even further. I believe we should be encouraging small business to invest more in research and development. That again can be done through tax incentives, or incentives of other kinds, to increase and enhance technological innovation. I believe we will find that every dollar we invest in research and development will reap us benefits, both in terms of generation of wealth and in generation of new jobs which we in this country badly need. We are going through some very major structural changes in this country today. The manufacturing sector is declining. The service sector is on the increase. There have been suggestions that the number of people employed in the manufacturing sector in North America is going to decline very rapidly. We have to take cognizance of that fact, and I think that here again the small business sector can move in to fill that gap.
In summary, Mr. Speaker, I submit to you that small family enterprises have the potential to utilize the skills and talents of those working in manufacturing today who may see their jobs become redundant in the future. I believe that, given the proper climate, the small business sector can play a leading

March 18, 1983
Small Businesses Loans Act
role in the development of new products and the improvement of old products. We have excelled in technological advances in the resource and farming sectors. We have gone through a major revolution in the agricultural sector. It takes a lot fewer people today to produce the same amount of food that was produced years ago. Adjustments have been made and agriculture is healthy and survives. We are very skilled in energy development and the forestry sector. However, we have a very serious challenge to cope with in the restructuring of the manufacturing sector, and I submit that small business can indeed play a leading role. But we must encourage the risk taker. We must ensure that the entrepreneur is rewarded for his risk, his hard work, initiative and creativity. If we do, we can unleash the entrepreneurial spirit in this country.
I think we must recognize that fundamental changes are occurring, Mr. Speaker. We must also recognize that it presents us with a golden opportunity, indeed a major challenge. We must accept these challenges and build for the future rather than dwell on the past. A vital component of that effort is a stable, sound and positive climate. Therefore the Government of Canada, complemented by the provincial Governments, can do a lot to ensure that a positive climate is not only brought about, but indeed sustained in order to support the vibrance, dynamism, and spirit which is out there ready to be tapped.


Nelson Andrew Riis: Mr. Speaker, I am pleased to rise this afternoon to speak to the Bill to extend the Small Businesses Loans Act. There is no question that this Bill has been put to good use over the years. It has indeed assisted many small businesses in their attempts to expand into new plants, new equipment and new ventures. On behalf of the New Democratic Party I say that we want to do everything possible to ensure swift passage of this Bill.
These days small-businessmen have very little to cheer about, considering the economic climate in Canada. The fact that the small business community lacks many of the safety nets available to the large corporate sector really puts them at a disadvantage in their efforts to acquire capital, market their products, and compete in the national and international markets. When you consider the struggle a small entrepreneur has today in competing against the large corporations and national chains, particularly in the retail sector, along with the multinationals operating in Canada, you realize that the small-businessman has a real difficult time. Nevertheless, Mr. Speaker, they are able to succeed in spite of the odds against them.
It is interesting to note that of the host of federal, provincial and local Government programs available to business, both large and small, 95 per cent of them cater to the large business operation and ignore the small entrepreneur. Again I think that demonstrates very clearly the reason why we in this House have to spend more time addressing the needs, concerns and challenges facing the small entrepreneur.
I listened with interest today as we were told that small business represents 645,000 enterprises in Canada. They account for 42 per cent of all business employment these days and 25 percent of Canada's Gross National Product. I want to
add a few things to that list. If one examines the record, one will find that almost all of the new jobs created in Canada in the last two years have been created by the small business sector. This was the growth sector in Canada. The introduction of new ventures and new techniques to the marketplace have come by and large from the small business sector. Most of the research and development that has taken place in Canada in the last few years has been initiated by the small business sector. That sector is virtually 100 per cent Canadian owned, which means that their first and last commitment is to Canada and their community. That is something we in this House have to address more boldly and more often. We know that so much of our economy has its future decided not in the towns and cities of Canada but in places such as London, New York, Tokyo and Bonn. Those people making decisions about the future of Canada's economy are not making them in the best interests of Canadian citizens and Canada. Their responsibility and priority is to the shareholders of their own corporations in foreign lands. It is the small business sector which is committed to Canada, to their Province, their region and their community. That is the kind of commitment we ought to be encouraging more boldly and more often.
I must say that one of the advantages of the small business sector in the recovery we all hope to witness in the months ahead is that this sector is the most flexible of our economy. The small-businessman is able to dodge, weave, twist and turn to take advantages of changes in the economy and economic technology. They can take advantage of new initiatives taken by the federal and provincial Governments. These are the people who are able to move quickly in this changing and dynamic economic world.
Again I would emphasize the need for the federal Government and its provincial colleagues to give more attention to encouraging the small business sector to get it out on the frontier, to be in the vanguard of this economic change. One could go on, Mr. Speaker, and list all the problems the Government has created for the small business sector, but I believe that would be fruitless because they are well known. I want to spend my time identifying what ought to be done to assist the small business sector which is difficult to overcome, and impossible for some. I would just read into the record a short paragraph from a letter I received from a constituent, a letter typical of what we receive these days. It says:
Dear Nelson:
We are all facing a very difficult economic environment, and survival, both personally and businesswisc, is foremost in the minds of those involved in the private sector of our economy. Unfortunately, one of the main players involved in the private sector, and a supposed partner to many of us, has chosen to ensure protection of its own interest at the exclusion of the interest of small and medium sized business interests, and in the long term the interests of this country. This main player I mentioned is the Canadian banking establishment.
If there is one element of society that causes problems for the small business sector, it is the chartered banks. When seven chartered banks in Canada represent at least 90 per cent of all banking, the result is a monopoly and an infamous double standard. They are not prepared to do the same for the
March 18, 1983

small entrepreneur as they are prepared to do for corporations such as Dome, Massey, Chrysler or Maislin. They are prepared to renegotiate loans for large corporations and will fall over backwards in order to assist them, but they have demonstrated an insensitivity toward the small businessman in financial difficulty. That is hard to understand when one considers the role that small business plays in the country. The banks call their loans prematurely and then the small business entrepreneur has difficulty in getting the banks to explain why this is done so that it can be avoided in future.
The small business entrepreneur is often asked to guarantee a loan that he applies for. A recent study conducted by the Canadian Federation of Independent Business stated that the typical small business loan is guaranteed to the extent of 295 per cent. What is the risk to the banks when the typical loan is guaranteed to the extent of 295 per cent, Mr. Speaker? Hon. Members are well aware that many loans to the small business sector require to be secured to 300 per cent, 400 per cent and even as high as 500 per cent of the value of the loan.
With that kind of security it is wrong for the banks to claim that they are involved in a risky business. Perhaps there is risk in their dealings with large corporations, but they are always anxious to lend hundreds of millions of dollars to the Dome Petroleums of the world, knowing that ultimately there is no risk because the Government will come to the rescue if they get into difficulty. If difficulty does arise, then the banks turn to the small business community and start pulling loans in prematurely in order to keep up their cash flow. That is the kind of double standard to which I referred earlier.
Overlapping guarantees are often required. Corporate guarantees are often required to double up with personal guarantees or mortgage guarantees or property guarantees or security guarantees or joint and several guarantees. A loan to a small partnership may be secured 100 per cent by one partner, 100 per cent by another partner and 100 per cent by yet another. It may be secured many times over so there is no risk to the lender.
The banks are famous for passing the buck. One may discuss a problem with a junior official with a bank who says he will take it to the senior partner. That partner says he will take it to the regional director. The regional director says that he will take it to head office. Head office sends back the message that it is standard banking practice. They pass the buck so that it is difficult for the small entrepreneur ever to get an answer or identify the reason for the difficulty with the loan.
I know that the Minister of State for Small Businesses and Tourism (Mr. Rompkey) is concerned about small business and has been anxiously waiting for the Small Business Development Bond or the Small Business Bond to get introduced by way of a tax measure. I give him credit for good and honourable intentions. But the Canadian chartered banks refuse to co-operate with the federal Government. They refuse to offer the Small Business Bond to those small businesses that are experiencing financial difficulty. It is virtually impossible to get a Small Business Development Bond these days. Despite the best intentions of the Government, the chartered banks
Small Businesses Loans Act
toss the legislation out the window because they are not interested. I suspect it betrays their true interest in the small business community.
I should like to identify a few areas which I think the Minister of State for Small Businesses and Tourism and the Minister of Finance (Mr. Lalonde) ought to consider when drafting the next budget. The Small Business Development Bank should be restructured. It could be made more efficient and more sensitive to the needs of the small businessman. I should like to see the CASE Program strengthened and the banks providing risk and venture capital with equity options to a greater degree. The SBDB could be used as a clearinghouse for all federal programs of interest to small business, and perhaps that service could even be provided to the Provinces in which it is operating as well. The grant application process and funding procedures could be streamlined to allow the small businessman to acquire capital more quickly and regularly.
I should like to see a revision to the Bank Act that would ensure that a certain proportion of funds is set aside for loans to small businesses at acceptable and reasonably interest rates. Other countries realize the value of the small business sector and recognize that funds must be set aside so that the small entrepreneur can acquire cash for various ventures at rates lower than the going rate. This would encourage the small business sector, and the Bank Act could be revised to achieve this.
I should like the budget to include a real commitment to "buy Canada". In the United States we see a "buy America" policy in both the private and public sectors. A "buy Canada" component in the public sector and private sector would give encouragement to the small entrepreneur. It would light the fire under the small business community and present it with opportunities that it does not have at the moment. I should like the next budget to make money available for research and development in the area of the small entrepreneur. I should like to see mechanisms in the next budget to unleash the billions of dollars lying in Canadian savings accounts and make those moneys available for investment in small Canadian corporations. This would develop Canadian resources and would allow Canadians to make decisions that are in the best interests of the country and the community.
The federal Government should provide assistance for marketing new products and existing products overseas. The small producers could thus become more viable.
I should like the federal Government to encourage cooperative business ventures with a concept that would focus on financing services as well as marketing services. Co-operative services could be useful at the start-up stage of small businesses and for the first year or two. They could benefit from new and up-to-date office equipment and technology without the need to purchase these outright.
I think it is necessary for the Government to seriously consider reducing the amount of red tape that binds small business. The small businessman quickly becomes discouraged when he sees the tax forms that have to be filled. When an

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Small Businesses Loans Act
individual sets up business for the first time and receives a flood of forms to be filled out weekly, monthly or quarterly, it is too much for him. For the small operator it is too much, particularly in the incipient stages of an enterprise.
I would like to see the budget include financial incentives for small businesses to maintain and to revitalize Canada's small communities. It is important that Government initiatives encourage the maintenance of small community businesses and work against the trend we see of moving people, facilities and businesses into larger metropolitan centres. It should take steps to encourage the small-business sector we find in Canada's small villages and towns to stay in place and remain as vital organs of their communities.
I would like to see the Minister of State for Small Businesses and Tourism (Mr. Rompkey) bring forward a Bill soon which would recognize the fact that Canada's small business is a federal tax-collecting agency. The federal Government should find ways and means of compensating small businesses for their collection of federal sales tax from which the federal Government benefits exclusively.
Most Provinces recognize that small businesses provide a tax collection service, and the federal Government should now follow suit. I believe that many steps could be taken which would provide incentives, encouragement and support for the small-business sector, A simplification of the existing tax laws as they apply to the small-business sector would be a step in that direction. As I indicated, the removal of the red tape required of small businesses would be another step in that direction. But, most important, one gets the impression that the small-business sector of our economy is not a priority with the Government.
I am not necessarily saying that it is not, but the perception in the land is that the Government is quite prepared to invest hundreds of millions-nay, many billions-of dollars to assist large corporations. When it comes time to expend money to provide assistance even to small businesses in dire straits, to money is slow in coming. Therefore, one gets the impression that the federal Government is not particularly interested in supporting small business.
While small businesses today have little to cheer about, they should and could have a great deal to cheer about. When we consider the natural resources which abound in virtually every region of Canada in one form or another, when we consider that Canada as a nation has more energy alternatives than probably any other country in the entire world, when we consider that we are a well educated, well trained population in terms of having a populace which is able to take advantage of the newest and most exciting technologies available, and when we consider that we have capital in this country-and I want to emphasize that point-to support new business ventures that in fact would result in a full employment option for Canada becoming a reality, we realize that all we lack is the will. When we add together the natural, human and capital resources, we realize that we lack leadership and the will to
succeed. Perhaps this is a small step today. By seeing the Small Businesses Loans Act extended for small businesses in Canada for another period of time and with the pending budget, let us hope and pray that the federal Government will see this as the beginning of the process of supporting, nurturing and encouraging the most vital sector of our economy, the small-business sector.


Benno Friesen: Mr. Speaker, it is a pleasure to rise to speak on Bill C-144, to extend the Small Businesses Loans Act which is part of the heritage of the Diefenbaker administration. Also it is a pleasure to see the marvellous conversion on the part of the New Democratic Party to the small-business community.
I listened with great interest to the Hon. Member for Kamloops-Shuswap (Mr. Riis). I believe he meant every word he said with respect to small business. It is a tragedy that he cannot bring Members of his Party along with him into that policy. On the one hand they want to see small business succeed. In fact they want it to succeed so well that it stays small, because if it ever grows, they want to nationalize it and punish success. It is a mystery to me how the Hon. Member could say in one of his closing sentences that the country lacks a will to succeed. Then when the business succeeds they want to punish it, as I heard this morning during Question Period- punishing profit, which is one of the dirty words in the lexicon of the New Democratic Party. If we look over their policies from their annual conventions, we find that they have such a profound commitment to no growth, whether it is energy, profit or whatever aspect of the economy, that their entire policy is really the cruise missile of the Canadian economy; they will search out and destroy whatever they can if it gets anywhere. The question they have never answered is: If a small business does what they want it to do-succeeds, makes a profit, grows and multiplies-at what point does it become a wicked, wicked enterprise?


Nelson Andrew Riis: Do you not have anything positive to say? At least we have something positive to say. All we hear from you is doom and gloom, whine and snivel.


Benno Friesen: That is a question they will not answer. I know the Hon. Member for Kamloops-Shuswap wants to interrupt. He is entitled to do that because he has to speak on behalf of his entire caucus, but very few of his caucus share his point of view with respect to small business. As the Minister of Finance (Mr. Lalonde) rightly observed this morning, the Hon. Member for Kamloops-Shuswap is wearing blue and grey today. That is appropriate.
The Bill we are debating now, while it was introduced originally by the Diefenbaker Government, has changed in its purpose. Originally it was geared to helping small business expand and prosper. Now I think it is necessary to rescue small business. That is a tragedy. I recognize that part of this is because of the general economic malaise around the world and that, therefore, small business has a peculiar problem and cannot compete as well as large corporations.
March 18, 1983

The Bill we are discussing today is exceptionally important in that it provides borrowing power at 1 per cent above prime. This is an important resource for the small-business community. The Hon. Member for Kamloops-Shuswap is quite right; perhaps that is the main reason the banks try to keep it a secret. They do not want to lend money at 1 per cent above prime.
While borrowing capacity is one of the problems facing the small-business community, the more excruciating problem is the cost of capitalization or of buying. A dairy farm in the Fraser Valley costs about $1 million or a sizeable, good, efficient fishing boat on the Pacific Coast costs about $1 million. When money has been invested in a farm, a boat or some other merchandising business, the business is competing not only with other farmers, other fishermen or other merchants, it is competing with the Government. The competition is not necessarily in merchandising, it is also competition with Government regulations. We multiply the risk which the small-businessman takes when he invests his $1 million, and while it is good that we can provide this 1 per cent above prime opportunity to business, there are other problems. It is a tragedy that that businessman then faces the hurdles of all of the Government regulations and all of the hoops through which the businessman has to jump.
The real solution for the small-businessman is not so much borrowing capacity as it is profitability, to make sure that he can get an honest and sufficient return on investment. If you cannot get a profit on what you have invested, why borrow? What is the purpose of this Bill? There is no doubt that the general malaise in the market plays a very important part in the difficulties facing the small-businessman. The real problem is that the Government itself is antagonistic toward the small-businessman.
I have a few examples to show what some business people have faced. These I have encountered in the past year. A small business in my community specializes in the installation of sun decks. The name of the company is Ensurco. A number of months ago the head of the company wrote to me regarding a refund of duty and taxes. This company specializes in sun decking, and it has faced what many other small companies have faced, a downturn in the market. This downturn in the market is particularly evident in the Lower Mainland of British Columbia and it had a devastating impact on the housing industry and the saleability of homes. This company bought inventory on the expectation that it would be called upon to do a lot of work. But houses sat empty, lots were undeveloped and the company was stuck with its inventory.
Let me read into the record what this businessman faced as a result of the Government's attitude. He wrote:
We import vinyl sundecking materials from General Tire and Rubber Co. This particular shipment in question was found to be exceptionally baggy and almost impossible to work with. Unfortunately, because of rather large inventories already on hand, and the fact that we move our old inventory out first, it took a number of months to discover the defects. Even then, it was only that our dealers to whom we sell the product, complained it was causing them undue hardships applying the product. We immediately applied for a credit from our supplier which eventually came through to the tune of about $7,000. We assumed that
Small Businesses Loans Act
once the credit came through we could apply to Canada Customs for a refund on duties. By this time well over six months had elapsed. Because of the relatively large size of the claim, our manufacturer had to have someone verify the problem, causing some additional delays. By then, we had given credits to our dealers (who had already purchased the product) for approximately 50 per cent of its value, and had arranged to sell off the remainder of the inventory for approximately the same. When we finally applied for a refund, we were told there was a 90 day limit after the original import of the goods to register a claim. If we did not do so, we were simply out of luck. While we understand that ingnorance of these rules and regulations is no defence, we still feel we have a reasonable right to expect a refund. In a telephone call to the Dominion Customs Appraiser's office a number of months ago, I was informed that there was a special section (462B) of the Customs Act which gave some discretionary powers to the Appraiser to allow a refund if the 90 day time limit has passed, so long as the two year limit is not yet up. I have pursued this with Revenue Canada, but unfortunately been unsuccessful.
The answer of the Minister of National Revenue (Mr. Bussieres) was: "You are absolutely right; there is a special discretionary power and we will send you the regulations". About 30 pages of regulations and application forms arrived. But unfortunately, under another Section of the Act, I think Hon. Members know that if officials of National Revenue are confronted with the regulation that seems to give the businessman a way out and he might be able to get the refund, National Revenue always manages to find another regulation which countervails the original one and the Government gets to keep its money. Here is a man trying to keep his company together, struggling to keep it afloat and his enemy is not only the economy but the Government. The Government is fighting him.
I have another letter from a company called Madison Sales Ltd., Burnaby, B.C. This gentleman writes, in part:
The remarks in M. Bussieres' third paragraph indicates to me that he is blissfully unaware of the struggle businesses of any type or size have in maintaining a position in the marketplace, or meeting their obligations-particularly in such times as these. His lines reading "The annual report will provide my department with the information necessary to recommend legislative changes, develop appropriate audit programs and assist in the development of tax policy" is a classic bureaucratic summation of where they consider priorities are standing. I also note that we are "Licensees".
I agree that we legally have to complete this form. Whether we will remains to be seen, as under the present circumstances we will be fortunate indeed if we are even in business by this time next year. The threat of imprisonment is, of course, to be expected. This is, after all, the "Land of the Free". Perhaps we should start our National Anthem with the words "Oh-Canada" instead of "O Canada."
I have yet another example. I began dealing with this issue probably nine months ago. It deals with the Canadian West Coast Publishers Limited. Here is a small company providing about nine jobs. It went into business to publish information for the Chambers of Commerce throughout the Fraser Valley. They put out a brochure to help the chambers of commerce in each locality publicize and advertise the attractiveness of that community to future business. There would be a 10 per cent excise tax on that type of work. As soon as the Department of National Revenue saw what the Department thought was a tourist information bureau, it became taxable. That 10 per cent made the difference between making it or breaking it.
I started to negotiate and mediate between that business and the Minister of National Revenue. At first there seemed to be a glimmer of hope. As I said before, there was always another

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Small Businesses Loans Act
clause which countervailed the original one. Soon my constituent, the businessman, realized that there were several other publishing companies doing identically the same thing he was. In fact, he tailored his masthead on the publication to suit the conditions and terms laid down by Revenue Canada. As soon as he did that, National Revenue found another reason why he did not qualify under the terms and conditions. He found several other businesses doing the same thing. But Mr. Speaker, National Revenue replied: "Sorry, you still do not qualify. What we will have to do now is to punish the others you have discovered on our behalf." That shows the antagonistic attitude of this Government toward businessmen.
I have another example. I had a businessman call me a few weeks ago. He was operating a branch company in my community. He had a young man come to him begging for work. He kept coming back and asking whether there was something he could do. The businessman scrounged around the company and said: "I think I can find some work as long as there is no additional bookkeeping overhead for me so I can justify you to head office". The businessman called National Revenue downtown. It did not matter what kind of a formula he devised for National Revenue because it never was adequate to enable him to hire this extra person without creating extra expense for himself.
I finally told him that I believed one should adopt a different approach to National Revenue. One should not call National Revenue to ask if what one wants to do is acceptable; one should call them and say: "This is what I am going to do. What is the best way of going about it?" If National Revenue is given the opportunity to say no, they will do so. That is their style.
As I said at the outset, it is probably beneficial that we are passing this legislation and providing these additional borrowing opportunities for the small business community. The necessity for this legislation becomes evident when one reads headlines such as the one in the Ottawa Citizen of March 15 which says "Bankruptcies in Canada Rising"; or the headline in the Gazette of January 18 which says "Liabilities Double in Bankruptcies"; or the headline again in the Ottawa Citizen of January 18 which says "Bankruptcies Up 33 Per Cent in 1982". We must support this legislation but it is a tragedy that the Government does not realize that the real problem facing the businessman is not so much the ability to borrow but the ability to make a profit which, in turn, rewards him and enables him to stay in business.
Therefore, while we will pass this legislation and welcome it, we realize it is not the solution to the economic problems facing Canada today.


Mr. Bill Kempling (Burlington):: Mr. Speaker, while we are pleased to see this Bill come before the House, it was necessary in order to continue the life of the Small Businesses Loans Act in any event.
The small business portfolio could be one of the economic recovery engines for the months ahead. To be effective, however, it must go far beyond the present limits of the Act. Most small businessmen who could utilize this Act need operating funds. They have been ravaged by high interest rates and other increases in expenses that are beyond their control. Such expenses as insurance, telephone charges, Unemployment Insurance premiums, workmen's compensation, gasoline taxes, municipal taxes and so on have all contributed to the dilemma confronting a small-businessman. Therefore, this Act should be amended further to allow funds borrowed under this Act to be used for operating expenses. When one sees the dimension of the real crisis facing the small businesman, I am sure Hon. Members would agree with that amendment.
To a minor extent, the problem they are facing is aided by the Small Business Development Bond. This instrument is only used after a business is threatened with a cut-off of operating funds from a bank. It is last ditch or dire straits legislation-to coin a current phrase-that is utilized if time permits. That time is the period before the bank closes down a business.
One needs only to look at the bankruptcies in the 1980-82 period to appreciate the crisis. In 1982 there were 10,765 business bankruptcies, 410 farm bankruptcies and 30,463 personal bankruptcies. The amount of losses through business and farm bankruptcies in 1982 was $2.33 billion. Personal bankruptcy losses would be in addition to the business and farm losses.
Some of these people will make it back into business and some will not. Our concern should be to see that the survivors, those who are still conducting business, continue to survive. We should also see that those who have gone under or have become bankrupt and seek another chance are able to find a financial atmosphere to accommodate them and provide a lesson from their unfortunate experience.
The small businessman desperately needs the ability to restructure his balance sheet. The sooner this is accomplished, the sooner revenue in the form of taxes from profits will flow. We are all aware today that Government revenues are substantially down from what was anticipated. Regardless of the cause or the politics of revenue decline, the fact is that it must be replaced in some measure if economic recovery is to be sustained.
You will note, Mr. Speaker, that I am not talking about massive Government grants or hand-outs to small business. Most would reject this approach in any event. What must happen instead is that the Government must recognize the position of small business in our economy, the contribution it makes to tax revenues and employment stability. It must recognize the importance of the ability with which small business can change direction and adjust to the market, to innovate and adapt in order to survive.
I suppose that aside from being able to conceive an idea and convert it into economic activity from which a profit may be realized, the constant challenge of a changing market is the major stimulation to the entrepreneur. Running small business is an art. It is every bit as creative as painting a picture. To
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conceive an idea of a product or service for the marketplace, to obtain the resources and funds that are required to take that first step and to see the venture take hold and grow, is very creative, exciting and satisfying.
In spite of all the gloom and doom that abounds, there are more opportunities today for small businesses than at any time in the last decade. One of the dynamics of a challenge is to turn adversity into advantage. Many businesses have been severely damaged by the recession and many are victims of the times. Most are in difficulty because of the lack of depth in equity investment. I will return to that issue later.
We have entered into another industrial revolution. The advent of computers, word processors and robotics, in addition to the information and communications explosion, have given us the opportunity to adapt this technology to the small business field. The next decade will produce outstanding products that will allow us to serve wider markets more rapidly and efficiently.
Many of the problems that occupied our time in the past decade will be solved by this new technology and we will be able to devote ourselves to producing more and better products. The exciting part of this new technology is that it is available to all sizes of businesses, either by direct purchase, through rental or lease, or through the purchase of a service.
Let us use the challenge for the advertising industry as an example. That industry must adapt to the new costs facing a businessman. More businesses will depend upon catalogues to present their products because the cost of transportation and accommodation will reduce the number of salesmen who will travel across the country selling products to various customers. Order desks of the future will have video phones which will be used to try to bridge the lack of personal contact in the flesh, so to speak. The mechanics of cash flow will be a computer program. The transfer of funds will aid cash flow and keep accounts receivable and payable more current.
In order fully to explore and exploit this revolution, we need some new financial instruments. It may come to pass that the insurance industry will respond to the needs of small business and begin to supply insurance or even funding if it is not available from the banks.
We must move away from the situation where a businessman is squeezed out by a nervous banker. Banks should treat all businesses equally. Collateral must be replaced with other guarantees, or at least downgraded in importance.
Here is an example of the average small-businessman. He has a limited liability company, a line of credit at the bank and a term loan at the same bank. As security, the bank takes his accounts receivable, the personal guarantee of the officers and directors, and then takes a floating charge debenture on all other assets, including inventory, machinery, lands and buildings. The bank usually values the inventory at 30 per cent of its value, regardless of market conditions. It would be sold on a distress basis and the balance of the assets would be sold to satisfy the bank loans. That is a deplorable way to operate, but those are the facts of life today.
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This is just madness, so we must create another instrument for financing small business that would put some competition into the equity field. The program sponsored by the Province of Ontario, the Small Business Development Corporation, is excellent. We should have a variety of these programs to cover the small business base of this country. These programs should be initiated by Governments but should use private sector funding. They would inject some good, solid competition into equity financing at competitive rates, which is exactly what is needed in this country today.
The floating charge debenture favoured by most banks is an albatross around the neck of the small business community. Canadians are great savers. We have more money on deposit per capita than any other western nation. We must devise financial equity instruments to shake loose some of that money as a basis for financing small business.
We must take some action on other fronts. Research and development needs a real shot in the arm. Provincial research foundations co-operating with the National Research Council and the federal and provincial Departments of Industry are doing excellent work. But we must go further. The Small Businesses Loans Act should be amended to allow it to be used for the acquisition of a patent, or for the registering of a patent. We could set in place a registered research and development fund that would allow small businesses to accumulate funds for research and development. Most R and D projects die because of the lack of cash. There is no shortage of ideas, no lack of inventiveness, ingenuity, or entrepreneurship. But there is a lack of available funding for R and D in most small businesses. We are holding back the future by not exploiting this fantastic resource.
Mr. Speaker, we have developed a very sophisticated service industry that depends on imported products to a great extent. Much of that industry could be rapidly converted into small manufacturing operations that could generate new products from a combination of equity funds at a reasonable price and a broad thrust into R and D financing, as I have suggested.
How urgent is this, you may ask, Mr. Speaker. I believe it is on the scale of a crisis. Consider again these facts; that Government revenues are falling; that Industry, Trade and Commerce reports our largest firms will reduce capital spending by 8 per cent for 1983, and that follows a 6 per cent reduction for 1982; that manufacturing is only at 67 per cent of its capacity; that bankruptcies are 33 per cent higher than last year; that unemployment is at 1,600,000; that the net job loss last year was 355,000; that UIC benefits for the first 11 months of 1982 are $7.7 billion; that corporate profits are 51 per cent lower in the third quarter of 1982 than a year earlier; and that return on shareholders' equity is below 10 per cent. Last year's data and analysis of the current quarter shows that return on equity is at about 4.6 per cent. That is not a very attractive figure to potential investors.
This is the dimension of the dilemma that we face. If we are going to respond to these stark facts we must take some bold action, not by throwing wads of money at the problem, but by

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Small Businesses Loans Act
creating an atmosphere in which the business and industry of Canada can repair the wounds they have suffered over the past few years. This Bill is a small step in that direction. It is not the answer, it is part of a much larger solution. The question
is,	will the Government respond, or will it shove its head in the sand as it has done so often in the past?
Mr. Speaker, every time I speak on a Friday afternoon I always say that it is exciting to be in the House of Commons at 25 minutes to four, with the gallery vibrating and the people applauding the great speech one is making; but this is a very serious matter. I hope that the Minister will take note of the comments that I have made. 1 am a firm believer in the small business sector. I believe it is the engine that will enable us to turn a lot of the things around in this country. I do not believe that this is an area that needs an awful lot of money thrown at
it.	I think it needs an atmosphere that the Minister and the Government can help create. I think, given the proper atmosphere, that business will respond; and when you look at the stability that the small business sector gives to the labour force, you begin to realize how vital it is that it becomes stimulated and activated again.
The major thing, Mr. Speaker, I say to the Minister, is the lack of operating funds and a competitive equity base for the small business sector. Given those two things, I am confident that small business will respond to it and will play a major part in the turn-around of our economy.


Mr. Stan Schellenberger (Wetaskiwin):: Mr. Speaker, I am pleased to rise after the Hon. Member for Burlington (Mr. Kempling) who gave a great address on the Small Businesses Loans Act. This act has been in place for over 20 years now and it offers loan guarantees to small businesses which can meet various regulations that are put forward in the Act.
When we look at the statistics that have been put forward, we find there is a difficult problem in the country. We see that there are more and more bankruptcies and small businesses which are having difficulty meeting their payrolls. With the interest rates difficulties that we have just gone through, many businesses drew down a lot of the savings that they have been able to build up in the last number of years. That is still the sector that is capable of generating new jobs in the fastest way in our society. It is responsible for over 40 per cent of our business activity now and 25 per cent of our Gross National Product. It is the sector, as I said before, that is capable of quickly helping the over two million people who are unemployed or who have quit looking for a job, and is providing the opportunity for many of our young people to get into the work force.
When we talk about loan guarantees, we have to be a bit careful because, as I have watched this Government over the past two or three years, I find that more and more of those loan guarantees are going out in substantial amounts to one or two large companies who have found themselves in difficulty. We all recall the loan guarantees that have gone to Massey-Ferguson, to Chrysler, recently to Petrosar and Petromont, Maislin Trucking, and a very large one to Dome Petroleum. These loans have put a tremendous strain on the capital that is available in banks to other sectors, and I am afraid that
because of this kind of strain on the banking system and the amount of capital available many small businesses which could have found themselves capable of getting loan guarantees under this Act are not getting those guarantees.
With regard to the other statistic showing how much our banks have out in loans to other countries as well, as was pointed out in a recent Time magazine article, the western world has some $706 billion out in loans to Third World countries and enterprises. Many of those countries are not capable of paying those loans back today, and they are in default of payment.
This does not bode well for small businesses. Many speakers previously have read letters from their constituents, and I could do the same. Businesses are having problems and are unable, despite all the Government programs, to get the kind of assistance that can get them through a brief period of difficulty.
In passing this Bill and putting in place an Act such as this, we should be providing an instrument specific to a small business or an individual. This obviously should allow Government to foster the policy of giving loans to those who truly need them. This points to the fact that the businesses that really require this type of assistance should be accurately identified in order to avoid missing a target that we put forward in this House of Commons and wasting the limited finances that we have, as a Government, to assist small businesses.
Yesterday we talked about the Small Business Development Bond and how we should monitor it. Yesterday I asked the Minister a question about it. He did not give a very satisfactory answer. I suspect the same will be true of this Act. It is being left entirely in the hands of the banks to make decisions on our behalf. Perhaps we can qualify that. Maybe that is the way we ought to do it. I would like to think that we would check from time to time to make sure that small-business persons going to those lending institutions to apply for a loan under the Act are not being turned away by some superfluous argument which they are not able to defend themselves against.
I have sat across the desk of a manager of a lending institution. I know how quickly they can state whether or not they will make a loan. It is very difficult to argue with them unless you study intensively the regulations they are using. Most small-businessmen applying for this type of loan are not familiar with the regulations under which they are applying. If the bank manager does not have the capital or is reluctant to lend money to that individual, he can easily pass him out the door.
I like to think when we have specific legislation such as this that we would target that incentive in the right direction. On the other hand, when speaking about the Small Business Development Bond yesterday, we pointed out that many of the banks and lending institutions use these instruments which are
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put at their disposal by Government to assist those businesses which are in the risk category, not in the category of defaulting, but in that area where, if given assistance, it will put them in a good risk category. That is happening to a large extent with the Small Business Development Bond. 1 would like to know whether that may be happening to those who apply under the Small Businesses Loans Act.
The guarantees that we are offering should not interfere that much in the marketplace unless they are given to very large companies where huge amounts of capital go into the hands of one individual. The cost to Government of this kind of loan is almost nothing, unless the loan is in arrears or is defaulted. In my opinion, it is better to go forward in this manner than with a direct loan from Government to business or in the direction of taking some equity position in a business.
This type of program is appealing. There is very little Government bureaucracy attached to it. If Government has some small monitoring mechanism to ensure the lending institutions are following the regulations that Parliament would like, this Bill can be a very effective instrument.
This Act was put in place over 20 years ago to assist small businesses to expand. That should be one of its functions today. We are also in the position today of assisting small businesses to survive. I hope we look at expanding some of the regulations of this Act to assist in that manner. One way that was discussed was to allow the banks and lending institutions to use this Act to assist businesses with operating capital.
What has happened often in recent months is that banks which have been carrying on business have been cutting off that operating capital. I can give the example of a sailboat company. Most sales are in the spring and summer; it has difficulty maintaining itself over the fall and winter. This company is having its capital cut off. As a result, it is being forced into insolvency. It cannot continue to operate and must go into bankruptcy, selling off the boats at a very small amount of their value. It is very sad. If that business had been allowed to exist for a few more months, it could have probably continued. If the economy is in an upturn pattern in the next number of months, it could have been a very viable business on into the future.
In the last year or so, many small businesses have been contacting their Member of Parliament asking what to do when dealing with companies, large or small, that are going bankrupt. I received a call just last week from one such company. It had done $50,000 worth of business with a fairly large company in the city of Edmonton. That company has gone bankrupt and is asking creditors to accept 25 cents on the dollar. That is very difficult for that small business. In fact, it may drive it into bankruptcy, as I suspect this kind of situation has driven other small business into bankruptcy in the last few years.
This small-businessman suggested that we develop a system to protect small businesses against going into bankruptcy and losing a large amount of capital. He suggested setting up a bond system. When they do business with the Government, they have to be bonded to ensure they are capable of paying
Small Businesses Loans Act
the contractors working for them. You do that by taking out an adequate bond to cover the contract with the Government.
He suggested requiring small businesses to take out bonds to cover contracts with other small businesses. In that way, they would be secured. If they did not have a bond, they would recognize that they are taking a risk. It would then be up to that business as to whether or not it entered a contract. This is an interesting suggestion that might be explored. I discussed the difficulties with him. It is a suggestion that could be implemented in a very positive manner.
In difficult financial times companies have trouble expanding their business. The whole area of new venture capital and new equity capital causes many difficulties for small businesses. New businesses are very vulnerable for the first number of years. That has been pointed out in a very cruel fashion in my constituency in the last number of years.
In 1979 and 1980 the oil business was booming in Alberta. Many small businesses developed quickly to take up the jobs available. Industrial parks around the Edmonton area expanded very rapidly. Canadian entrepreneurs left large companies, Canadian and foreign, and used the expertise they had built up to start their own venture. They were very successful until the National Energy Program hit Parliament and this country, and the results have hurt those businesses tremendously. They were unable to survive and went out of business in large numbers.
There is a crucial stage when a new company starts up and that crucial stage can be very severely affected by such things as Government interference and Government budgets. In 1980, the Association of Canadian Venture Capital Companies took a survey of some 62 venture capital recipients. The survey showed that risk capital investments in young companies generated significant streams of benefits in the first number of years. With respect to companies founded between 1976 and 1979, each $100,000 of equity capital invested to 1979 produced an average of $310,000 of exports, $10,000 of expenditures on research and $44,000 in corporate, property and personal income tax. That is significant for an investment of that size.
Surveys which the United States has taken show that almost 80 per cent of all new jobs were created in the last number of years by young firms in the age group of zero to four years. Therefore, most of the new jobs in that country have been created by small businesses which have started up in the last few years. They have not been created by large companies and have not been created to any great extent, in the United States at least, by Government.
In Canada, ventures have chronically suffered from lack of risk equity capital. The more successful a company, it seems, the harder it is to raise additional venture capital or to finance its growth. That, certainly, has been the case during this recent recession because it seems like that type of capital has virtually dried up. One of the reasons must be the recent budgets which have come forward in this House of Commons.

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We have just had forced upon us closure on Bill C-139 which may cause many difficulties. I will not speak again about the Small Businesses Development Bond because we went over that a number of times. If we look at interest deductibility, where interest on funds borrowed to acquire shares in taxable Canadian corporations is only deductible up to $10,000, we see that ceiling restricts the Canadianization of companies which need investment capital in this country.
On capital cost allowance, the deduction for depreciation is limited to half the normal write-off in the year in which the asset is acquired. That causes difficulties. The original budget banned all reserves for payment of taxes on sale of property. Now we have three-year reserves allowed, but it still makes it difficult for business to make large capital purchases because payments cannot be spread beyond that three-year period.
With respect to annuities, these, of course, bring me close to my constituency because many farmers have used these annuities to assist them in paying the tax, which rips them off for their pension funds which they have worked so hard for all of their lives. Capital gains tax, in my opinion, should be abolished, but since it is there the farmers were able to use the annuities. We now have those funds diverted from the private sector where they have been invested and put into Government coffers where they are gobbled up, and who knows how they will be used to benefit those farmers and business people. And I could mention the 12.5 per cent dividend tax position.
There are many, many examples in the last number of budgets which have caused great difficulty for small businesses, especially in these hard economic times. What my colleagues and I are saying here is that we approve of this Bill. We hope that it could be expanded, but we also want to impress upon the Government the things which should be done to assist small business, the capacity of small business to create jobs, and the ability of small business to get this country going again in the near future.


Hon. Ron Huntington (Capilano):: Mr. Speaker, Bill C-144, as we have been told, really extends to 1985 the $1.5 billion borrowing limit which expires this coming March. We on this side agree with this extension. We all know that there is a limit in terms of the clients eligible for loans insured under the Small Businesses Loans Act, with $1.5 million in sales being the ceiling. Therefore, in fact we are dealing with a true and accurate definition of the small business community.
Some of the history of the Act is quite interesting. In 1977, which was before the banks had an incentive to make loans under this Act, there was a total of 4,800 to 4,900 loans authorized. The amount of loans authorized at that time was in the order of $96.5 billion. The average size of the loan was in the order of $19,700 and there had been 72 claims paid under the program at that time, for a cost to the Treasury of $632,000.
Then, in the wisdom of the House, we decided to make it 1 per cent above prime for the banks, and the banks finally had an incentive to use this insurance and to make available very important money to the innovative small business sector which wanted to take a chance in the marketplace. We then started
to see a rapid escalation in the use of the loan. Loans moved from 4,900 to 7,300 in 1978, then to 10,700 loans in 1979, and in 1982 the last figures show that there are 16,500 loans authorized under this Act, for a total since its inception of 116,500.
History shows that the Act is of value and it is starting to be used extensively. From 1977 we have gone from $96 million to some $427 million of loans authorized. The average size of the loan has grown by only $5,000. We have escalated progressively through the years. The number of claims paid have increased from 72 in 1977 to 444 in 1982. Losses to the program in 1977 were $632,000 and these increased to $8,800,000 in 1982. Those are the preliminary figures to November 30.
It is interesting, Mr. Speaker, to look at the estimates for the program. In 1981-82 they were $2.5 million and the forecast halfway through the year was for $9,300,000. We can see, therefore, the effects of the high interest rate policy of the monetary system of this Government on the small business sector. We note in the Estimates for 1983-84 that it expects to spend $13 million on the program, so the Minister and the Department of Industry, Trade and Commerce are certainly anticipating a continuation of the very troubling situation which exists out in the community.
One of my colleagues gave some figures on bankruptcies so I do not have to read those figures back into the record, but I must say that bankruptcies-and not just the formal bankruptcies-are at a very serious rate of escalation, with all of the human tragedy which they cause. Because of Section 178, which in our wisdom we put into the new Bank Act, we have now moved into an era of soft bankruptcies, where the bank, before one of the creditors of an organization triggers a bankruptcy, can move in with receiver, charge the cost of that receiver to the operation, and literally take over the cash flow of the business.
In spirit and intent this is a pretty good move. However, I guess like most Members I have spent hours each week involved in pretty tragic cases of businesses going down the tube when really what they need is some bridging time to get over the loss of working capital and retained earnings caused by a combination of two factors. One was the rapid escalation in interest rates, up over 24 per cent, which in turn began to slow down the world economy. Those organizations forced to pay that kind of an interest rate found themselves with inventories which were not turning over as fast and the financial liquidity of the business community was lost to the banks.
Now, I am an individual who has always respected the rule book of the banks. 1 do not expect the bank to lend me depositors' money without totally protecting themselves and reducing the risk to a minimum. That is why this Small Businesses Loans Act type of insurance is so important to the high-risk entrepreneur venturing into the marketplace. 1 think it is one of the healthier programs we have. Frankly, 1 think it should
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be available through, and administered by, the Federal Business Development Bank.
Perhaps the Minister in his wrap-up might tell us what has happened to the study his predecessor started on the financial requirements of the small business community. I can remember having delivered to my office about 22 packages of paper on the various studies. I think they were started even prior to my occupying that portfolio. All that paper was finally made available to us and then the Minister's predecessor started to examine the study to find out just what it was that the small business community needed. I am wondering if he would be good enough to report on the progress of that study, as long as he does not need another study to find out what the progress is. I have mentioned the changes in the nature of receivership and all of this should be part and parcel of the study they are dealing with in that ministry.
As you and most of my colleagues in the House probably know, Mr. Speaker, I am basically against Government intervention in the marketplace. I really believe that the free market system, the law of supply and demand, if respected and adhered to, provides one of the most effective filters for inefficiency, and for those who take a risk and lose, which is available without real cost to the community. You can take a chance. You can do your assessments and appraisals. Through the Federal Business Development Bank you can hire business advisers, and if you have any moxie at all in assessing your investment risks, then you should be able to get money from the chartered banks under this program or through the FBDB as a lender of last resort.
I would like to see us have a debate on the FBDB some day and remove the banks' lender of last resort status. I think they have a magnificent staff, expertise, and if given the chance I think they probably could come up with some very vital answers if the Government truly wants the small business sector, the entrepreneurial sector, of this country to work. If you are going to intervene in the marketplace, Mr. Speaker, you should do it in a constructive way. The Government should not intervene with financial guarantees and assistance unless it does a study to find out what the root of the problem is in the marketplace and the financial community.
It is not good enough for the Government to give a $34 million loan guarantee to a company like Maislin after the Prime Minister (Mr. Trudeau) attends a ballgame sitting in a private box. If memory serves me right, Mr. Speaker, the problem was that Maislin wanted to buy and did buy a trucking firm in Wisconsin. They stripped themselves of working capital to make the purchase and then the trucking firm got caught in the deregulation policy of the U.S. Government. Their cash flow just went to ribbons and all of a sudden the Canadian parent company is in trouble. But then it has the ability, through its friends right to the highest offices of the Government of Canada, to have the people of Canada guarantee a $34 million loan.
As a result of questions this week in the House we found out that the Government has not had a capable observer on the Board of Directors, and that it is likely Maislin is going to become a terminal case unless they can get another loan
Small Businesses Loans Act
guarantee. This kind of intervention, Mr. Speaker, is totally negative. Not only that, it is immoral and absolutely angers everyone in the marketplace. None of the people who are served by the Small Businesses Loans Act have this kind of
access.
Small businesses have been built up into intermediate size businesses. They have very successfully generated large payrolls from which are deducted a lot of income tax. Some of them are in trouble today and in receivership and none of them is being given any kind of courtesy approaching this kind of insider trading, so to speak.
Look at the loan guarantee to Chrysler, Mr. Speaker. I was in Detroit in 1967 on a tour of the auto plants. At the end of the tour I had to rise to my feet and give my impressions. In 1967 my impression was that Chrysler would not survive the decade because it did not appear to be plowing its earnings back into plant modernization and product development. All the major automobile companies in the Detroit area refused to recognize that ten years down the road this world was going to become energy short and that we could no longer afford to drive around with the unnecessary weight of these great tin cans. All you had to do was look at Asia and Europe to know what we in North America were going to be facing in ten years. Yet what happens? We do not recognize the root of the problem.
These megacorporations worship the balance sheet. They do not think of the interest of the country and they did not realize the social and energy needs of the nation down the road. The industry was a loser ten years ago and it is obviously a loser today unless it is able to equip itself with robots and improve production and quality to match that which is coming out of Japan in the automobile sector.
Look at a company like Massey-Ferguson. It has been a pride and joy to this country. It was part and parcel of the farm community down through the years. Yet we see dividend distribution, weak management, lack of modernization and market forecasting, and then we watched that company get into so much trouble that we had to go and bail it out with a Government Loan guarantee. None of this courtesy is extended to the small and intermediate sector. I could give chapter, litany and verse on Dome, which got into trouble. In each case that I have mentioned, the banks had a too high percentage of their equity invested and so they were at risk if companies like Chrysler, Massey and Dome went under. Of course, the Government moved in to save the banks.
Why has the Inspector General of Banks allowed the banks to grab the big loans that yield the highest profits and the lowest administration costs, instead of ensuring that the risk is spread over a broader market? The big companies which have been guilty of all the sins of imperfection and bad management have been bridged. It is time that the House considered a bridge for the small businessman and for the intermediate sector.

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If we are going to consider bridging, Mr. Speaker, we will have to take warning from the intervention and efficiency study of the Economic Council of Canada, 1982. It points out that the Government cannot bridge or intervene in the market financially unless it gets to the root of the problem.
Today we are talking about the small business community so let us see what problems are shown in the survey done in 1982 by the Canadian Federation of Independent Business. It found that the number one problem bothering the business community was interest rates. This was identified as the number one problem by 65 per cent of respondents. Slower than normal business was identified by 52 per cent of respondents. Naturally this means that the turn-around on inventory does not generate the cash flow that is needed to cover the high burden of interest rates. Government tax burden was identified as the problem by 48.6 per cent of respondents. No one in the business community wants to escape taxes but they can pay more if they are assisted to earn profits. Inflation was identified as the main factor by 45.7 per cent of respondents. It now ranks fourth in importance in the eyes of the small business community. Government regulation and paper burden was identified by 43 per cent.
I ask the Minister, through you, Mr. Speaker, what happened to the years and years of work done under four successive Ministers in the secretariat that deals with the paper burden problem? The incumbent Minister, who was formerly Minister of National Revenue, must know what the Department of National Revenue does to the business community. His predecessor, who now sits on this side of the House, was amazed at what he found. We were co-operating on studies of ways to clean up the Department of National Revenue and reduce its arbitrary interpretation of the Act. Small businessmen have been dealing with the Department for years and doing things in a certain way and then, all of a sudden it is zap, a new interpretation and they are frozen. A businessman may have an inventory on which he is paying high interest rates and then find that the Government has put a new interpretation on an existing regulation. That kind of instability with the normal flow of business interferes with the tax revenues that the Government needs to collect from business. The tax collector thinks he is grabbing when actually he is throwing water on the coals with this type of behaviour.


The Acting Speaker (Mr. Rose):: Order, please. I regret to interrupt the Hon. Member but his time has expired. He may continue with the unanimous consent of the House. Is there consent?


Some Hon. Members:: Agreed.


Arthur Ronald Huntington: I thank Members sincerely. I thank my colleagues, through you, Mr. Speaker, for allowing me to continue for a few minutes.
The Minister of State for Small Businesses and Tourism (Mr. Rompkey), with his background as Minister of National Revenue, has an opportunity to deal with a category of items that are a real aggravation to the generation of wealth and taxes in the business community. If he were to clean up that
area he would make a real contribution to the system. First of all he should see if something cannot be done to accelerate the paper burden study. Then he could get together with the Minister of Finance (Mr. Lalonde). In my opinion, the Minister of Finance is a very bright person. I have great respect for his brightness and his abilities although I do not have respect for the direction in which he is leading us.
There is a way to clean up the Income Tax Act and allow the business community to operate in a more stable environment. There were 47 amendments to Bill C-139 and I do not think we even debated them in Committee of the Whole because the Government brought in closure. I just cannot believe the damage that was done to the business community by the budget brought in when Mr. Chretien was Minister of Finance. I spent many congenial hours with him and his Parliamentary Secretary, who was Mr. Lumley. I advised them that they were creating an absolute jungle of holding companies for shareholders and owners of small and intermediate business in the country.
That is exactly what happened. Everyone ran around creating holding companies with the dividend laws that were put in place at that time. Then the dividends were dammed up. Naturally, the corporate tax was paid for the dividends when declared. The holding companies dammed up the dividends so that the actual owner who had transferred his ownership to a holding company did not pay tax on the dividends he received. The lawyers and accountants across the country had a great time doing all the incorporations. But then Mr. MacEachen came along and undid all of that, after being warned that it would happen.


Lorne Edmund Nystrom: Mr. Speaker, I rise on a point of order. I am not a real conservative regarding the House rules, but I believe the Hon. Member is breaking the rules and I think you should rule on the matter. He has referred to the Deputy Prime Minister by name, to the Justice Minister by name, and to the Minister of Industry, Trade and Commerce by name. I do not like to be a conservative in this, but it seems to me that he is breaking with tradition. I wonder if you would rule on that.


The Acting Speaker (Mr. Rose):: The Hon. Member for Capilano (Mr. Huntington).


Arthur Ronald Huntington: Mr. Speaker, 1 am glad you ignored that trivial intervention. I was saying that one Minister creates a great haven to dam up dividends and the next Minister dismantles it and puts on a 12.5 per cent dividend tax. This forced the re-organization of every well planned tax balance sheet in Canada. Millions of dollars must have been spent on adjusting the balance sheets and share structures of Canadian companies as of December 31, 1982. They have had to strip down preferred shares and roll them over into a new class of preferred share. They have taken deferred bonuses and rolled profits out ahead. You could not believe what has happened to business community balance sheets, Mr. Speaker, since the MacEachen budget, the three subsequent budgets and the non-mini-budget of the Minister of Finance. It seems that the Government has
March 18, 1983

implemented all this confusion by design to destroy absolutely the private sector. There is no one out there who can make a decision or who knows what to do. Personally I have had to pay $150 each for four rulings out of the Department of Finance, and I waited from five to seven months for them. I notice the Department has stopped that habit, but it was another $500 in fees to which it was not really entitled.
I do not want to abuse the extra time I have been given, but we must do something about this Act if we want the private sector to survive. I tell the Minister of State for Small Businesses and Tourism that the continuing escalation and costs of this program and all other programs, even FBDB programs, will be more than the Treasury can handle. I think it is dealing with the life of the private sector now, and perhaps it is by design.


Mrs. Jennifer Cossitt (Leeds-Grenville):: Mr. Speaker, I welcome the opportunity to speak on Bill C-144, a Bill to continue providing necessary assistance to our small-business community. Five thousand small businesses received assistance in 1981 and 1982. I might add that it was necessary and welcome assistance provided through the legislation contained in the Small Businesses Loans Act. Had this assistance not been made available to them, I am sure they would have joined the many thousands of small entrepreneurs which have succumbed to bankruptcy.
1 am particularly pleased with the urgency the Government has shown that this program be continued because there are currently few Government programs which offer any direct assistance or relief to small businesses. We must, at all costs, ensure that this community remains healthy and viable.
Since 1961 when this Act first came into effect and up until last September when the latest statistics wer tabulated, over 100,000 loans were made to small businesses, worth almost $2 billion. Yet this has obviously not been enough to enable a great number to survive. Despite the 12,000 loans made in the first nine months of last year, there was still a record number of bankruptcies recorded in 1982. In fact, there were 33 per cent more bankruptcies in 1982 than there were in 1981 and 63 per cent more bankruptcies than in 1980, just two years earlier.
It is with these statistics that I am very concerned. Indeed, all Hon. Members of the House should be very concerned. Every month I see one more store closed, one more notice of receivership in the newspaper in Leeds-Grenville, and all I can think of is: How many people will be joining the constantly growing number of unemployed; how long has this business been struggling to keep going; what little assistance would have been required to keep it in operation?
These businesses being forced into bankruptcy are not young, inexperienced businesses, but rather businesses which have been run by families for generations, businesses which have served the community for many decades. These are small entrepreneurs which we all expect to continue to prosper
Small Businesses Loans Act
because they have been aroused for so long, they have many years of experience and knowledge behind them, and when they Finally give up the fight to stay alive, we are brought to the appalling realization that the small family business is in very grave jeopardy.
My riding is comprised of people who have lived there generation after generation, with small businesses handed down through their families, and they have provided many useful services to their community. Yet I know of numerous family businesses that have had to close down and give up because they have been forced into a corner by present disastrous economic circumstances. Many are being faced with the decision of filing for bankruptcy or selling out to larger conglomerates, so that the business will stay alive and people will not lose their jobs.
The people in Leeds-Grenville do not give up easily. They fight to survive. I know when a firm in my riding has to call it quits that the company has tried everything possible to make a go of it. It has contacted every Government agency or anyone it feels can be of assistance. It has borrowed all that it can to pay bills and maintain operating costs. It has cut salaries and laid off employees, with the hope that these cost-saving measures will aid it to weather the economic storm so that it can return to normal and bring about a healthier operation. But after all the efforts, many are still faced with the same choice-sell if it is not too late or declare bankruptcy.
I know and have felt the anguish through which these firms have to go with the final decision they have to make because 1 have worked many long weeks on their behalf, suggesting possible alternatives and providing necessary liaison with Government Departments in the slim hope that there just might be something to save them and enable them to remain solvent. It is the most heart-rending experience to know that all one's efforts have failed and the company is forced to give up.
We have only three cheese factories left in Leeds-Grenville, one of which, the Forfar cheese factory, has been in existence since 1863. It has become quite a landmark in Leeds, being well known for the excellent cheese it produces. Some years ago it was faced with the need to close down, and 17 local dairy farmers got together and decided to keep it operating. As 1 said before, we in Leeds-Grenville fight to survive and have a great sense of community spirit. We do not give up easily. The Forfar cheese factory is still in production today and is visited by many tourists, as well as many Members of the Chamber who enjoy its products.
Unfortunately other businesses have not fared so well in my riding. The Johnson Shoe Company is a firm that was operating in Brockville for 30 years, but unfortunately it was left with no other alternative but to close its doors for the last time earlier this year. I could go on and on with other examples of family businesses which have been in existence for generations and have had to close down. It is when institutions like the Johnson Shoe Company which have been operating for
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Small Businesses Loans Act
decades are being forced to sell out or close up their doors that I become very concerned with the direction the country is headed.
It goes without saying that every Member of Parliament has received a great number of representations from small businesses in their constituencies. I certainly have in the few months I have been a Member of Parliament. All the concerns to which I have listened and the letters I have received carry the same theme-less Government interference and more tax incentives to provide a healthy environment for free enterprise to exist.
For the record I would like to read comments from a completed questionnaire distributed by the Canadian Federation of Independent Business. All of us in the Chamber are familiar with these, but this particular one is from a small-business owner in my riding who wrote:
The economy has gone from bad to worse. Who is really doing anything about anything? As a small-businessman, we are hanging by our fingernails while the federal Government keeps piling on.
A further quotation from the same individual:
We, the small-businessman, cannot make the ends meet any more. Government is too demanding, taking so many of our dollars for everything it's ludicrous! They must be stopped at all costs!
As we are all aware, these questionnaires are distributed by the Canadian Federation of Independent Business at regular intervals. They provide Hon. Members with a great deal of information and interesting comments. I am sure the sentiments expressed by my constituents hold true across Canada. Whether it is a small business in Halifax or a small business in Kelowna, they all face the same problems and have the same concerns.
Ten years ago only 3,000 businesses went bankrupt. Today almost 11,000 have given up. This is an increase of almost 266 per cent in ten years, a situation which is completely out of control. We in the Opposition know only too well that this situation has to be brought under control and that Government action is needed now.
Let us look at what the Government is doing or not doing, as the case may be. What the Government is doing is trying to raise tax revenues to pay for its ever-increasing debt through measures that are, in effect, damaging to the small business community. For example, small-businessmen will no longer be able to participate in the new deferred profit-sharing plans which have been responsible for the continued healthy operation of many small firms. In effect, this will prohibit the owner of a company from providing for his or her own retirement out of the profits of the business, forcing them instead to turn to Registered Retirement Savings Plans as their only avenue. Unfortunately, these plans do nothing to stimulate the economy and, in effect, put money in a place where it cannot be used to increase investment in small business.
Other measures, such as the 12.5 per cent small business dividend distribution tax and the increased taxes on employee benefits, have also put unnecessary burdens on small businesses and have increased the phenomenal amount of paper work with which they are forced to deal. Quite often they
simply hand it all over in sheer frustration to their accountants because they can neither decipher nor handle it all.
Instead of making things easier for small businesses, instead of eliminating the red tape of government regulations, instead of stimulating investor confidence in small businesses to maintain a positive climate to encourage the small entrepreneur, the Government is doing the exact opposite. It is making things more difficult, it is creating more red tape, and it is driving away potential investors who put their money into Registered Retirement Savings Plans instead of Canadian companies.
The Government has also taken away the thrust of the Small Business Development Bond which was introduced by a Conservative Government in 1979.


Walter David Baker: I have never seen the Government look better! There is not one single Liberal Member in the House.


Mr. Munro (Esquimalt-Saanich):: Not one Liberal Member is to be seen.


Jennifer Cossitt: At that time, it provided incentive and much needed assistance to small businesses. The present Government has reduced this measure to a shadow of its former self and it will now provide assistance only to those firms in severe financial trouble. However, the bond has achieved little success because of these changes. What is happening is the banks are refusing to lend money to any company that is in enough financial difficulty to qualify for the bond.
What this Government is creating is an environment of uncertainty, an environment in which no small business can survive, an environment that does not encourage the small entrepreneur to expand. Yet despite this adverse climate, 150,000 new businesses started up last year. The spirit of small business is alive. There are still people out there willing to take a chance in the free enterprise system and try to make a go of their particular interests despite a continuing uncertain economy, despite high interest rates and despite tax laws that benefit no one but the public purse. The Government should be taking advantage of this entrepreneurial spirit instead of trying to squelch it through its own fiscal mismanagement and detrimental tax laws.
We should be encouraging this spirit and there are several ways that we can do this. We could revamp the Small Business Development Bond so that it will relieve the interest rate burden on small businesses. A 3 per cent reduction in interest costs would give many small businesses the extra boost needed to maintain a viable operation.
We could make it easier for small businesses to obtain debt financing through the Federal Business Development Bank so that they get the capital incentive they need now. Tax credits would also provide incentives for investors to put their money into Canadian business and provide those businesses with much needed capital funds.
We need to cut back on the load of paperwork with which the Government has burdened these businesses. Simplifying
March 18, 1983

the regulations and the forms would make it easier for small businesses to handle their own affairs, to save on accounting costs, and it would provide them with more time to devote to research, thus increasing profits.
The Government should stop emphasizing its interest in big business and devote more of its attention to the concerns of the small business person. Small businesses create jobs and employ people, but unless new incentives are introduced, small businesses will continue to close their doors in frustration at a system that continually beats them down rather than builds them up.
Canada needs sound concrete policies to stimulate investor and consumer confidence, programs that encourage the purchase of Canadian manufactured goods, less Government control and tax laws. These do not have to be so complicated that they can only be interpreted through an accountant.
Free enterprise must be allowed to flourish. Small businesses provide a great constituency of job creation. The Government has time and time again initiated job creation programs. Yet I believe that if the Government were to concentrate its efforts into providing more incentive for small businesses, this would result in greater job creation and would provide a healthier atmosphere in which free enterprise could grow.
A self-employed person creates employment for himself and others and as a result we see a greater contribution to the public purse through income taxes. The small business community has to be provided with a means to stay viable and productive so it can continue to contribute to the health of this country. The more bankruptcies, the greater the federal deficit, because people begin to draw from the public purse. The Government loses the means to collect the revenues it would otherwise receive. What does it take before the Government realizes that Canadians today are getting away from being the pioneers they once were, that the initiative for Canadians to realize their dream of starting their own business is fast becoming a thing of the past?
There is an urgency in our country to stimulate growth of small businesses which are made up of people who are industrious self-starters, ambitious, full of energy and motivation. We should be very careful that we do not lose their ability to produce, and in fact we should help them to continue their high level of productivity. Everything possible should be done to stimulate and encourage the motivation of the small entrepreneur.


Douglas Grinslade Lewis: Mr. Speaker, it is a pleasure for me to have an opportunity to address the House on the Small Businesses Loans Act. I have a great many small businesses in the riding of Simcoe North and I have spent all of my business life working for small business people.
Bill C-144 extends the life of the Small Businesses Loans Act to March 31, 1985. As the House is aware, the legislation was due to expire on March 31, 1983. This legislation increases the total guaranteed business improvement loans that may be outstanding to SI.5 billion from $850 million.
Small Businesses Loans Act
In acting for clients, one of the difficulties we found in dealing with banks and small business loans was that bankers were not too fond of processing these loans because of the vast amount of paperwork involved in obtaining them. This practice applied to all chartered banks and I do not single out any one particular bank with this criticism. Often I have been in a bank manager's office with a client asking about the Small Businesses Loans Act and about the other financial instruments available. The bank manager usually reaches under the desk and with both hands lifts up a thick set of regulations, and somewhere in the middle he finds the regulations with respect to the Small Businesses Loans Act. There will be an indication from the bank manager that he is not too keen to go through this red tape with the customer, and usually asks: "Why do you not have one of our conventional loans at the going interest rate plus 2 per cent?"
I say from a very practical standpoint that the Government would be well advised to consider very seriously the red tape which is involved in getting these loans in the bank branches to the small business people. They can afford to hire accounts and lawyers, but I am not sure that the essence of small business loans should be to employ accountants and lawyers, although both professions are very honourable. That should not be the purpose for which the Government of Canada becomes involved in the assistance to small business.
The small business sector is hurting today mainly because of the mismanagement of the economy by the Liberal Government. There is no question about that. Interest rates were kept at an artificially high level by the Liberal Government for the last three and one-half years. This has caused severe hardship in the small business community and has caused many to go broke. It has caused a reshaping of business practices which, in itself, is not totally wrong but has caused a great deal of hardship.
Small business people entered into the Government-created depression of 1981 with fixed bank loans. That practice was honourable and not unusual. At that time, business people knew where they stood when they had reasonable interest rates of 10 per cent and 11 per cent. When the recession that was induced by the Liberal Government began and interest rates were raised in an effort to cut down on inflation, the small business community started to hurt. Not only did the Government do nothing to assist the small business community, but the Government took steps in the November, 1981 budget which seemed to be designed to finally eliminate the small business community.
During those days, the popular joke which emerged was that if one wanted to run a small business, one simply bought a large business and waited. Many of these problems facing small business which I will elaborate on are familiar to the Government because it created them.
1 have mentioned the budget. The budget created an element of uncertainty for small business. Small businesses could not plan because the budget that was brought in in November

March 18, 1983
Small Businesses Loans Act
of 1981 was revised in December, 1981 in what is normally called by the business community "MacEachen's retreat".
The country then went through a winter of uncertainty and our Party crossed the country to listen to submissions from the interested parties who were concerned about the economy. We made our remarks in the House based on those concerns, and there subsequently was a retreat or adjustment in the form of one of the mini-economic statements which have replaced anything of tangible worth in the economic documentation of the Liberal Government.
There was another retreat in July of 1982. Of course, there was a change of Finance Ministers when we went from bad to worse, one might say, in order to give the present Minister of Finance who had decimated the energy industry a chance to do that to the entire economy. That is the situation we are presently faced with.
The Goverment finally brought the Income Tax Act before the House. It proceeded to cut off debate on that Bill, much to the dismay of those who wanted an Act that contained the proper amendments. I understand that the Government itself had some amendments but was unable to put them on the floor of the House due to time allocation. Once again, that has caused hardship to the small business community.
We introduced the Small Business Development Bond in an effort to create a method by which small businesses could capitalize their debts on a once in a lifetime basis so that they knew where they stood with their debt problems. They were to have reasonable interest rates with which the banks could participate. The Liberal Government gutted the Small Business Development Bond completely. It then became necessary for a business to be going broke in order to meet the criteria for receiving a Small Business Development Bond.
There is not much competition between banks and their branches for lending money to businesses that are going broke. It is not very good practice for an aspiring bank manager to call his or her head office and say that they have a new customer who is going broke and wants a Small Business Development Bond. People who adopt that practice would find themselves transferred out of the head office or to a much smaller branch.
Another measure in the Government's budget which hurt small business was the capital cost allowance write-off. It was cut in half in the first year of purchase and was a direct attack on the small business community.
I do not believe the Government realizes just what part small business plays in the country. A study conducted by the Massachusetts Institute of Technology reports that in the United States almost 80 per cent of all new jobs were created by young firms which have had from zero to four years of business participation. In any given region of the U.S., new job creation was almost entirely due to company births or expansion. Migration from other regions was relatively unimportant.
We found that in Ontario, for example, 75 per cent of business creation is usually internal small business. The Liberal Government put far too much emphasis on megaprojects, only to see them collapse. The Government protected
and bailed out Dome Petroleum while other businesses in ridings such as mine and those of my colleagues went broke because they could not get small business loans or assistance.
At the same time you see examples such as Maislin Transport, which is a very well connected trucking firm. The darlings of the Liberal Government found that it had access to the only loan that would be given to the trucking industry by the Liberal Government. Last summer, the Government made an exception-since we have now learned that this action did not represent a precedent-for Maislin and said that Maislin would put in $2.5 million and the Government would lend Maislin $34 million on that basis. Maislin simply had its subsidiary sell off its pension fund and transfer the funds into the company-we hope-and that was termed an infusion of equity capital.
As I suggested to the Minister of Industry, Trade and Commerce (Mr. Lumley), the Government has rewritten the accounting terminology of "shareholders' equity". It now means selling off part of a subsidiary company. That is called an infusion of shareholders' equity.
At the same time that the Government was promising this money to Maislin and putting Canadian taxpayers out on a limb, Maislin was losing $1 million a month. The small businesses I represent do not want $ 1 million from the Government or $34 million in loan guarantees. They want a chance to grow, thrive and survive in these tough times. Any Members in the House who have trucking firms in their constituencies now find that the promises of the Government which it made in the heat of the summer of 1982 were empty and limited. When the Government promised that criteria would be developed for trucking firms, there was no such development. There were no criteria, and today in the House the Minister confirmed that there was no intention of lending any money to the great number of trucking firms that have applications in to the Ministry of Industry, Trade and Commerce. If we had not brought that out today, the Government would have been content to have those applications sitting on the Minister's desk for a long, long time-another broken promise.
That is the point I want to make today. We generally are in favour of the Small Businesses Loans Act. 1 think once we have had an opportunity for debate in this House, when we have had some of our colleagues who are not here today and who want an opportunity to speak come forward, we will be in a position to say that this Bill has had the examination that it deserves from Parliament.


The Acting Speaker (Mr. Blaker):: I recognize the Hon. Minister, who is the mover of the Bill, the Minister of State for Small Businesses, on a point of order.


Bill Rompkey: Mr. Speaker, I have a question for the House Leader of the Official Opposition. I was very pleased to hear his remarks and his support for this Bill and indeed to hear the support from that side of the House for small businesses and
March 18, 1983

for this Bill today. I was particularly pleased to hear the constructive comments made by the former Minister for Small Businesses, of which I have made some notes, and also of the Hon. Member for Vegreville (Mr. Mazankowski) and others.
I noticed that flowing through them, although some of the comments were constructive, was general support for this Bill and for small business. Knowing, then, that we had to have the legislation before the end of March, otherwise small business will indeed be handicapped, knowing their support for small business, knowing that there are no real changes in this Bill from past policy, and knowing that this is only one instrument for small business, I would ask him now if he would confirm early understandings that I thought we had that this Bill would pass all stages today.


Douglas Grinslade Lewis: Mr. Speaker, although that question is not directly on the content of my speech, I would like to suggest that I do not, to the best of my knowledge, remember any suggestion that this Bill would pass all stages today. Our critic for small business is not here and 1 know he wants an opportunity to comment on this Bill. In my remarks I said that I realized when the Act was going to expire, but we do think it is appropriate that our critic for small business has an opportunity to make a statement on this Bill. Unfortunately, we were only apprised of the fact that this Bill was coming up today-


Arthur Ronald Huntington: We did not get the Bill.


Douglas Grinslade Lewis: The Bill was only introduced yesterday afternoon. We operate a little differently from the Government in that we plan what we are doing in advance so that we can have people here to speak. We would be glad to accommodate the Government if they would give us sufficient notice to allow us to bring in our speakers and to do a job on it.


Bill Rompkey: Mr. Speaker, I would simply have to say that we laid on the record a roll-over of a provision that is very important for small business and laid on the record our support for small business. I listened to what the Opposition had to say as closely as I could, but I have to say now that there is rhetoric on the other side but very little substance of real support for small business.
What I am hearing, really, is more of the same kind of phoniness that we have heard before. I think that the word should go out from here to the small business community across Canada that what we are seeing is further obstructionist tactics by the Opposition. They talk a good game for small business but they never put their money where their mouth is.


Donald W. Munro: You never put the Bill in your mouth.


An Hon. Member:: That is not a point of order.


The Acting Speaker (Mr. Blaker):: Order, please. There may have been a point of order to the Minister's statement at the beginning, but I subsequently lost track of where it might have
Small Businesses Loans Act
gone. It is evident from statements in the House that there will be further speakers if necessary to take us to five o'clock.
Does the President of the Privy Council want the question put? I cannot do that if there is an Hon. Member rising to speak on the Bill.


Yvon Pinard: I want to ask a question of the previous speaker, Mr. Speaker. We have ten minutes.


The Acting Speaker (Mr. Blaker):: I am sorry, I misunderstood the President of the Privy Council. Could he rise and indicate what it is he is asking?


Yvon Pinard: Mr. Speaker, are Hon. Members allowed to ask questions for ten minutes after speeches on second reading?


The Acting Speaker (Mr. Blaker):: The President of the Privy Council was rising on a question?


Yvon Pinard: Yes. Mr. Speaker, my question is to the House Leader of the Official Opposition. He just indicated very clearly that he was denying, for his Party, the unanimous consent required to get the remaining stages of the Bill through this afternoon.
I would like to ask him this question. Is he aware that many times in the past before he was appointed House Leader of the Official Opposition there was agreement to get such a Bill, as a matter of fact a Bill like this one, through with one speaker per Party? How is it that today he is requiring that many speakers on his side to obstruct the passage of this urgent legislation? Could he explain why, under the pretext that his critic is not here, knowing that this Bill was to be called yesterday-


Arthur Ronald Huntington: You are wasting time.


Yvon Pinard: I am sorry, I thought the Hon. Member was interjecting, Mr. Speaker. There is still time; it is not yet five o'clock. If there is unanimous consent we could get the remaining stages of that Bill through now, like we used to do in the past.


Walter David Baker: What is the question?


Yvon Pinard: The Hon. Member for Nepean-Carleton (Mr. Baker) who is asking me what is the question knows very well what I am talking about, because when he was the Opposition House Leader we used to get more than one Bill through all stages on a Friday afternoon. I am asking the Hon. Member behind him why he is not following the good example of his predecessor.


Douglas Grinslade Lewis: Mr. Speaker, I would say to the Government House Leader that I am following all of the good examples of all of the outstanding House Leaders of the Conservastive Party and trying to avoid some of the examples of the Government. I cannot explain the great interest in speaking on this Bill. I indicated that we were in general support of the Bill, but

March 18, 1983
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I think we have a right to have our critic speak on the Bill, as soon as we can get him back here. We received notice of a Bill that was printed yesterday. It would be a much different matter if this Bill was not numbered Bill C-144. If it was numbered C-28 and had been on the Order Paper, I could call my critic, who is off on other important parliamentary business, and say to him; "How about this Bill that has been printed for some time, can we go ahead with it?" It is the rush to judgment-


An Hon. Member:: It was printed today.


Yvon Pinard: He is paid $60,000 a year and he should be here. He is overpaid.


An Hon. Member:: The ink is hardly dry on this Bill.


Mr. Ouellet:: Mr. Speaker, I rise on a point of order. I listened with great interest to what the Hon. Member just said.


Arthur Ronald Huntington: You just got here.


André Ouellet: I just want to remind the Hon. Member that if in fact he has the disposition to send to committee stage a Bill that has been on the Order Paper for a long time, I am wondering why, in the spirit of co-operation, Bill C-12, the bankruptcy legislation that has been on the Order Paper for many, many months, that has been studied and discussed in the House on numerous occasions, is not allowed to go the Committee. One of his backbenchers earlier this week made that very suggestion, that the Bill be referred to the Committee. Maybe the Opposition House Leader would be ready to do this right now.


Donald Frank Mazankowski: You have run out the clock.


Douglas Grinslade Lewis: Mr. Speaker, I would be pleased to reply to the Minister. He will know that this very important Bill, C-12, had two days' debate in May of 1981. That was not the biggie. The biggie was in November, 1982, when it was brought on for part of a speech. In fact, the Hon. Member for Red Deer (Mr. Towers) still has the floor for that part of the speech. It has not been brought on at all in 1983. Since the Government House Leader is in the House, maybe the two Ministers could get together and the Government House Leader might be prevailed upon to bring it forward since, as I understand it- and I have not been at this job all that long-the Government controls the business of the House.


Walter David Baker: A question of privilege, at one minute after five?


Mr. Cousineau:: I rise on a point of order.


The Acting Speaker (Mr. Blaker):: It is five o'clock. As a courtesy I will recognize the Hon. Member, but he should be brief.


Some Hon. Members:: Five o'clock.


The Acting Speaker (Mr. Blaker):: I now have indications from Members that they wish me to see the clock. Since that request is made, I have to do so.
It being five o'clock, I do now leave the chair until Monday morning at eleven o'clock.
At 5 p.m. the House adjourned, without question put, pursuant to Standing Order.

Monday, March 21, 1983