1983-12-13

GOVERNMENT ORDERS


Hon. Marc Lalonde (Minister of Finance) moved: that Bill C-2, an Act to amend the statute law relating to income tax and to make related amendments to the Canada Pension Plan and the Unemployment Insurance Act, 1971, be read the second time and referred to a Committee of the Whole.
He said: Mr. Speaker, while it is a coincidence that the Bill before us today is going forward in proximity to the Throne Speech, it is very much an appropriate coincidence. My April Budget and the large portion of the Budget to be implemented by this Bill shares, in common with the Throne Speech, the Government's continuing determination to meet all its responsibilities to the people of this country.
The Budget did not choose, for example, between the need to practise fiscal responsibility, on the one hand, and the maintenance of the "social safety nets", on the other. We met our responsibility in both respects and we continue to do so. A full and long-lasting recovery for the Canadian economy must be based on the confidence and the demonstrated ability of Canadians to make progress in every important area of national life. The practise of fiscal responsibility does not mean the sacrifice of social responsibility. Indeed, I cannot imagine that one would have much meaning without the other. That principle has been firmly underlined in the Throne Speech setting out the Government's agenda for the next phase of the national recovery.
The Bill before us today can be seen in the perspective of this broad national effort to create the conditions and strengthen the momentum for economic and social betterment in the challenging years ahead. That is the spirit in which I am proud to recommend this Bill to the House.
The current round of consultations which my colleague the Minister of State for Finance (Mr. MacLaren) and I have been conducting on economic and fiscal policy, has involved some 30 groups and associations. An integral part of this process was the federal-provincial conference in Montreal last Thursday with my provincial colleagues. The provincial Ministers of Finance and Treasurers share with me an optimistic
view of the outlook for 1984. Though our country still faces considerable problems, we are making great progress in developing a stronger and more competitive economy.
At the conference I officially informed my provincial colleagues that an additional $769 million would be available over the balance of 1983-84 in federal transfers for federal health care and post-secondary education. Building on the basis of the revised figures for this year, this adjustment will likely add more than $300 million to federal transfers for education and health services in subsequent years, that is, over and above what had been forecast until recently. This additional federal contribution will allow the provinces to fund further improvements in health or educational services or to relieve the fees assessed on those Canadians who use those services.
In total, federal transfers under the various programs of assistance and fiscal support to the provinces will be about $24.5 billion in the current year. This is an increase of some $2.8 billion from last year. This additional support for the provinces' fiscal situation allows them to allot further funds to provincial services, including the important field of job creation.
My April Budget contained two major objectives: first, to ensure that the recovery then in its early stages would expand into every sector of the Canadian economy; and, second, to make the recovery a durable one by beginning immediately to create the conditions for sustained economic growth and development in the 1980s. Bill C-2 now before the House represents a large part of my recovery Budget. It contains tax initiatives which will provide more than $2 billion worth of tax assistance to the private sector over the four years of the Government's recovery program. These measures are vital to the building of a broad and durable recovery with particular emphasis upon a gradual but sustainable revival and expansion of investment in all phases of economic development. Investment is the key to an improved and expanded productive capacity which ultimately determines the job-creating capacity of the Canadian economy.
At the time of the April Budget speech many Canadians were not convinced that the economic recovery had taken hold. In the months since then we have seen a remarkable transformation in business and consumer confidence. This confidence is firmly based on the economy's actual performance. The recent report on Gross National Product showed even stronger growth in the third quarter than in the first half of the year. The turnaround in the Canadian economy is stronger than the recovery which is occurring in the United States. Canada has

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not only had the fastest pace of economic expansion of any major industrial nation, but also the largest percentage increase in employment and the greatest decline in the rate of inflation. The recovery in Canada is the strongest of any business cycles since the 1974-75 upswing.
Let us look at some of the other indicators backing up this strong GNP performance. The annual rise in the Consumer Price Index has shrunk to 4.9 per cent, an inflation level which few people were predicting a year ago. The gap between the inflation rates of Canada and the United States has now risen from about five percentage points a year ago to about two points at the present time. The current inflation rate is the lowest Canada has known since 1972. Wage settlements on a non-COLA basis have declined to 5.9 per cent. Mortgage interest rates are the lowest in more than 2.5 years. We had a merchandise trade surplus of $14.5 billion for the first ten months of this year. This has fallen slightly below last year's record pace only because of a pick-up of imports reflecting the economic recovery. Finally, some 370,000 new jobs were created in the 12 months since the start of the recovery in November, 1982.
The Government's policies in this new session will reflect our concern for continuing this growth in employment. An essential part of that concern must involve a continued effort to restrain price inflation. Our recent history shows clearly the benefits of lower inflation in the form of greater business and consumer confidence, more investment, more buying power, more jobs.
During the recent economic recession, the great barrier in the way of recovery and job creation was the pervasive fear of high and accelerating inflation. Those fears translated into a slump in business investment and a reluctance to expand payrolls. The renewed confidence growing from our success in fighting inflation is now translating directly into consumer spending, new investment and increased competitiveness. All of these mean new jobs.
A survey of 17 economic forecasts recently published by the Conference Board of Canada show there is a widely shared optimism about prospects for a continued health recovery. The average of the 17 forecasts is for a real economic growth that will strengthen from 3 per cent this year to 4.6 per cent next year. This reflects an upward revision in the expectations of these economists since the previous Conference Board survey.
Canada's economic comeback is being recognized internationally as well. The British magazine Euromoney recently rated 93 different nations from the standpoint of economic growth, inflation, currency strength, exports and the balance of payments in the last year. The winner of 93 countries was Canada. We were tops in the world in that regard.
Our situation was well summarized in a recent speech by the President of the Investment Dealers' Association of Canada, Mr. Andrew Kniewasser. He said and 1 quote:
I can recall no period in my lifetime when the Toronto Stock Exchange composite index increased 90 per cent in 13 months, when interest rates declined
by 60 per cent in 19 months, when the rate of increase in the cost of living declined by 60 per cent in 19 months, when there was a swing or a turnaround in the real rate of Gross National Product by 7 per cent in nine months and I do not think there has ever been a period in Canadian history when we were capable of generating 370,000 new jobs during the first nine months of a recovery.


Mr. Kristiansen:: He sounds like a Minister.


Marc Lalonde: 1 hear the Hon. Member saying this gentleman sounds like a Minister. I am glad to tell my hon. friend that this is a statement by an outstanding leader of the Canadian business community, and a very independent one at that.
The first stage of the recovery in Canada saw a restoration of the balance sheet position of Canadian business working off some of the debt burdens created in recent years. The tax policies of the April Budget assisted in this process. Recently we have had welcome reports of the increase in utilization of plant capacity in our manufacturing industry. Canadian business is now in a stronger position to undertake the new investment that will be needed to create new jobs and improve our competitive position. The measures in this Bill provide important new incentives to support that investment.
This Bill has three major elements: first, the changes to the income tax proposed in the April Budget; second, the indexed security investment plan; third, the proposals for changes to the tax incentives for research and development as outlined in the consultative document dated April 19. Finally, this Bill implements a number of technical amendments to the Income Tax Act as announced on April 5.
This is an important tax Bill. It contains special incentives to encourage investment in Canadian business and thereby speed recovery and increase employment. The Bill also contains measures of importance for individual taxpayers. The enrichment of the employment expense deduction by increasing it from 3 per cent to 20 per cent of employment income with a maximum deduction of $500 will benefit about four million taxpayers with annual incomes of less than $16,667.
The maximum deduction for child care expenses will be doubled, which will be of great assistance particularly to working mothers. Many of these measures are applicable to the 1983 tax year.
[ Translation]
Mr. Speaker, all the measures contained in this Bill have been the subject of broad consultations with the public. In August, the Budget measures announced last April were published in the form of a draft Bill, together with technical explanations, in order to help taxpayers and their advisers to examine and analyze the proposed changes and to make representations.
In the course of this process, a number of useful proposals for improving the legislation were made and are now included in the Bill. Furthermore, the Standing Committee on Finance, Trade and Economic Affairs received and examined briefs on
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the draft Bill. Although many very useful improvements were made as a result of this process, the parliamentary committee stressed in its report that the limited number of briefs and the relatively minor nature of the complaints received indicated that the tax proposals set out in the Bill had been well received by the public. It takes time to conduct thorough and far-ranging consultations, and this has, in fact, delayed adoption by the House of the legislative measures provided in the Budget. However, I believe the result is better legislation that can be more readily analyzed by the Members of this House. In fact, we may be gaining time in the overall process which consists in getting a large number of tax measures from the budgetary stage to final passage by Parliament.
The measures in the Bill that are aimed at implementing the Indexed Security Investment Plan have also been published in the form of a draft Bill, with technical explanations. When preparing this draft Bill, we have had the advantage of ongoing consultations with representatives of financial institutions, tax experts and other resource persons, since the Indexed Security Investment Plan was first detailed last April.
The provisions of this Bill aimed at implementing the new financing mechanisms for research and development and the relevant tax credits arise directly from intensive consultations which included many businesses involved in research and development and also representatives of the financial institutions responsible for financing such activities. The conclusions of this consultation process were summarized in the report that accompanied the Budget documents of April 19 of this year. This particular document led to further discussion, and finally to the draft Bill published in October with a view to soliciting comments.
In fact, all parts of the Bill before the House today have been the subject of intensive consultation. 1 should, of course, like to thank all those who contributed to this consultation, and especially the Members of the Standing Committee on Finance, Trade and Economic Affairs.
The consultation and study process, as well as our data on economic recovery, have confirmed that the budgetary measures in this Bill will have a very positive impact. Now that recovery appears to be well under way, it is not only appropriate but also essential that we should adopt the budgetary tax measures that provide the basis for business investment and spending plans.
Hon. Members will no doubt recall the legislative history of the last major Bill amending the Income Tax Act. Bill C-139 was given first reading on December 7, 1982-almost exactly a year before this Bill-and did not receive final reading by the House until March 24 last. I am sure that Canadian taxpayers will share my hope that this experience will not be repeated with the present Bill. While I recognize the legitimate demands of members for adequate debate and explanation of
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important legislation such as this, we must also have regard for the reasonable hopes of Canadian taxpayers that their tax refunds should not be delayed as they were in 1983 because of legislative delay affecting Bill C-139. We must provide taxpayers with certainty, at an early date, that they can count on the tax measures in this Bill being adopted.
In this speech l do not propose to discuss all of the tax change proposals in this Bill. Questions on those detailed points will, of course, be answered at the committee stage. However, 1 would like to review some of the major tax measures that are before us.
A major element of the April Budget was to accelerate productive investment and job creation in the private sector. The Bill improves the effectiveness of the federal investment tax credit. It provides that credits earned for eligible investment made after April 19, 1983 may be used without limit to reduce federal income tax payable, and that unused credits may be carried over for deduction in any of the three previous or seven subsequent years. Also, the investment tax credit will be extended to heavy equipment used in the construction industry. These improvements to the investment tax credit will provide about $1.3 billion of support for private investment over the next four years.
To further encourage new expenditures by businesses that are not currently paying income tax, the Bill provides two further initiatives relating to the investment tax credit. First, a portion of the credit resulting from expenditures made after April 19, 1983, and before May 1, 1986, will be refunded to the business incurring the expenditure. For small business corporations and unincorporated businesses, 40 per cent of investment tax credits not used to reduce income taxes will be refundable. For other businesses, 20 per cent of such credits will be refundable.
Second, the introduction of the special recovery share-purchase tax credit will allow corporations with unused investment tax credits to flow-out the credit to investors who subscribe for new equity shares in the corporation. The credit, which may be as much as 25 per cent of the value of such shares, can be offset against the investor's tax liabilities. Pension funds and other tax exempt investors may obtain an equivalent benefit by obtaining a refund of any share-purchase tax credit earned by them. This measure applies to shares issued after June 30, 1983, and before 1987.
It is estimated that these two measures should provide a further $640 million of support to private investment. The combined impact of these measures will be to allow many more businesses to take advantage of tax incentives that promote investment, and therefore to participate in the economic recovery and the creation of long-term employment in the private sector.
The Bill also allows business losses to be carried back three years and forward seven years, instead of one year back and five years forward as at present. The three-year carryback will be phased in over two years for most businesses, but for small business corporations this new benefit will take effect immediately. Farmers and fishermen will be immediately entitled to a

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three-year carryback and 10-year carryforward of losses. These measures will allow businesses to take better advantage of their losses and will increase cash flow to business by $305 million this year.
I should like to say a word now on the indexed securities investment plan. The encouragement of Canadians to invest a greater proportion of savings in the common equity of Canadian corporations is an important part of the recovery program and is an important thrust of the last Budget. I believe Canadians should invest a much larger share of their savings into common equity than has been the history of this country. The ISIP is intended to assist Canadian corporations to raise equity and, at the same time, offset the effects of inflation on the taxation of this form of investment gains on the investor.
Though the cost to the federal Treasury of the ISIP program will not, for technical reasons, be very great in the first year or so, once the program reaches maturity we estimate it will involve some $300 million per year in forgone revenues. We consider that this is a worth-while investment towards encouraging greater and more widespread equity investment by individual Canadians. Though the plan itself is complex in its operation, this will not be a problem for individual investors. The detailed accounting will be handled by the financial institutions and investment firms that will offer ISIP plans.
I want to say a word now about incentives for research and development. The consultative paper tabled last April 19 showed that Canadian tax incentives for research and development compare very favourably with those of other countries but that there are areas where they could be made more simple and more effective. An extensive process of consultation ensued, and its results are now reflected in the measures in the Bill dealing with research and development incentives. One of these measures will replace the 50 per cent allowance for incremental R and D expenditures with an increase of 10 percentage points in the investment tax credit for over-all R and D expenditures. This will simplify the delivery of these incentives and increase their use to business-particularly firms in the high-tech industry and those with extensive research and development programs.
The other important R and D measure in the Bill introduces a new mechanism for financing research. This mechanism will permit the flow-out of a special 50 per cent tax credit to investors by corporations that renounce the tax credits and deductions on their research expenditures. Investors who provide financing to the corporation in the form of equity or debt or pursuant to specific contractual arrangements will be eligible for this special tax credit. This measure will be of particular benefit to those corporations which are not currently taxable and therefore do not benefit from the existing tax incentives. It will simplify significantly the tax-assisted financing of R and D. These two measures taken together will, in 1984, add a further $100 million annually to the tax incentives already provided for research and development through the tax system.
[ Translation]
Mr. Speaker, I should also like to say a few words about tax measures for the individual Canadian. In addition to provisions aimed at encouraging investment, which I already mentioned, the Bill also contains a number of measures that are important to the individual taxpayer. Canadians who purchase a new home before the end of 1984 and who are eligible to contribute to a Registered Home Ownership Savings Plan will be able to deduct from taxable income, in one lump sum, the amount needed to bring their total deductions up to the $10,000 limit. Previously, annual deductions were limited to $1,000 per year. The Bill also provides, as a special short-term incentive, that in 1983, RHOSP holders will be allowed tax-free withdrawals of any amount used for the purchase of designated home furnishings or appliances. These measures have provided a substantial stimulus for the manufacturing and construction industries and for the employment situation in these vital sectors.
The Bill also provides for a rise in the employment expense deduction, which will increase from 3 to 20 per cent of employment income, subject to the current maximum amount of $500. About four million employees whose annual employment income is below $16,700 will benefit from this measure.
Three major tax components of the federal child benefit system have been changed to help lower income families, working parents and others in need. The ceiling on the child care expense deduction will be raised from $1,000 to $2,000 per child and from $4,000 to $8,000 per family. The child tax credit has been maintained at $343 for the 1983 fiscal year, and will continue to be fully indexed to the inflation rate in subsequent years. However, to ensure that this credit is applied only to those who need it most, the Bill provides that the family income threshold above which the child tax credit begins to be phased out will remain at $26,300 for 1983 and subsequent years.
Third, for 1983 and subsequent taxation years, the Bill will maintain, at its current level of $710 the tax exemption for children and other dependants under eighteen years of age. The net effect of these changes will be, starting in 1984, to increase Government revenues, which will be used to reinforce social programs available to Canadians in need.
This Bill is premised on fiscal responsibility, Mr. Speaker. So also should be the proposals forthcoming from Hon. Members in this debate. I will be listening with great interest for well balanced, fiscally responsible suggestions from all members of the House.


Mr. Crosbie:: Here is one: resign!


Marc Lalonde: Representations of labour, farmer, business and consumer groups whom 1 have met in the course of my economic consultations have gone to much effort to present thoughtful, well reasoned statements on the policies they
December I 3, 1983

would like to see followed. I welcome the important contribution they make to economic debate in this country. 1 would equally welcome similar statements by Hon. Members opposite on the economic and fiscal policies they advocate.
In his contribution to the Throne Speech debate last Friday, the Leader of the Opposition (Mr. Mulroney) spoke at length of the importance with which he viewed increased productivity and research and development. Unfortunately, and I should say as usual, he made no specific proposals in either regard. 1 trust he will demonstrate the strength of his convictions by urging his colleagues to support this Bill. It contains tax measures which will allow Canadian industry to become more productive and will provide a tax regime for research and development that is virtually the most generous in the world.
1 refer to an article in the December 10 issue of The Financial Post entitled "R and D spending is up as renovation of economy starts to take hold". It states that if R and D spending is any indication, "Canada's economy is undergoing a much-needed renovation". It notes that by Statistics Canada projections, R and D spending this year will increase by nearly 11 per cent to $5.2 billion. I quote again:
New high-tech firms will continue to spring up. Recently proposed amendments to the Income Tax Act, when finally passed by the House of Commons, will make it considerably easier for new companies to raise R and D tax shelters to fuel their growth.
In recognition of an important aspect of the issues before the House, 1 want to speak briefly about the goal of simplifying the tax system. Although real efforts were made to minimize complexity in the drafting of this Bill, 1 am quick to acknowledge that this is not simple legislation. Nonetheless, some notable simplification will be achieved by the approach being taken to the new R and D proposals. In general, the tax mechanisms used to achieve budgetary goals are not new and therefore have the benefit of familiarity to taxpayers. A significant exception is the ISIP initiative, the indexed security investment plan, which is both new and, unavoidably, not simple. ISIP is, of course, a vehicle that taxpayers may or may not use on a voluntary basis. As I indicated, this Bill has been the result of extensive, consultations and revisions by consultants from the private sector and experts in the field.
I was pleased to see that the House Standing Committee on Finance, Trade and Economic Affairs took note of the release on August 15 of explanatory notes to the draft Bill. The Committee described this initiative as "a major improvement in the effort to make complex tax changes more understandable to the general public". Late last month I made available revised explanatory notes. I have given my commitment that simplification of the tax system will be a continuing high priority, particularly as it applies to the small business sector.
This effort has been going forward in the Department of Finance and in consultation with the private sector. A very useful symposium on the subject of small business tax simplification was sponsored by the Canadian Tax Foundation this summer.
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It has been said before that it is not easy to simplify, and this is certainly true in the case of our Income Tax Act, We have often seen how adopting a new and relatively simple tax measure can involve a host of consequential amendments to the Act. We may well ask ourselves whether it is really necessary to adopt a certain tax measure, considering the complexities of its implementation. Up to now, our studies have clearly indicated that it is a question we should ask ourselves more often. It is also true that simplicity is not only desirable for the legislation. For the professional consultant working for a small business, the form that he must complete and the administrative procedures he must follow represent the reality of compliance, all of which has a substantial impact on the cost of such compliance. Simplification in this area is perhaps just as important as simplifying the legislation. We must realize that simplification does not necessarily mean using fewer words. Nor should it mean making our tax legislation less precise. In fact, the legislation must be precise if the individual is to know exactly which provisions apply to him.
These are only a few of the considerations arising in the course of present efforts being made in this difficult and challenging area. We are working very hard on this, in cooperation with the private sector, because we are absolutely convinced it is a very important matter.
In concluding, I would like to stress that the legislation before the House today has been the subject of an exhaustive study by various groups concerned by these measures. We were open to constructive proposals, and that is how a number of important changes came to be incorporated in this Bill. The legislation before the House clearly reflects the support of those who took part in the consultation process. The budgetary measures in the Bill are there not only because they were supported by the public but because they have had a positive impact on economic recovery.
The economy's performance was particularly good during the third quarter of 1983. During the twelve-month period up to last November, we were able to create 370,000 new jobs. The unemployment rate dropped from 12.8 to 11.1 per cent, despite the fact that a large number of people were seeking employment on the labour market. We must continue to offer new employment opportunities as economic growth progresses, and we shall do so. At the same time, we are all aware of the economic problems and uncertainties facing many of our fellow citizens. No one can be satisfied with the unemployment rate we have today, and we must stimulate a sustained and sound expansion of our economy that will make it possible for thousands more Canadians to return to the labour market.
Finally, we must not compromise our present recovery by failing to take this legislation seriously and unduly delaying its adoption. Let us provide the certainty and stability of the legislative measures required to support sustained expansion of business investment and employment in Canada, an objective


I 14 COMMONS DEBATES
[Stage Direction]
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this Government is pursuing with a great deal of vigour and which I hope will be supported by the Opposition Parties in the course of this debate.
Mr. Blenkarn:: I rise on a point of order. I realize it is not required, but would the Minister answer some questions with respect to matters set out in his speech?


The Acting Speaker (Mr. Corbin):: That would have to be done with the unanimous consent of the House and the Minister's approval. Is it agreed?


Some Hon. Members:: Agreed.


Donald Alex Blenkarn: Mr. Speaker, the Minister spoke about tax simplification. This Bill creates new kinds of corporate tax, Part VII tax and Part VIII tax, and has a rather complicated system of allowing investors to take advantage of investment tax credits. Consequently, those investment tax credits are likely to be used up in reduced taxation. In view of the fact that the Minister intends to allow investment tax credits to be used, why did the Minister not simply have a refundable system for investment tax credits, or research and development tax credits for that matter, rather than go through the hassle of having the brokers, the investment counsellors, and the huge numbers of tax lawyers and accountants involved in the system? Why did he not just have a system of refundable credit? He is, in effect, in every case, creating the possibility of a refundable credit.


Marc Lalonde: Mr. Speaker, as I have stated, we will have an opportunity to discuss these particular issues in detail when we are addressing the Bill at committee stage. We can then speak about various provisions in great detail. Indeed, we had very much in mind the fact that a large number of corporations, particularly small corporations, and also small corporations in the research and development field that start with two or three bright fellows getting together and initiating a new product or trying to develop a new product, do not have profits and are not expected to have profits for a few years. We have tried to take steps to encourage them to stimulate new equity investment, to bring new people who would be ready to invest into that field.
To achieve this objective we have provided means that did not exist before whereby they can transfer a good part of the accumulated tax credits that they cannot claim against profits that they do not have to individuals who will invest. That does not require the advice of a lot of accountants and lawyers. A business person who has a reasonable knowledge of the process should be able to achieve this. Obviously, if you want to issue shares and expand your firm, you will require and seek some professional advice, whether you have tax credits or not. Firms do this every day. We have tried to make the system as simple as we could.
As 1 indicated, we have considered these proposals which are before the House today in the light of extensive consultations with the firms concerned. I have sent my officials around to visit the small research and development firms, for instance, to sit down with them and ask them what their problems were and how we could help them to grow and expand. We have done the same thing with small businesses and larger businesses as far as tax credits are concerned. The results of those consultations are now before you. They are measures which have the support of the private sector, measures which they themselves say they can deal with, administer and benefit from.
As I have said, 1 am afraid the Income Tax Act will always remain a pretty complex piece of legislation. Apart from the 1S1P itself, which is new and complex, I do not believe the other measures are of such complexity that they will create problems. As I have said, in the course of our consultations we have received advice from the private sector firms themselves indicating that they were satisfied with the regime we were proposing.


John Carnell Crosbie: Mr. Speaker, I suppose one should get used to it, but I cannot get used-


The Acting Speaker (Mr. Corbin):: Order please. The Hon. Member for Duvernay (Mr. Demers) rises on a point of order.


Mr. Demers:: Mr. Speaker, I have a question, and I think I should ask it before the Hon. Member begins his speech.


The Acting Speaker (Mr. Corbin):: Order, please. The Standing Orders do not provide for a period of questions, comments and answers during the first three speeches of the leading party spokesmen. Questions and answers may be directed to other speakers who are entitled to 20-minute speeches, but the Standing Orders do not allow it at this time. However, the Hon. Member could have sought unanimous consent, but he should have done so before the Hon. Member for St. John's West (Mr. Crosbie) began his speech.


Yves Demers: Mr. Speaker-


John Carnell Crosbie: Mr. Speaker, the House will go into Committee of the Whole and questions can be asked then. As I was saying, Mr. Speaker, I suppose we get used to being disappointed-


The Acting Speaker (Mr. Corbin):: Order. Again I apologize to the Hon. Member for St. John's West. The Hon. Member for Duvernay is asking to be recognized on a point of order.
[ Translation]
As 1 have explained to the Hon. Member-I am afraid he rose a bit late since the Chair had recognized the Hon. Member for St. John's West who has already begun his speech. It is not proper to interrupt him at this time, and I would ask the Hon. Member to resume his seat when the occupant of the Chair is standing.
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I might remind all Hon. Members, as the Minister of Finance (Mr. Lalonde) did, that this Bill will eventually be referred to the Committee of the Whole House and that they will then have every opportunity to direct questions to the Minister of Finance on any subject. As well, I might point out that the debate at this time ought to be of a general nature and that specific questions should not be raised. The debate is of a rather universal nature. 1 will not recognize the Hon. Member for Duvernay (Mr. Demers) for the purpose of asking a question.


John Carnell Crosbie: Mr. Speaker, the third time may be lucky. As I was saying, the Minister's opening remarks are disappointing. Of course, we should be used to disappointment in this House from the administration opposite that has been there for the last 20 years. The Minister is continuing in a pattern which was best set out by one of our fellow members in this House, the Member for York West (Mr. Fleming). He said that the Government operates on the basis of "cynicism, ballyhoo and manipulation".
That is exactly the trend that the Minister has continued today. The Budget that the Minister brought down last April included a number of tax changes. The Minister has the gall and audacity today to get up in the House and say to us on the Opposition side that he wants us to deal with this legislation which he has brought in now in a businesslike way and whip it through the House very quickly. When is the Government going to deal with these important tax changes in a businesslike way? When is the Government going to act in a businesslike manner?
Why is it that we have had to wait over eight months since the Budget came down on April 19 for the Minister to produce the legislation for the House to begin to deal with it? When is the Government going to play ball with the taxpayers in Canada, not bring in legislation eight months after the fact, after the changes are announced, as the Liberals have done all through their history?
1 remember that in 1979 there was the legislation from two Liberal budgets that had not been offered to the House or put through the House by the Liberal administration at the time that we took over the reins of government. That is the kind of sloppy administration and unbusinesslike practice that has so harmed the taxpayers and business sector here in Canada. And it continues with this Minister malingering and lingering for eight months before he produces his legislation for the House to consider.
It is up to the Government to set the business of the House. Nothing is more important than tax changes and income tax legislation. It should have been before the House months ago. The Minister's Budget had two ostensible purposes, he said; to stimulate the economy in the short run and to bolster Government revenues over the medium term. The only reason the public has not risen against the provisions of the Budget, part of which we are now seeing before the House, is that they do
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not understand what is to happen to them. They do not understand that this Budget is supposed to be one that stimulates the economy in the short run but that its real purpose is to take a tremendous revenue grab from the Canadian people in the longer run.
The Canadian people do not realize that because, according to this Budget, there is a $475 million decrease in taxes taken in 1983-84, which is this present year. However, the Budget plans to take in an additional $805 million from the taxpayers of Canada in 1984-85. In other words, next year the Government will take back double what it reduced this year and then the Minister of Finance (Mr. Lalonde) plans to take an additional $2.4 billion from the consumers of Canada in the year after that, 1985-86.
He is not finished, however. He is now out of office and the Liberals are out of office. Their term expires at the end of March, 1985; but the Minister continues on to tax the Canadian people and is going to take an additional $3 billion in taxes from Canadian taxpayers in the financial year 1986-87.
In other words, there is a $475 million reduction now and $6 billion to be taken from the Canadian consumer and Canadian taxpayer in the three years that follow. The public does not understand that. They do not understand what will happen to them if this legislation passes through the House. We are not going to support the legislation, Mr. Speaker, 1 can promise you that.
What is the Government's situation? What is the Minister's situation? The Minister's situation is that he is just as duplicitous, just as devious, just as deceptive as his predecessor whom he replaced. He is slightly less disastrous for the Government than his predecessor. In the last 12 years this Minister of Finance and his Liberal predecessors have brought in budgets that resulted in deficits totalling $132,608 million. In the last three and one-half years, since the first Speech from the Throne of April 14, 1980 came down, this Minister and his predecessor have brought in budgets that are resulting, by the end of this year, in a total of $82.8 billion in deficits. That is $82.8 billion in four fiscal years.
But what did this Minister and his Government say it would do? Why, in the Speech fro the Throne of April 14, 1980 they promised that "We will reduce the federal deficit in a planned and orderly manner". How can you reduce the deficit if you increase it $82.8 billion? Is that a planned and orderly manner in which to reduce the deficit? That is the Liberal way of reducing the deficit.
Having fooled the public in the Speech from the Throne of April 14, 1980, surely in the document of December 7, 1983 the Liberals must have come clean. They must have told the truth for a change. Let us look at the Speech from the Throne brought down last week. What did the Minister and his colleagues say? They said: "While stimulating job creation, the Government will hold to a fiscal policy track". They love these tracks. There is the third track, there is the fiscal policy track, there is the VIA Rail track and there is the double track and there is a double cross of the double track. Now they are holding to a fiscal policy track "which will contain and then

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curb the federal deficit as recovery strengthens". That is what the Government will now do with the deficit: it will contain the deficit. It will curb the deficit "curb, boy, curb". One can see the Minister going down the streets of Ottawa curbing the deficits-the deficit going to the curb right behind them. They are now going to contain and then curb the federal deficit as the recovery strengthens. What an inexactitude!
In this very document the Minister shows a deficit for next year in excess of $28 billion, a deficit the year after of over $26 billion. Is that the way the Liberals contain and curb the deficit? What a tissue, what a patina, of lies, deception and deceit in the Speech from the Throne and in the budget speeches we have seen in the last four or five years in particular. There is $82.8 billion in deficits in the last three and one-half years, despite what they said.
Is it any wonder that the Member for York West, disgusted beyond belief, said that the Government operates "through cynicism, bally-hoo and manipulation"? He also said: "If we stay the way we are, surely we are dead". We are looking at the dead across from us now. The zombies are there because they will stay the way they are. The Minister's speech today shows that they will stay the way they are.
What else did the Government say in the Speech from the Throne of April 14, 1980? It said that "One of the essential objectives of this Government is to put more people to work". Unemployment has gone up 50 per cent since then. It was 7.5 per cent when that statement was made and it is 11.1 per cent today.
1 thought it pitiful today when I heard the Minister of Finance boastfully saying that the unemployment rate has now declined from 12.8 per cent to 11.1 per cent. One would think that he would not even mention that; but he was boasting that the unemployment rate had now come down to 11.1 per cent. When that Minister took office the unemployment rate was under 8 per cent; now he boasts that it is 11.1 per cent. Deception is a mark of "Lalondemania" for sure.


Marc Lalonde: That will not go very far. It is too complex!


John Carnell Crosbie: "Lalondemania" is too complex. The Minister does not expect to see that in his lifetime, but he will. They will be chasing him and he will be running right out of the country. That is the kind of "Lalondemania" we will see.
Perhaps if the theory of the Budget worked, one could say something for it, that there will be a very strong recover so that governments to come after this one can take more and more in taxes in the next three and four years. However, will there be the recovery that the Minister forecasts? I say there are signs, and many of them, that indicate that this recovery is not a strong and healthy recovery. We are in a position of real danger. The bank rate is rising sharply, as the newspapers say, to 9.9 per cent. That is the Bank of Canada rate as of last Thursday. The Canadian dollar is struggling to remain over 80 cents in terms of the U.S. dollar. The Canadian dollar is under heavy pressure. We have the Government and the Bank of Canada committed, as the Governor of the Bank of Canada said in a speech several weeks ago which has been endorsed by
the Minister of Finance since, to the stand that the Canadian dollar cannot be allowed to flounder down below 80 cents U.S. because of the threat that brings of renewed inflation and renewed problems. Therefore, we have what appears to be a high likelihood of future interest rate increases if the Canadian dollar remains under pressure. We have the likelihood that the Canadian dollar will continue to be under pressure because our merchandise trade surplus is now declining again as our imports start to come in in greater volume and value.
We know that the Minister's projections for economic growth this year have already turned out to be inaccurate. We know, from looking at what the forecasters say, that we are by no means assured of a strong recovery. We simply do not know whether the Canadian economy and the Canadian consumer and taxpayer can afford to pay these increased taxes that the Minister is imposing on them for future years.
What are some of those taxes? The Minister is changing the Income Tax Act in major ways. He is eliminating, in effect, the federal tax reduction of $200 a year. In the next financial year he will gain $455 million and in 1985-1986 he will gain $1.5 billion. That is a major change in income tax which the public will have to pay. What other tax is there? Why, the Minister is imposing an increase in the federal sales tax. Is not this the same Minister and the same Government that came here wailing and gnashing their teeth because certain provinces impose hospital insurance premiums, or because they have high sales taxes which are regressive? Is not this the Government which is against these kinds of regressive impositions and which has announced that next fall, within less than 12 months from now, it will increase the federal sales tax by 1 per cent so the tax becomes in most cases 10 per cent of the value of an item sold? And for construction goods I think it will be 6 per cent. The Government will gain next year from the Canadian consumer another $300 million in federal sales tax. The year after that the Government will take in an additional $900 million, and the year after that an additional $1 billion in the most regressive way possible, which is by a sales tax. This, for a Party which does not believe in anything but progressive taxation, is a huge regressive tax bite, far greater than the hospital insurance premiums collected by Ontario or any other province that this Government has now introduced legislation to try to stop. Hypocrits, cynics, manipulators guilty of deviousness, deviates; this is what the Government is composed of.
What else is the Government doing, Mr. Speaker? Why, the Government is going to continue the Canadian ownership special charge which is imposed on the Canadian consumer. It is regressive. It could not be more regressive. It is gorilla-like in its regressivity. Through the Canadian ownership special charge every Canadian who drives a car or heats his house by heating oil is taxed 4.5 cents a gallon, which is almost a cent a litre. Next year the Canadian consumer will be paying $965 million to the Government through that tax, the same amount as this year; but the year after the Canadian consumer will be paying $985 million. In 1986-87 the amount will total $1
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billion. This money will come from Canadian consumers under the Canadian ownership special charge, which was imposed, we were told, to help Petro-Canada buy Petrofina. Petro-Canada has bought Petrofina for $1.7 billion. Then we are told this charge is to help bail out Dome Petroleum, the gnomes from Dome, to the tune of $500 million. That is not going to go ahead now. Still, this Government leaves the tax on.
Why, Mr. Speaker? Let me tell you what the Minister of Energy, Mines and Resources (Mr. Chretien) has said. I hope the Minister of Finance is listening to me.


Marc Lalonde: Always.


John Carnell Crosbie: Good. Here is what the Minister of Energy said about the Canadian ownership special charge: "The tax stays and there will be no exception. But we are still studying what to do with the money". The tax stays but the Government does not know what it is going to do with the proceeds. The Government is going to keep the tax anyway. This is the group that was so upset about the consumer and how the consumer had to pay more for gas and oil products in 1979-80.
According to the Toronto Star for November 22, the Minister of Energy, who is a tough guy now he is in power, is not worrying about the Canadian consumer. He said: "The tax stays and there will be no exception. But we are still studying what to do with the money". That is the kind of government this country has. The Liberals do not care what you pay for gasoline or heating oil. They do not care what the poor widow in St. John's, Newfoundland pays for heating oil as long as they get their cent a litre, their 4.5 cents a gallon. But they do not even know what they are going to do with the money when they get it, according to the Minister of Energy. What a bunch!
This is why we are not supporting this legislation even though there are some good things in it. We are not going to delay the legislation. We are not interested in debating it for an unreasonable or an unconscionable length of time. The unreasonableness and the unconscionability in this House are all on the other side. We want to see this Bill go through because there are some measures which will help the business community and hopefully help a recovery. But we are not going to assist the Government in taxing the Canadian people long after this Government is defeated. That will be when this Government gets the courage to call an election, which has to be done by March, 1985. This Minister is asking us to impose taxes on the Canadian people that he has no moral right or authority to impose. He is planning the tax grab next fall when he might not even be here in power next fall. The election might be over by the fall of 1984. Yet the Minister is planning to make these changes that will come into effect in 1985 when he will be gone. He is considering only the political short term and nothing else. A special recovery tax is what the Liberals call the sales tax.
Then there is a new 6 per cent tax on telecommunications services. Every time you pay your cable company, you will pay 6 per cent more to the Minister of Finance. This is a new tax to be charged to you. Last September the Minister increased
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excise taxes on alcohol 13.3 per cent and on tobacco 15.8 per cent. He was not considering the consumer then, Mr, Speaker. The poor devil who needs a cigarette because he gets so frustrated at this Government, knowing that it will be in power for another year or so, is paying 15.8 per cent more for it. If he is driven to drink, as hundreds of thousands have been by this Government, he pays another 13.3 per cent in excise tax. Never mind the six and five. The six and five only applies to the working guy. It does not apply to this Government.
When those tax increases were announced, the Minister of Finance said the growth this year would be 5.2 per cent in our GNP. Now he expects it to be between 4 per cent and 5 per cent, which is considerably less than he forecast. The Auditor General just brought down a report which shows an unsatisfactory situation in the forecasting methods of the Department of Finance. The Minister has not alluded to that yet. He has just brought in the Auditor General's Annua! Report which states the Minister of Finance has deceived the public about the deficit. The official figures state a $102.8 billion deficit in the last three years. The Auditor General says that the federal Government provides us with a distorted picture of our financial status, that it exaggerates the value of some assets and excludes certain liabilities. He says that in the last fiscal year the deficit was understated by $5.3 billion. In other words, the deficit this year is not really $31.3 billion, it is $31.3 billion plus $4 billion, $5 billion or $6 billion which the Government is hiding by using improper methods of reporting in its financial statements. But the Minister of Finance does not mention that.
The pattern of deviousness and deception continued in the Speech from the Throne when the Minister pretended that the provinces were going to get $500 million more for health and hospital services. Then it turned out that this is oney the federal Government owned the provinces under the existing formula for transfer payments. The formula is tied to increases in the GNP. He owned the provinces $500 million because the GNP figures were wrongly forecast for the last three years. This Government tries to pretend in the Speech from the Throne that this is new money for the provinces to help them with hospital care and health. That is deliberate and calculated deception. It is a lie. This Government has stooped so far now that it puts lies in the mouth of the Governor General when he reads the Speech from the Throne. That is one of this Government's main deceptions and lies which they gave the Governor General to read on December 7. It is a scandalous piece of business.
We do not know what the situation will be in Canada next year. We do know that the Canadian consumer is already suffering. All these tax increases will fall on consumers in the area of personal income tax and in the area of sales tax on all goods they buy, as well as in the area of gasoline and oil products. In the last two years their persona! disposable income in Canada has declined almost 5 per cent. This Minister will hammer Canadian taxpayers and consumers whose disposable income has already gone down 5 per cent in the last two years. According to Statistics Canada, personal disposable

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income has declined by a further 5.8 per cent in the first six months of this year.
In the last recoveries we have had in Canada, the personal disposable income of Canadians went up 6.6 per cent in the first two quarters of those recoveries. However, in this so-called recovery the personal disposable income of Canadians has declined. This is the recovery about which the Minister is boasting, a recovery where the ordinary Canadian consumer continues to suffer declines in his personal disposable income; that is, what he has to pay for goods after he has paid his taxes. The recovery, such as it is, is relying on consumer spending financed not from the current incomes of people but from their savings. That is shown by the fact that the savings rate has dropped 5.5 per cent in the past year and is currently 10.4 per cent, the lowest rate of savings since the first quarter of 1979. Consumers are not spending because their personal disposable income is higher; it is because they are dipping into their savings to spend.
The Minister does not care what has happened to the personal disposable income of Canadians. He is heaping tax increases on them, not this year because there is an election which must be fought in 1984 or by March 1985. He has it carefully calculated to fall later, after we have taken over the administration of the government and we are in government. Then people will start looking at their pay cheques and saying: "What in the name of God has happened? My taxes have gone up, the sales tax has gone up. I am being gouged in oil and gasoline, and look who is in power now". The Minister hopes they will blame it on the next government. That is what this change is carefully calculated to do. The Minister is an elongated Hunchback of Notre Dame, a beardless Rasputin; only Rasputin could dream up such steps.
All those tax increases will weaken consumer demand and threaten economic growth next year, just when we may very well have a faltering recovery. Are these tax increases necessary to reduce the federal deficit? Who knows? One has to be in office to see where savings might be made. We know that this is a government which is not attempting to have any savings. The Minister said that the deficit next year will be smaller than this year's. We will wait and see.
What about tax reform, to which the Minister alluded? He apologized for the fact that the Income Tax Act has not been simplified as he would like. He acknowledges that it needs to be more equitable and comprehensible to Canadians, but nothing is done about it. These are the people who have been in power for the last 20 years. It is under their 20-year regime that the Income Tax Act has grown into the hydra-headed monster that it now is. It is so bad that people are now starting to refuse to pay their income taxes. The Department of National Revenue is having increasing problems getting people to pay their income taxes. Some of us in the House know all about that; it has been in the news lately. People are no longer self-regulating, it is too complicated for them. That is why the Chairman of the Standing Committee on Finance, Trade and
Economic Affairs, the Hon. Member for Ottawa Centre (Mr. Evans), said on November 10:
-it is my contention that our current system of taxation remains a major impediment to growth and future prosperity.
That is a Liberal Member of Parliament, a former Chairman of the Standing Committee. Why does he sit in those ranks supporting the people who are putting before us a system of taxation that is a major impediment to growth and future prosperity? How can he believe that and support this Government? That is the question we must ask ourselves. How far can hypocrisy run rampant in the Liberal ranks? Those were the comments of a back-bencher or a half back-bencher; he is half-way up the power ladder in the Liberal ranks. He will not make it because there is not time. He may be one of those Nobel Peace Prize seekers. I must send over my own wire just in case. As a bit of insurance, I will add my name to the petitions which are going over to Norway.
Who else said something like this? The Minister of State for Economic and Regional Development (Mr. Johnston) made a speech on November 29 to the Canadian Tax Foundation. What did he have to say about our system? He said:
I believed then and believe now that the income tax system is in many ways inequitable, unduly complex and is not making the contribution it should to economic growth.
That was a Cabinet Minister, a member of the Government, the powerful Minister of State for Economic and Regional Development who, when he speaks, makes other Cabinet Ministers cringe, perhaps not through fear but for other reasons. In his speech of November 29, at page 3, he said: "I believed then"-that was when he was an honest guy, out of politics or before he ran-"and believe now that the income tax system is in many ways inequitable, unduly complex and is not making the contribution it should to economic growth". How can he stay in the Government if that is what he believes? He has been there since 1979. He has been in Cabinet since 1980. He has been there three and a half years. When will he do something in addition to talk? He goes to his friends in the Canadian Tax Foundation and says one thing. He goes to his Cabinet colleagues and just goes along with them like a tame tabby. His colleague, the Minister of Finance, brings in this abomination which is now before the House, this dish of spaghetti amending the Income Tax Act. He went on to say:
I see the fiscal system, and more particularly the income tax system, as the single most important instrument of economic development-
That is how important it is, according to the Minister of State for Economic Development, Mr. Don Johnston, by the way. For you civilians out there who do not know who it is, it is Don Johnston; mark it down.


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


John Carnell Crosbie: The Minister.


The Acting Speaker (Mr. Corbin):: The Hon. Member should not call Hon. Members by their proper names. He knows the rules. He is an experienced parliamentarian. I thought he was deliberately using the Hon. Member's proper
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name. The public, listening or looking in on the House of Commons, is one thing; but the Hon. Member should speak to Hon. Members of the House, not to the public. 1 remind him of that and the fact that he should refer to Hon. Members by their constituencies or portfolios.


John Carnell Crosbie: Mr. Speaker, I was referring to the Hon. Member for Saint-Henri- Westmount, the Minister of State for Economic Development, who otherwise shall remain nameless. He is better off nameless.
He continue in his speech by saying:
I blame the complexities and burdens of our tax laws that drive taxpayers to seek tax savings as an end in itself, rather than putting talent and capital to other productive and profitable purposes.
1 agree with that. We all agree 100 per cent with that, but what is he doing to change the tax laws? He is in a position now to do something. He is not just a footloose tax practitioner making $500,000 a year in Montreal looking after the investments of the Prime Minister (Mr. Trudeau) and so on. He is now a Cabinet Minister with responsibility. Then he went on to say:
Entrepreneurs face enough risk without the added uncertainty of a changing fiscal environment.
However, he saved the best to the end. I ask the Minister of Finance to listen to what his colleague said:
As a tax practitioner, I preferred and still prefer tax expenditures and incentives over grants-
First, they are available to all comers who meet the criteria of the law. There can be no possibility of discriminatory treatment among recipients.
Who in this House is the worst purveyor of grants? Who is the greatest grant dispenser in the history of this House? It is the Minister of Finance, the man who devised the National Energy Program and the PIP grants. There will be $4.6 billion in PIP grants. Is the Minister listening? Can he not learn? Will he not listen? I am quoting his colleague, the Minister of State for Economic Development. They are discriminatory.
Second, they favour winners, not losers. Sometimes governments tend to pick losers rather than back winners such as Maislin Trucking. Sometimes the Government favours losers and not winners. The Minister of Finance is the friend and supporter of Maislin Trucking. He is giving us the evidence that he favours losers and not winners.


An Hon. Member:: What about Canadair?


John Carnell Crosbie: 1 do not like to mention Canadair and the $1.4 billion.
Third, they can be administered without any army of bureaucrats.
The Department of Energy has gone from 370 personnel to 1,390. I might be out by five or ten, but the number of personnel has increased by 1,000 under the administration of the Minister of Finance. The reason the Minister of State for Economic Development prefers tax expenditures is that tax expenditures can be administered without an army of bureau-
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crats; but when you have grants and discretion, you have an army of bureaucrats.
Fourth, they encourage market forces-
He gives four major reasons why the Government should proceed by way of tax expenditures and incentives rather than grants. He still remains a member of this Government and a colleague of the Minister of Finance, the man who brought in the National Energy Program. How could you match that for reprehensible hypocrisy of a most abject and disgusting type? He tries to curry favour on both sides. You cannot be in the Government and not in the Government. You cannot be in the Cabinet and not responsible. The Minister of State for Economic Development is responsible for all of the grants, including the PIP grants and the National Energy Program, just as the Minister of Finance.
I have one other quote on the subject of tax reform. This is the former Minister of Finance; we have not forgotten him. I refer to the former Minister of Finance from Cape Breton, who is now the Secretary of State for External Affairs (Mr. MacEachen). He got his knuckles rapped on the road to Damascus. He is a foot soldier now, travelling around the world. What did this former Minister of Finance say? In his November 12, 1981 Budget speech he said:
Many Canadians find our tax system unfair, and I agree with them.
For once in his life he said something clearly. That was said by a Minister of Finance who has done nothing about it, even though he has been in government since 1963. We now have another Minister of Finance saying the same thing. With friends like these, how will we ever get the tax system in a situation where it might be fair and equitable? So much for tax reform. They have been there 20 years and we have not seen one sign of simplification or reform of the income tax system.
Last Friday the Prime Minister said, as reported at page 49 of Hansard'.
It is time for a change, but let me tell the people of Canada who are thinking that, that if they change to a Tory Party they would be wise not to be unemployed or to be poor.
The poor devils cannot help it with a Liberal Government. Most of them are unemployed or poor. Imagine this Prime Minister telling them that they would be wise not to be unemployed or to be poor. He is neither unemployed nor poor. We have seen that. He goes all over the world, taking his children with him. He is neither unemployed nor poor. The Canadian people have had little choice in this matter, but they have been made poor and unemployed because of the economic policies of this Government, which have not been changed, and the Minister of Finance does not show any sign of wishing to change them.
Many other topics will be touched on by other speakers from our side. For example, the way the child tax credit has been changed and the methods of gaining increased revenue are deplorable. The $100 standard charitable donation has been eliminated, not to help the charitable voluntary groups in our society but to raise revenue for the Government. What they

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requested has not been carried out. The voluntary sector has been ignored by the Government.
We have a system of research and development tax credits and investments tax credits that are complicated beyond belief. We have a new scheme for investing in shares of publicly traded Canadian companies which is very complicated. In any event, it does not do anything for non-public Canadian companies. The Budget damage done by the Minister's predecessor in November, 1981 is quite clear. Much of it has not been changed. Some of the improvements he has made do not even approach the damage done by the MacEachen budget. One example is that the capital cost allowance has still not been changed so that you are allowed to take 100 per cent of your capital cost allowance and not just 50 per cent, as became the case under that Minister.
It is my view that there is very little praise required for these measures or this Budget. It is all based on forecasting. If you take the forecast of the Minister of April, 1983, upon which he based his Budget, and if you look at the forecasts of three other groups-The Conference Board, the Economic Council and Data Resources-all of them vary.
If you use the forecast of the Conference Board of Canada, which is more pessimistic than the Minister, and if you use the sensitivity analysis provided in the April Budget fiscal plan, if the Conference Board's outlook for real growth turns out to be right, if it is the correct one, their forecast and not the Government's that the economy is slipping back into a recession, total outlays will be $5 billion higher by 1986-87 than the Minister predicts, 1 per cent more per year. The budgetary deficit would go up $14.6 billion. Instead of being $25.6 billion in three years' time, it would be $40.2 billion, if the Conference Board projection is right and the Government is wrong. That is how important these forecasts are.
Financial requirements would go up by $19.7 billion. We would have to borrow $38.6 billion in 1986-87, $19.7 billion more than the Minister shows. A 1 per cent reduction in interest rates would put the deficit down by $1.4 billion. Of course, it would put it up that much with a 1 per cent increase in interest rates. That is how all of these figures can be changed by just a slight change in the forecast.
My time has just about expired. We are prepared to deal with this legislation reasonably quickly. There are questions that need to be answered in Committee of the Whole. Other speakers will address various aspects of this Bill in more detail. If there is a delay, it is the fault of the Government, but the public apparently is not objecting. Not many groups have come before the Finance Committee to object in any detail. The business community does receive some encouragement from the provisions of this legislation. They are quite happy to have it dealt with in a reasonable space of time.
However, this Bill is a part of this Government's attempt to deceive the Canadian people. There is no confidence in this Government. That is one of the reasons the recovery is now so uncertain. As everyone in the country who has money to invest knows, the Government operates, as was described by the Hon. Member for York West, on a policy of cynicism, ballyhoo and
manipulation. It no longer has the power to fool the Canadian people.


Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, I am quite pleased to have the opportunity to follow the Hon. Member for St. John's West (Mr. Crosbie) after hearing the Minister of Finance (Mr. Lalonde) deliver a speech regarding his new tax Bill earlier today. After listening to the Hon. Member for St. John's West, 1 must say that we were presented with quite a performance today. I believe anyone listening in today would have to agree. In a sense, it was a rare performance because just the other day I read with interest an article from The Globe and Mail of Toronto which indicated that the Hon. Member for St. John's West had commented that in most cases he approves of the Minister's actions and rarely attacks him in the House of Commons. Today he certainly attacked the Minister in the House of Commons, and for that we are all appreciative because he has raised a number of criticisms.
The article in The Globe and Mail goes on to indicate that if the Hon. Member for St. John's West were to be in government tomorrow-and he did allude on a number of occasions to the rare possibility of a Conservative success in the next federal election

he would continue with the general approach taken by the Minister of Finance. That is what I take from the article in The Globe and Mail. The Hon. Member for St. John's West, who is the Conservative finance critic, has said that he would continue with the general approach taken by the Minister of Finance and that if he were Finance Minister tomorrow he would keep the deficit on its target of $30 billion. I am not here to comment on the speech made by the Hon. Member for St. John's West. However, it certainly was a rare performance when compared with the comments he made a few days back, as reported by Canada's national newspaper.
I would like to confine my comments today to the speech made by the Minister of Finance. The Minister of Finance must be the nation's best poker player because he stood before the House of Commons today and in a very serious tone of voice and without cracking a smile said that recovery was well underway in Canada. I would ask the Minister of Finance to come with me to Kamloops, British Columbia, some afternoon, and when walking down the streets of that town, to tell some of the people on the street that the recovery is well underway, that things are going very well in Canada and that all kinds of excellent signs are before us.


Lyle Stuart Kristiansen: He would be recovered in black.


Nelson Andrew Riis: Well, Mr. Speaker, he would get an interesting trip out of town, I suspect. I would like to see the Minister of Finance stand before the Chamber of Commerce or the District Labour Council in communities such as Kamloops and explain how the recovery is underway and how things are going well in an area where unemployment levels are at 25 per cent and increasing. I would like to see him say that in an area where business, farm and ranch bankruptcies are continuing to
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increase, where businesses that have been in place for a generation or two are undergoing bankruptcy or receivership proceedings or are simply having to close their doors. 1 give the Minister credit for his unbelievable ability to stand before the House of Commons and, with a straight face, say that the recovery is underway. I give him full credit for his expertise and talent.
I listened with some interest when the Minister of Finance said that the taxpayers of Canada will be very happy with the new tax changes. Bill C-2 has been introduced today by the Minister of Finance, who I suppose would have to be called the father of this Bill because it was only nine months ago that Bill C-139, the last set of changes to the Income Tax Act, was passed. Nine months later, afert an early conception in the days following the passage of that particular Bill, we are now faced with Bill C-2, another 200 pages containing new taxes for the people of Canada.
The Minister of Finance has said that the taxpayers of Canada will be advantaged by and pleased with these progressive changes. I think he should have said that a bit more carefully, Mr. Speaker. There will be some people who will be in ecstasy as a result of these changes. Those are the loophole gymnasts, the people who take advantage of the loopholes provided by the Minister of Finance and is predecessors which enable thousands of Canadians who make in excess of $50,000 a year to pay not a single penny in income tax. As a matter of fact, just a few days ago, I believe, someone in the Finance Department had mentioned that last year there were nearly 200 people who happened to have incomes, derived mainly from investments, which were in excess of a quarter of a million dollars and who, because of their ability to use the loopholes in the tax system, did not pay a single penny in federal income tax.
We are seeing before us today a whole new set of loopholes which will unquestionably benefit some Canadians. Those loopholes will benefit those people who invest in the country and will benefit the upper income earners. There is no question about that. Of course, the Minister is proud of that fact because of his commitment to the trickle-down theory of economics. It reminds me of a farmer feeding a great deal of oats to a horse. That horse will benefit and eventually, after a period of time, some of those grains of oats will actually pass through the system and trickle down. That is the kind of trickle-down theory that we are seeing at its best here today. By providing tax loopholes and investment incentives to a handful of upper income Canadians, eventually all of the folks will benefit. That is one theory, Mr. Speaker. We are seeing the famous trickle-down theory introduced here today once again.
The Minister said that these must obviously be good proposals because all of the investors and all of the upper income earners who have been consulted agree with them. Of course those people agree with the proposals. I suspect that if he went to average Canadians on the streets of Ottawa, Calgary or St. John's and asked those people if they would care for a tax cut this year, a lot of them would agree. A lot of them would say,
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that they would like to have a tax cut and would like to pay less income tax this year. That the Minister of Finance has said that these must be excellent proposals because those who will benefit from them approve of them is a bit like asking a fox to put a new latch on the chicken coop door and then saying that the latch must be a good one because the fox recommended it.
It is that kind of perverted logic and perverted tax reform that is turning the people of the country off. People who listen to these debates and hear about what these taxes will actually do become more cynical than they have ever been before about this particular Government.
The Minister of Finance carefully omitted from his comments a number of tax changes. Yes, we will be seeing tax changes, but the manner in which they will benefit Canadians is rather mystical to me. The Minister of Finance said that we will increase the federal sales tax. That means that every Canadian will be paying more taxes in the years to come. Believe me, Mr. Speaker, that is not welcome news. The fact that we are using this opportunity to remove even more money from the average Canadian's pocketbook and that the disposable income of Canadians will be further eroded as a result of an increase in federal taxes is not welcome news. That increase will amount to $300 million in 1984 which means that $300 million will be taken out of the communities in Canada where that money would be circulated many, many times during the year and placed in the hands of the Minister of Finance. The increase will amount to $900 million in 1985 and $1 billion in 1986. That is the kind of tax change that the Minister of Finance so conveniently forgot to mention while he was speaking about what is included in Bill C-2.
As well, the Minister of Finance did not mention in any detail a couple of other proposals. He did not indicate to Canadians that the Canadian ownership special charge, a levy of four and a half cents on every gallon of gasoline used in the country, would continue for some time. I want to remind the Minister of Finance that the Canadian ownership special charge was levied a few years ago to enable the Government to buy Petrofina. This was in the best interests of Canadians over the long term. I believe that most Canadians who understood the benefits of having greater control over such a strategic resource as oil energy were quite prepared to pay four and a half cents per gallon extra. The transaction was completed but now the Government says it is going to continue the levy because it might be able to use the money for a variety of other things. It will collect four and a half cents per gallon from every single Canadian who drives a vehicle because someone has to pay for all the tax dodges and loopholes that are being created. If upper income earners do not pay income tax, we know who does. It is the average Canadian who pays more income tax, more excise tax and more federal sales tax as well as the extra four and a half cents on a gallon of gasoline. That is why the charge is being continued. It is not because we need more money for the health system or the social security system but because someone has to bear the cost of the hundreds of billions of dollars in newly created tax loopholes.

December 13, 1983
Income Tax Act


Mr. Parker:: It is a free ride for the rich.


Nelson Andrew Riis: These are some of the things that the Minister of Finance forgot to include in his comments on Bill C-2.
I want to make two or three points that 1 think Canadians should be aware of, Mr. Speaker. At this time of year a lot of people start to be very concerned about taxes. This is the time of year when the major newspapers in Canada devote many pages to pointing out ali the tax loopholes that certain Canadians will be interested in-the MURBS, the buying in of apartments and so on. This is a preoccupation with many Canadians at this time of year. Rather than spending a great deal of creative energy to find new ways of involving themselves in the country's economy, many Canadians become preoccupied with dodging taxes. The tax lawyers and tax accountants have a field day. If any area of job creation is taking off these days, it has to be those two groups as more tax loopholes are provided and as the system becomes more and more complex.
When we are dealing with the twelfth edition of the Income Tax Act, 1983, we are dealing with an Act that has become totally incomprehensible. If any tax advisers in the country, sophisticated as they may be, hold that they can advise clients because they understand the Income Tax Act, I suggest that would be a good reason for anyone to seek a new tax adviser. It is just impossible to understand the Act in its present form. A great deal of it is open to the interpretation of individuals. One individual will seek some tax advice from a member of the Finance Department and will be given a certain interpretation only to find out that it is incorrect. Although the advice may be followed and a return based on it, if it turns out to be wrong the taxpayer is at fault. We have been presented with an additional 200 pages of tax changes. We went through this in March of this year and it is likely we will see more changes next year. All this only makes the Act more incomprehensible than ever.
It is interesting to know what the Department of Finance has to say about the Income Tax Act and those who benefit from it. Not long ago it provided a guide entitled Analysis of Federal Tax Expenditures for Individuals. It pointed out that the average taxpayer, with an income in 1979 of between $10,000 and $15,000, saved on average $771 through tax deductions. In the same year, however, a taxpayer with an income greater than $100,000 saved an average of $4,600 as a result of deductions. That shows what a lot of people have come to believe-that those in the upper income brackets benefit more from the various tax deductions available than those in the lower income bracket.
The Minister of Finance said that everyone would benefit from the tax changes he was introducing today. Information gleaned from his Department showed very clearly that in the tax year 1983-84, most Canadians would be subject to a tax decrease. However, that situation changes for the year 198586 and onwards. For example, if an individual is married and has two dependants under the age of 18 and is earning $15,000
per year, in 1984 he will save $6 but in 1985 he will pay an extra $296. If his income is in the $30,000 bracket, next year he will pay an additional $472. In other words, people who earn more than $7,500 will pay more income tax in the years following this one. The typical Canadian will find that his taxes increase as a result of these changes.
As we examine the Bill introduced by the Minister I think it is important that we consider what the Government is attempting to accomplish as a result of the changes and the context in which they are being introduced. By definition, the changes that are being introduced are illogical. If we have a government, such as the one we have now, that lacks vision of what the economy ought to be doing, or lacks a comprehensive, strategic economic or industrial policy, that lacks a plan for the future, then we have a government without a road map, as the Auditor General has said. Who would take a motor trip in a foreign land without a road map to find out where they have been, where they are, and more important, where they are going? But in this country today we have a driver without a road map and we have no idea where he is taking us.


Mr. Kempling:: And we are running out of gas.


Nelson Andrew Riis: As the Hon. Member indicates, we are running out of gas at the same time. A government that lacks any kind of sectoral planning cannot introduce income tax reform that makes sense. All it can do is provide benefit for a handful of Canadians and perhaps achieve some rather mystical ends that only the Minister knows about. It is obvious who benefits under this illogical approach to tax reform. A very select number of Canadians benefit. The only economic logic in this is the trickle-down theory. The main beneficiaries are the small group of elite, upper income Canadians.
Mr. Speaker, it is close to one o'clock, so 1 look forward to returning to my comments later.


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


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
December 13, 1983


Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, I am particularly concerned about senior citizens, and especially single women seniors. This one group in particular over a long period of time has been in desperate need. Six out of every ten single seniors live below the poverty level.
In Canada today we have assistance for those over 65, and we have the Canada Pension for the disabled under the age of 65. But the remaining and nagging problem remains for thousands of women between the ages of 60 and 65. For these needy Canadians there is very little.
1 care about these needy women as many of them live in my riding and I personally know many of them. These women are often too old to find decent jobs but not old enough to qualify for the federal guaranteed supplement or spouses' allowance. A quick alternative must be found to remove these needy Canadians from the indignity of welfare rolls.



HUMAN RIGHTS


Mr. Pierre Deniger (La Prairie):: Mr. Speaker, I should like to draw the attention of the House to what seems to me to be a major shortcoming of our legal system. Recently, I was in touch with an inmate who had decided to apply to the National Parole Board. However, for reasons which I cannot explain and which fall within the exclusive jurisdiction of the board, the inmate was denied parole because of a document to which he does not have and will never have access, and the contents and the authors of which he will never know. In my humble opinion, such provisions in the act are tantamount to a serious breach of the right to information. And what is more, in the case of inmates, confidentiality and secrecy requirements deprive them of any opportunity to defend themselves and restrict their basic right to know why they are denied their freedom.
On the day after the 35th anniversary of the Universal Declaration of Human Rights, it might be necessary to review certain policies which raise some doubts about the respect for the principles underlying human rights.



CURRENCY


Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, paper banknotes have many disadvantages. They wear out quickly, tear, fade, burn, and are damaged by contact with water. According to recent press releases-and I know this has to be true because it was a CP wire story in The Toronto Star-the Isle of Man has solved many of these problems by issuing plastic banknotes. Although Manx banknotes cost the same to manufacture as regular paper ones, they are said to be virtually indestructible, with an average life expectancy of some five years in comparison with only a few months for paper. Perhaps the Bank of Canada should study the Manx experience with a view to implementing the issuance of plastic banknotes in Canada if they are found suitable for use in Canadian climatic conditions.

[ Translation]



SHOE INDUSTRY


Mr. Jean Lapierre (Shefford):: Mr. Speaker, now that the economic indicators are more encouraging, that interest rates have gone down to less alarming levels and that we have succeeded in controlling inflation, the one problem which still troubles all of us is unemployment which unfortunately remains at completely unacceptable levels. The work ethic is an extremely important concept for Canadians, and as we know, idleness can cause social and human tragedies. No one is insured against lay-offs and everyone tries to avoid them. It is in this spirit that the workers of the J.A. Blais company urge the government not to make an ad hoc decision about the next shoe quotas.
In principle, I am a proponent of free trade and a free market, but my concern for people overrides my idealistic view of international trade. I therefore ask that the issue of quotas for the shoe industry be examined without delay to give a clear and specific signal to an industry desirous to retool and to workers who feel insecure facing the prospect of their quotas being abolished. If we could offer alternative jobs to those who work in these less competitive sectors, I would say: Long live free enterprise and let the rules of free competition apply. However, when we know that for every position hundreds of unemployed line-up to apply for it, our labour ajustment programs are too often only stop gaps both in theory and in practice at the present time.

December 13, 1983



PARLIAMENTARY CONTROL OVER PUBLIC EXPENDITURES

Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, Auditor General Kenneth Dye yesterday expressed a very valid concern when he pointed to the increasing lack of parliamentary control over government expenditures, and lack of accountability to Parliament by Crown corporations and the bureaucracy. The scrutiny of government which Parliament is supposed to provide is increasingly difficult to achieve in any credible way, given the complexity of modern government and the fact Parliament has not yet been reformed to take this into account.
In the last session of this Parliament the Special Committee on Standing Orders and Procedure made a number of recommendations which, if implemented, would have the effect of restoring to the House of Commons some of the power lost over the years through the evolution of the present bureaucracy, the concentration of power in the Prime Minister's office and Cabinet, and the role that party discipline, government party discipline in particular, has played in reducing the power of the House over other groups in the decision and policy making process.
Some of the recommendations of the Committee dealt with control of expenditures. Others dealt with the need for the House to have more control over its own life, and for its committees to be more independent of the Government both in staffing and the appointment of chair people. Another dealt with the selection process for Speaker of the House, and the need for the House to be more genuinely involved in the selection of the Speaker. These and other recommendations could go a long way toward creating a Parliament that would have the ability and the reformed self-understanding to resume the ancient role of the House of Commons as that forum which truly scrutinizes and makes government accountable to the people.



PRIVY COUNCIL OFFICE


Mr. Dan McKenzie (Winnipeg-Assiniboine):: Mr. Speaker, the Liberal Government is not only incapable of effectively managing the country, but Ministers are also unable to control costs and over-expansion in their own offices. The Privy Council Office currently staffs 525 employees, with a budget of $28.3 million. In comparison, the United States has only 393 people in the White House Office, with a yearly budget of only $22.3 million. Even the United Kingdom requires only 69 persons to be employed at Number 10. The size of staff and budget does not proportionately represent the population either, as Canada's population is 25 million, the United States has 232 million, and the United Kingdom has a population of 55 million.
Canadian taxpayers are carrying an overloaded burden already without having to bear the cost of maintaining this huge bureaucracy. For the Prime Minister (Mr. Trudeau) to allow this is a clear indication of the contempt he holds for the Canadian public, and he should have the decency to call an election to allow the Canadian public to indicate the contempt they hold for him.



THE PRIME MINISTER

Mr. Gordon Towers (Red Deer):: Mr. Speaker, tonight in the Automotive Building at the CNE in Toronto, the Liberals are celebrating the Prime Minister's (Mr. Trudeau) second last farewell.
Taking into account the current state of the Gallup poll, I understand that in his honour the main course will be humble pie and burned grits. I am also told that the menu will be all finger food in recognition of the Prime Minister's propensity for saluting Canadians with one digit. There will also be, I am told, fish fingers, lady fingers and, of course, finger bowls. Senator Keith Davey's suggestion that the Cabinet act as waiters was scrapped because with their track record-they are all thumbs-there would be just too many thumbs in the soup bowls.
Bon appetit, and a special nod to John Napier Turner who, I understand, is receiving the fickle finger award for his diligent work in starting up the wild escalation in the federal deficit when he was Minister of Finance, and who, 1 understand, is departing shortly to join the Foreign Legion.



LIBERAL PARTY OF CANADA


Mr. Marcel Roy (Laval):: Mr. Speaker, the Progressive Conservative Party government was defeated in the House on December 13, 1979. Following its defeat, we implemented a liberal philosophy which has meant a lot for Canadians, something for which 1 feel we should rejoice. For instance, this defeat enabled us to put forward the National Energy Policy. We are all aware of the part the Prime Minister has played in the Quebec referendum which was seeking the separation of that province from the rest of Canada. That was a major step for this Government. In addition, there were the patriation of the Constitution and Charter of Rights, all objectives which would never have been achieved under a Progressive Conservative government.
Mr. Speaker, I meant to emphasize, as indicated in the Speech from the Throne, that we intend to keep on developing a liberal philosophy through a Liberal Government in Canada.
December 13, 1983



THE PRIME MINISTER

Mr. Ian Waddell (Vancouver-Kingsway):: Mr. Speaker, Christmas is a time for miracles. In keeping with that tradition one of the Members of the House raised the matter of the famous "Last Supper" in Toronto tonight. It seems to me that they have got the wrong "Last Supper". In fact the "Last Supper" is the "Last Supper" to which every condemned man is entitled. Certainly all the necessary people will be there to play their parts, Mr. Speaker.
Vying for the role of executioner will be Fleming and Perrault. Consoling the condemned man as the guillotine is readied will be Senator Keith Davey. Eager for the role of the disinterested Madam Lafarge, with sharpened knitting needles at the ready, is Iona Campagnolo. Once the blade has dropped, the over-anxious coroner, played by John Turner, of course, will rush with ill-concealed haste to confirm that the dirty deed has been done finally. There will be no stay of execution. There will be no eleventh hour phone call from the Nobel committee. There will be no reprieve from the Canadian electorate. If this is truly to be the "Last Supper" for the Prime Minister, I think I can join with other Members of the House in saying that we hope that he will eat a hearty and last meal.



FOOD AND DRUGS


Mr. Joe Reid (St. Catharines):: Mr. Speaker, at this particular time of the year when Yuletide parties are commonplace it is worth while knowing that one beverage, wine, is full of the necessary vitamins and minerals which a body requires. It has been found that wine contains the minerals potassium, calcium, sodium, magnesium, phosphorous, copper, iron, cobalt, manganese, sulphur, chromium and zinc. It contains as well, Mr. Speaker, vitamins A, B, C, and B complex. The acid in these wines, especially found in the dry wines of Niagara, is also beneficial because it aids the digestive system.
If every individual would replace sleeping pills with a glass or two of wine, as they do in European countries, we would be a happier, healthier people. Wineries from coast to coast should, as they extol! the virtues of their products, emphasize these facts. Wines are a food product that can become a part of everyday living and social life. A reclassification of wines as food products would substantially reduce the forms of taxation, make these excellent beverages available to a larger market at a more reasonable price, and provide a stimulus to our grape growers and wineries which are being suffocated by excessive taxation.
Oral Questions ENERGY



DEPARTMENT'S USE OF FUNDS FOR PETROLEUM INCENTIVES PROGRAM

Mr. Ray Skelly (Comox-Powell River):: Mr. Speaker, on November 29 the Minister of Energy, Mines and Resources (Mr. Chretien) was asked to explain why his Department had transfered $50 million from the Canadian Home Insulation Program to the Canadian Dry Hole Program. The Minister on that day, the day of the vote on the matter, answered that he did not know a thing about it but would inquire into the matter.
Mr. Speaker, for the Minister's information, the Auditor General has expressed severe concerns about the Canadian Dry Hole Program. The petroleum industry has expressed serious concerns about the Canadian Dry Hole Program. In the House the NDP has asked questions, both orally and on the Order Paper. We have asked for a reference to the committee to study the problem. We have asked for the committee to be convened so that the Minister could be questioned. The Minister's answers, by and large, are so weak and defensive that it is clear that he is spending more time on his leadership aspirations than on his responsibilities with the Department.


Some Hon. Members:: Hear, hear!



ORAL QUESTION PERIOD


Mr. Brian Mulroney (Leader of the Opposition):: Mr. Speaker, my question is for the President of the Treasury Board, whom I see entering the House. In his report the Auditor General accuses the Government of Canada not only of wasting the taxpayer's money, but also of using "-accounting policies that are inappropriate for a fair presentation of the assets and liabilities and revenues and expenditures of the Government of Canada". The Auditor General has in effect accused the Government of misrepresenting its true financial position by in excess of $20 billion in the last fiscal year.
The Auditor General is a most honourable person who was given independence precisely because he was capable of rendering objective judgments. Given this objective analysis by the Auditor General, what specific steps is the Government planning to take to ensure that in future the taxpayers of Canada can know exactly how their dollars are going to be spent? What program is the Minister ready to announce today to ensure that the kinds of overwhelming boondoggles announced by the Auditor General no longer occur on the backs of the Canadian people?
126

December 13, 1983
Oral Questions


Hon. Herb Gray (President of the Treasury Board):: Mr. Speaker, while my hon. friend was speaking to fundraising dinners he may very well have, during that period, missed the fact that I answered questions posed by some of his colleagues to confirm that the Comptroller General-


John Carnell Crosbie: Come on you turkey, answer.


Herbert Eser (Herb) Gray: -already has under way a major study into the issues raised by the Auditor General and his predecessors about successive Public Accounts, and has also asked for the assistance of the prefessional institute of the accounting profession in Canada with a view to coming up with recommendations aimed at resolving differences of opinion between himself and the Auditor General as to the proper form of the Public Accounts of Canada.


SIZE OF DEFICIT-REQUEST FOR NEW FINANCIAL STATEMENT
Martin Brian Mulroney: Mr. Speaker, this Government is belly-up. That is what the Auditor General was saying.


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: All we get are platitudes, and what you have done has placed a mortgage on the backs of Canadian youth that they cannot live long enough to pay off. That is what the spending of this Government has done.


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: The Minister of Energy thinks that it is funny. The way that he counts, what is funny is the fact that he can even get to his office in the morning. That is the funny thing about it.


Mr. Pinard:: Question.


Martin Brian Mulroney: In the 1980 Throne Speech, Mr. Speaker- [Translation]
Ah, the clowns from Quebec! Patience! Patience!

In the 1980 Throne Speech the Government promised, "-to reduce the federal deficit in a planned and orderly manner". Since that time the net debt has skyrocketed from $81 billion to $150 billion. If you add the $20 billion that the Auditor General said that you secreted away, it is an increase of almost 100 per cent in three years in our debt.


John Carnell Crosbie: Shame.


Martin Brian Mulroney: These are enormous discrepancies between the Government's figures and those of the Auditor General, which are causing profound concern in investment communities around the world. Will the Minister tell us when the Government proposes to bring forward a new and comprehensive financial statement which this country now requires on an absolutely urgent basis?


Herbert Eser (Herb) Gray: Mr. Speaker, the Public Accounts of Canada are prepared for the purpose of reporting to Parliament on compliance with legislation adopted by Parliament. The Auditor General feels that they should be prepared on a different basis and, because of this difference of opinion, in response to a request by the Public Accounts Committee the Comptroller General of Canada has a major study into these issues under way.
In fact, on November 24 the Comptroller General appeared before the Public Accounts Committee and presented a statement to the Public Accounts Committee on the work he is doing to attempt to resolve these differences in an effort to reassure people on this very issue.
So I can say to my hon. friend that while he may have been engaged in other activities he may have missed the questions posed by his colleagues to which I replied in the House, confirming that work is under way to try to resolve these issues at the request and according to the timetable set by the Public Accounts Committee itself.
The statements in question do present a fair and balanced picture of the financial position of the Government, and in due course the Minister of Finance will provide additional information.


Martin Brian Mulroney: Mr. Speaker, no wonder this country is broke. There is a $22.5 billion discrepancy, and he calls it a difference of opinion. This is going to be good; now he is being coached by the Minister of Finance. You have got enough trouble! Twenty-two billion dollars would pay the entire medicare bill for all Canadians for an entire year. That is not a difference of opinion.


IMPORTANCE OF FINANCIAL INFORMATION
Martin Brian Mulroney: Mr. Speaker, in regard to the discrepancy, the Auditor General
states:
Interest rates are being established, the extent of tax revenues are being estimated, decisions on the deployment of resources both in the public and private sector are being contemplated. Each is dependent, to an important degree, on the credibility and completeness of the financial information available.
The Minister recognizes the seriousness of the implications in what the Auditor General is saying, that all of this depends on the completeness and credibility of the financial information provided.


Mr. Chretien:: Order.


Martin Brian Mulroney: Will the Minister tell the House when the Government will come forward with a new and comprehensive financial statement, to make sure that Canadians and the international investment community know exactly what kind of bad shape we are in?


Herbert Eser (Herb) Gray: Mr. Speaker, the Public Accounts of Canada must be tabled each
December 13, 1983

year by law, I believe, in the fall of the year. The Public Accounts of Canada which were tabled a few weeks ago have been prepared in exactly the same form in which they were tabled when the last Conservative Government was in place.
1 must say that the Auditor General of that day made similar reservations about those accounts. 1 am sure that my hon. friend is not suggesting that the public accounts tabled by the last Conservative Government, led by my hon. friend, the Right Hon. Member for Yellowhead, did not present a fair and balanced picture of the financial situation of the Government. If he is not saying that, then he cannot validly argue that these financial statements do not present a balanced picture.
Therefore, we are working to deal with these issues which involve the fact that there is a lack of an accepted accounting standard for these types of statements. We have involved the assistance of the accounting profession, as well as the work of the Comptroller General. I can assure my hon. friend that we are treating this seriously, certainly as seriously as the Government of the last Conservative Prime Minister, and we will do a lot better in dealing with these issues than he did.


Mr. Lewis:: Mr. Speaker, the only thing the President of the Treasury Board omitted to say was that the deficit is $85 billion higher.


PRESENTATION OF PUBLIC ACCOUNTS
Douglas Grinslade Lewis: Mr. Speaker, my question is directed to the President of the Treasury Board. Does the Government agree with the Auditor General that the primary objective of the Government's financial statement is to provide the taxpayers, who are the shareholders of Canada, with a clear picture of the Government's financial position, or is the Government simply hiding behind compliance with the law? What is the Government trying to do? Will he give us the straight facts, and all the people of Canada the straight facts, or will he continue to hide behind compliance?


Herbert Eser (Herb) Gray: Mr. Speaker, we are giving the people of Canada the straight facts in the public accounts by reporting to the Canadian people through Parliament. We have to tell Parliament how the Government has handled the money voted by Parliament. This is what the public accounts are designed to do.
One can argue that they should be in a different form, but to accept that argument one must have accepted accounting standards for government accounting which have not been put into place. One would also likely have to change laws of this Parliament, for example, laws calling for separate accounts for the Canada Pension Plan and the Unemployment Insurance Fund. If my hon. friend wants to suggest that, we can consider it. In the meantime we are reporting to the people of Canada in the way my hon. friend continues to argue we should. We are reporting to the people of Canada through Parliament. I am sorry that my hon. friend objects to that, but on other occasions he calls for more of it.
Oral Questions


Douglas Grinslade Lewis: I suggest to the Minister that the financial statements are misleading and that is what the Auditor General has said.


ROLE OF PARLIAMENT
Douglas Grinslade Lewis: Mr. Speaker, does the Minister not agree that there is a direct link between the deficit and Parliament's awareness of the magnitude of the deficit and the policies upon which we eventually decide as parliamentarians? If the deficit is not accurately stated, how can Parliament accurately decide on what policies to agree?


Herbert Eser (Herb) Gray: Mr. Speaker, my hon. friend has raised a valid point. But I am suggesting to my hon. friend that one cannot necessarily accept the premise of some of the Auditor General's comments that we are not accurately stating the various liabilities of the Government. If one accepted that premise, one would also have to accept the argument that there are a number of assets we should be recording which would more than balance what he says are liabilities. For example, there is the value of our gold reserve, the value of accounts receivable for taxes, and the value of inventories and equipment on hand which, as the Comptroller General reported to the Public Accounts Committee on November 24, likely equal or surpass the amount of liabilities which the Auditor General suggests have not been recorded. If one wants to accept one side of the argument, one has to accept the other side. The result is that the statements do accurately and fairly present the financial affairs of this Government to the Canadian people.


ESTABLISHED PROGRAMS FINANCING
Ms. Pauline Jewett (New Westminster-Coquitlam):: Mr. Speaker, my question is for the Minister of Finance and it concerns another government hoax. In the Speech from the Throne the Government announced a $1 billion youth fund and an increase in transfer payments to the provinces for medicare and post-secondary education. We now know that the $1 billion youth fund is in fact only $260 million in new money and that the increase in transfer payments is automatic, not discretionary.
In addition, there is a further $118 million lost to the young people due to the cap the Government has put on post-secondary education funding. In light of the Government's statements that youth are a priority, instead of engaging in this hoax will the Minister not at least live up to that commitment by removing the six and five cap on-
[Editor's Note: At this point a disturbance took place in the galleries.]

December 13, 1983
Oral Questions


Pauline Jewett: -post secondary education funding for those very institutions, universities and colleges which themselves provide the programs for all our young people?


Marc Lalonde: Mr. Speaker-


An Hon. Member:: There is a distraction; take advantage of it.


Marc Lalonde: I regret that the friend of the Leader of the Opposition could not stand what the hon. lady had to say.
I want to report first of all, that indeed there is a $1 billion fund created for youth and job-creation for young people which will include over $260 million of new money, as the Hon. Member has indicated, which is significant.
1 also want to report to the Hon. Member that this year the provinces will be receiving $769 million over and above what they anticipated receiving this year, and certainly over and above what I anticipated paying them this year. This amount results from adjustments to the gross national product figures made by Statistics Canada last summer.
Again, 1 want to stress that no provincial Minister expected to get that windfall this year. That amount represents many times the $150 million represented by user fees and extra billing by doctors. Therefore that should allow the provinces to do away completely with extra billing and user fees in the provinces where they have these amounts.
As far as the specific point raised with regard to postsecondary education is concerned, I would like to point out to the Hon. Member that the payments for post-secondary education by the Government of Canada will be increased by 6 per cent and 5 per cent which, as a whole, represents more than many provinces will have been paying to post-secondary education themselves during the course of this year. In effect, if you take into account the population count, our transfers, for post-secondary education will be more like 7.1 per cent rather than 6 per cent. That is, 1 would say, more than what most provinces-


Mr. Nielsen:: Order.


Marc Lalonde: -are going to add to post-secondary education during the course of the year.


An Hon. Member:: That is a long answer for nothing.


Pauline Jewett: Mr. Speaker, everything the Minister said is all well known to all of us here. The fact is it is this Government that has made a commitment to post-secondary education, to the very programs that our young people are going to need to help prepare them for the kind of society into which we are coming.


REQUEST FOR ESTABLISHMENT OF TASK FORCE
Pauline Jewett: Mr. Speaker, furthermore, in view of the fact that the capping of
the post-secondary education funding is itself a violation of the EPF agreements, will the Minister not only reconsider that capping, but will he and the Government, in view of the additional fact that the Throne Speech has all kinds of commissions, consultations and task forces announced, very seriously consider the creation of a task force, which would include representatives of the universities and colleges, students and faculty, as well as the two levels of government, to look at the whole problem of post-secondary education in the light of the very real crisis that our post-secondary institutions are experiencing?


Marc Lalonde: Mr. Speaker, not only are we going to transfer more this year than the provinces anticipated, to the tune of $769 million, but in the following years the provinces will be receiving in excess of $300 million more than they anticipated receiving according to the forecasts made last spring. Therefore, the total amounts transferred to the provinces for post-secondary education and health services will be very significantly over and above what had been anticipated. This should allow them to provide more funds for post-secondary education, should allow them to do away with user fees and extra billing, should allow them to improve their health services, and should allow them to contribute more to job creation.


Some Hon. Members:: Order.


Marc Lalonde: The Hon. Member knows again that the transfers for post-secondary education are going to be higher than in effect the provinces are going to put into post-secondary education.


Erik Nielsen: Order. We do not want a book.


Marc Lalonde: And she knows that there is no power to force the provinces to put that money where it should go.


Pauline Jewett: Mr. Speaker, the reason there is no authority on the part of the federal Government is that it gave up that authority to say how the money would be spent.


Some Hon. Members:: Hear, hear!


Pauline Jewett: The federal Government gave that up years ago, and it never should have done so.


REQUEST THAT MINISTER CONSIDER PROPOSAL
Pauline Jewett: Mr. Speaker, the Minister has not answered my second question, which was: if the Government really thinks that post-secondary education is important, and I believe it does, why does it not then, since it insists on six and five being in place during this period of hiatus, create a task force to study all the problems of post-secondary education? The Minister of Youth will not do this, unless the Minister is going to tell me that one of the functions of the new Minister of Youth is to look into post-secondary education funding. I doubt if it is. Will he
December 13, 1983

please therefore look seriously at the creation of a representative task force along the lines I have already suggested?


Marc Lalonde: Mr. Speaker, as I said earlier, the Government is contributing more money to post-secondary education than it ever did before. By increasing its transfer payments to the provinces, the government is contributing more than the provinces themselves are adding. I think it is clear the Canadian Government is doing its share, and more than its share, with respect to postsecondary education, and this does not include the hundreds of billions of dollars that the Department of Employment and Immigration is investing in training young Canadians to prepare them for the job environment.
Regarding the point raised by the Hon. Member, I may remind her that the Secretary of State consults regularly with his colleagues who are responsible for education, that 1 myself was discussing the matter of financing health care and postsecondary education with my colleagues, the ministers of Finance, as recently as last Thursday, and finally, that the Minister of Employment and Immigration is also consulting with his colleagues on training programs in this area. The Government of Canada, and I would ask the hon. lady to think about this, has not only done its share but more than its share in this field.


DEPARTMENT OF EMPLOYMENT AND IMMIGRATION
Hon. Bill Jarvis (Perth):: Mr. Speaker, my question is for the Minister of Employment and Immigration who, I am sure, must be deeply concerned about the sometimes bitter criticism of the operations of his Department contained in the Auditor General's Report. Mr. Dye reports the Department does not determine its future human resource needs in a detailed and systematic manner. In other words, it does not identify future job opportunity areas. He then goes on to say that there is an absence of a national strategy to determine whether. Employment and Immigration is delivering its services to those who need them most, or whether clients are receiving the most appropriate programs. How does the Minister respond to these criticisms in two fundamental areas-future job creation program potential, which is not identified by the Department, and second, whether the 1.5 million jobless are in fact being delivered programs to meet their needs, or whether the proper programs are being delivered to them?


Hon. John Roberts (Minister of Employment and Immigration):: Mr. Speaker, we take the criticisms that have been presented by the Auditor General about the administration
Oral Questions
and direction of our programs, very seriously. Over two months ago I did give instructions to my officials to examine each of these criticisms and return to me with proposals on how we could properly respond to them. We have since that time had continuing discussions with the Auditor General about how we might respond to the criticisms which are presented of our programs.
In relation to the first part of the Hon. Member's question, I would like to say that one of the major problems we have in developing the most precise and cost-effective programs for job formation has been, at least until recently, a lack, I believe, of an adequate knowledge base of what job opportunities are most likely to be present in the Canadian economy in the future. It is for that reason that we have moved to the establishment of the occupational projection system. It is for that reason that we have supported financially the Business Council on National Issues and the Canadian Labour Congress in putting together the Labour Market Institute, exactly to give us better information than we have had in the past as to where job opportunities in the Canadian economy, as we look down the next three or four years, are likely to be found. There has been a conscious effort on our part, at least over the past year, and perhaps longer than that, to respond to the kind of concern which the Auditor General has expressed.


EVALUATION OF JOB-CREATION PROGRAMS
William Herbert Jarvis: Mr. Speaker, in addition to alleging that the Department is unable to identify job potential, and in addition to the allegation that it is not delivering services properly to those who need them most, the Auditor General reports that the Department does not have in place the proper method of evaluating what took place within many of the job-creation programs. Therefore, the Auditor General is reporting that the job potential is not known, that the proper delivery is not in place, and there is no method of evaluating. I ask the Minister most seriously does he believe that his Department, on the basis of the Auditor General's Report, is responding to its responsibility in terms of the expenditure of billions of dollars of taxpayers' money, and I believe much more fundamental and important, is he responding properly to the human tragedy of 1.5 million Canadians who are unemployed?


John (Moody) Roberts: Yes, Mr. Speaker, I think 1 should make it clear, as I perhaps did not in my previous answer, that these problems of definition of job opportunities in the future are not simply problems that have existed within government. They have existed as well within the educational institutions and within the private sector. The problem we have had is not a lack of will on the part of government to act; it has been generally throughout our society a lack of being able to find precisely where those job opportunities are going to lie, partially because of the very openess of the Canadian economy and its sensitivity to fluctuations which are difficult to forecast in the international economy generally.

December 13, 1983
Oral Questions
As to the second part of the Hon. Member's question, Mr. Speaker, while obviously in any operation which which is as large a scale as in Employment and Immigration there are bound to be, upon occasion, examples which can be criticized by the Auditor General, which is indeed his job, I can answer with firmness, yes, I do believe that our administration is sound. Indeed, the Auditor General made some pleasing references to the fact that we were better placed than other administrations in other countries to carry forward to our clientele the kinds of services which Parliament has confined to us as our responsibility. Yes, I do believe we do that effectively. I do believe that we do that cost effectively. We do not do it in an absolutely ideal way, and therefore we are open to criticism which we are happy to receive, and to which I try to respond.


NATIONAL ENERGY PROGRAM
Miss Pat Carney (Vancouver Centre):: Mr. Speaker, my question is addressed to the Minister of Energy, Mines and Resources. The Auditor General has reported that the National Energy Program is not being properly monitored to see if it is meeting its goals of energy self-sufficiency, Canadian control of the oil and gas industry, and the discovery of new oil and gas reserves. He said at the time of his audit that proper evaluation systems were not in place. How could the Minister spend $5.7 billion of taxpayers' money without knowing what he is doing?


Joseph Jacques Jean Chrétien: Mr. Speaker, the Auditor General said that the challenge faced by my Department after the NEP was well met by the Department, and that the programs were well administered. In the case of this program, the law of Parliament was passed less than a year before the visit of the Auditor General. It is very difficult to make an evaluation in less than a year after a huge program such as this one has been put in place. They explained to the Auditor General that there was a monitoring plan. However, one cannot feel the effects of investing in drilling and oil and gas operations in a short term like that.
Anyone who knows anything about drilling knows that, when one drills for oil and gas, at times it is better to expect to have some dry holes. There were 300 wells drilled in the North Sea before the first oil discovery. If the Hon. Member reads all the report she will find that the Auditor General said that the programs were well managed. He wanted to have more monitoring of the program, and we said that we were putting such a system in place to satisfy him.


CANADIAN OWNERSHIP ACCOUNT
Pat Carney: Mr. Speaker, my supplementary question is also addressed to the Minister of Energy, Mines and Resources. He may have had trouble tracking the money, but he certainly did not have any trouble spending it.
In determining that the National Energy Program was not being properly monitored, the Auditor General said that he could not find a single person in the Minister's Department who admitted responsibility for the Canadian ownership charge which collects about $1 billion a year by way of the gasoline tax. Since the EMR bureaucracy has quadrupled since 1980 when the NEP was introduced, could the Minister please designate at least one person to keep an eye on this $ 1 billion fund?


Joseph Jacques Jean Chrétien: Mr. Speaker, if you read the whole report of the Auditor General on the Department of Energy, Mines and Resources, especially on the implementation of the National Energy Program, you will find that he considers the program very well managed and that he is satisfied with the progress made. I am convinced that the problems which he raised, if any, will be solved.
The Hon. Member, as many others have done, takes a single aspect out of context, but if she reads the whole report several times, she will realize that he is fully satisfied with the management in my Department, especially after the sweeping changes made to the National Energy Program since 1980.
[English)


RESPONSIBILITY FOR CANADIAN OWNERSHIP ACCOUNT
Right Hon. Joe Clark (Yellowhead):: Mr. Speaker, could the Minister of Energy, Mines and Resources tell us whether he has anyone in charge of the Canadian Ownership account today, and does he know who it is?


Joseph Jacques Jean Chrétien: Mr. Speaker, the comment of the Auditor General concerning the Department of Energy has been received by my Department.


Erik Nielsen: He does not know.


Joseph Jacques Jean Chrétien: I do not know the name of that person.


Some Hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: This comment is being looked into, but the Auditor General indicated that he was satisfied with the way in which the Department was managed, and that the tasks confronting the Department were very well achieved. There were some shortcomings in the controls, and we are making sure that they are overcome in the shortest possible time.
December 13, 1983


INDUSTRY
Mr. Gilbert Parent (Welland):: Mr. Speaker, my question is directed to the Minister of Regional Industrial Expansion. For a number of months there have been ongoing negotiations with various offshore manufacturers to invest in the aerospace industry in Canada. Because of the high unemployment rate in the Niagara region, and because we have an aerospace plant in the region, namely, Fleet Industries of Fort Erie, could the Minister advise us of the status of these negotiations, and tell us if our employment rate will be helped if these negotiations are successful?


Hon. Ed Lumley (Minister of Industry, Trade and Commerce and Minister of Regional Economic Expansion):: Mr. Speaker, about an hour ago the Government of Canada-


Some Hon. Members:: Oh, oh!


Edward C. Lumley: 1 realize the Opposition does not want to hear any good news. It is not interested in the creation of new jobs or high technology. We understand that, but we on this side think it is pretty important.
About an hour ago the Province of Ontario and the Government of Canada announced a joint funding arrangement with one of the largest aerospace manufacturing companies in the world, MBB from Germany, which will create about 760 permanent high technology jobs in Canada, and invest about $72 million.


ATOMIC ENERGY CONTROL BOARD
Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is directed to the Minister of Energy, Mines and Resources. I hope he will give some good news to the workers in the atomic energy field. As the Minsiter knows, three weeks ago in the House of Commons I asked him if he was aware of the fact that the Atomic Energy Control Board was in the process of increasing the risk levels of workers in the atomic industry, including increasing fivefold the risks to women working in the atomic energy area. At that time the Minister promised to look into the matter and to see whether or not he would allow, or force, the Atomic Energy Control Board to have open hearings on these increases in the guidelines.


Joseph Jacques Jean Chrétien: Mr. Speaker, I have studied that problem and discussed it with the authorities who assured me that public hearings can be held if need be. They assured me that they have been in touch with the people concerned by that situation but, according to them, there is no serious problem at this
Oral Questions
moment. However, if the Hon. Member wants to raise some problems which have not been drawn to the attention of the Board, he could let me know more specifically what they are and 1 could make sure that the people involved are heard by the Board.


INCREASE IN PERMISSIBLE RADIATION LEVEL
Rodney Edward Murphy: Mr. Speaker, my supplementary question is also directed to the Minister of Energy. I raised these concerns with the Minister in the House three weeks ago. When the radiation level is increased five times for young women with unborn children, it is a public concern which requires open public hearings. I wish the Minister would act. I ask him to instruct the Atomic Energy Control Board to ensure that the hearings are open to the public, to the unions, and to the workers themselves.


Joseph Jacques Jean Chrétien: Mr. Speaker, I said that they have been assured by the commission that these things will be done when they are requested. There has been no specific request to this effect.


Rodney Edward Murphy: I have asked you.


Joseph Jacques Jean Chrétien: If the Hon. Member gives me the names of the people who want to appear, I will pass them on and ensure that their views are heard by the commission.


PUBLIC WORKS
Hon. Roch La Salle (Joliette):: Mr. Speaker, I have a question for the Minister of Public Works. It refers to page 533 of the Auditor General's Report. Surely the Minister is aware of the Treasury Board Regulations providing that contracts up to $100,000 may be awarded without inviting tenders. These are Treasury Board Regulations. Since the Auditor General is saying that in fourteen instances, the Minister of Public Works entered into contracts for over $100,000 with architectural and engineering firms, could the Minister tell us how he managed to perform that feat of evading Treasury Board Regulations? Did he get a reprimand from the latter? Anyway, it is my view that Canadians would like to know how the Minister managed that feat in fourteen instances over the last Fiscal year?


Hon. Romeo LeBIanc (Minister of Public Works):: Mr. Speaker, the Hon. Member is working himself into a state of indignation. I would like to reassure him. The decision was taken to increase from $30,000 to $100,000 the level of consultants' fees that could be adjudicated, quite directly by

December 13, 1983
Oral Questions
the Minister of Public Works, as had always been the case. To my knowledge, that system had not been changed when the Hon. Member was minister in the former Government. This being said, as far as I am concerned, I had made representations and had extensive discussions with my colleague, the President of the Treasury Board, to see whether we could come to some arrangement, to some system that would allow us to maintain what in my view had been a worthwile tradition conferring adequate authority to the Minister of Public Works. Later the discussions came to a conclusion and since then, I have complied as have all other ministers with the practices as established.


REQUEST FOR DETAILS OF CERTAIN CONTRACTS FOR SUMS OVER $100,000
Roch La Salle: Mr. Speaker, the Minister is referring to regulations. The last revised regulations go back to September 20, 1982. The Auditor General is stating that in 14 instances contracts have been awarded to architectural and engineering firms for amounts exceeding $100,000. If I understand the report correctly, the Minister seems to have been at fault 14 times. Here is my question to the Minister: How could he break or evade government regulations providing that contracts worth $100,000 and over should be awarded after inviting tenders? In 14 instances, this has not been the case. Either the Minister is stating that the Auditor General is lying to the Canadian people, or he violated the regulations imposed on him by the Treasury Board. My question is as simple as that: Did the minister cheat on the Treasury Board regulations, or did the Auditor General in his report lie to the people?


Hon. Romeo LeBlanc (Minister of Public Works):: At no
point did I indicate that the Auditor General has told the truth or not. What I stated is that in my view the way he reported the facts is incomplete. Here is what I said: We held discussions over a number of months on whether we could come back to the system under which the Minister of Public Works had always operated. After these discussions or in the course of these discussions, 1 went on submitting proposals to the Treasury Board, which approved them. Those are the 14 sins of which I am accused by our former confessor, the Hon. Member. After Treasury Board had ruled that it actually maintained the maximum at $100,000, I began inviting tenders just as everybody else did.


MINES AND MINING
Hon. Ray Hnatyshyn (Saskatoon West):: Mr. Speaker, my question is addressed to the Minister of Energy, Mines and Resources. It is now the second anniversary of a decision by Eldorado Nuclear Limited that pronounced, in a heartless and deceptive way, a death sentence on the Saskatchewan mining town of Uranium City. That sentence has now been carried out and, for all intents and purposes, Uranium City is dead. Aside from the payments that were obliged to be paid according to law, and they were precious little, all that the federal Government has paid is the moving costs of people leaving Uranium City. A year and a half ago a task force recommended payment of compensation and indemnification. Will the Minister now tell us whether the Government is prepared to take action to compensate those people who have property interests in particular in Uranium City?


Joseph Jacques Jean Chrétien: Mr. Speaker, I am not the Minister responsible for Eldorado Nuclear Limited. It is the Minister of State for Social Development who is responsible for Cl DC. I will pass the request to the Hon. Member on to the Minister in the other place.


REQUEST FOR GOVERNMENTAL ACTION
Ramon John Hnatyshyn: Mr. Speaker, I am not going to walk across to the Senate to ask questions. I want to know from the Minister what the Government is going to do. He has a responsibility in terms of Energy, Mines and Resources. What is he going to do for these people in Saskatchewan who have been abandoned? The Government not only shut down a mine, but shut down an entire town. I want to have some action on the part of this Government with respect to those people.
[ Translation]


Hon. Pierre Bussieres (Minister of National Revenue):: Mr. Speaker, the Hon. Member who is so upset about the closing down of a whole town ought to focus his indignation on his leader who is something of an expert on the subject. He could show him what he did to Schefferville.
As for the Auditor General's Report, I can assure the Hon. Member that I shall be meeting the Minister responsible and that I will provide the appropriate answers as soon as I get them.
December 13, 1983


AGRICULTURE
Mr. Marcel Ostiguy (Saint-Hyacinthe-Bagot):: Mr. Speaker, my question is directed to the Minister of Agriculture or to his Parliamentary Secretary. On July 7 of this year, the Department of Agriculture announced a grant of $26.5 million for Canadian applegrowers in four provinces that suffered severe frost in 1981. Could the Parliamentary Secretary inform the House whether the study has now been completed and when the applegrowers can expect to receive the Government aid they have been promised since July 7 of this year?


Mr. Marcel Dionne (Parliamentary Secretary to Minister of Agriculture):: Mr. Speaker, as we all know, in 1981-1982, Canadian applegrowers suffered severe losses due to frost. We also know that the provincial Ministers refused to declare designated areas, and the federal Government had to intervene alone in order to help the Canadian apple industry.
To answer my hon. colleague's question, I can assure him that 40 per cent of the payments will be made before Christmas, and the rest of these payments, which are being made to finance replanting of Canadian orchards, will be made after the holidays, in February or March.


FOREIGN INVESTMENT REVIEW AGENCY
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, my question is directed to the Minister of Industry, Trade and Commerce. It concerns jobs. It also concerns a November 21 announcement made by FIRA which permitted an American trade convention service, called Concept Convention Services of Boston, to establish in Halifax in the new trade centre which will open there shortly. What consultation process did FIRA use to reach that decision? In particular, was any study done to determine the effect of this American company on local firms that are already doing the same kind of business in the Halifax area?


Edward C. Lumley: Mr. Speaker, on such a detailed question as that 1 would have expected the Hon. Member to give me advance notice.
1 would have obtained the information, but I will check and get back to him.


REASONS FOR DECISION
Lorne Edmund Nystrom: Mr. Speaker, I have a copy of a telegram sent to the Minister on November 24 by the president of one of the local firms which provides the
Oral Questions
same kind of service in the convention centre. He says that his company and his competitors were not even consulted. Why would a foreign firm from Boston be allowed into the Halifax area when there are Canadian firms which provide the same services in the same area of the country? Why bring in a foreign firm that will displace Canadian companies and displace Canadians from the jobs they now have?


Edward C. Lumley: Mr. Speaker, there are thousands of FIRA cases that we handle in the course of a year. I cannot remember the specific details of all of them. Obviously, it would not have been approved if there had not been some significant net benefit for Canada. 1 will check the allegations of the Hon. Member and get back to him.


CANADIAN COAST GUARD
Hon. John Wise (Elgin):: Mr. Speaker, in the absence of the Minister of Supply and Services, I have a question for the Minister of Industry, Trade and Commerce. My question is supplementary to the one put by my friend from Yorkton-Melville. It deals with jobs. We heard an exchange earlier in the House about shutting down towns. There is a prime example from the last four years of a government effectively shutting down a country.


Mr. Deputy Speaker:: Order. Will the Hon. Member get to his question?


John Wise: Mr. Speaker, the Minister has had in his possession a telex from a manufacturing company in Vancouver, B.C., Prime Mover Control, Inc., in which it received official information from the Coast Guard, the Department of Transport, the Department of Supply and Services, as well as the Department of Industry, Trade and Commerce, that the Coast Guard is insisting on the fact that navigational aids be purchased from a Swedish firm. This is a second example-


Mr. Deputy Speaker:: Order. This is hardly supplementary to the question asked by the Hon. Member for Yorkton-Melville. If the Hon. Member wants to ask a question of the Minister, he will be recognized for that, but he was recognized for a supplementary. Will he please make his question short?


John Wise: Mr. Speaker, this is the second example in a three-week period where this Government is officially encouraging economic activity to go beyond Canada. What does this do in the interest of productivity and in the interest of employment and economic activity?


Hon. Lloyd Axworthy (Minister of Transport):: Mr. Speaker, if 1 heard the Hon. Member properly, he indicated that the Coast Guard was issuing orders for purchases to be made for navigational aids. I consider his comments to be equally

December 13, 1983
Oral Questions
serious. I will look into this immediately and see if some corrective action can be taken.


FINANCE
Donald Alex Blenkarn: Mr. Speaker, my question is directed to the Minister of Finance. The Minister will know that today the Canadian dollar broke 80 cents despite massive efforts by the Bank of Canada to prop up the dollar. Will the Minister assure the House that he will direct that the Bank of Canada not manipulate interest rates so as to maintain the dollar at an artificially high level?


Marc Lalonde: Mr. Speaker, I have no difficulty giving that assurance. The Bank of Canada is not manipulating the market. It is ensuring that the market is orderly and in that regard is preventing purely speculative moves. This has been the traditional practice of the Bank for years.
in Canada we do have a floating dollar. At the present time, as the Hon. Member knows, the value of the U.S. dollar has increased substantially in all world markets. As a matter of fact the Canadian dollar is holding up very well against European currencies and against the yen. I am just completing a series of consultations and I have heard very strong representations from the fishing industry on the East Coast, and from the forest industry on the West Coast, complaining that the Canadian dollar was over-valued when those sectors were trying to compete on European markets, and on the Japanese market in particular.


LEVEL OF INTEREST RATES
Donald Alex Blenkarn: Mr. Speaker, I thank the Minister for that answer, but what I would like to have from the Minister is an undertaking that he will make sure that the Bank of Canada does not artificially increase interest rates in Canada in order to make the dollar look good, as it did before, costing us this great recession. I would hope that we do not have to go through another round of horrendously high interest rates.


Marc Lalonde: Mr. Speaker, I have no problem with assuring the Hon. Member once more that the Bank of Canada will not maintain an artificially high dollar simply for, as he said, the pleasure of it, or something like that. I can give him that assurance without any difficulty.


NATIONAL ENERGY PROGRAM
Joseph Jacques Jean Chrétien: Mr. Speaker, I rise on a point of privilege. Simply to help the House of Commons, the Hon. Member for Yellow-head (Mr. Clark) asked me a question about a name-


Some Hon. Members:: Oh, oh!


Mr. Deputy Speaker:: Order, please.


Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, 1 rise on a point of order. My point of order, which could possibly be a point of privilege, arises out of the record of yesterday's Hansard. 1 requested of the Speaker the right to ask a supplementary question and the Speaker, in her wisdom, decided that I should not ask a supplementary question at that time. You recognized me at a later time, Mr. Speaker. There is no record in yesterday's Hansard of the question that I asked nor of the ruling that was given by the Speaker at that particular time. I do feel that-


Some Hon. Members:: Oh, oh!


Donald W. Munro: I am not addressing other Members in the House, Mr. Speaker, and I see no reason for them to be addressing me. 1 do feel, Mr. Speaker, that there ought to be a record of that exchange between me and the Speaker in Hansard and 1 do hope that the matter will be remedied in the next copy of Hansard.


Mr. Deputy Speaker:: We will look into the matter raised by the Hon. Member.



ROUTINE PROCEEDINGS

[Stage Direction]
[ Translation]
["-restore the right of producers to split producers' cars."]
Joseph Jacques Jean Chrétien: Mr. Speaker, I see that the Opposition is not really interested in knowing the truth. However, the Assistant Deputy Minister responsible for financial administration, Mr. Stuart Mensforth-



[Stage Direction]
RESPONSIBILITY FOR CANADIAN OWNERSHIP ACCOUNT Mr. Deputy Speaker: Statements by Ministers.
Some Hon. Members:: Order!
December 13, 1983


Erik Nielsen: Mr. Speaker, I rise on a point of order.


Mr. Deputy Speaker:: The Hon. Minister has been recognized under Statements by Ministers. It is perfectly in order for him to make a statement.


Joseph Jacques Jean Chrétien: On a point of order, Mr. Speaker. I mentioned the name which the Member for Yellowhead (Mr. Clark) wanted to know. I therefore hope that he is satisfied with the answer. 1 simply wanted to set the record straight through a point of order, and I have managed to do that. The Opposition is taken by surprise because we can come up with quick answers as I have done today.


Yvon Pinard: Mr. Speaker, I was paying close attention when the Minister of Energy, Mines and Resources (Mr. Chretien) took the floor. He said very clearly in French that he was seeking the floor on a point of order, and he spoke to that point of order, not under the item Statements by Ministers.
Mr. Speaker, we on this side of the House were paying close attention. The Minister rose on a point of order and I would ask that-I would ask that you keep that in mind before making a ruling. We were paying close attention. He sought to be recognized on a point of order and not under the item Statements by Ministers, that was obvious. That is why, before you make a ruling, Mr. Speaker, I would ask you to consult with your advisers at the table.


Some Hon. Members:: No, no!


Mr. Deputy Speaker:: It is true that the Minister of Energy, Mines and Resources (Mr. Chretien) sought to be recognized on a point of order. The Chair proceeded to Statements by Ministers and very explicitly called "Statements by Ministers".


Yvon Pinard: It was a point of order.


Mr. Deputy Speaker:: Nevertheless, the Chair called "Statements by Ministers" and if the Minister chose to be recognized at that time, it was a statement as far as the Chair is concerned.


Some Hon. Members:: Hear, hear!


Mr. Deputy Speaker:: The practice has been that an equal amount of time has been allowed for Hon. Members on the other side of the House to comment if they wish.


Yvon Pinard: Mr. Speaker, I rise on a point of order. It is clear in the rules that a point of order can be made at any time and that is exactly what the Minister did. He did not seek to be recognized under Statements by Ministers but he stood in his place seeking permission to be heard on a point of order
Statements by Ministers
and he was recognized as such. Therefore, he was not making a statement. He was recognized on a point of order and that can be done at any time. I submit very respectfully, Mr. Speaker, that what he said was not said under Statements by Ministers but was said after he sought to be recognized on a point or order, which can be done at any time.


Mr. Deputy Speaker:: The Chair would ask the indulgence of the House. The Chair has attempted to be as careful and as fair about the matter as possible under the circumstances. It is true that I called "Statements by Ministers". It is equally true that the Minister insisted that he was rising on a point of order. The Minister made a short intervention. I would hope that there might be a disposition by the House to simply let the matter rest at this point.


Some Hon. Members:: No!


Mr. Deputy Speaker:: In fairness to everyone concerned, the Chair has attempted to deal with this matter as a statement but the Minister insists that he put it as a point of order. In fairness to everyone concerned, I would hope that if there is to be any further intervention, it does not exceed the time that was taken by the Minister in making a very brief statement.


Charles Joseph Clark: Mr. Speaker, 1 rise on a point of order to make two points. First, it is the view of this side of the House that you, Sir, are in charge of the proceedings in this Chamber and not the President of the Privy Council (Mr. Pinard).


Some Hon. Members:: Hear, hear!


Charles Joseph Clark: Second, let me say that we regret in particular that the Government did not choose to take the opportunity you provided today, Mr. Speaker, to begin again the practice of announcing government policy through the use of ministerial statements on motions. There has not been a statement on motions in the House in the last four years, and that is a travesty that undermines the authority of the House of Commons and makes it far more difficult for the public of Canada to know what is going on or for Parliament to hold the Government in any way accountable.
The Minister of Energy, Mines and Resources (Mr. Chretien) has now discovered who in his Department is responsible for the Canadian Ownership Account and has now discovered who in his Department was responsible for the purchase of Petrofina. He did not know who was responsible for that multimillion dollar expenditure. Now that he does know, I would hope that later in the debate he would take the House of Commons into his confidence. If I may say so, I hope the Government will continue the practice of making statements on motions-


Mr. Deputy Speaker:: Order. In effect, what has happened is that the Right Hon. Member for Yellowhead (Mr. Clark) has commented on the statement made by the Minister. This can be shown by reading Hansard. I would hope there would be a disposition at this point to proceed to the next item of business.

December 13, 1983
Statements by Ministers


Yvon Pinard: Mr. Speaker, I just want to point out on the last point of order that the former Prime Minister-


Some Hon. Members:: Order, order!


Yvon Pinard: -looked as bright today as he looked four years ago.


Mr. Deputy Speaker:: Petitions.


Ramon John Hnatyshyn: Mr. Speaker, I rise on the same point of order.


Mr. Lawrence:: A point of order.


Mr. Deputy Speaker:: Hon. Members cannot have it two ways; it either was a statement or it was not. The Chair has treated it as a statement and we are proceeding to the next item of business.


Erik Nielsen: Mr. Speaker, 1 rise on a point of order.


Mr. Deputy Speaker:: The Chair does not intend to hear further discussion regarding a matter that is not being treated as a point of order. We are proceeding to petitions. The Hon. Member for Yukon (Mr. Nielsen).


Erik Nielsen: Perhaps, Mr. Speaker, the Chair would be disposed to hear a quotation from Beauchesne which has some significance-


Mr. Deputy Speaker:: On what basis is the Hon. Member seeking to be recognized?


Erik Nielsen: If you hear me you will find out.


Some Hon. Members:: Oh, oh!


Mr. Deputy Speaker:: Is it a point of order or a statement? Order, please. The Chair has called "Statements by Ministers". The Chair has heard a statement from the Minister of Energy, Mines and Resources and a comment of equal length in time by the Right Hon. Member for Yellowhead. As far as the Chair is concerned, that disposes of the matter. Is the Hon. Member rising on another point? This matter, as far as the Chair is concerned, was not order and has been treated as a statement by a Minister. A comment has been made by the Right Hon. Member for Yellowhead and the Chair wants to proceed to the next item of business.
The Chair will not recognize the Hon. Member for Yukon on a matter that has been decided. The matter has been decided by the Chair but if he raises another matter, that is a different thing. On this matter the Chair has made a decision.


Erik Nielsen: Mr. Speaker, I insist, as the House Leader of the Opposition in the House of Commons, that the Chair is required to extend to me the courtesy to be heard.


Mr. Collenette:: Rubbish!


Erik Nielsen: I know the Government-


Mr. Deputy Speaker:: Order. Courtesy after a decision of the Chair is not courtesy. The Chair has made a decision. The Chair appeals to the Hon. Member for Yukon, an experienced member of the House of some years standing.


An Hon. Member:: He is supposed to be.


Mr. Deputy Speaker:: The Chair has made a decision in the matter and the Chair would like to proceed to petitions.


Erik Nielsen: That experience tells me that I have a right to be heard.


Joseph Jacques Jean Chrétien: Have you got a petition?


Mr. Deputy Speaker:: It is most irregular for the Hon. Member to insist on being heard on a matter that has been decided by the Chair.


An Hon. Member:: You heard Pinard.


Mr. Deputy Speaker:: Petitions.


Erik Nielsen: Mr. Speaker, I rise to cite Beauchesne.


Mr. Olivier:: Sit down.


Mr. Deputy Speaker:: The Hon. Member cannot rise to speak to a point of order that has been decided by the Chair.


An Hon. Member:: He can.


An Hon. Member:: He will.


Mr. Deputy Speaker:: The point of order has been decided by the Chair. If the Hon. Member has another point of order, yes; but the Hon. Member is aware that the Chair has decided that this was a statement by a Minister and has allowed a reply. That disposes of the matter as far as the Chair is concerned. Petitions.


Erik Nielsen: Mr. Speaker-


Mr. Deputy Speaker:: The Hon. Member cannot comment on a decision of the Chair. He cannot reflect on a decision of the Chair. I repeat, the Hon. Member cannot reflect on a decision of the Chair. I am asking the Hon. Member on what basis he is seeking to be recognized.


Erik Nielsen: Well-


Mr. Deputy Speaker:: Is the Hon. Member being recognized on a point of order? Is that what he seeks? The Hon. Member has to decide the basis on which he seeks to be recognized. Petitions. The Hon. Member for Humboldt-Lake Centre (Mr. Althouse).


PETITIONS
Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker-
December 13, 1983


Erik Nielsen: Mr. Speaker-


Victor Fredrich (Vic) Althouse: -this petition is addressed to the honourable the House of Commons of Canada in Parliament assembled.


Erik Nielsen: Mr. Speaker-


Victor Fredrich (Vic) Althouse: The petition of the undersigned residents of Canada-


Erik Nielsen: Mr. Speaker-


Victor Fredrich (Vic) Althouse: -who now exercise their right to present a grievance humbly sheweth: Whereas the splitting of producer
cars-


Erik Nielsen: Mr. Speaker, may 1-


Victor Fredrich (Vic) Althouse: -for moving grain has long been used by producers but was blocked recently by a Justice decision-


Erik Nielsen: May 1 be heard, please?


Victor Fredrich (Vic) Althouse: -that the grain Act did not permit the splitting of producer cars-


Erik Nielsen: May 1 be recognized, Mr. Speaker?


Victor Fredrich (Vic) Althouse: -we therefore call upon the Parliament of Canada to give speedy assent-


Erik Nielsen: Mr. Speaker-


Victor Fredrich (Vic) Althouse: -to Motion 321-7/9A-


Erik Nielsen: Mr. Speaker-


Victor Fredrich (Vic) Althouse: -introduced by the Minister of Justice which would remedy this situation and once again-


Erik Nielsen: Mr. Speaker-


Victor Fredrich (Vic) Althouse: -restore the right of producers to split producers' cars.



NATIONAL ENERGY PROGRAM


Erik Nielsen: Mr. Speaker, may 1 be heard, please?


Mr. Deputy Speaker:: Would the Hon. Member for Yukon (Mr. Nielsen) please state on what basis he seeks to be recognized.


Erik Nielsen: I have been trying to tell the Chair that-


An Hon. Member:: Oh, sit down!


Erik Nielsen: -for the last 15 minutes but the Chair not only interrupts but will not listen to what I have to say.
Statements by Ministers


Mr. Deputy Speaker:: Would the Hon. Member please state if he is rising on a point of order; yes or no?


Erik Nielsen: You can regard it as a point of order or a question of privilege, if you will. Take it either way. 1 want to cite-


Joseph Jacques Jean Chrétien: He does not have to decide.


Erik Nielsen: I really cannot-


Some Hon. Members:: Order!


Some Hon. Members:: Oh, oh!


Erik Nielsen: 1 really cannot fathom how the Chair can decide what I am going to say before I say it.
What 1 was going to do was draw the attention of the Chair to Citation 262 of Beauchesne which divides the period with respect to Statements by Ministers into a statement in reply- that is one phase of it-and questions which follow those two statements; so that the second element is a separate point of order.


Joseph Jacques Jean Chrétien: Is that a statement?


Erik Nielsen: I want to put that to the Chair. It reads as follows:
Statements by Ministers have now been given a recognized place in Routine Proceedings.
That has happened. It goes on to say:
The Standing Order is specific but considerable latitude has been left to the Speaker to set limits on the participants. The Speaker has emphasized that both the Government and Opposition contributions should be brief and factual. The purpose of the ministerial statement-
And so on. Citation 263 reads as follows:
A brief question and answer period may follow the Minister's statement and Opposition comments.
It is that second point of order that I put to the Chair, that there is still a brief question period. The rules allow us to put questions to the Minister following the two contributions, the one by the Minister and the one by the Right Hon. Member for Yellowhead.


Some Hon. Members:: Hear, hear!


Mr. Deputy Speaker:: I call to the attention of the Hon. Member that this matter is at the discretion of the Chair. The question is also at the discretion of the Chair. It is very explicit in the Standing Orders and the Chair has not, in the total circumstances, and I think quite understandably, allowed further discussion or questioning on the matter. 1 hope, with the co-operation of Hon. Members, to proceed to the next item of business.


Joseph Jacques Jean Chrétien: Read the rest.


Marcel-Claude Roy: Table the book.


Erik Nielsen: I would if I could. Somebody needs it, in this place. Mr. Speaker, if you have no-

December 13, 1983
Statements by Ministers


An Hon. Member:: A little louder, Erik.


An Hon. Member:: Ten o'clock, Erik.


Mr. Deputy Speaker:: I call Citation 263 to the attention of the Hon. Member. It reads as follows:
A brief question and answer period may follow the Minister's statement and Opposition comments. The length of this period is left to the discretion of the Speaker-
The Speaker has exercised his discretion.


Erik Nielsen: Mr. Speaker, will you allow me to be heard? Will you tell them to turn on my microphone so that I can be heard? I now have to raise my voice. I refer the Chair-


Mr. Deputy Speaker:: It is not the intention-


Erik Nielsen: Citation 263-


Mr. Deputy Speaker:: It is not the intention of the Chair to engage in an argument with the Hon. Member under these circumstances. The Hon. Member may, at other times and places, take whatever measures he considers necessary. However, it is the decision of the Chair that the statement by the Minister was treated not as a point of order but as a statement. The Minister disagrees. There was a statement by the Right Hon. Member for Yellowhead. The Chair exercised some discretion in permitting comments and in permitting what was a comment. At this stage the intervention was brief and, if I may call it to the attention of the Hon. Member for Yukon, the reply exceeded that of the Minister in time. I think Hansard will so disclose.
In the circumstances, it is the decision of the Chair that the matter shall be treated this way and we will proceed to the next item of business.


Erik Nielsen: A clarification.


Mr. Deputy Speaker:: I have called petitions and I am now-


Erik Nielsen: Mr. Speaker, I have a separate point of order here.


Mr. Deputy Speaker:: At this point the Chair would like to recognize the Hon. Member for Kootenay West (Mr. Kristiansen), I presume on the same matter.


Erik Nielsen: I would like to be heard on the point of order.


Lyle Stuart Kristiansen: Mr. Speaker, I have the honour to present a petition to the honourable House of Commons of Canada in Parliament assembled.


Erik Nielsen: I rise on a question of privilege.


Mr. Deputy Speaker:: Order. The Chair understood the Hon. Member for Kootenay West was making an intervention on what is alleged to be a point of order at this point, which has
been decided by the Chair. Now, what is the Hon. Member for Yukon saying at this point?


Erik Nielsen: Thank you for allowing me to be heard and instructing that the light be turned on, Mr. Speaker.
I rise to seek clarification from the Chair, because with all of the howls that were going on I may have missed something. Was it the Chair's ruling that under that Standing Order and that Citation the Chair has a discretion as to whether to allow questions following the comments? I see the Chair nodding in the affirmative. That is all I wanted to establish.


Yvon Pinard: That is what Beauchesne says.


Erik Nielsen: I am afraid it does not.


Yvon Pinard: You quoted it yourself.


Erik Nielsen: Not with respect to questions. Comments, yes, but not questions.


Mr. Deputy Speaker:: Petitions.


PETITIONS
Lyle Stuart Kristiansen: Mr. Speaker, I will try again. I have the honour and duty to present a petition to the honourable the House of Commons of Canada in Parliament assembled. The petition of the undersigned residents of Canada, who now avail themselves of their ancient and undoubted right thus to present a grievance, humbly sheweth that this Government refuse to test or manufacture parts for the Cruise missile, that it recognize the Cruise missile as an unprecedented escalation of the nuclear arms race, and that agreement to test the Cruise would make it impossible to attain the noble goal of ratifying present arms limitations agreements and of creating future ones. Therefore may this House take the symbolic step of refusing the Cruise and thereby fulfil the Prime Minister's pledge to suffocate the nuclear arms race. And as in duty bound your petitioners will ever pray.


Mr. David Kilgour (Edmonton-Strathcona):: Mr. Speaker, this is a petition on behalf of the Women's International League for Peace and Development. I have not counted them but there are approximately 3,000 names of people from across Canada. The petition says that in this critical period of a new cycle of nuclear weapons which could be unverifiable, Canada must give strong support to those parties in European governments who are refusing to accept Cruise and Pershing missiles. Canada must refuse to sign any agreements protesting U.S. nuclear devices or their delivery systems. It is my honour and
December 13, 1983

duty to file this petition with the House of Commons pursuant to my undertaking to this group.



PENSION REFORM


Mr. John Evans (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, I believe you will find there have been consultations and there is unanimous consent to introduce a series of motions to re-establish committees and so on. On that basis I move:
That a Special Committee consisting of nine Members to act as a Parliamentary Task Force on Pension Reform, be appointed to examine and report upon the proposals for reform of the Canadian retirement income system contained in the Government of Canada's paper "Better Pensions for Canadians" with particular reference to the following:
(1)	the method of inflation protection proposed for employer-sponsored pension plans;
(2)	the changes proposed in survivor benefits under the Canada and Quebec
Pension Plan;
(3)	the issue of expanding mandatory pension arrangements, including:
(a)	the size of any expansion of mandatory pension arrangements required to enable Canadians to avoid serious disruption of their living standards upon retirement;
(b)	the nature of any expansion, be it through the Canada and Quebec Pension Plans, through compulsory employer-sponsored plans or through some other means; and
(c)	when any recommended expansion of benefits and contributions should come into effect.
(4)	the financing of the Canada Pension Plan;
(5)	the proposals to overcome the special problems facing women, including
homemakers, under the current pension system; provided
That changes in membership of the committee be made only pursuant to Standing Order 69(4)(b);
That the provisions of section (9) of Standing Order 69 be suspended in application to the Special Committee;
That the Special Committee have the power to retain the services of expert, professional, technical and clerical staff as may be deemed necessary and that for these purposes the Committee be deemed never to have ceased to exist;
That the Special Committee hold hearings and receive views and representation from interested groups and individuals across Canada and that, for this purpose, the Special Committee deems it necessary to adjourn from place to place or travel inside Canada provided the estimated expenses for such travel and the locations to be visited are defined in advance and that, when deemed necessary, the required staff accompany the Special Committee or its members;
That notwithstanding the usual practices of the House, if the House is not sitting when an interim or final report of the Special Committee is completed, the Special Committee may make the said report public before it is laid before the House;
That the evidence adduced by the Committee in the first session of the present Parliament be deemed to have been referred to the Committee; and
That the Special Committee shall report no later than December 31, 1983; and
That the members of the Committee be Mr. Dantzer, Mr. Desmarais, Mr. Frith, Mrs. Killens, Miss MacDonald (Kingston and the Islands), Mr. MacLcl-lan, Mr. Reid (St. Catharines), Mr. Weatherhead and Mr. Young.
That is the first motion, Mr. Speaker.


Mr. Deputy Speaker:: Does the Hon. Parliamentary Secretary to the President of the Privy Council (Mr. Evans) have unanimous consent to move his motion?
Motions


Some Hon. Members:: Agreed.


Mr. Deputy Speaker:: The Hon. Member for Yukon.


Erik Nielsen: Thank you for authorizing my microphone to be turned on so I can be heard, Mr. Speaker.


Some Hon. Members:: Oh, oh!


Erik Nielsen: We are pleased to give consent to the putting of that motion, but for the record we would ask the Parliamentary Secretary to assure us that the wording of the motion is substantially, if not verbatim, the same as the motion that set up the previous committee.


John Leslie Evans: To the very best of my knowledge that is correct.


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


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.


John Leslie Evans: Mr. Speaker, I would move the following motion as well:
That the Standing Committee on Fisheries and Forestry be empowered to appoint nine Members of the House to act as a subcommittee to investigate, monitor and report on all aspects of acid rain;
That the subcommittee and members of the subcommittee have the power to adjourn and travel from place to place in Canada and the United States of America and that the necessary staff accompany the subcommittee and members of the subcommittee;
That the subcommittee have the power to retain the services of expert professional, technical and clerical staff as may be deemed necessary;
That the subcommittee shall report to the Committee from time to time; and
That the evidence adduced by the subcommittee in the first session of the present Parliament be deemed to have been laid upon the Table and referred to the Committee.


Mr. Deputy Speaker:: Is there unanimous consent to introduce the motion? The Hon. Member for Yukon.


Erik Nielsen: Thank you for authorizing the controller to turn on my microphone so I might be heard, Mr. Speaker. If the Parliamentary Secretary can give us the same assurance with respect to this motion as he did with respect to the last one, we would be pleased to give that consent.


John Leslie Evans: To the best of my knowledge, Mr. Speaker, it is the very same.


Mr. Ian Deans (Hamilton Mountain):: Mr. Speaker, we too will give consent. It crosses my mind, however, that there is a

December 13, 1983
140_______________________________
Motions
strange double standard being applied in the House in dealing with the House Leader for the Official Opposition. He is given leeway that no other Member is ever given.


Some Hon. Members:: Shame.


Mr. Deputy Speaker:: It is not the intention of the Chair to do anything other than deal with Hon. Members as evenly and fairly as possible. Does the Hon. Parliamentary Secretary to the President of the Privy Council have the unanimous consent of the House to introduce this motion?


Some Hon. Members:: Agreed.


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


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.


John Leslie Evans: Mr. Speaker, we have here the same procedure again. I would like to move the following motion:
That a Special Joint Committee of the Senate and of the House of Commons be appointed to consider the Reports of the Commissioner of Official Languages;
That all such reports be deemed to have been or to be upon tabling referred to the Committee;
That nine Members of the House of Commons, to be designated at a later date, be members on the part of this House on the Special Joint Committee;
That the Committee have power to sit during sittings and adjournments of the House of Commons;
That the Committee have power to report from time to time, to send for persons, papers and records, and to examine witnesses and to print such papers and evidence from day to day as may be ordered by the Committee;
That the Committee be empowered to retain professional, clerical and stenographic help as may be required;
That a quorum of the Committee be four members, whenever a vote, resolution or other decision is taken, so long as both Houses are represented and that the Joint Chairmen be authorized to hold meetings, to receive evidence and authorize the printing thereof, when three members are present so long as both Houses are represented; and
That a message be sent to the Senate requesting that that House do unite with this House for the above purpose, and to select, if the Senate deems it to be advisable, members to act on the proposed Special Joint Committee.


Mr. Deputy Speaker:: Does the Hon. Parliamentary Secretary have the unanimous consent of the House to move this motion?


Erik Nielsen: Thank you for authorizing the controller to activate my microphone so that I can be heard, Mr. Speaker. Would the Parliamentary Secretary again give us the same assurance with respect to that motion as he has with respect to the previous two?
There is one other thing that should be said about this particular Committee. I understand that in its interim report a
completion date on its work has been placed which some Members feel is unlikely to be met. I assume that under those circumstances the Government would convey to the committee members, both in this place and the other place, that the option is open to them to submit a further interim report to their respective Houses requesting an extension of time to sit if that indeed is necessary.


John Leslie Evans: Mr. Speaker, I can give the same assurance. In fact, I have other motions to present and I can give the same assurance with all those motions at once, but I think the Hon. Member is thinking of the wrong motion. This one establishes the Joint Committee on Official Languages, and the one to which he is referring is the Joint Committee on Senate Reform.


Erik Nielsen: Yes.


Mr. Deputy Speaker:: Does the Parliamentary Secretary have unanimous consent of the House to introduce this motion?


Some Hon. Members:: Agreed.


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


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.


John Leslie Evans: Mr. Speaker, I would like to move also:
That a Special Committee consisting of Mr. Daudlin, Mr. Kelly, Mr. Lewycky, Mr. McCauley, Mr. Mitges, Mr. Paproski and Mr. Veillette act as Parliamentary Task Force on Participation of Visible Minorities in Canadian Society, be appointed to examine the subject-matter described by its title, and in particular:
(1)	to seek positive and constructive ideas and models pertaining explicitly to ameliorating relations within Canada between visible minority and other Canadians;
(2)	to identify and investigate positive examples and models of the promotion of harmonious relations between visible minority Canadians and other Canadians, particularly in institutional areas, and find ways and means of improving those relations;
(3)	to seek the views that contribute constructively and positively to the promotion of racial tolerance, understanding and harmony of concerned voluntary, community and minority groups and organizations and individuals, as well as business, professional and trade associations, labour unions, public and private institutions and relevant specialists;
(4)	within a general review to consider Federal Government policies and programs in the area of race relations;
(5)	to recommend the development of positive programs that the Committee finds necessary to promote racial understanding, tolerance and harmony in Canadian society; and
(6)	to encourage the continuation of the dialogue that will be initiated, in a climate that is open and constructive.
December 13, 1983

That the committee report no later than six months after its membership is named;
That the committee have all of the powers provided to standing committees pursuant to Standing Order 69(8);
That the committee have the power to retain expert, professional, technical and clerical staff and that for these purposes the committee be deemed never to have ceased to exist;
That the committee be empowered to adjourn from place to place within Canada;
That the evidence adduced by the committee in the first session of the present Parliament, be deemed to have been referred to the committee; and That the provisions of sections (4) and (9) of Standing Order 69 of the House of Commons should be suspended, unless otherwise agreed to by this committee.


Mr. Deputy Speaker:: Does the Hon. Parliamentary Secretary to the President of the Privy Council have unanimous consent to move this motion?


Erik Nielsen: Thank you for authorizing my microphone to be activated so that 1 might be heard, Mr. Speaker. For the record, the same assurances are given with respect to this motion as was given to previous ones.


John Leslie Evans: Mr. Speaker, 1 give the same assurance with respect to the motion I am putting now and to the next two that I will give.


Mr. Deputy Speaker:: Does the Hon. Parliamentary Secretary have unanimous consent to move this motion?


Some Hon. Members:: Agreed.


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


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.


John Leslie Evans: Mr. Speaker, I would like to move:
That the House of Commons do unite with the Senate in the appointment of a Special Joint Committee of the Senate and of the House of Commons to consider and report upon ways by which the Senate of Canada could be reformed in order to strengthen its role in representing people from all regions of Canada and to enhance the authority of Parliament to speak and act on behalf of Canadians in all parts of the country;
That the Committee include in its final report recommendations concerning the method of selection, powers, length of term for Senators, distribution of seats and other matters that the Committee considers relevant to the reform of the Senate;
That the Members of the House of Commons to act on behalf of the House as members of the said Committee be Mr. Comtois, Mr. Cosgrove. Mr. Crosby (Halifax West), Mr. Gourde (Levis), Mr. Harquail, Mr. Jarvis, Mr. Murphy, Mr. Portelance, Mr. Roy and Mr. Thacker;
That the Committee have power to appoint, from among its members, such sub-committees as it may deem advisable or necessary;
That the Committee have power to sit during sittings and adjournments of the House;
Motions
That the Committee have power to report from time to time, to send for persons, papers and records, and to print such papers and evidence from day to day as may be ordered by the Committee;
That the Committee have power to adjourn from place to place within Canada;
That the quorum of the Committee be 10 members, whenever a vote, resolution or other decision is taken, so long as both Houses are represented and that the Committee be authorized to hold meetings, to receive evidence and authorize the printing thereof, whenever 5 members are present, so long as both Houses are represented;
That the Committee be empowered to retain the services of professional, clerical and stenographic staff as deemed advisable by the Joint Chairmen and that for these purposes the committee be deemed never to have ceased to exist; That the Committee present its final report no later than January 31, 1984;
That the evidence adduced by the Committee in the first session of the present Parliament be referred to the Committee; and That a Message be sent to the Senate to inform that House accordingly.


Erik Nielsen: Thank you for authorizing the controller to activate my microphone so that I might be heard, Mr. Speaker. That was the Committee that I was concerned about. The reporting date being January 31. Doubts have been expressed by some Members as to whether or not they can complete their work by that date. I would simply suggest that the Government convey to the Members of both this House and the other place that should it become necessary to go beyond the 31st in their collective opinion, they can always come back to the House for an extended date for reporting.


Mr. Deputy Speaker:: Does the Hon. Parliamentary Secretary to the President of the Privy Council have unanimous consent to move this motion?


Some Hon. Members:: Agreed.


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


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.


John Leslie Evans: Mr. Speaker, I move:
That the Standing Committee on Communications and Culture review all relevant provisions of the Income Tax Act relating to the taxation of visual and performing artists and writers including, but not limited to, the criteria for establishing the professional status of visual and performing artists and of writers and the method for determining allowable business deductions for such artists and to recommend any changes that the Committee deems necessary and proper;
That such review include the hearing and consideration of the views of interested parties and organizations; and
That the Evidence adduced before the Standing Committee on Communcia-tions and Culture in the first Session of this Parliament, be referred to the Committee.
I can give the Hon. Member the assurance he asked for.

December 13, 1983
Income Tax Act


Erik Nielsen: Thank you, Mr. Speaker, for authorizing the controller to allow me to be heard. We gladly give our consent and the same assurances.


Mr. Deputy Speaker:: Does the Parliamentary Secretary have the unanimous consent of the House to move this motion:


Some Hon. Members:: Agreed.


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


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

John Leslie Evans: Mr. Speaker, given that it is early in the session, 1 simply ask that all questions be allowed to stand.


Erik Nielsen: Mr. Speaker, I am not so sure that we want to consent to that. Since it is very early in the session, we are prepared, with great reluctance, to consent to that motion being put but only on the premise that the Parliamentary Secretary will answer starred questions promptly and that he will give priority to the questions that are back on the Order Paper, dating back to 1980, 1981 and 1982.


John Leslie Evans: Mr. Speaker, as has always been the case, I will give the greatest attention to starred questions and to any other questions asked by an Hon. Member of the House to ensure that prompt and complete answers are provided.


Mr. Deputy Speaker:: Shall all questions stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Lalonde that Bill C-2, an Act to amend the statute law relating to income tax and to make related amendments to the Canada Pension Plan and the Unemployment Insurance Act, 1971, be read the second time and referred to Committee of the Whole.
Nelson Andrew Riis: Mr. Speaker, 1 am pleased to continue in the debate on this very critical Bill. I must say that one is tempted to make a comment on the call for civility which Members of the House have made, particularly Leaders of certain political Parties. However, perhaps the meaning of civility has taken on a new meaning as of today. But I will refrain from commenting on that particular item.
The Minister of Finance (Mr. Lalonde) indicated that Bill C-2 represented an effort on behalf of the Government to bring a sense of equity and fairness into the taxation system and to all Canadians as we reflect on our tax forms that we will be filling out in the months ahead. I must say that exactly the opposite has happened. Some time ago 1 was attempting to allocate what I call the golden loophole award to those 297 Canadians who were able to amass incomes in excess of a quarter of a million dollars last year while, as a result of the loopholes in the tax system, they were not required to pay any income tax at all. I suspect we can add a silver loophole and bronze loophole award to those other categories of Canadians who, through the use of the loopholes, found it unnecessary to pay any income tax at all. I refer to the more than 7,900 Canadians who, in 1981, made incomes in excess of $50,000 and paid no income tax. This number was up by 64 per cent from the previous year.
In other words, the tax loopholes are becoming wider and enabling more Canadians to pay absolutely no income tax at all. Of course, one could say the same thing about various elements in the corporate sector. Corporate giants such as the Bank of Montreal which made a sizable income last year, even by corporate standards of hundreds of millions of dollars, was not required to pay a single cent in federal income tax. As a matter of fact, it was able to acquire $22 million in tax referrals to the next year, which again adds that much more to the tax deferral bundle.
I believe that recent figures indicate that the taxes deferred by various corporations now amount to in excess of $25 billion. Therefore, when talking about fairness in our tax system, we have a great distance to go.
In response to questioning in the House of Commons, the Minister of Finance suggested that the fact that so many Canadians pay no income tax at all should not be of concern to opposition members since those Canadians will eventually be paying income tax.


Mr. Orlikow:: Eventually we will all be dead.


Nelson Andrew Riis: As my friend states, eventually we will all be dead.
I think it must be pointed out that other countries do not have this attitude. Other nations close to us have quite a different position when it comes to federal income tax, particularly those who are able to use loopholes to pay no income tax at all. We need look no further than the United States. As a result of a tax equity and fiscal responsibility Act in the United States, those who manage to accumulate enough loopholes to avoid tax on incomes of more than $30,000 are assessed an alternative minimum tax of 20 per cent on all income over that amount. I suggest it is fair to say that everyone pays federal income tax in the United States.
That is certainly not the case in a country such as ours as a result of the number of tax loopholes. Not only has the
December 13, 1983

Government backed off and made more loopholes available to Canadians, it has also backed off from an initiative-to give some credit where credit is due-of the Member for St. John's West (Mr. Crosbie) when he introduced a process in 1979 in which all of the tax loopholes were identified. As these tax loopholes were identified, the amount of money lost to the federal Treasury was identified, so that at the end of the year one could see the list of tax loopholes available in 1979. Two hundred of them were identified at that time. As well, the related amounts of money lost to the federal Treasury were identified.
This allowed us to evaluate clearly whether a tax loophole given to a certain group of Canadians which cost one-half billion dollars a year was worth it. We could sit down and discuss that and it enabled us to use some logic to evaluate the various tax provisions that gave advantages to certain groups of Canadians.
However, one year later, in 1980, the Liberal Government, because, I feel, it found it somewhat embarrassing when it was unable to justify these tax breaks to certain Canadians, did away with this exercise. No longer are those tax loopholes outlined as they were in 1979 and the amount of expenditures attached to each one clearly defined. In other words, it appears that the Government has some interest in clouding the subject of taxation and blurring it so that Canadians do not understand the abuse to which the tax system has been put.
Furthermore, I believe that in the minutes I have remaining it is only fair to identify what changes in the tax system we in the NDP would like to see. After all, the Minister asked for some suggestions and indicated that this would be an opportunity for Members opposite to articulate clearly some policy in terms of tax reform. I would like to do that for a few moments and will begin by raising one small challenge. With all of these tax loopholes being provided to the corporate sector, 1 would ask whether it is in the best interests of our country. I read with interest that the Canadian Federation of Independent Business polled its members only to find that more than half the business community, particularly the small business community, said that the paperwork attached to the tax forms required by the Government of Canada was identified as their number one problem. I think we have to ask the question, when you consider that in 1981 when the federal Government took in something like $8 billion in corporate income tax but lent or gave out to the corporate sector $8 billion in various benefits, whether or not that is an appropriate way to proceed. Do we need to go out and bribe corporations to do certain things? Do we have to go out and use taxpayers' money to encourage corporations to carry on certain kinds of activities in certain parts of the country? Is it really required?
I would like to suggest that if business sees a good deal, business will go for it. I am not convinced that a whole set of tax incentives is the basis upon which corporations and businesses should make investment decisions. As a matter of fact, when you read some of the submissions made to the Economic
Income Tax Act
Council, particularly one by the chartered accountant firm of Ernst McWhinney, you will find that that firm observed that most government incentive programs have only marginal impact on the decision whether or not to invest. In other words, when you consider that we pay out $8 billion a year to the corporate sector in incentives and in tax dodges only to collect $8 billion in corporate income taxes, I think we have to ask ourselves whether this is the right way to proceed.
1 am not going to suggest for a moment, Mr. Speaker, that there are not some tax concessions to the business sector which are not beneficial. Again, it is fair to say that we have at the moment no way to evaluate all the tax concessions we give to individuals and corporations to see whether or not they are in the best interests of Canada. They may be in the best interests of certain select groups in society, but we have no way of determining whether or not they are in the best interests of Canada.
We would like to see more replacement of the tax expenditure system with a system of refundable tax credits, such as the existing child tax credit. This would offer benefits which would rise inversely with income. In other words, this would assist those more in need much more than the present system, which I think I have demonstrated assists those with the very least need of all.
We would also like to suggest that some evaluation of all the tax concessions to corporations should be put into place to ensure that those tax concessions are accomplishing what they set out to do. I believe that when we look very closely at the 200 some tax loopholes that are provided we find that most of those tax loopholes provide little benefit to the economy per se or to the Canadian society per se.
We would like to examine the position put forward by the Carter Commission when it reported in 1966 and said "A buck is a buck and should be taxed accordingly". If you are an individual who obtains most of your income from business, you are taxed quite differently than if you are a Canadian obtaining our income from salaries and wages. As a matter of fact, you are taxed on half your income, which means, in a sense, that a buck is not a buck but that for some people a buck is a $2 bill.
It is that kind of inequity, it is that kind of bias in favour of investments that cause a lot of Canadians to be very concerned about the equity of our present tax system and is encouraging many Canadians to move their economic activities underground, so that today the underground economy is growing by leaps and bounds because people are doing everything possible to dodge taxes as a result of the unfairness that has now become so obvious.
For example, let us look at three taxpayers in this tax year. The first one is making $25,000 a year; the second is making $200,000 a year by salary, and the third is making $200,000 based on investment income. The tax rate, using our traditional tax form, for the $25,000 a year man comes to about 14.4 per cent; for the $200,000 a year man on a salary it is 43.8 per cent; and for the $200,000 investment individual it is 18.5 per cent. Virtually the same rate applies to the person making

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Income Tax Act
$200,000 a year as a result of investments and to the individual making $25,000 a year as a result of wages or salaries. On top of that, something that the $25,000 a year man does not have at his or her disposal is the tax shelters that the others would have in the form of the film industry, the purchase of apartments, the oil and gas exploration opportunities, which in many cases, as we have demonstrated, results in no tax being paid by those with incomes of $200,000 plus.
That is the reason Canadians are sick and tired and do not trust the Minister of Finance when he brings forward suggestions that he is coming through with a whole new set of tax loopholes which will benefit Canadians, because Canadians know full well that what he means is that a select group will benefit.
We would like to put an end to special treatment on capital gains and institute a capital gains and dividends tax that treats such gains as earned income. In other words, let us do what the Carter Commission said and call a buck a buck and tax a buck as a buck and not some bucks as 50-cent dollars. We would also like to consider imposing taxes on the outflow of interest and dividends outside Canada. This is a major bleeding off of capital from our country. I think we want to look at other progressive nations to see how they deal with individuals and corporations that are quite content to move literally billions of dollars out of Canada on an annual basis as a result of interest and dividends.
We would also like to have a re-examination of the estate and gift tax which was eliminated in 1971. We feel that this tax should be reinstated with provision to exempt family farms, small business and interspousal transfers. It is interesting when you notice that 60 per cent of Canada's wealth is owned by fewer than 10 per cent of its citizens. When the estate tax was eliminated in 1971, approximately $66 billion was freed of the tax-burden, and the cost to the Treasury in future taxes would be approximately $12.5 billion. We are one of the few countries in the entire world which does not have an estate and gift tax. It was eliminated in 1971, as I have mentioned. To institute a tax that most people in the world have, certainly every progressive, thinking nation in the world has in place, would result in a significant step in reducing the deficit. I would like to hear particularly members of the Progressive Conservative Party when they speak on this Bill comment on this estate and gift tax and state why they feel it should not be reintroduced.
We would also like to reform the current system of RRSPs and RHOSPs so that these instruments would be more accessible to lower income Canadians. At the moment, a typical lower income Canadian has a difficult time coming up with extra funds to put into a Registered Home Ownership Savings Plan or a Registered Retirement Savings Plan. It is very difficult for them. The system appears at first glance to be available to every Canadian. But it is like the legal system, which is available to every Canadian in theory but when we come down to the actual, real situation, people with an average income in Canada have difficulty with it. The same is true in
coming up with additional funds to put aside for retirement purposes or for an eventual home.


Mr. Gamble:: What is your solution?


Nelson Andrew Riis: I have identified some of our concerns. We could go on about many, many more situations, and we will have an opportunity to do so as we get into the detail of Bill C-2. As this proceeds, I believe the unfairness of Bill C-2 will become amply clear as will the fact that all the recommendations do either one of two things. They either provide additional loopholes to upper income Canadians or they impose additional taxes on lower or middle income Canadians.
Why is the Government at this time, when consumer spending is required as at no other time in recent history, saying that its solution is to give tax breaks to the very wealthy in the hope that some of the benefits will trickle down eventually to most Canadians? This is the Reagan supply side approach to solving our problem. Why is the Government saying it is going to increase the sales tax to Canadians, that it is going to keep a tax on gasoline, which is unnecessary and which was promised would be removed last year? Those kinds of policies will not assist in the recovery, but will retard it. When we consider the message which is going out today to Canadians across the country as to what the Government is doing to them through the tax system, we realize that it will not buoy up their hopes or provide them with some vision of what our economy and society could and should be. It will confirm in their hearts and minds the fact that the Government is cynical and misleads the people of Canada when the Minister of Finance stands in the House and says that these tax measures will benefit them. He does not say that they will benefit a handful of wealthy Canadians or that the tax burden upon most Canadians will be increased.
The disposable income of most Canadians has eroded over the last number of years. In other words, they do not have the opportunity now to purchase the goods or services as they would normally do. This tax change will take more money out of the hands of Canadians at a time when more money should be circulating in the economy. At a time when we should be taking steps to encourage people to purchase more services and goods, we are doing exactly the opposite. We are telling people to hold on, because they will be punished even more. Their taxes will go up. They will pay more federal sales tax, which is regressive by definition. At the same time the Government will assist a few of its wealthy buddies. It is too close to what is going on in the United States. It is too close to the supply side economics being introduced by Ronald Reagan and Margaret Thatcher. It is not the kind of solution that Canadians want or need.


The Acting Speaker (Mr. Corbin):: It is not possible for the Hon. Member for Dollard (Mr. Desmarais) to ask a question at this point unless he obtains unanimous consent of the House to do so. Is there unanimous consent for the Hon. Member to put a question?

December 13, 1983


Some Hon. Members:: Agreed.


Mr. Desmarais:: Mr. Speaker, the Hon. Member for Kam-loops-Shuswap suggested that we should change the Income Tax Act in order to make registered retirement savings plans available to a greater number of Canadians. What kind of changes is he proposing?


Nelson Andrew Riis: Mr. Speaker, I realize that other Hon. Members asked that same question in a more informal way when I was suggesting a method of reforming the system, not necessarily by removing existing policies. A tax credit system could be used in an effort to provide more money in the hands of people who perhaps do not pay any income tax at all as a result of their positioning on the low end of the spectrum.


Donald Alex Blenkarn: How could we have a tax credit without any income tax?


Nelson Andrew Riis: Obviously I have not had an opportunity to think through this answer as much as I should. Perhaps I could respond to the Hon. Member's question during the time we are considering the Bill clause by clause.


Mr. Thomas Siddon (Richmond-South Delta):: Mr. Speaker,
I was interested in the comments of the Hon. Member for Kamloops-Shuswap (Mr. Riis). I believe he is the economic development critic for the New Democratic Party. He focused largely on the alleged failures, at least in his eyes, of supply side economics and the so-called preponderance of loopholes in the income tax system. However, he did not focus upon the main issue with which Canadians in all parts of this land have to contend, that is, unemployment and the extent to which the measures put forward in Bill C-2 might aid in the resolution of that very serious problem which is of particular concern to young people.
In commencing my comments on Bill C-2, an Act to amend the Income Tax Act, 1 want to point out that my particular emphasis will be on the R and D tax credits presented in the Bill by way of an amendment, through Clause 74, to Section 127 of the Income Tax Act, and the addition of a new Part VIII to the Income Tax Act by the inclusion of a new Section 194. The proposed changes to the scheme of incentives to encourage more research and development in Canada contain a couple of rather interesting provisions. One is a straightforward increase in R and D tax credits. I will have more to say about that later. Second, through a provision which would allow investors to purchase shares in research and development companies, they would be allowed a tax shelter on virtually all the income diverted into that investment. In other words, they would be entitled to a 50 per cent tax credit on income earned and directed into R and D companies. In a general sense we commend these initiatives. However, when I deal with the specific increases in R and D tax credits, I will point out the tremendously inadequate level of support they represent to a very important sector of our economy.
This Bill is yet another example of the tendency of the Government, rather than to develop a 21st century approach to
Income Tax Act
the serious problems facing the economy, to tinker and dicker with an antiquated system. The tax system has become so complex and unwieldy that it is almost impossible for modern high technology companies to contend with the ins and outs of the Income Tax Act.
Last week the Prime Minister (Mr. Trudeau) talked in the House about social Darwinism, as he called it. The lack of recognition in the House of the inescapable fact that the future is very bleak for our young people illustrates the fact that the Liberal Party has essentially given to Canadians a 20th century social Darwinism. I say this because Canada is approaching a very desperate time in its history, with some 600,000 young people unemployed and an unemployment level which is now 500,000 to 600,000 persons higher than it was in 1980-81. Also there has been a tremendous deterioration in the economy. As a recent headline indicated, "Prospects are grim for young jobless according to recent OECD projections".
The Minister of State for Economic and Regional Development (Mr. Johnston), who should be taking a positive leadership role in the solution of this serious problem, was quoted as saying to the Macdonald Commission that "full-time jobs for all may not be realistic". This was according to the Minister who, surprisingly enough, is also the Minister of State for Science and Technology. For these reasons I believe the Party opposite has been guilty over the past 15 years of bringing Canada into the 20th century of Darwinism.
My Party's position, as presented in the House last week by my Leader, the Hon. Member for Central Nova (Mr. Mul-roney), represents an opportunity for Canadians to move forward into the 21st century and to take advantage of a tremendous upswelling of opportunity which is ours to be had, through the vigorous pursuit of research and development.
On the other side it is more of the same old boys with the same old ploys. Rember the autumn of 1981 when the Minister of Finance (Mr. Lalonde) indicated in the House that in no way, shape or form was the federal Government contemplating an excise tax on natural gas exports. Then in the budget of that year he proceeded to slap a tax on all natural gas production. That type of sleight of hand has led Canadians to decide that it is time for a change. This Government cannot be trusted. Canadians will see over and over-and they will witness it once again this evening at the great spectacle in Toronto known as the "Last Supper"-reasons for distrusting the Government.
I would like to say in the context of Bill C-2 that in the case of the R and D tax credits which 1 would like to address, there is another example of why this Government should not be trusted. There has been a lot of talk in the House by the Minister of Finance and the Minister of State for Science and Technology about how generous these new R and D tax credits are going to be to what we hope is the rapidly developing sector of our economy known as the high technology industry, bearing in mind the spin-off opportunities it offers the general infrastructure of this country.

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Yet there is a notion that somehow the development this very important sector will bring is going to do more harm than good to the Canadian people. Therefore, there is a tendency on the part of government planners, particularly the experts in the Department of Finance, to pooh-pooh and downplay the very important role that a much greater commitment to research and development by this country can make in terms of challenge and providing meaningful and permanent careers for our young people. So they have presented this facade of generous R and D tax credits.
In a couple of respects, as I said earlier, it is more of a facade than a reality. For example, they pretend that the ability to deduct research and development expenses by a Canadian corporation is in someway an incentive to carry out research and development. It is not. The ability to deduct research and development costs is no more of an incentive than the ability to deduct the costs of a word processor, a new truck or a plant addition. It is not an incentive to do additional research and development. Any company that invests in research and development in preference to some other investment is merely incurring a deductible expense. There is no special reason to make a higher priority of that than of something else.
We have to build into the tax system real incentives which make it more attractive to invest in legitimate research and development. That is where this Bill falls far short of the expectations that it creates. The level of R and D tax credits proposed here are pitifully small in relation to what is required. If we study the complexities of the Bill, as we will later on, we find that a company that claims these modest deductions, these R and D tax credits of 20, 25 and 30 per cent, must then reduce its basic deduction for those R and D expenses by a corresponding amount. In other words, what you see is not what you get. You think you are getting a 20 per cent R and D tax credit, but when you work out the numbers, you are only getting 10 per cent. You have to subtract the amount of the basic deduction that you claim for that same investment in R and D. That is what I mean by suggesting that it is the same old boys with the same old ploys. It is not what it appears to be.
I would like to make an important case that has to be made for a much greater national commitment to research and development initiative in our country. In recent months, various Ministers have been talking about an unprecedented resurgence of the Government's commitment to R and D. 1 have here a graph published by the Ministry of State for Science and Technology headlined "GERD reaches all-time high". In other words, our expenditure in research and development reached an unprecedented level. In fact, in 1982-83 it reached a level of about 1.3 per cent of our Gross National Product. That is only slightly higher than the level being invested in research and development in 1968, before the beginning of the Trudeau era.
If we look at the intervening years, we find that during the seventies, Canada's commitment to research and development fell to appallingly low levels while every other major industrialized nation was going ahead rapidly in terms of commitment to research and development. The most prosperous nations of the OECD and western industrialized nations reinvest something approaching 2.5 per cent of their Gross National Product in research and development. Canada is doing only half of that. That has tremendous implications for our young people and the long-range future that we provide for them as meaningful citizens in this country.
Our children are anxious to have jobs in the disciplines for which they are very well trained. They are going to school and learning about exotic concepts. They are much more acquainted with everything that is going on in the world. They know how to program computers at the age of eight, nine and ten. That is where they want to see their future evolve. They want a government which does not bad-mouth technology, which suggests technology will be harmful, will displace people and so on. They want to be persuaded of the opportunities that technology offers. They want the Government to make major and specific commitments to invest in new technology. The products that evolve from that technology and the income that will accrue to all Canadians by the re-investment of capital will provide new jobs and expand educational and business opportunities for our young people. Instead, we are doing about half as well as most of the prosperous industrialized nations of the world, in terms of support for R and D.
Another telling fact is that most industrialized nations are doing between two and three times as much research and development in the private sector as we are in Canada. That is not all done with private money. It is because of some very creative tax, tariff and export-oriented policies that countries like Japan, West Germany, Great Britain and the United States are pursuing.
I will cite a few statistics for the sake of comparison. In West Germany, expenditures by the private sector on R and D are 1.6 per cent of Gross National Product while in 1981 in Canada, the expenditure was only .48 per cent, or about one-third. In the United States it was 1.6 per cent of GNP, 1.41 per cent in the United Kingdom, and 1.2 per cent in Japan. All of these countries are putting much more emphasis on the role of research and development in the private sector than Canada.
There are only two ways to encourage the private sector to do more R and D. First, the federal Government must help to create a climate through the tax system in which the rewards may be enjoyed by those who invest and pursue the expansion of knowledge and the development of products, and then enjoy the assistance of Government in marketing those products around the world. The other approach government can take is to hand money to specially qualified groups and individuals by way of grants.
Under the Liberal Government for the past 15 years, the grant system has not worked effectively. The minute you adopt the grants approach, you have to be able to distinguish between the winners and losers. We have put all of our eggs in a few large baskets. We have poured millions, indeed billions, of dollars into major enterprises and technology such as the
December 13, 1983

Canadian Challenger, the new helicopter plant and so on. In the process, we have denied small business and entrepreneurs the type of tax based incentive system that would induce individuals to share in the risk that is natural in any research and development initiative. A lot of smaller scale ventures encouraged by a very rewarding income tax system will lead to much less wastage of limited public revenue than a few large-scale losers that are now hanging like a millstone around the necks of future generations of Canadians.
So we have to find ways to increase the inducement for the private sector to do more research and development in Canada. Out of the 1.3 per cent of our Gross National Product which we invest in research and development, the private sector commitment is about one-half, between .5 and .7 per cent, compared, as 1 indicated earlier, with 1.6 to 2 per cent of GNP in other major industrialized nations.
1 have with me, Mr. Speaker, a table indicating how the government support for research and development breaks down. 1 would like to read a couple of those figures to the House for interest's sake. The in-house research of the federal Government consumes about $1 billion of expenditure per year out of a total of the $5 billion national commitment to R and D. The grants in aid which are directed toward that very important fundamental research in universities amount to about $440 million. But the industrial support for research and development in the private sector takes the form of the NRC industrial programs sponsored by the National Research Council, the Enterprise Development Program offered by IT & C, and the R and D tax credits contained within the Income Tax Act. All of these in total only amount to some $360 million. Thus we are spending three times as much on government laboratories as we are on private sector R and D in the country.
And, we wonder why there are no opportunities for the young engineering and science graduates and the young people with Masters and doctoral degrees. Why are they not working in the private sector? It is because we have created a self-perpetuating life in the academic sphere and in government laboratories, instead of cultivating the instinct to take all of that brilliant knowledge that evolves out of our academic institutions to be translated into real and meaningful devices and products that the world requires. That is the challenge that faces Canada, Mr. Speaker. We must create a tax climate so that those ideas are drawn out of the universities and encouraged to flow rapidly through a process of evolution, proof-testing and comparison with other products to evolve eventually into world-class competitive products which can be sold more cheaply and which are of at least as high a quality as those produced in any other country in the world. That is where we are failing and that is where the initiatives presented in this proposed amendment to the Income Tax Act falls sadly short of what is required.
Finance Department officials have estimated that the additional impact of the R and D tax credits and the flow-through
Income Tax Act
provisions contained in Bill C-2 will generate at best about $100 million of additional tax expenditure over the present $225 million of tax expenditure which is going into R and D. That $100 million of additional tax expenditure by the Government is only one-tenth of what it spends on all of the government laboratories and it is only one-fiftieth of our total R and D commitment of $5 billion, which is still only half of what it should be. What the income tax amendment to the R and D tax credits does is to increase the incentive to do research in the private sector by something in the order of one one-hundredth of what is required. The amendment is only 1 per cent as powerful and significant as what is required to get the private sector really rolling along and doing much more research and development in the country.
If we followed through with the complexity of the means of claiming the R and D tax credit, the complexity of an investor investing in the flow-through shares that are provided for in this Bill and the cost of accountants, lawyers and tax experts for determining whether or not a company could qualify for these initiatives, and then looked at the pitiful size of these benefits, we would have to conclude that there really is not very much in this amendment. In fact, as a result of the rescinding the old incremental tax provision which allowed some rapidly growing high-tech companies to claim a super depletion allowance which was more than the cost of their R and D investment, many of the most rapidly growing high-tech companies will receive lower benefits under this Bill than they would have under the old system.
In a moment I will conclude my comments, Mr. Speaker, and I hope that we will deal with this matter in greater detail at committee stage. But in concluding, 1 would just like to reiterate that if R and D performers think they are going to get a 20 per cent or 25 per cent tax credit out of these measures, they will find that they are only getting half as much as they think they are after they have diminished their normal deduction for expenditures on R and D. Here once again the Government is promoting a deceit. The Minister of Finance is going across the country saying that we are doing all of these great things for R and D when in fact our national commitment to encourage and support R and D in the private sector is between one-fiftieth and one one-hundredth of what it ought to be if Canada is to get on that great golden wave of opportunity and not be left behind by the other rapidly developing industrialized nations around the world.


Mr. Cullen:: Mr. Speaker, I listened very carefully to the Hon. Member and I heard him use the expression: "The amount is pitifully small". Some of the figures he was quoting were not what I would interpret as being pitifully small, particularly as they affect the taxpayer. I heard him mention figures like $5 billion. I am wondering if the Hon. Member can tell us, from his research, what the over-all global amount is that is being spent on R and D. I am not referring to percentages but to a global figure.


Thomas Edward Siddon: Mr. Speaker, I would be happy to do that. In fact, in the present fiscal year, Canada is committing about $5

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Income Tax Act
billion in total to research and development. Half of that amount is coming from the public sector and half from the private sector. About S2.5 billion is coming from each sector. To catch up with the other industrialized nations, we should be spending close to $10 billion this year. We would need to spend that amount if we wanted to be spending what Japan, West Germany, Switzerland and the other major industrialized nations are investing-not spending but investing-in R and D.
1 should make the point here that there is a proven multiplier effect in that every dollar we invest in research and development, even with all of the uncertainty that entails, will multiply tenfold in terms of its contribution to the Gross National Product. There are many examples of this. Canada is investing $5 billion in research and development, and the R and D tax credits, prior to these amendments, really only granted a tax expenditure of $200 million in relation to the total of $5 billion. The increased tax expenditures resulting from this legislation will only increase that amount by another $100 million.
The figure of $100 million as compared to $5 billion is only one-fiftieth of the total, yet we should be doubling that total. In fact, we can look at the example set by the other industrialized nations in terms of their commitment to private sector research, which is not all by way of grants, of course. There must be a snowball effect created by the government initiative. As compared to what those nations are doing, Canada should be committing one more percentage point of GNP to private sector research. At today's GNP, that would amount to about $4 billion more to the private sector. I am saying that we must get $4 billion more worth of investment into R and D in the private sector, and yet this Bill is only giving us $100 million. That is where I get the ratio of one-fiftieth of what is really required in terms of the initiative by Government.


Jack Sydney George (Bud) Cullen: Mr. Speaker, the Hon. Member and I obviously have different ideas about the amounts that can be described as being pitifully small. When 1 hear such figures as the government contribution of $2.5 billion, they strike me as rather significant amounts. I do not think anyone on this side of the House needs to be convinced of the benefits of R and D, and that is why these changes are being made.
I know, and the Hon. Member will also know, that the Minister has been going around the country in an attempt to determine what the best avenue is for R and D. He has already indicated that grantsmanship, as he called it, is not the best method. It seems to me that the Department of Finance is not, to use his words, pooh-poohing R and D but has come up with a new scheme and a different approach so that people can invest money in R and D companies and there will be significant tax advantages to be gained. I would expect that that idea was probably not initiated by the Department of Finance but may very well have been a suggestion made by the private sector which would like to invest in R and D.
The Hon. Member has said that these amounts are not an incentive if we take out the direct increase in the tax credit. In my experience, after having done some studies of the funding
that is available, there really has not been too much reticence on the part of the companies to go out and use that as an incentive. The Hon. Member may not think that it is an incentive but officials of companies I have talked to believe that it is quite an incentive. Because of the direct increase and the new and novel approach of investing in R and D companies, it strikes me that the Department of Finance is not pooh-poohing the idea but is endeavouring to find a better way. The Hon. Member himself can see that this may be a better way than the straight grant procedure.
When the Hon. Member suggests a doubling of this amount, 1 am wondering if he is talking about a doubling of the tax advantages that are available to the companies, if he takes the second approach of encouraging investors, or if he has a third approach that he thinks might be more effective in encouraging R and D in Canada.


Thomas Edward Siddon: Mr. Speaker, I am sure that if the former Minister would consult with most companies engaged in research and development they would tell him that these measures are very welcome but quite inadequate. In fact, the high technology firms represented by the Canadian Advanced Technology Association have pointed out that as a result of rescinding the incremental tax provision, many of the most rapidly growing companies located in the Ottawa area, Silicone Valley North, will enjoy lower tax inducements than they did previously.
The former Minister asks what I would advocate. First of all, I think we should decouple the notion of deducting eligible expenditures, whether for R and D or for anything else, from the notion of an incentive. Then we should create a simple incentive system based on an R and D tax credit which is not complicated by corresponding deductions from the basic expenditures that have to be deminished in proportion to the tax credit received to start with. We should then increase the R and D tax credit to something significant to provide an extra lever to encourage companies not yet into R and d, or only into it in a very modest way, to invest more. If we can extend a 50 per cent tax credit to individuals who invest in shares in R and D corporations, why can we not extend a corresponding tax credit to small groups of entrepreneurs or scientists, as individuals, against other income, to invest in their own R and D ventures? Why can we not give them a full tax credit on the earnings from that investment in R and D instead of 10 per cent, 20 per cent or 30 per cent? Why not give them the option of sending their money to Ottawa by way of income tax or of investing it straight into R and D? If we do less than that, we are not going anywhere.
Finally, if we do not give a special break to products which evolve from R and D and which are exported, and introduce some kind of export tax deduction to encourage Canadian companies to get out into the world and sell, then there is no point in spending all this money on R and D.


Jack Sydney George (Bud) Cullen: Mr. Speaker, 1 have heard it said that many multinational companies in Canada that get tax advantages as
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a result of doing R and D then take that product to another country and market it from that country. Has the Hon. Member given any thought to how that might be prevented, or would he prevent it? It seems to me that we pay the cost but we may not share the benefits that both he and I, I am sure, would like to see devolve to Canadians.


Thomas Edward Siddon: Mr. Speaker, this question brings me back to my earlier comment. If we had a climate in Canada which gave greater inducement to the exportation of products than to consumption of products in Canada and if productivity were under control through the aggressive application of technology instead of our running away from technology, then I am sure those companies would keep the jobs in Canada because we could be internationally competitive in those products.
If the Japanese can export products tax free that they could sell at home at a higher price, then why are we not doing the same? If we do not address those fundamental questions we will remain in the stagnant position we are in now, with well trained young people who have no expectation of doing anything meaningful with their lives.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Corbin):: It is my duty, pursuant to Standing Order 45, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for Surrey-White Rock-North Delta (Mr. Friesen)-External Affairs-East Germany-Diplomatic recognition-Government position. (b) Protection of Canadian citizens; the Hon. Member for Esquimalt-Saanich (Mr. Munro) External Affairs-Czechoslovakia-Dual nationality issue; the Hon. Member for Winnipeg-Birds Hill (Mr. Blaik-ie)-Established Programs Financing-Announcement in Throne Speech-Amount of federal funding. (b) Government policy on funding medical care.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Lalonde: That Bill C-2, An Act to amend the statute law relating to income tax and to make related amendments to the
Income Tax Act
Canada Pension Plan and the Unemployment Insurance Act, 1971, be read the second time and referred to Committee of the Whole.
Mr. Louis Duclos (Montmorency-Orleans):: Mr. Speaker, last week, at the beginning of the debate on the Speech from the Throne, the Leader of the Official Opposition (Mr. Mul-roney) promised to support all Government measures that would have a beneficial effect on the Canadian economy and would benefit Canadians as a whole.
Mr. Speaker, I believe we have before us a Bill that is exactly the kind of legislation the Leader of the Official Opposition was referring to. I think the Members of the Official Opposition and our colleagues in the New Democratic Party will now have a chance to let the House work in an efficient and responsible manner. I would therefore appeal to their sense of responsibility and their intelligence, to let us proceed as quickly as possible with consideration of this Bill, to avoid a repeat of last year's experience when the following spring, the Government was in a position where it could not process right away the tax refunds to which several million taxpayers were entitled.
However, Mr. Speaker, since the past often reflects what the future holds in store, I am still a little worried, especially since this morning, I heard the Member for St. John's West (Mr. Crosbie), the Official Opposition critic for finance, when he blamed the Government for the fact that in the past, the passage of amendments to the Income Tax Act had been delayed. Mr. Speaker, it seems to me that the Hon. Member for St. John's West and his colleagues have very short memories. I think anyone with the least bit of goodwill and who has closely followed events in the House in recent years will recall, and I challenge anyone on the opposite side to deny this, that it was not the Government Members who systematically helped to delay very substantially the business of the House. We all remember the bells crisis during the energy debate. Remember the bad faith demonstrated by Opposition Members during the debate on the Crow! It is that kind of behaviour that has wasted, not hours and days, but weeks and months of the time of this House, and the responsibility for delaying the passage of major amendments to the Income Tax Act lies with the Members of the Opposition, who are answerable to the Canadian people.
Mr. Speaker, that being said, I believe we cannot discuss amendments to the Income Tax Act, especially where it concerns corporate taxes, without looking at the overall picture we were given by the Minister of Finance (Mr. Lalonde) last April, when the Minister brought down his Budget. At the time, the Government undertook to spend a grand total of $4.8 billion in an attempt to stimulate Canada's economic recovery, of which $2.4 billion would be spent on recovery projects. In fact, this was a series of measures, which included projects that were already in the portfolios of various Departments. Seventy

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per cent of these projects should be under way sometime next
year.
Mr. Speaker, these measures were, of course, intended to provide a stimulus for economic recovery until the private sector, thanks to other measures I will be discussing in a few moments, thanks to tax incentives, would be able to take over and finish the initial startup. That is why I think it is quite clear that the Official Opposition has no justification for drawing out this debate, since the Bill contains some very useful measures, some very satisfactory measures for the private sector that will help it make a substantial contribution to economic recovery. 1 think it would be hard for Opposition Members to justify any obstruction or boycotting of the business of the Parliament.
Mr. Speaker, one must keep in mind the whole series of investment tax credits, about which 1 will have more to say later on, as well as the special recovery investment fund over the next four years, because those are constructive and concrete measures which entail some $2.4 billion which the Government will earmark for assistance to the private sector so as to pave the way for Canada's economic recovery. And $1.3 billion of that $2.4 billion will be tax concessions from the federal Government to corporations-


An Hon. Member:: Which ones?


Louis Duclos: -in the form of tax credits. Mr. Speaker, that is a useless question. 1 work very often with the Hon. Member on the Committee on Finance, Trade and Economic Affairs, and all he has to do to find the answer to his question is to read through the budget speech and the budget papers.
As 1 was saying, Mr. Speaker, the various tax credits aimed at easing investment recovery mean that the federal Government will forego $1.3 billion over the next four years.
If I may, Mr. Speaker, 1 should like to elaborate on that. For one thing, the general tax credit will be more readily available than ever to corporations as a whole, in the sense that there will no longer be a ceiling on such credits. Under the former legislation, the limit was $15,000, plus 50 per cent of the federal tax, that is the federal tax over and above $15,000. Henceforth, there will be no restriction on the amount which corporations may claim as investment tax credit.
1 should point out that, as a result of amendments to the corporate income tax legislation, it will now be possible to transfer the tax credit back to two years so that the investment tax credit will apply to federal taxes due on profits made in 1981 and 1982. That is not allowed under the existing legislation, but it will be possible from now on. As a result, the federal treasury will not collect $190 million for 1981 and $280 million for 1982.
With respect to investments made before May 1986, the special recovery refundable investment tax credit will apply. What that means is that a corporation will be eligible for a cash refund if it cannot use its full tax credit because it has not made enough profits. In the case of small companies, this refund will amount to a maximum of 40 per cent of the unused tax credit, as compared to a maximum of 20 per cent in the case of other corporations. Here again, the federal treasury will forego fairly substantial revenues-$115 million for 1981 and $120 million for 1982.
Mr. Speaker, that is indeed a very interesting consideration for companies that are just getting off the ground. These are companies which have not made enough profits in the first few years to take full advantage of the investment tax credit. From now on, if they cannot apply the tax credit against their profits, they will at least be entitled to a cash refund.
The third form of tax credit is what is called the special recovery share-purchase tax credit. This proposal is extremely important, and even essential, in view of the present economic context in Canada. It aims at making it easier for businesses to acquire new equity capital. The shareholder will be able to claim a tax credit amounting to 25 per cent of the price paid when the shares were issued. This is important because, as we know, and we saw this even more clearly during the recession, our businesses generally have very weak financial structures in the sense that a great majority of small and medium businesses in Canada have very little equity capital and enormous debts. Yet, it is much easier for a business which has a lot of equity capital to survive a period of temporary hardship without risking bankruptcy because, as there is no contractual obligation for a company to declare dividends, the distribution of which can always be cancelled when times are hard, while a business which is deeply in debt can be forced to declare bankruptcy if it cannot meet its contractual obligation, namely the repayment of its debt according to its agreement with the lender.
Mr. Speaker, this proposal will mean a loss of revenue for the Federal Treasury of $50 million in 1981 and $70 million in 1982.
Before closing, I would like to touch briefly on the question of tax incentives for research and development, and in this regard, I fully agree with my honourable colleague for Richmond-South Delta (Mr. Siddon), who emphasized the importance for a country such as Canada of doing even more in the field of research and development. This is exactly what the tax measures announced by the Minister of Finance will do. It will represent a loss of revenue of $150 million for the government in the 1982 fiscal year.
Mr. Speaker, I believe that one thing should be emphasized when we talk about research and development in Canada, and in this regard I fail to see the consistency of the position taken by our friends of the Official Opposition. Everything is interrelated in politics and in economics. The statements that are
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made are often related to other phenomena. Of course, the relationship is not always obvious, but when we look at it closely, it becomes apparent.
We know for instance that, in Canada, one of the main reasons for the lack of financial support for research and development is that very little research and development is done in the private sector, especially by the big multinationals which operate in Canada. This is noteworthy since the Opposition often tends to critize government policies aimed at screening foreign investments. They often attack the Foreign Investment Review Agency, or FIRA, whose role it is, before deciding to allow or refuse foreign investments, to ensure that any new investment from other countries will bring significant benefits to Canada and the Canadian economy, specifically in the area of research and development. However, Mr. Speaker, the big multinationals which came to Canada during the 50's, the 60's or the 70's, when we had what could be considered an open door policy, have done virtually nothing in the field of research and development.
All this goes to show, Mr. Speaker, that the government must continue to have some form of control to ensure that those investing in Canada do not do so only to skim the market, that they are not coming here to invest with the savings of Canadians, but that when they do invest in Canada they assume their responsibilities in the area of research and development. It is my view that the Government itself still must make a bigger effort, and we are going in the right direction with the initiatives announced last April by the Minister of Finance. However, I feel that more must be done by the private sector. As far as I am concerned tax incentives must be made available by the Government, and that is what we are doing.
Mr. Speaker, I will conclude my remarks because there are so many worthwhile proposals in the Bill that I could go on for hours upon hours explaining the reasons why the Opposition parties will have to accept their responsibilities and allow us to proceed rapidly with the Bill. The child tax credit had jumped up $50 from $293 to $343 in the June 1982 budget. Clearly, this was more than what was allowed under the indexation provision because, in 1983, had we not changed the existing legislation, we would only have been permitted to increase the child tax credit from $293 to $326. Thus, in view of the immense needs, the most urgent needs of our underprivileged Canadian families, the ones who benefit the most, large families in some cases who very readily benefit from the child tax credit, I feel that as legislators we have a responsibility to deal as rapidly as possible with the Bill in order that the Government may increase the child tax credit as it proposes to do.


Mr. Deputy Speaker:: Are there Hon. Members rising to ask questions of the Hon. Member who has just spoken?
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John Albert Gamble: Mr. Speaker, as I understand the urging of the Hon. Member, he is suggesting that, despite the fact that Bill C-2 is first introduced for debate today and consists of over 205 pages, it be immediately passed by the House. If that be the case, let me ask him if he is familiar with the recommendations made to the Minister of Finance by the joint committee on taxation of the Canadian Bar Association and the Canadian Institute of Chartered Accountants in November of this year. If he is, let me then ask him how he believes the provisions of Bill C-2 meet the complaints legitimately made by the learned representatives of both of those bodies to the provisions of subparagraph 54 (g)(iii) as they presently stand in the Income Tax Act, having regard to the rather devastating and detrimental effect that would be suffered as a consequence of the potential obligation to include in the computation of income an item which hitherto has been regarded as non taxable, that is to say the proceeds of disposition of personal residences?
[ Translation]


Louis Duclos: Mr. Speaker, I do not know whether we have a translation problem or, whether the Hon. Member has listened closely enough to my brief contribution. I was only referring to a reasonable time frame. I assume I am dealing with serious people, responsible people, and as a member of the Committee on Finance, Trade and Economic Affairs, I am familiar with the proposals, the changes the Hon. Member has just referred to. Indeed we will have an opportunity, at second reading stage, to consider this legislation clause by clause, taking into account what the Hon. Member has just referred to. So, I am not saying no. 1 am not saying this legislation should pass third reading stage tomorrow morning. I am saying that on second reading, the danger is that we may hear mere repetitions, empty proposals, and political rhetoric to delude the Canadian public. If on the other hand there are serious proposals, proposals based on convincing argument, I am willing to co-operate with the Hon. Member.


John Albert Gamble: Mr. Speaker, I think the Hon. Member will recognize that the process which we are going through is one which involves a detailed examination of a very complex statute, the kind of Bill this House sees, unfortunately, too often. It involves the lifeblood of the nation which is being sucked away by a Government that does not understand what it is doing. It is that very attitude of, "everything is fine, let's pass it" that creates the problems from which the nation now suffers. It is only when this House has some regard for these provisions, and how complex they are, and how burdensome they are on the people of Canada, that we shall ever come to grips with the monster that we have created and under which the people of Canada today suffer.
It is all very well for the Hon. Member to suggest that when we begin to deal with this Bill in committee changes will be made. He knows and I know and every Member of this House knows that there will not be one change made to this Bill. What we will see in the end is this monstrous piece of

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legislation rammed down the throats of the public without any regard to some of the provisions.
1 would like to ask him about one other provision, which is a simple one that will not create any problem for him. It is with respect to Clause 87 which provides for the incurring of interest payments on taxes that have not, according to the Department of National Revenue, been paid on time. Everything in that Clause makes sense except for a few words which relate to the application by the Minister of the taxes that are paid. The Hon. Member has probably had occasions to intervene on behalf of constituents, such as constituents of mine who have suffered when the Minister, in error, has applied payments to a different taxation year than the taxation year selected by the taxpayer. Under those circumstances, and having regard to the way in which this section is drafted, it will be unfortunate for the taxpayer who will be charged interest on those payments which have been improperly applied by the Minister. Mr. Speaker, would the Member calm down, be patient-


Mr. Fisher:: You want him to calm down?


John Albert Gamble: -and allow this Bill to be examined in detail and not urge the House to rush through its approval of this piece of important legislation?


Louis Duclos: Mr. Speaker, whoever is listening to the Hon. Member must feel that he surely is a newcomer to the House. Yet, he has a certain Parliamentary experience, having been elected for the first time, I think, in 1979. In other words, since he has been a Member of the House for four years, almost five years now, he should know, just as all our colleagues do know, that the Second Reading stage is the time for great speeches, for affirmative statements.


John Albert Gamble: Is that what you are doing?


Louis Duclos: Exactly, Mr. Speaker. That is exactly what 1 am doing: in committee a carefully planned and detailed approach to the section by section consideration of the bill. The Hon. Member has mentioned Section 87 or 88. Well, he is aware that nothing can be done about it for the time being. The only thing which the Opposition could do now, something it has repeatedly done in the past, would be to try to hinder the normal course of our proceedings. We are the Government, Mr. Speaker. We have been duly elected. An election will take place within the next few months or in a year or so; if the Canadian people who have entrusted us with this mandate, after hearing the arguments of the Hon. Member and his colleagues, feel that our party has failed them, the party opposite will then have the opportunity to demonstrate its governing ability; for the time being, however, the opposition having been given the chance and the time to express its dissatisfaction with a bill has no right under our Parliamentary system, to try to obstruct the normal course of our proceedings. That is all I whish to point out to the Hon. Member and his colleagues.
Yet, I should like to emphasize that we must pay special attention to the amendments Hon. Members opposite may bring, often upon suggestions by such groups as the Canadian Institute of Chartered Accountants whose Members are certainly well aware of the mechanics of our tax system and who must cope on a daily basis with all sorts of problems while seeking to properly advise their clients.
Then, I agree with the Hon. Member. My only objection is that the change he is suggesting cannot be made at this stage of our proceedings.


Donald Alex Blenkarn: Mr. Speaker, may I ask a question?


Mr. Deputy Speaker:: There is just over a minute remaining for questions. If the Hon. Member wants to ask a question, it should be brief.


Donald Alex Blenkarn: Has the Hon. Member examined the ISIP proposals in this Bill, some 30 clauses? Would he be able to explain to the small business people in his constituency why they would have to pay capital gains tax on all of the gain in the shares of their companies or businesses, notwithstanding inflation, whereas those who invest in big business, in companies listed on the stock exchange, would be able to have indexation on their capital gains? How would he explain the fairness of that?


Louis Duclos: Mr. Speaker, again the Hon. Member is raising a controversial and debatable question and we will have the opportunity to consider it in committee. He seems to be referring to discrimination against a group of companies which are not dealt with in the same way as those listed on the stock exchange in Toronto or Montreal. Again, we will have to consider very seriously this kind of problem.
As for the businessmen in my constituency, I think, Mr. Speaker, that I have always been able to explain to them the advantages and disadvantages of the Government tax policies. The Government spends money and has also to levy taxes. There is no other way.


Donald Alex Blenkarn: Mr. Speaker, it is my pleasure to rise in this debate because it concerns a Bill that is a typical Liberal Government income tax Bill. It is a tinkering type of Bill that is full of amazing complications. It is one that, like the budget, came out in sound and fury, promising ail sorts of wonderful things to be delivered to the people of Canada and to do great things for research and development, for investment and for the stock market. It would improve the equity of companies and would indeed be the new nirvana.
The fact of the matter is that on examination of this horribly complicated legislation, which in many respects should be thrown into the ashcan and rethought, we find that
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it is legislation that will do irreputable damage to business and the affairs of the country which it seeks to promote.
Of course, the Bill covers a waterfront of issues. Many of its provisions are ones which should have been passed last March had the Government not foreclosed Bill C-139 in the committee in the last session. I point out to the House that there was no filibuster of Bill C-139 in committee. We were working through the committee stage of that Bill in Committee of the Whole. We had managed to cover at least one-third of the Bill in Committee of the Whole. Yet the Government suddenly decided that it had had enough and the Bill must pass. It terminated the consideration of the Bill by the usual closure effort.
Today we are now faced with a clean-up of Bill C-139. Many of the measures contained in this Bill are complicated technical measures that should have been included when the income tax Bill was before us in March. However, they were not included because the Government insisted on bashing through that Bill without regard to these confusing matters.
There are some good measures and some bad measures in this Bill. Clearly, help to families who have young children at home by providing the ability to deduct child care to the extent of $2,000 a year or $8,000 in total for a family is a significant advantage. It is the type of measure which should have been introduced some time ago. Clearly, the extension of the child tax credit to $343 is important. However, I caution the House not to get too carried away with that because as inflation progresses the sum of $26,330 that represents the maximum income available on that tax credit scheme will slowly erode the value of that tax credit provision. At the same time, while the tax credit provision is eroded, so will the value of the $710 presently available to those who claim children as a deductible expense.
From there on we run into problems with the Bill. The first and most dangerous problem concerns the way the Bill treats charities. The charitable groups of this country came before the Government with a fifty-fifty give and take proposition. They proposed to abolish tire $100 automatic deduction for charitable donations and give those people who contribute to charities a tax credit equal to 50 per cent of the donation. The concept was to encourage more gifts to the voluntary sector.
The Government took the take out of the give and take proposal but never gave anything. It abolished the right to claim an automatic $100 on charitable donations in the tax return and gave the charities nothing. It stated that if someone wanted to deduct anything for a charitable donation, that person must prove every last nickel of the gift with a proper receipt. This may be all right if it were not so complicated to get receipts, but when it comes to small gifts it has been estimated that it costs $8 for a charity to give a receipt, so that a $5 gift would cost the charity $3 if the person insisted on a receipt.


John Leslie Evans: Nonsense.


Donald Alex Blenkarn: My friend across the way says nonsense. I refer him to page 2 of a brief which was presented to his
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Minister on September 30 of this year by the National Society of Fund Raising Executives.
Not only did the Government do that to the charities, it also proceeded with a White Paper that told the charities that if they increased their overhead beyond a certain amount they would cease to be treated as charities. This put the charities between a rock and a hard place. This is what the Government intends to do to voluntary agencies. It does not want to treat them properly. While my colleagues will be speaking further on this issue, it does form part of the Bill and we must consider how charitable and voluntary organizations in this country have been treated in this legislation. Provisions of this nature must be eliminated from the Bill.
Next we come to the registered home ownership provisions. There are some provisions here that allowed some of these registered home ownership funds, to be used to buy a home, and to buy furniture. I have written to the Minister and suggested that those funds to be used for the purchase of furniture could also be used for the purpose of home improvements. At this point I suggest to the Government that RHOSP funds be used for home improvements and that repairs to homes might be included. At the same time, perhaps the time limit of December 31, 1983, might be extended so that that particular provision could be extended for at least another six months. I say that because I believe we will all agree in the House that we still suffer from a great deal of unemployment. Second, the kinds of funds that we are trying to get back into the system are funds that are RHOSP moneys that really should not be RHOSP moneys but occur by mistake or by a marriage. For example, if you, Sir, were to marry a lady who had a home and you moved in with her, you could not claim a RHOSP on your own and buy another house because you can only have one home as your principal residence and qualify for a RHOSP as an investment for a new home. The consequence is that funds of that nature are locked in and cannot be taken out. The concept behind these amendments was to allow those moneys to be released for home furnishings, and I suggest for home improvements as well.
The Bill goes on to deal with a number of exploration expenses and overseas employment tax credits. With respect to the overseas employment tax credit, it is our view that this whole question of overseas or foreign income should be free from Canadian tax, period. We see no particular reason for saying that there should be some complicated arrangement whereby a Canadian who earns a good part of his income out of the country should pay tax to Canada on that income earned in a foreign country. After all, that income in a foreign country is taxed in that foreign country. There is no reason for the very complicated provisions set out in this Bill somehow to try to bring some of that income, subject to an $80,000 salary calculation, back into tax in the way it does. This is the kind of clause we should throw out. It is the kind of clause that adds needless complications to the tax provisions in the Income Tax Act.

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Next, the Bill deals with farming losses and allows those farming losses to be capitalized. My colleagues will be speaking in the House with respect to farming losses and asking why, if those farming losses that cannot be written off as losses are to be capitalized, then why can they not be treated as losses and written off against other income? A number of questions have been raised with the Minister of National Revenue (Mr. Bussieres) with respect to restricted farm losses and, in our view, the Minister has not been handling these correctly. Those of my colleagues involved in agriculture will be bringing details of their concerns to this House.
Last, I want to deal with the three major issues that I see in this Bill, issues that were not dealt with by the Standing Committee on Finance, Trade and Economic Affairs, in its hearings in September. These issues are the golden loophole issues. They are the 1SIP issue, the investment tax credit issue, and the research and development tax issue.
First let me deal with 1SIP issue. What happens here is that a person who invests in the shares of a company which happens to be listed on a Canadian stock exchange-and I may point out there are only about 1100 possible companies involved- can somehow set up a fund where any capital gains on those shares in that fund are indexed to the cost of living. Only the real gain is subject to tax at the capital gains tax rate. Losses are treated in the same fashion. Real losses, that is, what you lose when you lose money on an investment, are deductible in accordance with the capital gains deduction of losses. That may seem fair. That may seem that we are now recognizing that some gains are real gains and some gains are inflationary gains. Indeed, if we analyse the whole question of capital gains tax, we find that the Government does not make any money on capital gains tax, but it makes money on taxing inflation. All of a sudden, having recognized that principle, this Government recognizes that those who invest in listed stocks of listed companies will be able to have the advantage of paying capital gains tax only on their real gains and, what is even more important to those people, will have the right to deduct their losses from any other source of income.
You will know, Sir, that if you make a capital gain, you pay capital gains tax. But what if you make a capital loss? For example, suppose you were to sell your farm at a loss of $100,000. You can write that loss off against other income at $2,000 per year. It would take 50 years to get your loss back, but not if you have an ISIP. Buy shares and have them in an ISIP and have the shares go to pot; you can write all the losses off against other income immediately. Is that fair? In the name of fairness, this is what is presented in this Bill.
Even more important, this Bill treats investments, inputs, and calls and share options, all as part of a real investment scheme. When you put an option on some stock, there is no new investment in Canada. When you give somebody an option on stock which you may or may not hold, there is no new investment in Canada. That is a game only traders play. Yet the traders who trade behind the ISIP get their grain as a capital gain. They pay only half tax on it. If they lose, they write all their losses off. What a wonderful deal for traders. If
there ever was a definition of someone who is in the business, the nature of trade, and activity in the nature of trade, it is somebody who wheels and deals in the stock market in puts and calls. Yet these people are going to be given the golden loophole.
Talking about the golden loophole, my friend from Kam-loops-Shuswap (Mr. Riis) talked about it. Let me give you the opinion of Lyman Mclnnis, a senior partner in Touche, Ross. He calls this program "a hell of a lot of bureaucratic machinery giving a benefit to investors who least need the help". Even if you want to call them investors, the people who benefit from the ISIP are not the people who need the help. What we ought to be doing is having a provision to index or abolish capital gains for the little people in this country who invest in the plants, the farms and the businesses that make our country grow. These people are bottled by this Government, yet the people who invest in the 1,100 companies or so are treated with the golden glove.
This is not the kind of statute that a true Liberal Government would bring in. This is the kind of statute brought before this House by the friends of the brokers, the friends of the wheeler-dealers, the friends of the rich boys.
Let us go on to this investment tax credit and the treatment of the investment tax credit as our next concern. There is an advantage in the Bill. It says that if you have an investment tax credit in your company and you are a small business, this Government will give you back 40 per cent of your tax credit in cash if you apply when you file your tax return. If you are a big business, you can get 20 per cent back, and you can carry your investment tax credits back three years and forward seven years. That is all very well. But the Government then threw in a scheme to help the brokers, to help the big investors. That scheme involves a situation where a company can issue shares and the person who buys the shares can have the investment tax credits and take them off his personal income tax. If you want to get rid of your investment tax credits, issue shares. But to do that you have to have a prospectus. You have to have a lawyer and you have to have a tax accountant. The system is very complicated. One has to set up and pay a Part VII tax. Then one has to prove one's investment for a refund of that Part VII tax. If one does all that, the whole investment tax credit is written off, not by the businessman but by the fat cat investor.
Is that not an interesting way of helping business? Is that not the way a Liberal Government goes? Is that the way to build Canada? They do not give the small businessman the money. They give him 40 per cent of his investment tax credit, but if he goes through the "whoopee-whoopee", the guy down the street with the big bankroll gets 100 per cent of his investment tax credit in his pocket. Is that helping business?
I would like to turn to the R and D tax credit system. There is a dandy, there is a dandy! Many of us from Ontario know there is a provision whereby the Government of Ontario will give a grant to those who invest in R and D. One can now
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stack the grant with this R and D tax credit system. However, if a small businessman spends his money on R and D, he does not get any money back. He can write off some. He has his tax credits which can be written off. He gets it back somehow that way. Strangely enough, if we analyse it, big businessmen will do better than small businessmen. The way they are calculated, R and D tax credits are somewhat more profitable for big business than for small business. How do they write off R and D tax credits if they want to pass them along to investors? They go through the prospectus, see the broker and set up a new system.
I see Mr. Speaker rising. I would appreciate unanimous consent to proceed.


Mr. Deputy Speaker:: Is there unanimous consent for the Hon. Member to extend his remarks?


Some Hon. Members:: Agreed.


Donald Alex Blenkarn: I thank the House. If a small businessman wants to sell some shares, perhaps he could pass his shares and R and D tax credits over to the big, fat fellow down the street who has lots of money and lots of income. He can take the R and D tax credits and receive a 50 per cent credit against his taxes. For example, if he paid tax at a marginal rate of 30 per cent, in effect he could wipe out his entire taxes. However, if one is running a business and has no profit, all one can do is carry the R and D tax credits back three years and forward seven years. I am glad that can be done. It is an important advantage, but that is all one can do. Strangely enough, the tax credits are deductible against the amount of R and D investment. When the tax calculations are completed, small companies do not do as well as big ones.
Let me wind up my analysis of the statute by saying that it is impossibly complicated. I venture to say without fear of contradiction that no Member of the House could easily explain the sections of the Act. There are Hon. Members who earned their living in their prior occupations as tax consultants, however there is probably not one of them who can say that he or she totally understands the provisions of the Bill. When the Hon. Member for Montmorency-Orleans (Mr. Duclos) said that we should pass this in a hurry-


Louis Duclos: That is not what I said.


Donald Alex Blenkarn: -he must have been really telling us to close our eyes and believe in Big Brother because Big Brother would look after us. It creates a Part VII tax and a Part VIII tax in companies. I do know how they will explain that to businessmen in their constituencies. I will have a difficult time in my constituency, although I have spent many hours studying this Bill. It begs relevance to business. If they really wanted to help R and D, why did they not introduce a straight refundable credit back to companies which made the investment without regard to whether or not they paid tax? That is not difficult. Why are they prepared to pass on the tax credit in full to an investor but are not prepared to give it to the company that actually made the investment? Why are they not prepared to
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do the same thing with investment tax credits? It would be simpler and certainly fairer, but it would not help brokers, lawyers and tax accountants.
Should they be helped? I commend for the attention of the House an address given by the Minister of State for Economic and Regional Development (Mr. Johnston) to the Canadian Tax Foundation in Montreal on Tuesday, November 29, 1983.
I commend it as compulsory reading for Hon. Members of the House. I almost totally agree with everything the Minister said. It is too bad he is not the Minister of Finance; if he believes what he said in his speech, this Bill would not be before the House.


Douglas Glenn Fisher: Mr. Speaker, my colleague and companion from Mississauga has made his usual provocative speech on tax matters. I would like to start out by saying that he referred to tax practitioners, which he has been in the past. Based upon his reflections today, he will not return to that profession in the future when he is retired after the next election. His advice was not worth a wooden nickel.
I would like to ask him about his give and take proposal; I have two or three questions on it. First, how big is the take part of that proposal, in his opinion?


Donald Alex Blenkarn: Mr. Speaker, the charitable organizations which presented this brief to the Minister indicated that they felt the Government would in fact make money on the give and take proposal for the first five years.


Douglas Glenn Fisher: Do you agree?


Donald Alex Blenkarn: That was my feeling when I analysed it. Of course, we in the Opposition do not have the computers and the rest of it. I suppose they are clearly available to the public by the way the Ministry of Finance looks after its computers. It was indicated to us that there was no reason that proposal would not fly well.


Mr. Chenier:: You do not know.


Donald Alex Blenkarn: Yes, we do. More important, we have to look at whether we are better off encouraging private charities and voluntary organizations to do some of the things which are done at a great expense by government. A great number of the social affairs handled by government can and should be handled by private groups. We would cut down taxes considerably.
My friend comes from Mississauga, as I do. He knows the amount of voluntary work which takes place there and makes it possible for hospitals and so on to run efficiently and effectively. Any encouragement which can be given to voluntary organizations dramatically cuts down the obligations of the state to provide services.


Douglas Glenn Fisher: I agree that we should do everything possible to support our voluntary and charitable organizations. From meeting my colleague at various meetings across Mississauga, I know that the two of us are quite active in trying to support volunteers as much as we can. However, that is motherhood. I asked him how much he was prepared to spend in supporting

December 13, 1983
Income Tax Act
private sector organizations. How much is the take in the give and take proposal? He does not have an answer to that because he has not gone beyond the motherhood part of the proposal.
Let me ask him a second question. He was very critical about the Government's attempts to put limits on the overhead that charities can incur. What limit would he put on? Does he believe that an overhead of 100 per cent would be all right? I see him shaking his head. Does he think that an overhead of 2 per cent would be all right? What limit would he give us?


Donald Alex Blenkarn: Mr. Speaker, the limits proposed are not all that bad, provided they are not damaged by this particular clause which demands receipts. In other words, there are many charities that collect little bits of money, such as $5, $8, $10. If receipts are required, the cost of administering that type of charity is very high. My friend shakes his head. I only give information that has been given to me by a host of charities. I will be delighted to forward to my friend the letters we have received from at least 30 charities indicating the concerns they have as to the cost structure they are likely to face in the demand by people to get a receipt. They say it is not likely to occur this year, but will occur when people find that if they are going to claim anything for charity, they have to file a receipt for every donation.
My friend might not appreciate this, but when it comes close to filing time, a person all of a sudden remembers that he gave $10 to a hospital fund and then whips around to the hospital to ask for a receipt. That is the kind of problem we will face. Until now, a person who did this required more than $100 in receipts to get a nickel off his tax. My friend laughs. A great number of people gave less than $100. They gave, but did not keep track of it. We are now forcing people to keep track of it. That is what will create the overhead that I talked about.


Douglas Glenn Fisher: Mr. Speaker, if my hon. friend gives more than 50 cents to a charity the next time round, he will know that most charities are quite happy to give him a receipt at the drop of a hat. I am prone to buy tickets for events in my riding. They are often $2 or $3. I always get a receipt for these. The charities do that automatically.
The Hon. Member is again avoiding the question. He will not tell us how big is the take that he thinks charity should get and how much is a reasonable overhead. He does not need to go into the motherhood issues he has given us. He does not need to indicate his unwillingness to give anything over 50 cents. Really, you have to give over $1 before you will get a receipt. Once you are up in the high figures, they will issue a receipt. Will the Hon. Member stop giving us these red herrings and tell us how big is the take and how big is a reasonable overhead for a charity?


Donald Alex Blenkarn: Mr. Speaker, let us assume that the arrangement would be exactly the same as political contributions. My friend has the exact figures in his records with respect to political contributions. Is there any reason why it should be 75
per cent on the first $100 and 50 per cent on the next $500 for a political donation and then have my friend insist on nothing other than taxable income gift arrangements on a gift to a hospital or the Red Cross? Is that his attitude?


Douglas Glenn Fisher: Mr. Speaker, I am really encouraged to hear a Tory finally begin to make a policy statement. We now know from the Hon. Member for Mississauga South, who is a responsible member of the Finance Committee and a deputy critic for finance for his Party, that on every $100 deduction, the first $100 of a gift to charity should have 75 per cent credit from the federal Government. I take it that the Tory position is that the first $100, which today is a standard deduction, assuming that people are in a 25 per cent tax category, that that standard deduction of $100 at a 27 per cent rate is worth $25 to the taxpayer, and now the Tory Party is saying it should be worth $75 to the taxpayer. I take it that that is their position. They want the federal Government in the pocket of every charity to the tune of $75 for the first $100.


Donald Alex Blenkarn: Mr. Speaker, that is obviously a misrepresentation. We are comparing one system to another. The charities have suggested that the tax credit be 50 per cent on the first $100. Obviously there would be budget restraints if that went too far, but the principle is there. In all fairness, if we are going to take tax credits to finance our political activities, we should be prepared to give tax credits to finance our charitable activities.


Mr. Deputy Speaker:: The period of ten minutes has just about expired. Is there unanimous consent for the Parliamentary Secretary to ask a question?


Some Hon. Members:: Agreed.


John Leslie Evans: Mr. Speaker, I would like to follow up on the excellent questions by my colleague for Mississauga North because, quite frankly, I am intrigued by the give and take proposal. 1 know my friend from Mississauga South is as well. We now have in the range of 44,000 registered charities in Canada which qualify for tax treatment. Many of those are of a nature that I am not sure the Canadian taxpayer would be happy to see receive a 50 percent, let alone a 75 percent, tax credit. I do not think the Hon. Member's Party would be happy to see all of these charitable organizations that are now registered for tax purposes receive this kind of tax treatment. How would he go about defining what charities should receive the kind of treatment proposed in the give and take proposal?


Donald Alex Blenkarn: Mr. Speaker, that is a question of the approval of charities. The Parliamentary Secretary knows the Government has a White Paper on this matter. 1 would have thought that the Government would have had a parliamentary study on the licensing of charities. The answer is very simple. Is the Parliamentary Secretary going to distinguish between one church and another, and between the Red Cross and the Cancer Society? Obviously he may believe there are charities that are not charitable or not advancing the work of our Lord, education, or all the rest of it. I am not going to decide which
December 13, 1983

of the 44,000 charities should be disqualified. When charities are registered for charitable purposes, why is their validity as charities not examined? The Hon. Member is all worked up about which one should and which one should not qualify, but that is a matter of administration of a tax statute. It is not a question of the validity of whether donations to the Red Cross should be treated in a worse way than our political donations.


John Leslie Evans: Mr. Speaker, I have listened to the debate today, especially with regard to voluntary organizations. 1 have a very close friend who has done a paper in this area which is intriguing. The give and take proposal falls into the over-all concept that he has put forward about allowing taxpayers to specify how their tax dollars should be used by receiving some form of tax credit in exchange for the allocation of their funds for some acceptable public social purpose that would be carried out by the private sector. The Hon. Member for Mississauga South (Mr. Blenkarn) has raised this notion, and it is an intriguing one which should be looked at. However, I am afraid that it goes far beyond the scope of the Bill that is before us today.
The Bill before us today is an attempt to implement the tax measures which were brought down in the April budget. Quite frankly, I have listened to the members of the opposition Party raise great concerns about this Bill. To their way of thinking, or at least the way they are expressing their thinking today, this is a Bill that should not be passed and one that we should debate in the House forever and ever. I quite frankly do not understand that position. 1 was Chairman of the Finance Committee when, for the second time during my tenure, the Minister of Finance (Mr. Lalonde) referred the Ways and Means motions to our Committee.


Donald Alex Blenkarn: But he didn't refer them all.


John Leslie Evans: All except for the ISIP, the tax credit and one other. However, all of the others were referred to the Committee. The first time they were referred to the Committee was a year ago. We came back with a report, to which the Minister responded by making changes to the legislation, which was Bill C-139.
In addition, Mr. Speaker, the Minister then referred the Ways and Means motions from his April budget to the Committee and the Committee undertook its standard procedure, which was to advertise widely across the country. I have with me the proceedings of the Committee which reflect the report that we drafted after our deliberations. We considered all of the Ways and Means motions. We had officials from the Department of Finance before us and we questioned them at length regarding each provision in the Ways and Means motions, and as well we went through the explanatory notes which were before us in detail and asked the officials to explain them, after which questions were raised by the members.
Income Tax Act
I should indicate to you, Mr. Speaker, that we advertised in every Canadian daily newspaper from coast to coast asking for submissions. From that process, we received 15 submissions from across the entire country of which two related directly to the Ways and Means motions that were before the Committee. Thirteen of those submissions dealt with tax matters and general tax policies that went far beyond the scope of the Committee's mandate and far beyond the scope of the Bill that is before us today.
In other words, after advertising, calling for submissions and calling for witnesses, we received two relevant submissions. That implies to me, Mr. Speaker, and I think I draw a valid conclusion, that this Bill and its provisions are widely accepted in the community. There is no great concern about the Bill. The provisions have been scrutinized in public, they were scrutinized at the time the budget was brought down and they have been scrutinized since mid-summer when the Ways and Means motions were publicly available. We advertised for submissions and received only two.
The Committee went through the entire process of examining the Ways and Means motions and we drafted our final report. Our final report on this entire matter, excepting only two or three of the provisions that were not in the Ways and Means motions that I and the Hon. Member for Mississauga South have already mentioned, comprises only two pages. If there is any criticism of this Bill, it is certainly in the most muted of tones.
We have spoken about the overseas employment tax credit, and the Hon. Member for Mississauga South was correct. There are two issues which we said had remained unaddressed. One issue is that income from foreign assignments should perhaps not be taxable in Canada at all, and the Hon. Member has raised that point. We referred that issue to the Minister and, indeed, we believe that the Minister is considering it. However, it does not form part of this Bill because it has far-reaching implications that could not be incorporated into the current legislation. The Minister certainly is aware of the matter because it was contained in our report.
Second, dealing with overseas employment, the amount that is non-taxable refers to certain types of employment income, and we as a committee questioned whether or not it should apply to all income from all sources of employment. It is now relatively restricted and we thought the provision was unduly restricted. Again, the Minister has agreed to examine this and take that under consideration in subsequent legislation and budget proposals.
The investment tax credits have been extended to a three-year carryback and a seven-year carryforward, and we are concerned that there may be more than one benefit such that the combined tax benefits may exceed the investment. In other words, there are several forms of investment tax credits. We thought that this was a good proposal which would provide some impetus to investment, but we were concerned with the so-called stacking problem. We were concerned that if a province allows an investment tax credit and the federal Government allows an investment tax credit, then indeed these
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two investment tax credits could be stacked one on top of the other and the investor could receive a benefit from the public purse, both federal and provincial, that might exceed that which policy would dictate. As a result, we asked the Minister if he would not look into the question of stacking to see if the kinds of investment tax credits that were made available would remain within the policy that we had prescribed regarding how much should be provided as an incentive to investors, and the Minister agreed once again that he would look into these matters. It is certainly a matter for federal-provincial negotiation but not a matter that could be decided quickly or decided in this legislation. Apart from that, the investment tax credit proposals that are being put forward were felt by all members of the Committee to be good proposals.
The deduction for child care expenses has been increased and indeed has been doubled. It has gone from $1,000 up to $2,000 per child, to a maximum of $8,000. We thought that that was a very good measure indeed. We have heard a great deal said about the standard deduction today. In effect, the standard deduction means that if one is to deduct an amount from one's taxable income, then indeed it should reflect an amount that has been contributed to some organization that provides a social good. In other words, that deduction should be for an actual contribution to a charity. As it stands now, a person who makes no contribution whatsoever can deduct $100 from his taxable income whether or not he makes a contribution.
The proposal to remove the $100 deduction only means that if one is to receive a tax deduction, which is ostensibly for either medical expenses which are still tax deductible above 3 per cent or for a charitable donation, then one should have paid those medical expenses or made a charitable donation. That seems to be eminently sensible.
A question was raised regarding the receiving of receipts. A person will now have to attach receipts to his tax form proving that he gave $25 to the Heart Fund, $25 to the Cancer Society and $25 to the Red Cross, and he will be able to deduct that amount from his taxable income. That also seems eminently sensible.
We have heard that there is a $8 cost for issuing a receipt. The people who come around to my door collecting for the Cancer Society, the Heart Fund or the Terry Fox charity ask me if I would like to make a donation. I say that I would, I write my cheque, hand it to them, they fill out a receipt, sign it and give it to me. Eater, I attach that receipt to my tax form. The receipt is issued at the door. The only time a receipt has to be issued is when you use direct mail. Then a receipt has to follow but that is the choice of the charity. It can use door to door volunteers or direct mail. In this day of computers surely we can overcome the difficulty of issuing receipts for tax purposes.
1 think the standard deduction should have been removed and the deduction of any charitable donation to a registered charity should be maintained. It just requires a receipt. That is
a fair proposal and it should have been implemented a long time ago. The give and take proposal is something quite apart and will have to be considered in future legislation.
The Committee looked at other measures such as that for joint exploration corporations. It thought there were administrative problems with that and it was referred back to the Minister of Finance. The Committee considered restricted farm losses and found the matter to be an area worthy of further discussion and study. It did not say that the Minister should change the proposals which are put forward in the Bill but rather, that the area was worthy of further discussion and study.
Tax legislation does not come in one big package in an attempt to solve all problems at once; it evolves over time. I shall say something about that later if I may.
One very interesting question is not dealt with in the legislation although the Committee thought it should be. A taxpayer is charged interest from the day taxes are due if they are not paid. The Committee felt it was reasonable that if taxes were overpaid, interest should accrue for the period during which the Government had use of the money that was overpaid. If interest is charged for underpayment of tax from the date the underpayment occurs, then interest should be paid on overpayment of tax from the day on which the overpayment occurred. That matter is being examined by the Minister and the Department.
That is the sum total of the concerns of the Members of the Finance Committee with regard to the legislation. Two pages sum up the entire report of the Committee. Only two submissions were received from the public and the business community, so I do not know how Members like the Hon. Member for St. John's West (Mr. Crosbie) who was a member of the Committee-although his attendance record is not exaclty perfect-can stand here and rave that the legislation is horrendous and should be mulled over in the House and in committee forever. Presumably Members of the Finance Committee have expertise in this matter and they have reported back saying, in essence, that the Bill is a good one, that the proposals are good, but that there are some problems that should be studied further.
I think it is eminently sensible to move forward with the legislation, Mr. Speaker, and get it through the House. I suggest that it should be passed before we leave for the Christmas recess so that taxpayers can be assured they will receive their refunds on time. In the new session we should deal with initiatives rather than a Bill that has been studied and commented on favourably, in almost all cases, by the community at large.
Today, the Hon. Member for St. John's West commented on certain proposals on taxation that I have put forward. I have been interested in this area for a very long time, as has the Minister of State for Economic and Regional Development (Mr. Johnston) who recently made a speech on the subject to the Canadian Tax Foundation. I have put forward proposals that would change the tax laws in radical ways. I am not ashamed of that. I do not think it flies in the face of what a
December 13, 1983

member of the Government should do. That is the tradition on this side of the House. This Party encourages its members to put ideas forward and not hide them under a bushel basket as is done by members of the Opposition. 1 am not afraid to put my ideas forward for scrutiny although some Members condemn me for doing so. 1 would turn that condemnation around and point it back at the Opposition whose members will not put their ideas forward for scrutiny. The Minister has put forward ideas for simplification of the tax laws but he has not felt compelled to keep them quiet. The Minister and his predecessor have greatly increased the consultation process involved in budget making and have made references to the Standing Committee on Finance, Trade and Economic Affairs not only of their Ways and Means motions, but of measures that involve policy.
In the last session there was a reference to the Standing Committe on Finance, Trade and Economic Affairs to consider the simplification of the small business tax system. That does not seem to be the action of a Minister who is afraid of new ideas. In this Party we are not afraid of new ideas. Our members are free to put forward their ideas for comment or criticism, and Ministers listen.


John Albert Gamble: But they do nothing.


John Leslie Evans: The Hon. Member should look at Bill C-139 and at the Ways and Means motions that led to it. He will see that the Minister of Finance changed the Ways and Means motions substantially in response to the ideas, criticisms and comments made by members of the Committee. He listened and he changed the Bill. The consultation process worked in that case and it has worked with the business community and all sorts of groups in the private sector and other levels of Government. In this way the Minister found new means of achieving his objectives.
1 think the proposals are radical and show a new approach. As a member of this Party I feel free to do that. The proposals have been well received not only by members of the business community but by members of this Party and by the Government. 1 look forward to being able to put forward even more ideas in the future and to having them incorporated into the tax legislation of this country.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Benno Friesen (Surrey-White Rock-North Delta):: Mr. Speaker, I rose in my place yesterday to ask the Prime Minister (Mr. Trudeau) whether he would confirm that the Government is negotiating diplomatic relations with East Germany, the German Democratic Republic. To my surprise he said he could not confirm that. Someone else mentioned at the time that maybe he would deny it, which very significantly he chose not to do.
Frankly, I was really quite surprised by his answer because I know that there have been discussions with that government for at least three years, possibly more, regarding that eventuality. I am aware that those discussions are now reaching the latter stages, and there is some discussion about the nature of the Embassy and so forth. Therefore, I am first of all concerned about why the Prime Minister would deny it. I wonder if the Parliamentary Secretary, or whoever is going to answer on behalf of the Prime Minister, is going to confirm the denial or correct the record and state what actually is going on, that in fact the Government is going to establish diplomatic relations with the German Democratic Republic.
My concern stems from what I think is an opportune moment to do some hardnosed negotiating with that country on behalf of Canadian citizens who were born in East Bloc countries. As members will know, the record is pretty clear, pretty blatant as a matter of fact, with respect to Czechoslovakia. It is a widely established European custom that citizens do maintain duel citizenship. If they come to North America, for example, the country of birth does not necessarily relinquish its claim on the nationality or citizenship of a person who may have in the meantime established Canadian citizenship. I recognize the limitations on the ability of this Government with respect to that issue. No Canadian Government can tell Czechoslovakia or East Germany, or Italy for that matter, that they cannot require dual citizenship. That is beyond our mandate and I am not asking for the impossible. However, 1 am saying that if we are negotiating with one of those countries to establish diplomatic relations, we can demand some other rights and guarantees for Canadian citizens.
For example, members will know that it is a crime in East Bloc countries to leave those countries and come to the West. Those countries demand payment for the social services provided to the people, payment for the withdrawal of military service and so forth. Therefore, leaving the East Bloc country of birth is branded as a criminal offence. It seems to me, Mr. Speaker, that now is an opportune time to score some points with those countries.
It is understandabnle-not acceptable but understandable- that we are in this dilemma now with East Bloc countries whose diplomatic relations were worked out 30 or 35 years ago. At that time we did not have the experience of history, of knowing how communist countries were going to react to Canadian citizens. We know how Czechoslovakia treats Canadian citizens. We know, as my colleague for Esquimalt-

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Adjournment Debate
Saanich (Mr. Munro) has pointed out, that Czechoslovakia will demand a Czechoslovakian passport of Canadian citizens. In order to get that they have to swear allegiance to Czechoslovakia. If they are servants of the Canadian Government, for example, how can they swear allegiance to this country when they take out a citizenship, and also give an oath when they take office as a public servant, and then go back to Czechoslovakia and swear allegiance to that country? That is the kind of dilemma facing some Canadian citizens.
My point yesterday, Mr. Speaker, was simply this. Now that we are in a negotiating position with a country, why do we not score some points and require some concessions from that country that will provide some security for Canadian citizens born in East Germany? Then when they want to return to the land of their birth to visit relatives or simply to see their birthplace they will have some security in that that country will not be able to demand those things which other countries are demanding at this time.
I would like the person who is responding today to clear the record. Are we negotiating with the German democratic republic? If we are, would the Government give us, and those Canadian citizens who were born in East Germany, the assurance that if we are establishing that relationship there will be assurance that when they return to visit the land of their birth they will not be required to take an oath of allegiance or be branded as criminals by that country?
[ Translation]


Mrs. Suzanne Beauchamp-Niquet (Parliamentary Secretary to Deputy Prime Minister and Secretary of State for External Affairs):: First of all, Mr. Speaker, I should like to remind the Hon. Member for Surrey-White Rock-North Delta (M. Friesen) of his question yesterday to the Prime Minister (Mr. Trudeau). He precisely asked whether the Right Hon. Prime Minister, and I quote:
-could confirm that the Government is planning in the near future to extend diplomatic recognition to East Germany, the German Democratic Republic?
To which the Right Hon. Prime Minister's reply was:
No, Madam Speaker, 1 cannot confirm that.
Then, I suggest it is quite clear. If I may, Mr. Speaker, I should like to provide the House with a little background information. Canada recognized the German Democratic Republic in 1972. Yet, it was only in 1975 that Canada agreed to diplomatic exchange with the German Democratic Republic. In 1977, ambassadors at large were accredited for the first time from Warsaw to Canada and from Washington to the German Democratic Republic. Bilateral political consultations between officials took place in 1977, 1979, 1981 and 1983, so that a bilateral trade agreement was signed as recently as September 9, 1983, by the Hon. Senator Hazen Argue, Minister of State. This bilateral agreement had been preceded by major sales of Canadian grains to the German Democratic Republic. It was then agreed that after our bilateral exchanges
have developed, we would consider opening permanent diplomatic missions in Ottawa and East Berlin. As no final decision has been made concerning that, the Right Hon. Prime Minister replied yesterday to my hon. friend opposite that he could not confirm that Canada is about to extend diplomatic recognition to East Germany. Yet, I can confirm today that there are continuing discussions aimed at drafting a memorandum of agreement calling for reciprocal conditions similar to those we would grant the German Democratic Republic when we decide to open a permanent mission in East Berlin.
The opening of a German Democratic Republic mission in Ottawa hinges, as my hon. friend opposite surely knows, on the results of these negociations and a ministerial decision.


EXTERNAL AFFAIRS-CZECHOSLOVAKIA-DUAL NATIONALITY ISSUE
Donald W. Munro: Mr. Speaker, my question as recorded at page 86 of yesterday's Hansard concerned dual nationality, particularly as it refers to national Canadians of Czechoslovak origin. What concerned me particularly was the practice, of which I have been made aware, of an enforced resumption of Czechoslovak citizenship by such Canadians who perhaps had come here as refugees from an oppressive regime-not just the first generation but the second and even into the third generation of those persons of Czech nationality-as a prerequisite of being able to visit Czechoslovakia to see their relatives.
This enforced resumption of Czechoslovak citizenship consisted in particular of swearing a new oath of allegiance to the communist regime in Czechoslovakia despite the fact that those persons had chosen a new head of state in the person of Her Majesty, the Queen, to whom they had sworn allegiance. Now, to fulfill a completely understandable family urge to visit a grandmother, uncle or neice, they must swear allegiance to their previous head of state, a communist president. As nearly as we can make out-and this was only 1977-there have been some 1,100 Canadians of Czech and Slovak origin who were admitted to Canada as refugees who have since been obliged to reconfirm their allegiance to the regime in Czechoslovakia from which they fled, and have had to do this in order to visit the relatives they left behind in Czechoslovakia.
That is not all; far from it, unfortunately. Among these 1,100 Canadians who had to reaffirm their allegiance elsewhere, a fair number are employees of the Crown. Some of these Canadian public servants have been known to travel to Czechoslovakia on Czechoslovak passports. Does this not strike the Government as not only odd but unacceptable?
Indeed, not very long ago the House gave first reading to my Bill to amend the Canadian Citizenship Act so as to remedy this abuse. What I proposed in that Bill-and I shall seek to reintroduce it this session-was to deprive citizens of their Canadian citizenship if, while under no disability, they declared allegiance to a country other than Canada. That was Bill C-650, given second reading on April 6, 1982.
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1 have also asked questions, as did the former Member for Central Nova, which were fogged off with the reply that the Government was examining the problem or trying to work out a dual nationality agreement with the Czechoslovak authorities. I hope that any such agreement will contain provisions which will safeguard these Canadians. I would go further and suggest that Canada could take the lead in elaborating and developing an international convention on dual nationalities under UN auspices.
The problem is that it not only causes schizophrenia in honest to goodness immigrants who came to this country in good faith, but could very well facilitate the planting of a number of espionage agents working on behalf of the Soviet Union or the Czechoslovak government. That is a problem we must examine very carefully. 1 hope the Parliamentary Secretary to the Secretary of State for External Affairs (Mrs. Beauchamp-Niquet) will shed some light on this very serious problem.


Suzanne Beauchamp-Niquet: Mr. Speaker, I should like to point out that Canadians of Czechoslovak origin, like those of other East European origins, do sometimes experience difficulties with respect to their original nationality, particularly when they travel in their country of birth. Canada offers consular assistance to those Canadians so that in the other country they will be given fair treatment pursuant to the Final Act of Helsinki and the Closing Document of Madrid concerning the free movement of people.
In Czechoslovakia, a particular difficulty stems from a directive under which a Canadian of Czechoslovak origin has a choice: either he reaffirms his Czechoslovak nationality and travels with a Czech passport or, after paying a fee, answering a highly detailed questionnaire and waiting for a certain period of time, he renounces his Czechoslovak nationality and travels in Czechoslovakia with a Canadian passport and a Czech visa.
Now and again, the Department of External Affairs and our embassy in Prague make representations to Czechoslovak authorities concerning the difficulties experienced by Czech Canadians who have a dual nationality. In addition, External Affairs officials are in contact with representatives of the Canado-Czechoslovak community about this question.
Precisely to solve once and for all the problems of a consular nature, including those of dual nationality which concern my colleague opposite and the Government, a few years ago Canada began to negotiate consular agreements with East European countries. Negotiations are long and complex, all the more so because the provinces must be consulted about certain aspects. Nevertheless, a lot of progress has been made and we hope soon to be able to sign such agreements with some of them, including Hungary and the USSR.


Donald W. Munro: And Czechoslovakia!
Adjournment Debate


Suzanne Beauchamp-Niquet: I am coming to that, Mr. Speaker. As for Czechoslovakia, negociations have been very slow since 1980 because of the problem caused by the aforementioned guideline. Last September, while in Prague for the purpose of discussing consular relations, External Affairs officials were informed that changes in the Czechoslovakian legislation were being considered and that, meanwhile, present regulations would be applied more simply and quickly. In view of the circumstances, the Canadian Government hopes that negociations will resume in the near future. I would like to add, Mr. Speaker, that we understand the concerns of the Hon. Member. It is a concern shared by this Government which explains our negociating position for the purposes of signing a memorandum of agreement.
[DOT]	(1815)


ESTABLISHED PROGRAMS FINANCING-ANNOUNCEMENT IN THRONE SPEECH-AMOUNT OF FEDERAL FUNDING. (B) GOVERNMENT POLICY ON FUNDING MEDICAL CARE
William Alexander (Bill) Blaikie: Mr. Speaker, I would like to follow up on a question I asked the Minister of National Health and Welfare (Miss Begin) last week having to do with the $500 million which was indicated in the Throne Speech and which has been described by the Government as additional funding in the transfer payments to the provinces for health care and post-secondary education, and to take issue with the description the Government has given to this money as being additional money.
This is money which the Government would have had to provide in any case. This money comes about as a result of the formula in the Established Programs Financing and the formula is tied to the Gross National Product. Earlier this year, perhaps last year or whenever it was that the Government estimated it would be transferring $13 billion to the provinces, it estimated that on the basis of what the Government thought the GNP would be at that time. The Government underestimated the growth of the GNP. I think everybody did. The money which the Government estimated it would transfer is less than what the Government will in fact transfer in 1983-84, by some $500 million, according to the Government's own figures. This is not new money. This is not discretionary money. It is not money the Government is putting in over and above its existing commitments. It just means that at one point in time the Government had an incorrect view of what its existing commitments were. Now the Government has a more correct view of what its existing commitments require the Government to give to the provinces in 1983-84.
[DOT]	0820)
The federal Government has done a great disservice with the introduction of the Canada Health Act to the political context within which we now have to talk about federal-provincial funding and the federal-provincial partnership which medicare represents. It tried to give the impression that somehow it was being generous when it comes to health care and post-second-

December 13, 1983
Adjournment Debate
ary education. Also it tried to give the impression that this additional money to which it referred can somehow be construed as a reason for the provinces, and others who have been critical of the Government, to let up on the demand that the federal Government be willing to reopen the question of the adequacy of its funding commitment to medicare and, indeed, the adequacy of the relationship between the federal and provincial Governments over the long-run.
We see the federal Government on the one hand indicating that it wants to enhance and preserve medicare. On the other hand, it is doing very severe political damage to the context within which federal-provincial relations and negotiations over medicare have to take place. I have no simpathy for the various provinces, in particular those with Progressive Conservative Governments which have allowed the principles of medicare have to take place. I have no sympathy for the extra billing, user fees and that sort of thing. However, that does not blind me to the fact that they have a case against the federal Government when they accuse it of trying to misrepresent just what is going on in terms of the funding relationship between federal and provincial Governments.
The Government has consistently failed to create the political context within which it would have moral advantage over the provinces. It began to damage the possibility of that political context as far back as 1977 when it moved to cap its own contributions to medicare. It did much more damage again in April 1982 when it unilaterally cut back on federal transfer payments to the provinces. It has also damaged the possibility of the context for preserving and enhancing medicare by pretending in the Throne Speech that it was giving additional money or being overly generous to the provinces when it comes to federal transfer payments for health care and post-secondary education.
That is not the case. If it were the case, why didn't the Government announce, when the formula relating to the GNP indicated that the amount it gave to the provinces decreased, that it was giving less money to the provinces. It did not say that it would not give as much money to the provinces this year as it thought it might. The Government did not come up with that kind of announcement. This means that it cannot now come out and say it is giving more money to the provinces than planned and expect it to be regarded as an act of generosity.
It is unfortunate the Government chose to do that in the Throne Speech. In the very next week it introduces the Canada Health Act. If that Act is to be a success, and if the intentions of the Government in bringing it in are to be realized, the damage which has been done to federal-provincial relations must be healed. That has to start on both sides of the federal-provincial fence. The provincial Governments have their work to do in cleaning up their act, as has the federal Government.
The Government has not been particularly helpful by trying to pretend, as it did in the Speech from the Throne, that it was doing something new in regard to health care and post-secondary education. I can only express my regret that it chose once again to damage a political context within which we could look
for some light at the end of the tunnel in terms of federal-provincial relations over health care. It would have been much better for it to have said nothing at all than to have said what it did say with regard to the money it has to pay to the provinces in 1983-84. I regret very much that it did not have the wisdom to just be silent on that. It would have been better, of course, to indicate in conjunction with the tabling of the Canada Health Act that it was willing to reopen the question of the long-term adequacy of its relationship with the provinces as far as the funding of medicare is concerned. But it did not do that.


John Leslie Evans: Mr. Speaker, I am happy to be able to respond to the Hon. Member. The Hon. Member's point is that the federal Government is somehow trying to imply that there is a new generosity involved in the $540 million that goes to health care and the $229 million that goes to post-secondary education, totalling $769 million. It is not a matter of generosity, but a matter of fact.
The formula used for EPF estimates indicates at the beginning of the year what moneys will flow to the provinces for post-secondary education and health care. It is that amount on which the provinces budget. It is an unbiased formula. Sometimes at the end of the year there is an over-payment; we have transferred too much or more than the estimated amount. At other times it is less. In this case it is going to be more than the estimate.
Any good provincial Minister of the Treasury is going to base his expenditures on the estimated amount that will be transferred from the federal Government. There is going to be an additional $540 million transferred as a result of changes in GNP and changes in population. That is not a matter of generosity, but a matter of fact. It is $540 million more than the province's budgeted for.
The problem is that the provinces have been saying that they are under-funded on the basis of the existing formula. The point that the Minister of National Health and Welfare (Miss Begin) was trying to make is that the case for under-funding falls apart in light of the reality of the extra amounts that will be available based on the formula. Based on the existing formula, there is an additional $540 million to be transferred for health care and an additional $229 million for post-secondary education. That is a matter of fact. The provinces did not know that money was coming to them. They could not have budgeted for it, so it is in fact money over and above what they thought at the beginning of the year would be available to fund medical expenses and post-secondary education. It is not a matter of generosity or a matter of deception.
If the case for changing the formula is being made on the basis that the amount of money that was estimated at the beginning of the year was too little, that case falls apart when the formula generates additional moneys; $540 million additional for health care and $229 million for post-secondary education. That is the point. Additional moneys will be trans-
December 13, 1983

ferred to the provinces over and above what they thought they were going to get. It is a debit to the federal treasury. There is no doubt about that. It is in addition to what we estimated we were going to pay. It is a credit to the provinces over and above what they thought they would get. Therefore, it is a real transfer that enhances the ability of the provincial governments to finance medicare and post-secondary education.
Adjournment Debate
Quite frankly, I hope that those are the purposes to which the provinces put the money.


Mr. Deputy Speaker:: Order. The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow afternoon at two o'clock.
At 6.28 p.m. the House adjourned, without question put, pursuant to Standing Order.

Wednesday, December 14, 1983